    [Senate Hearing 113-465, Part 1]
    [From the U.S. Government Publishing Office]

                                                     S. Hrg. 113-465, Pt. 1

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 2410

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2015 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
       MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER
                                    PURPOSES

                                   ----------

                                     PART 1

                 U.S. STRATEGIC COMMAND AND U.S. CYBER COMMAND
                                MILITARY POSTURE
                  U.S. CENTRAL COMMAND AND U.S. AFRICA COMMAND
                U.S. NORTHERN COMMAND AND U.S. SOUTHERN COMMAND
                   U.S. PACIFIC COMMAND AND U.S. FORCES KOREA
                                  NAVY POSTURE
                                  ARMY POSTURE
                       ARMY ACTIVE AND RESERVE FORCE MIX
                               AIR FORCE POSTURE
    RECOMMENDATIONS OF THE NATIONAL COMMISSION ON THE STRUCTURE OF THE AIR
                                     FORCE
                    REFORM OF THE DEFENSE ACQUISITION SYSTEM

                                   ----------

       FEBRUARY 27; MARCH 5, 6, 13, 25, 27; APRIL 3, 8, 10, 29, 30, 2014

             Printed for the use of the Committee on Armed Services

                                      ______

                          U.S. GOVERNMENT PUBLISHING OFFICE

    91-186 PDF                   WASHINGTON : 2015
    -----------------------------------------------------------------------
      For sale by the Superintendent of Documents, U.S. Government Publishing
      Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
             DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
                              Washington, DC 20402-0001

        DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL
             YEAR 2015 AND THE FUTURE YEARS DEFENSE PROGRAM--Part 1

        U.S. STRATEGIC COMMAND AND U.S. CYBER COMMAND  b   MILITARY POSTURE
      b   U.S. CENTRAL COMMAND AND U.S. AFRICA COMMAND  b   U.S. NORTHERN
     COMMAND AND U.S. SOUTHERN COMMAND  b   U.S. PACIFIC COMMAND AND U.S.
     FORCES KOREA  b   NAVY POSTURE  b   ARMY POSTURE  b   ARMY ACTIVE AND
    RESERVE FORCE MIX     b   AIR FORCE POSTURE  b   RECOMMENDATIONS OF THE
     NATIONAL COMMISSION ON THE STRUCTURE OF THE AIR FORCE  b   REFORM OF
                         THE DEFENSE ACQUISITION SYSTEM

                                                     S. Hrg. 113-465, Pt. 1

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 2410

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2015 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
       MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER
                                    PURPOSES

                                   __________

                                     PART 1

                 U.S. STRATEGIC COMMAND AND U.S. CYBER COMMAND
                                MILITARY POSTURE
                  U.S. CENTRAL COMMAND AND U.S. AFRICA COMMAND
                U.S. NORTHERN COMMAND AND U.S. SOUTHERN COMMAND
                   U.S. PACIFIC COMMAND AND U.S. FORCES KOREA
                                  NAVY POSTURE
                                  ARMY POSTURE
                       ARMY ACTIVE AND RESERVE FORCE MIX
                               AIR FORCE POSTURE
    RECOMMENDATIONS OF THE NATIONAL COMMISSION ON THE STRUCTURE OF THE AIR
                                     FORCE
                    REFORM OF THE DEFENSE ACQUISITION SYSTEM

                                   __________

       FEBRUARY 27; MARCH 5, 6, 13, 25, 27; APRIL 3, 8, 10, 29, 30, 2014

                                   __________

             Printed for the use of the Committee on Armed Services

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

                                        ______

                           U.S. GOVERNMENT PUBLISHING OFFICE

    91-186 PDF                     WASHINGTON : 2015
    -----------------------------------------------------------------------
      For sale by the Superintendent of Documents, U.S. Government Publishing
      Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
             DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
                              Washington, DC 20402-0001

                          COMMITTEE ON ARMED SERVICES

                         CARL LEVIN, Michigan, Chairman

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

                        Peter K. Levine, Staff Director

                    John A. Bonsell, Minority Staff Director

                                      (ii)

                                C O N T E N T S

                                  ----------

                               february 27, 2014

                                                                       Page

    U.S. Strategic Command and U.S. Cyber Command....................     1

    Haney, ADM Cecil D., USN, Commander, U.S. Strategic Command......     4
    Alexander, GEN Keith B., USA, Commander, U.S. Cyber Command......    15
    Questions for the Record.........................................    54

                                 march 5, 2014

    Military Posture.................................................    69

    Hagel, Hon. Charles T., Secretary of Defense; Accompanied by Hon.
      Robert F. Hale, Under Secretary of Defense, Comptroller........    73
    Dempsey, GEN Martin E., USA, Chairman, Joint Chiefs of Staff.....    89
    Questions for the Record.........................................   153

                                 march 6, 2014

    U.S. Central Command and U.S. Africa Command.....................   183

    Austin, GEN Lloyd J., III, USA, Commander, U.S. Central Command..   185
    Rodriguez, GEN David M., USA, Commander, U.S. Africa Command.....   204
    Questions for the Record.........................................   238

                                 march 13, 2014

    U.S. Northern Command and U.S. Southern Command..................   249

    Jacoby, GEN Charles H., Jr., USA, Commander, U.S. Northern
      Command, and Commander, North American Aerospace Defense
      Command........................................................   251
    Kelly, Gen. John F., USMC, Commander, U.S. Southern Command......   262
    Questions for the Record.........................................   318

                                 march 25, 2014

    U.S. Pacific Command and U.S. Forces Korea.......................   329

    Locklear, ADM Samuel J., III, USN, Commander, U.S. Pacific
      Command........................................................   332
    Scaparrotti, GEN Curtis M., USA, Commander, United Nations
      Command/Combined Forces Command/U.S. Forces Korea..............   342
    Questions for the Record.........................................   385

                                 march 27, 2014

    Posture of the Department of the Navy............................   401

    Mabus, Hon. Raymond E., Jr., Secretary of the Navy...............   404
    Greenert, ADM Jonathan W., USN, Chief of Naval Operations........   416
    Amos, Gen. James F., USMC, Commandant of the Marine Corps........   437
    Questions for the Record.........................................   509

                                 april 3, 2014

    Posture of the Department of the Army............................   585

    McHugh, Hon. John M., Secretary of the Army......................   588
    Odierno, Gen. Raymond T., USA, Chief of Staff of the Army........   590
    Questions for the Record.........................................   680

                                 april 8, 2014

    Army Active and Reserve Force Mix................................   695

    Odierno, GEN Raymond T., USA, Chief of Staff of the Army.........   698
    Grass, GEN Frank J., ARNG, Chief of the National Guard Bureau....   707
    Talley, LTG Jeffrey W., USAR, Chief of the Army Reserve and
      Commanding General of the U.S. Army Reserve Command............   715
    Questions for the Record.........................................   765

                                 april 10, 2014

    Posture of the Department of the Air Force.......................   771

    James, Hon. Deborah Lee, Secretary of the Air Force..............   774
    Welsh, Gen. Mark A., III, USAF, Chief of Staff of the Air Force..   789
    Questions for the Record.........................................   830

                                 april 29, 2014

    Recommendations of the National Commission on the Structure of
      the Air Force..................................................   841

    James, Hon. Deborah Lee, Secretary of the U.S. Air Force.........   845
    Welsh, Gen. Mark A., III, USAF, Chief of Staff of the U.S. Air
      Force..........................................................   852
    McCarthy, Lt. Gen. Dennis M., USMCR (Ret.), Chair, National
      Commission on the Structure of the Air Force; Accompanied by
      Hon. Erin C. Conaton, Vice Chair; Hon. R.L. `Les' Brownlee,
      Member; Dr. Janine A. Davidson, Member; Dr. Margaret C.
      Harrell, Member; Gen. Raymond E. Johns, Jr., USAF (Ret.); and
      LTG Harry M. `Bud' Wyatt III, ANG (Ret.).......................   877
    Questions for the Record.........................................   907
    Annex A..........................................................   910
    Annex B..........................................................  1032
    Annex C..........................................................  1033
    Annex D..........................................................  1037

                                 april 30, 2014

    Reform of the Defense Acquisition System.........................  1041

    Kendall, Hon. Frank, III, Under Secretary of Defense for
      Acquisition, Technology, and Logistics, Department of Defense..  1044
    Sullivan, Michael J., Director, Acquisition and Sourcing
      Management, Government Accountability Office...................  1056
    Etherton, Jonathan L., Senior Fellow for Acquisition Reform,
      National Defense Industrial Association........................  1097
    Schwartz, Moshe, Specialist in Defense Acquisition Policy,
      Congressional Research Service.................................  1104
    Berteau, David J., Senior Vice President, Center for Strategic
      and International Studies......................................  1119
    Questions for the Record.........................................  1136

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                          THURSDAY, FEBRUARY 27, 2014

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

                 U.S. STRATEGIC COMMAND AND U.S. CYBER COMMAND

        The committee met, pursuant to notice, at 9:36 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, Udall,
    Manchin, Gillibrand, Blumenthal, Donnelly, Kaine, King, Inhofe,
    McCain, Sessions, Ayotte, Fischer, Graham, and Lee.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody. Today, we begin
    our annual posture hearings with the combatant commands by
    receiving testimony from the U.S. Strategic Command (STRATCOM)
    and the U.S. Cyber Command (CYBERCOM), a sub-unified command of
    STRATCOM.
        Let me welcome Admiral Cecil D. Haney, USN, in his first
    appearance before the committee as the Commander of STRATCOM,
    and General Keith B. Alexander, USA, in what may be his final
    appearance before the committee as the Commander of CYBERCOM.
    General Alexander also serves, as we know, as Director of the
    National Security Agency (NSA). When he retires at the end of
    next month, he will, by far, be the longest serving NSA
    Director in history. We thank you both for your extraordinary
    service.
        This hearing comes at a time of reduced budgets across the
    U.S. Government, including the Department of Defense (DOD).
    Even though this hearing comes in advance of the 2015 budget
    request, we'll want to hear from our witnesses about the impact
    of the overall budget situation and the expected 2015 budget
    submission, the impact that is likely to be the result of both
    that overall situation and the budget submission on the
    programs and operations under their oversight and direction.
        Admiral Haney, I hope that you will address the full range
    of issues impacting STRATCOM today, including the status of our
    nuclear deterrent, the impact of the recent Intercontinental
    Ballistic Missile (ICBM) cheating scandal, any potential
    efficiencies and cost savings that could reduce the $156
    billion that DOD projects it will need to maintain and
    recapitalize our nuclear triad over the coming decade, steps
    that may be needed to ensure that we can protect or
    reconstitute our space assets in any future conflict, and
    concerns about the adequacy of DOD's future access to
    communications spectrum as pressure builds to shift more and
    more spectrum to commercial use.
        For most of last year, General Alexander has been at the
    center of both the crisis over the loss of intelligence sources
    and methods from the [Edward] Snowden leaks, and the
    controversy over aspects of the intelligence activities
    established after September 11 to address the terrorist threat.
    We look forward, General, to hearing your views about the
    changes to the NSA collection programs directed by the
    President, the impact on the military of the Snowden leaks, the
    capability of the personnel that the Military Services are
    making available for their new cyber units, the Services'
    ability to manage the careers of their growing cadre of cyber
    specialists, and steps that can be taken to ensure that the
    Reserve components are effectively integrated into DOD's cyber
    mission.
        In addition, I hope that you'll provide us with your
    analysis of the Chinese campaign to steal intellectual property
    from U.S. businesses. The committee has almost completed a
    report on cyber intrusions into the networks of some of the
    defense contractors on whom DOD may rely to conduct operations.
    I hope that you'll give us your assessment as to whether China
    has shown signs of altering its cyber behavior subsequent to
    Mandiant Corporation's exposure of the operations of one of its
    military cyber units.
        Before I call on Senator Inhofe, I want to remind everybody
    that we are going to have a closed session at 2:30 p.m. this
    afternoon to address questions from our worldwide threats
    hearing last week with Director Clapper and General Flynn,
    questions that were deferred to a closed session. We have
    circulated a list of those questions to committee members and
    to witnesses. It is my intention to go down that list of
    questions that were deferred, recognizing each Senator on the
    list in the order in which the questions were raised at the
    open hearing. Those Senators who raised questions--and this is
    the order that they were raised--Senators Reed, McCain, Ayotte,
    Blumenthal, Nelson, Fischer, Vitter, Levin, and Graham. If a
    Senator lets me know that he or she is unable to attend this
    afternoon, if they would like, I'd be very happy to raise the
    question on his or her behalf.
        We're also going to try to have our military nominations
    voted on off the floor between votes. We have stacked votes,
    and that's a good opportunity to approve our military
    nominations and recommend their confirmation prior to the end
    of the month.
        I now call upon Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        I have the utmost respect for our panel today, particularly
    General Alexander, because we've developed a close
    relationship, and I appreciate that very much. I think a lot of
    people don't realize, in that period, the time you've been
    here--it was touched on by the Chairman--but, been a Director
    of the NSA; the chief of Central Security Service; Commander,
    Joint Functional Component Command and Network Warfare; and
    then, of course, the Commander of CYBERCOM. Since graduating
    from West Point, in 1974, was it?--that you're getting close to
    retirement. I think you need to stretch that out now, because
    you're going to be retiring 39 years, 10 months. You ought to
    make it an even 40. Anyway. This will likely be your last time
    to testify to this committee. That's a cause for celebration,
    I'm sure.
        Admiral Haney, the 5-year debate over the course of the
    U.S. nuclear weapons policy is, for the most part, settled. The
    President, in June 2013, the Nuclear Weapons Employment
    Strategy is closer to the deterrence policy that has guided
    U.S. nuclear policy since the end of the Cold War, and moves
    away from the President's naive vision of the world without
    nuclear weapons. It emphasizes the vital role of nuclear
    weapons in deterring threats, and assures allies, it reaffirms
    the necessity of a modern nuclear triad as the best way--and
    I'm quoting now--``as the best way to maintain strategic
    stability and--at a reasonable cost, and hedge against
    uncertainty.''
        One of your challenges will be ensuring the commitment to
    nuclear modernization is carried out. We'll have some specific
    questions about that, shortly. Congress supports these efforts.
    The fiscal year 2014 omnibus spending bill provided virtually
    all of what the President had requested for nuclear
    modernization. Unfortunately, the President's request fell
    short of the commitment that was made in 2010; that was in
    order to get the necessary votes to pass the New Strategic Arms
    Reduction Treaty (START).
        Department of Energy (DOE) funding for nuclear weapons
    activities over the past 3 years is about $2 billion short, and
    virtually every nuclear weapon life extension program (LEP) is
    behind schedule now. The follow-on nuclear ballistic missile
    submarine replacement of the air-launch cruise missile are both
    2 years behind schedule, and a decision on a follow-on ICBM has
    not been made. This needs to be addressed.
        I also want to know your thoughts on the Missile Defense
    Agency (MDA) plans to enhance the U.S. Homeland Missile Defense
    System (MDS) by improving sensor capability and developing a
    new kill vehicle for the ground-based interceptor (GBI). These
    efforts are essential to defending this country.
        General Alexander, CYBERCOM has made strides in normalizing
    cyber planning, the capabilities and the fielding of the cyber
    mission force of nearly 6,000 cyber warriors. However, I am
    concerned that insufficient progress has been made toward
    developing a strategy to deal with the growing number of
    complexity of threats that we're facing today that we've never
    faced before. The status quo isn't acceptable, and the
    administration is to blame for its inability to develop and
    employ an effective cyber deterrent strategy.
        Recent events show that our enemies are paying attention to
    well-publicized events involving Iran, one involving an
    enduring campaign of cyber attacks on the U.S. banks and the
    financial sector, and another involving the exploitation of
    critical Navy network. They should concern all of us.
        The apparent inaction of the administration underscores its
    failed cyber deterrence strategy. This is going to have to
    change until our adversaries understand that there will be
    serious consequences for cyber attacks against the United
    States, as we've already seen coming our way.
        In closing, I want to comment briefly on the Snowden
    situation. This man is not a whistleblower or a hero, as some
    have portrayed him to be. He's a traitor who stole nearly 2
    million documents, the vast majority of which have nothing to
    do with the activities of the NSA. In the process, he's
    potentially giving our enemies, and also giving Russia and
    China, access to some of our military's most closely guarded
    secrets. He's undermined our ability to protect the country and
    has put the lives of our military men and women in greater
    risk. These are the hallmarks of a coward, not a hero, and it's
    time the American people fully understand the damage that
    Snowden has done to our national security.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you so much, Senator Inhofe.
        Admiral Haney.

    STATEMENT OF ADM CECIL D. HANEY, USN, COMMANDER, U.S. STRATEGIC
                                COMMAND

        Admiral Haney. Good morning, Chairman Levin, Ranking Member
    Inhofe, and the distinguished members of this committee.
        With your permission, I'd like to have my full statement
    made as part of the record.
        Chairman Levin. It will be.
        Admiral Haney. Thank you, sir.
        I am honored to join you today as my first appearance, as
    was mentioned, here as the Commander of STRATCOM. I'm also
    pleased to be here with General Keith Alexander, whose
    responsibilities as Commander of CYBERCOM and Director of the
    NSA are critical to national security and my command's ability
    to perform its missions. I greatly value his advice and
    counsel. I thank him for his many years of distinguished
    service to our Nation.
        STRATCOM executes a diverse set of global responsibilities
    that directly contribute to national security. I can say with
    full confidence today that STRATCOM remains capable and ready
    to meet our assigned missions. We're blessed to have a
    talented, dedicated, and professional military and civilian
    workforce to address the significant national security
    challenges facing the United States. I thank Congress and this
    committee for your support. I look forward to working with you
    throughout my tour of duty.
        We appreciate the passage of the 2-year bipartisan Budget
    Control Act of 2013 and the 2014 Consolidated Appropriations
    Act. This legislation reduces near-term budget uncertainty.
    But, I remain concerned that sequestration will continue to
    stress the human element of our capabilities, as well as
    impacting our capacity to meet the threats and challenges of
    the 21st century.
        The current global security environment is more complex,
    dynamic, and uncertain than any time in recent history.
    Advances in state and nonmilitary capabilities continue across
    air, sea, land, and space domains, as well as in cyber space.
    The space domain is becoming ever more congested, contested,
    and competitive. Worldwide cyber threats are growing in scale
    and sophistication. Nuclear powers are investing in long-term
    and wide-ranging military modernization programs. Proliferation
    of weapons of mass destruction (WMD), nuclear technologies
    continues. WMD capability delivery technologies are maturing
    and becoming more readily available. No region in the world is
    immune from potential chemical, biological, radiological, or
    nuclear risk. Terrorist threats remain a source of significant
    ambiguity, and the threat of homegrown violent extremists
    remains a concern.
        Against this dynamic and uncertain backdrop, STRATCOM's
    mission is to partner with other combatant commands to deter
    and detect strategic attack against the United States, our
    allies, and to defeat those attacks if deterrence fails. Our
    unified command plan assigned missions are strategic in nature,
    global in scope, and intertwined with the capabilities of our
    joint military force, the interagency, and the whole of
    government. This requires increased linkages and synergies at
    all levels to bring integrated capabilities to bear through
    synchronized planning, simultaneous execution of plans, and
    coherent strategic communications.
        Your STRATCOM manages this diverse and challenging activity
    by actively executing a tailored deterrence and assurance
    campaign plan and by executing my five command priorities. That
    is to provide a safe and secure and effective nuclear deterrent
    force; partnering with other combatant commands to win today;
    addressing challenges in space; building the necessary cyber
    space capability and capacity; and to prepare for uncertainty.
        In keeping with the 2010 Nuclear Posture Review (NPR), my
    number-one priority is to ensure a safe, secure, and effective
    nuclear deterrence force consisting of the synthesis of the
    dedicated sensors, assured command and control, the triad of
    delivery systems, nuclear weapons and their associated
    infrastructure, and trained and ready people.
        In light of recent personnel integrity concerns within the
    ICBM force, I fully support Secretary Hagel's initiative to
    assemble key DOD stakeholders to fully assess and understand
    the implications of recent events, and seek long-term,
    systematic solutions that will maintain trust and confidence in
    the nuclear enterprise. This has my utmost attention. But, let
    me repeat, America's nuclear deterrent force remains safe,
    secure, and effective.
        In addition to our critical deterrent-and-assurance work,
    we're engaged on a daily basis in a broad array of activities
    across our mission areas of space, cyber space, intelligence,
    surveillance, reconnaissance, combating WMD, missile defense,
    joint electronic warfare, global strike, and, of course,
    analysis and targeting.
        While these diverse activities are being synchronized and
    integrated by an outstanding team, none of the work I've
    described can happen without trained, ready, and motivated
    people. They remain our most precious resource, and deserve our
    unwavering supporting.
        My travels to a number of STRATCOM components and partner
    locations since I took command in November 2013 confirm my
    belief that we have an outstanding team in place across all of
    our mission areas. I have the utmost respect for their
    professionalism, dedication to duty, and sustained operational
    excellence. In today's uncertain times, I'm proud to lead such
    a focused and innovative team. We're building our future on a
    strong and successful past.
        Your continued support, together with the hard work of the
    outstanding men and women of STRATCOM, will ensure we remain
    ready, agile, and effective in deterring strategic attack,
    assuring our allies, and defeating current and future threats.
        I thank you for your time. I look forward to your
    questions.
        [The prepared statement of Admiral Haney follows:]
                   Prepared Statement by ADM C.D. Haney, USN
                                  introduction
        Mr. Chairman and distinguished members of the committee, I am
    honored to join you today. This is my first appearance before you as
    the Commander of U.S. Strategic Command (STRATCOM), and I appreciate
    the opportunity to testify about the importance of strategic deterrence
    in the 21st century and on how STRATCOM is responding to today's
    complex global security environment. Following my confirmation late
    last year, I reviewed STRATCOM's missions, priorities, and
    capabilities. I found an organization executing a diverse set of global
    responsibilities that directly contribute to national security, and I
    am pleased to report that today STRATCOM remains capable and ready to
    meet our assigned missions. We are blessed to have a talented,
    dedicated, and professional cadre of military and civilian men and
    women to address the significant national security challenges facing
    our Nation. I thank Congress and this committee for your support and I
    look forward to working alongside you throughout my tour of duty.
        STRATCOM carries responsibility for nine mission areas as assigned
    by the Unified Command Plan (UCP). These mission areas are critical to
    national security and strategic stability. The more significant
    challenge to sustaining excellence in these mission areas for the
    foreseeable future remains how we balance national priorities and
    fiscal realities given the outlook for future Department of Defense
    (DOD) budgets under current law spending constraints. This requires
    that we take a strategic approach to understanding and prioritizing
    near term and future threats in a systematic manner that ultimately
    involves balancing risks. My STRATCOM team and I are fully engaged in
    this work helping to not only execute missions and conduct detailed
    planning, but providing insight to inform our national decision making
    process regarding these critical strategic national security issues.
    Even in the current fiscal environment, and given the complex strategic
    security environment, we must ensure the necessary strategic
    capabilities are adequately resourced.
                          global security environment
        The current security environment is more complex, dynamic and
    uncertain than at any time in recent history. Advances of significant
    nation state and non-state military capabilities continue across all
    air, sea, land, and space domains--as well as in cyber space. This
    trend has the potential to adversely impact strategic stability. Nation
    states such as Russia and China are investing in long-term and wide-
    ranging military modernization programs to include extensive
    modernization of their strategic capabilities. Nuclear weapons
    ambitions and the proliferation of weapon and nuclear technologies
    continues, increasing risk that countries will resort to nuclear
    coercion in regional crises or nuclear use in future conflicts. A
    number of actors are improving their existing Weapons of Mass
    Destruction (WMD) capabilities while others are pursuing new
    capabilities along with the technologies to deliver deadly agents
    against targets of their choice. These include nations as well as non-
    state Violent Extremist Organizations (VEOs).
        While we have increased our own cyber capabilities, the worldwide
    cyber threat is growing in scale and sophistication, with an increasing
    number of state and non-state actors targeting U.S. networks on a daily
    basis. Due to cyber space's relatively low cost of entry, cyber threats
    range from state-sponsored offensive military operations and espionage
    activities, to VEOs intent on disrupting our way of life, to cyber
    criminals and recreational hackers seeking financial gain and
    notoriety. Additionally, the U.S. supply chain and critical
    infrastructure remains vulnerable to cyber attack, and even as we
    detect and defeat attacks, attribution remains a significant challenge.
        Developed nations rely heavily on space systems to enable a wide
    range of services which provide vital national, military, civil,
    scientific and economic benefits. The space domain is becoming ever
    more congested, contested and competitive but the number of space-
    faring nations continues to grow. The United States still retains a
    strategic advantage in space as other nations are investing significant
    resources--including developing counterspace capabilities--to counter
    that advantage. These threats will continue to grow over the next
    decade.
        Finally, uncertainty continues to manifest in a number of other
    ways such as terrorist threats, social unrest and turmoil, and regional
    competition for scarce resources and economic opportunities.
                          principles of our deterrent
        In the broadest sense, STRATCOM's mission is to deter and detect
    strategic attacks against the United States and our allies, and to
    defeat those attacks if deterrence fails. Strategic attacks are those
    which have decisive negative outcomes--and they are not all nuclear in
    nature. They may impact many people or systems, affect large physical
    areas, act across great distances, persist over long periods of time,
    disrupt economic and social systems, or change the status quo in a
    fundamental way. While nuclear attack will always remain unique in its
    potential for devastation, today's strategic attacks can occur through
    a variety of mechanisms across multiple domains and are defined by the
    magnitude of their effect versus a specific weapon or means of
    delivery. As a nation, we must continue our efforts toward deterring
    both nuclear and non-nuclear strategic threats to global security.
        Although the likelihood of major conflict with other nuclear powers
    is remote today, the existential threat posed by a nuclear attack
    requires the United States to maintain a credible and capable deterrent
    force. While total deterrence against any particular adversary is never
    guaranteed, I am confident in our ability to deter nuclear attack. Arms
    control treaties have and continue to reduce the likelihood of nuclear
    conflict with Russia, but the possibility of regional nuclear conflict
    strains U.S. alliances and global security commitments.
        STRATCOM is taking appropriate steps to mitigate these strategic
    risks by actively executing a tailored deterrence and assurance
    campaign plan against specific strategic threats on a daily basis and
    by updating contingency plans that account for deterrence failure. Our
    campaign and contingency plans employ the breadth of STRATCOM
    capabilities in concert with other U.S. capabilities and the regional
    combatant commands.
        Increased interdependence between organizations (to include other
    combatant commands, the interagency, and allies and partners) and
    across domains will be a hallmark of future military operations. Our
    military forces must exercise the ability to operate in degraded
    environments, and future conflicts are not likely to be limited to a
    single domain or by geographic boundaries. Our planning leverages
    robust integration with other combatant commands and applies the
    breadth of STRATCOM capabilities to pursue national objectives.
    Combatant commands, the whole of the U.S. government, and allies and
    partners will need to train, exercise and operate together using all
    the instruments of national power. This will require increased linkages
    and synergies at all levels to bring the appropriate integrated
    capabilities to bear through synchronized planning, simultaneous
    execution of plans, and coherent strategic communications. The
    Combatant Command Exercise and Engagement Fund supports STRATCOM's
    needs by addressing our joint training requirements and is integral to
    improving joint context and enabling capabilities that enrich our
    training environment. Adequate funding is essential to maintaining
    STRATCOM's ability to train, exercise, and operate together.
                        stratcom mission and priorities
        STRATCOM provides an array of global strategic capabilities to the
    Joint Force through its nine UCP assigned missions: Strategic
    Deterrence; Space Operations; Cyber space Operations; Joint Electronic
    Warfare; Global Strike; Missile Defense; Intelligence, Surveillance and
    Reconnaissance; Combating Weapons of Mass Destruction; and Analysis and
    Targeting. These diverse missions are strategic in nature, global in
    scope, and intertwined with capabilities of the Joint Force, the
    interagency and the whole of government.
        While executing our UCP missions, STRATCOM efforts are guided by my
    five overarching priorities. My number one priority is to provide a
    safe, secure and effective nuclear deterrent force as directed by the
    2010 Nuclear Posture Review (NPR). It is my responsibility to ensure
    our nuclear deterrent force remains viable and credible now and as long
    as nuclear weapons exist.
        Second, we will partner with other combatant commands to win today.
    Future conflicts are not likely to be limited by conventional
    constraints characteristic of 20th century warfare or by geographic
    boundaries; thus our planning leverages robust integration with other
    combatant commands and applies the breadth of STRATCOM capabilities to
    synchronize efforts in pursuit of national objectives. Toward this end,
    we are shifting from geography-based to adversary-based thinking and
    are reevaluating our planning assumptions to more accurately reflect
    the threats, our goals, partner capacity, and both adversary and ally
    military capabilities.
        Third, we must continue to address challenges in space. The
    National Security Space Strategy identifies space as contested,
    congested and competitive. The space domain, along with cyber space, is
    simultaneously more critical to all U.S. operations yet more vulnerable
    than ever to hostile actions. Today, the United States continues to
    hold an advantage in space. We must maintain that advantage as we move
    deeper into the 21st century and other nations continue to invest
    heavily in offensive, defensive, and commercial space capabilities. Key
    to these efforts will be securing assured access to space and
    developing a robust situational awareness of the space environment
    across the dimensions of time, space, and spectrum.
        Fourth, we must continue to build cyber space capability and
    capacity. Cyber space operations extensively support all of my other
    mission areas and there are significant negative impacts if that
    support becomes uncertain. Along with the need to protect U.S. critical
    infrastructure and intellectual property, information assurance is a
    critical facet of national power that underpins our ability to identify
    national security risks and to hold those threats in check. This means
    we must simultaneously strengthen our internal information security
    safeguards and protect against a maturing set of external cyber
    threats.
        Finally, geopolitical and fiscal realities demand that we prepare
    for uncertainty. We need the right information in the right hands at
    the right time to make correct assessments and decisions. We are
    critically dependent on the Intelligence Community's (IC) foundational,
    data-based intelligence on adversary underground facilities, physical
    vulnerabilities, command and control, military force analysis, defense
    resources and infrastructure, and WMD facilities. We also rely on the
    IC's in-depth analysis of adversary national defense strategy doctrine
    and military leadership. Decisionmaking will also require predictive
    analysis to prioritize our activities along with flexible, agile,
    adaptable thinking and systems. Since predictive analysis of the future
    will never be error free, we must maintain adequate readiness to
    address uncertainty. We must align our posture to the threat while
    acknowledging that the threat itself will continue to evolve.
    Uncertainty also requires us to conduct a penetrating analysis of our
    capabilities and resources to clearly identify where we are taking risk
    and where we cannot accept further risk.
                    mission area capabilities & requirements
        Prioritizing resources to meet our goals requires a thoughtful
    assessment of national priorities in the context of fiscal realities.
    Today's budget environment remains a concern as we look to sustain and
    modernize our military forces. We appreciate the passage of the 2-year
    Bipartisan Budget Act of 2013 and the 2014 omnibus appropriations, as
    they reduce near-term budget uncertainty.
        Although these recent actions provide us with some relief, the
    sequestration-level reductions in fiscal year 2013 have impacted our
    readiness and have the potential to impact our capabilities in the
    future. While our Service components realigned limited resources toward
    strategic missions to preserve our strategic deterrence capabilities in
    the short term, those same organizations took on significant additional
    risk in our ability to address long-term requirements. Many procurement
    and research, development, testing and evaluation investment accounts
    have experienced delays and we anticipate future programmatic
    challenges as a result. At this point it is also difficult to fully
    discern the impact of sequestration in fiscal year 2013 on our people,
    but the combined effects of a hiring freeze, furlough, and other force
    reduction measures continue to stress the human element of STRATCOM's
    capabilities.
    Nuclear Deterrent Forces
        America's nuclear deterrent force provides enduring value to the
    Nation. It has been a constant thread in the geopolitical fabric of an
    uncertain world, providing a moderating influence on generations of
    world leaders. Today, our strategic nuclear capabilities--a synthesis
    of dedicated sensors, assured command and control, the triad of
    delivery systems, nuclear weapons and their associated infrastructure,
    and trained ready people--remain foundational to our national security
    apparatus. As stated in the 2010 NPR, ``as long as nuclear weapons
    exist, the United States will maintain a safe, secure, and effective
    nuclear arsenal, both to deter potential adversaries and to assure U.S.
    allies and other security partners that they can count on America's
    security commitments.'' We are working across the Department to
    implement the President's new guidance for aligning U.S. policies to
    the 21st century security environment. This includes revising Office of
    the Secretary of Defense and Joint Staff guidance as well as updating
    our own plans.
        Although our nuclear arsenal is smaller than it has been since the
    late 1950s, today's nuclear weapon systems remain capable and will
    serve the United States well into their fourth decade. In recent years
    the percentage of spending on nuclear forces has gradually declined to
    only 2.5 percent of total DOD spending in 2013--a figure near historic
    lows.
        Today's nuclear forces remain safe, secure, and effective despite
    operating well beyond their original life expectancies. The nation
    faces a substantive, multi-decade recapitalization challenge, and we
    must continue investing resources toward that effort. Our planned
    investments are significant, but are commensurate with the magnitude of
    the national resource that is our strategic deterrent. If we do not
    commit to these investments, we risk degrading the deterrent and
    stabilizing effect of a strong and capable nuclear force. I fully
    support planned and future sensor improvements, upgrades for nuclear
    command, control, and communications (NC3) capabilities, strategic
    delivery system recapitalization efforts, weapon life extension
    programs, stockpile surveillance activities, and nuclear complex
    infrastructure modernization. Together these efforts provide the
    necessary investments to ensure our triad of nuclear forces remains
    viable and credible.
        Sensors
        Our Integrated Tactical Warning and Attack Assessment (ITW/AA)
    network of sensors and processing facilities provides critical early
    warning and allows us to select the most suitable course of action in
    rapidly developing situations. While the Defense Support Program (DSP)
    is approaching the end of its life, the Space Based Infrared System
    (SBIRS) program is on track to provide continued on-orbit capability.
    The survivable and endurable segments of these systems, along with
    Early Warning Radars, are being recapitalized and are vital to
    maintaining a credible deterrent. I fully support continued investment
    in this critical area.
        Nuclear Command, Control, and Communications
        Assured and reliable NC3 is critical to the credibility of our
    nuclear deterrent. The aging NC3 system continues to meet its intended
    purpose, but risk to mission success is increasing. Our challenges
    include operating aging legacy systems and addressing risks associated
    with today's digital security environment. Many NC3 systems require
    modernization, but it is not enough to simply build a new version of
    the old system--rather; we must optimize the current architecture while
    leveraging new technologies so that our NC3 systems interoperate as the
    core of a broader, national command and control system. We are working
    to shift from point-to-point hardwired systems to a networked IP-based
    national C3 architecture that will balance survivability and
    endurability against a diverse range of threats, deliver relevant
    capabilities across the range of interdependent national missions, and
    ultimately enhance Presidential decision time and space. Specific
    programs now in work include the Family of Beyond-line-of-sight
    Terminals, Presidential National Voice Conferencing, the Multi-Role
    Tactical Common Data Link, Phoenix Air-to-Ground Communications
    Network, the E-4B Low Frequency communications upgrade, the B-2 Common
    Very Low Frequency Receiver communications upgrade, and the E-6B
    service life extension program.
        Nuclear Triad
        Per the 2010 NPR, ``retaining all three Triad legs will best
    maintain strategic stability at reasonable cost, while hedging against
    potential technical problems or vulnerabilities.'' The commitment to
    the triad was reinforced in the U.S. Nuclear Weapons Employment
    Planning guidance the President issued in June 2013. STRATCOM executes
    strategic deterrence and assurance operations with Intercontinental
    Ballistic Missiles, Ballistic Missile Submarines, and nuclear capable
    heavy bombers. Each element of the nuclear triad provides unique and
    complimentary attributes of strategic deterrence, and the whole is
    greater than the sum of its parts.
        Intercontinental Ballistic Missiles
        Our Intercontinental Ballistic Missile (ICBM) force promotes
    deterrence and stability by fielding a responsive and resilient
    capability that imposes costs and denies benefits to those who would
    threaten our security. Though fielded in 1970, the Minuteman III ICBM
    is sustainable through 2030 with smart modernization and
    recapitalization investments. STRATCOM continues to work with the Air
    Force on initiatives to modernize safety and security capabilities and
    to address age-related ground support system concerns such as
    Transporter-Erector vehicles and re-entry system test equipment. The
    Ground Based Strategic Deterrent Analysis of Alternatives (AoA) is
    studying a full range of ICBM concepts which will shape our land-based
    deterrent force well beyond 2030.
        Ballistic Missile Submarines
        Recapitalizing our sea-based strategic deterrent force is my top
    modernization priority and I am committed to working closely with the
    Navy on this program. The Navy's Ballistic Missile Submarines (SSBN)
    and Trident II D5 ballistic missiles constitute the Triad's most
    survivable leg and the assured response they provide underpins our
    nuclear deterrent. This stealthy and highly capable force is composed
    of two major elements, the missile and the delivery system. Both are
    undergoing needed modernization. With respect to the missile, we are
    extending the life of the D5 missile to be capable until after 2040.
    With respect to the submarine that delivers these missiles, the Ohio-
    class submarine has already been extended from 30 to 42 years of
    service--no further extension is possible and these submarines will
    start leaving service in 2027. As such, the Ohio Replacement Program
    must stay on schedule. No further delay is possible. Continued and
    stable funding for the Ohio Replacement SSBN also supports our
    commitment to the United Kingdom to provide a Common Missile
    Compartment design and will ensure both their and our new SSBNs achieve
    operational capability on schedule.
        Heavy Bombers
        While the Nation relies on the long-range conventional strike
    capability of our heavy bombers, the nuclear capability of B-52 and B-2
    bombers continues to provide us with flexibility, visibility and a
    rapid hedge against technical challenges in other legs of the Triad.
    Last March, for example, the United States carried out training flights
    of B-52 and B-2 bombers over the Korean Peninsula to assure partners
    and allies and underscore our security commitment to extended
    deterrence in the Asia-Pacific region. Maintaining an effective air-
    delivered standoff capability is vital to meet our strategic and
    extended deterrence commitments and to effectively conduct global
    strike operations in anti-access and area-denial (A2AD) environments.
    Planned sustainment and modernization activities, to include associated
    NC3, will ensure a credible nuclear bomber capability through 2040.
        Looking forward, a new highly survivable penetrating bomber is
    required to credibly sustain our broad range of deterrence and strike
    options beyond the lifespan of today's platforms. The Long-Range
    Standoff AoA was completed in 2012 and concluded that a follow-on
    nuclear cruise missile was necessary to replace the aging Air Launched
    Cruise Missile (ALCM).
        Weapons and Infrastructure
        Nuclear weapons and their supporting infrastructure underpin our
    nuclear triad. All warheads today are on average nearly 30 years old.
    Surveillance activities are essential to monitoring the health of our
    nuclear warheads. Life Extension Programs (LEPs) are key to sustaining
    our nuclear arsenal into the future, mitigating age-related effects and
    incorporating improved safety and security features. Our robust
    science-based Stockpile Stewardship provides us confidence in
    sustaining our nuclear forces without a return to nuclear testing,
    which the United States halted in 1992.
        The DOD and the Department of Energy (DOE) have worked together to
    develop a synchronized, multi-decade plan for a modern, safe, secure
    and effective nuclear stockpile. The Nuclear Weapons Council (NWC)
    approved what has been referred to as the ``3+2'' plan--so named
    because the long-term result is three ballistic missile and two air-
    delivered warheads. This framework sustains a nuclear force that
    addresses both near term technical needs and future triad capability
    requirements. The W76-1 LEP is in progress to support the submarine leg
    of the triad. This is particularly important as the W76-1 represents
    the majority of our survivable deterrent force. The Air Force and the
    National Nuclear Security Administration (NNSA) continue to make
    progress on a full life extension for the B61 gravity bomb that
    includes both nuclear and non-nuclear components, critical to our
    strategic capabilities and extended deterrent commitments. Both LEPs
    are necessary to maintain confidence in the reliability, safety and
    intrinsic security of our nuclear weapons. Looking to the future, we
    continue to work with NNSA on the feasibility of an interoperable
    nuclear package for our ballistic missile warheads and options for
    sustaining our air-delivered standoff capabilities.
        Sustaining and modernizing the nuclear enterprise's infrastructure
    is crucial to our long-term strategy. A new uranium facility at Y-12 in
    Oak Ridge, TN, will address deteriorating conditions in our Manhattan
    Project era facilities, while our interim plutonium strategy will meet
    stockpile requirements over the next decade as we explore long-term
    production alternatives. Continued investment in the nuclear enterprise
    infrastructure is needed to provide critical capabilities that meet our
    stockpile requirements.
        In the wake of recent unfortunate personnel incidents within the
    ICBM force involving integrity issues, I fully support the Secretary's
    initiative to assemble key stakeholders within the DOD to fully digest
    the implications and to seek long-term systemic solutions that will
    maintain trust and confidence in the nuclear enterprise. This has my
    utmost attention.
        New Strategic Arms Reduction Treaty (START) Implementation
        STRATCOM continues to work with the Office of the Secretary of
    Defense (OSD), the Joint Chiefs of Staff (JCS) and the Services to
    effectively and efficiently implement the reductions called for in New
    START. Now more than 3 years old, New START has continued to contribute
    to the U.S.' insight into Russia's nuclear forces and has contributed
    to increased transparency and predictability between our two nations.
    Since the treaty's entry into force in 2011, the U.S. and Russia have
    each conducted over 54 inspections and have exchanged over 5,500 New
    START message notifications. To date, the United States has eliminated
    39 B-52Gs and 50 Peacekeeper ICBM silos, thus removing them from
    accountability under New START. The U.S. also made substantial progress
    toward de-MIRVing MM III ICBMs on alert, thereby reducing the number of
    warheads in a deployed status. This year, we will finalize our
    preferred New START force structure and we are on track to achieve New
    START's limits of 1,550 deployed warheads, 700 deployed delivery
    systems, and 800 deployed and non-deployed delivery systems by February
    2018.
    Space Operations
        Our national space capabilities provide us with the ability to
    globally navigate, communicate and observe natural and man-made events
    in areas where non-space sensors are either not available or not
    feasible. Space capabilities are also a key component of strategic
    deterrence. Our space sensors, command and control systems, and space
    situational awareness capabilities are critical in supporting both our
    deployed nuclear forces and our national decisionmaking processes.
        As highlighted in the President's 2010 National Space Policy, these
    capabilities ``allow people and governments around the world to see
    with clarity, communicate with certainty, navigate with accuracy and
    operate with assurance.'' Determined adversaries who understand the
    military and economic advantages provided by space, along with an
    expanding debris population on orbit, increase the challenges of
    operating in this critical domain. Space continues to be increasingly
    congested, contested and competitive. The National Security Space
    Strategy offers a set of approaches to mitigating those
    characteristics: partnering with responsible nations, international
    organizations and commercial firms to promote responsible, peaceful and
    safe use of space; maximizing the advantages provided by improved space
    capabilities while reducing vulnerabilities; and preventing, deterring,
    defeating and operating through attacks on our space capabilities.
        Key to all of these efforts is sufficient Space Situational
    Awareness (SSA)--the data that allows us to understand what is on
    orbit, where it is, and how it is being used. Our goal is to ensure
    space remains an open domain for all legitimate users. Sharing SSA
    information with other nations and commercial firms promotes safe and
    responsible space operations, reduces the potential for debris-making
    collisions, builds international confidence in U.S. space systems,
    fosters U.S. space leadership, and improves our own SSA through
    knowledge of other owner/operator satellite positional data.
        For all its advantages, there is concern that SSA data sharing
    might aid potential adversaries, therefore we are taking positive steps
    to ensure that does not occur. In accordance with U.S. law, STRATCOM
    has negotiated SSA Sharing Agreements with 41 commercial entities and 5
    nations (France, Italy, Japan, Australia, and Canada) and is in the
    process of negotiating agreements with five additional nations
    (Germany, Great Britain, Israel, South Korea, and Brazil). Through
    these sharing agreements, STRATCOM assists partners with activities
    such as launch support; maneuver planning; support for on-orbit anomaly
    resolution, electromagnetic interference reporting and investigation;
    support for launch anomalies and de-commissioning activities; and on-
    orbit conjunction assessments.
        STRATCOM's Joint Functional Component Command for Space (JFCC-
    Space), located at Vandenberg Air Force Base in California, leads the
    efforts to ensure continuous and integrated space operations and
    routinely track tens of thousands of space objects in orbit around the
    Earth. This includes over 1,100 active satellites owned and operated by
    approximately 74 nations and government consortia, plus hundreds of
    small commercial and academic satellites.
        We must sustain judicious and stable investments to preserve the
    advantages we hold in this dynamic and increasingly complex environment
    while continuing to seek out innovative and cooperative solutions with
    allies and partners to ensure the products and services we derive from
    operating from space remain available, even when threatened by natural
    events or the actions of a determined adversary. These include both
    active and passive protection measures for individual systems and
    constellations and a critical examination of the architectural path we
    will follow to ensure resilience and affordability in space. We are
    exploring options such as disaggregation as a method to achieve
    affordable resilience but additional analysis is necessary in this
    area.
    Cyber Space Operations
        Today, we conduct our UCP assigned cyber space missions through our
    assigned sub-unified command, U.S. Cyber Command (CYBERCOM) located at
    Fort Meade, MD. I have delegated the authority to CYBERCOM to conduct
    the day-to-day business of directing DOD information network operations
    and defense, planning against cyber threats, coordinating with other
    combatant commands and appropriate U.S. Government agencies, providing
    military representation for cyber matters, planning and executing
    operational preparation of the environment, and executing cyber
    operations as directed. STRATCOM retains authority for oversight of
    advocacy and theater security cooperation.
        This alignment allows STRATCOM to manage the integration of all our
    capabilities to deter or defeat attacks in multiple scenarios while
    taking full account of the interdependencies and interactions among
    combatant commands and across the air, sea, land, and space domains,
    and in cyber space--all tied together through the electromagnetic
    spectrum.
        STRATCOM, through CYBERCOM, is working with Joint Staff and the DOD
    Chief Information Officer (DOD CIO) to implement the Joint Information
    Environment (JIE) framework. The JIE provides a foundational framework
    to enable improvements in our ability to see and defend the DOD
    Information Network. Furthermore, the JIE framework is intended to
    enable timely and secure information sharing in the joint environment,
    improving warfighters ability to access critical data and information
    for mission command. Alignment of the JIE with the equivalent IC
    information technology enterprise is a key component required to
    achieve this goal.
        Our primary obstacles to cyber space operations within DOD are
    issues of capacity and capability. None of these activities can occur
    without a right-sized and well-trained cadre of cyber professionals.
    The Cyber Mission Force (CMF) construct will address the significant
    challenges of recruiting, training, and retaining the people,
    facilities and equipment necessary to generate the human capital
    required for successful cyber space operations. Our plans call for the
    creation of 133 cyber mission teams manned by over 6,000 highly trained
    personnel by the end of fiscal year 2016. To date, 17 of those teams
    are fielded and engaged in a variety of missions. The majority of these
    teams will support the combatant commands with the remainder supporting
    national missions. Budget stability is the key to achieving this
    vision, as every training day we lose to fiscal constraints will cause
    further delays in fielding the CMF.
    Missile Defense
        I believe that effective missile defense is an essential element of
    the U.S. commitment to strengthen strategic and regional deterrence
    against states of concern--continued investments in this area are
    essential to national defense. Today, 30 operational Ground Based
    Interceptors (GBIs) protect the United States against a limited ICBM
    attack from potential regional threats such as North Korea. In March
    2013, Secretary Hagel announced the decision to add 14 GBIs in Alaska
    and a second Army/Navy Transportable Radar Surveillance-2 (AN/TPY-2)
    radar in Japan, study a potential third CONUS GBI site, and restructure
    the SM-3 IIB interceptor into an advanced kill vehicle technology
    program. These decisions will hedge against a growing North Korean
    threat, add additional sensor capability to improve coverage, introduce
    needed Exo-atmosphere Kill Vehicle (EKV) improvements, and will
    facilitate quickly adding a third CONUS GBI site if needed. We continue
    to examine new threats and consider alternative ways and means for a
    future architecture to improve sensors and discrimination for greater
    Ballistic Missile Defense System (BMDS) effectiveness.
        STRATCOM's Joint Functional Component Command for Integrated
    Missile Defense (JFCC-IMD) is located in Colorado Springs, Colorado and
    continues to conduct a variety of activities aimed at maturing our
    missile defense capabilities. First, they are working to operationalize
    developmental missile defense capabilities in coordination with other
    combatant commands and the Missile Defense Agency (MDA). These efforts
    serve to integrate sensors across mission domains and geographical
    areas, synchronize and manage the availability of missile defense
    assets, and hedge against the possibility of threats developing faster
    than originally anticipated. Second, they are working to develop and
    implement joint training to enable integration and synchronization with
    other combatant commands, and host and orchestrate international
    missile defense wargaming scenarios. These efforts identify and
    recommend sourcing solutions to ensure appropriate forces are employed;
    synchronize global missile defense planning at all levels to ensure
    unity of effort across our geographically distributed network of
    sensors and shooters, across multiple organizations, and across
    multiple domains; and collaborate with key allies and partners.
    Finally, they are integrating warfighters into missile defense testing
    and evaluation.
        The European Phased Adapted Approach (EPAA) protecting our NATO
    allies is on schedule with Phase I becoming operational in Dec 2011
    using a forward based radar and Aegis Ballistic Missile Defense (BMD)
    ships. Phase II is on track for completion in 2015 and will add an
    Aegis Ashore system in Romania, SM-3 IB interceptors, and additional
    Aegis BMD ships. Phase III planned for 2018 will add an Aegis Ashore in
    Poland and a more capable SM-3 IIA interceptor both on land and at sea.
    Steady progress was made in 2013 as we continued development and
    testing of Aegis BMD software, construction of Aegis Ashore test and
    operational facilities, SM-3 Block IIA system design, and successful
    SM-3 operational and developmental flight tests.
        The Cobra Dane radar located at Eareckson AFS, AK, is critical to
    homeland defense and must be sustained. This unique asset provides
    unmatched coverage against long range threats from northeast Asia as
    well as helping to catalogue many thousands of space objects. Cobra
    Dane is an aging system and requires continued investment.
    Additionally, the deployment of an operational THAAD missile defense
    system to Guam provides vital protection against North Korean
    provocations toward one of our key Territories.
    Global Strike
        STRATCOM's Joint Functional Component Command for Global Strike
    (JFCC-GS) operates from Offutt Air Force Base, NE, with headquarters at
    Barksdale Air Force Base, LA. JFCC-GS provides a unique ability to
    command and control our global strike capabilities and build plans that
    rapidly integrate into theater operations. This includes integration of
    combat capability including those associated with kinetic and non-
    kinetic effects. The following key capabilities are integral to
    supporting my Global Strike mission.
        STRATCOM's Joint Warfare and Analysis Center (JWAC) in Dahlgren,
    Virginia enhances our Strategic Deterrence and Global Strike missions
    by providing unique and valuable insight into selected adversary
    networks. JWAC's ability to solve complex challenges for our Nation's
    warfighters--using a combination of social and physical science
    techniques and engineering expertise--is invaluable to protecting the
    Nation and helping the Joint Force accomplish its missions.
        Our Mission Planning and Analysis System (MPAS) is the Nation's
    only comprehensive planning system for developing nuclear options. MPAS
    supports my responsibilities for Strategic Deterrence and Global Strike
    through the development of nuclear options for the President, as well
    as holding time-sensitive targets at risk through crisis action
    planning. Continued modernization of MPAS is essential to our ability
    to conduct global strike operations.
        Conventional prompt strike (CPS) capability offers the opportunity
    to rapidly engage high-value targets without resorting to nuclear
    options. CPS could provide precision and responsiveness in A2AD
    environments while simultaneously minimizing unintended military,
    political, environmental, economic or cultural consequences. I support
    continuing research and development of these important capabilities.
    Combating Weapons of Mass Destruction
        A WMD-armed terrorist is one of the greatest potential threats we
    face today, and no region of the world is immune from potential
    chemical, biological, radiological or nuclear risks. STRATCOM is DOD's
    global synchronizer for Combating Weapons of Mass Destruction (CWMD)
    planning efforts, leveraging the expertise resident in our Center for
    Combating Weapons of Mass Destruction (SCC-WMD) and our partners at the
    Defense Threat Reduction Agency (DTRA)--both located at Fort Belvoir,
    VA. Together, our organizations conduct real-world and exercise CWMD
    activities with the other combatant commands to identify, prioritize,
    and mitigate WMD risks posed by proliferation of WMD technology and
    expertise to nation states and non-state actors. We have been
    successful so far, but given the magnitude of the WMD threat, we can
    ill afford to short-change these efforts.
        The Standing Joint Force Headquarters for Elimination (SJFHQ-E) was
    certified for initial operating capability in September 2012. SJFHQ-E
    provides a full time, trained joint command and control element that
    can quickly integrate into strategic- to operational-level headquarters
    to provide WMD elimination planning, intelligence, and operational
    expertise for a Joint Force Commander. Additionally, the SJFHQ-E
    recently completed its relocation from Aberdeen Proving Grounds, MD, to
    Fort Belvoir, VA, to better leverage DTRA's expertise and manpower.
        STRATCOM has and continues to support U.S. Central Command, U.S.
    European Command (EUCOM), and DTRA as part of the international effort
    to eliminate Syria's chemical weapons program. Our personnel are
    providing direct support to EUCOM in preparation for the removal and
    destruction of chemical materials from Syria and will remain engaged
    until elimination of Syria's program is complete.
    Intelligence, Surveillance, and Reconnaissance (ISR)
        The demand for ISR will always outpace our ability to fully satisfy
    all requirements. At the same time, we are focused on the goal of
    reducing the ``cost of doing business'' as articulated in Sustaining
    U.S. Global Leadership Priorities for 21st Century Defense. Located at
    Bolling Air Force Base, MD, STRATCOM's Joint Functional Component
    Command for ISR (JFCC-ISR) is working with our headquarters, the Joint
    Staff, the Services, the combatant commands, and the IC to improve the
    management of the DOD's existing ISR capabilities. I fully support this
    initiative which focuses on maximizing effectiveness of the
    capabilities we have, while minimizing duplication of effort between
    DOD and the IC.
    Joint Electronic Warfare
        Given the importance and need of Joint Electronic Warfare,
    STRATCOM, in collaboration with the Joint Staff and the Office of the
    Secretary of Defense, continues to drive the development of
    comprehensive Joint Electromagnetic Spectrum Operations (JEMSO) policy
    and doctrine that consolidates the activities of Electronic Warfare
    (EW) and Spectrum Management. The National Military Strategic Plan for
    EW was approved in late 2013, providing a framework for EW operations,
    articulating threats and vulnerabilities, and clarifying risks and
    strategic imperatives for electromagnetic spectrum (EMS) control. The
    joint architecture plan for Electromagnetic Battle Management is
    currently under development--the preliminary work done so far will
    identify applicable architectures in order to better refine
    requirements.
        STRATCOM assesses systems to determine vulnerabilities to jamming,
    orchestrates events to evaluate the ability to detect jamming and
    operate in such an environment, coordinates with the combatant commands
    to determine impacts to plan execution, and sponsors initiatives to
    combat jamming and generate requirements. These assessments and
    initiatives greatly improve the DOD's understanding and mitigation of
    JEMSO capability gaps and vulnerabilities.
        We seek to use the EMS more efficiently by investing in time and
    technology sharing and fully investigating spectrum re-use
    opportunities. There are a number of ongoing spectrum reallocation
    efforts with potential adverse impacts to DOD operations. We will
    continue to work closely with DOD CIO, Joint Staff, and National
    Telecommunications and Information Administration to ensure warfighter
    requirements are adequately considered prior to any decision.
    Command and Control (C2) Facility
        In 2012, the U.S. Army Corps of Engineers broke ground on a C2
    Facility for STRATCOM. This project will replace a C2 Facility that is
    over 57 years old, plagued with numerous heating, cooling, and power
    infrastructure deficiencies and will provide the necessary information
    technology infrastructure to support STRATCOM in the digital age. The
    construction team is working hard to keep the project on schedule, to
    ensure that we are optimizing resources, and to create an
    infrastructure that has a lower cost of ownership than our current
    facility. When complete, the new C2 Facility will play an effective and
    integral part of our strategic deterrent as well as STRATCOM's other
    assigned missions for decades to come. I appreciate the steadfast
    support that Congress continues to provide for this effort.
                                   our people
        People remain our most precious resource and deserve our most
    robust support. The critical bonds of trust, teamwork, and
    professionalism unite the STRATCOM family. Last year we created a
    Resilience Coordination Office, an effort that has been noted as a
    potential benchmark program for the DOD. Resilience coordinators
    provide training, information, resources and other tools to present
    healthy behavior options in response to life stressors. Sexual assault,
    workplace violence, breaches of integrity, alcohol abuse and associated
    behaviors have my strongest personal condemnation, and my entire staff
    understands my expectation to report and denounce inappropriate
    behavior whenever and wherever it occurs.
        My travels to a number of STRATCOM and partner locations since I
    took command in November 2013 confirm my belief that we have an
    outstanding team in place across all our mission areas. I am proud to
    serve alongside the men and women of STRATCOM and have the utmost
    respect for their professionalism, dedication to our missions and
    sustained operational excellence even through difficult times. These
    great Americans will do all they can for their nation, but are rightly
    concerned about their futures given last year's furloughs and planned
    manpower reductions over the next several years. These reductions are
    not inconsequential--we believe we can achieve the Department's goals
    but not without a commensurate loss of organizational agility and
    responsiveness.
                                   conclusion
        We are experiencing dynamic changes within the DOD as we transition
    toward a different force posture and a reduced defense budget. In spite
    of this environment, our UCP missions remain unchanged as we partner
    with our fellow combatant commands to deter adversaries, assure allies,
    protect critical infrastructure, preserve freedom of movement, and
    respond to crises.
        In today's uncertain times, I am proud to lead such a focused,
    innovative and professional group dedicated to delivering critical
    warfighting capabilities to the Nation. We are building our future on a
    strong and successful past, and your support, together with the hard
    work of the outstanding men and women of the U.S. Strategic Command,
    will ensure that we remain ready, agile, and effective in deterring
    strategic attack, assuring our allies, and defeating current and future
    threats.

        Chairman Levin. Thank you so much, Admiral.
        General Alexander.

    STATEMENT OF GEN KEITH B. ALEXANDER, USA, COMMANDER, U.S. CYBER
                                COMMAND

        General Alexander. Chairman Levin, Ranking Member Inhofe,
    distinguished members of the committee, thank you for this
    opportunity for what could be my final hearing here, as you
    stated.
        Sir, I would ask that my written statement also be added to
    the record.
        Chairman Levin. It will be.
        General Alexander. One of the things I'd like to cover,
    based on your questions, is a few things about what we see
    going on in cyber space. But, I'd emphasis upfront the great
    men and women that we have within the Command and supporting us
    throughout DOD and with some of our other agencies. I'll touch
    on that briefly.
        You brought up the issue of the threat--both you and the
    ranking member. I think it's important to step back and look at
    what's going on in this space, because it impacts everything
    that you brought up, from what Snowden has done to where we are
    with our policies and laws and what we're going to do to defend
    in this space. It is changing so rapidly that our policy and
    laws lag behind it.
        If you look at all the applications that are coming out and
    the way this space is actually growing, it is far beyond where
    current laws and policies are. I think this is absolutely one
    of the key and fundamental issues that we have to have in a
    discussion with the American people. How do we protect our
    Nation in this space and through this space? Both of those are
    issues that are on the table today. How do we do it in such a
    manner that they know we're protecting their civil liberties
    and privacy while concurrently protecting this Nation?
        You brought up the fact of the amount of exploits. I'm
    going to define, for my use here, a difference between
    exploitation and the attacks. Exploitation is where their
    intent is to steal either information or money. Attacks will be
    where they want to disrupt or destroy devices or actions in and
    of cyber space.
        We see an awful lot of exploitation. You brought up the
    Mandiant report and what's going on. That exploitation is for
    the theft of intellectual property as well as to get into some
    of our sensitive systems. It goes throughout the
    infrastructure. From my perspective, the best way to solve the
    exploitation problem--and to also defend against disruptive and
    destructive attacks--is to form a defensible architecture, a
    Joint Information Environment (JIE).
        If I were to leave you with one thought of what we could
    and should do as a Nation, we should protect these networks
    better than we have them protected today. Not just within DOD,
    but also our critical infrastructures. Time and again, we're
    seeing where people have exploited into these networks, only to
    find out that the way that they're getting in is so easy that
    it's difficult to defend. So, step one, Mr. Chairman, is a
    defensible architecture.
        Attacks are growing. It was mentioned by the ranking
    member. The attacks that we saw against Wall Street and around
    the world, the destructive attacks that have hit Saudi Aramco,
    RasGas in South Korea, and most recently, the Sands
    Corporation. When you look at those destructive attacks, they
    destroyed data on systems that had to be replaced. This is a
    significant change from disruptive attacks, those distributed
    denial of service, which only disrupt for the time that that
    attack is going on, versus a destructive attack, where the
    information is actually lost. Far more damaging, far more
    timely, far more costly. Both of those are going on together.
    My concern is, that is growing. We will see more nation-states
    using that. If diplomacy fails, that will be their first
    course. We have to be prepared for that, as a nation, and we
    have to work with our allies to set up what are the ground
    rules and deterrence in this area.
        So, some thoughts. First, the Services are doing a great
    job, from my perspective. Working through the furloughs and
    sequestration, I think where we are right now in setting up the
    cyber teams is superb. I sat down with some of our folks in
    training. I know several of you have asked questions on this.
    We have had roughly 4,500 seats where people have gone into
    different training things. One of the things that you can count
    on me in this command is to set up the best trained force in
    the world. We're doing that. We've gotten people from the
    Services, from the Navy, the Army, the Air Force, instructors
    from the academies, to come out and help us set up these
    programs. It's superb. When you look at the number of people
    and the quality that we have in this, it's absolutely superb.
        Training the young folks going in, that's going to take
    time. We'll have roughly one-third of that force fully trained
    by the end of this calendar year. I think that, given the
    sequestration, is a huge step forward. We are on track to get
    the team stood up, as well. They'll reach Initial Operational
    Capability, roughly one-third of those, by the end of this
    year. Those are two steps forward that we have to really focus
    on and that we're taking.
        I mentioned team sport. Within DOD, you want us to work
    closely with the Services. We are, with our component commands.
    That's going well. I think Admiral Haney and I see that as one
    of the key things that we can do to ensure that the Services
    are aligned and that we're training everybody to a joint
    standard. That's going on. We have a close relationship with
    them, and we operate in a joint environment. That's huge. But,
    we also have to work with the Defense Security Service Academy
    and NSA. I think those relationships are also good and strong.
        Finally, within the interagencies, with the Department of
    Homeland Security (DHS) and the Federal Bureau of Investigation
    (FBI) specifically, I think those relationships are good. With
    Secretary Johnson in place, I think we'll take some further
    steps forward. We'll meet with him in a couple of weeks.
        Team sport, something that we have to work together. I am
    concerned that our policy and law lagged behind this. Part of
    that is educating people, the American people and our
    administration and Congress and the courts, on what's going on
    in this space. Many of the issues that we've worked our way
    through over the last 5 years on the NSA side, working with the
    Foreign Intelligence Surveillance Act (FISA) court, boils down
    to an understanding of what's going on in cyber space, our
    ability to articulate it, and their understanding of what we're
    talking about. This makes this area especially difficult, and
    one that I think we need to step back, set a framework for
    discussion with the American people. This is going to be
    absolutely important in setting up what we can and cannot do in
    cyber space to protect this country. From my perspective,
    that's going to be one of the big issues that we move forward.
        I think a precursor to that is getting the NSA issues
    resolved. We have to get those resolved, because, ironically,
    it operates in the same space. If we can solve the NSA issues,
    especially the surveillance program that the President asked us
    to look at, which, over the next several weeks, I think we will
    bring back to you all a proposal, I think that will be the
    first step. Pending that, we can then look at that as a way and
    construct for how we would move forward in cyber space.
        Bottom line, Mr. Chairman, we have great people out there
    and the Services are doing a great job. I am really impressed
    with the types and quality of the soldiers, sailors, airmen,
    marines, and civilians that we're getting. It's absolutely
    superb. We need to invest in that training more, and we're
    taking that as our top priority.
        That's all I have, Mr. Chairman.
        [The prepared statement of General Alexander follows:]
               Prepared Statement by GEN Keith B. Alexander, USA
        Chairman Levin, Senator Inhofe, distinguished members of the
    committee, thank you for the opportunity to speak to you today on
    behalf of the men and women of the U.S, Cyber Command (CYBERCOM). This
    will be the last time I have the honor of talking about our Command's
    fine and dedicated servicemembers and civilian personnel before this
    committee. It always gives me great pleasure to tell you about their
    accomplishments, and I am both grateful for and humbled by the
    opportunity I have been given to lead them in the groundbreaking work
    they have done in defense of our Nation.
        CYBERCOM is a subunified command of U.S. Strategic Command in
    Omaha, Nebraska though based at Fort Meade, MD. It has approximately
    1,100 people (military, civilians, and contractors) assigned with a
    Congressionally-appropriated budget for fiscal year 2014 of
    approximately $562 million in Operations and Maintenance, Research,
    Development, Test and Evaluation, and military construction (MILCON).
    CYBERCOM also has key Service cyber components: Army Cyber Command/
    Second Army, Marine Forces Cyber Space Command, Fleet Cyber Command/
    Tenth Fleet, and Air Forces Cyber/24th Air Force. Together they are
    responsible for directing the defense ensuring the operation of the
    Department of Defense's information networks, and helping to ensure
    freedom of action for the United States military and its allies--and,
    when directed, for defending the Nation against attacks in cyber space.
    On a daily basis, they are keeping U.S. military networks secure,
    supporting the protection of our Nation's critical infrastructure from
    cyber attacks, assisting our combatant commanders, and working with
    other U.S. Government agencies tasked with defending our Nation's
    interests in cyber space.
        CYBERCOM resides with some key mission partners. Foremost is the
    National Security Agency and its affiliated Central Security Service
    (NSA/CSS). The President's recent decision to maintain the ``dual-hat''
    arrangement under which the Commander of CYBERCOM also serves as the
    Director of NSA/Chief, CSS means the co-location of CYBERCOM and NSA/
    CSS will continue to benefit our Nation. NSA/CSS has unparalleled
    capabilities for detecting threats in foreign cyber space, attributing
    cyber actions and malware, and guarding national security information
    systems. At CYBERCOM, we understand that recreating a mirror capability
    for the military would not make operational or fiscal sense. The best,
    and only, way to meet our Nation's needs today, to bring the military
    cyber force to life, and to exercise good stewardship of our Nation's
    resources is to leverage the capabilities (both human and
    technological) that have been painstakingly built up at Fort Meade. Our
    Nation has neither the resources nor the time to redevelop from scratch
    the capability that we gain now by working with our co-located NSA
    partners. Let me also mention our other key mission partner and
    neighbor at Fort Meade, the Defense Information Systems Agency (DISA).
    DISA is vital to the communications and the efficiency of the entire
    Department, and its people operate in conjunction with us at CYBERCOM
    on a constant basis. We all work in conjunction with the extensive
    efforts of several Federal Government mission partners, particularly
    the Department of Homeland Security (DHS), the Department of Justice
    and its Federal Bureau of Investigation (FBI), and other departments
    and agencies. We also work with private industry and allies in the
    overall mission of securing our networks, identifying threat actors and
    intentions, building resiliency for Federal and critical infrastructure
    systems, and supporting law enforcement in investigating the theft and
    manipulation of data.
        Allow me to review the highlights since our last posture hearing
    before the committee a year ago. The main point I want to leave with
    you is that we in U.S. Cyber Command, with the Services and other
    partners, are doing something that our military has never done before.
    We are putting in place foundational systems and processes for
    organizing, training, equipping, and operating our military cyber
    capabilities to meet cyber threats. CYBERCOM and the Services are
    building a world class, professional, and highly capable force in
    readiness to conduct full spectrum cyber space operations. Seventeen
    out of 133 projected teams have achieved full or ``initial''
    operational capability, and those teams are already engaged in
    operations and accomplishing high-value missions. The Cyber Mission
    Force is no longer an idea on a set of briefing slides; its personnel
    are flesh-and-blood soldiers, marines, sailors, airmen, and
    coastguardsmen, arranged in military units that are on point in cyber
    space right now. We are transforming potential capability into a
    reliable source of options for our decisionmakers to employ in
    defending our Nation. Future progress in doing so, of course, will
    depend on our ability to field sufficient trained, certified, and ready
    forces with the right tools and networks to fulfill the growing cyber
    requirements of national leaders and joint military commanders. That is
    where we need your continued support.
                               the threat picture
        The Department of Defense along with the Department of Homeland
    Security, the Department of Justice, and the Federal Bureau of
    Investigation have primary responsibilities to defend the United States
    in cyber space and to operate in a global and rapidly evolving field.
    Our economy, society, government, and military all depend on assured
    security and reliability in this man-made space, not only for
    communications and data storage, but also for the vital synchronization
    of actions and functions that underpins our defenses and our very way
    of life. CYBERCOM concentrates its efforts on defending military
    networks and watching those actors who possess the capability to harm
    our Nation's interests in cyber space or who intend to prepare cyber
    means that could inflict harm on us in other ways.
        Unfortunately, the roster of actors who concern us is long, as is
    the sophistication of the ways they can affect our operations and
    security. We have described some of these in previous hearings, and I
    know the Director of National Intelligence recently opened his annual
    Worldwide Threat Assessment for Congress with several pages on cyber
    threats, so I'll be brief here.
        I can summarize what is happening by saying that the level and
    variety of challenges to our Nation's security in cyber space differs
    somewhat from what we saw and expected when I arrived at Fort Meade in
    2005. At that time many people, in my opinion, regarded cyber
    operations as the virtual equivalents of either nuclear exchanges or
    commando raids. What we did not wholly envision were the sort of cyber
    campaigns we have seen in recent years. Intruders today seek persistent
    presences on military, government, and private networks (for the
    purposes of exploitation and disruption). These intruders have to be
    located, blocked, and extracted over days, weeks, or even months. Our
    notion of cyber forces in 2005 did not expect this continuous,
    persistent engagement, and we have since learned the extent of the
    resources required to wage such campaigns, the planning and
    intelligence that are essential to their success, and the degree of
    collaboration and synchronization required across the government and
    with our allies and international partners. Through concerted efforts,
    and with a bit of luck, we are creating capabilities that are agile
    enough to adapt to these uses and others, and I am convinced we have
    found a force model that will give useful service as we continue to
    learn and improvise for years to come.
        We have some key capability gaps in dealing with these increasingly
    capable threats. Cyber space is a medium that seems more hospitable to
    attackers than defenders, and compared to what real and potential
    adversaries can do to harm us, our legacy information architecture and
    some of our weapons systems are not as ``cyber robust'' as they need to
    be. Our legacy forces lack the training and the readiness to confront
    advanced threats in cyber space. Our commanders do not always know when
    they are accepting risk from cyber vulnerabilities, and cannot gain
    reliable situational awareness, neither globally nor in U.S. military
    systems. In addition, the authorities for those commanders to act have
    been diffused across our military and the U.S. Government, and the
    operating concepts by which they could act are somewhat undefined and
    not wholly realistic. Further our communications systems are vulnerable
    to attacks. We need to rapidly pursue a defense in depth as we envision
    with the fielding of the Joint Information Environment.
        These gaps have left us at risk across all the CYBERCOM mission
    areas that I described above.
                             cybercom's priorities
        CYBERCOM is addressing these gaps by building cyber capabilities to
    be employed by senior decisionmakers and Combatant Commanders. In
    accordance with the Department of Defense's Strategy for Operating in
    Cyber Space, the people of CYBERCOM (with their NSA/CSS counterparts)
    are together assisting the Department in building:

        (1)  A defensible architecture;
        (2)  Trained and ready cyber forces;
        (3)  Global situational awareness and a common operating picture;
        (4)  Authorities that enable action;
        (5)  Concepts for operating in cyber space.

        We are finding that our progress in each of these five areas
    benefits our efforts in the rest. We are also finding the converse--
    that a lack of momentum in one area can result in slower progress in
    others. I shall discuss each of these priorities in turn.
    Defensible Architecture
        The Department of Defense (DOD) owns seven million networked
    devices and thousands of enclaves. CYBERCOM, with its Service cyber
    components, NSA/CSS, and DISA, monitors the functioning of DOD
    networks, providing the situational awareness to enable dynamic
    defenses. Unfortunately, DOD's current architecture in its present
    state is not fully defensible. That is why the Department is building
    the DOD Joint Information Environment (JIE), comprising a shared
    infrastructure, enterprise services, and a single security architecture
    to improve mission effectiveness, increase security, and realize IT
    efficiencies. The JIE, together with the cyber protection teams that I
    shall describe in a moment, will give our leaders the ability to truly
    defend our data and systems. Senior officers from CYBERCOM and DISA
    serve on JIE councils and working groups, and together with leaders
    from the office of the DOD's Chief Information Officer, Joint Staff J6,
    and other agencies, are guiding the JIE's implementation (with NSA's
    support as Security Adviser). JIE has been one of my highest priorities
    as Commander, CYBERCOM and Director, NSA/CSS.
    Trained and Ready Forces
        Over the last year, we have made great progress in building out our
    joint cyber force. When I spoke to you in March 2013 we had just begun
    to establish the Cyber Mission Forces in the Services to present to
    CYBERCOM. This force has three main aspects: (1) Cyber National Mission
    Teams to help defend the Nation against a strategic cyber attack on our
    critical infrastructure and key resources; (2) Cyber Combat Mission
    Teams under the direction of the regional and functional combatant
    commanders to support their objectives; and (3) Cyber Protection Teams
    to help defend DOD information environment and our key military cyber
    terrain. On January 17, 2014 we officially activated the Cyber National
    Mission Force--the U.S. military's first joint tactical command with a
    dedicated mission focused on cyber space operations. We have plans to
    create 133 cyber mission teams by the end of fiscal year 2016, with the
    majority supporting the combatant commands and the remainder going to
    CYBERCOM to support national missions. The teams will work together
    with regional and functional commanders according to a command and
    control construct that we are actively helping to forge and field.
        The training for this force is happening now on two levels. At the
    team level, each cyber mission team must be trained to adhere to strict
    joint operating standards. This rigorous and deliberate training
    process is essential; it ensures the teams can be on-line without
    jeopardizing vital military, diplomatic, or intelligence interests.
    Such standards are also crucial to assuring intelligence oversight and
    to securing the trust of the American public that military operations
    in cyber space do not infringe on the privacy and civil liberties of
    U.S. persons. Our training system is in the midst of certifying
    thousands of our people to high and joint military-wide standards.
        At the individual level, we are using every element of capacity in
    our Service schools and in NSA to instruct members of the Cyber Mission
    Force teams. We have compiled a training and readiness manual, a
    ``summer school'' for cyber staff officers, and are shaping
    professional military education to enhance the cyber savvy of the
    force. To save time and space, furthermore, we have established
    equivalency standards to give individuals credit for training they have
    already taken in their Services and at NSA, with a board to adjudicate
    how much credit to confer for each course. Finally, we have established
    Job Qualification Records for team work roles to provide joint
    standards, further reinforcing common baselines of knowledge, skills
    and abilities across Service-component teams.
        As our training system geared up to meet our need for trained
    operators and certified teams, sequestration-level reductions and
    furloughs last year seriously impeded our momentum. The uncertain
    budget situation complicated our training efforts; indeed, we had to
    send people home in the middle of our first-ever command and staff
    course last summer. Moreover, every day of training lost had cascading
    effects for the overall force development schedule, delaying classes,
    then courses, and then team certifications, to the point we are about 6
    months behind where we had planned to be in training our teams. We are
    only now catching up to where we should have been months ago in
    building the Cyber Mission Force.
    Increased Operational Awareness
        Enhanced intelligence and situational awareness in our networks
    help us know what is happening in cyber space. Our goal is to build a
    common operating picture, not only for the cyber activities of
    organizations based at Fort Meade but also across the U.S. Government.
    We are moving toward this objective, for instance by coordinating the
    activities of the CYBERCOM and NSA operations centers. Achieving it
    should let all who secure and defend our networks synchronize their
    activities, as well as see how adversarial and defensive actions can
    affect one another, which in turn enhances the efforts of planners and
    the predictability of the effects they seek to attain.
    Capacity to Take Action
        The last year saw increased collaboration between defenders and
    operators across the U.S. Government and with private and international
    partners. CYBERCOM played important roles in several areas. CYBERCOM,
    for instance, has been integrated in the government-wide processes for
    national event responses. This regularly exercised capability will help
    ensure that a cyber incident of national significance can elicit a fast
    and effective response at the right decisionmaking level, to include
    pre-designated authorities and self-defense actions where necessary and
    appropriate. In addition, CYBERCOM participated in whole-of-government
    actions with partners like the Departments of State, Justice, and
    Homeland Security in working against nation-state sponsored cyber
    exploitation and distributed denial-of-service attacks against American
    companies. Finally, we already benefit from sharing information on
    cyber threats with the services and agencies of key partners and
    allies, and are hopeful that cybersecurity legislation will one day
    make it easier for the U.S. Government and the private sector to share
    threat data in line with what the administration has previously
    requested.
    Operating Concepts
        To oversee and direct the Nation's cyber forces, as previously
    mentioned, we have established a National Mission Force Headquarters in
    CYBERCOM at Fort Meade. This functions in parallel with analogous
    headquarters units (the four Joint Force Headquarters) for the Service
    cyber components, which themselves work with the NSA/CSS regional
    operating centers in Georgia, Texas, and Hawaii.
        We can report some good news with respect to the realism of our
    cyber exercises, which put these operating concepts to the test.
    CYBERCOM regularly participates in more than twenty Tier 1 Combatant
    Command, coalition, and inter-agency exercises. We also run a Cyber
    Wargame that looks 5 years into the future and includes industry and
    academic experts. CYBERCOM's flagship exercises, Cyber Flag and Cyber
    Guard, are much more sophisticated now and are coupled directly with
    Joint Doctrine and the Force Model. Cyber Flag, held each fall at
    Nellis Air Force Base in Nevada, includes all the Service cyber
    components as well as inter-agency and international partners. Cyber
    Flag 14 in November 2013 assembled more than 800 participants, included
    conventional maneuvers and kinetic fires in conjunction with cyber
    operations, and featured a much more realistic and aggressive adversary
    in its expanded virtual battlespace. In the past we were tentative
    about letting the cyber ``red teams'' loose, for fear they would impair
    expensive training opportunities for conventional arms. In our recent
    Cyber Flag iteration last fall, we figuratively took the gloves off.
    Our defense consequently got its collective nose bloodied, but the
    defenders to their credit fought back and prevailed in chasing a
    determined foe out of our systems. For its part, Cyber Guard is a
    whole-of-government event exercising State- and national-level
    responses to adversary actions against critical infrastructure in a
    virtual environment. It brings together DHS, FBI, CYBERCOM, State
    government officials, Information Sharing and Analysis Centers, and
    private industry participants at the tactical level to promote shared
    awareness and coordination to mitigate and recover from an attack while
    assessing potential Federal cyber responses. Finally, we are also
    building and deploying tools of direct use to ``conventional''
    commanders in kinetic operations, some of which were most recently
    utilized in the latest Red Flag exercise run to keep our pilots at the
    highest degree of proficiency.
                              where are we going?
        Let me share with you my vision for what we at CYBERCOM are
    building toward. We all know the U.S. military is a force in
    transition. We are shifting away from legacy weapons, concepts, and
    missions, and seeking to focus--in a constrained resource environment--
    on being ready for challenges from old and new technologies, tensions,
    and adversaries. We have to fulfill traditional-style missions at the
    same time that we prepare for emerging ones, with new tools, doctrines,
    and expectations, both at home and abroad. We are grateful to Congress
    for lessening the threat of wholesale budget cuts called for by the
    Budget Control Act. That makes it easier for the Department of Defense
    to maintain its determination to shield our cyber space capabilities
    from the resource reductions falling on other areas of the total force.
    It is fair, and indeed essential, for you to ask how we are utilizing
    such resources while others are cutting back.
        Our answer is that the trained and certified teams of our Cyber
    Mission Force are already improving our defenses and expanding the
    operational options for national decision makers, the Department's
    leadership, and joint force commanders. We are building this force and
    aligning the missions of the teams with intelligence capabilities and
    military requirements. Our cyber mission teams will bring even more
    capability to the ``joint fight'' and to whole-of-government and
    international efforts:

             CYBERCOM is working with the Joint Staff and the
            combatant commands to capture their cyber requirements and to
            implement and refine interim guidance on the command and
            control of cyber forces ``in-theater,'' ensuring our cyber
            forces provide direct and effective support to commanders'
            missions while also helping CYBERCOM in its national-level
            missions. In addition, we are integrating our efforts and plans
            with component command operational plans, and we want to ensure
            that this collaboration continues at all the Commands.
             Our new operating concept to enhance military cyber
            capabilities is helping to foster a whole-of-government
            approach to counter our Nation's cyber adversaries. Indeed,
            CYBERCOM planners, operators, and experts are prized for their
            ability to bring partners together to conceptualize and execute
            operations like those that had significant effects over the
            last year in deterring and denying our adversaries' cyber
            designs.

        Here is my greatest concern as I work to prepare my successor and
    move toward retirement. Despite our progress at CYBERCOM, I worry that
    we might not be ready in time. Threats to our Nation in cyber space are
    growing. We are working to ensure that we would see any preparations
    for a devastating cyber attack on our critical infrastructure or
    economic system, but we also know that warning is never assured and
    often not timely enough for effective preventive actions. Should an
    attack get through, or if a provocation were to escalate by accident
    into a major cyber incident, we at CYBERCOM expect to be called upon to
    defend the Nation. We plan and train for this every day. My Joint
    Operations Center team routinely conducts and practices its Emergency
    Action Procedures to defend the Nation through inter-agency emergency
    cyber procedures. During these conferences, which we have exercised
    with the participation up to the level of the Deputy Secretary of
    Defense, we work with our interagency partners to determine if a Cyber
    Event, Threat or Attack has occurred or will occur through cyber space
    against the United States. As Commander, CYBERCOM, I make an assessment
    of the likelihood of an attack and recommendations to take, if
    applicable. We utilize this process in conjunction with the National
    Military Command Center to determine when and if the conference should
    transition to a National Event or Threat Conference.
        We understand that security is one of the greatest protections for
    civil liberties, and that liberty can suffer when governments hastily
    adapt measures after attacks. At CYBERCOM we do our work in full
    support and defense of the civil liberties and privacy of Americans. We
    do not see a tradeoff between security and liberty; we promote both
    simultaneously, because each enhances the other. Personnel at CYBERCOM
    take this responsibility very seriously. The tools, authorities, and
    culture of compliance at NSA/CSS give us the ability and the confidence
    to achieve operational success against some of the toughest national
    security targets while acting in a manner consistent with civil
    liberties and rights to privacy. That said, unless Congress moves to
    enact cybersecurity legislation to enable the private sector to share
    with the U.S. Government the anomalous cyber threat activity detected
    on its networks on a real-time basis, we will remain handicapped in our
    ability to assist the private sector or defend the Nation in the event
    of a real cyber attack. I urge you to consider the now daily reports of
    hostile cyber activity against our Nation's networks and appreciate the
    very real threat they pose to our Nation's economic and national
    security as well as our citizen's personal information. I am concerned
    that this appreciation has been lost over the last several months, as
    has the understanding that--when performed with appropriate
    safeguards--cyber threat information sharing actually enhances the
    privacy and civil liberties as well as the security of our citizens.
                                   conclusion
        Thank you again, Mr. Chairman and members of the committee, for
    inviting me to speak, and for all the help that you and this committee
    have provided CYBERCOM over the years. It has been my honor to work in
    partnership with you for these past 39+ years to build our Nation's
    defenses. Never before has our Nation assembled the talent, resources,
    and authorities that we have now started building into a cyber force. I
    am excited about the work we have done and the possibilities before us.
    This is changing our Nation's capabilities, and making us stronger and
    better able to defend ourselves across the board, and not merely in
    cyber space. We can all be proud of what our efforts have accomplished
    in building CYBERCOM and positioning its men and women, and my
    successor, for continued progress and success.

        Chairman Levin. Thank you so much, General. If that
    proposal comes in the next few weeks, it may come before your
    retirement, in which case this may not be your last hearing
    before this committee.
        Senator Inhofe. Then he might reach 40 years.
        Chairman Levin. That's true.
        But, anyway, we know how much you've put into this effort,
    and we do look forward to that proposal. It's way beyond this
    committee. The entire Congress, the American people, and, of
    course, the administration look forward to the recommendations
    that you'll be making or the proposal that you'll be making.
        Let's have a 7-minute first round.
        Admiral, I think you made reference to the ground-based
    midcourse defense (GMD) system. We've had some flight test-fit
    failures with both models of the deployed kill vehicles. My
    question is this. Do you believe that it is a high priority to
    fix the problems with our current GMD kill vehicles and that we
    need to use a fly-before-you-buy approach to ensure that,
    before we deploy any additional GMD interceptors, that we need
    to demonstrate, through successful and realistic intercept
    flight testing, that the GMD system has been fixed and will
    work as intended?
        Admiral Haney. Senator Levin, a very important question,
    there. The importance of MDS, and the ingredients that go in
    there--the kill vehicle is an important part of that system,
    and the failures that we've had in the past are under review,
    expecting a readout soon from the review board. But, it is
    critical that we get to the technical issues associated with
    the kill vehicle and get those corrected so that we can have
    better reliability in our MDS. That, coupled with investments
    in discrimination and sensors, is key to the way forward.
        Chairman Levin. Should we fix the kill vehicle problems
    before we deploy an additional GMD interceptor?
        Admiral Haney. Sir, I believe we need to do both in
    parallel while we understand the problem deeper. That is
    already underway.
        Chairman Levin. General, let me shift to you about some of
    the issues that you addressed.
        First, there was an article in yesterday's or the day
    before's New York Times, saying that, in late spring 2011, NSA
    and DOD developed options for the President to conduct
    sophisticated cyber attacks on the Syrian military and on
    President Assad's command structure. Can you provide the
    committee, in a classified manner for the record, if necessary,
    your assessment about the accuracy of the article and your
    views on the decision that the President purportedly made
    relative to that and to the thinking behind that decision?
        General Alexander. Mr. Chairman, I will provide a
    classified response to that.
        [The information referred to follows:]

        [Deleted.]

        Chairman Levin. I assume you were in the middle of that
    discussion and those options.
        General Alexander. Yes, sir.
        Chairman Levin. Okay.
        General, in January, as you pointed out, the President
    ordered a transition to end the Telephone Metadata Collection
    Program, as it currently exists, to preserve the capabilities
    that we need, but without the government collecting and holding
    the data on call detail records. Do you believe that the
    government needs to hold all the metadata records in order to
    determine whether terrorist suspects overseas are communicating
    with persons located in the United States, or could a third
    party, a private third party, hold that data, or service
    providers perhaps keep the data?
        General Alexander. Mr. Chairman, I think there are three
    options on that, that I would put on the table. You mentioned
    government holding it, the Internet service providers holding
    it, and I think there is yet another option, where you look at
    what data you actually need, and get only that data. Can we
    come up with a capability that just gets those that are
    predicated on a terrorist communication? I think you have those
    three options that I would put on the table. Those are three of
    the ones that I think need to be fully discussed and the merits
    for both sides. They have pros and cons on the agility that you
    would have with the programs.
        We have made some recommendations. I think that will be our
    view over the next couple of weeks within the interagency. I am
    confident that the process is going well in this. They've had
    deputies and other meetings amongst the interagency, and I
    think the facts are being put on the table to help make a good
    decision to bring forward to you all.
        Chairman Levin. Thank you. The Privacy and Civil Liberties
    Oversight Board and the President's Review Group on
    Intelligence and Communications Technology both characterized
    the section 215 program as useful; however, they said that it
    has not yet identified a single instance involving a threat to
    the United States in which the program made a concrete
    difference--these are their words--in the outcome of a
    counterterrorism investigation.
        Can you, either for the record or here, give us examples or
    the list, if it's a finite list, of where the program made a
    ``concrete difference'' in the outcome of a counterterrorism
    investigation?
        General Alexander. Mr. Chairman, I can. There's two sets.
    Let me give you the first part, which was what we gave to
    Congress on 54 different terrorist events--not all attacks, but
    this could be facilitation--roughly, 13 were facilitation, and
    the rest were terrorist plotting and attacks--that went on here
    and throughout the world. That's the 54 number that everybody
    has known. Of those 54, 41 were outside the United States, 13
    were inside the United States. The Business Record FISA program
    could only apply to those 13. It actually was used in 12 of
    those 13.
        The issue which is the concrete part, gets us back to the
    mid portion of this. In sitting down with the Director of the
    FBI, both past and present, the issue comes up with one of
    agility. How do we go quicker? Things like the Boston bombing
    shows where this program and its agility really make a
    difference.
        So, from my perspective, there are some ongoing, concrete
    examples today, that we can provide the committee in a
    classified setting, that shows, from my perspective, that this
    program makes a difference.
        The issue really comes down to your earlier question. So,
    how much data do you need? How do we do this data in the right
    way? Can we come up with a better way of doing it? Which is
    what the President has tasked us to try to come up with.
        I do think there is a better way. That's what we're putting
    on the table. I think it will address both of your questions--
    the database and how we respond.
        Mr. Chairman, I would like to provide more details on the
    ongoing stuff that we're seeing, threats that we're seeing with
    this program.
        Chairman Levin. All right, it would be very helpful that
    you give us the list of each instance where the program has
    made a concrete difference, because that is very different from
    what these two organizations and commissions found. We'll
    expect that for the record, General. We appreciate it.
        [The information referred to follows:]

        The National Security Agency has provided to Congress a list of
    some 54 examples involving section 215 as well as section 702 of the
    Foreign Intelligence Surveillance Act (FISA), as amended by the FISA
    Amendments Act. The colloquy at the 27 February hearing refers to this
    list and to the use of section 215 authorities during the investigation
    of the Boston Marathon bombing. The context of this question has
    changed significantly since the time of the hearing. The administration
    has called for legislation providing for the telephone metadata to be
    queried (with court approval of each query term) while it is held by
    the service providers, instead of NSA acquiring the data in bulk. Such
    legislation has now passed the House and is under consideration in the
    Senate. Upon request, NSA is prepared to provide Congress with current
    information on the operation of the section 215 program during this
    interim period and/or after the program is restructured pursuant to any
    legislative changes.

        Chairman Levin. Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        You heard my characterization of Snowden in my opening
    remarks. Do the two of you agree with that?
        Admiral Haney. I do.
        General Alexander. I do.
        Senator Inhofe. We've developed a chart that we have shown
    to both of you. I think, Admiral Haney, you went over this
    yesterday with some of our staff. For the benefit of those up
    here, we have copies.
        [The chart referred to follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Inhofe. If you look at the peak there, that would
    have been as the end of the Cold War came, and we started
    dropping down in our nuclear modernization program. It was
    fairly level until getting into the current date that we're in
    right now.
        You see the little hump there? That would be a new--
    necessary in order to get this done--a new cruise missile, new
    ICBM, new sub-launched. Have you had a chance to look at this
    chart? Do you feel that's what our needs are now, Admiral
    Haney, the accuracy of this chart?
        Admiral Haney. Senator Inhofe, I have seen this chart, and
    what I think is unique about the chart is, it really gives a
    great presentation of the history of funding that we have
    invested in our strategic deterrent, and also gives, even
    beyond the Future Years Defense Program, an approximation of
    what requires to be modernized. As you look at this chart, it's
    unique, in terms of what was paid for, back in the late 1980s,
    early 1990s, and how that sustains us today in having a
    credible deterrent that we're operating in a safe, secure, and
    effective manner today.
        Senator Inhofe. Yes, that's in the past, but the way we're
    going forward is what I'm interested in, which I think we're
    going to have to do.
        Now, I'm going to read a list. There are eight delays that
    have bothered me, and I'd like to have you comment on any of
    these and how they fit into the chart of what our expectations
    of the future are.
        First of all, (1) the ballistic missile submarine, delayed
    2 years; (2) air-launch, delayed a little bit more than 2
    years; (3) the follow-on ICBM, still no decision yet; (4) the
    B-61 bomb LEP, that was delayed 2\1/2\ years; (5) both
    warheads, the W-78 and W-88, delayed 2 years; (6) plutonium
    handling facility, deferred at least 5 years; (7) uranium
    processing facility, delayed at least 4 years; and (8) funding
    of the DOE weapons activities, $2 billion short of the New
    START commitments, those START commitments that were made by
    the President and by the administration in order to secure the
    votes necessary to pass New START.
        Of these eight, first of all, do you agree? Which do you
    think are more significant in correcting so that we can meet
    the expectations of this chart?
        Admiral Haney. Senator, you've really captured where we
    need to go, in terms of modernization across the triad, in
    which the 2010 NPR articulated its value to our Nation in
    strategic deterrence. As I look at the modernization programs
    that are either in progress or going forward, we have delayed
    the Ohio replacement program to the point where we can ill
    afford to delay it any further. Right now, those platforms are
    going to be the longest serving submarines in the Ohio-class
    today, getting up to 42 years of service out of them in the
    current plan. It is important that we move forward with that
    program.
        As you look at each leg of the triad, there are
    modernization aspects. Some are underway. You mentioned the air
    leg, for example, the B-61 LEP, there is work ongoing today
    associated with that program. We have to keep it on track in
    order to have that portion of the air leg. You know we have a
    3-plus-2 strategy that we're committed to, and we have to
    continue to work that.
        The one piece of this chart that has significant
    uncertainty gets in terms of the impacts of sequestration,
    particularly as we look at beyond the current fiscal year, the
    next fiscal year, and particularly as we look at those cuts,
    going forward.
        Senator Inhofe. Okay. I agree with that. But, part of the
    chart also, that most can't see from where you are, is that it
    would only cost--this modernization that is to reach these
    expectations, about 5 percent of the defense spending. So, I
    see this as affordable. Do you agree with that?
        Admiral Haney. Senator, I would say to not continue the
    modernization of the triad is not an option. This chart, though
    not in percentages, does, in fact, illustrate that when you
    look at--in the current timeframe and--I would say in the last
    5 years we've been about 3 percent, and going up to nearly
    twice that much is a significant investment, but a necessary
    investment going forward.
        Senator Inhofe. Thank you very much.
        General Alexander, I wanted to get into a little bit more
    time on this, because of my concern that I've expressed to you
    on several occasions, over Iran, over the threat that's there.
    People think of the threat of Iran, as I have too, as gaining a
    nuclear capability, a delivery system that could reach the
    United States. That's been a great concern of ours. But, what
    is not as obvious is what that was revealed in the Wall Street
    Journal article, back in February, about what they are able to
    successfully infiltrate the critical Navy computer network, and
    then, of course, getting into Wall Street and all of that. So,
    I'd ask you the consequences of the Iranian cyber space. There
    won't be time to get into that, but I would like to have you
    just comment.
        You were talking about the education of the American
    people. I think that's it. This whole thing on the NSA and how
    people are using an issue that may be there, but it's there
    only for a very small part of it. Is this what you mean when
    you say the education of the American people? I think that's
    what you mean. Again, how are we going to go about doing that?
        General Alexander. Mr. Chairman, that's what I mean. How do
    we help them understand the evolution of what's going on in
    this space and what the country is asking NSA to do to protect
    the Nation from terrorist attacks and now to provide early
    warning for cyber. You have a couple of issues that we're
    asking NSA to do. What we've seen with all the reviews is that
    they're doing it right. Everything gets pointed out that we
    tell the court when we make a mistake, we do it right.
        But, the real issue comes down to understanding, what do we
    need to do to fix these problems? You mentioned access into
    networks. When you look at it, it is banks, it is electric, it
    is government networks, it is private networks, it is all of
    them. The thing that we haven't done is built security into
    these networks at the pace that we need to.
        What I would propose, especially for the government, is to
    implement the JIE and create a defensible architecture, and
    learn how to use it. We wouldn't leave our classified material
    out in Central Park and then wonder why people are taking it.
    Right now, access to these networks is fairly easy. There are a
    lot of ways to get into it, and they only have to find one.
    That's what they're doing.
        Senator Inhofe. That's right. That's right.
        My time has expired, but I talked to the Defense Reporters
    Association this morning, and told them this very thing, that
    people are not aware of the threat that you and I are talking
    about here in this hearing. I think, as part of the educational
    thing, we're going to have to really work on the media to
    properly express to the American people the reality of what
    we're facing and of the threat that's there.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator, very much.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        Thank you, gentlemen, for your service. Admiral Haney,
    welcome.
        This being General Alexander's, perhaps, last appearance
    before the committee, I have to thank him for his great service
    to the Nation. I've known General Alexander since he was a
    plebe and I was his company commander at West Point. Despite
    that very poor initial role-model relationship, he has done
    quite well for himself. I know you've been involved, General,
    in lots of policy questions, but no one can or should question
    your integrity and your selfless service to the Nation. I thank
    you for that, sir. Thank you.
        You've raised a series of questions, and my colleagues
    have, too, with respect to the intersection of threats to our
    commercial enterprises and threats to our national security.
    These are commingling, and you're suggesting that NSA can and
    should play a more prominent role in providing assistance to
    civilian authorities, but that would require, I think,
    additional legislation. First, do we need additional
    legislation? Second, can you give us the quick insights in what
    that relationship might look like?
        General Alexander. Senator, I'm not espousing that NSA
    should have a greater role inside the United States. What I am
    saying is that NSA has some unique capabilities in
    understanding threats, how they're built, and how they go
    about, and we should have a better relationship for how we
    share that, those things between government and industry. That
    is where I think we need cyber legislation, sharing those
    capabilities, and especially those signatures.
        Let's say that we come up with a signature for how a
    foreign adversary is getting into our networks, and it's
    classified because of the way NSA got it, either through their
    own capabilities or through a partner. Giving it to industry in
    an unclassified manner would almost ensure that the adversary
    would know and respond and change that signature in a few days.
    We've seen that happen. So, we have to have a classified
    relationship for sharing some of this information and
    technology with industry so that we can improve it.
        The defensible architecture, I think that's unclassified.
    The way we actually defend it, that gets into a classified
    area. I think that's where I believe we're going to need cyber
    legislation. It's the ability to share that with industry that
    we'll have to legislate, because today you can't go back and
    forth easily.
        Why I made the comment on the business record FISA is,
    we're also looking at, can we share some of these terrorist
    selectors with industry in a classified manner and get
    responses back, where the government, nor anyone, has to hold
    an entire database? That's a possibility, and something I think
    we should pursue.
        If we do one, if we do the business records, it sets a case
    in precedent for cyber, and I think that's where the public
    debate really needs to come down and where people need to
    understand exactly what we're talking about.
        I would not be an advocate for having NSA operate within
    the United States.
        Senator Reed. Thank you very much, General.
        One of the other sides of this discussion is that you can
    alert industry to potential threats, but, ultimately, industry
    will have to build the protection mechanisms in their systems.
    That's going to require them to invest in more security. That
    seems to logically follow from your comment.
        General Alexander. I think that's mostly correct, Senator.
    I would change it slightly to say there's going to be a role
    for government for defending the Nation so that if another
    nation were attacking a sector of industry, we would have the
    government have to step in to protect it. But, you're correct,
    they have to build the defensible architecture as well,
    something that can tip and queue and say, ``I'm having these
    problems, you need to step in.'' Those are decisions where the
    policy and the law have to precede the event. That's where I
    think we have to push that understanding so people understand
    why we have to train CYBERCOM to operate at network speed in
    these areas.
        Senator Reed. Let me ask a question to both you gentlemen,
    and that is that the command-and-control networks, particularly
    with respect to our nuclear forces, which is clearly the
    responsibility of the government, are you confident that we
    successfully can protect those networks from cyber intrusion?
        Admiral Haney?
        Admiral Haney. Senator Reed, yes, I am confident that we
    can protect those networks associated with our strategic
    deterrent. As we look at the future of threats, I am mindful,
    though, that we have to keep pace, as General Alexander has
    discussed. That's a necessity, because in having a deterrent,
    you have to have the necessary command-and-control-and-
    communications systems that also have to be assured, not just
    now, but well into the future.
        Senator Reed. General Alexander?
        General Alexander. Senator, I agree, we can, today, defend
    it, and it's going to continue to evolve, and we have to
    continue that assessment and our investment in their defense.
        Senator Reed. Thank you very much.
        All right, we've talked about the modernization issue of
    the triad, and we're already underway in several programs, but
    they've been delayed, as Senator Inhofe pointed out quite
    specifically and quite bluntly. One issue, obviously, is the
    Ohio-class replacement, Admiral Haney, and that seems to be
    further along than most of the other major platforms. Is that a
    fair assessment?
        Admiral Haney. Senator, the requirements have been
    established for the Ohio replacement, and there's design work
    that's underway, and the plan has been going through very good
    detail to get us out to where we can have a commissioned
    platform that's certified and ready to deploy in 2031.
        Senator Reed. Thank you.
        There's another aspect to this modernization issue, and
    that's not the new platforms, but that's making sure that
    existing facilities are adequate, particularly with respect to
    accidental incidents. You're confident, Admiral Haney, that
    you're investing enough in just the upkeep of the facilities so
    that we are absolutely confident that there is going to be no
    potential, or any significant potential, for accidents?
        Admiral Haney. Senator, my confidence exists, relative to
    the inspections that we do associated with our nuclear
    enterprise to ensure today that we are safe, secure, and
    effective. But there are investments that are needed in some of
    our enterprise facilities that deal with the production, the
    storage, long-term storage, and dismantlement of weapons that
    are also required for the future.
        Senator Reed. Thank you very much, gentlemen. Thank you for
    your service.
        Chairman Levin. Thank you, Senator Reed.
        Senator McCain.
        Senator McCain. I thank both the witnesses.
        General Alexander, thank you for your outstanding service.
    I'm sure you view your last appearance here with mixed
    emotions. I would also like to congratulate you on overcoming
    your initial schooling and the malign influence of Cadet Reed.
    I think you've done very well. [Laughter.]
        Senator Reed. Cadet Captain Reed. [Laughter.]
        Senator McCain. Okay, excuse me. Cadet Captain Reed. Excuse
    me. Another mistake made by the authority. [Laughter.]
        General Alexander, we've been kicking around this
    legislation, cyber security legislation, now for several years,
    and we've been going back and forth. Everybody knows we need
    the legislation, and you've made significant and valuable
    inputs. I can't tell you the number of meetings I've gone to on
    it. One of the biggest problems we face is that this issue
    crosses the many jurisdictional lines of different committees.
    Have you given thought to the idea that maybe we should have a
    select committee to examine this entire issue of cyber
    security?
        General Alexander. Senator, I think that would be a great
    idea, although I don't know as much about your job,
    unfortunately. But, I do think having something that pulls all
    that together would make a lot of sense.
        Senator McCain. I'm sure you feel a sense of frustration
    that we haven't acted legislatively, which you have repeatedly
    over the years advocated. Is that correct?
        General Alexander. I am concerned, Senator, that the lack
    of legislation will impact our ability to defend the country in
    this area.
        Senator McCain. I thank you.
        Director Clapper and General Flynn testified that the vast
    majority of the more than 1.8 million documents that Edward
    Snowden stole have nothing to do with government surveillance
    programs. It puts national security at risk, and the lives of
    our men and women in uniform at risk. Do you have anything to
    add to their comments?
        General Alexander. I am greatly concerned about the risk to
    our men and women in the military and to our Nation from
    terrorist attacks, because I think it is doing both. So, I
    would just add the terrorists.
        Senator, I am concerned that they are learning how we stop
    them, and they're going to get through. I think that's the
    near-term issue that we face, both here in the United States
    and in Europe, and that we haven't adequately addressed that
    problem.
        Senator McCain. You would agree that what's been released
    so far is really just the tip of the iceberg? Is that a correct
    assessment? That much greater damage can be done by Mr. Snowden
    releasing more of the documents?
        General Alexander. That is correct, Senator.
        Senator McCain. Recently, a Wall Street Journal article
    suggested that the Iranians were able to successfully
    infiltrate a critical Navy computer network. It was last
    February 17th that they were able to access the bloodstream of
    the Navy network. According to the article, Iran's infiltration
    of a Navy computer network was far more extensive than
    previously thought, and, ``It took the Navy about 4 months to
    finally purge the hackers from its biggest unclassified
    computer network.'' Do you believe we have a credible
    deterrence in the cyber domain against this kind of activity by
    Iran and other adversaries?
        General Alexander. Senator, I think we need to evolve a
    deterrence strategy that draws the lines on what is acceptable
    in cyber space and what actions we take. That does not yet
    exist.
        Senator McCain. Finally, maybe this is more appropriate for
    a closed hearing, but there's a New York Times article that
    said that Jason Healy, the director of the Cyber State Craft
    Initiative at the Atlantic Council, argued that using cyber
    warfare for humanitarian purposes in Syria, such as taking
    steps to degrade Assad's use of air power, might be an
    effective tool and one that might reverse the tide of world
    opinion that the U.S. Government is using cyber capabilities
    for nefarious ends.
        Do you have a comment on that, General?
        General Alexander. Senator, I think one of the things that
    you and the administration would depend on CYBERCOM and
    STRATCOM is to create options for policymakers to determine
    which is the best approach in solving these. I think that is
    one of the things that we've evolved. I think that's a good
    thing. I don't know that I necessarily agree with the statement
    when and how to use it. I do think other countries are using
    it. So, I'd go back to your earlier statement, what's the
    deterrence strategy, and how do we help evolve that? I think
    that's going to be the key to this.
        I do think, in future environments, cyber will be the first
    tool used in future----
        Senator McCain. By both sides.
        General Alexander. By both sides.
        Senator McCain. General, since this probably is your last
    appearance, there's been a great deal of criticism about NSA
    spying, invasions of privacy, Americans and foreign leaders
    being eavesdropped on. I think I can safely say that, given
    your long tenure, this is probably the most controversy that's
    been generated about your agency and its work. I'd like for you
    to take the remaining couple of minutes that I have to put this
    in perspective for us and for the American people.
        It happens to be my opinion that we are in grave danger of
    a new form of warfare that most of us don't understand. Maybe
    you can put this in perspective for us as to what we're facing,
    and maybe give some response to the critics that say that we're
    invading every home, every individual, that we are gathering
    all this information. You've seen it, all this publicity and
    controversy swirling around NSA activities. Maybe you could
    take a minute and try to put it in the perspective from your
    many years of experience in this area.
        General Alexander. Senator, thank you for that opportunity.
        I think one of the greatest honors and privileges I've had
    in my almost 40 years is to lead the men and women of NSA. They
    are the best I've ever seen, doing quietly what our Nation has
    asked them to do: protect this country in cyber space, and
    develop the tools to protect our networks. We're doing that.
        To assume that what NSA is doing is a rogue agency or is
    outrange, you see now, from all the different reviews, that NSA
    is doing exactly what the Nation has asked them to do. So, the
    issue now comes to a debate, what do we want NSA to do, and
    what do we need it to do? That gets to the heart of the issue
    that you've put on the table.
        From my perspective, the space, cyber space, where both NSA
    and now CYBERCOM operate, is one space where both the good guys
    and the bad guys all operate in that same space. Forty years
    ago, it was different. Foreign military communications were in
    a separate circuit from our domestic communications. Now,
    they're all intertwined. That's where the policy and the legal
    debates have not yet come to fruition and said, ``So, how do
    you operate in that space so that you can stop a terrorist
    attack, stop a war between two countries in the Middle East,
    and protect this Nation?'' All of that is at the heart of the
    issues that we're talking about right now.
        I think the Nation has to have NSA working with foreign
    partners to ensure that wars don't go on in the Middle East,
    that we stop terrorist attacks, and that we protect this
    Nation. It's in that same space that cyber adversaries also
    operate in. The rules that we have now have to accommodate both
    what I'll call active operators, cyber operators, and defense,
    from an intelligence perspective, in the same space.
        I think your idea of a select committee, perhaps, to
    address this converging area is one of the things that we
    should look at. It is evolving quickly. As it will be a phase-
    zero to phase-one part of future conflict, we're going to have
    to get this right.
        I think putting CYBERCOM where it is, and what we've done
    with it, is the right thing. I think Secretary Gates pushing
    this towards NSA and CYBERCOM as an entity, an activity,
    ensured that we had the team building it together. I think we
    should further evolve that team where it needs to be.
        But, Senator, if I could just end on one thing. When I
    looked at the people of NSA and what they're doing, the true
    tragedy in all of this is the way the press has articulated
    them as the villains, when what they're doing is protecting
    this country and doing what we have asked them to do. What
    we're finding out, in every review, in every case, they've done
    what we've asked them to do. If they made a mistake, we find
    out, ``Oh, they reported that 3 years ago to the courts, to
    Congress, and to the administration.'' No one is doing anything
    underhanded. They're just trying to do the job that this Nation
    needs them to do.
        I think we have to have a reset with how we look at NSA and
    CYBERCOM. I think we have to get on with the cyber legislation.
    Those attacks are coming, and I think those are near-term.
    We're not ready for them. The Nation needs an agency like NSA,
    with its technical capacities, to help ensure we can evolve
    that future space to where we need it. They're the ones, the
    predecessors who helped us crack Enigma, the red and purple
    codes from Japan, and they're the ones that helped protect our
    communications, and they're the ones we're going to need in the
    future.
        So, Senator, thank you for that opportunity.
        Senator McCain. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator McCain.
        Senator Udall.
        Senator Udall. Good morning, gentlemen.
        Admiral Haney, let me just start by saying I really enjoyed
    having a chance to sit and visit with you. I'm very much
    looking forward to, as the chairman of the Strategic Forces
    Subcommittee, working with you and Senator Sessions, the
    ranking member, and the rest of the subcommittee, to make sure
    that our strategic deterrent remains safe, reliable, and
    affordable. We talked quite a bit about the affordability
    factor. It'll be a great privilege to work with you.
        General Alexander, as always, it's good to see you. I know
    that you, as Senator McCain suggested, may have mixed feelings
    about this being your last appearance before the committee, and
    I, too, want to thank you for your four decades of service to
    our country.
        That said, I remain concerned about NSA surveillance
    activities and the constitutional ramifications when it comes
    to our liberties, and I'd be remiss if I didn't address those
    concerns today, at least for old times' sake. I would add that
    your knowledge is vast, and I really appreciated your initial
    comments about how we move forward when it comes to,
    particularly, sections 215 and 702. I want to make a couple of
    comments about sections 215, and then ask you a question.
        You know well that Members of Congress, I think as long ago
    as 7 years, were asking questions about the use of section 215.
    They and I learned that we really couldn't have an open,
    informed debate about the law, because the official meaning of
    the law was secret, and that concerned a number of us. It
    concerned me even more when I joined the Senate Select
    Committee on Intelligence (SSCI) here on the Senate side 3
    years ago, and I was able to take some time in classified
    settings to better try and understand what was going on.
        It felt to me like--and I believe this strongly--that
    secret laws undermine trust in authority, and then that erodes
    and damages our capacity to fight terrorism and protect the
    American people. Then, when the public learns that government
    officials have been rewriting the law in secret, confidence is
    undermined, and then it makes it harder for you to do the job
    you want to do and the job that I admire you for doing. I
    believe that confidence has been undermined with regard to the
    Patriot Act.
        So, my question to you is--and I think you'll have
    opportunities to answer this as a civilian, as well, because I
    think people are going to want to hear your point of view,
    given your broad experience. Do you think it was wise to keep
    classified the interpretation of the law itself? Then, what
    advice would you give to your successor to help him understand
    the importance of making the boundaries of the law clear to the
    public?
        General Alexander. I think the rationale, Senator, for
    going in and keeping this secret was sound at the beginning. I
    think hindsight says, could we and should we have done more? I
    think that's the open debate right now.
        My concern is, now that terrorists know how we do this, do
    they learn such that we can't stop them? I think the real issue
    that I see is, we're giving away a capability, which means
    there's one less tool, or that tool at least is minimized in
    its capability for stopping terrorist attacks and understanding
    what they're up to, and for other issues like that.
        I do think, though, given where we are today, we have to be
    transparent on this in the cyber legislation so the American
    people can enter into it, and that is, here's how we would
    propose doing this data. I think that debate that the
    administration would purport is one that should be open. I
    think if we do that right for this set of data, we can then
    look at cyber legislation in a parallel effort, and do that
    right, as well, and in an open session.
        So, I think those two would be a good way to move forward.
        Senator Udall. I want to note for the record as well that I
    hear you continuing to emphasize, ``We really do need to get
    cyber legislation through Congress.'' I also hear you implying,
    and I think saying directly, that we can figure out how to have
    the right kind of approach to metadata. Again, I want to let
    you know I appreciate your willingness to work on that as we
    move forward, per the President's recommendations.
        If I might, I'd like to turn to Admiral Haney and talk
    about the crews that operate our ICBMs. We've been well aware
    of some of the stories over the last couple of months about
    what's been happening. I think the missile crew might pull
    eight alerts per month, and they spend time in the capsule, in
    addition to briefings, preparing for their shifts, and actually
    getting out to the missile field, so that a 24-hour alert
    actually lasts about 3 days. Again, that would equal eight
    times per month. The airmen are kept very busy during their
    alerts, with training exercises and drills. That only leaves 6
    days off a month, which is when the crews study for the exams,
    where they, I think, have to have a perfect score to pass.
        I'm extremely concerned, you are extremely concerned, about
    the reports of cheating on those exams. I fully support a
    thorough investigation and appropriate disciplinary action.
    But, there's a real need to address the root causes of some of
    the morale and discipline issues that have begun to surface.
        Can you talk about what's done to prevent burnout in the
    missile crews? They're bright, they're talented, they're
    incredibly committed. How do we keep them focused on this
    deadly serious mission and then make sure they have
    opportunities for advancement and development?
        Admiral Haney. Senator, I think those are very important
    questions. These are questions that are, in fact, being looked
    at in the series of reviews that are ongoing, first within the
    Air Force in the command-directed investigation, as well as the
    Force Improvement Program, which is more of a grassroots look
    at this, holistically--I have people on that team, as well--in
    addition to the reviews that have been led by the Secretary of
    Defense in looking at the nuclear enterprise in its entirety.
        I do believe, though, from personal experience, going down,
    being in the alert facilities and the capsules with our combat
    alert crews, though, that, through this scattering of articles,
    it really makes it look like the majority of them are not
    dedicated to the mission. I'm here to tell you, that is
    absolutely false. I've met a number of these talented
    individuals that are very proud of serving our country as
    missileers in that community. Quite frankly, they are
    distraught over one thing in particular, and that is their
    colleagues that--a few of them--have, in fact, cheated, and
    really feel that they are getting a broad grade instead of the
    grade that they deserve, because they have been carrying out
    this mission, day-in and day-out. Clearly, we are looking at
    the methodologies of evaluations versus certification, and
    working hand-in-hand with the Air Force to make sure we look at
    that hard and get it right.
        Senator Udall. Thank you, Admiral.
        Chairman Levin. Thank you, Senator Udall.
        Senator Sessions.
        Senator Sessions. Thank you, Mr. Chairman.
        Thanks to both of you. General Alexander, thank you for
    your service for so many years. Admiral Haney, we look forward
    to continuing to work with you. Thank you for your good visit
    to my office recently.
        General Alexander, with regard to our capabilities to
    intercept communications and so forth that has been discussed,
    NSA, the fact that that's been revealed, did it not, in fact,
    tell our adversaries what our capabilities are, at least some
    of them--most--a lot of them, and that, therefore, allowing
    them to avoid detection in ways that could be damaging to the
    United States and our ability to protect the country?
        General Alexander. That's correct, Senator.
        Senator Sessions. In your opinion, have some of those
    capabilities enabled us to have information that helps protect
    the country from attack?
        General Alexander. Absolutely, Senator.
        Senator Sessions. General Alexander, in a response to a
    previous question, you said, ``If DOD does not develop
    effective offensive capabilities in cyber space, and clear
    rules of engagement for using them, adversaries will have
    little to fear of a U.S. response and, therefore, have little
    motivation for restraint.'' In other words, as I interpret you
    today, is, if we have no settled philosophy about how to
    respond to damaging interferences with our systems through
    cyber attacks, then our adversaries are not likely to be
    deterred from adventures to try to damage our systems. Is that
    what you're saying? How far along have we made it toward
    developing the kind of policies you suggest are necessary?
        General Alexander. Senator, I think, more specifically, we
    need to set the norms in cyber space, what's acceptable, what's
    not, and what will we do? I think the President did part of
    that in his 2009 paper, which said an attack in cyber space,
    here's what we'll respond. We'll use cyber plus everything
    else.
        Senator Sessions. Repeat that?
        General Alexander. I think in May 2009, there was a cyber
    memorandum that the President put out that said, ``We'll
    respond to attacks in cyber space with cyber and any other
    means available.'' So, I think he put that on the table. I
    think that's the correct approach. I think we have to take it
    to the next step. When and what will we do?
        Right now, there are a number of things that have gone on
    against our infrastructure. The question is, when do we act?
    That's a policy decision. But, I do think what we don't want to
    do is let it get to the point where we find out, ``Okay, that
    was unacceptable, and we didn't set the standard.'' We have to
    have a deterrence area. We're helping to push that.
        Senator Sessions. In other words, we tell people who are
    causing us damage that, ``When you do A, B, or C, you can
    expect that you'll receive some damage in return.''
        General Alexander. That's correct. Or some form of a
    deterrence area to keep them from doing that, Senator.
        Senator Sessions. To what extent have we gotten there? Of
    course, Congress has a role to play in this. We have multiple
    committees in the House and the Senate, and you have the White
    House and DOD. Do you think we could do better to help develop
    a unified policy? Is that important recommendation you'd have
    for Congress?
        General Alexander. Absolutely. I think we need that. We
    need the cyber legislation. As I stated earlier, we need a
    defensible architecture. We need to implement that as well, I
    think share that with our industry partners so they know how to
    get the defensible architecture that Senator Reed talked about.
        Senator Sessions. I thank you for that. I would just say
    that, having been involved with the drafting of the Patriot
    Act--it was said it was rushed through. It was carefully done,
    over months of intense work. Senator Leahy, Senator Hatch, all
    of us on the Senate Judiciary Committee, NSA's involvement. I
    believe in virtually every aspect of the Patriot Act, what we
    did was carefully done so it was within the Constitution and
    within prior court rulings about what's permissible. That was
    the goal, and I don't believe it represented, in any
    significant way, any kind of new erosion of American freedoms.
    There are great capabilities that I admit can be abused, and we
    need to make sure that they are not being abused, and the NSA
    needs to be watched. But, fundamentally, properly executed, I
    think it's not a danger to our constitutional rights. Great
    care was taken to do that. It became a bipartisan piece of
    legislation that had overwhelming support.
        Admiral Haney, thank you for your leadership. I believe we
    made some progress on some of my concerns, but I think we need
    to be even more clear about it. I think there's a growing
    consensus to maintain a strong nuclear deterrent within our
    government. I think you would agree with that.
        Admiral Haney. Absolutely, Senator.
        Senator Sessions. The Secretary of Defense coauthored a
    book, within a year of his confirmation, ongoing to zero
    nuclear weapons. The President has talked about it. Other
    people have talked about it. But, that can't be in the
    immediate future in the world that we are living in.
        I think that the nuclear employment strategy, the 2013
    report, is pretty clear. I hope our adversaries understand it,
    and American people do. It says we'll field nuclear forces to
    deter potential adversaries and ensure U.S. allies that they
    can count on America's security commitments. Does that
    represent your understanding? That's a quote from the report.
        Admiral Haney. Absolutely, Senator.
        Senator Sessions. You think that's important?
        Admiral Haney. Very important.
        Senator Sessions. I do, too. It also says we'll maintain a
    nuclear triad consisting of ICBMs, submarine-launched ballistic
    missiles, and nuclear-capable heavy bombers as the best way to
    maintain strategic stability at reasonable cost and hedge
    against uncertainty. That's one of the principles, also, in the
    report, is it not?
        Admiral Haney. It is definitely in the report, and it is
    been echoed by our leaders, Secretary of Defense Hagel,
    himself.
        Senator Sessions. I'm glad of that, because there's some
    discussion, there was some uncertainty about that, at least in
    my mind.
        Then it says we should maintain, ``a forward-based posture
    with nuclear weapons on bombers and fighter aircraft in support
    of allies and partners.'' That's in the report, also.
        Admiral Haney. Yes, Senator.
        Senator Sessions. Indeed, Secretary Hagel has said--and
    modernization is something, colleagues, that we really have to
    get serious about. Our adversaries are updating far more than
    we are, in many cases. He said, in January of this year, I was
    pleased to hear, ``The modernization of our nuclear stockpile
    is really important.'' He went on to say, ``We're going to
    invest in the modernization we need to keep the deterrent
    stronger than it's ever been. You can have my commitment on
    that.'' So, I thank Secretary Hagel, our former colleague,
    Senator Hagel, for making that clear statement.
        I hope that you will keep us informed as you move toward
    accomplishing this goal of the needs and challenges that you
    face. I believe Congress will respond to help you overcome
    obstacles, because it's just unthinkable that this nuclear
    system, that represents less than 5 percent of our budget, we
    don't do it in a way that meets all the goals that we have to
    meet as a Nation.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Sessions.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        General Alexander and Admiral Haney, thank you so much for
    your service.
        General Alexander, from what you've seen, what did we miss
    with Edward Snowden, in terms of how he got in the system, how
    he got information? When you look back at that, what happened?
        General Alexander. Senator, the issue that we missed here
    with Snowden, he was an IT specialist responsible for moving
    data from the continental United States to NSA Hawaii. In doing
    that, all the data that he was moving, he had access to. So,
    part one is, we needed a way of tracking what he did with that
    data. It was supposed to go to a common sharepoint server,
    which he was to maintain, which it did do. But at times, he
    would take that data off in a way that couldn't be seen by our
    sensors by the actions that he took.
        Part one, we trusted the IT folks that run our networks. We
    shouldn't have, in this case. Part two, we didn't have enough
    checks and balances on exactly where that information--we fixed
    both of those. We've come up with about 40 different internal
    fixes that will help fix this whole network and make it even
    more secure.
        I think it's depressing, from my perspective, that we have
    to look at defending our network from those who sit within it,
    that we have trusted. But, that's where we are and that's what
    we have to do, and that's what we're doing with the data that
    we have today. I think, for insider threats, we're fixing that
    with the way and the tools that we're putting in.
        Bottom line is, we trusted a person we should not have
    trusted.
        Senator Donnelly. Obviously, you've made changes. You've
    made significant changes. Do you have an ongoing group who are
    looking at other areas? For instance, you looked at, in effect,
    this chain. Do you have groups looking at other areas in
    regards to worst case scenarios and how to fix them? Where
    there might be holes.
        General Alexander. Sir, we have insider threat groups that
    are working within DOD, the Intelligence Community, NSA, and
    CYBERCOM. Four different sets of those, working and sharing
    ideas together. I think that's a great way to red-team this
    approach. We are cross-leveling those issues that we find, and
    working that. I think that has been very healthy and helpful.
        Senator Donnelly. One of the things I was wondering is, how
    do we prevent it in the future? Is that it? What else?
        General Alexander. I believe we could stop the Snowden of
    the future from doing what he did, the massive stuff. There
    will always be an issue with--we're going to have to trust some
    people with some level of information. We have to do that. That
    will be almost impossible to stop, that which you take in your
    mind and go out with. Those parts are going to be very hard.
    That's where I think what we do in the court system with
    individuals like this will be the key way of limiting or
    eliminating that type of action.
        I think we have to set a penalty system for doing this.
    But, that's for the courts and others to decide. From our
    perspective, what we're doing is, we're ensuring that people
    who touch the data, we can track, audit, and ensure that
    they're using it correctly, and at least identify who has done
    something, and quickly.
        Senator Donnelly. Have you taken a look at your vetting
    system of people who have access to this information?
        General Alexander. We have. We've adjusted that, in part.
    But, that's a very difficult one, especially where and when a
    process or a person changes the way they think about something.
    So, we are changing the review timelines from 5 years to 2
    years for different individuals, to make sure and to conduct
    more random checks.
        Senator Donnelly. Okay.
        In another area, you had mentioned about your belief in the
    importance of cyber legislation. When we looked at cyber
    legislation, a number of folks in the business community
    objected to the reporting requirements that would come up. How
    would you assess the level of cooperation between the private
    sector and your efforts in protecting the networks?
        General Alexander. Senator, there are two sets of issues.
    One is, given the current Snowden issues, many of the companies
    want to distance themselves, in part, but understand in the
    cyber area we have to work together, we have to share. We have
    to understand when they're under an attack.
        Ironically, we cannot see all of that. So, the issue is, if
    there is an attack, especially a destructive attack, the
    probability that that will get through is higher in the
    civilian infrastructure. So, we have to have a way of sharing
    signatures so they can detect and stop those, and tell us when
    they're coming so we can go see who's doing that. That's where
    FBI, DHS, NSA, and CYBERCOM all work together.
        Within the United States, I referred earlier with Senator
    Reed, I think that's something we want FBI and DHS to lead, not
    NSA. What we can do is provide the outside-in, telling you
    what's going on, who the adversaries are, and then, if the
    policymakers make decisions on what we can do, we have the
    tools and capabilities outside the country to take those
    actions, as appropriate.
        Senator Donnelly. One of the areas that is specialized in,
    my home State of Indiana at Crane Naval Warfare Center, is
    detection of counterfeit parts. I wanted to ask you, General,
    what confidence do you have in our ability to detect the
    counterfeit or deliberately subverted components? How are we
    going to strengthen our efforts to do that better in the
    future?
        General Alexander. Counterfeit parts, Senator, is a tough
    issue, so you have to approach it two ways. One is, where is
    the data going and what do we do with it? So, that gets you
    back to a defensible architecture, where it is the data, not
    the systems, that you want to take care of. I think that will
    help alleviate some of the concerns on these cloned or
    implanted parts that can do damage to our infrastructure.
        It is a tough area. We have done work on that. I could
    provide, in a classified session or statement, some insights to
    some of the things that we have done, identifying and
    remediating against those.
        Senator Donnelly. Okay.
        Then, Admiral, I didn't want you to feel left out here, so
    I had wanted to ask you--in regards to North Korea, what do you
    think is needed, if anything, to shore up our anti-ballistic
    missile system to mitigate the threats that are being rattled
    on a regular basis by North Korea? How do we make sure we're
    squared away there?
        Admiral Haney. Senator, as we look at North Korea as well
    as others, it's very important that we continue the work we've
    been doing in ensuring our MDS's reliability is the best it can
    be. With that is the whole mechanism of getting to the far left
    of the business. This includes getting the indication-and-
    warning part right, as best we can, all the way to the business
    of improving our MDS--first and foremost in our ability to
    sense things and discriminate, as well as the business of
    improving our kill vehicle.
        Senator Donnelly. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator Lee.
        Senator Lee. Thank you, Mr. Chairman.
        I thank both of you for your many years of distinguished
    service.
        General Alexander, we'll miss you and we have enjoyed
    working with you.
        Admiral Haney, what is your assessment of Russian and
    Chinese reliance on nuclear weapons? Specifically, do you think
    that those countries are more likely to increase or decrease
    their reliance on nuclear weapon systems as a deterrent in the
    coming years?
        Admiral Haney. Senator, clearly we monitor closely
    developments in those countries regarding their nuclear
    arsenal. It is clear to me that both of those countries have
    been involved and they have publicly announced their
    modernization programs and some of their strategies in a
    variety of their legs of their strategic nuclear capability. I
    will not speculate, in terms of the future, but clearly, in
    terms of what we've seen to date, we have seen a definite
    emphasis of having a credible capability by both countries
    mentioned.
        Senator Lee. One thing I'd like to know is how any of that
    changes, both with regard to those countries and possibly other
    countries, if we, as the United States, proceed with any plan
    to draw down our strategic weapons below the New START levels.
    How is that likely to deter other countries from increasing
    their own reliance on nuclear weapons, on either increasing or
    modernizing their nuclear weapon systems? Specifically, I'd
    like to know what, if any, evidence exists to suggest that our
    drawdown of our strategic weapons would have that kind of
    impact.
        Admiral Haney. Senator, first, I would say that it's very
    important, from my perspective, that we continue to work to
    have a credible, safe, secure, and effective deterrent. Those
    actions, within themselves, are what we are about and what we
    are on a journey of doing, including our own modernization
    programs, as discussed earlier during the hearing.
        The connective tissue, in terms of how other countries look
    at us, both from a deterrence and assurance perspective, are
    very important. But, I think, as they look at us today, they
    see us working very hard to ensure each part of our strategic
    deterrent is being cared for and that are being operated in a
    proper manner. Even as we go down to the agreed-upon treaty
    limits for New START treaty, each warhead, to system, to
    systems-of-systems that are associated with that, continue to
    remain a very effective arsenal to support our deterrence needs
    for the future.
        Going beyond those limits will require negotiations and
    verification mechanisms, and we'll have to look at the whole
    thing, including tactical nukes.
        Senator Lee. But, do we have any historical precedent that
    suggests that, as we draw down our systems, our nuclear
    arsenals--is there anything in our history, any historical
    evidence, to suggest that as we do that, other countries are
    less likely to be developing, increasing, or modernizing
    theirs? That would include consideration of countries like Iran
    or North Korea. In recent years, we have drawn ours down. So,
    on what basis could we conclude that continuing to draw ours
    down below the New START levels would likely deter other
    countries from continuing to move forward with their systems?
        Admiral Haney. The first amount of evidence really shows
    the amount of nuclear stockpile that has been reduced, both
    from the United States of America and from Russia, in terms of
    treaties that have been established over the years, including
    the New START treaty.
        Senator Lee. But, beyond Russia, can you point to anywhere
    else where that's had a deterrent effect on other countries?
        Admiral Haney. I won't, at this point, try to give a thesis
    that connects the dots there, because the intent of each and
    every country is their own internal business, and I would say
    that countries will look at the--not just the drawdown, they
    will look at what's in their strategic interests, and they will
    develop capability across various domains, including nuclear,
    to satisfy their needs.
        Senator Lee. Okay. If we don't have a thesis on that, we
    don't have any evidence, either.
        That does concern me, for the additional reason that, even
    with Russia, many of us here are very concerned with the fact
    that there have been reported violations by Russia of the
    Intermediate Range Nuclear Forces (INF) Treaty, dating all the
    way back to 2008. So, I'm interested in inquiring into your
    views, based on your perspective as the commander of our
    strategic forces, as to what the consequences are to our own
    national security when we have entered into a nuclear weapons
    agreement with a country--Russia--that's in violation of that
    agreement. Don't you think that that represents something of a
    threat to our national security?
        Admiral Haney. Senator, not just my command, STRATCOM, but
    our whole of government takes very seriously the treaties that
    are in place, and give that a lot of scrutiny, in terms of
    things. The treaties that we have, such as New START treaty,
    the goodness in those is a ``trust, but verify.'' The
    verification piece is very important. When I look at what--
    particularly, a goodness in the New START treaty is the--it
    allows for more transparency than just the number of
    verification looks both sides have per year, and they are
    ongoing today, even as we work toward those New START treaty
    limits.
        Senator Lee. Okay. I appreciate your response. I'd like to
    submit some more questions to you in writing but I'd just like
    to leave you with the thought that I am very concerned, and I
    believe I'm not alone in this, in saying that it's distressing
    to me that we could be talking seriously about drawing down our
    potential in this area, even below New START levels, without
    evidence that doing so is going to deter other countries from
    developing, increasing, modernizing their own forces. I really
    would like to see some evidence as to why we should believe
    that. That evidence certainly should extend beyond an
    indication that there has been some reduction by Russia,
    especially when Russia tends not to comply with its own
    obligations.
        Thank you.
        Chairman Levin. Thank you, Senator Lee.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        Thanks, to both of our witnesses.
        Admiral Haney, I'm sitting here realizing, as we're talking
    about the nuclear deterrent, I wrote my senior thesis on the
    nuclear deterrent. I'm not going to give you the exact year,
    but let me just say, Lyndon Johnson was President of the United
    States.
        What concerns me is that the premise of deterrence and
    mutually assured destruction assumes a state actor, a rational
    actor, and a non-suicidal actor. I'm wondering if we don't need
    to rethink the whole theory of deterrence when we're dealing
    with the potential, anyway, of nuclear capability in the hands
    of non-state actors who aren't particularly rational and who
    are, in fact, demonstrably suicidal. I don't expect you to give
    me a dissertation on this now, but I'd really appreciate some
    thought about the nuclear deterrent theory in an age of totally
    changed circumstances. Do you have any immediate thoughts?
        Admiral Haney. Senator, I will say, as you look at the
    cost-benefit kind of relationship in nuclear deterrence, and,
    as you articulated, the business of the intent of the actor,
    rationality of the actor is important, you look at strategic
    deterrence in terms of what capability a nation will have that
    can threaten the United States of America.
        Senator King. But, we might not even be talking about
    nations. I think that's one of the important points here. We're
    not necessarily--if Iran develops a nuclear capability or
    Pakistan or someone else, and they export it to al Qaeda,
    you're talking about 19 people on a tramp steamer headed for
    Miami.
        Admiral Haney. Yes, Senator, that's why--and coupled with
    having a strategic deterrent is just as important as our
    efforts that are ongoing in combating WMD. That part of the
    portfolio in the business is ongoing, too. You can't have one
    without the other in today's uncertain environment.
        Senator King. I'd like to suggest you might follow up on
    this question, in terms of how does the theory of deterrence
    apply in 2014?
        [The information referred to follows:]

        [Deleted.]

        Senator King. General Alexander, good to see you again.
    We've met in a lot of committee meetings. When is a cyber
    attack an act of war? Any ideas?
        General Alexander. I think that's a political decision, a
    policy-level decision. I think it comes down to what is the
    impact of such an attack?
        In cyber space, some of the attacks will be not observable
    and, therefore, not a big attack. It would almost be like a
    show of force. Think of it as a blockade. In cyber, you're
    going to have the whole spectrum that we have in the physical
    space now in cyber space, and I think we're going to have to
    learn.
        But, I would submit that if it destroys government or other
    networks to a point that it impacts our ability to operate,
    you've crossed that line. Now, that's a policy decision, not
    mine. What we would do is recommend where those lines are.
        I think those things that are less than that, that are
    blocking communications or doing something, think of that as
    the old jamming electronic warfare, now in cyber, probably less
    than, but it could get to an act where you want that to stop
    because of the impact it's having on your commerce.
        So, those are issues that, what we'll call the ``norms'' in
    cyber space, need to be talked to on the international level. I
    think that's one of the things that we push. I think the
    administration is pushing those norms. I think it has to go a
    lot further. People need to understand it. It gets back to some
    of the earlier discussions about, do we understand exactly what
    we're talking about here by ``norms'' in cyber space?
        Senator King. One thought is--and, Admiral Haney, this
    would be for you, as well--to think about the fact that we
    currently, I believe, have an asymmetric advantage in this
    area, given the capabilities that we have. Perhaps we should
    develop a deterrent concept with regard to cyber, ``If you mess
    with our networks, your lights will go off,'' to provide a kind
    of deterrence for this kind of activity, rather than waiting
    for them to take down the New York Stock Exchange or the gas
    pipeline system; to let the world know that we have this
    capability, and if people want to pursue this activity against
    us, they will be retaliated against in a way--and, indeed, the
    nuclear deterrent theory worked for 70 years. So, I just
    commend that to you as a possible American strategic statement.
        Mr. Chairman, I want to associate myself with the comments
    of Senator McCain. I've been now to a lot of hearings here and
    in SSCI that have focused on the necessity for cyber
    legislation. There was a major bill in 2012 that failed, and
    here we are, a year and a half later, every one of our
    witnesses has told us how important this is, how urgent it is,
    and yet, for reasons that I'm not entirely clear on, we aren't
    there yet. Maybe we need a select committee to iron out
    differences between other committees, Intelligence, Judiciary,
    Armed Services, whoever, to get this on the Senate floor.
        If we have an attack 2 or 3 months from now and we haven't
    done anything, we're going to look pretty dumb around here,
    because we've certainly had plenty of warnings in every one of
    these hearings. I think it's time that Congress acted. I don't
    think it's a particularly partisan issue. I hope that we can
    figure out a procedural way to move forward. I thought the
    suggestion Senator McCain made, made some sense, of putting
    together some kind of joint or select committee in order to do
    this.
        Final question. Admiral Haney and General Alexander, should
    CYBERCOM be elevated to a full unified combatant command? Are
    we at that stage in the evolution of this threat?
        General Alexander. I think we're getting towards that
    stage. What I would say right now, what we've done great with
    STRATCOM is set up the command, get the people trained. We're
    going to get to a point where you have enough forces, where I
    think unity of command, and the command and control between
    Secretary and the President directly to that, will make more
    sense. From an operational perspective, that's something that
    they will need to consider probably over the next year or so. I
    think, with those teams coming online, that goes great.
        I would just say, candidly, General Bob Kehler and Admiral
    Haney have been superb to work with, so it has not risen to an
    issue. I do get concerned that, if there is an attack, having a
    streamlined command-and-control from the White House to that
    command is going to be important, and you're going to want to
    have something like that. So, I think you're going to get to
    that over the next year or so.
        Senator King. I think the next Pearl Harbor is going to be
    cyber, and I certainly hope that we're going to be prepared,
    better prepared, than we were in 1941.
        Admiral Haney. Senator, as General Alexander has stated, we
    work, our two organizations, very closely together, and we
    recognize the speed of cyber. The one thing I would say
    connecting the dots to all of your questions--when we look at
    deterrence and our capability, sometimes we like to slice and
    dice it into one particular area versus the other. Our whole-
    of-government and our full military and national capabilities
    are what adversaries have to look at, in terms of deterrence at
    large. That can't be lost as we drill into specific areas. Even
    as we look at what command-and-control organization we have in
    the future, the real key will be how we interconnect all of our
    different areas together in order to prevent, deter, and, if
    deterrence fails, to get at it and win.
        Senator King. I appreciate that but again, given our
    asymmetric advantage in cyber, it seems to me that we are in a
    position now where we could use it as a deterrent to any of
    these kinds of activities.
        I appreciate your testimony, gentlemen.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator King.
        Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman.
        Thank you, General, for your service. I appreciate the many
    years that you have served to protect this country and our
    citizens.
        Welcome, Admiral Haney. It's good to see you. I appreciated
    having the opportunity just about a week ago to be back in
    Nebraska, and you were very kind, and we had a number of
    briefings there at STRATCOM, and I appreciate your taking the
    time to do that with me, and look forward to many more in the
    future, and congratulate you on your new command.
        You mentioned the defense of nuclear command-and-control
    networks from cyber attack. Can you talk more generally about
    the need that we have to modernize those systems?
        Admiral Haney. Senator, as we have talked before but in
    particular, when we look at strategic deterrence, the business
    of having both the correct sensing of the environment and the
    ability to move the information such that we have the
    appropriate command and control in a timely manner is critical.
    So, this is an area that we continue to work on, will continue
    to have investments. We have a strategy that we're working to
    move forward on. We have to stay on course, even with
    sequestration.
        Senator Fischer. A lot of times we focus on the hardware,
    on the platforms. We talk about the need to modernize warheads,
    the costs of our bombers and submarines. But, how are we going
    to communicate all this? What about our phone lines? What about
    the new building that's going up there in Bellevue, on Offutt?
    Can you talk a little about the importance of all that?
        Admiral Haney. Senator, I would say, in the command-and-
    control structure, what we count on is redundancy and
    reliability through a spectrum of different adverse
    environments. When you look at the different missions that
    STRATCOM has--I do thank Congress for their investment in the
    command-and-control complex that's being built, because our
    ability to command and control our forces as well as move
    information is important. This goes all the way to the forces,
    those folks in either alert facilities, bombers to submarines,
    all the way up to the President of the United States.
        Senator Fischer. We heard questioning from Senator Lee and
    then from Senator King about deterrence, and if it is
    effective. We still face threats from nations who have nuclear
    capability. So, I believe that that deterrence is extremely
    necessary. But, since we also face the threat from terrorists
    and from others, there's that natural tie-in with cyber
    security being necessary and making sure that our country is
    prepared in that respect as well.
        I know in the past there's been the talk about separating
    the two command authorities and the necessity of doing that. Do
    you think that's the way to go? In my conversations with
    General Koehler in the past, just looking at how it works and
    how we're able to make those decisions by one commander, I
    think leaving it under one command, maybe at this point but
    also in the future, makes sense, especially with our budgetary
    constraints. I would ask both of you--I know, General, you just
    spoke about possibly in a couple of years maybe separating
    them. But I would ask the Admiral's opinion on that as well.
        Admiral Haney. Senator, I think myself and General
    Alexander are in fundamental agreement that what we want to do
    is win in cyber, and we want the command-and-control structure
    that allows us to win, first and foremost. As we look at
    investments to be made, as General Alexander has spoken and
    discussed, it's most important that we build up our cyber
    capability, and that's the piece that's a priority for me as
    well. So as I look at investment dollars in the near-term, very
    important to build that capability. We may get to a point, at
    some point, where our national leaders fundamentally believe
    that that's the best organization, and to change structure, it
    has to be the structured to win.
        Senator Fischer. General, do you have any comments?
        General Alexander. I agree, and I think what Admiral Haney
    said is right on target.
        Just to help articulate one step further, let's say an
    action was going on in the Middle East that didn't yet get to
    the strategic. You also then have and want us to directly
    support that combatant command in those actions. We both do.
        The issue that I see that's really going to raise this is,
    cyber is more likely to be used in what we call phase zero. So,
    the continuity of command and control from phase zero to phase
    one is where I think we'll actually start to look at, how do we
    do this?
        From my perspective, what Admiral Haney put out there, the
    most important thing we can do right now is train and organize
    those teams. That's where we're focused. I do think this is
    something that we'll wrestle post my time here. I just put that
    on the table as a logical conclusion from my perspective from
    about a year, year and a half out.
        Senator Fischer. Thank you both very much.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Fischer.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman.
        To our witnesses, appreciate this important testimony.
        To open off with a question, really for both of you--
    Admiral Haney, you said the question of what is the right
    command structure is subsumed under the goal, which is, we want
    to win in cyber. Winning in cyber, I focus on our personnel. Do
    we have the personnel to win in cyber?
        Admiral Haney, in your testimony, you noted that plans call
    for 133 cyber mission teams manned by over 6,000 highly-trained
    cyber personnel by the end of fiscal year 2016. I'd like to
    have each of you talk about the challenges of the recruitment
    and training of these specialized cyber personnel in an economy
    where they have a whole lot of other options. Talk a little bit
    about that dimension of the challenge that we face.
        General Alexander. Senator, let me just start off. We are
    actually getting good feed from the Services in this area. By
    the end of this year, we'll probably be one-third of the way
    through, even with sequestration, in terms of bringing them on
    board and getting them into training seats. As you would
    expect, the training in these programs, depending on which
    position on the team they're going to, goes from anywhere from
    20- to 40-some weeks, plus. So, that's the key, if you will,
    the big problem that we have is getting them through that.
    That's 4,600 different course seats that we'll have had people
    in by the end of this year. So, the Services have done
    extraordinary work.
        In terms of hiring these people in, from my perspective,
    the young kids coming in, they want to do this. This is great,
    and they're great people. Some of our best operators in this
    space are the military personnel. We have to continue to do
    that.
        We need to look at how we encourage them to stay in the
    military. That's going to be incentive pay and things that
    we've talked to the Services about. But, my hat's off to the
    Service Chiefs who have helped push this in our Service
    components. I think, by the end of this year, where you see
    where we are, and if you have a chance to come up and see some
    of those teams in action, actually doing real-world missions,
    it's superb. It is exactly what our Nation needs them to do,
    both on the offensive preparation side and protecting our
    infrastructure.
        Admiral Haney. Senator, I have also watched and had an
    opportunity to chat with some of our cyber warriors, not as
    many touch points as I'm sure General Alexander has had. I
    often ask this question to them. What makes them stay on? It is
    being able to contribute to the mission that makes a
    difference, to a point, every time I've asked that question.
    I'm proud of each and every one of them and what they do.
        I will say, also, we focus a lot on that portion of the
    business, but there's also planning that goes on, associated
    with cyber, and that's integrated in terms of what our
    combatant commands do, geographically, across the globe, and
    that's the fusion of our capability, cyber with our other
    capabilities, that also make a difference as we go forward.
        Senator Kaine. I would expect that, within the cyber space,
    you have an interesting mixture of Active Duty military and DOD
    civilian personnel. Is that profile, the mixture of the
    Services and then civilian DOD, different in your cyber work
    than it is in other military missions?
        General Alexander. It's roughly the same, Senator.
        Senator Kaine. Okay.
        General Alexander. The Services approach it a little bit
    different. We gave them some different leeway. But, I think the
    key in the cyber civilian area--one of the things that we're
    looking at is how do we put all the team onto a same footing
    for their personnel system so that they're not disadvantaged,
    each in different ones. So, we have CCP, ISSCP, MIP, Service
    ones.
        Senator Kaine. Right.
        General Alexander. But, what you really want is them to be
    one team. So, how do we help them do that? That's something
    that we're looking at and, I think, a key point.
        Senator Kaine. Remind me that, earlier in 2013, when we
    faced sequestration, do different parts of your unit get
    affected differently, whether they were civilian, DOD, or
    Active Duty?
        General Alexander. That specifically was the problem. So
    many of them had to stand down or furlough on one side, because
    they were in one side of billets, while others were allowed to
    stay on because they were in a different set of billets, and
    then the military, yet different. So it did tend to separate
    and cause problems within the team that I would like to fix. I
    want them to think they're here for the good of the Nation as a
    cyber team. Erase those budget boundaries, if you would.
        Senator Kaine. General Alexander, there were some reports
    in February 2014, just recently, about Chinese People's
    Liberation Army in Shanghai and how they employ thousands of
    members specifically trained to conduct cyber attacks against
    critical infrastructure in the United States--power grid, gas
    lines, water works. Talk a little bit about that, if you would,
    just about the magnitude of the cyber effort underway in the
    People's Republic of China that you are basically trying to
    defend the Nation against every day.
        General Alexander. Senator, to get into details on that,
    I'd like to answer that in a classified setting, if I could. I
    would just tell you, you hit on the key parts. We have a lot of
    infrastructure--electric, our government, our financial
    networks. Look at all the ways--look at what happened to Target
    and others. So when you look at it, it covers the whole
    spectrum.
        We have to have a way--a defensible architecture for our
    country, and we have to get on with that. We have to look at
    how we take away from adversaries an easy ability to penetrate
    that--steal intellectual property, money, or other things. So,
    that's JIE, but JIE, where we give it out to others. I think we
    have to get with that.
        In terms of what China and other nations are up to, I'd
    rather answer that in a classified session so I don't make a
    mistake.
        Senator Kaine. Understood.
        Let me ask Admiral Haney a question. One of STRATCOM's
    ongoing tasks--and your testimony discusses this on pages 20
    and 21--is work on the Syrian chemical weapons disposal
    together with U.S. European Command (EUCOM) and the Defense
    Threat Reduction Agency (DTRA). There are some professionals
    and assets in Virginia that have been engaged in this. The Cape
    Ray is a Merchant Marine ship based out of Portsmouth that's
    currently in Rota, that has been involved in this. We have
    intelligence professionals at Ravana Station that have been
    involved through the Defense Intelligence Agency, as well. Talk
    a little bit about the work that STRATCOM does in this ongoing
    effort to rid Syria of one of the largest chemical weapons
    stockpiles in the world.
        Admiral Haney. Senator, this is obviously an ongoing effort
    that involves not just STRATCOM, but as mentioned, EUCOM, as
    well as the Organization for the Prohibition of Chemical
    Weapons. That piece, it's good to see the teamwork that's going
    on together with other allies and partners that are
    contributing to this mission. From a STRATCOM standpoint,
    working with our Strategic Command Center for countering WMD--
    that's also at the DTRA headquarters--has been instrumental in
    working to come up with a solution to rid ourselves of some of
    those chemical weapons by the facility that's built on Cape
    May, as you discuss. That's a good-news story, but that's part
    of the story in terms of the collective international effort
    that's ongoing in order to rid Syria of those chemical weapons.
        Senator Kaine. Right.
        Mr. Chairman, thank you.
        Chairman Levin. Thank you, Senator Kaine.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        General Alexander, I wish you well in retirement, but I
    wish you were not retiring. You've done a great job for our
    country, and I find you to be one of the most capable officers
    we have. I just want to let you and your family know how much I
    appreciate your service to our country.
        Now, having said that, could you describe in 30 seconds--
    and I think what Senators King and Kaine talked about, just
    boil it down, what could a major cyber attack do to the United
    States? What kind of damage could incur?
        General Alexander. I think they could shut down the power
    in the Northeast, as an example, Senator, shut down the New
    York Stock Exchange, damage data that's in the Stock Exchange,
    remove data, shut down some of our government networks, other
    government networks, impact our transportation areas. Those are
    some things.
        Senator Graham. Release chemicals?
        General Alexander. I think that would be harder. They could
    get into SCADA [Supervisory Control and Data Acquisition]
    systems.
        Senator Graham. Affect water supplies?
        General Alexander. Water supplies, right. They could do
    damage to that. They could do flows on rivers.
        Senator Graham. Would it cost us trillions of dollars?
        General Alexander. Potentially, especially in the financial
    sector.
        Senator Graham. Could it cost thousands of lives?
        General Alexander. It could.
        Senator Graham. You're telling us Congress hasn't given you
    and your colleagues the tool to deal with this threat. Is that
    fair to say?
        General Alexander. That's correct, Senator. We need a way
    to work with industry to understand this.
        Senator Graham. If all this could happen, and we could
    help, seems like we would. Do you agree with that?
        General Alexander. I agree, Senator.
        Senator Graham. When it comes to bipartisanship, I would
    allow Senator Whitehouse to write the bill. I've been in a
    bipartisan coalition with him. I think he's one of the smartest
    people in Congress who understands this issue.
        General Alexander. He's superb.
        Senator Graham. Isn't he? I mean, he really--I hate to say
    that about Sheldon, but he really----[Laughter.]
        I'll just limit it to cyber. I don't want to hurt him back
    home.
        Senator Inhofe. That would be more appropriate in closed
    session----[Laughter.]
        Senator Graham. Yes, probably. That's probably--you're
    right. You're right.
        So in your tent of sequestration, if we continue down the
    road of what we're doing to our military and our Intelligence
    Community, what kind of effect will that have on our ability to
    defend ourselves in your world, General Alexander?
        General Alexander. Senator, the key thing that it would
    impact is our ability to train and get these forces in. That's
    where I see the biggest impact. What happened last year when we
    had sequestration and furlough, it knocked out the training for
    about 6 weeks, which actually restarts a lot of that training.
        Senator Graham. On a scale of 1 to 10, how much capability
    would we be losing in your area if we allowed sequestration to
    be fully implemented?
        General Alexander. I'd have to go back to get an accurate
    answer on that.
        Senator Graham. Would it be catastrophic?
        General Alexander. It would be, in my opinion. I just don't
    know, Senator.
        Senator Graham. We'll give that a 10.
        Admiral Haney, if sequestration is fully implemented, what
    kind of effect does it have on your ability to modernize the
    force?
        Admiral Haney. Senator, if sequestration is fully
    implemented, it will have potentially disastrous impacts in
    terms of things. It really will be all up, in terms of the
    critical decisions that would have to be made, in terms of the
    money that is allocated and appropriated by this.
        Senator Graham. So let me see if I can summarize your
    testimony. If Congress continues on the path we have charted
    regarding sequestration, we'll have a catastrophic effect on
    the Intelligence Community, we'll have a dangerous effect on
    our ability to defend the Nation through strategic weaponry. On
    the cyber front, you've described a Pearl Harbor on steroids,
    and you're asking Congress to act. Let's just remember what's
    been said today, that we have to do something about
    sequestration, in my view; we need to do something on the cyber
    front.
        Now, let's get back to Senator King's questions, which I
    thought were very good, about the role of strategic forces. Do
    you agree with me that deterrence is one aspect of a strong,
    capable nuclear program to deter rational nation-states from
    engaging the United States? Is that still a viable concept in
    the 21st century?
        Admiral Haney. Yes, Senator, it is.
        Senator Graham. Do you agree with me that what Senator King
    said is true, people who embrace chaos and suicide will not be
    deterred. So, our goal, when it comes to terrorist
    organizations and rogue states who do not have a rational bone
    in their body, is to deny them the capability?
        Admiral Haney. That's correct, Senator.
        Senator Graham. Do you agree with me, General Alexander--
    this is where you come into play, big time--the idea of a
    nuclear device coming into the United States on a steamer with
    20 people on board is not a thing of novels. Is that a real
    threat?
        General Alexander. That's one of our great concerns,
    Senator.
        Senator Graham. Do you agree with me that that's one of the
    real things the NSA can do to help the country defend itself,
    to find that out before it happens?
        General Alexander. I do, Senator.
        Senator Graham. Prevention, denial, and interdiction. So we
    need to make sure that when it comes to rogue states, who will
    not act rationally when it comes to terrorist organizations,
    that we can have good intelligence, we can stop it before it
    starts.
        Now, when it comes to Iran, do you believe they're a
    rational nation-state, in terms of owning nuclear weapons?
    Would you feel comfortable with the Iranians having a nuclear
    capability?
        General Alexander?
        General Alexander. Senator, I would not.
        Senator Graham. Admiral Haney.
        Admiral Haney. I would not, as well.
        Senator Graham. Would one of your great concerns be that
    they would share that technology with a terrorist organization?
        General Alexander. Senator, that's part of my concern, and/
    or use it.
        Senator Graham. Either way, it's not a good outcome.
        Can you envision a circumstance if there's a deal struck
    with the Iranians, General Alexander, that allows them to
    enrich uranium, even at a small level? What's the likelihood
    that Sunni Arab states would want light capability?
        General Alexander. I think it's probable.
        Senator Graham. Could somebody actually ask the Sunni Arab
    world, ``What would you do if the United States agreed to allow
    the Iranians to enrich, at any level?'' Do you agree with me,
    Admiral Haney, that one of the nightmare scenarios for the
    world would be if you had enrichment programs over uranium all
    over the Middle East?
        Admiral Haney. Senator, I would agree and state that one of
    our aspects of deterrence and assurance is working to prevent
    just that.
        Senator Graham. I would end with this thought. If somehow,
    some way, the world sanctions an Iranian enrichment program,
    you have set the stage for the whole Middle East to becoming an
    enrichment zone, and God help us all, under that scenario.
        Thank you.
        Chairman Levin. Thank you, Senator Graham.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to thank both of you for being here and for your
    extraordinary service to the country. Thank you, General
    Alexander. You've done a wonderful job and have had to serve
    during very challenging times, so appreciate your service; and
    your service, as well, Admiral Haney.
        I wanted to follow up on the Iranian threat. Admiral Haney,
    when Director of National Intelligence (DNI) Clapper came
    before this committee last year, he said that the Iranians were
    working on two ICBM systems that would give them the capability
    of hitting the United States of America by 2015. Where are we
    on that threat, in terms of the Iranians' ICBM program and
    their capability of hitting the United States?
        Admiral Haney. Senator, I would really want to address that
    question in a more classified forum to get to the real details
    necessary to answer that question. But, the assessment to 2015
    remains, from my understanding.
        Senator Ayotte. So, DNI Clapper's public assessment last
    year of 2015 still stands at this point, from your
    understanding. I understand you don't want to get into the
    details of that in this setting.
        Admiral Haney. Yes, Senator.
        Senator Ayotte. One of the threats that obviously--Senator
    Graham asked you about the threat of perhaps the Iranians with
    their nuclear program, if it is permitted to continue--is to
    provide that technology to terrorist organizations. But,
    obviously, the ICBM threat is one that we would be concerned
    about as well to our country. Would you both agree?
        Admiral Haney. Yes, Senator.
        General Alexander. Yes.
        Senator Ayotte. We also faced, as we've talked about in
    this hearing, a threat from the North Korean ICBM capability as
    well, correct?
        Admiral Haney. Yes, Senator.
        Senator Ayotte. So, one of the issues that we have been
    discussing in this committee is the issue of a third missile
    site, an east coast missile site for protection of the east
    coast of the United States of America. In the defense
    authorization, we have asked for a contingency plan for that
    site. I wanted to get your sense of where that stood and how
    quickly, if we made the decision to go forward with an east
    coast site, would it take us to stand that up, in light of the
    fact that we're facing a potential threat of 2015 by the
    Iranians? You would agree with me that the east coast site
    would provide additional protection against that kind of
    threat.
        Admiral Haney. Senator, an east coast site will definitely
    provide additional capability against a threat to augment what
    we already have. But as we have discussed, fundamentally we
    have to invest in priorities order to work to get our sensing
    and discrimination right, as well as getting our kill vehicle
    also performing to specification. But the current system
    provides us some capability.
        Senator Ayotte. Some capability, but yesterday General
    Jacoby testified before the House Armed Services Committee, and
    he said that the third site, if you built it, would give us
    better weapons access, it would give us increased inventory and
    increased battlespace with regards to a threat coming from the
    Middle East. Those are the facts. So, you would agree with him
    on that, that this--if, in fact, we are facing an Iranian ICBM
    threat, in addition to further sensing and discrimination
    capabilities, this would be important, given the population
    centers we have--New York, Washington--to have that additional,
    as General Jacoby described it, increased inventory and
    increased battlespace.
        Admiral Haney. I agree 100 percent with General Jacoby on
    increased inventory and battlespace.
        Senator Ayotte. Are you working with General Jacoby on the
    contingency plan if this Congress makes the decision to go
    forward with that site so that we're ready to do it?
        Admiral Haney. We are working the planning associated with
    that.
        Senator Ayotte. Excellent. Thank you.
        How do you assess right now the threats that we face from
    North Korea--I know you were asked about it earlier, but where
    do you assess our ability, particularly--I know that we're
    adding the additional GBIs in Alaska, but how do you assess our
    ability to meet that threat as well at the moment? Where are we
    in installing those additional interceptors in Alaska?
        Admiral Haney. The work is ongoing for those additional
    interceptors to be complete by about 2016. But, there's other
    work that's ongoing across our missile defense apparatus.
    Things that we have done, for example, the THAAD capability
    that was placed in Guam, the work we're doing to get a second
    TPY-2 radar in Japan, business of upgrading our sensors, and
    the work to improve discrimination, all ongoing to help with
    this capability, including getting to the next test associated
    with our ground-based system.
        Senator Ayotte. That would be the next test, to ensure that
    the kill vehicles are properly working, given the prior tests
    and the assessment of those tests?
        Admiral Haney. That's correct, Senator.
        Senator Ayotte. So, one of the things that Senator Inhofe
    asked you upfront that I think is of concern to many of us is
    the modernization commitments that were made by the
    administration under section 1251 in conjunction with signing
    the New START treaty. Just to put it in simple terms, where are
    we? How do you assess the resourcing of those modernization
    commitments, both now in the current fiscal year 2014 budget
    context, and then going forward in particular on those
    modernization commitments? Obviously, if sequestration were to
    stay in place, that's one scenario. Then if you can give us a
    real sense of where are we on this? Because I remain deeply
    concerned that those commitments are not there at the level of
    resources that they should be, making sure that we have the
    modernization that needs to be done to our nuclear deterrent.
        Admiral Haney. Senator, the modernization efforts, some of
    which are definitely in progress and in a good place, some of
    the work that has been going, in terms of 3-plus-2 strategy
    associated with warheads, is moving forward. Clearly, there's
    had to be a prioritization of efforts and a relook at certain
    efforts to ensure affordability and cost-effectiveness. That
    piece is ongoing as well.
        Senator Ayotte. But as we look at this--these issues--I
    know my time is up, but the one thing I think of is what keeps
    you up at night in this position? Both of you. I think that's
    the most important thing we should be thinking of. What are you
    most worried about? We may not ask you the right question.
        Admiral Haney. My biggest concern right now is we're
    looking at the future, and particularly our ability to balance
    resources and be able to, at the same time, work to have
    credible capability across the spectrum in all the mission
    areas that I have responsibilities for as combatant command, in
    addition to the strategic nuclear deterrent, maintaining that
    in the safe, secure, and effective manner so as mentioned that
    our assurance prevents other countries from wanting to increase
    or go nuclear, in terms of capability.
        Senator Ayotte. I'm afraid to get this answer, General
    Alexander. What keeps you up at night?
        Please share that with us.
        General Alexander. Yes. There are two issues. We talked
    about cyber. So that's half of it. The other is in the
    terrorism area. I think the greatest concern that I have, both
    for our country and for Europe, is a terrorist attack that
    galvanizes some of these Islamic fundamentalists into a true
    fighting force that could hurt our Nation and Europe. I believe
    right now we don't have the proper footing, especially with our
    European allies, to stop that. We have to have a candid set of
    discussions, solve our own problems with business record FISA,
    and other things. But, we also have to deal with them to ensure
    that they're doing something similar to protect themselves.
        In the past, as the President pointed out, we do a lot to
    help protect them. Some of our capabilities have been impacted
    by these leaks. Our ability to stop it has gone down just when
    they're growing. Look at Syria, Iraq, all of that. I am
    concerned over the next 12 months something like that bad will
    happen.
        Senator Ayotte. Thank you both. Thank you for your service.
    We really appreciate it.
        Chairman Levin. Thank you very much, Senator Ayotte.
        Does anyone need a second round? [No response.]
        I'm going to withhold my questions for a second round.
    Instead, I'll be asking both of you some questions for the
    record, which we'll expect prompt answers on.
        Thank you, Admiral Haney and General Alexander. We will
    stand adjourned.
        [Whereupon, at 11:50 a.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Carl Levin
                           recent cheating incidents
        1. Senator Levin. Admiral Haney, last month, the Department of
    Defense (DOD) disclosed that upwards of 92 of 200 Intercontinental
    Ballistic Missile (ICBM) control officers at Malmstrom Air Force Base
    were either directly or indirectly involved in cheating on a monthly
    proficiency exam. On February 4, the Navy disclosed that upwards of 30
    of 150 naval reactor instructors were involved in cheating on a
    qualification exam at the Navy's training facility in South Carolina.
    What is your assessment of why these incidents happened, and what do we
    need to do to prevent similar problems in the future?
        Admiral Haney. Our service core values are the foundation to all we
    do as a joint military force--Integrity is one of these values and I
    expect both Navy and Air Force to properly investigate these issues and
    will work hand-in-hand with the Service investigations and the
    Secretary of Defense nuclear enterprise reviews. From the results of
    these investigations and reviews, we must then take appropriate actions
    to get this corrected.
        The Air Force and Navy are looking into the motivations to gain a
    better understanding to ensure we are approaching this issue from a
    readiness perspective. Our personnel, units, and leadership team must
    remain focused on operational readiness while we motivate our
    professional personnel to do the right things even when no one is
    looking. Testing is a good tool to evaluate checklist familiarity,
    situational awareness, and combat proficiency. While providing our
    professionals clear guidance on how to advance, not using test scores
    but assessing performance, excellence, and service.

        2. Senator Levin. Admiral Haney, has the incident at Malmstrom Air
    Force Base affected the readiness of the missile wing?
        Admiral Haney. No. This incident is not a reflection of the unit's
    combat capability and it's not a reflection of every individual's
    readiness. Following the incident, Air Force Global Strike Command and
    20th Air Force took immediate actions to validate the readiness of the
    ICBM crew force and determined it remains knowledgeable, capable, and
    competent. Every ICBM crew member was retested before their next alert.
    20th Air Force implemented tighter test development, control, and
    administration procedures. Our nuclear deterrent remains safe, secure,
    and effective.

                funding for nuclear weapons and delivery systems
        3. Senator Levin. Admiral Haney, the Congressional Budget Office
    (CBO) estimates that over the next 10 years the government plans to
    spend $156 billion to directly maintain and modernize our nuclear
    delivery systems of submarines, bombers, and missiles. If you include
    costs associated with the Department of Energy (DOE), associated
    command control systems, and historical cost growth, the number rises
    to $356 billion over 10 years. That is an incredible amount of money.
    Will you review the programs discussed in this report and report back
    to me on specific proposals to achieve efficiencies and savings?
        Admiral Haney. U.S. Strategic Command (STRATCOM) participates in
    ongoing DOD budget activities, as well as the interagency DOD/DOE
    review process, to identify efficiencies and savings as we modernize
    our nuclear complex. Our priority is maintaining a safe, secure, and
    effective deterrent and we are committed to working with Congress to do
    so in an efficient, cost-effective manner.

        4. Senator Levin. Admiral Haney, we were presented today with a
    chart from the Air Force Global Strike Command showing the funding
    profiles for the DOD nuclear forces out to 2050. This is an important
    chart in that it puts in perspective past funding and a rationale for
    the systems that require recapitalization in the future. Is it correct
    that this chart is illustrative in nature and not a firm budgeting
    document that DOD is required to use in specifying the Future Years
    Defense Program as found in 10 U.S.C. section 221?
        Admiral Haney. The specific chart is an illustrative picture and is
    not an official DOD budget document being used to determine future
    nuclear enterprise investments. DOD's best cost estimate for
    modernizing the nuclear triad over the next 10 years is detailed in the
    annual 1043 report. Cost projections beyond that time period have
    uncertainty as a number of nuclear enterprise modernization programs
    are still not defined.

         cost overruns at the national nuclear security administration
        5. Senator Levin. Admiral Haney, the prior STRATCOM Commander,
    General Kehler, repeatedly voiced concern on the ability to the
    National Nuclear Security Administration (NNSA) to support DOD's
    stockpile needs due to large cost overruns. Do you share similar
    concerns about the NNSA? If so, do you have any views as to what steps
    we could take to address this problem?
        Admiral Haney. The nuclear complex faces a substantive, multi-
    decade recapitalization challenge, and we must continue investing the
    necessary resources to maintain a safe, secure, and effective nuclear
    deterrent. If we do not commit to these investments and execute our
    programs as planned, we risk degrading our deterrent capabilities. With
    the oversight of the Nuclear Weapons Council, both DOD and DOE continue
    to work closely to refine the long-term nuclear stockpile sustainment
    strategy that maintains our deterrent capabilities while balancing
    resource and infrastructure demands.

                           protection of space assets
        6. Senator Levin. Admiral Haney, STRATCOM is responsible for
    coordinating the use of, and protecting, national security satellites.
    Press reports indicate that countries such as Russia and China have
    been aggressively developing anti-satellite capabilities. Do you
    believe we have adequate policy guidance and operational plans to
    protect our space assets from hostile actions by other countries?
        Admiral Haney. Yes--I am comfortable with existing policy,
    guidance, and authorizations, and will request assistance when (and if)
    required. I believe we are well-prepared to respond to the threat from
    potential adversaries today, but the space environment is becoming more
    contested, congested, and competitive, and our ability to respond must
    improve proportionally. New systems and technology upgrades are part of
    our threat response strategy, but in the interim, STRATCOM is taking
    action to optimize our space protection capability with a strategic
    review and update of our policy guidance and operational plans.
        STRATCOM continues to refine our space protection plans and policy
    to direct timely and appropriate responses to situations that would
    threaten our national security in space. This includes updates to
    operational procedures, by mission area and geographic region, to
    respond to the most likely and most dangerous threat scenarios. To
    bolster our space protection capability, we are leveraging
    international and commercial relationships that promote the safe and
    responsible use of space for all and provide for the common defense of
    ourselves and our partners.

                space and joint electronic warfare capabilities
        7. Senator Levin. Admiral Haney, DOD is vacating part of the radio
    frequency spectrum in an effort to free up more bandwidth for
    commercial providers. Important to this effort is its ability to obtain
    comparable spectrum in which to operate in. Are you familiar with these
    actions?
        Admiral Haney. Yes, I am familiar with the President's 2010
    Memorandum: ``Unleashing the Wireless Broadband Revolution,'' that
    directed the Secretary of Commerce and the National Telecommunications
    and Information Administration (NTIA) to collaborate with the Federal
    Communications Commission (FCC) to make available an additional 500 MHz
    of spectrum over the next 10 years for commercial wireless broadband
    service. I am also familiar with the subsequent Middle Class Tax Relief
    and Job Creation Act of 2012 that directs auction of 1695-1710 MHz, and
    the March 2013 FCC announcement of intent to also auction 1755-1780 MHz
    as early as September 2014.
        The current Unified Command Plan (UCP) assigns me as the advocate
    for both space and joint electronic warfare capabilities. Inferred in
    these responsibilities is inclusion of the electromagnetic spectrum-
    based requirements for these capabilities. Following announcement of
    the impending spectrum auction, the Services assessed system impacts
    resultant to the loss of specified spectrum, and STRATCOM provided an
    assessment of operational impact to the same focusing on spectrum for
    space operations and the necessity to allow continued electronic
    warfare training, testing, and evaluation. My concerns were addressed.
    One of the key aspects to DOD success in transitioning to alternate
    frequency bands is the appropriate and timely funding by the auction
    process for critical warfighter systems.
        While I have the responsibility for space and electronic warfare
    capabilities advocacy, I am aware of the impending 1755-1780 MHz
    auction impact to various other systems, such as the Air Combat
    Training Systems (ACTS) and the Precision Guided Munitions (PGM).
        Lastly, I have the responsibility to advocate for space and joint
    electronic warfare capabilities on behalf of the combatant commands,
    but I have not been assigned overall combatant command advocacy for
    electromagnetic spectrum use requirements.

        8. Senator Levin. Admiral Haney, as the combatant commander
    responsible for ensuring adequate spectrum for DOD assets, are you
    ensuring there is comparable spectrum to move to?
        Admiral Haney. Following announcement of the impending spectrum
    auction, the Services assessed system impacts resultant to the loss of
    specified spectrum, and STRATCOM provided an operational impact
    assessment focusing on spectrum availability for space operations and
    the requirement to continue electronic warfare training, testing, and
    evaluation. My concerns were addressed and incorporated into the DOD
    Alternative Proposal to mitigate spectrum sell-off impacts to
    operations. One of the key aspects to DOD success in transitioning to
    alternate frequency bands is the appropriate and timely funding by the
    auction process for critical warfighter systems.

             cyber intrusions into private sector computer networks
        9. Senator Levin. General Alexander, private companies, such as
    airlines and shipping companies, provide critical capabilities to
    support DOD force generation and deployment operations. DOD's annual
    Report to Congress on Military and Security Developments Involving the
    People's Republic of China said that China's computer network
    exploitation capabilities could be used ``to slow response time by
    targeting network-based logistics, communications, and commercial
    activities.'' How concerned are you that cyber intrusions into private
    sector computer networks could be exploited to degrade our response to
    an overseas contingency?
        General Alexander. [Deleted.]

        10. Senator Levin. General Alexander, DOD reporting requirements
    and agreements are largely focused on contractors reporting cyber
    intrusions that impact systems that contain or process defense
    information at the time of the compromise. Shouldn't we be concerned
    about cyber compromises of operationally critical contractors like
    airlines and shipping companies, even if DOD information isn't
    impacted?
        General Alexander. [Deleted.]

        11. Senator Levin. General Alexander, in addition to any immediate
    risk to DOD information, can't those compromises be used to collect
    intelligence about contractor networks or establish a foothold that
    could be exploited to impact DOD operations in the event of a
    contingency?
        General Alexander. [Deleted.]

                        accessing all telephone records
        12. Senator Levin. General Alexander, the President's Review Group
    stated on multiple occasions that the 215 program, contrary to many
    public reports, actually now only collects ``a small percentage of the
    total telephony metadata held by service providers.'' This observation
    was recently supported by a Washington Post story that quoted current
    and former government officials that less than 30 percent of all the
    calls made to, from, or within the United States are currently captured
    in the bulk collection program, due to dramatic growth in cell phone
    and Voice-Over-Internet-Protocol use that has outpaced National
    Security Agency's (NSA) handling capacity. In a statement, NSA
    confirmed that, ``it is correct to say that the growth in mobility data
    had affected the metadata program.'' What is your response to the
    Review Group's argument that the program cannot be considered as
    critical if the government has not taken steps to access more than a
    large fraction of the pertinent records, nor should negative queries
    provide reassurance of the lack of a domestic nexus to specific
    suspected terrorists?
        General Alexander. There needs to be a distinction made between the
    value of the program and whether it is ideally implemented. There have
    been a number of technical and cost issues that precluded optimal
    implementation of the program to date, which NSA has been addressing as
    it continues to improve implementation of the program to increase the
    likelihood of NSA detecting and helping to mitigate terrorist plots in
    the United States and abroad. That said, the program has been effective
    and of value even as it is currently operating. Even with incomplete
    information, NSA is able to make use of this substantial dataset.

        13. Senator Levin. General Alexander, if the records are left with
    the service providers, and the government under court order could
    demand responsive records as needed, would that eliminate the problem
    you seem to be having in keeping up with the volume of records,
    especially the mobile phone records?
        General Alexander. Leaving records at the service providers does
    reduce the problem of keeping up with the volume of call detail
    records. However, implementation must be performed with care to ensure
    that the agility to obtain timely results and link them across multiple
    providers is not lost.

                 cyber capabilities for the combatant commands
        14. Senator Levin. General Alexander, offensive military cyber
    operations outside of a recognized conflict region present many
    difficult policy issues, ranging from collateral effects, to the
    sovereignty interests of third countries, as well as what constitutes
    covert action versus a traditional military activity. In contrast,
    cyber operations that are confined to traditional military targets on a
    recognized battlefield present fewer concerns. The combatant commands
    are eager for cyber forces to contribute to their operational plans,
    but it is our understanding that little has been achieved to date to
    incorporate cyber capabilities into the combatant commands' operational
    plans. Have the force providers in the Services and defense agencies
    assigned appropriate priority to this aspect of the overall cyber
    mission?
        General Alexander. [Deleted.]

        15. Senator Levin. General Alexander, in your view, what is the
    potential for cyber forces to contribute to the success of traditional
    military operations?
        General Alexander. [Deleted.]
                                     ______

              Questions Submitted by Senator Kirsten E. Gillibrand
              roles of reserve and national guard in cyber mission
        16. Senator Gillibrand. General Alexander, the National Commission
    on the Structure of the Air Force recently released their findings,
    which highlighted the importance of the National Guard and Reserve in
    the U.S. cyber mission. Specifically, it noted that the Guard and
    Reserve were uniquely positioned, because of their part-time status, to
    attract and retain the best and the brightest in the cyber field.
    Additionally, the National Defense Authorization Act (NDAA) for Fiscal
    Year 2014 has directed DOD to look at the integration of the Guard in
    all its statuses into the cyber workforce. I have long agreed with this
    assessment, and introduced the Cyber Warrior Act which would establish
    National Guard cyber teams in each State to leverage this talent pool.
    In addition to the National Commission's review, I know that DOD is
    also looking at the role of the Reserve component in U.S. Cyber Command
    (CYBERCOM). Are there any initial findings from the NDAA-mandated
    report on CYBERCOM staffing, including regarding the role of the
    Reserve component, that you can share with me?
        General Alexander. No, not at this time.

        17. Senator Gillibrand. General Alexander, what is your vision for
    the roles of both the Guard and Reserve in CYBERCOM and within the
    distinct Service cyber elements?
        General Alexander. CYBERCOM envisions the Guard and Reserve will
    play a vital role in our cyber mission by working through the Services
    for the opportunity to leverage their civilian skill sets, the dual
    mission of the Guard, and the complementary nature of reservists to
    address specific needs, fill gaps, and provide a surge capability
    within the Active component.

              recruitment and acquisitions goals for cyber mission
        18. Senator Gillibrand. General Alexander, I want to be helpful to
    DOD in recruiting the best talent and acquiring the best tools for our
    cyber mission. What direction has been given to the Services regarding
    recruiting goals and priorities for individuals with skills and
    aptitudes relevant to the needs of CYBERCOM?
        General Alexander. The Cyber Mission Force (CMF) construct and the
    corresponding planning documentation, identifies the size and scope of
    the CMF, the associated knowledge, skills, and abilities required for
    the various work roles that make up the CMF, the schedule for manning
    the teams, and the work role priorities. Together, this information
    provides the Services with their targeted recruiting goals and
    priorities.

        19. Senator Gillibrand. General Alexander, in your opinion, what
    can Congress do to assist DOD in this effort?
        General Alexander. CYBERCOM continues to promote and support the
    Science, Technology, Engineering, and Mathematics (STEM) initiatives
    that encourage primary and secondary schools to incorporate math,
    science, engineering, and technology--particularly in the Computer
    Sciences--into their curriculums. The education of our next generation
    is critical to help make sure this force remains competent and
    relevant. In the short-term, providing CYBERCOM with the oversight
    authorities it needs to ensure that it can enforce common, joint
    architectural components to support both CYBERCOM strategic
    requirements and unique Service specific requirements is critical.
        We also have to build our deep bench. That means ensuring our young
    people have the skills they need to thrive in this mission space.

        20. Senator Gillibrand. General Alexander, what do you believe DOD
    needs in order to remain on the cutting edge of cyber defense?
        General Alexander. DOD requires trained and ready cyber teams that
    can take a more proactive approach rather than the reactive approach.
    DOD also requires a more defensible, data-centric architecture with
    cloud-enabled analytics, and a dynamic and reconfigurable network.
    CYBERCOM requires appropriate authorities to defend U.S. national
    interests in cyber space. Additionally, policy is required that clearly
    establishes roles and responsibilities across agencies that provide the
    authority to see and defend systems outside of the DOD Information
    Systems.

        21. Senator Gillibrand. General Alexander, as we plan for the NDAA
    for Fiscal Year 2015, what would you like to see us include in the
    bill?
        General Alexander. CYBERCOM defers to OSD on legislative proposals.

                         homeland security relationship
        22. Senator Gillibrand. General Alexander, you currently serve as
    both Commander of CYBERCOM, and Director, NSA/Chief, Central Security
    Service (CSS), giving you a unique perspective on the cyber debate.
    What do you think are our two most important cyber needs for the next 5
    years?
        General Alexander. Recently, I described to the House Armed
    Services Committee five key things we need to do without further delay,
    namely: promote a defensible architecture; develop a trained and ready
    workforce; pass cyber legislation that enables two-way, real-time
    information-sharing among and between private and public entities; set
    up a seamless cyber command and control structure from the President on
    down; and, build a common picture to strengthen our Nation's cyber
    security defenses.

        23. Senator Gillibrand. General Alexander, how will you incorporate
    cyber forces, especially in the National Guard, into our Homeland
    defense strategy?
        General Alexander. The CYBERCOM Guard Reserve office is diligently
    working with the National Guard Bureau and the U.S. Northern Command to
    develop a cyber space strategy framework that incorporates relevant
    portions of our Homeland defense strategy involving the protection of
    our Nation's critical infrastructure and key resources.

        24. Senator Gillibrand. General Alexander, please provide your
    thoughts on the relationship between the Department of Homeland
    Security (DHS) and DOD in terms of global cyber security roles and
    responsibilities.
        General Alexander. Global cooperation on cyber security is
    necessary to address the threat, build consensus on the norms of
    responsible conduct in cyber space, and address ongoing malicious
    activity. CYBERCOM strongly endorses the U.S. Government's team
    approach, leveraging all of our Homeland security, law enforcement, and
    military authorities and capabilities, which respectively provide for
    domestic preparedness, criminal deterrence and investigation, and
    national defense. As such, the Department of Justice (DOJ), DHS, and
    DOD each have specific, critical roles and responsibilities as part of
    the Federal whole-of-government effort to counter cyber threats.
    Moreover, all three departments are involved with private and
    international partners within their areas of responsibility, and
    whether their activities are at home or abroad, the departments support
    one another to address cyber issues. As with threats to the United
    States, our allies, and our interests in other domains, DOD has the
    mission to defend the Nation, to include the protection of national
    security systems. This responsibility logically extends to all domains,
    including cyber space. DHS is responsible for securing unclassified
    Federal civilian government networks and working with owners and
    operators of critical infrastructure to secure their networks through
    risk assessment, mitigation, and incident response capabilities. DOJ is
    the lead Federal department responsible for the investigation,
    attribution, disruption, and, and as appropriate, prosecution of cyber
    security incidents. As authorized by the President, and consistent with
    the law, DOD defends, deters, and takes decisive action in cyber space
    to defend national interests; supports DHS in Homeland security (i.e.,
    personnel, equipment, and facilities); and supports Federal agencies
    pursuant to the Defense Support of Civil Authorities process.

                           dynamic threat environment
        25. Senator Gillibrand. General Alexander, the dynamic nature of
    the cyber threat presents a unique problem in that we typically find
    ourselves in a perpetual game of catch-up, always chasing our
    adversary. As soon as one system fix is introduced, countless other
    vulnerabilities, some known, many unknown, become all the more
    magnified. How do you intend to address the continually morphing
    requirements distinct to the cyber threat facing both DOD and the
    United States as a whole?
        General Alexander. [Deleted.]

        26. Senator Gillibrand. General Alexander, what do you project as
    the main over-the-horizon cyber threat?
        General Alexander. [Deleted.]

        27. Senator Gillibrand. General Alexander, how do you weigh the
    threat emanating from state-level actors with the full strength of
    integrated offensive cyber programs versus non-state actors or lone
    hackers with a grudge?
        General Alexander. [Deleted.]

                                    training
        28. Senator Gillibrand. General Alexander, I appreciated your
    comments on the training our cyber warriors are receiving. I would like
    to hear more about the training capacity at the Service academies and
    in the current pipeline. Do you see room for improvement? If so, is
    there a need for additional authorities from Congress?
        General Alexander. Each Service Academy educates our future service
    and joint leaders slightly differently. There is always room for
    improvement, but we are especially pleased with the way the Naval
    Academy has embraced cyber-related education. One hundred percent of
    their graduates will receive at least two semesters of technical cyber
    education with a large percentage of them earning a STEM degree.

                            troop retention concerns
        29. Senator Gillibrand. General Alexander, since cyber is a
    relatively new field, it seems like the Services are not having any
    trouble recruiting talent at this point. However, the issue of
    retention is of concern to me. What are your recommendations for
    retention of these servicemembers across the total force?
        General Alexander. CYBERCOM remains engaged with each of the
    Services to address current and projected Active Duty requirements, as
    needed. This includes designating servicemember re-enlistment and
    career field bonuses for cyber career fields, along with associated
    Active Duty service commitments to assist with retention. Additionally,
    CYBERCOM continues to utilize civilian temporarily expanded hiring
    authorities and is in negotiation with the Air Force to expand the
    current internship program to include universities offering cyber-
    specific expertise. The National Guard and Reserves offer
    servicemembers the opportunity to continue contributing to the cyber
    mission in uniform after they have completed Active Duty service. We
    will continue to work with the Services to develop plans to integrate
    the National Guard and Reserves into the cyber domain, including
    recruitment and retention strategies for Reserve component members.

        30. Senator Gillibrand. General Alexander, do you believe that
    current retention strategies are useful to the cyber force, or should
    we be considering different strategies?
        General Alexander. While to date, overall retention has not been a
    concern strategically, we will continue to work with the Services to
    address assignment policies and career management for highly-technical/
    highly-trained cyber professionals with the desired result to maintain
    skill currency and utility. Strategies are still being developed/
    implemented, once implemented, retention rates will be monitored.

                         joint information environment
        31. Senator Gillibrand. Admiral Haney and General Alexander, in
    some of my conversations, I have heard that the Joint Information
    Environment (JIE) is a good idea, but there are some concerns about the
    challenges of implementing it effectively. What challenges do you see
    and what are you doing to address concerns about implementation?
        Admiral Haney. The JIE will transform the DOD Information Network
    (DODIN) into a defensible and operationally effective architecture by
    shifting the focus from protection of individual military Service-
    specific networks, systems, and applications to securing data and its
    uses. I support the JIE approach. Given these challenges, the threat,
    and the need for efficiency, we must move in this direction. I see
    three key challenges to JIE implementation.
        First, transferring responsibility and authority for network
    command, control, and security of an organization's operational network
    to a third party is a new paradigm. Second, DOD must leverage finite
    resources to design and implement JIE while continuing to operate and
    maintain the existing DODIN infrastructure. JIE will demand the
    involvement of some of our best technical experts even as we rely on
    these same people for current operations. Third, implementation of the
    JIE framework is being accomplished without a program of record and
    corresponding dedicated funding line. This intentional, strategic
    decision introduces a degree of complexity in maintaining alignment of
    the various IT acquisition programs across DOD, but the risk appears to
    be manageable and will allow the Services and combatant commands to
    retain control of their individual information technology budgets while
    providing capabilities that enable the entire enterprise.
        We are addressing these challenges through a combination of rapid
    capability implementation and optimization of existing governance
    constructs. We are leveraging the lessons learned from implementing JIE
    Increment 1 in U.S. European Command (EUCOM) and U.S. Africa Command
    (AFRICOM), streamlining development processes, minimizing the time
    required of our technical experts, and ensuring critical path
    activities minimize impact on DOD components. Additionally, in
    partnership with the DOD CIO, we are leveraging established governance
    forums to apply the collective expertise of the entire JIE team toward
    solving tough challenges and making informed decisions.
        General Alexander. The JIE will transform the DODIN into a
    defensible and operationally effective architecture by shifting the
    focus from protection of individual military Service-specific networks,
    systems, and applications to securing data and its uses. I support the
    JIE approach. Given these challenges, the threat, and the need for
    efficiency, we must move in this direction. I see three key challenges
    to JIE implementation. First, transferring responsibility and authority
    for network command, control, and security of an organization's
    operational network to a third party is a new paradigm that will be
    challenging to overcome. Second, DOD must leverage finite resources to
    design and implement JIE while continuing to operate and maintain the
    existing DODIN infrastructure. JIE will demand the involvement of some
    of our best technical experts even as we rely on these same people for
    current operations. Additionally, it will need to include the design
    and implementation of a strong security infrastructure. Third,
    implementation of the JIE framework is being accomplished without a
    program of record and corresponding dedicated funding line. This
    intentional, strategic decision introduces a degree of complexity in
    maintaining alignment of the various IT acquisition programs across
    DOD, but the risk appears to be manageable and will allow the Services
    and combatant commands to retain control of their individual
    information technology budgets while providing capabilities that enable
    the entire enterprise. We are addressing these challenges through a
    combination of rapid capability implementation and optimization of
    existing governance constructs. We are leveraging the lessons learned
    from implementing JIE Increment 1 in EUCOM and AFRICOM, streamlining
    development processes, minimizing the time required of our technical
    experts, and ensuring critical path activities minimize impact on DOD
    components. Additionally, in partnership with the DOD Chief Information
    Office, we are leveraging established governance forums to apply the
    collective expertise of the entire JIE team toward solving tough
    challenges and making informed decisions.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
              responding to fast-evolving cyber security landscape
        32. Senator Ayotte. General Alexander, in your testimony you state
    that persistent threats are the new normal and adversaries are
    continuing to ramp up investments and capabilities in penetrating our
    civilian and defense networks. At the same time, you note that--DOD
    network and the number of connected devices--and therefore potential
    vulnerabilities--are rapidly expanding. It is the nature of cyber
    security that we must always work just to avoid falling behind fast-
    advancing threats, and yet it doesn't appear that we are matching our
    resources to the growing threats. As we create cyber organizations and
    structures, it is important that we build them in an efficient manner.
    You said that since you arrived at Fort Meade in 2005, CYBERCOM has
    been building foundational systems that the military has never had
    before. What strategies are we employing to ensure that these
    foundational systems will be flexible enough to respond to changes in
    the cyber security landscape in the future?
        General Alexander. [Deleted.]

                need for modernization--impact of sequestration
        33. Senator Ayotte. Admiral Haney, in your prepared statement, you
    write that, ``The Nation faces a substantive, multi-decade
    recapitalization challenge [for our nuclear deterrent], and we must
    continue commensurate with the magnitude of the national resource that
    is our strategic deterrent. If we do not commit these investments, we
    risk degrading the deterrent and stabilizing effect of a strong and
    capable nuclear force.'' If sequestration runs its full course, what
    impact would sequestration have on our Nation's nuclear deterrent?
        Admiral Haney. The nuclear deterrent is a synthesis of dedicated
    sensors, assured command and control, the triad of delivery systems,
    nuclear weapons and their associated infrastructure, and trained ready
    people. If sequestration runs its full course, it will impact every
    element of our deterrent in several ways. Reduced funding will cause
    delays in modernization programs, force reductions in the workforce,
    and make it difficult to recruit and retain qualified personnel. The
    timing of sequestration is not inconsequential--it comes at a time when
    the nuclear enterprise is in dire need of investment. Quite simply,
    these impacts increase the risk to sustaining a viable, credible
    nuclear deterrent.
                    north korea threat to the united states
        34. Senator Ayotte. Admiral Haney, does North Korea currently
    possess an ICBM that can strike the United States?
        Admiral Haney. [Deleted.]

        35. Senator Ayotte. Admiral Haney, what parts of the United States
    could North Korea strike?
        Admiral Haney. [Deleted.]

        36. Senator Ayotte. Admiral Haney, does North Korea have the
    ability to strike Los Angeles?
        Admiral Haney. [Deleted.]

        37. Senator Ayotte. Admiral Haney, when, if not already, do you
    expect North Korea will have the capability to strike Los Angeles?
        Admiral Haney. [Deleted.]

                   ability to manufacture new nuclear weapons
        38. Senator Ayotte. Admiral Haney, do the Russians and Chinese have
    the ability to manufacture new nuclear weapons?
        Admiral Haney. [Deleted.]

        39. Senator Ayotte. Admiral Haney, does the United States have the
    ability to manufacture new nuclear weapons?
        Admiral Haney. NNSA is maintaining a safe, secure, and effective
    nuclear weapons stockpile primarily through reuse and refurbishment of
    legacy components during planned life extension activities. We are not
    currently manufacturing new nuclear weapons; however we do require a
    modernized nuclear enterprise infrastructure capable of producing
    nuclear weapons components to maintain the stockpile over the long-
    term. While interim production capabilities are projected to meet
    requirements over the next decade, we must actively pursue and fund
    long-term infrastructure production capabilities in order to sustain
    our deterrent.

        40. Senator Ayotte. Admiral Haney, does the United States need this
    capability?
        Admiral Haney. NNSA is maintaining a safe, secure, and effective
    nuclear weapons stockpile primarily through reuse and refurbishment of
    legacy components during planned life extension activities. We are not
    currently manufacturing new nuclear weapons; however we do require a
    modernized nuclear enterprise infrastructure capable of producing
    nuclear weapons components to maintain the stockpile over the long-
    term. While interim production capabilities are projected to meet
    requirements over the next decade, we must actively pursue and fund
    long-term infrastructure production capabilities in order to sustain
    our deterrent.

        41. Senator Ayotte. Admiral Haney, when will we have this
    capability?
        Admiral Haney. NNSA is maintaining a safe, secure, and effective
    nuclear weapons stockpile primarily through reuse and refurbishment of
    legacy components during planned life extension activities. We are not
    currently manufacturing new nuclear weapons; however we do require a
    modernized nuclear enterprise infrastructure capable of producing
    nuclear weapons components to maintain the stockpile over the long-
    term. While interim production capabilities are projected to meet
    requirements over the next decade, we must actively pursue and fund
    long-term infrastructure production capabilities in order to sustain
    our deterrent.

                          aerial refueling capability
        42. Senator Ayotte. Admiral Haney, how important is the Air Force's
    air refueling capability to the bomber leg of the nuclear triad?
        Admiral Haney. Aerial refueling tankers are a critical enabler of
    the triad's airborne leg and our survivable command and control system
    aircraft. Without aerial refueling, the B-52, B-2, and future bomber
    force cannot complete their assigned conventional or nuclear missions
    from continental U.S. bases. Tankers also provide a multi-role
    capability by carrying personnel and cargo in support of forward
    deployed bombers, as well as providing additional communications relay
    capability to the bomber force.

                 effects of additional nuclear arms reductions
        43. Senator Ayotte. Admiral Haney, the administration has suggested
    that it would like to pursue additional nuclear arms reduction beyond
    the reductions we are already undertaking under the new Strategic Arms
    Reduction Treaty (New START). Why is it necessary to pursue further
    reductions in U.S. and Russian strategic nuclear forces?
        Admiral Haney. I agree with the findings of the Nuclear Posture
    Review (NPR) that the United States and Russia have more nuclear
    weapons than necessary for stable deterrence. Thus, we have a potential
    opportunity to further enhance our security without undermining
    deterrence of potential adversaries or assurance of our allies.
    However, any such reductions would need to occur under a bilateral and
    verifiable construct.

        44. Senator Ayotte. Admiral Haney, what would be the effect on our
    nuclear deterrence and our country's security if we reduce our nuclear
    forces too low?
        Admiral Haney. [Deleted.]

        45. Senator Ayotte. Admiral Haney, how low is too low?
        Admiral Haney. The answer to the question, ``how low is too low,''
    is fully dependent upon the underlying geopolitical environment. Thus,
    I'm hesitant to speculate absent a description of the presumed
    environment.

            concerns remain about increased transparency with russia
        46. Senator Ayotte. Admiral Haney, in your written statement, you
    wrote about the importance that we ``collaborate with key allies and
    partners.'' You write about the importance of assuring our allies. You
    mention the `` . . . increasing risk that countries will resort to
    nuclear coercion in regional crises or nuclear use in future
    conflicts.'' You also wrote that, ``now more than 3 years old, New
    START has continued to contribute to the U.S. insight into Russia's
    nuclear forces and has contributed to increased transparency and
    predictability between our two nations.'' Yet, a New York Times article
    from January 29, 2014, titled, ``U.S. Says Russia Tested Missile,
    Despite Treaty,'' suggested that Russia may be in violation of the
    landmark 1987 arms control accord between our two countries, the
    Intermediate-Range Nuclear Forces Treaty (INF) by testing a new ground-
    launched cruise missile. The article goes on to say that ``American
    officials believe Russia began conducting flight tests of the missile
    as early as 2008.'' Have the Russians been transparent with you
    regarding testing a new ground-launched cruise missile?
        Admiral Haney. [Deleted.]

        47. Senator Ayotte. Admiral Haney, have you discussed this issue
    with our European allies?
        Admiral Haney. No, I have not had any discussion about Russia with
    any European allies.

        48. Senator Ayotte. Admiral Haney, do you agree with Mr. McKeon,
    who is the Chief of Staff for the National Security Staff and who is
    nominated by the President to be Principal Deputy Under Secretary of
    Defense for Policy, that the issue is not closed and that a violation
    of the INF would be very serious?
        Admiral Haney. I would like to restate the Department of State
    position that concerns remain over Russian compliance with the INF
    Treaty. Beyond that, I view any treaty compliance question with any
    state, not just Russia, as a potentially serious issue. Whether or not
    it is of military significance is dependent upon the scale and scope of
    the potential deployment, the underlying reasons why the capabilities
    that may be a violation are being pursued, and the approaches/options
    we have available to address it.
        I have and will continue to monitor this situation.
                                     ______

                   Questions Submitted by Senator Deb Fischer
                     dual-hat relationship of nsa/cybercom
        49. Senator Fischer. Admiral Haney and General Alexander, in
    December, the President chose not to split the current NSA/CYBERCOM
    relationship. A White House statement on the decision stated that,
    ``Without the dual-hat arrangement, elaborate procedures would have to
    be put in place to ensure that effective coordination continued and
    avoid creating duplicative capabilities in each organization.'' Do you
    agree with the President's decision?
        Admiral Haney and General Alexander. Yes, we absolutely agree with
    the decision to maintain the dual-hat relationship of NSA/CYBERCOM.
    That arrangement is essential to our ability to maximize DOD's cyber
    space capabilities and vital to our ability to execute cyber space
    operations at net speed. The dual-hat arrangement allows CYBERCOM and
    NSA to seamlessly synchronize, integrate, and coordinate their
    independent capabilities towards common objectives. It allows us to
    share information and capabilities more quickly, within DOD and with
    other U.S. Government agencies and departments, thereby increasing our
    overall awareness of events and activities in cyber space and reducing
    our response time to threats. This arrangement also allows us to share
    DOD's physical and virtual cyber space architecture, saving us the cost
    of developing two separate systems. Most importantly--to deconflict
    operations quickly and efficiently. By the very nature of the cyber
    space architecture, CYBERCOM and NSA operate in the same virtual space
    while conducting their operations. It is imperative that they
    synchronize their efforts to leverage the technical expertise of both
    organizations, avoid duplication of effort, and deconflict those
    missions in order to avoid fratricide or inadvertent compromise.

        50. Senator Fischer. Admiral Haney and General Alexander, why is
    the current relationship between NSA and CYBERCOM important?
        Admiral Haney and General Alexander. CYBERCOM relies to a great
    extent on NSA's cyber architecture and personnel to execute their
    assigned mission. Yes, we absolutely agree with the decision to
    maintain the dual-hat relationship. That arrangement is essential to
    our ability to maximize DOD's cyber space capabilities and vital to our
    ability to execute cyber space operations at net speed. The dual-hat
    arrangement allows CYBERCOM and NSA to seamlessly synchronize,
    integrate, and coordinate their independent capabilities towards common
    objectives. It allows us to share information and capabilities more
    quickly, within DOD and with other U.S. Government agencies and
    departments, thereby increasing our overall awareness of events and
    activities in cyber space and reducing our response time to threats.
    This arrangement also allows us to share DOD's physical and virtual
    cyber space architecture, saving us the cost of developing two separate
    systems. Most importantly--to deconflict operations quickly and
    efficiently. By the very nature of the cyber space architecture,
    CYBERCOM and NSA operate in the same virtual space while conducting
    their operations. It is imperative that they synchronize their efforts
    to leverage the technical expertise of both organizations, avoid
    duplication of effort, and deconflict those missions in order to avoid
    fratricide or inadvertent compromise.

        51. Senator Fischer. Admiral Haney and General Alexander, can you
    elaborate on the duplicative capabilities referenced in the above
    statement?
        Admiral Haney. In order to operate in the cyber domain, both
    organizations need expertise, tools, accesses, high-performance
    computing resources, situational awareness of friendly and adversary
    activity, and intelligence to identify potential adversaries, their
    tools, and their methods. Sharing such capabilities results in far
    lower costs than attempting to replicate them.
        That arrangement is essential to our ability to maximize DOD's
    cyber space capabilities and vital to our ability to execute cyber
    space operations at net speed. The dual-hat arrangement allows CYBERCOM
    and NSA to seamlessly synchronize, integrate, and coordinate their
    independent capabilities towards common objectives. It allows us to
    share information and capabilities more quickly, within DOD and with
    other U.S. Government agencies and departments, thereby increasing our
    overall awareness of events and activities in cyber space and reducing
    our response time to threats. This arrangement also allows us to share
    the DOD's physical and virtual cyber space architecture, saving us the
    cost of developing two separate systems. Most importantly--to
    deconflict operations quickly and efficiently. By the very nature of
    the cyber space architecture, CYBERCOM and NSA operate in the same
    virtual space while conducting their operations. It is imperative that
    they synchronize their efforts to leverage the technical expertise of
    both organizations, avoid duplication of effort, and deconflict those
    missions in order to avoid fratricide or inadvertent compromise.
        General Alexander. We don't view these capabilities as duplicative
    but rather as complimentary. In order to operate in the cyber domain,
    both organizations need expertise, tools, accesses, high-performance
    computing resources, situational awareness of friendly and adversary
    activity, and intelligence to identify potential adversaries, their
    tools, and their methods. Sharing such capabilities results in far
    lower costs than attempting to replicate them.

                                   launchers
        52. Senator Fischer. Admiral Haney, do you believe the limit of 700
    deployed ICBMs, deployed Submarine-Launched Ballistic Missiles (SLBM),
    and deployed heavy bombers provided in the New START treaty adequately
    meets U.S. deterrence needs for the current geopolitical environment?
        Admiral Haney. Yes, the force structure under New START meets U.S.
    deterrence needs for the current geopolitical environment.

        53. Senator Fischer. Admiral Haney, are you aware of any analysis
    supporting a substantial reduction of deployed ICBMs, deployed SLBMs,
    and deployed heavy bombers below the limit set by the New START treaty?
        Admiral Haney. I support findings of the NPR Follow-on analysis and
    the President's determination that we can safely pursue up to a one-
    third reduction in deployed nuclear weapons from the levels established
    in New START. Future nuclear reductions are possible provided they are
    done in a negotiated, verifiable manner that deters potential
    adversaries, maintains strategic stability, and assures our allies and
    partners. Any discussion or negotiation regarding lower levels should
    include both strategic and non-strategic nuclear weapons.

                       stratcom and cybercom relationship
        54. Senator Fischer. Admiral Haney and General Alexander, does
    CYBERCOM have the authority to fully execute its mission, or are
    changes to the current Unified Command Plan (UCP) necessary for its
    current operations?
        Admiral Haney and General Alexander. Yes, CYBERCOM has the required
    authorities to execute its assigned missions. The UCP 2011 assigns
    Commander, STRATCOM, eight specific responsibilities for cyber space
    operations, six of which Commander, STRATCOM, delegated to Commander,
    CYBERCOM. The two retained by Commander, STRATCOM, include advocacy for
    cyber space capabilities and integrating theater security cooperation
    activity, deployments, and capabilities that support cyber operations.
    CYBERCOM routinely engages STRATCOM and NSA both when mission
    requirements require additional authorities or responsibilities.
    Although CYBERCOM has sufficient authorities to conduct its current
    mission as authorized by the President, the Secretary of Defense, and
    the Director of NSA, we continue to advocate for additional missions to
    address growing threats, which would require additional authorities.
    Even though the sub-unified relationship is not optimal, it is
    functional.
                                     ______

                    Questions Submitted by Senator Roy Blunt
                     current command for cyber capabilities
        55. Senator Blunt. General Alexander, what is the current mission
    assignment demand for cyber capabilities or entities that are
    simultaneously focused on cyber security, information operations, and
    cyber intelligence; and what existing capacity or entities meet the
    current demand?
        General Alexander. [Deleted.]

                      air national guard and cyber threats
        56. Senator Blunt. General Alexander, the Air National Guard is
    currently proposing the elimination of over 50 percent of the Air Force
    capacity for cyber Red Teams. How do you propose to replace capacity--
    that took over 10 years to develop in some cases--considering that the
    demand for threat emulation is increasing?
        General Alexander. As we continue to build the CMF, there will be
    an increased need for threat emulation. The CYBERCOM Cyber Protection
    Teams contain cyber threat emulation as one of the five functions. Air
    Force Space Command continues to explore the possibility of increasing
    Air National Guard presence in the CMF.

                         cyber nsa-certified red teams
        57. Senator Blunt. General Alexander, given the increasingly active
    cyber warfare environment, have you expressed or plan to express NSA
    and/or combatant command requirements for cyber NSA-certified Red
    Teams?
        General Alexander. CYBERCOM manages a process called the Cyber
    Effects Request Form for all DOD elements to submit requirements for
    cyber space effects delivered by Red Teams, Blue/Hunt Teams, or any
    other Friendly Cyber Defense Force. DOD-certified Red Teams, via the
    STRATCOM and NSA-coordinated process, can support the mission.
    Additionally, there will be 68 Cyber Protection Teams by 2016 with Red-
    Team capability.

        58. Senator Blunt. General Alexander, please share current and
    planned NSA and/or combatant command requirements for NSA-certified Red
    Teams.
        General Alexander. As the CYBERCOM CMF come online, they will
    contain a Cyber Threat Emulation Team which performs a similar mission
    to the DOD Certification and Accreditation Red Teams, but with a
    smaller scope and range that will be defined by their Service/Command
    association. These teams will leverage the existing cryptologic
    architecture to the maximum extent possible. This will ensure maximum
    integration and utilization of other existing architectures comprised
    of infrastructures, platforms, systems, applications, and services,
    while allowing operations within the confines of appropriate
    authorities and preserving organizational equities. This implementation
    method will also provide vision and guidelines to combatant commands,
    Services, and agencies for the development of new architectures
    designed to fill capability gaps.

       executive order 13636: ``improving critical infrastructure cyber
                                   security''
        59. Senator Blunt. General Alexander, how do you propose--please be
    specific about current and planned initiatives--to fulfill Executive
    Order 13636, ``Improving Critical Infrastructure Cyber Security,''
    regarding cyber threat support for the private sector so that they may
    better protect and defend themselves against cyber threats?
        General Alexander. Over the course of the last year, NSA has been
    integrally involved with others in the interagency to fulfill the
    objectives of Executive Order 13636. In particular, NSA provided threat
    information and technical expertise to support the National Institute
    of Standards and Technology and others to develop and deliver the first
    iteration of the Cyber Security Framework in February and now actively
    partners with DHS to begin promoting adoption of the Framework by
    industry through the Voluntary Critical Infrastructure Cyber Security
    Program. NSA provides threat information to enable DHS, DOD, and other
    sector-specific agencies to properly assess sector risk by identifying
    critical infrastructure at the greatest risk. NSA supports expansion of
    the DHS-managed Enhanced Cyber Security Services program by providing
    classified signatures and mitigation measures to DHS for sharing with
    participating companies within all sectors. NSA also helps set the
    security requirements to ensure appropriate handling and implementation
    of threat signatures and mitigation measures provided to the companies
    through the Enhanced Cyber Security Services program. In addition, NSA
    continues to team with DHS and the FBI to attribute cyber threat
    indicators, and, when requested by a Federal agency, provides forensic
    and other technical support through that agency to enable better
    support to a critical infrastructure entity.
        NSA partnered with national cyber security centers within DHS, FBI,
    and DOD to develop the cyber security Information Sharing Architecture
    within the executive branch which is designed to enable rapid and
    secure sharing of cyber threat and incident information across the
    national cyber security centers.

        60. Senator Blunt. General Alexander, is there a current or planned
    initiative under Executive Order 13636 that includes information-
    sharing with the private sector on prevention measures identified by
    NSA-certified Red Team missions?
        General Alexander. As a standard practice conducted over the years,
    and one that is also responsive to Executive Order 13636, the NSA
    Information Assurance Directorate (IAD) regularly publishes documents
    on cyber defense best-practices and lessons-learned based on IAD
    operations, including Red Team and Blue Team activities. This material
    is made available to the public on the NSA IAD public website.
                                     ______

                    Questions Submitted by Senator Mike Lee
             continuation of the iranian ballistic missile program
        61. Senator Lee. Admiral Haney, an Iranian negotiator, Abbas
    Arachi, stated earlier this month that his country would not negotiate
    with the West on its ballistic missile program, and General Flynn of
    the Defense Intelligence Agency told this committee that Iran could
    have an ICBM by 2015. This is an issue that has not been addressed in
    the interim deal between the United States and Iran. Do you believe
    that continued progress of the Iranian ICBM program is a threat to the
    United States?
        Admiral Haney. Iran's progress on space launch vehicles--along with
    its desire to deter the United States and its allies--provides Tehran
    with the means and motivation to develop longer-range missiles,
    including an ICBM. We judge that Iran would choose a ballistic missile
    as its preferred method of delivering nuclear weapons. If Iran were to
    make progress toward developing an ICBM capable of delivering a nuclear
    or conventional warhead and with sufficient range to reach the
    continental United States, I would consider that a threat to the United
    States.

        62. Senator Lee. Admiral Haney, should an agreement in ICBM
    development be something that is addressed in the final agreement that
    we are negotiating with the Iranians?
        Admiral Haney. The nature and scope of what should be negotiated
    with Iran is beyond my purview.

                      future nuclear reductions of russia
        63. Senator Lee. Admiral Haney, the President plans to seek a
    future nuclear reductions agreement with Russia, who we know are
    modernizing their current nuclear arsenal and rely on their strategic
    and tactical weapons as the backbone of their defense and regional
    influence. What incentives currently exist for the Russians to
    negotiate for further reductions?
        Admiral Haney. Russian incentives could include reducing the cost
    of maintaining and modernizing their nuclear capabilities, improved
    regional security via reciprocal U.S. reductions, and continued
    progress towards meeting their Treaty on the Nonproliferation of
    Nuclear Weapons (NPT) agreed obligations. We will learn more about
    Russian desires as we continue the dialogue on these issues.

                      new start commitments and compliance
        64. Senator Lee. Admiral Haney, it has been over 3 years since the
    New START treaty was ratified. When will DOD make a decision on
    strategic force structure to comply with the Treaty and why has it
    taken so long to do so?
        Admiral Haney. Soon after New START entered into force, DOD
    developed an implementation plan to ensure the Nation would meet its
    Treaty obligations. This careful planning process ensured that
    decisions were well-informed and not made prematurely. As stated in the
    Secretary's April 2013 memorandum, a force structure decision will be
    made before fiscal year 2015 to ensure we remain on track to meet our
    New START commitments.

        65. Senator Lee. Admiral Haney, to what balance of SLBMs and ICBMs
    do you believe is the best strategic option for compliance under New
    START?
        Admiral Haney. The Treaty provides both parties the latitude to
    determine and adjust force structure as necessary to best meet their
    strategic deterrence goals and objectives. DOD's position for the
    deployed force, as submitted in the most recent report required by
    Public Law 112-81, section 1043, includes 240 SLBMs launchers, up to
    420 ICBMs, and up to 60 heavy bombers. This balance of forces is
    sufficient to execute our strategic deterrent mission.

                    cutting costs and improving efficiencies
        66. Senator Lee. Admiral Haney and General Alexander, funding for
    nuclear forces and weapons laboratories will only total 4 percent of
    national defense spending in 2014, and former Deputy Secretary of
    Defense, Ash Carter, stated in reference to nuclear weapons last year
    that, `` . . . it is not a big swinger of the budget. You don't save a
    lot of money by having arms control and so forth.'' However, no matter
    the size of a program, it should not be immune to finding areas where
    costs can be reduced. Can you talk about initiatives to cut costs and
    increase efficiency under your command, and what savings do you believe
    you can achieve with better practices?
        Admiral Haney. Following the Secretary's guidance, STRATCOM has
    fully participated in DOD-level activities to seek efficiencies and
    reduce cost. Our efforts over the past 3+ years included Secretary of
    Defense Efficiencies Review, UCP/Combatant Command Review, 20 percent
    headquarters reduction, and sequestration reductions. In addition to
    these externally-directed activities and budget reductions, we
    continually seek efficiencies, better practices, and conduct an annual
    review of all command resources to ensure our funding is aligned with
    DOD's priorities.
        General Alexander. STRATCOM equity only.

                          cyber attacks and terrorism
        67. Senator Lee. General Alexander, what is your assessment of the
    ability for terrorist organizations or lone wolf attackers to conduct
    cyber attacks on our military's infrastructure?
        General Alexander. [Deleted.]

        68. Senator Lee. General Alexander, deterring cyber attacks from
    non-state actors would be inherently different than deterring a state
    actor, so how is CYBERCOM working to deter these types of attacks?
        General Alexander. [Deleted.]

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            WEDNESDAY, MARCH 5, 2014

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

                                MILITARY POSTURE

        The committee met, pursuant to notice, at 9:36 a.m. in room
    SH-216, Hart Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, McCaskill,
    Hagan, Manchin, Shaheen, Gillibrand, Blumenthal, Donnelly,
    Hirono, Kaine, King, Inhofe, McCain, Sessions, Chambliss,
    Wicker, Ayotte, Fischer, Graham, Vitter, Blunt, Lee, and Cruz.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody.
        Secretary Hagel, General Dempsey, Secretary Hale, welcome.
    We thank you for joining us.
        We meet today to hear from you about the fiscal year 2015
    budget proposal for the Department of Defense (DOD). We do so
    at a time of extraordinary challenge and uncertainty for DOD
    and for the Nation.
        Members of this committee are well aware of the threats
    that face our military around the world today. From an
    unreliable partner in the President of Afghanistan, to a
    dangerous and unstable situation in Ukraine. From an al Qaeda
    resurgence in Syria and Iraq, to a new set of challenges in
    Asia and the Pacific Rim.
        Hanging over all those issues is a fundamental question,
    one that the budget proposal before us makes clear in stark
    terms. The question is whether the resources that we are
    providing to DOD are adequate to enable our military to meet
    its national security missions.
        The proposal before us makes reductions in force structure
    and compensation that will be difficult for many to support.
    These reductions were driven by the top line of the budget, a
    top line that Congress dictated when we enacted the Budget
    Control Act (BCA) of 2011 and reaffirmed, with minor relief for
    DOD and other agencies, in the Bipartisan Budget Act (BBA) that
    we enacted earlier this year. The top line of $496 billion
    established in law for the fiscal year 2015 military budget is
    unchanged from the funding level in fiscal years 2013 and 2014
    and remains more than $30 billion below the funding provided to
    DOD in fiscal years 2010, 2011, and 2012.
        Put simply, the spending caps included in that legislation
    seriously challenge our ability to meet our national security
    needs and to meet our obligation to protect and promote public
    safety, health, education, justice, transportation, the
    environment, and other domestic needs.
        The BCA cut $487 billion from the DOD budget over 10 years,
    and sequestration cut another $500 billion on top of that. The
    BBA that we recently passed means that we will partially avoid
    sequestration for 2014 and 2015, but only partially.
        While we have made some progress against the deficit, we
    have done so not by making the structural reforms to revenues
    and entitlement programs that would put us on a sound financial
    footing, but by continuing cuts to the funding that DOD and
    other Federal programs need to meet important national
    priorities. This shortfall requires painful tradeoffs in just
    about every area of DOD's budget.
        For instance, the budget proposes significantly lower end
    strengths for the ground forces, including a further reduction
    of 50,000 in Active Duty Army end strength, with smaller
    reductions in the Guard and Reserve. The budget restricts the
    pay raise for servicemembers below the rate of inflation,
    freezes pay for general and flag officers, begins a phased
    reduction in the growth of the housing allowance that will
    result in servicemembers paying 5 percent out-of-pocket for
    housing costs, reduces support to commissaries, and makes
    significant changes to the TRICARE benefit.
        The budget also calls for retiring the Air Force A-10 and
    the U-2 aircraft, inactivating half of the Navy cruiser fleet,
    reducing the size of the Army helicopter fleet by 25 percent,
    and terminating the Ground Combat Vehicle program.
        If sequestration budget levels remain in effect in fiscal
    year 2016 and beyond, DOD has informed us that it will request
    further reductions in end strength, the retirement of the
    entire KC-10 tanker fleet and the Global Hawk Block 40 fleet,
    reduced purchases of Joint Strike Fighters (JSF) and unmanned
    aerial vehicles, the inactivation of additional ships, reduced
    purchases of destroyers, and the elimination of an aircraft
    carrier and a carrier air wing. The argument for these cuts is
    that they are needed to pay for the restoration of some of our
    reduced readiness and protect the investments in technology and
    equipment that we need to ensure that our men and women in
    uniform will continue to be the best-prepared, best-equipped
    force in the world in a time of sharply reduced budgets.
        DOD has wisely chosen to increase its investment in the
    areas of cyber operations and special operations where our need
    for increased capability is most clear. DOD has also correctly
    recognized that while our military may need to be smaller, it
    must not be hollow, whatever its size. As the Acting Deputy
    Secretary of Defense told us last month, if we do not provide
    enough funding to supply our troops the latest technology and
    training that they need, we are doing them a disservice, and
    when we send them into harm's way, that disservice can quickly
    translate into a breach of trust.
        If we want to restore funding cuts proposed in the
    President's budget, we have two choices. We can raise the
    statutory funding caps or we can find other savings in the
    defense budget to pay for any proposed cuts that we do not want
    to make. The budget proposal itself takes the first approach
    with proposed spending above the statutory caps. This is the
    so-called Opportunity, Growth, and Security Initiative, which
    would provide an additional $56 billion of funding government-
    wide in fiscal year 2015, including an additional $26 billion
    for DOD.
        In addition, the Future Years Defense Program (FYDP)
    assumes that the caps established in the BBA established in law
    will be modified and that DOD will receive $115 billion above
    the statutory caps for the 4 years starting in fiscal year
    2016. We are also told that the administration has proposals to
    pay for these increases, but we have not yet seen the details.
        In addition to the many other program and budget issues
    that we need to address, we are interested in hearing more
    specifics from today's witnesses about proposed funding above
    the statutory caps, the $26 billion in the so-called
    Opportunity, Growth, and Security Initiative for fiscal year
    2015, and the $115 billion above the caps in subsequent fiscal
    years in the FYDP. We need to know how this additional money
    would be used to help restore more of our military readiness
    and what the consequences would be if Congress fails to provide
    those additional funds. While these additional funds would not
    fully offset the damage that sequestration spending caps have
    done, the added money would, hopefully, help make our looming
    collision with budget reality less damaging.
        Secretary Hagel and General Dempsey, the corner that the
    BCA has painted DOD into has forced you to make some difficult
    choices. We will, of course, scrutinize DOD's recommendations.
    I have no doubt that in some cases our choices will differ from
    yours, but that should not distract us from the larger issue,
    which is that the budget caps that are now in law provide DOD
    and, indeed, the entire Federal Government, with resources that
    are unequal to the mission that we expect you to carry out. I
    have not given up hope that we can, on a bipartisan basis, come
    to an agreement that will provide more adequate funding to meet
    our national security and other vital priorities.
        I would also ask you to comment as part of your opening
    statement on the current situation in Ukraine and to inform us
    and the public as to what your view is on these very rapidly
    unfolding events.
        We thank you and turn to Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        The recent events across the Middle East, Africa, and most
    recently Ukraine have brought into sharp focus the reality that
    President Obama seems unwilling to accept, that the tide of war
    is not receding. Instead, U.S. national security is being
    challenged in ways we have never seen before.
        During a recent trip that I made through Africa, Europe,
    and Afghanistan, I met with our troops, diplomats, and foreign
    partners. They all made clear that the global security
    environment they are facing is more volatile and complex than
    at any time in recent memory and growing more dangerous by the
    day. President Vladimir Putin's abrupt invasion of Ukraine last
    week only underscores this troubling reality.
        Director Clapper, the Director of National Intelligence
    (DNI), told this committee in February that: ``looking back
    over my now more than half century in intelligence, I have not
    experienced a time when we have been beset by more crises and
    threats around the globe.'' Yet, this administration's
    misguided budget priorities are robbing our military men and
    women of the tools they need to defend the Nation against
    growing threats. At a time when our national intelligence
    experts tell us that we face the most diverse, complex, and
    potentially damaging threats to our national security in
    history, we are poised to slash defense budgets by a trillion
    dollars during this decade.
        The results of these cuts have been devastating to our
    national security. The Navy is at a historically low level of
    ships. The Air Force is at the smallest in its history. Ground
    forces may fall to the level below the beginning of World War
    II. Readiness levels of remaining forces are plummeting, and
    commanders now use the term ``hollow'' to describe their
    ability to defend the Nation. Last October, General Odierno
    said that he had only 2 brigade combat teams out of 40 that
    were ready for combat.
        Secretary Hagel, you said just last week, ``American
    dominance on the seas, in the skies, and in space can no longer
    be taken for granted.'' I appreciate your honesty on that.
        Frank Kendall, the Under Secretary of Defense (USD) for
    Acquisition, Technology, and Logistics (AT&L) said, ``the U.S.
    military's technological superiority is being challenged in
    ways that I have not seen before.''
        Some in this town have accepted that gutting our military
    is necessary to rein in our growing debt. They could not be
    more wrong. Defense spending is not what is driving our debt
    crisis. Runaway entitlement spending is the real driver of the
    exploding national debt. The reality is that defense spending
    accounts for only about 16 percent of the annual spending,
    while entitlement spending accounts for more than 60 percent.
        Fiscal years 2014 and 2015 show that entitlement benefits
    are increasing 3 percent more, while our defense is going down
    from 17 to 16 percent. It is not getting any better, it is
    getting worse.
        Over the last 5 years, the President has repeatedly chosen
    to ignore the facts. Not once during his time in office has the
    President put forward a budget that proposed any meaningful
    reform to entitlement spending. Instead, he has consistently
    demonstrated that politics takes priority over our fiscal house
    and, far too often, it is our military's men and women who are
    paying the price.
        This year's budget is no different. In fact, the so-called
    Opportunity, Growth, and Security Initiative continues this
    troubling trend. It holds hostage necessary resources for our
    military that could be used to begin rebuilding readiness and
    capabilities for more domestic spending and higher taxes. That
    is irresponsible.
        What is being done to our military is not new. We have made
    this mistake before. The military drawdowns from the 1970s and
    the 1990s were more budget-driven follies intended to realize a
    peace dividend that proved to be short-lived. It left the
    country with a military too small to meet its ability and
    rising threats of a dangerous world. Each time, we did not
    realize the folly of these decisions until it was too late.
        Today, our forces are being asked to do more with less
    training, less equipment, and untimely and ultimately less
    capability. This budget lacks a realistic assessment of the
    increased risks on the battlefield and the increased risks our
    service men and women are forced to make. As we have all said
    many times, risk equals lives.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Secretary Hagel.

       STATEMENT OF HON. CHARLES T. HAGEL, SECRETARY OF DEFENSE;
    ACCOMPANIED BY HON. ROBERT F. HALE, UNDER SECRETARY OF DEFENSE,
                              COMPTROLLER

        Secretary Hagel. Chairman Levin, Ranking Member Inhofe,
    members of the committee, thank you for this opportunity to
    present our budget for fiscal year 2015 and to address some of
    the specific questions that Chairman Levin, as well as Ranking
    Member Inhofe, noted about what was behind a number of the
    decisions that we made as we prepared this budget and how we
    made those decisions.
        I appreciate being here today with General Dempsey. General
    Dempsey has been an integral part of our defense enterprise and
    this Nation's leadership. I have valued his counsel, his
    leadership, and his partnership. I appreciate his service to
    the country. I know this committee appreciates his leadership
    and service to the country.
        I also want to acknowledge Bob Hale, who is our current
    Comptroller, who will be involved in his last budget
    presentation after 5 years of very distinguished service to
    this country and DOD. I would tell you as Secretary of Defense,
    and I suspect my predecessors, Secretary Gates and Secretary
    Panetta, would say the same, Bob Hale has been an indispensable
    part of the process at a very difficult time. Bob Hale and his
    people have worked tirelessly and continued at a time that is
    probably as uncertain as we have been through, maybe anytime
    since World War II. When we talked about government shutdowns
    for 16 days, furloughs, budget uncertainty, and no budget, it
    has been his remarkable leadership that has helped us. I do not
    think I overstate Bob Hale's value to DOD and this country.
        As you suggested, Mr. Chairman, our focus today is on the
    fiscal year 2015 budget. Let me address generally the situation
    in Ukraine. I will then ask General Dempsey for his comments.
    General Dempsey and I, over the last few days, have both been
    in constant touch with our fellow ministers and Chiefs of
    Defense (CHOD) at the North Atlantic Treaty Organization
    (NATO), as well as Russia and Ukraine. In fact, today we are
    putting together a call for me with the new minister of defense
    for Ukraine. Over the last couple of weeks, I had conversations
    with the previous two ministers. General Dempsey spoke this
    morning with the Russian CHOD who expressed a number of points
    that I will let General Dempsey note.
        I spoke Saturday with the Russian Minister of Defense,
    Minister Shoigu, about this. We have also constantly been in
    touch, as I said, with our collaborators on our side of the
    Atlantic, allies, NATO partners in particular, on the issue.
        I was at NATO last week where I attended the regularly
    scheduled NATO ministerial. We took a few hours to meet with
    the NATO Ukraine commission. We had then the Deputy Minister of
    Defense of Ukraine with us and spent some time with him.
        Across the administration, our efforts, Mr. Chairman, have
    been focused on deescalating the crisis, supporting the new
    Ukrainian Government with economic assistance, and reaffirming
    our commitments to allies in Central and Eastern Europe. I
    strongly support the administration's approach to this
    deescalation. As you all know, Secretary Kerry was in Kiev
    yesterday. He is in Paris today. He is scheduled to meet with
    Russian Foreign Minister Lavrov today. There was a NATO meeting
    yesterday, another NATO meeting today. The Organization for
    Security and Co-operation in Europe (OSCE) has announced that
    it is sending 35 observers to Ukraine. The other forums that
    the United States is part of are also meeting. The U.N. has had
    one Security Council meeting. There, I suspect, will be more
    and other activities along the diplomatic and economic front.
        Earlier this week, I directed DOD to suspend all military-
    to-military engagements and exercises with Russia. In
    particular, that includes two trilateral exercises that we had
    scheduled with the Russians, one with the Canadians and the
    Russians, the other with the Norwegians and the Russians.
        Also this morning, DOD is pursuing measures to support our
    allies, including stepping up joint training through our
    aviation detachment in Poland, an area that I visited a few
    weeks ago, and augmenting our participation in NATO's air
    policing mission on the Baltic peninsula. Our U.S. European
    Command (EUCOM) Commander, General Breedlove, is convening
    Central and Eastern European CHODs.
        Mr. Chairman, I think everyone on this committee, in
    particular, I know Senator McCain was in Ukraine a few weeks
    ago, knows that this is a time for wise, steady, and firm
    leadership, and it is a time for all of us to stand with the
    Ukrainian people in support of their territorial integrity and
    their sovereignty. We are doing that. That, in particular, is
    what President Obama continues to do as we pursue diplomatic
    and economic options.
        I would like to, again, thank the committee, Mr. Chairman,
    for their role in this.
        Just another point about supporting the administration's
    approach to how we all are coming at this crisis. This economic
    package that we are proposing, as you all know, the OSCE has
    also proposed an economic package working with the
    International Monetary Fund (IMF), for Ukraine is a
    particularly important part of this, and we will continue to
    work those channels, as well as the diplomatic channels.
        Mr. Chairman, I think it is clear, as you and Ranking
    Member Inhofe had noted in your opening statements, that the
    events of the past week underscore the need for America's
    continued global engagement and leadership. The President's
    defense budget reflects that reality, and it helps sustain our
    commitments and our leadership at a very defining moment. I
    believe this budget is far more than a set of numbers and a
    list of decisions. It is a statement of values and priorities.
    It is a budget grounded in reality, and you noted some of that
    reality, Mr. Chairman, in your remarks. It is a reality that
    prepares the U.S. military to defend our national security in a
    world that is becoming less predictable, more volatile, and in
    some ways more threatening to our country and our interests, as
    was noted in Ranking Member Inhofe's statement. It is a plan
    that allows our military to meet America's future challenges
    and our future threats. It matches our resources to our
    strategy.
        It is also a product of collaboration. All of DOD's
    military and civilian leaders were included: the Chairman, Vice
    Chairman, Service Secretaries, Service Chiefs, all of our
    people. We value their leadership and their input. Our senior
    enlisted input was important.
        As we all know, America has been at war for the last 13
    years. As we end our second war of the last decade, our longest
    ever, this budget adapts and adjusts to new strategic realities
    and fiscal restraints while preparing for the future.
        This is not a business-as-usual presentation. It is a
    budget that begins to make the hard choices that will have to
    be made. The longer we defer these difficult decisions, the
    more risk we will have down the road, and the next DOD leaders
    and Congress will have to face more complicated and difficult
    choices.
        You have outlined in your statement, Mr. Chairman, some
    reflection of the kinds of cuts DOD has had to take over the
    last couple of years and what is out ahead of us. December's
    BBA, which you referenced, gave DOD some temporary relief. It
    gave us some temporary relief from sequestration, and it gave
    us some certainty for planning for a year. But it still imposes
    more than $75 billion in cuts over the next 2 years, and unless
    Congress changes the law, as you have noted, sequestration will
    cut another $50 billion starting in fiscal year 2016.
        The President's 5-year plan provides a realistic
    alternative to sequestration, projecting $115 billion more than
    current law allows. DOD requires additional funding to
    implement our updated defense strategy as outlined in the
    Quadrennial Defense Review (QDR). The strategic priorities
    articulated in the QDR represent America's highest security
    interests: defending the Homeland, building security globally,
    deterring aggression, and being ready and capable to win
    decisively against any adversary. The funding levels in the
    President's budget let us execute this strategy, with some
    increased risks in certain areas.
        I made clear in my much longer written statement, and it is
    quite clear in the QDR, what these risks are. We have not held
    back on the reality of these risks. These risks would be
    reduced, however, if Congress approves the President's
    Opportunity, Growth, and Security Initiative, a proposal that
    would provide DOD with an additional $26 billion in fiscal year
    2015, as you have asked the question, to improve readiness and
    modernization. That $26 billion represents an effort that would
    help dig us back out of the hole that we have been in the last
    2 years on readiness, particularly focused on modernization. My
    submitted statement, as I said, contains details of this
    initiative, which I strongly support.
        Although our 5-year budget plan exceeds sequestration
    levels, over the past year, DOD has prepared detailed planning
    for continued sequestration level cuts showing the even harder
    choices we would have to make in order to comply. Those too are
    laid out. Even though we are requesting spending levels above
    sequestration, we have maintained flexibility in our budget,
    flexibility to respond immediately to the lower top line,
    should sequestration be reimposed. We did this by reprogramming
    some of the sequestration-level force structure reductions that
    take longer to plan and longer to implement, such as the
    decommissioning of the aircraft carrier, the USS George
    Washington. This was the responsible thing to do. It was
    responsible, given the reality that DOD might continue to
    experience the large cuts in budget and sequestration laws
    because of going back, reverting to sequestration in 2016.
        That is why I have issued formal guidance to Service
    leadership, Mr. Chairman, that these specific reductions will
    not be made if Congress indicates it will make future
    appropriations at the top line levels in our 5-year plan. DOD
    has the responsibility to prepare for all eventualities, just
    as Congress has the responsibility to provide DOD with some
    budget predictability. My submitted statement explains our
    budget details and the rationale behind those key decisions.
        As I close, Mr. Chairman, I want to briefly address some
    very critical issues.
        First, the balance between readiness capability and
    capacity. To meet our national security needs under constrained
    budgets, we focused on the balance, the balance that will be
    required to defend this country going forward. After more than
    a decade of long, large stability operations, we traded some
    capacity to protect the readiness and modernization
    capabilities as we shift to focus on future requirements. These
    are shaped by enduring and emerging threats. We have to be able
    to defeat terrorist threats and deter our adversaries with
    increasingly modern weapons and technological capabilities. We
    must also ensure that America's economic interests are
    protected through open sea lanes, freedom of the skies and
    space, and deal with one of the most urgent and real threats to
    all nations, cyber attacks. That is why we protected funding
    for cyber and Special Operations Forces.
        For the Active Duty Army, Mr. Chairman, we propose drawing
    down to about 440,000 to 450,000 soldiers, less than 10 percent
    below its size pre-September 11. I believe this is adequate for
    future demand. We will continue investing in high-end ground
    capabilities to keep our soldiers the most advanced on Earth.
    Army National Guard and Reserve units will remain a vibrant
    part of our national defense and will draw down by 5 percent.
    It will also streamline Army helicopter force structure by
    reducing the Guard's fleet by 8 percent. The Active Army's
    fleet will be cut by 25 percent, but we will still maintain and
    keep these helicopters modernized with the latest technology as
    we move from a fleet of seven models to four.
        These decisions, including our recommendation to trade out
    Apaches in the Guard for Blackhawks, were driven by strategic
    evaluations. Guard units may prefer the Apache, but under the
    constrained budgets, high-demand resources like Apaches must be
    where they can deploy fastest. As our U.S. Northern Command
    Commander recently testified, his Homeland missions do not
    require armed attack helicopters.
        The Navy, for its part, will take 11 ships out of its
    operational inventory, but they will be modernized and returned
    to service with greater capability and longer life spans.
        The Marine Corps will continue its planned drawdown to
    182,000, but will devote 900 more marines to increased embassy
    security. Though smaller, the marines will remain ready and
    postured for crisis response as they move back to their
    expeditionary amphibious roots.
        The Air Force, as you have noted, will retire the A-10,
    replacing it with more modern and sophisticated multi-mission
    aircraft, like the JSF.
        The specific numbers and reasons for all of my
    recommendations, as I have noted, are included in my statement.
        As I close, Mr. Chairman, regarding compensation reform,
    taking care of our people means providing them with both fair
    compensation, as well as the training and tools they need to
    succeed in battle at any time, anywhere, and return home
    safely. To meet those obligations under constrained budgets and
    achieve that balance, we need some modest adjustments to the
    growth in pay and benefits. All these savings will be
    reinvested in training and equipping our troops. There are no
    proposals to change retirement in this budget.
        Let me clarify what these compensation adjustments are and
    what they are not.
        First, we will continue to recommend pay increases. They
    will not be as substantial as in past years, but they will
    continue.
        Second, we will continue subsidizing off-base housing
    costs. The 100 percent benefit of today will be reduced, but
    only to 95 percent, and it will be phased in over the next
    several years.
        Third, we are not shutting down any commissaries. We
    recommend gradually phasing out some subsidies but only for
    domestic commissaries that are not in remote locations. Since
    commissaries will continue to operate tax- and rent-free, they
    will still be able to provide more people with a very good
    deal, as they should.
        Fourth, we recommend simplifying and modernizing our three
    TRICARE systems by merging them into one TRICARE system with
    modest increases in co-pays and deductibles that encourage
    using the most affordable means of care. Active Duty personnel
    will still receive health care that is entirely free. This will
    be more effective, more efficient, and will let us focus more
    on quality. Overall, everyone's benefits will remain
    substantial, affordable, and generous, as they should be.
        The President's defense budget is responsible. It is
    balanced and it is realistic. It supports our defense strategy,
    defends this country, and keeps our commitments to our people
    not only ensuring that they are well-compensated, but they have
    the best training and equipment in the world.
        However, these commitments would be seriously jeopardized
    by a return to sequestration-level spending. My submitted
    testimony details how sequestration would, in fact, compromise
    our national security. The result of sequestration-level cuts
    would be a military that could not fulfill its defense
    strategy, putting at risk America's traditional role as a
    guarantor of global security and ultimately our own security.
    That is not the military the President and I want for America's
    future. I do not think that is the military this committee
    wants for America's future, but it is the path we are on.
        Mr. Chairman, members of the committee, DOD leaders and I
    look forward to working with you as we make these difficult
    choices, these hard decisions that will be required to ensure
    America's security today and into the future and protect our
    national interests.
        Mr. Chairman, thank you.
        [The prepared statement of Secretary Hagel follows:]
                     Prepared Statement by Hon. Chuck Hagel
        Chairman Levin, Ranking Member Inhofe, members of the committee:
    thank you for the opportunity to be here today.
        The President's fiscal year 2015 budget submission for the
    Department of Defense (DOD) fully reflects the historic transition
    taking place as America winds down the longest war in its history. This
    is a defining budget that will begin adapting and reshaping our defense
    enterprise for years to come.
        With this budget, we are repositioning the military for the new
    strategic challenges and opportunities that will define our future: new
    technologies, new centers of power, and a world that is growing more
    volatile, more unpredictable, and in some instances more threatening to
    the United States. We are also helping navigate through a period of
    great uncertainty regarding the future level of resources DOD will have
    to defend the Nation.
        I have no illusions about the fiscal realities facing DOD. It was
    almost exactly 1 year ago that $37 billion in sequestration cuts were
    imposed for fiscal year 2013--cuts that came on top of the $487
    billion, 10-year defense spending reductions required by the Budget
    Control Act of 2011.
        We had to implement this $37 billion cut in a matter of months
    while trying to avoid catastrophic damage to national security. It
    wasn't easy, and our people and our mission suffered for it.
        Today, DOD is in a better place as a result of the Bipartisan
    Budget Act passed in December 2013. It provided DOD with some relief in
    this fiscal year and for fiscal year 2015. It gave us much-needed
    budget certainty for the next fiscal year.
        The Bipartisan Budget Act was possible because Members of Congress
    both Republican and Democrat worked together with this administration
    for the greater interests of our country.
        But we're not yet where we need to be. So our partnership must
    continue.
        Under the spending limits of the Bipartisan Budget Act, DOD's
    budget is roughly $496 billion in fiscal year 2014--or $31 billion
    below what the President requested last year. The law also meant
    cutting DOD spending in fiscal year 2015 to $496 billion, which is $45
    billion less than was projected in the President's budget request last
    year. Sequestration-level cuts remain the law for fiscal year 2016 and
    beyond.
        The President's budget request adheres to Bipartisan Budget Act
    spending limits for fiscal year 2015. But it is clear that under these
    limits the military will still face significant readiness and
    modernization challenges next year. To close these gaps, the
    President's budget also includes an Opportunity, Growth, and Security
    Initiative. This initiative is a government-wide proposal that is part
    of the President's budget submission. It would provide an additional
    $26 billion for the Defense Department in fiscal year 2015.
        These additional funds are paid for with a balanced package of
    spending cuts and tax reforms, and would allow us to increase training,
    upgrade aircraft and weapons systems, and make needed repairs to our
    facilities. The money is specifically for bringing unit readiness,
    equipment, and facilities closer to standard after the disruptions and
    large shortfalls of the last few years. I strongly support the
    President's proposal.
        Defense budgets have long included both a 1-year budget request,
    and a 5-year plan that indicates expectations for the future. Over 5
    years, the President's plan projects $115 billion more in spending than
    at sequestration levels.
        Some have asked why the President continues to request budgets
    above sequestration levels. The reason is clear. President Obama and I
    are not going to ask for a level of funding that would compromise
    America's national security interests. We never would. Continued
    sequestration cuts would compromise our national security both for the
    short and long term.
        That said, if sequestration returns in fiscal year 2016 and beyond,
    or if we receive funding levels below the President's request, we are
    prepared to specify the cuts we would have to make, and the risks we
    would then have to assume. These cuts are detailed in this testimony.
        However, the President, the Chairman, and I do not expect Congress
    to push us further down a path that has clear risks to our national
    security. Instead, we expect that all of us can continue working
    together, as partners, to find a balance . . . and to assure America's
    national security. If Congress is going to require us to operate under
    increasingly constrained budgets, Congress must partner with us so that
    we can make the right decisions.
        The President's budget matches resources to the updated defense
    strategy in this year's Quadrennial Defense Review (QDR), which is
    being released this week and which builds on the President's January
    2012 Defense Strategic Guidance. The QDR is not budget-driven; rather,
    it is resource-informed, defining the risks assumed under the
    President's budget as well as the risks that would be assumed under the
    return of sequestration. A QDR that completely ignores fiscal realities
    would be irrelevant.
        The QDR outlines our top strategic priorities, which weighed
    heavily on the choices presented in this budget:

             Defending the homeland against all threats;
             Building security globally by projecting U.S.
            influence and deterring aggression; and,
             Remaining prepared to win decisively against any
            adversary should deterrence fail.

        By prioritizing DOD's strategic interests, we will rebalance our
    military over the next decade and put it on a sustainable path to
    protect and advance U.S. interests and America's global leadership.
        To fulfill this strategy DOD will continue to shift its operational
    focus and forces to the Asia-Pacific, sustain commitments to key allies
    and partners in the Middle East and Europe, maintain engagement in
    other regions, and continue to aggressively pursue global terrorist
    networks.
        As a whole, this budget allows DOD to implement the President's
    defense strategy, albeit with some increased risks, which I specify
    later in my testimony.
        The reality of reduced resources and a changing strategic
    environment requires us to prioritize and make difficult choices. Given
    the uncertainty about funding levels, our current 5-year plan reduces
    selected end strengths and forces to levels consistent with
    sequestration-level cuts. Those additional reductions could be reversed
    if funding rises above sequestration levels. I explain this in greater
    detail later in my testimony. The way we formulated our budget gives us
    the flexibility to make difficult decisions based on different fiscal
    outcomes.
        budget top-lines: balancing readiness, capability, and capacity
        Consistent with the strict spending limits of the Bipartisan Budget
    Act, President Obama is requesting $495.6 billion for DOD's fiscal year
    2015 base budget. Since last year's plans expected $541 billion for
    fiscal year 2015, this represents a $45 billion cut. It will allow the
    military to protect U.S. interests and fulfill the updated defense
    strategy--but with somewhat increased levels of risk. DOD can manage
    these risks under the President's fiscal year 2015 budget plan, but
    risks would grow significantly if sequestration-level cuts return in
    fiscal year 2016, if proposed reforms are not accepted, and if
    uncertainty over budget levels continues.
        In formulating this budget, our priority was balancing readiness,
    capability, and capacity--making sure that whatever size force we have,
    we can afford to keep our people properly trained, equipped,
    compensated, and prepared to accomplish their mission. That's the only
    reasonable course under constrained budgets. There's no point in having
    a larger military if you can't afford to keep it ready and capable.
        Accordingly, a little more than two-thirds of DOD's fiscal year
    2015 budget--$341.3 billion--funds our day-to-day costs, what a
    business might call their operating budget. These funds pay for things
    like fuel, spare parts, logistics support, maintenance, service
    contracts, and administration. It also includes pay and benefits for
    military and civilian personnel, which by themselves comprise nearly
    half of the total budget.
        The remaining third of our budget--$154.3 billion--pays for
    investments in future defense needs, or what a business might call
    their capital improvement budget. These funds are allocated for
    researching, developing, testing, evaluating, and ultimately purchasing
    the weapons, equipment, and facilities that our men and women in
    uniform need to accomplish their mission.
        Broken down in a more specific way, our budget includes the
    following categories:

             Military pay and benefits (including health care and
            retirement benefits)--$167.2 billion, or about 34 percent of
            the total base budget.
             Civilian pay and benefits--$77 billion, or about 16
            percent of the total base budget.
             Other operating costs--$97.1 billion, or about 19
            percent of the total base budget.
             Acquisitions and other investments (Procurement;
            research, development, testing, and evaluation; and new
            facilities construction)--$154.3 billion, or about 31 percent
            of the total base budget.

        Those figures do not include funding for Overseas Contingency
    Operations (OCO) in fiscal year 2015. Since the administration is still
    determining its post-2014 presence in Afghanistan and the President of
    Afghanistan has yet to sign the Bilateral Security Agreement, the
    President's budget currently includes a placeholder for DOD's OCO
    request, equal to last year's request. I appreciate Congress'
    understanding that OCO funding is particularly important to our
    servicemembers deployed around the world, and request that it be
    approved expeditiously once the President submits his complete OCO
    funding request for fiscal year 2015.
                              being more efficient
        But first, asking taxpayers for half a trillion dollars means that
    DOD must make every dollar count--particularly under budget
    constraints. So we're continuing to find new ways to use our resources
    more wisely and strategically, be more efficient, reduce overhead, and
    root out waste, fraud, and abuse.
        This year, a new package of reforms in these areas--the second-
    largest submitted by this administration--produced $18.2 billion in
    savings for fiscal year 2015, and some $93 billion in savings through
    fiscal year 2019. This enabled us to make smaller cuts in other areas.
    Building on a 20 percent cut in management headquarters operating
    budgets--which we began implementing in December for the Office of the
    Secretary of Defense and the Joint Staff, and which the Services and
    agencies are implementing during the 5-year defense plan--this package
    includes savings from reducing contractor costs and civilian personnel;
    terminating or delaying some troubled weapons and procurement programs
    in favor of higher priorities; and cutting back on costs at certain
    defense agencies. It also includes health care savings that we found by
    cutting back lower-priority research projects and construction and by
    taking advantage of slower growth of health care costs in the private
    sector.
        We are also continuing to monitor previous years' initiatives to
    use our resources more efficiently, as well as making progress toward
    auditability on our financial statements. DOD remains committed to
    becoming fully audit-ready by 2017, and to achieving audit-ready budget
    statements by this September. This is an ambitious goal for an
    organization of our size and complexity, and there is still much more
    work to do. But we are making real progress. Several DOD organizations
    have achieved important, positive audit results. Last year, for
    example, the Marine Corps became the first military service to receive
    an unqualified audit opinion--in this case for the current year of its
    budget statement.
        In addition to these efforts, we must take a serious look at
    responsible procurement and acquisition reforms that will further
    increase the buying power of defense dollars. This is particularly
    important if we're going to protect investments in modernized
    capabilities. DOD officials are already working closely with
    congressional efforts to go over defense acquisition and procurement
    laws line-by-line, and we hope to start implementing legislative
    reforms as soon as this year.
        No reasonable discussion of allocating our resources more
    efficiently can avoid the need to reduce excess facilities. With this
    submission, we are asking you to authorize a round of Base Realignment
    and Closure (BRAC) to begin in fiscal year 2017.
        I understand Congress' concerns about BRAC, including your desire
    to reduce overseas infrastructure first and your frustrations with BRAC
    2005. That's why this round will be focused on finding savings rather
    than reorganization and will feature a rapid payback of up-front costs,
    and why DOD will continue to reduce overseas infrastructure.
        But we must also divest ourselves of excess domestic facilities,
    and BRAC is the most responsible path. I am mindful that Congress has
    not agreed to our BRAC requests of the last 2 years, but if Congress
    continues to block these requests while reducing the overall budget, we
    will have to consider every tool at our disposal to reduce
    infrastructure. We can't keep financing overhead that we don't need,
    because we're taking that money away from areas that we do need. The
    more we delay now, the more we'll have to spend later on unneeded
    installations instead of on training, equipping, and compensating our
    people--robbing our troops of the resources they need to be able to
    fight and win decisively when we send them into harm's way.
        Congress and DOD must work together as partners to make these
    decisions wisely--because no matter what, we must reduce force
    structure and end strength in order to sustain a ready and capable
    force under constrained budgets.
          sustaining a ready and capable force--now and in the future
        This is the lesson of every defense drawdown over the past 70
    years. Whether after World War II, Korea, Vietnam, or the Cold War, the
    U.S. military retained more force structure than it could afford to
    properly train, maintain, and equip--giving too much weight to capacity
    over readiness and capability. Because readiness and modernization were
    sacrificed, it took much more money for the military to recover and be
    sufficiently trained and equipped to perform assigned missions.
    Conflict ultimately did resurface.
        We can't afford to repeat those mistakes, which is why we decided
    to trade some capacity for readiness and modernized capabilities, in
    order to ensure that our military will be well-trained and supplied in
    arms and equipment. All of our force structure decisions were made
    strategically--protecting investments in the forces that would be
    uniquely suited to the most likely missions of the future, and
    minimizing risk in meeting the President's defense strategy.
        Our decisions for investing in a modernized and capable future
    force were made in a similar way. With the proliferation of more
    advanced military technologies and other nations pursuing comprehensive
    military modernization, we are entering an era where American dominance
    on the seas, in the skies, and in space--not to mention cyberspace--can
    no longer be taken for granted. Because it is essential for deterring
    aggression, and because the risk of failure against those potential
    adversaries would be far greater than against any others, the
    President's budget puts a premium on rapidly deployable, self-
    sustaining platforms that can defeat more technologically advanced
    adversaries.
        Sustaining these critical investments under restrained budgets
    required setting strategic priorities and making difficult tradeoffs.
    That's why each Service's budget allocations were made based on
    strategy and with the goal of maintaining balance in the readiness,
    capability, and capacity of the force.
    Army: (24 percent of the President's fiscal year 2015 budget)
        The Army's $120.3 billion will support 32 Active-Duty brigade
    combat teams in fiscal year 2015. Since we are no longer sizing the
    force for large and prolonged stability operations, the Army will
    accelerate the pace and increase the scale of its post-war drawdown--
    reducing by 13 percent, from about 520,000 soldiers to a range of
    440,000-450,000 Active-Duty soldiers instead of 490,000. To maintain a
    balanced force, the Army National Guard and Reserves will also draw
    down, but by a smaller percentage and by a smaller amount than the
    Active Army--reducing by an average of 5 percent, from about 355,000
    guardsmen and 205,000 reservists to 335,000 guardsmen and 195,000
    reservists.
        Analysis conducted by the QDR indicated that under the President's
    budget, the U.S. military's resulting post-war ground force will be
    sufficient to meet the updated defense strategy: capable of decisively
    defeating aggression in one major combat theater--as it must be--while
    also defending the Homeland and supporting air and naval forces engaged
    in another theater.
        In terms of capabilities, we chose to terminate and reevaluate
    alternative options for the Army's Ground Combat Vehicle program, which
    had become too heavy and needed an infusion of new technology. The Army
    will also streamline its helicopter force from 7 to 4 airframes. Aging
    Kiowa helicopters and older training helicopters will be retired and
    replaced with more advanced Apache helicopters that will move from the
    National Guard to the Active Force. In return, the Guard will receive
    much more versatile Blackhawk helicopters, which are not only critical
    for warfighting, but also more apt for the missions the Guard conducts
    most frequently, such as disaster relief and emergency response.
        The past decade of war has clearly shown that Apaches are in high
    demand. We need to put the Apaches where they will be ready to deploy
    fast and frequently when they're needed. This decision will also help
    the Guard's helicopter force more closely adhere to State and Federal
    requirements for homeland defense, disaster relief, and support to
    civil authorities while still serving as an important operational and
    strategic complement to our active-duty military. The Guard's
    helicopter fleet would only decline by 8 percent compared to the Active
    Army's decline by 25 percent, and the overall fleet will be
    significantly modernized under the President's budget plan.
        In making these difficult decisions on the Guard and Reserves, we
    affirmed the value of a highly capable Reserve component, while keeping
    the focus on how our military can best meet future demands given fiscal
    constraints. We made choices based on strategic priorities, clear
    facts, unbiased analysis, and fiscal realities . . . and with the
    bottom line focus on how best we can defend the United States.
    Navy and Marine Corps: (30 percent of the President's fiscal year 2015
            budget)
        The Navy and Marine Corps are allocated $147.7 billion for fiscal
    year 2015. The Navy's $124.9 billion will support a fleet approaching
    300 ships and some 323,600 active-duty sailors, as well as help
    preserve the fleet's modernization programs. The President's budget
    plan protects our investments in attack submarines, guided missile
    destroyers, and afloat staging bases--all of which we will need to
    confront emerging threats. Specifically:

             Virginia-class Attack Submarines: We are requesting
            $5.9 billion for fiscal year 2015, and $28 billion over the
            Future Years Defense Plan (FYDP), to support buying two
            submarines a year through fiscal year 2019.
             DDG-51 Guided Missile Destroyers: We are requesting
            $2.8 billion for fiscal year 2015, and $16 billion over the
            FYDP, to support buying two DDG-51 destroyers a year through
            fiscal year 2019. This will grow our destroyer inventory from
            62 at the end of fiscal year 2014 to 71 (68 DDG-51s, 3 DDG-
            1000s) at the end of fiscal year 2019.
             Afloat Forward Staging Bases: We are requesting $613
            million over the FYDP to support buying one afloat forward
            staging base between now and fiscal year 2019.
             Aircraft Carriers: The President's budget plan enables
            us to support 11 carrier strike groups, including the USS
            George Washington and its carrier air wing. If we receive the
            President's funding levels through fiscal year 2019, we will
            keep the George Washington in the fleet and pay for its nuclear
            refueling and overhaul. We are requesting $2 billion in fiscal
            year 2015 and $12 billion over the FDYP to support completion
            of the Gerald Ford, construction of the John F. Kennedy, and
            initial procurement of the next carrier.
             F-35 Joint Strike Fighter: The Department of the Navy
            is acquiring two F-35 variants--the Navy carrier-based variant,
            the F-35C, and the Marine Corps short-take-off-and-vertical-
            landing variant, the F-35B. The Navy is requesting $3.3 billion
            for 8 aircraft in fiscal year 2015 (2 F-35Cs and 6 F-35Bs), and
            $22.9 billion for 105 aircraft over the FYDP.

        Again, trade-offs were required to prioritize those investments
    under current budget constraints. In order to help keep its ship
    inventory ready and modern at reduced budget levels, half of the Navy's
    cruiser fleet--or eleven ships--will be placed in a long-term phased
    modernization program that will eventually provide them with greater
    capability and a longer lifespan. This approach to modernization
    enables us to sustain our fleet of cruisers over the long term, which
    is important because they're the most capable ships for controlling the
    air defense of a carrier strike group.
        Despite preserving the fleet's modernization programs and providing
    for increases in ship inventory over the next 5 years, I am concerned
    that the Navy is relying too heavily on the Littoral Combat Ship (LCS)
    to achieve its long-term goals for ship numbers.
        The LCS was designed to perform certain missions--such as mine
    sweeping and anti-submarine warfare--in a relatively permissive
    environment. But we need to closely examine whether the LCS has the
    independent protection and firepower to operate and survive against a
    more advanced military adversary and emerging new technologies,
    especially in the Asia Pacific. If we were to build out the LCS program
    to 52 ships, as previously planned, it would represent one-sixth of our
    future 300-ship Navy. Given continued fiscal constraints, we must
    direct future shipbuilding resources toward platforms that can operate
    in every region and along the full spectrum of conflict.
        Therefore, no new contract negotiations beyond 32 ships will go
    forward. With this decision, the LCS line will continue beyond our 5-
    year budget plan with no interruptions. Additionally, at my direction,
    the Navy will submit alternative proposals to procure a capable and
    lethal small surface combatant, generally consistent with the
    capabilities of a frigate. I've directed the Navy to consider a
    completely new design, existing ship designs, and a modified LCS. These
    proposals are due to me later this year in time to inform next year's
    budget submission.
        While these decisions still keep the Navy on track for a 300-ship
    inventory by 2019, finding the money required to modernize older ships
    and buy new ones will depend on the Navy's success in its aggressive
    and ambitious plans to reduce acquisitions costs and use available
    resources more efficiently, particularly in the acquisition of
    contracted services. My office will be keeping a close eye on these
    efforts.
        The Marine Corps' $22.7 billion will support 182,700 marines,
    including about 900 more marines devoted to increased security at
    embassies around the world. It will also support a geographically-
    distributed force posture in the Asia-Pacific, which will be critical
    as we continue rebalancing to the region.
    Air Force: (28 percent of the President's fiscal year 2015 budget)
        The Air Force is allocated $137.8 billion in fiscal year 2015. We
    chose to protect funding for advanced systems most relevant to
    confronting threats from near-peer adversaries--including the F-35
    Joint Strike Fighter, the new Long-Range Strike Bomber, and the KC-46
    refueling tanker. These platforms will be critical to maintaining
    aerial dominance against any potential adversaries for decades to come.
    Specifically:

             F-35 Joint Strike Fighter: We are requesting $4.6
            billion for 26 aircraft in fiscal year 2015, and $31.7 billion
            for 238 aircraft over the FYDP.
             Long-Range Strike Bomber: We are requesting $900
            million for development funds in fiscal year 2015, and $11.4
            billion over the FYDP.
             KC-46 Tanker: We are requesting $2.4 billion for 7
            aircraft in fiscal year 2015, and $16.5 billion for 69 aircraft
            over the FYDP.

        Because we believe research and development is essential to keeping
    our military's technological edge, the President's budget also invests
    $1 billion through fiscal year 2019 in a promising next-generation jet
    engine technology, which we expect to produce improved performance and
    sizeable cost-savings through less fuel consumption. This new funding
    will also help ensure a robust industrial base--itself a national
    strategic asset.
        Protecting these investments required trade-offs. In the next 5
    years, in order to free up funding to train and maintain no less than
    48 squadrons, the Air Force plans to reduce the number of active-duty
    personnel from 328,000 airmen at the end of fiscal year 2014 to 309,000
    airmen by the end of fiscal year 2019. The Air Force will also retire
    the 50-year-old U-2 in favor of the unmanned Global Hawk system, slow
    the growth in its arsenal of armed unmanned systems, and phase out the
    aging A-10 fleet.
        The A-10 ``Warthog'' is a venerable platform, and this was a tough
    decision. But it is a 40-year-old single-purpose airplane originally
    designed to kill enemy tanks on a Cold War battlefield. It cannot
    survive or operate effectively where there are more advanced aircraft
    or air defenses. As we saw in Iraq and Afghanistan, the advent of
    precision munitions means that many more types of aircraft can now
    provide effective close air support, from multirole fighters to B-1
    bombers to remotely piloted aircraft, which can all execute more than
    one mission. Moreover, the A-10's age is making it much more difficult
    and costly to maintain. Analysis showed that significant savings were
    only possible through eliminating the entire support apparatus
    associated with the aircraft. Keeping a smaller number of A-10s would
    only delay the inevitable while forcing worse trade-offs elsewhere.
    Defense-Wide: (18 percent of the President's fiscal year 2015 budget)
        The remaining share of the budget--about $89.8 billion--is
    allocated for organizations across the DOD.
        For fiscal year 2015, this includes more than $7.5 billion for the
    Missile Defense Agency, which is critical for defending our homeland
    and reassuring our European allies. This funding will enable DOD to
    increase the number of Ground-Based Interceptors and make targeted
    investments in additional defensive interceptors, discrimination
    capabilities, and sensors. The budget continues to support the
    President's schedule for the European Phased Adaptive Approach.
        Since special operations forces play a key role in
    counterterrorism, crisis response, and building partner capacity, the
    President's budget for fiscal year 2015 allocates $7.7 billion for
    Special Operations Command. This is equal to what we requested last
    year, a 10 percent increase over what Congress appropriated for fiscal
    year 2014, and will support a Special Operations Force of 69,700
    personnel.
        The President's fiscal year 2015 budget increases cyber funding to
    $5.1 billion and maintains funding for intelligence agencies and other
    support activities. Through funds allocated to the Navy and the Air
    Force, the President's budget also preserves all three legs of the
    nuclear triad and funds important investments to ensure a safe, secure,
    and effective nuclear deterrent.
    Compensation Reform and Structural Adjustments to Some In-Kind Benefits
        For all the money that goes into maintaining a modernized and
    capable force, people are the core of our military. In this era of
    constrained budgets, ensuring that our people are properly trained,
    equipped, prepared, and compensated requires looking at difficult
    trade-offs and making some difficult choices. Compensation adjustments
    were the last thing we looked at, because you take care of your people
    first.
        While Congress has taken a few helpful steps in recent years to
    control the growth in compensation spending, we must do more. At this
    point, given the steps we've already taken to reduce civilian personnel
    costs in compliance with congressional direction, no realistic effort
    to find further significant savings--savings needed to close serious
    shortfalls in training, maintenance, and equipment--can avoid dealing
    with military compensation. . . . That includes pay and benefits for
    active and retired troops, both direct and in-kind.
        We could reduce overall payroll spending by further reducing the
    total number of people in uniform. But since too small a force adds too
    much risk to our national security, we must also address the growth in
    pay and benefits for servicemembers so that we can afford to provide
    them with the training and tools they need to successfully accomplish
    their missions and return home safely.
        Since 2000, Congress has in some cases boosted pay increases above
    the levels requested by DOD. Benefits were added and increased by more
    than what most active-duty personnel sought, expected, or had been
    promised when joining the military. Congress also added a new health
    care benefit and approved DOD proposals to increase housing allowances.
    As a U.S. Senator, I supported such proposals. It was the right thing
    to do at the time, given the burdens being placed on our
    servicemembers, the military's recruiting and retention challenges, and
    the fact that we had few constraints on defense spending.
        But today DOD faces a vastly different fiscal situation--and all
    the Services have consistently met recruiting and retention goals. This
    year we're concluding combat operations in America's longest war, which
    has lasted 13 years. Now is the time to consider fair and responsible
    adjustments to our overall military compensation package.
        America has an obligation to make sure servicemembers and their
    families are fairly and appropriately compensated and cared for during
    and after their time in uniform. We also have a responsibility to give
    our troops the finest training and equipment possible--so that whenever
    America calls upon them, they are prepared with every advantage we can
    give them so that they will return home safely to their families. The
    President's budget fulfills both of these promises to our
    servicemembers and their families by making several specific proposals.
    Basic Pay Raises
        For fiscal year 2015 we are requesting 1 percent raise in basic pay
    for military personnel--with the exception of general and flag
    officers, whose pay will be frozen for a year. Basic pay raises in
    future years will be similarly restrained, though raises will continue.
        DOD rightfully provides many benefits to our people; however,
    finding the money to meet these commitments while protecting training
    and readiness under tighter budgets will require a few structural
    adjustments to three of them--housing, commissaries, and TRICARE.
    Housing
        In the early 1990s, DOD covered only about 80 percent of
    servicemembers' total off-base housing costs. Since then, we increased
    that rate to 100 percent.
        To adequately fund readiness and modernization under constrained
    budgets, we need to slow the growth rate of tax-free basic housing
    allowances (BAH) until they cover about 95 percent of the average
    servicemember's housing expenses. We would also remove renters'
    insurance from the benefit calculation.
        This change will happen over several years, to ensure that our
    people have time to adjust to it. In order to ensure that military
    personnel don't have to pay more out-of-pocket after they've signed a
    lease, a servicemember's allowance won't be adjusted until they've
    moved to a new location. This means that no one currently living in a
    particular area will see their housing allowances actually decrease;
    only servicemembers moving into the area will receive the lower rate,
    which is what already happens under the current rules when housing
    market prices go down.
        To account for geographic differences in housing costs, we will
    also design this adjustment to ensure that all servicemembers in the
    same pay grade have identical out-of-pocket costs. That way, once the
    overall change has been fully phased-in for all personnel,
    servicemembers in the same pay grade but living in different areas
    would end up paying the same dollar amount toward their housing costs--
    and they'll know exactly how much that will be so that they can make
    informed decisions and trade-offs in their own budgets.
        All of these savings will be invested back into the force, to help
    keep our people trained and equipped so they can succeed in battle and
    return home safely to their families.
    Commissaries
        There's no doubt that commissaries provide a valued service to our
    people, especially younger military families and retirees. For this
    reason, we're not directing any commissaries to close.
        Like our base exchanges, commissaries currently do not pay rent or
    taxes. That won't change under any of our proposals. But unlike base
    exchanges, commissaries also receive $1.4 billion in direct subsidies
    each year. In order to adequately fund training and readiness under
    constrained budgets, we need to gradually reduce that subsidy by $1
    billion (about two-thirds) over the next 3 years.
        Stateside commissaries have many private-sector competitors, and
    it's not unreasonable for them to operate more like a business. Since
    commissaries still operate rent-free and tax-free, they will still be
    able to provide a good deal to servicemembers, military families, and
    retirees as long as they continue to shop there. Going forward, only
    commissaries overseas or in remote U.S. locations would continue
    receiving direct subsidies, which, for example, not only helps pay to
    ship U.S. goods to bases overseas, but also helps those who either may
    not have the option of a local grocery store or are stationed where
    food prices may be higher.
    TRICARE
        In recent years, Congress has permitted DOD to make some changes
    that slow the growth in military health care costs; however, these
    costs will continue to grow, and we need to slow that growth in order
    to free up funds for training and readiness. So we need to make some
    additional smart, responsible adjustments to help streamline, simplify,
    and modernize the system while encouraging affordability.
        Merging three of our TRICARE health plans for those under 65--
    Prime, Standard, and Extra--into a single, modernized health plan will
    help us focus on quality while reducing complexity and administrative
    costs. The new plan would adjust co-pays and deductibles for retirees
    and some active-duty family members in ways that encourage TRICARE
    members to use the most affordable means of care, such as military
    treatment facilities and preferred providers.
        Some important features of the military health care system will not
    change. The scope of benefits will not change, and we will continue to
    distinguish between in-network and out-of-network care. Active-duty
    personnel will still receive health care that is entirely free--that's
    the promise we make when they sign up, and it's a promise we intend to
    keep. Medically retired personnel and survivors of those who died on
    active duty will continue to be treated favorably, with no
    participation fees and lower co-pays and deductibles. DOD will continue
    to support our programs for wounded warriors.
        With the TRICARE single health plan, active-duty family members and
    retirees under age 65 will be able to save more money by using military
    treatment facilities (MTF) if they're close to home, which are often
    under-used. More than 90 percent of active-duty servicemembers and
    their families live within an MTF's 40-mile-radius service area. For
    families of active-duty servicemembers stationed far away from MTFs,
    such as recruiters, all their care will continue to be considered ``in-
    network'' even if there are no network care providers in their remote
    location.
        Under this proposal, the share of costs borne by retirees will rise
    from about 9 percent today to about 11 percent--still a smaller cost
    share than the roughly 25 percent that retirees were paying out-of-
    pocket when TRICARE was initially set up in the 1990s. While we will
    ask retirees and some active-duty family members to pay modestly more,
    others may end up paying less. Overall, everyone's benefits will remain
    substantial, affordable, and generous--as they should be.
        Given these proposed efforts to modernize and simplify TRICARE for
    retirees under age 65, we will not resubmit last year's request for
    sharp increases in enrollment fees for these retirees.
        For retirees who are old enough to use Medicare and who choose to
    have TRICARE as well--what we call TRICARE-For-Life (TFL)--we would ask
    new members to pay a little bit more as well. Since TFL coverage
    currently requires no premium or enrollment fee, DOD again proposes a
    small per-person enrollment fee equal to 1 percent of a retiree's gross
    retirement pay up to a maximum of $300 per person--comparable to paying
    a monthly premium of no more than $25. For retired general and flag
    officers, the maximum would be $400 per person. Current TFL members
    would be grandfathered and exempted from having to pay enrollment fees.
    Even with this small enrollment fee, TFL members will still have
    substantial, affordable, and generous benefits--saving them thousands
    of dollars a year compared to similar coverage supplementing Medicare.
        Congress has taken helpful steps in the past, authorizing
    adjustments to the TRICARE pharmacy co-pay structure and initiating a
    pilot program for TFL members to refill prescriptions for maintenance
    medications (such as those that treat high blood pressure and high
    cholesterol) by mail order. These are good practices that we must now
    build upon in order to better encourage more TRICARE members to use
    generics and mail-order prescriptions, which help save the most money.
    Under our plan, MTFs will continue filling prescriptions without
    charging a co-pay, while all prescriptions for long-term maintenance
    medications will need to be filled either at MTFs or through the
    TRICARE mail order pharmacy. To ensure that our people aren't caught
    off-guard and have time to make the necessary adjustments, our plan
    would be slowly phased in over a 10-year period.
        As with our structural adjustments to housing and commissaries, all
    these savings will go toward providing our people with the tools and
    training they need in order to fight and win on the battlefield and
    return home safely to their families.
    Military Retirement
        Our proposals do not include any recommended changes to military
    retirement benefits for those now serving in the Armed Forces. Because
    military retirement is a complex and long-term benefit, it deserves
    special study. Therefore, we are working with and waiting for the
    results of the Military Compensation and Retirement Modernization
    Commission, which is expected to present its report in February 2015,
    before pursuing reforms in that area. But DOD continues to support the
    principle of ``grandfathering'' for any future changes to military
    retirement plans.
    Why Now
        DOD's military and civilian leaders conducted substantial analysis
    to arrive at our proposed package of compensation adjustments. We
    concluded that, even after we make these changes and slow the growth in
    military compensation, we will still be able to recruit and retain a
    high-quality force and offer generous, competitive, and sustainable
    benefits.
        These proposed compensation adjustments will be phased in over
    time, but they must begin now because budget limits are already in
    place. If we wait, we would have to make even deeper cuts to readiness
    or force structure in order to comply with the budget caps that
    Congress has passed into law. We must be able to free up funds in order
    to provide our men and women in uniform with the tools and training
    they need to succeed in battle and return home safely to their
    families. Sustaining a well-trained, ready, agile, motivated, and
    technologically superior force depends on it.
        To be clear, our proposals were carefully crafted to reform
    military compensation in a fair, responsible, and sustainable way,
    making the most modest adjustments we could afford. We took a holistic
    approach to this issue, because continuous piecemeal changes will only
    prolong the uncertainty and create doubts among our personnel about
    whether their benefits will be there in the future.
        We recognize that no one serving our Nation in uniform is overpaid
    for what they do for our country. But if we continue on the current
    course without making these modest adjustments now, the choices will
    only grow more difficult and painful down the road. We will inevitably
    have to either cut into compensation even more deeply and abruptly, or
    we will have to deprive our men and women of the training and equipment
    they need to succeed in battle. Either way, we would be breaking faith
    with our people. The President and I will not allow that to happen.
        We're also recommending freezing generals' and admirals' pay for 1
    year. As I've already announced, I'm cutting the budget of the Office
    of the Secretary of Defense by 20 percent. The Joint Staff, the Service
    Chiefs, and the combatant commanders are cutting their management
    headquarters operating budgets by 20 percent as well. We're also
    continuing to focus on acquisition reform and asking for another round
    of authority for base realignment and closure.
                        risks in the president's budget
        I've outlined the funding levels we need and the decisions we had
    to make to stay within the limits agreed to in the Bipartisan Budget
    Act. They add some risks to our defense strategy, but manageable ones.
        Over the near-term, because of budget limitations even under the
    Bipartisan Budget Act and after 13 years of war, the military will
    continue to experience gaps in training and maintenance--putting stress
    on the force and limiting our global readiness even as we sustain a
    heightened alert posture in regions like the Middle East and North
    Africa. The President's Opportunity, Growth, and Security Initiative
    would provide an additional $26.4 billion to DOD and would allow us to
    make faster progress in restoring and sustaining readiness--
    significantly mitigating this risk by closing these near-term gaps in
    readiness and modernization.
        This Opportunity, Growth, and Security Initiative is not a wish
    list of ``unfunded priorities'' or ``unfunded requirements''--the
    government-wide Initiative is fully paid-for, and for DOD, this money
    is specifically intended to bring unit readiness, equipment, and
    facilities closer to standard after the disruptions and shortfalls of
    the last few years. Each service receives a share of this funding. For
    example:

             The Army's share would go toward additional training
            and increasing its investment in Blackhawk helicopters.
             The Navy's share would go toward aviation depot
            maintenance and logistics and increasing its investment in P-8
            Poseidon, E-2D Hawkeye, and Joint Strike Fighter aircraft.
             The Marine Corps' share would go toward unit-level
            training and increasing its investment in the H-1 and KC-130
            aircraft.
             The Air Force's share would go toward additional
            readiness and training range support and increasing its
            investment in F-35, C-130J, and MQ-9 Reaper aircraft.
             Across the Services, DOD would be able to increase
            funding needed for military construction and facilities repair
            and maintenance.

        We also face the risk of uncertainty in a dynamic and volatile
    security environment. Budget reductions inevitably reduce the
    military's margin of error in dealing with these risks, as other powers
    are continuing to modernize their weapons portfolios, to include anti-
    air and anti-ship systems. A smaller force strains our ability to
    simultaneously respond to more than one major contingency at a time.
    But with the President's budget, our military will still be able to
    defeat any aggressor.
                  sequestration's effect on programs and risk
        However, if sequestration-level cuts are re-imposed in fiscal year
    2016 and beyond, if our reforms are not accepted, or if uncertainty on
    budget levels continues, our analysis has shown that we would have to
    make unavoidable decisions that would significantly increase those
    risks. As I've made clear, the scale and timeline of continued
    sequestration-level cuts would require greater reductions in the
    military's size, reach, and margin of technological superiority.
        At a minimum, we would be forced to draw down the Active Army to
    420,000 soldiers, the Army Guard to 315,000 soldiers, and the Army
    Reserve to 185,000 soldiers. We would also have to draw down the Marine
    Corps to 175,000 marines, and retire a 25-year-old aircraft carrier--
    the USS George Washington--and her carrier air wing ahead of her
    scheduled nuclear refueling and overhaul. Keeping the George Washington
    and her carrier air wing in the fleet would cost $6 billion over the
    FYDP.
        This budgeting process has been marked by uncertainty and
    irregularity, with changes to our spending assumptions that came late
    in the process--including congressional action on a Bipartisan Budget
    Act that provided a new level of spending for fiscal year 2015. We also
    face the reality that sequestration remains the law of the land
    beginning in fiscal year 2016. As a result, I chose to be conservative
    in my direction to the military Services for this budget submission and
    directed them to first plan in detail for sequestration-level funding.
        Even though the 5-year budget plan submitted along with the
    President's budget request assumes $115 billion more than
    sequestration-level funding, in its later years we have programmed for
    sequestration-level force sizes for the Active Duty Army, Army Guard
    and Reserve, and Marine Corps end strength, as well as for carrier
    strike groups. It takes time to plan and execute a successful drawdown
    that preserves capability in the process. Past drawdowns have reduced
    force structure too fast with too little planning. The resulting
    problems required significant amounts of time and money to fix.
        DOD leaders have assessed that our desired force levels--440,000-
    450,000 for the Active Army, 195,000 for the Army Reserve, 335,000 for
    the Army Guard, 182,000 for the Marine Corps, and 11 carrier strike
    groups--are sustainable over the long term at the President's budget
    level. Therefore, fiscal year 2016 will be a critical inflection point.
    DOD will be looking for a signal from Congress that sequestration will
    not be imposed in fiscal year 2016 and the budget levels projected in
    this 5-year plan will be realized. If that happens, we will submit a
    budget that implements our desired force levels. I have given the
    military leadership formal guidance that documents these levels.
        The bottom line is that if Congress indicates it will build on the
    precedent of the Bipartisan Budget Act and provide relief from
    sequestration by appropriating at 5-year funding levels equal to those
    in the President's budget, we will not need to take end strength down
    to those lowest levels or decommission the George Washington.
        But if we don't get some clarity in our future funding, we will
    have to start implementing those changes. If sequestration-level cuts
    are re-imposed in 2016 and beyond, we would have to make many other
    cuts not only to force structure, but also to modernization and
    readiness--all in addition to making the changes proposed in the
    President's fiscal year 2015 budget plan. That means fewer planes,
    fewer ships, fewer troops, and a force that would be under-trained,
    poorly-maintained, and reliant on older weapons and equipment:

             The Army, in addition to shrinking the Active-Duty
            Force to 420,000 soldiers and the Guard and Reserves to lower
            levels, would have 50 fewer Light Utility Helicopters in the
            Guard force.
             The Navy, in addition to retiring the USS George
            Washington and her carrier air wing, would have to immediately
            lay up six additional ships, defer procurement for one
            submarine, and buy two fewer F-35Cs and three fewer DDG-51
            guided missile destroyers between fiscal year 2015 and fiscal
            year 2019. The Navy would ultimately have 10 fewer large
            surface combatants than would be expected under the President's
            funding levels.
             The Marine Corps, as mentioned, would have to shrink
            to 175,000 marines. While we would still devote about 900
            marines to increased embassy security around the world, this
            reduction would entail some added risk for future contingencies
            as well as sustaining the Marines' global presence.
             The Air Force would have to retire 80 more aircraft,
            including the entire KC-10 tanker fleet and the Global Hawk
            Block 40 fleet, as well as slow down purchases of the Joint
            Strike Fighter--resulting in 15 fewer F-35As purchased through
            fiscal year 2019--and sustain 10 fewer Predator and Reaper 24-
            hour combat air patrols. The Air Force would also have to take
            deep cuts to flying hours, which would prevent a return to
            adequate readiness levels.
             Across DOD, operation and maintenance funding--an
            important element of the budget that supports readiness--would
            grow at only about 2 percent a year under sequestration
            compared to about 3 percent a year under the President's
            budget. This will hamper or even prevent a gradual recovery in
            readiness. Funding for research, development, testing, and
            evaluation would decline by 1.3 percent a year under
            sequestration instead of increasing by 1.6 percent under the
            President's budget. There would be no recovery in funding for
            military facilities repairs and construction.

        Although future changes in the security environment might require
    us to modify some of these specific plans, the strategic impacts are
    clear. Under the funding levels that the President and I are asking
    for, we can manage the risks. Under a return to sequestration spending
    levels, risks would grow significantly, particularly if our military is
    required to respond to multiple major contingencies at the same time.
        Our recommendations beyond fiscal year 2015 provide a realistic
    alternative to sequestration-level cuts, sustaining adequate readiness
    and modernization most relevant to strategic priorities over the long-
    term. But this can only be achieved by the strategic balance of reforms
    and reductions the President and I will present to Congress next week.
    This will require Congress to partner with DOD in making politically
    difficult choices.
                          our shared national interest
        Formulating this budget request took courage on the part of many
    involved in the decisionmaking process--from the Joint Chiefs to the
    President. It required new ways of thinking about both short-term and
    long-term challenges facing our country.
        I look forward to working with Congress to find the responsible
    ground of protecting America's interests with the required resources.
        As we all know, these challenges and choices before us will demand
    moral and political courage on the part of everyone who has a stake in
    our national security and our national leadership. They will demand
    leadership that reaches into the future without stumbling over the
    present. Now is the time to summon that leadership--not for any one
    specific interest, but for our shared national interest.
        I appreciate this opportunity to discuss the President's fiscal
    year 2015 budget request for the Department of Defense, and I look
    forward to your questions.
        Mr. Chairman, thank you.

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

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

        General Dempsey. Thank you, Mr. Chairman, Senator Inhofe,
    other distinguished members of this committee. It is a
    privilege to be back here to provide you an update on our Armed
    Forces and to discuss our defense budget for 2015.
        I want to add my appreciation to Under Secretary Hale for
    his leadership and for his many years of service to DOD and to
    our Nation.
        Let me begin by acknowledging the alarming progression of
    events in Ukraine over the past few days. Our senior leaders
    have made it clear that they wish to see Russia's provocation
    resolved through diplomatic means and in close collaboration
    and coordination with our allies.
        Over the past several days, I have spoken with most of my
    NATO counterparts, and in particular, those in the Baltics and
    in eastern Europe. Understandably, they are concerned. They
    seek our assurance for their security. During our
    conversations, we committed to developing options to provide
    those assurances and to deter further Russian aggression. We
    agreed that together we must help shape a path back to the
    sovereignty and security for all the people of Ukraine. Simply
    put, the allies stand together.
        I recommended suspension of our military-to-military
    exchanges with the Russian Federation. The nature and extent of
    Russia's actions really left us very little choice.
        I have also directed EUCOM to consult and to plan within
    the construct of the North Atlantic Council. Obviously, we want
    to provide NATO's leaders with options that stabilize and not
    escalate tensions in Ukraine. But we are only one part of that
    equation.
        I spoke this morning with my Russian counterpart, General
    Valiry Gerasimov. I conveyed to him the degree to which
    Russia's territorial aggression has been reputed globally. I
    urged continued constraint in the days ahead in order to
    preserve room for a diplomatic solution.
        Russia's actions remind us that the world today remains
    unpredictable, complex, and quite dangerous. We cannot think
    too narrowly about future security challenges, nor can we be
    too certain that we have it right. The world will continue to
    surprise us, often in unpleasant ways.
        That was how my last week ended. It began for me in
    Afghanistan, addressing the security challenges that remain in
    that region and where I went to gain first-hand appraisals from
    our troops and from our commanders. As always, I left there
    inspired. They remain fully engaged on the missions set before
    them. They continue to build the institution of the Afghan
    National Security Forces (ANSF) which, given the right
    political structure around them, has the ability to sustain the
    fight. We will be prepared to support a variety of options over
    the next several months as our relationship with Afghanistan
    moves forward. This includes, of course, the option to draw
    down by the end of the year, if that is the decision made by
    our elected leaders.
        Meanwhile, our joint and NATO team has much work to do this
    year and they are ready for it. The global commitments of the
    joint force are not shrinking. Neither are our global security
    threats. The most likely threats emanate from violent extremist
    groups and from ungoverned spaces. Yet, we can never discount
    the possibility of state-on-state conflict. Therefore, our
    force must remain postured to provide options across the full
    spectrum of potential conflict.
        At the same time, the balance between our security demands
    and our available resources has rarely been more delicate, and
    that brings me to the budget. The Secretary has walked you
    through the major components of the fiscal year 2015 budget
    proposal, which is a pragmatic way forward. In my view, it
    balances as best as it can our national security and fiscal
    responsibilities. It provides the tools for today's force to
    accomplish the missions we have been assigned, rebuilding
    readiness in areas that were, by necessity, deemphasized over
    the past decade. It modernizes the force for tomorrow, ensuring
    that we are globally networked and that we can continue to
    provide options for the Nation. It also reflects in real terms
    how we are reducing our costs, the costs of doing business, and
    working to ensure that the force is in the right balance. As a
    whole, the budget helps us to remain the world's finest
    military, modern, capable, and ready even while transitioning
    to a smaller and more affordable force over time.
        But as I said last year, we need time. We need certainty
    and we need flexibility to balance the institution to allow us
    to meet the Nation's need for the future. The funds passed by
    this Congress in the BBA allow us to buy back some of our lost
    readiness and continue to make responsible investments in our
    Nation's defense. It does not solve every readiness shortfall.
    It is not a long-term solution to sequestration but it does
    give us a measure of near-term relief and stability.
        The Joint Chiefs and I will never end our campaign to find
    every possible way to become more effective. We will do things
    smarter and more efficiently, more in line with the sorts of
    security challenges that we face today and in line with the
    fiscal reality. We will seek innovative approaches as an
    imperative, not just in technology but also in how we develop
    our leaders, aggregate and disaggregate our formations, and
    work with our partners. We will improve how we buy weapons,
    goods, and services, and we will invest deeper in developing
    leaders of consequence at every level, men and women of both
    competence and character who are good stewards of the special
    trust and confidence gifted to us by our fellow citizens.
        But we have infrastructure that we do not need and, with
    your support, we ought to be able to reduce. We have legacy
    weapons systems that we cannot afford and, with your support,
    we ought to be able to retire. We have personnel costs that
    have grown at a disproportionate rate and we ought to be able
    to slow the rate in a way that makes the all-volunteer force
    more sustainable over time.
        If we do not move toward a sounder way to steward our
    Nation's defenses, we do face unbalanced cuts to readiness and
    modernization. We simply cannot ignore the imbalances that
    ultimately make our force less effective than what the Nation
    needs. Kicking the can down the road will set up our successors
    for an almost impossible problem. We have to take the long view
    here.
        I know these issues weigh heavily on the minds of our men
    and women in uniform and on their families. Our force is
    extraordinarily accepting of change. They are less
    understanding of uncertainty and piecemeal solutions. They want
    and they deserve predictability.
        I have said before that we must be clear about what the
    joint force can achieve, how quickly it can achieve it, and for
    how long at what risk. To be clear, we do assume higher risk in
    some areas in this budget. This means that under certain
    circumstances, we could be limited by capability, capacity, or
    readiness in the conduct of an assigned mission, and these are
    the risks that we have to manage.
        I support the QDR and this budget, but it is not without
    risks that I have conveyed in my assessment. I expect more
    difficult conventional fights. We must rely increasingly on
    allies and partners, and our global responsibilities are
    currently undiminished and will have to be placed in balance.
    If sequester-level cuts return in fiscal year 2016 or we cannot
    make good on the promises inside the QDR, then the risks will
    grow and the options that we can provide the Nation will
    dramatically shrink. That is a gamble none of us should be
    willing to take because it is our soldiers, sailors, airmen,
    marines, and coastguardsmen, America's sons and daughters, who
    will face tomorrow's challenges with whatever strategy,
    structure, and resources we develop today. Our most sacred
    obligation is to make sure they are never sent into a fair
    fight, which is to say, they must remain the best-trained,
    best-led, and best-equipped force on the planet. That objective
    has been the fundamental guiding principle as this budget was
    prepared and is one to which the Joint Chiefs and I remain
    absolutely committed.
        Mr. Chairman, members of this committee, thank you for your
    outstanding commitment to our men and women in uniform. On
    their behalf, I stand ready to answer your questions.
        [The prepared statement of General Dempsey follows:]
                Prepared Statement by GEN Martin E. Dempsey, USA
        Chairman Levin, Senator Inhofe, and distinguished members of this
    committee, it is my privilege to report to you on the state of
    America's Armed Forces, our accomplishments over the last year, the
    opportunities and challenges ahead, and my vision for the future force.
        We are in our Nation's 13th year at war. I am extremely proud to
    represent the men and women of our Armed Forces. Volunteers all, they
    represent America at its very best.
        It is these soldiers, sailors, airmen, marines, and
    coastguardsmen--America's sons and daughters--who will face tomorrow's
    challenges with the strategy, structure, and resources we develop
    today. Our men and women are our decisive edge. Sustaining our military
    strength in the face of an historic shift to the future means making
    sure that the force is in the right balance.
        In the near term, our mission in Afghanistan will transition, while
    we reset a force coming out of more than a decade of continuous
    conflict. We will sustain--in some cases adjust--our commitments around
    the globe to keep our Nation immune from coercion. We must do all of
    this with decreasing defense budgets. As a result, we will have to
    assume risk in some areas to create opportunity in others. This will
    require carefully prioritizing investments in readiness, training,
    modernization, and leader development.
        Our men and women in uniform are the cornerstone of this Nation's
    security and our strongest bridge to the future. They are trusting us
    to make the right choices. So are the American people.
                             joint force operations
        America's military has been in continuous conflict for the longest
    period in our Nation's history. But the force remains strong. The Joint
    Force today is as diverse and rich in experience as it has ever been.
    Our men and women remain engaged around the globe supporting our
    Nation's interests. They are defeating adversaries, deterring
    aggression, strengthening partners, and delivering aid.
        Over the past year, our men and women have continued to fight,
    transition, and redeploy from Afghanistan. In June of last year, the
    Afghans reached a decisive milestone as they assumed lead
    responsibility for their own security. This signaled a shift in our
    primary mission from combat to training, advising, and assisting the
    Afghan forces. While coalition forces prepare to support national
    elections in the coming weeks, we continue to develop options for the
    forces, missions, partnerships, and authorities that will set the
    conditions for our commitment to Afghanistan after 2014.
        The Joint Force continues to serve in and around an unpredictable
    Middle East through military-to-military exercises, exchanges, and
    security assistance. We are actively reinforcing our partners along
    Syria's borders to help contain violence, care for refugees, and
    counter the spread of violent extremism. We continue to pursue violent
    extremist organizations directly and through our partners where U.S.
    and allied interests are threatened. This includes support to partners
    in Yemen, and to French and African partners in Mali. Our military is
    also working closely with the U.S. Department of State to help restore
    security and stability in the Central African Republic and South Sudan.
        We have deepened our traditional security ties in the Asia Pacific.
    In addition to our support for Typhoon Haiyan recovery efforts, we have
    strengthened cooperation with our allies and partners through military
    activities and force posture. We have maintained an active presence in
    the South and East China Seas, while also remaining prepared to respond
    to provocations on the Korean Peninsula.
        We also remain postured with our interagency partners to detect,
    deter, and defeat threats to the homeland--to include ballistic missile
    defense, countering terrorism, and safeguarding against cyber-attack on
    government and critical infrastructure targets. Our men and women work
    collaboratively with other U.S. agencies, with forward-stationed State
    Department professionals, and with regional allies and partners to keep
    the Nation safe. Across all of these security operations, the Joint
    Force remains ready with military options if called upon.
                        balancing global strategic risk
        The global security environment is as fluid and complex as we have
    ever seen. We are being challenged in pockets throughout the world by a
    diverse set of actors--resurgent and rising powers, failing states, and
    aggressive ideologies. Power in the international system is shifting
    below and beyond the Nation-state. At the same time, the balance
    between our security demands and available resources has rarely been
    more delicate.
        The confluence of wide-ranging transitions, enduring and new
    friction points, and ``wild cards'' can seem unsolvable. Yet,
    understanding the interrelationships between trends reshaping the
    security environment offers opportunities to begin to solve some of the
    world's perplexing and prolonged challenges.
        In any effort, the military does not do it alone. We must bring to
    bear every tool of national power in American's arsenal. Our
    distributed networks of allies and partners are equally indispensable.
    Together, we can build shared understanding and develop focused, whole
    approaches that share the costs of global leadership. Deepening these
    hard-won relationships of trust and building the capacity of our
    partners will be more vital in the years ahead.
        With this context in mind, the Joint Force of the future will
    require exceptional agility in how we shape, prepare, and posture. We
    will seek innovation not only in technology, but also in leader
    development, doctrine, organization, and partnerships. We must be able
    to rapidly aggregate and disaggregate our formations, throttle up force
    and just as quickly, throttle it back.
        We will have to be more regionally-focused in our understanding and
    globally-networked in our approaches. We will be adaptable to combatant
    commander priorities to prevent conflict, shape the strategic
    environment, and--when necessary--win decisively.
        Importantly, we will have to balance these competing strategic
    objectives in the context of a resource-constrained environment. We
    must be frank about the limits of what the Joint Force can achieve, how
    quickly, for how long, and with what risk.
        Accordingly, we will need to challenge assumptions and align
    ambitions to match our combined abilities. Our force's greatest value
    to the Nation is as much unrealized as realized. We need to calibrate
    our use of military power to where it is most able and appropriate to
    advance our national interests. Our recent wars have reminded us that
    our military serves the Nation best when it is synchronized with other
    elements of national power and integrated with our partners.
                              balancing the force
        As part of an historic shift to the future, the institution is
    fundamentally re-examining itself to preserve military strength in the
    face of the changing security environment and declining resources. Here
    are five ways in which we are working to make sure the Joint Force
    remains properly balanced over time:
    Resource Allocation
        We are resetting how we allocate our budget among manpower,
    operations, training, maintenance, and modernization. Disproportionate
    growth in the cost per servicemember is overburdening our manpower
    account and threatening to erode combat power. We have to bring those
    costs back into balance with our other sacred obligations to the
    Nation.
        The President's fiscal year 2015 budget request, importantly,
    reflects the needed personnel reductions, institutional streamlining,
    and administrative changes that better reflect our military's more
    limited resources. We will keep driving towards becoming more steel-
    plated on all fronts--shedding waste, redundancy, and superfluity in
    our organizations and processes. We are rebalancing our tooth-to-tail
    ratio by shrinking the Department's headquarters, overhead, and
    overseas infrastructure costs. We are taking steps to improve our
    acquisitions enterprise. We will make the tough choices on force
    structure.
        We will never end our campaign to find every way to become more
    effective. Yet, we have already seen that not every effort generates
    the savings we need as fast as we need them. Some proposals to shed
    excess infrastructure have not gained the support of Congress, most
    notably our calls for a Base Realignment and Closure round and requests
    to retire legacy weapons systems we no longer need or afford.
        Getting our personnel costs in balance is a strategic imperative.
    We can no longer put off rebalancing our military compensation systems.
    Otherwise we are forced into disproportionate cuts to readiness and
    modernization. We price ourselves out of the ability to defend the
    Nation.
        We must work together to modernize and optimize our compensation
    package to fairly compensate our men and women for their service. We
    should provide the options and flexibility that they prefer and shift
    funds from undervalued services to the more highly valued benefits, as
    we reduce our outlays.
        We need to slow the rate of growth in our three highest-cost areas:
    basic pay, health care, and housing allowances. The Joint Chiefs, our
    senior enlisted leaders, and I also strongly recommend grandfathering
    any future proposed changes to military retirement, and we will
    continue to place a premium on efforts that support wounded warriors
    and mental health.
        To that end, I look forward to working in partnership with Congress
    and the American people on a sensible approach that addresses the
    growing imbalances in our accounts, enables us to recruit and retain
    America's best, and puts the All-Volunteer Force on a viable path for
    the future.
        We should tackle this in a comprehensive package of reforms.
    Piecemeal changes are a surefire way to fray the trust and confidence
    of our troops. They want--and they deserve--predictability.
    Geographic Shift
        The United States remains a global power and our military is
    globally engaged. While we transition from the wars of the past decade,
    we are focusing on an evolving range of challenges and opportunities.
    Our military will continue to have deep security ties in the Middle
    East and globally. We are--of necessity--continuing the rebalance to
    the Asia Pacific as part of our government's larger priority effort
    towards the future stability and growth of that region.
        Broadly, this geographic rebalance recognizes where the future
    demographic, economic, and security trends are moving. In a sense, it
    is ``skating to where the puck is going,'' as hockey great Wayne
    Gretzky used to say. As such, we are--over time--investing more
    bandwidth in our relationships in the Asia Pacific, engaging more at
    every level, and shifting assets to the region, to include our best
    human capital and equipment.
        Europe remains a central pillar to our national security and
    prosperity. Our NATO alliance has responded to security challenges in
    Afghanistan, Africa, and the Middle East. The most successful and
    durable alliance in history, NATO transcends partnership because common
    values underpin our 65-year-old alliance. Going forward, we will all
    benefit from the security NATO provides.
    Preparing across the Spectrum
        Our force is coming out of more than a decade of focusing primarily
    on one particular kind of fight centered on the Middle East. As a
    result, we have become the finest counterinsurgency force in the world.
        Current and future security challenges mandate that we broaden our
    approach. Across the Services, we are resetting how we apply our
    training bandwidth and how we develop leaders to account for conflict
    across the spectrum. This includes those critical conventional areas
    that--by necessity--were deemphasized over the past decade.
        We are also pluralizing our partnerships with other agencies and
    nations. With the global terrorism threat specifically, we are
    rebalancing our emphasis towards building or enabling our partners,
    while retaining the capability to take direct action ourselves.
        Remaining the security partner of choice increases our Nation's
    collective ability to safeguard common interests and support greater
    stability in weaker areas of the world. Improving partner capability
    and capacity in a targeted way is an important component of our
    military strategy, especially as our resources become more constrained.
    Force Distribution
        In keeping with the evolving strategic landscape, our force posture
    must also evolve. As we emerge from the major campaigns of the last
    decade, we are developing new approaches across and within commands in
    the way we assign, allocate, and apportion forces inside a broader
    interagency construct.
        We are determining how much of the force should be forward-
    stationed, how much should be rotational, and how much should be surge
    ready in the homeland. Baselining forces in each combatant command will
    allow us to predictably engage with and assure partners and deter
    adversaries. Baseline does not mean equal resources. We seek instead a
    force distribution appropriately weighted to our national interests and
    threats.
        Our military has become more integrated operationally and
    organizationally across the Active, Guard, and Reserve, especially over
    the past decade. We are working to determine the most effective mix of
    each of the components to preserve the strength we have gained as a
    more seamless force. This too will be different across the combatant
    commands. For example, many relationships in Europe--especially the
    newest NATO partner nations--benefit from the National Guard-led State
    Partnership Program, which is in its 20th year. Relationships such as
    these will help us to sustain the capabilities we will require in the
    years ahead.
        Also to strengthen the Joint Force, we are committed to offer
    everyone in uniform equal professional opportunities to contribute
    their talent. Rescinding the Direct Ground Combat Rule last January has
    enabled the elimination of gender-based restrictions for assignment.
    The Services are mid-way through reviewing and validating occupational
    standards with the aim of integrating women into occupational fields to
    the fullest extent over the next 2 years. We are proceeding in a
    deliberate, measured way that preserves unit readiness, cohesion, and
    the quality of the All-Volunteer Force.
        Additionally, as our force draws down, the remarkable generation
    that carried the best of our Nation into battle is transitioning home
    and reintegrating into civilian life. We will keep working with the
    Department of Veterans Affairs, other agencies, and communities across
    the country to make sure they have access to health care, quality
    education opportunities, and meaningful employment. This generation is
    not done serving and our efforts to enable them to contribute their
    strengths should be viewed as a direct investment in the future of
    America.
    Competence and Character
        We are making sure that as the Nation's Profession of Arms, we
    remain equally committed to competence and character throughout our
    ranks. The pace of the last decade, frankly, may have resulted in an
    overemphasis on competence. Those we serve call for us to be good
    stewards of the special trust and confidence gifted to us by our fellow
    citizens--on and off the battlefield.
        Even as--especially as--we take this opportunity to remake our
    force and its capabilities, we owe it to the American people and to
    ourselves to also take an introspective look at whether we are holding
    true to the bedrock values and standards of our profession.
    Historically, the military has done precisely this after coming out of
    major periods of conflict.
        The vast majority serve honorably with moral courage and
    distinction every day. But sexual assault crimes, failures of
    leadership and ethics, and lapses of judgment by a portion of the force
    are evidence that we must do more--and we are. These issues have my
    ongoing and full attention.
        It has been and continues to be one of my foremost priorities as
    Chairman to rekindle within the force both its understanding and its
    resolve as a profession. We must strengthen the enduring norms and
    values that define us and continue to be a source of trust and pride
    for our Nation.
        We are looking at who we are promoting. More importantly, we are
    looking at what we are promoting--the standards, the ethos, the essence
    of professionalism. We know that we can never let our actions distance
    us from the American people, nor destroy the message that draws many
    into the ranks of the military in the first place.
        To that end, we are advancing a constellation of initiatives
    towards our continued development as professionals. These include 360
    degree reviews, staff assistance and training visits to senior
    leadership, and a deeper investment in character development and
    education through the span of service. We are detecting and rooting out
    flaws in our command culture and promoting an ethos of accountability
    across the ranks. We know we own this challenge and we are committed to
    meeting it.
                          balancing strategic choices
        Our military's ability to field a ready, capable force to meet
    global mission requirements has been placed at risk by layered effects
    of the operational pace and converging fiscal factors of recent years.
        The funds above sequester levels passed by this Congress in the
    Bipartisan Budget Agreement allow us to buy back some lost readiness
    and continue to make responsible investments in our Nation's defense.
    It doesn't solve every readiness problem and is no long-term solution
    to sequestration, but it does give us a measure of near-term relief and
    stability.
        The Joint Chiefs and I are grateful for Congress's support of the
    efforts to return units to the necessary levels of readiness. It helps
    us preserve options for the Nation and ensure that our troops can do
    what they joined the military to do. Likewise, we appreciate the
    dialogue engendered in these chambers to determine the kind of military
    the American people need and can afford--the right mix of capabilities
    and programs to protect our national interests.
        While we have achieved a degree of certainty in our budget for the
    next 2 years, we still don't have a steady, predictable funding stream,
    nor the flexibility and time we need to reset the force for the
    challenges we see ahead.
        This tension comes at a time when winning together through
    jointness has been at its peak. If we don't adapt from previous
    approaches toward a sounder way to steward our Nation's defense, we
    risk ending up with the wrong force at the wrong time.
        The President's fiscal year 2015 budget request represents a
    balanced, responsible, and realistic way forward. It leads to a Joint
    Force that is global, networked, and provides options for the Nation.
    It helps us rebuild readiness in areas that were--by necessity--
    deemphasized over the past decade, while retaining capacity and
    capability. It supports the reset and replacement of battle-damaged
    equipment and helps us meet future needs by balancing force structure,
    readiness, and modernization priorities. It invests in missile defense
    and in modernizing the nuclear enterprise. It allows us to advantage
    intelligence, surveillance, and reconnaissance, Special Operations
    Forces, and cyber, while making adjustments to the conventional force.
        To be clear, we do assume higher risks in some areas under the
    fiscal year 2015 proposal, but this budget helps us to remain the
    world's finest military--modern, capable, and ready, even while
    transitioning to a smaller force over time. If sequester-level cuts
    return in 2016, the risks will grow, and the options we can provide the
    Nation will shrink.
        The Joint Chiefs and I remain committed to making the tough
    choices--carefully informed--that preserve our ability to protect our
    Nation from coercion and defend the American people. Our sacred
    obligation is to make sure our men and women are never sent into a fair
    fight. That means we must make sure they are the best led, best
    trained, and best equipped in the world.
        But, we need help from our elected leaders to rebalance the force
    in the ways I have described. This includes, importantly, making the
    financially prudent, strategically informed reductions we need.
        The opportunity is ours in the months ahead to carry the hard-
    earned lessons learned of our Nation's wars into the context of today,
    to set the conditions to prepare the force to address the challenges of
    tomorrow, and to sustain and support our dedicated men and women in
    uniform and their families. I look forward to seizing these
    opportunities together.
        Thank you for your enduring support.

        Chairman Levin. Thank you very much, General Dempsey.
        Secretary Hale, thank you. Thank you for your service. We
    all feel that the comments you just heard from your bosses are
    very appropriate.
        We are going to have a 7-minute round for our first round.
    We are all going to have to stick to the 7 minutes if we are
    all going get our time in by a quarter to 1 or 1 o'clock. I
    think we can do it.
        We have a series of stacked votes starting at 11:45 a.m. We
    are going to have to work through those votes with some of us
    leaving, coming back, and so forth. We are used to managing
    that kind of situation, but it may be a little trickier than
    usual this morning. If we all stick to our 7 minutes, I think
    we can do it.
        Your statements, of course, will be made part of the
    record.
        Let me ask you, General Dempsey. The 2015 budget request
    includes, as you both have mentioned, numerous personnel-
    related proposals which are intended to slow the growth of
    personnel costs. You have mentioned pay raises below rate of
    inflation, a 1-year pay freeze for general and flag officers, a
    reduction in the growth of the housing allowance, phased
    reduction in the subsidies for military commissaries, a series
    of changes to the TRICARE program, and, of course, a reduction
    in the end strength of the Army particularly.
        Secretary Hagel mentioned that the savings achieved by
    these proposals would be used to invest in modernization and
    readiness.
        Do the Joint Chiefs, including the Chief of the National
    Guard Bureau, agree to these personnel-related changes?
        General Dempsey. Yes, Mr. Chairman. We spent about a year
    working comprehensively to come up with that package.
        Chairman Levin. Thank you.
        General Dempsey. I just want to mention one other thing.
    Our goal here was to do this in a way that we could articulate
    our purpose to the force, which is, in fact, to put the money
    back into the Services so they can apply it to their readiness
    accounts, but also we wanted to do it once. One of the things
    that the members of the Armed Forces in the field suggest is
    whatever we have to do, let us do it once. Let us not do this
    every year.
        Chairman Levin. Thank you.
        If Congress rejects those proposals, is it not true that we
    would have to find approximately $31 billion that those
    proposals provide for readiness and modernization and we would
    have to find that $31 billion if we restored those cuts
    somewhere else in the budget? Is that true, Secretary Hagel?
        Secretary Hagel. Unless the Comptroller has any other
    opinion on this, it is true, and we tried to articulate that in
    the statements.
        Chairman Levin. Now, I want you to talk about the
    Opportunity, Growth, and Security Initiative. This is a $26
    billion add to the caps that are in law, and it requires
    congressional action.
        Do you both believe that the budget that you are requesting
    today, if approved by Congress without that additional $26
    billion in fiscal year 2015, would enable our military forces
    to fulfill its assigned missions to meet our national security
    strategy? So, first, if we do not add the $26 billion, can we
    carry out the missions needed to achieve that strategy?
        Secretary Hagel. We can fulfill our national security
    missions, but it will come at higher risks.
        Chairman Levin. Is it an acceptable risk? Is it a risk you
    can manage, to use the kind of terminology which you used here
    this morning?
        Secretary Hagel. We lay out those risks, Mr. Chairman, as
    to what we would have to do, and they are pretty specific. You
    mentioned some of them in your statement.
        Chairman Levin. How soon then will you be providing us with
    a specific list, item by item, of what would be funded with the
    additional $26 billion, if you were to get it?
        Secretary Hagel. We have now a general breakdown because I
    asked the Chiefs, with the Chairman, to give me their list of
    how they would use that money. We have some pretty good
    indications now and we provide that. I do not know if you want
    the Comptroller to get into that.
        Mr. Hale. We will have it next week, the line item detail
    on the Opportunity, Growth, and Security Initiative.
        Secretary Hagel. But, Mr. Chairman, I would just add the
    bulk of that goes to, I think you know, modernization and
    readiness. Then I think the last 10 percent of whatever you
    break it out, in general 100 percent of the $26 billion, would
    be to try to recapture a lot of the deferred maintenance over
    the last 2 or 3 years. But it is readiness and modernization.
        Chairman Levin. But we will get the detailed list in a
    week.
        Secretary Hagel. Yes.
        Chairman Levin. The FYDP assumes that the statutory caps
    are going to be modified and that DOD will receive $115 billion
    above sequestration levels for the 4 fiscal years after fiscal
    year 2015.
        DOD told us and the public that if it gets that extra
    money, it would be able to retain 11 carriers, an Army Active
    end strength of 440,000 or 450,000, and an Army National Guard
    end strength of 335,000. However, the budget documents that
    were submitted by DOD include the $115 billion in the FYDP but
    still provide for only 10 carriers, an Active end strength in
    the Army of 420,000, and a National Guard strength of 315,000,
    instead of what your statements have been. With that additional
    FYDP money those numbers would be higher.
        If you plan to spend the extra $115 billion in that FYDP,
    as you request, to maintain the 11 carriers and a higher end
    strength for the Active Army and Army National Guard, why is
    that not reflected in the budget documents?
        Secretary Hagel. The simple direct answer to the question,
    then if the Comptroller wants to go any deeper, the specific
    areas that you mentioned, which would be the 11th carrier and
    the force posture issue, is that we have some time to make
    those decisions based on knowing with some certainty what kind
    of resources we are going to have.
        Chairman Levin. But you said publicly that those----
        Secretary Hagel. We have also said publicly in a letter, I
    think yesterday, and the Comptroller talked about it in some of
    these briefings. We lay this out, by the way, in our follow-up
    documentation too.
        To answer your question, the specific reason is that we
    would then have to come back and make a decision planning for
    the worst, planning for the reality of the law, which is
    sequestration. But if that top line $115 billion would be
    funded, then we would be able to have the 440,000 to 450,000
    Active end strength and the 11th carrier because these are
    commitments that have to be made in the longer-term.
        Chairman Levin. Your documents that we are going to get
    into relative to the FYDP show that the carriers would be
    retained at 11. Will they show the end strength would be kept
    at 440,000 or 450,000 for the Army? Will they show the 335,000
    for the Guard or not?
        Mr. Hale. No. They will show 420,000 and 10 carriers.
        Chairman Levin. There is a problem.
        Secretary Hagel. No. I did not say the budget would reflect
    that. In explanation, I sent letters out yesterday or maybe it
    was earlier in the week, to the Chiefs also noting all this for
    the record. There is an explanation of why we are doing what we
    are doing to give our Services the time they are going to need
    to adjust to this. You have an air wing that would come with a
    carrier. You have people. These are longer-term obligations. If
    we do not believe we are going to have the resources, Mr.
    Chairman, then we are not going to be able to----
        Chairman Levin. I think there is a disconnect between the
    public comments and the budget documents, but I will leave it
    at that because my time is up.
        Senator Inhofe.
        Senator Inhofe. Mr. Chairman or Secretary Hagel, the QDR
    that came out today spends a lot of time explaining the risks
    associated with it. You know I applaud your decision to discuss
    risk because very often they do not since risk means lives, and
    I think we all understand that. I think it discusses risk so
    much because this administration has put our national security
    at more risk than I have seen in the years that I have been
    here.
        The DNI, James Clapper, agrees. He said on February 12,
    ``looking back over my now more than a half century in
    intelligence, I have not experienced a time when we have been
    beset by more crises and threats around the globe.'' Despite
    the fact that the world is becoming more dangerous, this risk
    is growing as a direct result of a dismantling of our defense
    over the last 5 years.
        Admiral Winnefeld told this committee, ``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.''
        General Dempsey, I appreciate your assessment backing the
    QDR and I could not agree with you more when you said, ``when
    we commit America's sons and daughters into combat, we must
    ensure that they are the best-trained, best-equipped, and best-
    led fighting force on the planet.'' Unfortunately, that is not
    a certainty anymore when you said in the QDR that our aging
    combat systems are increasingly vulnerable against adversaries
    who are modernizing and you discuss factors that diminish our
    present military advantage and complicate our ability to meet
    the ambitious strategic objectives.
        ``The loss in the depth across the force could reduce our
    ability that intimidates opponents from escalating in
    conflict.'' I think that means that we will have more events
    like Ukraine.
        I was in Georgia right before the Winter Olympics, and of
    course, Georgia goes right up into the area that Russia has
    confiscated from Georgia, about 20 percent, goes right up to
    where the Winter Olympics were. The leaders in Georgia were
    predicting there that the same thing that was happening in
    Ukraine was going to happen there. So I see that this is
    serious.
        If you look at the last two bars of the chart over here on
    this side, it shows that the entitlement benefits are going up
    again in this fiscal year that we are talking about now, and
    defense is going down at the same time. So the trend line, as I
    said in my opening statement, is going in the wrong direction.
        [The information referred to follows:]

        Senator Inhofe. Do either one of you want to comment on the
    continued advisability of increasing the entitlement programs
    as opposed to defense?
        Secretary Hagel. Senator Inhofe, my job is the DOD budget,
    and that is what I am focused on. I have presented the reality
    of the budget----
        Senator Inhofe. Okay, I understand that because you are
    given that and then you are doing the best you can, as is
    General Dempsey, within the confines of the budget that you had
    to work with. Is that what you feel?
        Secretary Hagel. Let us start with the fact that we are
    confined by budget caps. That is the reality. It is the budget
    cap that Congress agreed to that confines me, and I start from
    there.
        Senator Inhofe. That is fine. What I am talking about here,
    though, Mr. Secretary, is if that is advisable whether it has
    budget caps or not?
        But rather than to get into that in this limited time, I
    want to get into a couple of other things because it goes
    beyond just the entitlement reform I referred to. Yes, that is
    very real up here.
        I have a Congressional Research Service report that shows,
    and I have been working on this for quite some time, that in
    the last 5 years, between 2009 and 2014, the President has
    spent $120 billion on the environmental agenda, mostly global
    warming, climate, and that type of thing. I did a little bit of
    math. We were talking about the crisis we are in, and I have
    quoted so many people here from the Intelligence Community and
    from the defense community saying that this is a really serious
    crisis that we are in.
        In that respect, if you were just to take the amount that
    was not authorized by Congress, and I am talking about the
    environmental agenda, you could actually buy 1,400 F-35s. I
    think people need to understand that there is a price we are
    paying for all these agendas that have been rejected by
    Congress.
        I applaud your honesty, and the American people do also, I
    think, Secretary Hagel, when you said ``American dominance on
    the seas, in the skies, and in space can no longer be taken for
    granted.''
        We heard from General Odierno. He said such reductions
    ``will not allow us to execute the 2012 Defense Strategic
    Guidance (DSG) and will make it very difficult to conduct even
    one sustained major combat operation.''
        General Dempsey, you said ``we are putting our military on
    a path where the force is so degraded and so unready that it
    would be immoral to use force.''
        General Amos said ``we will have fewer forces arriving,
    less trained, arriving later to the fight.'' This is a formula
    for more American casualties. We are talking about American
    casualties, yes. That is how risk fits into this.
        Under Secretary Frank Kendall said on January 3, ``we are
    cutting our budget substantially while some of the people we
    worry about are going in the opposite direction.'' We have 20
    years since the end of the Cold War and a presumption that we
    are technologically superior, militarily. I do not think that
    is a safe assumption anymore.
        We have another chart that is over here. It is just a
    reminder. I put one of these at the place of each member. It
    talks about the cuts and the fact that defense consumes 16
    percent, down from last year, of the total budget and yet is
    responsible, on the top of that chart, for 50 percent of the
    cuts. We have talked about it several times during the course
    of this presentation. We are alleviating some $26 billion to
    help the military, at the same time it is being held hostage
    because there is another more than $30 billion that will be
    given the same relief to the domestic side.
        [The chart referred to follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Inhofe. That is my 7 minutes. Is that fair?
        Secretary Hagel. Is your question, is it fair?
        Senator Inhofe. That is my question.
        Secretary Hagel. Like I said, Senator, I have the
    responsibility for this budget. Every item you listed on your
    inventory of risks and problems, which we, I think, generally
    agree with, as we all do here. As you have noted, the group
    that has made the comments that you quoted, all accurate, is
    why we have come back up with an additional $26 billion
    request. That is why the President of the United States has
    asked for an additional $115 billion over the caps over the
    next 5 years.
        Senator Inhofe. Yes, but it is still disproportionate,
    domestic versus military. When I say this, I know you folks are
    given a budget. You are given caps, and you have to operate
    within those. To the American people, this does not look very
    realistic. I just think it needs to get in the record and
    articulated as to why we are in the situation we are in right
    now.
        Secretary Hagel. The Office of Management and Budget
    Director is making a presentation this morning about the entire
    budget, and that probably would be the appropriate person to
    ask the question.
        Senator Inhofe. That is good.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Inhofe.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        I first want to begin by thanking Secretary Hale for his
    distinguished service. Mr. Secretary and General Dempsey, thank
    you for your service.
        General Dempsey, when you were looking at the force
    structure, can you give us an idea of the assumptions and risks
    that you contemplated? Does this preclude us from a full
    spectrum of operations to do the force structure that you are
    operating under now or proposing to operate under?
        General Dempsey. At some level, Senator, those are two very
    different questions. The way we size the force is against what
    we believe to be an optimum amount of forward presence,
    rotational presence, and surge capability from the Homeland,
    and against combatant commander war plans. When we laid out
    this force against those activities, at the request of this
    committee, I might remind us, you asked us for many sessions to
    find that place where we think the risk becomes too high, and
    we see that. We can see that point, and it is called
    sequestration.
        The force we have in this budget can meet the requirements
    of the DSG, which was the foundational document on which the
    QDR was developed. I think that as we have a discussion about
    what this force can do in that context, as I said, there is
    higher risk in certain areas. One of those is the conventional
    fights and particularly land forces will take longer to
    generate. But that is a much longer conversation.
        The short answer to your question is, yes, we have done
    that analysis.
        Senator Reed. Let me just follow up with a quick question
    with respect to land forces. Because you have to operate on a
    notion of a rapid deployment of initial forces, then the
    follow-on forces, the ratio between your Active Force and your
    Reserve components is based upon the fact that you have to
    generate forces fairly quickly and have sufficient Active
    Forces to get to the point where Reserve Forces cannot only be
    mobilized but effectively integrated and trained. Is that the
    concept that you----
        General Dempsey. It is, Senator. This is about balancing
    the force such that we have a portion of it readily and
    immediately available. One of the other assertions in the QDR
    and elsewhere is that conflict will generally occur faster, in
    more unpredictable ways, and with higher degrees of technology.
    We have to make sure we balance the Active component to be the
    first responder and then rely upon the Reserves beyond that.
        Senator Reed. Thank you, General.
        Mr. Secretary, Senator Inhofe brought up a very fundamental
    issue we are struggling with broadly, and that is, the
    commitments we have made, particularly to future generations,
    and the resources we have available for not only the military
    but for education and for current investment. There is not a
    precise comparison but an analogy to your proposal with respect
    to some of the health care programs in the military, and some
    of the quality of life issues because you are battling a
    similar dynamic. Of course, let us recognize from the beginning
    these are all earned benefits through sacrifice and service to
    the Nation.
        But if we do not accept or somehow accommodate your
    suggestions, the effect will be that you will have fewer
    resources for Active Forces who have to go in harm's way. It
    affects their training. It affects the platforms that they use.
    It affects everything. That is the fundamental tradeoff that
    you are trying to negotiate at this moment. Is that fair?
        Secretary Hagel. Senator, it is fair, and it is part of the
    overall scope of the balance. I think any strategy, any
    perspective on not just short-term but more importantly the
    long-term responsibilities have to include the balance that the
    Chairman talked about, which we spent a lot of time on.
        I noted it in my statement your specific point about
    preparing our forces. It would be the most irresponsible act of
    a commander in chief or a secretary of defense or any leader to
    send men and women into war not prepared, not equipped, not
    best-led, not best-trained. That is part of the balance. So we
    have to ensure that that will continue. We have that today, but
    there is no assurance we are going to continue to have it. As a
    matter of fact, we will see degradation of that. But at the
    same time, the fair compensation as you say, earned pay, earned
    compensation, and earned benefits, has to be balanced as well.
        We think we have come up with a pretty reasonable balance.
    It is subject to questions. It should be. We should probe this.
    There might be better ways to do it. But as I noted in my
    statement, balance was a very significant part of how we came
    at this.
        Senator Reed. Let me ask General Dempsey. In your
    development, along with your colleagues, of these proposals
    with respect to the issue of existing benefits going forward,
    you, I presume, have had a dialogue with not only the Active
    Duty personnel but the retired forces? Are they the equity
    holders? You have talked to them about these issues.
        Do you feel as if you have done an effective job of
    explaining this to them? Have they responded in terms of
    recognition of these issues and a sense if we do this once and
    we do it right, it is appropriate and acceptable?
        General Dempsey. I cannot guarantee that there will be
    universal acclamation of this proposal. I will tell you that my
    senior enlisted advisor, Sergeant Major Bryan Battaglia, is
    sitting behind me. We have had the senior enlisted of each
    Service involved throughout the process. We have also reached
    out to the veterans support organizations and military support
    organizations. Some of them acknowledge certain parts of it. I
    do not know that any of them acknowledge all of it, but we have
    done our best.
        Senator Reed. I presume that is going to be a continuing
    dialogue?
        General Dempsey. It must be. That is right.
        Senator Reed. Because they have not only an interest here,
    but they have the credibility and legitimacy to be integral
    parts of whatever we do.
        General Dempsey. Right.
        Senator Reed. That is recognized by you and the Secretary,
    I presume.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you so much, Senator Reed.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        Thank you, Mr. Secretary, General Dempsey, and thank you,
    Secretary Hale, for your outstanding service.
        Mr. Secretary, you come here with a budget today, and I
    very much appreciate your comments that you are doing your best
    under the budget constraints that you are forced to abide by.
    Certainly some of the challenges you face have been bred by
    sequestration, as Senator Inhofe pointed out.
        But I do not think it is in dispute, is it, that this
    budget will give us the smallest Army since prior to World War
    II, the smallest Navy since sometime after World War I, and the
    smallest Air Force in that period of time? Admittedly, more
    capable, but certainly the smallest. Would you agree with that?
        Secretary Hagel. Yes, Senator, if you look at just the
    straight numbers, but there is more to it than that. It is
    capability.
        Senator McCain. I am sure there is much more to it. There
    is also a thing such as presence and others. But those are not
    disputable.
        I must say, Mr. Secretary, your timing is exquisite. You
    are coming over here with a budget that we agree on, at least
    on the numbers, at a time when the world is probably more
    unsettled than it has been since the end of World War II. The
    invasion of Crimea, Geneva II collapse, Iran negotiations
    stalled, the South China Sea, China more and more aggressive,
    North Korea fired missiles in the last few days, Syria has now
    turned into a regional conflict, and the list goes on. Today or
    yesterday, China announced its biggest rise in military
    spending in 3 years. On Wednesday, they increased their defense
    budget by 12.2 percent.
        I am sure that she was appropriately disciplined, but
    apparently Katrina McFarland, the Assistant Secretary of
    Defense for Acquisition, told a Washington, DC, crowd today,
    ``right now the pivot is being looked at again because,
    candidly, it cannot happen.'' Then she later, obviously, was
    disciplined and retracted those remarks.
        You come here with a budget that constrains us in a way
    which is unprecedented since previous times is my point, Mr.
    Secretary. There are unnamed quotes out of DOD: no more land
    wars. That is why we are reducing our forces to the degree we
    are. We have seen that movie before, Mr. Secretary. In fact,
    you and I have. We saw it after World War II, and we were not
    prepared for Korea. We saw it after Korea, and we were not
    ready for Vietnam. After Vietnam, we had a Chief of Staff of
    the Army who came over here and told this committee we had a
    hollow Army. Now we are going through the same, ignoring the
    lessons of history again. It is really a shame.
        Which brings me to Crimea. It is widely reported in the
    media today that our intelligence sources did not predict that
    the Russian invasion would take place. Was that true with your
    intelligence sources as well?
        Secretary Hagel. I am not going to get into intelligence
    matters here in an open hearing, Senator.
        Senator McCain. I am not asking for intelligence matters. I
    just want to know whether you were made aware of this threat
    that was going to take place. I do not know how classified that
    would be.
        Secretary Hagel. Senator, as I noted, I was at NATO last
    week, and there was a NATO-Ukraine commission meeting. Early
    last week, we were made well aware of this threat.
        Senator McCain. So despite all the media reports, our
    intelligence sources predicted that Lavrov would invade Crimea.
        Secretary Hagel. As I said, I will not get into the
    specifics in an open hearing. But if you would like a briefing
    to your staff on the specifics of your question----
        Senator McCain. How about commenting on news reports that
    say that?
        Secretary Hagel. News reports are news reports, but that is
    not real intelligence.
        Senator McCain. In other words, the fact is, Mr. Secretary,
    it was not predicted by our Intelligence Community and that has
    already been well known, which is another massive failure
    because of our total misreading of the Vladimir Putin
    intentions.
        Secretary Hagel. Senator, I said that we were----
        Senator McCain. Let me finish my statement, please. Mr.
    Putin was not going to see Sevastopol go into hands of a
    government that was not his client. That is just a fact.
        Now, please, go ahead.
        Secretary Hagel. I said that early last week, we were well
    aware of the threats. When I was in NATO, there was a meeting
    specifically about the threat with the NATO-Ukraine commission.
    I have been speaking over the past couple of weeks, more than
    that, to Ukraine defense ministers. The two I spoke to are now
    gone. So this was not sudden or new that we did not know what
    was going on.
        Senator McCain. The President and the Secretary of State
    have said this is not old East-West. This is not Cold War
    rhetoric. Do you agree with that statement, when Mr. Putin
    denies that there are troops in Russia, when Mr. Lavrov says
    today that they cannot withdraw Russian troops because there
    are no Russian troops in Crimea? Does that have some echoes to
    you of Cold War?
        Secretary Hagel. I think Secretary Kerry addressed this
    pretty clearly in his comments specifically about your point
    about no evidence, no credible----
        Senator McCain. I was asking for your view, sir.
        Secretary Hagel. I agree with Secretary Kerry.
        Senator McCain. Which is?
        Secretary Hagel. He laid it all out about we do not accept
    anything that President Putin said as fact about why they had
    to protect the so-called ethnic minority in Crimea and the
    other reasons that the Russians have laid out as to why they
    took the action they did. I thought Secretary Kerry did a good
    job of directing his comments to President Putin's remarks. I
    agree with what Secretary Kerry said.
        Senator McCain. I thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator Manchin.
        Senator Manchin. First of all, I want to thank you, all of
    you, for your service and, Mr. Secretary, for making a valid
    effort of putting a budget together that was done exactly the
    way it was asked to be done. What would the new DOD look like
    and why should it look differently than what it does today? I
    think you did that. We have to see now if we can all work
    within the recommendations that you put forth. Thank you for
    that.
        As far as DOD being under extreme budgetary pressures to do
    more with less, we understand that, but they have always risen
    to that occasion and I expect the same will be done.
        First, Secretary Hagel, I appreciate those efforts. The
    defense budget review highlights a number of areas, such as the
    foreign cost savings. I am concerned about the plans for the
    2016 fiscal year and beyond. They appear to pay little credence
    to the realities of sequestration. I hope that sequestration is
    going to go away, and I know you talked about that briefly. If
    it does not, are you asking and do you need that flexibility
    that was not in the previous sequestration?
        Secretary Hagel. Thank you, Senator. We do need that, as I
    have noted in my opening remarks, and I go into much greater
    detail in my written statement.
        I would just add one other thing. I appreciate your
    comments about trying to prioritize budgets. Governors probably
    know more about this than anyone, so thank you.
        Senator Manchin. General Dempsey, I have had a concern
    about Afghanistan since I arrived here 3 years ago. I am not of
    the belief that 10,000 troops being left in Afghanistan will
    change the direction. I have always said if money or military
    might would have changed that part of the world, we would have
    done it by now.
        But knowing where we are with Karzai now, knowing the
    unknown as far as the elections coming up, however long that
    may be, ratification or direction we are going, do you truly
    have a plan for pulling out of Afghanistan? I know it has been
    said, and the President has given the order to move in that
    direction. Are we moving in that direction? From that
    standpoint, what will happen with Bagram Air Force Base?
        General Dempsey. If I could, Senator, first I just want to
    speak briefly if we go back to sequestration in 2016, and if
    that means we need more flexibility. Absolutely, but
    flexibility alone will not answer any problems.
        Senator Manchin. Okay. The only thing I know is the
    draconian way it was being administered was not fair to
    anybody.
        General Dempsey. No, no. That is absolutely right. But the
    depth of it is a problem.
        Senator Manchin. I understand that.
        General Dempsey. On Afghanistan, we are there as part of a
    NATO mission, and I always remind us of that. They have a plan
    called Resolute Support for 2015 and beyond that accomplishes
    train, advise, assist, ministerial development, and so forth.
    The NATO plan calls for 8,000 to 12,000, and that is our
    recommendation at this point. That includes a regional
    approach, the hub in Kabul Bagram, and then a modest presence
    in the four corners of the country, in particular, because
    during this period, after their election, there will be a
    period of even greater instability, if that is possible, and we
    think it prudent to do that.
        In the meantime, we have had this challenge of getting the
    Bilateral Security Agreement (BSA) and have been directed to
    make other plans. So we have options between roughly 10,000 and
    0, and those options are being refined because every day that
    goes by, some of them become either more or less likely. In the
    meantime, our retrograde activities are ongoing. Those will not
    be a limiting factor or in any way box in our elected officials
    from making a decision. Retrograde is on path.
        To your question on Bagram, I think if we were to
    considerably shrink our presence in Afghanistan, Bagram would
    be a key node in that force structure, whatever size it
    becomes.
        Senator Manchin. Secretary Hagel, I met with Lieutenant
    General John Campbell last week concerning the repositioning of
    the Army as the budget was put forth. My concern was with the
    National Guard. Again as a former Governor, the Guard is very
    crucial to all of our States, but it is also crucial to the
    backup in defense. It is not the Guard that we knew growing up.
    It is a different Guard today.
        With that being said, I just feel the Guard can be used in
    a much more cost-saving and efficient manner, not having the
    full cost of a full-time military but a backup, if needed, to
    bring forward rather than downsizing the Guard. I think both of
    them were recommended as a reduction.
        Secretary Hagel. Senator, both were recommended for some
    reductions, although the recommendations we made for the Guard
    and Reserve were significantly less than the Active-Duty Force.
    But start with this. The importance and the relevance of the
    Guard and Reserve will continue. There is no question about
    that, especially with the accomplishments and what they have
    achieved over the last 13 years. As you noted, the Guard today
    is a different Guard, and we do not want to lose that,
    absolutely. But their mission is different than the Active
    Duty.
        It goes back to the question that Senator Reed asked me
    about balance. We have tried to balance this, Senator, with all
    the forces. What are we going to need? How are we going to best
    merge and value-add all of our forces together? The Guard and
    Reserve are a critical component of that.
        Senator Manchin. My time is running out.
        The amount of private contractors that we have are mostly
    ex-military anyway, but at a much higher cost. I have been very
    critical about the amount of money and effort that we put forth
    on contractors and it should be back into our military. I know
    you are all looking at the long-term legacy costs also, but I
    believe as a Nation we are much stronger with those people in
    uniform than we are with the contractors that we are using. I
    know you all believe that.
        The Senators that helped, and I cannot, for the life of me,
    understand why I had so much opposition trying to reduce the
    capital on contractor salaries. We thought maybe the same as
    the Vice President's salary might be adequate enough at
    $230,000, but others still believe it needs to be around
    $500,000.
        Secretary Hagel. I think, first, the directive that we
    received from Congress on this that came out of this committee
    has been very clear. I think we have made very significant
    progress. We are not where we need to be yet, but we are making
    tremendous progress bringing that element of our workforce down
    with controls and restrictions. We have it. We are doing it.
    Thank you.
        Senator Manchin. I appreciate it. Thank you all again for
    your service. I appreciate it very much.
        My time is up.
        Chairman Levin. Thank you, Senator Manchin.
        Senator Chambliss.
        Senator Chambliss. Thank you, Mr. Chairman.
        General Dempsey, the Joint Surveillance and Target Attack
    Radar System (JSTARS) Airborne Intelligence, Surveillance,
    Reconnaissance and Command and Control Battle Management
    platform provides theater commanders, as you well know, with
    vital ground surveillance to support targeting and attack
    positions. The Air Force Chief of Staff, General Welsh, has
    made it very clear that the Air Force's top three acquisition
    priorities are the F-35, the KC-46, and the long-range strike
    bomber. But right behind that is the replacement of JSTARS as a
    top priority.
        Now, the budget proposal calls for a 40 percent reduction
    in JSTARS presumably to fund the acquisition of a replacement
    platform. Can we meet battle management command, and control
    requirements with this proposed reduction, and what is the
    proposal to replace this platform?
        General Dempsey. The proposal to replace it, that is to
    say, the next generation of JSTARS capability, is a question I
    will have to go back and get with the Chief of Staff of the Air
    Force.
        But I can tell you that you asked the right question. Can
    we meet current demands with the current inventory of that
    platform? It is very difficult. It is one of our high-demand,
    low-density platforms. Oftentimes, we are faced with either
    employing it, for example, on the Korean peninsula or in North
    Africa. Those are the tradeoffs we make. We try to meet
    combatant commanders at the times when they need them the most,
    but it is hard to maintain a persistent presence with JSTARS
    globally. We have other assets that fill in the gaps, but
    JSTARS is a very valuable asset.
        Senator Chambliss. The proposed replacement is with a
    business jet which, frankly, makes sense because that 707
    platform was old when we bought it and it has gotten older over
    the years. But the folks under you in the Army break out into
    big smiles and their eyes light up when I talk to them about
    JSTARS in theater. We simply have no replacement weapons system
    that I know about, and the number in the budget is far from
    adequate to even begin thinking about replacement.
        I know General Welsh's feeling about this platform. I would
    just urge you to let us rethink this and think about what we
    are going to do long-term. Does it need to be replaced? I agree
    with that. I think it is time. The other options are not that
    concrete and not that positive. As you think about that, I look
    forward to engaging with you.
        Second, in defense of arbitrarily standing down the entire
    fleet of the A-10 aircraft, the Air Force has emphasized the A-
    10's sole use, close air support (CAS), discounting its
    capabilities in combat search and rescue and forward air
    control roles. While there are other assets that can perform
    the CAS mission, none can do so with the same maneuverability,
    loiter time, and targeting capability. I think it is wishful
    thinking to believe that pilots of those other platforms will
    receive the training necessary to be proficient in CAS.
        I agree it is an old platform, but it has done such a great
    job in recent theaters that we have been engaged in. It has
    been absolutely necessary to have it. Does it not make more
    sense, as we phase in the F-35, that that is the point in time
    in which we phase out the A-10 rather than just arbitrarily
    cutting off the A-10? For example, at Moody Air Force Base in
    my State, we are going to take those airplanes out in 2015 and
    2016, but we are not scheduled to even think about another
    tranche of F-35s being designated until about 2022 or 2024. My
    question is, does it not make more sense to phase those out as
    we phase in the F-35?
        General Dempsey. Senator, I am probably one of the few
    people in the room that has actually had an A-10 come to my
    rescue. You do not have to convince me that it has been an
    extraordinarily valuable tool on the battlefield.
        What you are seeing play out here is some of the very
    difficult budget decisions we have to make. In the Air Force,
    the Chief of Staff is trying to reduce the number of airframes
    so that the logistics and infrastructure tail are more
    affordable. In the Army, I am sure at some point we are going
    to have a conversation about going from seven different rotary
    wing platforms down to four. It is the kind of decision we have
    to make with the current budget pressure. I do support both the
    Chief of Staff of the Air Force and the Chief of Staff of the
    Army on their decisions.
        Senator Chambliss. Secretary Hagel, an issue that always
    raises concerns with military families is our commissaries.
    They are a core benefit. They contribute greatly to recruitment
    and retention, even though I am one of those who thinks that
    you may get just as good a deal at some other retail outlets
    around the country that may not be as accessible. The price may
    be better if you listen to Senator Coburn, particularly. But
    you are going to be reducing the $1.4 billion subsidy we pay by
    $1 billion over 3 years. At the same time, you are going to
    encourage the commissaries to act more like a business. It
    makes sense. I agree with that.
        But we also have a study that is going to be forthcoming in
    the early part of 2015 relative to commissaries. Senator Warner
    and I introduced a bill yesterday to leave the level of funding
    in place until that study comes back. Does it not make more
    sense to see what that study recommends, which may recommend
    the elimination of commissaries? I do not know what they may
    recommend. But does it not make more sense to see what that
    study says before we go about reducing the subsidy in a
    significant way?
        Secretary Hagel. Senator, are you referring to the Military
    Compensation and Retirement Modernization Commission (MCRMC)
    that is looking at all this?
        Senator Chambliss. Yes.
        Secretary Hagel. That is an important question, and we did
    look at that issue. We did not come forward with retirement
    suggestions or recommendations based on waiting until the
    commission comes back.
        The other pay and compensation issues that we did come with
    recommendations, commissaries being one of them, it was the
    feeling of our senior leaders and significant analysis. We knew
    enough about where we thought we were going to have to
    eventually go with commissaries and some of the other decisions
    that we made, that we felt we could make the decision now.
        You know we have about 250 commissaries around the world,
    and we are exempting all overseas commissaries and remote areas
    of the United States. We think that if you phase out that
    subsidy over that period of time that we are prescribing, that,
    not unlike the way postal exchanges are funded and self-
    sustained, it makes sense and very good deals will still be
    given and should be given to our service men and women. It was
    a consideration we made as part of the overall set of
    recommendations.
        Chairman Levin. Thank you, Senator Chambliss.
        Senator Hagan.
        Senator Hagan. Thank you, Mr. Chairman.
        Welcome, gentlemen. Thank you for being here.
        Before I start with questions, I want to address an issue
    that I learned about yesterday. Proposals in this budget would
    result in the inactivation of the Air Force's 440th Airlift
    Wing from Pope Airfield at Fort Bragg, NC. With the 440th
    Airlift Wing inactivated, there would be no Air Force planes
    stationed at Pope Airfield. I strongly disagree with this
    decision, and that would adversely affect the readiness of
    troops at Fort Bragg.
        The 440th provides critical support to the 82nd Airborne
    Division and all the other major units that we have at Fort
    Bragg. This support includes 23 percent of the total airlift
    for Fort Bragg's paratroopers and training missions. I just
    wanted to reiterate my strong disapproval of this
    recommendation to inactivate the 440th Airlift Wing.
        I want to go to my questions now. Secretary Hagel, last
    week I helped lead a bipartisan group of 51 Members of Congress
    writing to you about our concerns over TRICARE's sudden change
    in reimbursement policy for critical medical tests. As you
    consider your response to that letter, I want you to think
    about the following two real examples I want to describe to
    you. It applies to servicemembers, families, and retirees that
    will be affected by TRICARE's decision to stop reimbursement.
        Prior to January 1, 2013, an expecting Active Duty military
    family was tested and both were found to be carriers of the
    cystic fibrosis gene. This testing was covered by TRICARE at
    that time, and this was prior to January 1. Based on these
    findings, the delivery of this couple's child was moved to a
    hospital with a neonatal intensive care facility. The baby was
    born in that setting. They were able to address a life-
    threatening complication from cystic fibrosis immediately.
        If these circumstances were to occur today, these same
    cystic fibrosis tests would not be covered by TRICARE, and if
    not performed, the baby might have been born in an
    inappropriate delivery setting. That is the first example.
        A military retiree is in remission from leukemia. His
    civilian oncologist monitors special blood tests for him every
    110 days. This test is considered the most sensitive test
    available to track this type of cancer. His oncologist has told
    him that he would consider it malpractice if he did not use
    this test to monitor and to treat his cancer. The alternative
    covered test is more expensive and an invasive bone marrow
    biopsy.
        Last summer, this individual received a bill for over
    $1,000 for the blood test because TRICARE no longer covered it.
    While appealing the charge to TRICARE, he learned that the test
    would have been covered if it had been ordered through a
    military treatment facility.
        We are showing the dichotomy as to who gets to have TRICARE
    cover this test. These tests truly provide useful information
    to help physicians determine the best course of treatment for
    their patients and are widely considered by the medical
    community to be the normal standard of care.
        TRICARE needs to move quickly and reverse this decision so
    that those who have sacrificed so much for our country are not
    forced to pay out-of-pocket or forego these tests altogether.
        Secretary Hagel, I just wanted to give you that background
    and ask that you promptly respond back so that we can work
    together to fix this problem.
        Secretary Hagel. Of course I will, Senator. I am not aware
    of the specifics of what you are talking about. We will take
    all that. Our staff will be in touch with your staff this
    afternoon to get the specifics and details, and we will find
    out.
        Senator Hagan. Great. Thank you. That is why I wanted to
    give you those two real-life examples of how this really does
    impact current military men and women.
        As part of the fiscal year 2015 budget request, DOD is
    laying out a number of proposals that would negatively affect
    military compensation. While I understand the significant
    fiscal challenges that DOD faces, we cannot seek to balance the
    budget on the backs of our servicemembers. These proposals
    include a lower pay raise, increased out-of-pocket costs for
    housing, lower savings at the commissaries, and increased
    TRICARE fees.
        General Dempsey, I am particularly concerned about the
    combined impact of all of these benefit cuts. How do you see
    these impacting our servicemembers, especially our younger
    members that are enlisted with families?
        General Dempsey. Thank you, Senator. First of all, I
    mentioned that we spend every bit of the year working on this
    package, and we have any number of programs and data management
    instruments that can lay out exactly what the impact is. The
    two cases we use generally are an E6 at 12 years and a
    lieutenant colonel a little bit further in his career, and then
    we project that out to the 30-year point. We can certainly
    provide you that information. We think that this is a
    reasonable approach to getting pay, compensation, and health
    care back in balance.
        By the way, it pains me to hear the characterization of
    balancing the budget on the backs of our service men and women.
    This weighs heavily on all of us. The fact is that manpower
    costs can be anywhere from a third to a half of our budget, and
    we are trying to find about 10 percent of what we need to
    balance the budget out of that account and 90 percent of what
    we need out of the rest of the budget. We have been
    extraordinarily careful not to take some kind of templated
    approach to this. It has been very carefully managed.
        Senator Hagan. Thank you for your comments.
        Secretary Hagel, has DOD fully considered the potential
    impact that these cuts will have to recruitment and retirement?
    With the MCRMC set to release their findings in less than a
    year, does it make sense to perhaps make such across-the-board
    cuts before we actually see the results of that report?
        Secretary Hagel. Senator, as I answered Senator Chambliss'
    question on this, we did take into consideration all these
    different scenarios and possibilities. I think Chairman Dempsey
    laid it out pretty clearly, not just the balance but the
    responsibility we have to our men and women in uniform, the
    commitment we made to them, their families, and their future.
    That is the priority. I think we have come up with a set of
    recommendations that is balanced. We slow the growth of
    increases, and I laid out in my opening statement some of the
    specifics of that.
        We did not do this unilaterally or arbitrarily without the
    senior enlisted, without the Chiefs, but all of our military
    leadership were involved. As a matter of fact, I took
    recommendations as the Secretary of Defense from the Chiefs,
    Secretaries, and Chairman Dempsey on many of these things.
        We know we cannot continue to sustain the kind of growth
    that we are on and still make certain that our men and women
    will be ready and equipped, especially in light of a number of
    points made here earlier this morning about emerging threats
    and technologies. Some of our adversaries are developing pretty
    significant capabilities and technologies that we have to stay
    ahead of. That is part of the balance, but we did look at
    everything.
        Mr. Hale. May I just briefly add?
        Secretary Hagel. Yes.
        Mr. Hale. The reason we need to move now is because the
    budget caps are in place now, Senator Hagan. We have the
    information to go forward, and if we do not, then as has been
    said, we are going to have to cut training and maintenance and
    we do not want to do that.
        Senator Hagan. I thank all of you.
        Secretary Hagel, you mentioned the emerging threats. I
    chair the Subcommittee on Emerging Threats and Capabilities of
    this Full Committee, so I am very keenly aware of some of the
    issues and what we need to do there. But I know all of you
    certainly do take the best interests of our men and women who
    are serving at heart. I appreciate your service. I know you
    have a lot on your plate today. Thank you.
        Chairman Levin. Thank you, Senator Hagan.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman. I want to thank
    our witnesses here for their service during certainly very
    challenging times for our country.
        I wanted to follow up, Chairman Dempsey, on some of the
    remarks that Senator Chambliss made. I am glad to hear you
    describe how you were assisted by an A-10, and I think that
    story could be told many times, particularly by those who serve
    on the ground on behalf of our Nation and our Army. In fact,
    General Odierno came before this committee and described the A-
    10 as the best CAS platform we have today. It has performed
    incredibly well in Iraq and Afghanistan, he said, and our
    soldiers have confidence in this system.
        In the past, even before the performances we have seen from
    the A-10 in Iraq and Afghanistan, is this the first time that
    the Air Force has tried to eliminate this platform?
        General Dempsey. No.
        Senator Ayotte. No, we have been here before. Some of the
    biggest advocates for the platform have been your fellow
    soldiers who have had similar experiences with the A-10. Is
    that not right?
        General Dempsey. Absolutely. I have said this before and I
    will say it again. I will tell you, Senator, what is different
    now is that we had some slack in our budget over the last 10
    years. There is no more slack in it. The margins are really
    very tight.
        The A-10 is the ugliest, most beautiful aircraft on the
    planet.
        Senator Ayotte. I appreciate that. Let us talk about the
    slack because I understand the difficulties that you are all
    under in terms of the budget challenges. It seems to me as we
    talk about values and priorities, the biggest values and
    priorities that I know we all share is to make sure that our
    men and women in uniform have the best support and protection
    that they need.
        Let me say that I agree with what Senator Chambliss said,
    that the A-10 is not a single-purpose airplane.
        Let us talk about what we know is its very important
    purpose, CAS. Recently in a Wall Street Journal article, Air
    Force officials acknowledged, when this article discussed the
    elimination of the A-10, that getting rid of the A-10 could
    lead to higher deaths, longer battles, even defeat on the
    battlefield. This is from Air Force officials. In fact, Major
    General Paul T. Johnson, USAF, the Air Force Director of
    Operational Capability Requirements, said there is a risk that
    attrition will be higher than it should be. That is a clever
    way of saying more people will get hurt and die, and extreme
    risk is that you might not win.
        Here is my concern to all of you and a question. I
    understand the budget environment. Secretary Hagel and General
    Dempsey, your FYDP proposal is to eliminate and phase out the
    A-10 before we even we have an F-35A, which will presumably
    perform CAS, which will effectively not be operational until
    2021. You have it all phased out by 2019. Therefore, we have
    that gap there. When we talk about priorities and we hear Air
    Force officials, and I have heard similar concerns from those
    on the ground, that lives will be at stake, why are we not
    preserving that priority over other priorities?
        General Dempsey. If you do not mind, ma'am, I do not want
    to leave it hanging in the air that I would make a decision or
    support a decision that would put our men and women at greater
    risk. I would not.
        Senator, the CAS can be provided by F-15s, F-16s, F-18s,
    and B-1s with a sniper pod. There are other systems out there
    that can provide the capability.
        Senator Ayotte. We know that, General, but I will not get
    into the debate with you because I do not think you would
    disagree with me that the re-attack times are much faster for
    the A-10 because of the low and slow ability. If you are
    talking about 1 or 2 minutes on a re-attack time, that can be
    the difference between life and death on the ground. I
    understand that other platforms can certainly be part of this
    mission, but the question is, is it worth that time period for
    our men and women in uniform on a platform that has performed
    consistently well?
        The other concern I have is that it seems almost like an
    assumption that we are not going to fight another ground war,
    and I know that Senator McCain asked you that. You do not share
    that assumption, I hope. I do not think any of us want to fight
    another ground war, but I do not think we can go forward with
    that kind of assumption.
        General Dempsey. No, I do not share that view at all.
        By the way, one other point. You will be fortunate enough
    to have the Chief of Staff of the Air Force appear before you
    who happens to be an A-10 pilot. So I think maybe he will be
    able to----
        Senator Ayotte. I know, and I really hope he thinks back to
    his roots. I appreciate that.
        Let me discuss with you the priorities of where we are with
    regard to defense spending right now and share concerns you
    heard echoed across this committee. I also serve on the Senate
    Budget Committee as well and as I look at the President's
    proposed budget in fiscal year 2015, I am thinking about the
    threats we face around the world right now. I know all of you
    have laid out in your testimony that this is a very dangerous
    time around the world with the threats that we face. The
    President's budget actually proposes in fiscal year 2015 a 0.9
    percent reduction in defense, yet a 3.4 percent increase in
    non-defense spending. I think, as we look at the threats and
    the foremost responsibility to defend the Nation as the
    ultimate priority, that ensures that we can do and preserve
    everything else, including our freedom.
        The other thing I wanted to get your commentary on is, if
    you look at what we have spent on defense historically between
    1946 and 2014, we have spent roughly 6 percent of our gross
    domestic product (GDP) on defense spending. Where we are
    headed, based on the President's proposed budget, is that in
    fiscal year 2014 it goes down to 3.4 percent of GDP. As we go
    forward with this budget proposal, by 2024 we are down to 2.3
    percent of our GDP on defense. Do you think that is going to be
    sufficient to defend this Nation?
        Secretary Hagel. Senator, let me go back to a couple points
    I made earlier. That is why, to start with, the President is
    requesting a $115 billion increase over what the current law
    for the next 5 years. I can tell you, I can assure you, that
    this President of the United States puts the defense of this
    country as his highest priority. He knows that is his highest
    responsibility. He knows that he has the responsibility to fund
    the national security interests of this country and to carry
    out the security measures. I think the numbers are somewhat
    reflective of that commitment.
        I will let the Comptroller, if it is okay, respond to this.
    But I think in the five budgets that this President has
    presented, they have been above what have been eventually the
    ultimate number that we received.
        Senator Ayotte. I know that my time is up.
        Secretary Hagel. I do not think there is any question about
    this President's commitment to security of this country.
        Senator Ayotte. I do not want to dispute you on it, but if
    the President's number one priority is protecting the Nation,
    why is it almost a 1.0 percent decrease in 2015 for defense
    spending and a 3.4 increase for non-defense spending? To me,
    that shows you where the priority is, not that there are not
    important priorities on non-defense, but as I look around at
    the threats in the world right now, if his number one priority
    is defending this Nation, his budget does not seem to reflect
    that priority.
        Secretary Hagel. Are you not on the Senate Budget
    Committee?
        Senator Ayotte. I am. I am going there next.
        Secretary Hagel. Good. That is the right question there.
        Senator Ayotte. Good. I will ask it. Thank you.
        Chairman Levin. Just to clarify one number before I call on
    Senator Shaheen, I understand that the $115 billion more that
    is being requested for the FYDP is on top of the $26 billion in
    year 1.
        Secretary Hagel. Yes, that is correct.
        Chairman Levin. So it is a 4-year figure.
        Secretary Hagel. It is a 4-year figure.
        Chairman Levin. Not a 5-year.
        Secretary Hagel. Thank you.
        Chairman Levin. Thank you.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        Secretary Hagel, General Dempsey, Mr. Hale, thank you all
    very much for your service and for being here this morning.
        I would like to begin by echoing some of the concerns that
    many of my colleagues have already expressed and that you all
    talked about in your testimony with respect to Russia's
    provocative actions in Ukraine, and the challenges that means
    for us here in the United States and the international
    community. I certainly hope that we will see action in this
    Senate and in Congress in the next few days, or at least in the
    next week, that will express bipartisan concern and send a very
    strong message to Putin and to Russia that the country is
    united and we think those actions are totally inappropriate and
    unacceptable within the international community and
    international law. I hope that you all will continue to keep
    the committee informed about that issue in the coming weeks as
    challenges change. As you have indicated, things are changing
    there very rapidly.
        In many of the questions so far, people have talked about
    the increasing threats around the world, the significant crises
    we are facing throughout the world today, and the challenges
    that faces for our national security.
        What I hear mostly from my constituents in New Hampshire is
    not really about those challenges. It is about what is
    happening to our men and women in uniform. It is about what is
    happening domestically in terms of our military and its
    footprint in the United States. I represent a State which
    shares the Portsmouth Naval Shipyard, and so that is obviously
    a big issue for us with the Pease National Guard Base and the
    157th Air Refueling Wing.
        As I saw the budget that is being presented, one concern
    that I had was that there is still a request for another base
    realignment and closure (BRAC) round in the future. As chair of
    the Readiness and Management Support Subcommittee of this Full
    Committee, and Senator Ayotte is my ranking member, we are very
    concerned about that. I certainly strongly disagree with
    another BRAC round at this time for a couple of reasons that we
    really need answers to before we can go any further on this
    discussion.
        At our Readiness and Management Support Subcommittee
    hearing last year, I asked Acting Deputy USD for Installations
    and Environment John Conger specifically about the timeline for
    the delivery of a report on our installations in Europe with
    respect to our infrastructure. While I know that is a sensitive
    issue right now, it seems to me if we are going to be making
    decisions about base closures here in the United States, we
    need to have a picture worldwide about what we are facing, and
    Europe is part of that picture.
        Second, I do not think we have heard adequately about the
    cost of another BRAC round and how that would impact our
    ability to save money over time. We know that the last round
    cost about $14 billion more than was anticipated. There have
    been a number of recommendations for how to do this in the
    future that have not yet been adopted by DOD.
        I wonder if you could speak, Secretary Hagel, to that
    concern and to the potential for us to be able to see a report
    on what is happening with our other infrastructure around the
    world, particularly in Europe.
        Secretary Hagel. Thank you.
        We are, since 2000, down the road on our facilities closing
    in Europe by over 30 percent from where we started. We can get
    you the specific numbers, but I think I am pretty accurate with
    that. This committee gave DOD some very clear direction on
    that. We are complying with that. We are continuing to explore
    all of the options everywhere, particularly in Europe. But we
    will give you the specific numbers.
        [The information referred to follows:]

        Between 2000 and 2011, the Department of Defense (DOD) decreased
    the number of sites in Europe from 523 to 366 (a 30 percent reduction).
    Prior to the European Infrastructure Consolidation (EIC) process, an
    additional 70 sites were in the process of being returned to host
    nations, with another 62 identified for possible return. These returns
    are being validated through the EIC process, along with options for
    additional reductions. Once the EIC initiative is complete, DOD expects
    the number of European sites will have decreased by more than 55
    percent since 2000.

        Secretary Hagel. On two or three of the other points that
    you made on the cost, I presume you are talking about the 2005
    base closing?
        Senator Shaheen. Yes.
        Secretary Hagel. As I am sure you know, the focus on that,
    and Chairman Levin knows this very well, was as much on
    reorganization as anything else. Mr. Hale, the Comptroller, can
    give you specific numbers. But we are generating considerable
    savings today, and we will in the out-years, from base
    closings. If I recall, it is around $12 billion a year on
    savings, which we can document. We can show you that.
        The fact is, Senator, that we cannot continue to afford to
    carry infrastructure that we do not need. I wish we could do it
    all. I wish we could keep every platform we have everywhere,
    but we cannot do it all. It does not make sense taking money
    away from infrastructure that we do not need and is not
    relevant. It takes money away from what is relevant, our
    people, our modernization, and our readiness.
        We think BRAC is a smart position to have. We have called
    for it again. We are going to continue to work through all
    this. I have some options as Secretary of Defense in law,
    legally through a section in Article 10 of reorganization and
    so on. But I just think we have to come at this, like I said
    and Chairman Dempsey said, from the beginning with a complete
    understanding of what our needs for the security of this
    country are and going to be, then the requirements in order to
    fulfill our missions to secure this Nation, and our interests
    around the world. That is how we are coming at it.
        Senator Shaheen. I totally agree, Mr. Secretary. That is
    why I hope we will soon see the report on the European
    Infrastructure Consolidation (EIC) because I think that is
    information that would be helpful to this committee.
        Secretary Hagel. If I might, Senator, I will ask the
    Comptroller if he wants to add anything to the report or
    anything I have said.
        Mr. Hale. Another round of BRAC will be very different than
    2005. It will be aimed at saving money. It will probably cost,
    roughly based on historical precedents, about $6 billion. We
    will save $2 billion a year in perpetuity. If we do not do
    that, we are basically wasting $2 billion a year. We need your
    help on this one.
        Senator Shaheen. Do you have any information on when we
    might expect the report on the EIC?
        Mr. Hale. I do not know the exact date, but I will say we
    need to do both. We will cut a lot of Europe and will continue
    to as it is appropriate, but we also know we have domestic
    infrastructure that is unneeded. We need to go after both. I
    know how hard this is, but I do not want to see us wasting
    money.
        Senator Shaheen. I appreciate that, but it would be helpful
    for us to have that information so we can help work with you.
        Thank you.
        Chairman Levin. Senator Shaheen, thank you very much.
        Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman, and I thank the
    witnesses for all being here today.
        First of all, I would like to say, Mr. Secretary, that I
    appreciate your comments that you made last month with regard
    to modernizing our nuclear capabilities and also with your
    attention that you have given the issues that we have with
    intercontinental ballistic missiles. Thank you for that and for
    prioritizing those.
        In the President's speech in Berlin last year, he opened
    the door to additional reductions in nuclear forces. Since that
    time, we have heard numerous testimony and we have heard from
    commanders that further reductions should only come as part of
    a negotiated agreement with Russia. Is that your view?
        Secretary Hagel. Yes.
        Senator Fischer. General Dempsey, do you agree with that?
        General Dempsey. I do.
        Senator Fischer. As I understand it, the Russians are not
    interested in further reductions at this time. Is that true as
    well, Mr. Secretary?
        Secretary Hagel. There are not any further conversations on
    this issue, as far as I know.
        Senator Fischer. General Dempsey, do you also agree with
    that?
        General Dempsey. I do.
        Senator Fischer. Are we talking about or planning any
    additional reductions, whether it is going to be warheads or
    launchers? That is premature, would you say? Is it not really
    practical at this time?
        Secretary Hagel. We continue to work to comply, as the
    Russians do, with the New Strategic Arms Reduction Treaty
    (START) treaty. That is our focus and that is what we are
    continuing to do.
        Senator Fischer. Would you agree with that, General
    Dempsey?
        Are you saying that any addititional reductions in those
    warheads or launchers are really premature?
        Secretary Hagel. Beyond the New START treaty?
        Senator Fischer. Right.
        Secretary Hagel. Yes.
        Senator Fischer. Thank you.
        Also, last week, Mr. Secretary, you announced force
    structure changes. As you can imagine, a lot of us have heard
    about it, and not just from Active military and Reserve, but
    also our National Guard members. Our Governors were here last
    week or the week before as well. What I heard was the
    perception out there that possibly the Guard really was not
    engaged in how this decision was made. Can you speak to that
    for us?
        Secretary Hagel. Yes. First, I met with the Governors
    Council when they were in town, as you may know, and our senior
    representatives spent most of the day with the Governors and
    their staffs.
        Second, just incidentally, I had lunch with Nebraska's
    Governor, and we talked about these issues, as well as others.
        As I have already noted, the priority of the National Guard
    and Reserve in our force structure posture remains a critical
    part of our future and our national security, and we are
    planning for that. The National Guard has its representative as
    the Chief who sits at the table. The Chairman of the Joint
    Chiefs convenes those meetings. So the active participation and
    voice of the National Guard is very clearly heard on all
    matters. General Frank J. Grass, USA, has been an important
    addition to all these issues, recognizing that he represents
    the National Guard. There was no leaving out the National Guard
    on any decision, recognizing there were differences ultimately.
    But make no mistake, the priority of the National Guard's and
    the Reserve's future is critical to the interests of this
    country.
        Senator Fischer. So I can reassure my Guard at home that
    their views were heard? It was a collaborative proposal then?
        Secretary Hagel. General Grass is doing a very effective
    job representing them.
        Senator Fischer. Thank you.
        Back to Ukraine, everyone here has deep concerns with the
    situation there. Can you tell me what the goals are for the
    United States? What is our priority? Is our priority to return
    Crimea to Ukraine? How are we addressing what the priorities
    are for our country with regard to what is happening there?
        Secretary Hagel. Our objective, as the President laid out
    and what Secretary Kerry is doing, is to de-escalate the
    tension, the crisis, so that gives us an environment where we
    can work through the current situation.
        As I noted in my opening comments, a number of diplomatic/
    economic tracks are now in play. The President initiated those
    with our European partners, the U.N., OSCE, NATO, and the
    Budapest Partners that signed the 1994 Budapest agreement. I do
    not know what the status of that is today, but Secretary Kerry
    was supposed to meet with Minister Lavrov today, but I do not
    know whether that has happened or not. The different tracks,
    diplomatic and economic, solve this problem diplomatically. We
    have interests, of course we do. That is the goal. As you
    asked, what are we pursuing and what are we doing? I think it
    is the right approach, the responsible approach.
        Senator Fischer. Would you say our goal is to de-escalate
    tensions or to see the Russians removed from Crimea?
        Secretary Hagel. We have made our position clear. We have
    recognized the new government. We have said that the Russians,
    who have a basing agreement with Crimea, should return their
    troops to their barracks. There is a threshold of how many
    troops they can have in Crimea. This needs to be de-escalated
    where the tensions are down, the troops go back to their base,
    and the new government is allowed to govern and prepare for the
    elections which are set in May. That is the right approach.
        The integrity, the sovereignty of Ukraine has been
    violated. We have made that very clear, and that is the issue
    and will be the issue until that is resolved.
        Senator Fischer. Thank you, Mr. Secretary. Thank you, Mr.
    Chairman.
        Chairman Levin. I am going to call on Senator Ayotte just
    for a quick moment to clarify something, and then I will get to
    Senator Blumenthal.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to correct the record. I received the wrong numbers.
    I incorrectly suggested regarding the President's priorities
    that there was an increase in non-defense spending versus
    defense spending with regard to fiscal years 2014 to 2015. In
    fact, it is the reverse. There is a 1.0 percent reduction for
    defense and a 3.4 percent reduction for non-defense. To the
    extent I suggested that their priorities were reversed for the
    President, that was incorrect based on the numbers. I wanted to
    correct the record for that and any misimpression that was
    given as a result.
        Secretary Hagel. Senator, thank you very much.
        Senator Ayotte. Thank you.
        Chairman Levin. Thank you so much, Senator Ayotte.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        Let me begin by joining my colleagues in thanking you, Mr.
    Secretary, General Dempsey, and Mr. Hale, for your
    extraordinary service and your focus on the strategic
    priorities, which I believe are the right ones for this Nation.
    For example, on the need for additional submarines at the rate
    of two per year in production, for the focus on air superiority
    in the JSF, for the concentration on the needs to keep our
    National Guard and our Reserve Forces strong, and other
    strategic interests that have been the subject of questioning
    so far. I could question about them as well.
        But I want to focus for the moment on one man. He happens
    to be a resident of Connecticut, Mr. Conley Monk, who enlisted
    in the U.S. Marine Corps in November 1968 at the age of 20. He
    went to Parris Island, served in Vietnam from July until
    November 1969, where he was barraged by mortar fire, attacked
    by guerillas, gassed, and subject to rifle fire. He received a
    high proficiency rating for his conduct and performance on the
    field and some months after leaving Vietnam, he began to suffer
    from anxiety attacks, flashbacks, and insomnia, symptoms that
    we now know are associated with post-traumatic stress disorder
    (PTSD). Of course, PTSD was not even diagnosed until 1980. He
    was involved in altercations and other incidents that led to
    his confinement to the brig, and he was given the choice to
    leave the military with an other than honorable discharge and
    he chose to do so.
        That year, when he received that discharge, his condition
    was unrecognized but, of course, now would be recognized as
    such, thanks to the changes in policy. I commend them and I
    know that, General Dempsey, you have been instrumental in
    achieving them. Secretary Hagel, thank you for endorsing them.
    But the fact is that there are thousands, we do not know how
    many, of men who were discharged with other than honorable
    status and have suffered the stigma, shame, and loss of
    benefits. They were wounded twice, first on the battlefield and
    then in civilian life, first by PTSD and then by an other than
    honorable discharge which denied them medical treatment for the
    very wounds that they suffered, as well as employment benefits,
    housing, other veterans benefits.
        To be very blunt, Mr. Monk sued you and your colleagues, as
    did John Shepard before him. I have been involved in supporting
    the legal action, which I hope can be avoided by your
    engagement on this issue. As it happens, you were very
    forthcoming in the confirmation hearings, Mr. Secretary, and
    agreed to review this situation. I am asking you now to commit
    to changing the system because Mr. Monk has waited for 18
    months for the Board for Corrections of Naval Records (BCNR).
    The BCNR has not dealt with his application. He has begun a
    class action on behalf of himself, other organizations, and
    veterans. This system really needs to be changed and
    overhauled. I would like your commitment that you will address
    this situation as soon as possible.
        I supported you because of my confidence that you cared
    about veterans such as Mr. Monk, and the Department of Veterans
    Affairs (VA) is sympathetic and supportive of his situation
    but, obviously, cannot change his discharge. That is solely
    within your power. I continue to be confident, by the way, in
    your commitment to our veterans and our troops. I continue to
    have tremendous respect and admiration for your record of
    service and your commitment to them. This comment on my part is
    not by way of criticism. I know you have a lot of things on
    your mind and it has been a busy year, but I am asking for your
    commitment now.
        Secretary Hagel. Senator, thank you, and thank you for your
    generous comments.
        You have my absolute commitment. As a matter of fact, I
    asked our General Counsel yesterday about this lawsuit. I
    assume you are referring to the larger Vietnam Veterans of
    America?
        Senator Blumenthal. Exactly.
        Secretary Hagel. I took note of it. I asked our General
    Counsel to get back to me this week on it. I will get into it.
    Our staff will get the specifics on Mr. Monk from your staff.
    But I am already addressing the larger issue and taking a look
    at it, and I will do it personally.
        Senator Blumenthal. If I could ask, since I am going to be
    running out of time, for the General Counsel to contact me and
    perhaps brief me further on what steps you are preparing to
    take?
        Secretary Hagel. He will. Thank you.
        Senator Blumenthal. Thank you.
        Let me just briefly deal with the interoperability of
    medical electronic records for the DOD and the VA. I know this
    subject also has been on your mind. Could you update me as to
    what can be done as soon as possible, not only to make this
    system interoperable but also to, in effect, integrate it, make
    it seamless, and truly serve the medical interests of our
    veterans, as well as our Active Duty members?
        Secretary Hagel. Senator, when I went to DOD a year ago,
    this was a high priority, and I restructured the entire system
    within DOD because I became quickly frustrated, like I think
    everyone has, that we were not making progress and should have
    been making progress. We all spent a lot of money on this. I
    essentially put it under the direction of the USD for AT&L,
    Frank Kendall. We brought in a new team a few months ago. That
    new team has been briefing the Hill constantly, particularly
    the House of Representatives and the Senate Committees on
    Veterans Affairs. We have now gone out to the private sector on
    requests for proposals (RFP). We are going to have an
    interoperable system. We work very closely with the VA. I have
    DOD personnel at DOD and for months I have been working with
    them on the seamless transition of records. This is aside from
    this particular project. We have DOD personnel out in the State
    of Washington, assigned out there to the VA. Secretary Shinseki
    and I work very closely on this.
        We are going to get there. That is the goal. We will attain
    that. We will be putting an RFP out in the next couple of
    months, this year, of course, but sooner rather than later. We
    have had three different industry meetings. We have asked for
    those RFPs. They are out. We have gotten the response, and we
    want to make sure that we have an interoperable system with the
    VA, but also the private sector as well. We have now
    computerized the health care records, but we have some other
    things that we need to do as well. So I get it. We are doing
    it. If your staff would like a specific briefing on this, we
    can do that.
        Senator Blumenthal. I was just going to ask you whether
    that would be possible, and I would appreciate it.
        My time has expired, but I would just like to say when the
    General Counsel contacts me about the Vietnam veteran PTSD
    situation, keep in mind I am not asking about only Mr. Monk. I
    am asking about the literally thousands of others who suffer
    from PTSD, a condition that was undiagnosed until 1980. Many of
    them still suffer the shame and stigma of an other than
    honorable discharge, which in my view should be corrected so
    that they can have the benefits of having served our Nation.
        Secretary Hagel. I understand that and I know your long
    record on this. Thank you.
        Senator Blumenthal. Thank you.
        Chairman Levin. On that last item, it is a critically
    important item that Senator Blumenthal has been raising. In
    addition to directly reporting to him of what your decision is
    relative to that matter, would you let the committee know? I
    will share that with all the members of the committee. Senator
    Blumenthal has touched the issue which is very significant, and
    I think strikes a chord with all of us.
        Secretary Hagel. Yes, I will.
        Chairman Levin. Thank you.
        [The information referred to follows:]

        My staff has reached out to your staff to discuss this issue.

        Chairman Levin. Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        Thank you all for your service.
        We will try to get through a lot of ground here.
        Sixty-five detainees were released from Parwan Prison by
    the Karzai Government. I want to thank General Dempsey and
    Secretary Hagel for speaking out strongly, and supporting
    General Dunford. Secretary Hagel, I know you have been
    intimately involved in this issue.
        Do both of you believe it would help if Congress spoke
    about the consequences to our force and to the Afghans of
    continued release of detainees of this nature?
        Secretary Hagel. Senator, I do think it would be very
    helpful. You probably understand it as well as anybody in this
    body for reasons we know. I appreciate your leadership, as I
    have told you and as I have said publicly. But Congress' voice
    on this would be very important because this is a huge threat
    to our people.
        Senator Graham. I worry about more to come in the last
    hours of the Karzai administration. Senator Levin and I have a
    bipartisan resolution condemning these actions and threatening
    to cut off economic assistance, if they continue. I would like
    to urge my colleagues to find a way to get that passed as soon
    as possible. I do want to thank you both there.
        Sequestration was not your idea, was it, Secretary Hagel?
        Secretary Hagel. No. Let the record show.
        Senator Graham. Nor was it yours, General Dempsey?
        General Dempsey. No, Senator, it was not.
        Senator Graham. Whatever differences we may have, the
    problem that we are discussing was created by Congress and the
    White House. Please do not misunderstand what is going on here.
    The military has never suggested this road map we have set out
    for them. It was part of the U.S. Congress Joint Select
    Committee on Deficit Reduction's punishment clause, and here we
    are. I just want to let everybody know that you did not create
    this problem. You are going to have to help us solve it and
    live with it.
        But having said that, we will talk about some things about
    the budget. Reforming and dealing with personnel cost is a
    must, no matter how much money you have in the budget. Do you
    agree with me, General Dempsey?
        General Dempsey. I do, Senator. There are some things we
    should do, sequestration aside, and that is one of them.
        Senator Graham. I agree. I want to be generous to our
    military men and women. I want TRICARE to be a great deal, but
    a sustainable deal. TRICARE growth is on the path, Mr. Hale, of
    being unsustainable, is it not?
        Mr. Hale. I would rather put it that if we can slow the
    growth there, we can spend the money where we need it more.
        Senator Graham. The problem is that as it grows, it crowds
    out the rest of the budget. We have not had a premium increase
    since 1995. Is that correct?
        Mr. Hale. Actually, a couple of years ago, you did allow
    some modest fee increases in TRICARE Prime.
        Senator Graham. Structurally it has not changed much.
        Mr. Hale. That is correct.
        Senator Graham. I want to compliment you for putting all
    these tough issues on the table. Whether or not I agree with
    each proposal, I hope Congress will back you up as to how we
    sit down and look at future retirement benefits, grandfather
    everybody, and whether or not you should be able to retire at
    half pay for the rest of your life when you are 42. That is why
    I am waiting on the commission when it comes to TRICARE
    reforms, to look at everything, including commissaries. Count
    me in on reforming the military. Count me out when it comes to
    gutting the military.
        With that understanding, I would like to talk a little bit
    about our budget here. Mr. Hale, what percentage of GDP are we
    spending on our national defense in this budget?
        Mr. Hale. In 2015, it will be about 3.2 percent for DOD.
        Senator Graham. Historically in times of peace, is that low
    or high?
        Mr. Hale. It depends on what history you are looking at,
    but I know where you are going. If you go back 10 to 20 years,
    it was a lot higher.
        Senator Graham. Help me get there because I only got----
    [Laughter.]
        Mr. Hale. It was higher in the past. I would argue it is
    not a very good measure to determine the size of the budget,
    but it was definitely higher in the past.
        Senator Graham. Apples to apples, it has been well over 5
    percent in times of peace.
        Do you consider this, General Dempsey, a time of peace?
        General Dempsey. No, Senator. It would be hard to describe
    it that way.
        Senator Graham. It would be hard to describe this as a time
    of peace. The budget, 3.2 percent, is dramatically below what
    we would spend on our military in time of peace. We will see if
    we can reconcile that.
        Now, let us talk a little bit about the ongoing conflict.
    Have you talked with anyone in Ukraine on the military side,
    Secretary Hagel, that would indicate that if Russia continues
    to advance and there is a military conflict, if they move
    eastward toward Kiev, that they would request armaments from
    NATO?
        Secretary Hagel. I have not spoken with anyone who has
    suggested that or asked that.
        Senator Graham. We hope it does not happen. Let us say that
    Putin, for some reason, moves forward and he moves forward
    toward Kiev beyond Crimea. Would you support providing arms to
    Ukraine, if they asked NATO?
        Secretary Hagel. If it is a NATO decision, that would take
    all 28 members of NATO.
        Senator Graham. What would our vote be?
        Secretary Hagel. I do not know. It would depend on the
    circumstances. You know the NATO relationship with Ukraine.
        Senator Graham. What if they asked us unilaterally?
        Secretary Hagel. To provide them armaments and equipment?
        Senator Graham. Yes, as Russia marches toward Kiev, under
    that scenario.
        Secretary Hagel. That would be a presidential decision, and
    he would make that decision. We would give him recommendations.
        Senator Graham. I hope it does not happen, but I just want
    Russia to know that we are not going to sit on the sidelines
    forever here. If they have an escalation plan in their
    thinking, I would like them to know what comes their way, if
    the Ukrainian people are willing to fight and die for their
    freedom. I do not want any American boots-on-the-ground, but
    that is something we need to think about as a Nation.
        When it comes to 420,000 or 440,000 people in the Army,
    what percentage of that 440,000 would actually be trigger-
    pullers, people who go in and knock down doors and shoot
    people?
        General Dempsey. The Chief of the Army will appear before
    you. One of his institutional reforms is to rebalance tooth-to-
    tail.
        But maybe the other way to answer that question, Senator,
    is that the Army provides a lot of capabilities to the joint
    force, a lot of enablers and a lot of logistics. At any given
    time in any force, you can count on about a third of it being
    deployable.
        Senator Graham. A third of it being deployable.
        If we decided as a Nation to have 500,000 people in our
    standing Army and 360,000 people in the Guard would that be an
    irresponsible decision? Would we be throwing money away, given
    the threats we have?
        General Dempsey. I would have to go back and do the kind of
    analysis that we have done to get to 450,000.
        Senator Graham. I just want the point to be that the
    analysis of numbers is budget-driven, not threats. You are
    living in a budget confine, right? You are coming up with
    numbers to do the best you can with the money you have. I am
    asking you and Secretary Hagel, if the country wanted a
    500,000-person Army, would that be a waste of money if you had
    all the money in the world to spend, is that too much?
        General Dempsey. Can I first react to the characterization
    of this as entirely budget-driven? If it were entirely budget-
    driven, we would have accepted the levels of sequestration and
    built the budget accordingly. We have not. We have said that is
    too far and that we can provide the Nation's security needs at
    a higher level.
        Whether we would go higher again, I think I would have to
    do the analytics to figure out what to do with that.
        Senator Graham. Secretary Hagel?
        Secretary Hagel. I think Chairman Dempsey is exactly right.
    That is what we would have to determine.
        Senator Graham. Would you like to have a 500,000-man Army
    to defend the Nation, Secretary Dempsey?
        General Dempsey. I hope you just did not call me
    ``Secretary.'' [Laughter.]
        Senator Graham. Excuse me, I am sorry.
        General Dempsey. Then I would have to answer the question.
    [Laughter.]
        Senator Graham. I do not want to demote you here, I
    apologize. [Laughter.]
        General Dempsey. You know what, Senator? What I would
    really like is budget certainty and the flexibility to use the
    money I have responsibly, show you what that does, and then ask
    you: is this what you want to do?
        Senator Graham. Final question. If in year 10 of
    sequestration, our national security spending on defense is at
    3 percent or less of GDP, what kind of risk would that entail
    and is that smart?
        Secretary Hagel. I think the way we have to answer that, or
    analyze an answer for you, would be as we have done as we have
    prepared that QDR. What do we need? What do we require to
    defend the national interests of this country and protect this
    country? I do not know where that comes in. Does that come in
    at 4 percent or 3.5 percent or 3.2 percent? I think that is
    where you start, Senator, and then you match what those
    resources would be in order to accomplish the mission of
    securing this country.
        Senator Graham. Will you send me a statement doing that
    actually? I want you to do that exercise. Use 3 percent of GDP
    spending as the amount of money you will have, compare the
    risk----
        Secretary Hagel. For how long?
        Senator Graham. For the next 20 years.
        Secretary Hagel. For a certainty of 20 years?
        Senator Graham. Yes.
        Chairman Levin. Okay. While you are thinking of an answer
    to that----
        Secretary Hagel. We can run models. Sure.
        Chairman Levin. If you could get the committee and Senator
    Graham those models, that would be great.
        [The information referred to follows:]

        Based on conservative assumptions, the real gross domestic product
    (GDP) in 2034 is projected to be approximately $28.8 trillion in fiscal
    year 2014 dollars. The methodology used by the Congressional Budget
    Office, extended to 20 years, projects defense spending in 2034 to be
    about 2.2 percent of GDP which is over $600 billion in fiscal year 2014
    dollars. This would represent real growth in defense spending relative
    to today. If instead, defense spending is sustained at 3 percent of
    GDP, it could experience further growth, and thus lower risk.
        However, funding projections alone cannot determine risk. For
    example, a lot depends on the future security environment and how
    successful we will be over the next 20 years in deterring aggression
    and helping to bring about a safer world. We must also recognize the
    likelihood of technological and strategic surprise during this period.
    The other crucial variable is whether the Department of Defense (DOD)
    will be able to get its internal cost structure under control,
    including changes to military compensation and the military health
    system, as well as infrastructure consolidation and other institutional
    reforms. Additionally, a lot depends on the purchasing power of defense
    dollars. The defense sector has historically experienced higher rates
    of inflation than other sectors. Through the Better Buying Power
    initiative and other efforts, DOD is working to improve on that record.

        Chairman Levin. Now, the vote has started. I am going to
    run over to the Floor, vote, and come back. Senator Donnelly is
    next. When you are done, Senator Donnelly, would you turn this
    over to the next Senator who is here on this list that will be
    given to you? Then we will keep going from there. If there is
    no Senator who is back from voting, then we will take a short
    recess. Senator Donnelly?
        Senator Donnelly. Thank you, Mr. Chairman.
        General Dempsey, Secretary Hagel, and Secretary Hale, thank
    you again for all your service.
        In regards to the BSA in Afghanistan, and I apologize if I
    am asking you a question you have already been asked, is there
    a time when it becomes unworkable to do it? Is there, in your
    mind, a date like July or August, where you look up, we still
    have nothing, and you say the sands are out of the hour glass?
    Mr. Secretary?
        Secretary Hagel. The President has asked us for options,
    ranges of options, a scope of options, which we have provided,
    and the range of those options are, as Chairman Dempsey noted
    earlier, what we think it would require to do a train, assist,
    and advise mission, a counterterrorism mission, all the way if
    we come out. As far as the cutoff date, General Dunford and his
    leaders have framed up the general timeframe on this, and I
    will let Chairman Dempsey respond in any detail. But we, of
    course, had to look at that general timeframe just for the
    reasons you mentioned, because if we do not have a BSA, which
    the President made very clear to President Karzai, we have no
    alternative.
        Senator Donnelly. General, I think you know I am familiar
    with the timeframe. But when you are looking at September 15,
    do you have time to get this done?
        General Dempsey. Here is how I would answer it, Senator. We
    are in a condition of low risk right now. Our retrograde is
    going on pace. So the risk of having retrograde be affected is
    low. By about the middle of the summer, it goes to moderate. By
    the fall, it goes to high.
        Senator Donnelly. Okay.
        In regards to the ANSF, what is your assessment now of
    their ability? Once we go, we have trainers left. If a BSA is
    put in place, what's their ability to do the job? Are we
    continuing to stay on our metrics, as we had planned out to
    December 2014? What are your thoughts as to how they do once we
    are gone?
        General Dempsey. Tactically, they are capable today of
    sustaining the fight against those that are fighting them.
        Institutionally, that is to say, how they budget, how they
    pay, how they resupply, and how they procure, they are nowhere
    near being ready to do that on their own. That is the level at
    which I think we need to focus not only in the time remaining
    to us, but in the time beyond the end of 2014.
        Senator Donnelly. I know all of your commitment to this. I
    just wanted to mention it again. We have seen an article on
    suicides in the Army Reserve and in the Guard, down in Active
    but up again there. Any additional focus you can put on this
    would be extraordinarily important. If you need more resources
    in this area, let us know. This is a resource challenge for you
    as well, financially. But there are so many challenges for our
    Active Duty. You have done such extraordinary leadership jobs.
    Anything we can do to try to lift this burden off would be very
    important. Do you have all the resources you need in that area
    right now?
        General Dempsey. Yes, I think we do, sir, and generally
    because we have made the deliberate effort to place them there.
    But it requires constant recalibration. If it ticks up, we have
    to try to understand why.
        Senator Donnelly. Secretary Hagel, when we look at Ukraine
    and our NATO allies, and you hear or read, and I do not know
    how accurate it is, that some are not as eager to put up a
    stiff spine as others, how is coordination going with our
    European allies and NATO allies there?
        Secretary Hagel. I think the European allies understand
    this threat rather clearly, especially those on the border of
    Ukraine. The President has been very clear about our support of
    the people of Ukraine, their independence, and the integrity of
    their sovereignty, and I think Secretary Kerry has been very
    clear on that point.
        We have recognized the interim government, and as I said
    earlier, support the process toward elections. Let the people
    of Ukraine decide their future. You know the OSCE's
    announcement of their $15 billion commitment that they have
    made. In collaboration with the European allies, as well as
    others, Secretary Kerry noted a $1 billion U.S. commitment. I
    hope that Congress would move on that with some dispatch. The
    IMF is looking at different options.
        All of our allies, and particularly the Europeans, are all
    part of this effort. The whole diplomatic/economic track that
    is being used right now is the responsible way to approach
    that. There is very clear participation and active
    participation with our allies here.
        Senator Donnelly. Thank you.
        The stiff spine of all of you is critically important,
    obviously, and we appreciate it very much.
        With that, I will conclude my questions. Senator Lee is
    next in the queue.
        Senator Lee. Thank you, Mr. Chairman.
        Thanks to all of you for joining us. Thanks for your
    service on behalf of our country, it is deeply appreciated.
        Secretary Hagel, the administration has yet to make an
    Overseas Contingency Operations (OCO) request, I believe,
    because the President has yet to make a determination as to the
    specifics regarding a residual force in Afghanistan.
        Estimates that we hear on what might remain in Afghanistan
    run along a spectrum. At one end of the spectrum, we hear high
    estimates suggesting there might be 10,000 troops or so
    remaining after the withdrawal. Others suggest that it might be
    closer to zero. But even at the higher end of these estimates,
    if it were at the 10,000 range, this would still represent
    nearly a two-thirds decrease in our presence in Afghanistan
    next year. Can we expect, in light of that, to see a
    corresponding decrease in the OCO request for next year?
        Secretary Hagel. Thank you, Senator, for your question.
        I am going to ask the Comptroller to answer the specifics
    because that part of the budget, the OCO part of the budget,
    has many things in it. There are readiness issues and so on. It
    is not just Afghanistan. You have correctly noted we are
    waiting to see if we get some better clarity on the future
    post-2014.
        But let me ask the Comptroller to go a little deeper.
        Mr. Hale. A decrease but not proportional, Senator Lee, and
    as Secretary Hagel said, there are items in there that will not
    come down in proportion to boots-on-the-ground. Reset, fixing
    equipment as it comes out, ANSF are possibilities, and there
    are others as well. I am not prepared to give you a number. It
    will come down, but I would not expect it to be proportional.
        Senator Lee. Okay.
        Secretary Hagel, you have outlined some very specific
    reductions in end strength within the Army, its Reserve units,
    and within the Marine Corps. You were a little less specific on
    your reductions to DOD civilian employees and civilian
    contractors. Can you give us an update on your plan to cut 20
    percent of major headquarters operating budgets and other ways
    of making cuts in civilian personnel?
        Secretary Hagel. Yes, and we can give you a very detailed
    progress report, which we can give your staff a briefing on.
        But to answer your question, General Dempsey and I both led
    the effort for all headquarters across the world, joint
    service, combatant command, and obviously, starting with my
    office. That plan is underway. That plan is progressing. We are
    continuing to follow it out. I would be glad to give you a more
    detailed report.
        Senator Lee. Thank you, I would appreciate that.
        [The information referred to follows:]

        The Department of Defense (DOD) proposes an institutional reform in
    the fiscal year 2015 budget to reduce management headquarters operating
    budgets by 20 percent. This reform is part of DOD's greater efficiency
    efforts recognizing the need to consolidate duplicative efforts, reduce
    overhead, and achieve better alignment in support of a smaller force of
    the future. It is estimated to save $5.3 billion over the 5-year period
    from fiscal years 2015 to 2019.
        This savings estimate included savings from all headquarters; the
    Office of the Secretary of Defense (OSD), the Joint Staff, the Military
    Services, combatant commands, defense agencies, and field activities.
    Specifically for OSD, former Secretary of the Air Force Mike Donley led
    a review of each of the principal staff agencies. Based on his review,
    the following changes were directed. The Deputy Chief Management
    Officer (DCMO) is responsible for monitoring and reporting progress on
    these initiatives.

             Strengthening the Office of the DCMO to meet Office of
            Management and Budget and congressional expectations for better
            coordination and integration of DOD's business affairs by
            realigning the Office of the Director of Administration and
            Management (DA&M) and its subordinate elements and resources
            within the DCMO structure, better enabling DCMO to fulfill its
            responsibilities.
             Strengthening the capability of Office of the DOD
            Chief Information Officer's (CIO) to address the growing
            ability of other information technology (IT) and cyber
            challenges, to improve oversight of IT resources, and to
            further enable successful implementation of the Joint
            Information Environment through the realignment of the
            oversight of business systems from the DCMO to the DOD CIO,
            allowing each organization to focus on its core
            responsibilities.
             Restructuring the Office of the Under Secretary of
            Defense (USD) for Policy to balance workload across its
            Assistant Secretaries of Defense (ASD), sustain emphasis on the
            Asia-Pacific region, and strengthen focus on security
            cooperation.
             Directing the Acting USD for Personnel and Readiness
            to undertake a study to rebalance internal resources across the
            office's three ASDs, to better position this office to address
            major concerns related to DOD downsizing, such as readiness,
            total force management, and compensation.
             Directing the USD for Intelligence to establish its
            post-September 11, post-Operation Iraqi Freedom/Operation
            Enduring Freedom steady-state configuration and level of
            effort.
             Combining the Office of the Assistant to the Secretary
            of Defense for Intelligence Oversight with the Defense Privacy
            and Civil Liberties Office under the DA&M.
             Realigning the Office of Net Assessment (ONA) under
            the Office of the USD for Policy, preserving it as a distinct
            organization that reports to the Secretary, through the Under
            Secretary, to better ensure that ONA's long-range comparative
            analyses inform and influence DOD's overall strategy and
            policy.
             Approving plans for eliminating the five remaining
            non-presidentially appointed, Senate-confirmed Deputy USDs,
            fulfilling the direction from Congress.

        The operating budget for OSD was reduced by 20 percent. This
    reduction did not apply to budget items such as Capital Security Cost
    Sharing which helps pay for embassy security and the Combatant
    Commanders' Exercise and Engagement Training Transformation fund. These
    items are not management headquarters and were therefore excluded from
    the 20 percent reduction.
        The reductions are programmed on a ramp of generally 4 percent per
    year with a full 20 percent savings being realized in fiscal year 2019.
    This allows the reductions to be monitored on an annual basis.
        DOD is taking steps to provide increased transparency of management
    headquarters data. This will also help ensure that these reductions are
    realized. Any potential growth in management headquarters relative to
    the President's fiscal year 2015 budget submission will be reviewed by
    the Deputy Secretary of Defense.
        Section 904 of the National Defense Authorization Act for Fiscal
    Year 2014 requires a report on headquarters reductions which is due
    this summer. DOD is preparing this report, which will include more
    specific details on planned savings.
        Several other studies with a focus of further reducing the fourth
    estate are ongoing, and we anticipate additional reductions, where
    appropriate, in future budget submissions.
        DOD's total civilian full-time equivalent (FTE) reduction
    (including the management headquarters reduction) reflected in the
    fiscal year 2015 budget is 5 percent over a 5-year period from fiscal
    year 2014 to fiscal year 2019. Below is DOD's detailed civilian FTE
    profile over this time period.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Hale. May I briefly comment on the civilian full-time
    equivalents? They will come down about 5 percent, Senator Lee,
    from 19 percent to 14 percent. They are coming down. We need
    your help here. The way to cut civilians is BRAC because if you
    get rid of a brigade combat team, you do not get rid of
    civilians. You close the base where they work. If you no longer
    need it, then you can get rid of them. If we are going to see
    sustained reductions, we need your help in allowing us to close
    unneeded infrastructure.
        Senator Lee. Thank you.
        Mr. Secretary, the recent action by Russia in Crimea is
    alarming and it is part of a series of disappointments that we
    have seen since the Russian reset between the Syrian crisis,
    the situation with Edward Snowden, repeated Intermediate-Range
    Nuclear Forces (INF) violations by Russia, and now we have this
    situation in Ukraine. We have had a disappointing series of
    setbacks with Russia as it relates to our relationship with
    Russia.
        I want to talk to you a little bit about energy policy and
    how this might factor into that. It is of concern to me that
    some of the countries, including many of the democracies in
    many parts of the world, that should be more inclined to stand
    up to Russia are perhaps not in a position to do so because of
    the fact that they are heavily dependent on Russia for their
    energy needs, given their dependence on Russian-produced oil
    and natural gas.
        Do you not think that it would be in the national security
    interests of the United States to open up our domestic
    production of oil and natural gas specifically for purposes
    related to our national security? Is it not in our national
    security interests if we could open up our own production of
    oil and natural gas and make sure that we are able to export
    those commodities to a significant degree in the international
    market? The government in Russia, the plutocracy in Russia, is
    funded by this dependence on Russian oil and natural gas. Would
    that not help ameliorate this problem?
        Secretary Hagel. The short-term crisis that we are dealing
    with, Senator, is probably not going to be ameliorated with
    that dimension. However, your larger point is an important one
    about energy and production of energy. It is not insignificant
    that North America is going to be, essentially, as we fulfill
    the capabilities of our technology, the number one producer of
    energy in the world. As to the markets opening and what kind of
    leverage it gives us or not gives us on relationships with
    Russia or anyone else, markets always and economics always
    dictate different dynamics of any foreign policy equation.
        Senator Lee. Finally, Mr. Secretary, in light of the
    deterioration of our relationship with Russia, as I have just
    described, will the United States continue to pursue a new
    nuclear weapons treaty with Russia as the President outlined in
    his speech in Berlin last June?
        Secretary Hagel. We are pursuing compliance with the New
    START treaty. There is no new treaty.
        Senator Lee. Any new reductions in our nuclear forces?
        Secretary Hagel. I think the President has made clear that
    would not be unilateral. We would do it in conjunction, as we
    have in all past reductions.
        Senator Lee. I assume you would agree that recent events
    would give us certain pause in approaching that.
        Secretary Hagel. Certainly, but this President has started,
    and I think every President, with the Ronald Reagan theme of
    ``trust but verify.'' That is why you have verification
    procedures in place for all these treaties which are critical.
        Senator Lee. I understand, and I would only add that given
    their failure to comply with the agreements that we have, I
    have significant concerns about that.
        But I see my time has expired. I thank you for your
    testimony. Thank you, Mr. Chairman.
        Senator Kaine. Thank you to the witnesses for being here,
    your service, and the testimony today.
        I want to associate myself with Senator Lee's comments. I
    think the U.S. energy position gives us a significant national
    security opportunity. Just contemplate U.S. sales of natural
    gas, for example, to the six nations to whom we give waivers
    that need to buy oil from Iran. Our natural gas gives us the
    ability to help wean away those countries from reliance on
    Iranian oil. Similarly, the nations that purchase oil from
    Russia and often feel constrained because they do not have
    other sources to purchase oil or natural gas, we would have an
    enormous opportunity there.
        Be that as it may, I just want to make a point, and this is
    really for Secretary Hale, as a follow-up question for the
    record. As I read the testimony about the President's budget,
    you are seeking in this FYDP relief from sequester but not the
    full elimination of sequester. By my math, if we do exactly
    what you have asked us to do and we combine that with the
    earlier sequester relief that was contained in the 2014-2015
    budget deal, DOD will still be absorbing 54 percent of the
    sequester cuts that were imposed pursuant to the BCA of August
    2011. We are going to ask that question for the record because
    I think it is important for folks to know that DOD is not
    coming here and saying, ``give us relief from the entirety of
    sequester.'' You have made a bunch of very difficult decisions,
    and while you think any sequester, like I do, is foolish, you
    nevertheless are accepting the reality of more than half the
    sequester even in your presidential budget submission today.
        Am I in the ball park on that, Secretary Hale?
        Mr. Hale. Yes. There are a thousand ways to calculate it,
    but I think you are in the general ball park. There have been
    cuts associated and in the non-defense side too, I might add,
    associated sequestration.
        Senator Kaine. But we will submit a question for the record
    to specify exactly what cuts DOD has absorbed, even if the
    desired state of affairs occurs and we support the President's
    budget submission.
        Second, with respect to carriers, Secretary Hagel, your
    testimony on page 6 today of the prepared testimony basically
    says the President's budget plan enables us to support 11
    carrier strike groups, including the USS George Washington and
    its carrier air wing. Before I get into some particulars about
    it, is it the policy position of both DOD and the White House
    to continue to support an 11-carrier Navy?
        Secretary Hagel. Yes, it is.
        Senator Kaine. That is not just a policy position of the
    White House and DOD. It is also a statutory requirement, 10
    U.S.C. 5062(b). It is a congressional statutory policy as well.
    Is that correct?
        Secretary Hagel. That is correct.
        Senator Kaine. So any reduction of the carrier force from
    11 to 10 would not just be a matter of a budget line item, but
    it would also require a change in the statutory language, is
    that not correct?
        Secretary Hagel. That is correct.
        Senator Kaine. Now, in your opening testimony, and the
    chairman got into this topic a bit--you testified here but also
    in the speech that you gave last Monday that if the President's
    budget is enacted, the George Washington will be overhauled,
    just to focus on carriers for a second. I looked at the
    President's budget when I received it to determine how the 2015
    and 2016 budgets and beyond actually accomplished that. As the
    chairman indicated, I was a bit confused about that. I gather
    that the same could be said about the Marine Corps force end
    strength, the Guard end strength, the Army end strength, and
    the carrier issues. If I just look at the initial budget
    submission, I would probably be confused if the President's
    budget is enacted, would those priorities, in fact, be funded?
        Could you explain how, either in the budget document or
    documents to come or directives that have been put out within
    DOD, the enactment of the President's budget will make sure
    that those requirements, the statutory requirement in carriers,
    in particular, will be accomplished?
        Secretary Hagel. I will. I am going to ask the Comptroller
    to go into the more detailed explanation.
        As I had explained earlier, there are four, force
    structure, Army, Reserve, and carrier in the FYDP plan in those
    decisions that you just went through--there are about four of
    them, some force structure, Army, Reserve, and carrier. In the
    budget, we planned for current law in 2016 with sequestration.
    But I have sent directives to the Chiefs saying that if we get
    an indication, which we hope we will, that sequestration will
    not continue picking up in 2016, then we have time to plan. We
    do not have to make that decision right now because there is an
    air wing associated with this. There are people, there are a
    number of things associated with this particular issue. We have
    time to make those adjustments.
        So I understand the confusion on how we did it and why we
    did it. Let me stop there and ask Secretary Hale for further
    clarification. Thank you.
        Mr. Hale. With respect to the chairman, I think what we did
    is not a disconnect. It is prudent planning. The law of the
    land is sequestration. We do not know what Congress is going to
    do. For those force elements where we need time to plan, like
    carriers and Army Active end strength, we have put the
    sequester goal in the out-years of our 5-year plan. We have
    also said, as the Secretary has said, and have done it now in
    writing, if Congress gives us an indication they will
    appropriate at the President's budget for fiscal year 2015
    level over the period 2016 through 2019, we will stop the
    drawdown of the Army. We will keep the carriers at 11, and we
    will go back in next year's plan and make the changes we have
    to to accommodate that.
        Does that help?
        Senator Kaine. It does. I may ask a follow-up specifically
    on the record for that because the unequivocal nature of that
    commitment is an important one. If we battle hard to get
    sequester relief, we want that commitment to be an unequivocal
    one.
        Mr. Hale. But there is an ``if'' statement there. We have
    to have some indication from Congress that you are going to
    appropriate.
        Senator Kaine. Then you have just anticipated my next
    question. Mr. Chairman, this concerns me a little bit. If there
    is an indication from Congress, then we will do something
    different. Here is a little timing challenge. We just did a 2-
    year budget to give you more certainty and to give the private
    sector economy more certainty. It is not the intention of the
    Senate Budget Committee on which I sit to do a different fiscal
    year 2015 budget. We just tried to give you more certainty for
    2014 and 2015, including sequester relief that we fought very
    hard for. You are asking us for some additional certainty for
    the out-years when it is not the current intent of the Senate
    to do a different budget.
        We do not have to answer that question today, but I am
    wondering precisely what kind of indication would be sufficient
    given that we have just done a budget within the last 2 months
    and are not likely to return to one soon?
        Secretary Hagel. Senator, I get everything you said. I ask
    the same questions.
        Back to what the Comptroller said, for us, the
    responsibility we have, he used the term ``prudent.'' I cannot
    commit, nor any leader, carriers or force structures when, in
    fact, the law does not allow me to do that in the current
    numbers. We had to build some flexibility into this because,
    just like every hard choice that we have brought forward,
    Congress will make some recommendations, appropriations, and
    tough choices. The structure we have, the program we have, the
    ideas and the plans we have in the total, in the whole are in
    the balance for the next 5 years. If we do not have those
    numbers in order to keep that carrier and to keep that force
    structure at 440,000 to 450,000, then we will have to take it
    somewhere else. Maybe the decision is to do that. I do not
    know. We tried to balance this, Senator, to make sense for all
    of our needs. It is imperfect.
        Let me just add one thing. We have never been this way
    before. I do not think in Chairman Levin's long distinguished
    career in the Senate he has seen such a time. I certainly have
    never seen such a time of unpredictability, not just in the
    world and threats and uncertainty, but in budgets and
    resources. Where is all this going? In an enterprise the size
    of DOD is an imperfect set of dynamics and we are trying to
    plan in a responsible way.
        Senator Kaine. Mr. Chairman, I have one more question, but
    I am over on my time. Senator Vitter is up and I will wait.
        Chairman Levin. Have you voted?
        Senator Kaine. Yes, I have.
        Chairman Levin. Thank you.
        Senator Vitter.
        Senator Vitter. Thank you, Mr. Chairman.
        Thanks to all of our witnesses. Thanks for your service.
        Like a number of other folks, I am really concerned that
    the latest QDR is significantly budget-driven, and I do not
    think it is supposed to be. I can see a budget submission being
    budget-driven. That is part of the definition. I think the QDR
    is supposed to be fundamentally different.
        Why was, for instance, this QDR only designed to look out 5
    years? Is the mandated norm not 20 years?
        Secretary Hagel. It is, and I think reading through that,
    there are projections for the future.
        Senator Vitter. It is my understanding that they are not
    clear 20-year projections.
        Secretary Hagel. We did not give specific 20-year
    projections. That is pretty hard to do, Senator, a 20-year
    projection.
        Senator Vitter. Is that in some meaningful form not
    required by law, a 20-year outlook?
        Secretary Hagel. That is right, and we have done that. But
    we did not do it in the same specificity that we did in a 5-
    year outlook simply because I do not know, I do not know if
    anybody knows, what the world is going to look like. What we
    have tried to do, first of all, is comply with the law. It was
    not budget-driven; it was budget-informed.
        I directed, soon after I went to DOD a year ago, a
    Strategic Choices Management Review, which built a whole set of
    strategies to implement the President's DSG, which we have used
    as the guidance here for the QDR. It is not blind to the
    budget. Of course not. The reality is that a strategy is only
    as good as the resources to implement it. I know that it is not
    a budget. I know that. But it was informed by a budget.
        Senator Vitter. As a supplement to this hearing, can you
    submit for us how this QDR fulfills the mandate of looking out
    20 years? Because it is my understanding it is very different
    from previous QDRs and does not do that.
        Secretary Hagel. I will be happy to provide it.
        Senator Vitter. You do agree that that is the legal
    requirement?
        Secretary Hagel. As I said, we complied with the law.
        Senator Vitter. If you could just outline how you did that.
        [The information referred to follows:]

        The 2014 Quadrennial Defense Review (QDR) was crafted in accordance
    to 10 U.S.C. 118, including the requirement to look out 20 years. As
    articulated in Chapter I of the QDR, the Department of Defense examined
    global and regional trends in the security environment that shaped the
    overall defense strategy. Long-term assessments of the security
    environment were used as the basis of defense planning scenarios set in
    both the 2020 and 2030 timeframes, which were used to inform decisions
    about the future defense program. During the QDR, programmed and
    alternative forces were assessed against a wide range of plausible
    threats, which could manifest themselves in the near- (present to 5
    years), mid- (5 to 10 years), and longer-term. QDR analyses tested the
    ability of U.S., allied, and coalition forces to cope with potential
    challenges emerging during the next 20 years.

        General Dempsey. Could I add, Senator, if you would not
    mind?
        Senator Vitter. Sure.
        General Dempsey. This QDR was done in an environment that
    was a bit of an aberration. We could put a finer edge on what
    that means. But we had just completed in 2012 a DSG document
    that does some of the things you are talking about, that looks
    out. That is where this phrase ``rebalance to the Pacific''
    came and so forth, which is a long-term project, not an
    overnight affair. So the QDR used the DSG as the foundation
    document and built upon it, but the themes, the tenets, the
    principles, and the mission areas refer back to the DSG. There
    is a coherence here that we can lay out for you in a longer
    answer.
        Senator Vitter. Okay.
        General, do you think this QDR assumes or offers low to
    moderate risk?
        General Dempsey. As I said in my assessment, Senator, if we
    achieve the promises that are extant in the QDR with
    institutional reform and all of the things that come with that,
    then we can lower the risk over the QDR period with the force
    structure we have to moderate risk, but it is going to take
    some heavy lifting.
        Senator Vitter. So we are not there yet, and we need to get
    things exactly right under the QDR to achieve moderate risk, in
    your opinion?
        General Dempsey. That is my opinion.
        Senator Vitter. General, I assume you would agree. I think
    General Odierno has said repeatedly that 450,000 is the lowest
    level we can maintain reasonably in the Army. Do you agree with
    that?
        General Dempsey. Yes, I do, Senator. Two to 3 years ago, we
    were asked by this body where the risk becomes too high. Where
    is the floor? Each Service went about the task of trying to
    answer that question. The Chief of Staff of the Army has
    answered that question, and I agree with his answer.
        Senator Vitter. To compound the last two questions, do you
    think going below that floor would impose greater than moderate
    risk on us?
        General Dempsey. In certain mission areas. It would not
    affect our responsiveness in our defense in space, in cyber, in
    the air, and the maritime domain, but it would increase risk in
    the land domain.
        Senator Vitter. Last week, the head of U.S. Strategic
    Command said Iran may still be capable of fielding a missile
    that could hit the United States by 2015. What do we have built
    into this budget submission to deal with that possibility?
        Secretary Hagel. First, as you know in looking over the
    general numbers on the budget submission, we have added to
    modernization of our ballistic missile defense (BMD). We
    announced last year that we would build an additional 14
    interceptors. We are adding to cyber. We are adding to defense
    of the Homeland. We are working with the European allies on our
    European-phased approach in our missile defense there. We are
    addressing those vulnerabilities and those threats.
        Senator Vitter. Let me ask it a little bit differently. A
    missile to hit the United States by 2015 is a possibility, but
    not a certainty, I think, is the testimony. If over time we
    determined it was a probability or a near certainty, would we
    need to do something additional to maintain moderate to low
    risk in that category?
        Secretary Hagel. You are always assessing risk, threats,
    and the capability to respond to stay ahead of those threats.
        Senator Vitter. I am saying if we determine that was going
    to happen, not just the possibility, is there enough in this
    plan and in this budget to face that with moderate to low risk,
    or would you want to be doing something additionally?
        Secretary Hagel. We may do something additionally. But this
    is a timeframe on where we think the threats are, with all the
    different dynamics in play. Those future threats and the
    capabilities we will need to respond to them were the forward
    part of the budget presentation.
        Did you want to say something?
        General Dempsey. We believe that our BMD program, as it is
    articulated in our strategy and then captured in terms of
    resources in the budget, is adequate to the challenges we think
    we could face over that period. If they do break out in 2015,
    we think we have adequate land-based and sea-based BMD
    capabilities. If they broke out in a way that was unexpected to
    us, which is always a possibility, we would have to go back and
    take a look at it again.
        Senator Vitter. But what I am hearing is you think we are
    covered if they achieve that capability in 2015.
        General Dempsey. Yes.
        Senator Vitter. Something more aggressive would cause you
    to have to look back.
        General Dempsey. That is correct.
        Senator Vitter. Okay. That is all I have.
        Chairman Levin. Thank you, Senator Vitter.
        Senator Wicker.
        Senator Wicker. Thank you, Mr. Chairman.
        General Dempsey, I believe you stated you had been speaking
    to your Russian counterpart about Crimea. Is that correct?
        General Dempsey. Yes, about Crimea and about Ukraine, in
    general.
        Senator Wicker. Secretary Hagel, have you had conversations
    with the Russian Defense Ministry with regard to Crimea and
    Ukraine?
        Secretary Hagel. Yes.
        Senator Wicker. The Russian position, no one in the world
    believes it, is that these are not Russian troops which have
    occupied Crimea. Did either of these gentlemen you spoke to
    speculate as to who these forces belong to? Did you ask who the
    Russian leadership says these people belong to?
        General Dempsey. I actually did, Senator, and the answer
    was that they were not regular forces. They were well-trained
    militia forces responding to threats to ethnic Russians in
    Crimea.
        Senator Wicker. Well supplied, no doubt.
        General Dempsey. I did suggest that a soldier looks like a
    soldier looks like a soldier, and that distinction had been
    lost on the international community.
        Senator Wicker. Can you tell us, General, based on our best
    information, where these troops came from?
        General Dempsey. I cannot at this time tell you where the
    military forces inside of Crimea came from. I can tell you that
    we have been tracking other activities in the western and
    southern military districts, but let me roll back with the
    Intelligence Community and try to get you a better answer than
    that.
        [The information referred to follows:]

        [Deleted.]

        Senator Wicker. Okay.
        Secretary Hagel, can you enlarge on that at all?
        Secretary Hagel. No, I think the Chairman said it all.
        Senator Wicker. So it is not that you cannot tell us in
    this setting? Is it, right now, you do not know?
        Secretary Hagel. Tell us what, Senator?
        Senator Wicker. Where these troops came from.
        Secretary Hagel. You mean the specific Russian divisions?
        Senator Wicker. Yes.
        Secretary Hagel. I do not know the specific areas where
    they came from exactly.
        Senator Wicker. While the international community is
    watching, Secretary Hagel, other than just absolute logic, what
    evidence can you give to this committee and to the listening
    general public that these are, in fact, Russian troops?
        Secretary Hagel. What logic can I give?
        Senator Wicker. No, other than logic.
        Secretary Hagel. I am not contesting that. I am not
    suggesting otherwise.
        Senator Wicker. It is the Russians that are contesting it,
    and I would like for you to tell for the record what
    information we have as the U.S. military and as the DOD that
    contradicts the Russian position on this.
        Secretary Hagel. We could get that information for you. It
    is pretty clear that they are Russian troops.
        Senator Wicker. I think it is clear, but, General Dempsey,
    what evidence do we have?
        General Dempsey. We do not have any evidence, as yet. I
    think evidence could likely become available over time. But I
    will tell you that if you are asking for my military judgment,
    these are soldiers who have been taken out of their traditional
    uniforms and repurposed for placement in Crimea as a militia
    force. But my judgment is that they are soldiers.
        Senator Wicker. From both of you, we are not quite ready to
    cite chapter and verse how we know this for a fact, are we?
        General Dempsey. That is correct.
        Senator Wicker. Let me just say I hear some talking heads
    in the media trying to make a distinction between Crimea and
    eastern Ukraine, and it is disturbing to me. I will let you
    respond. It is disturbing to me to hear some people suggest
    that Crimea is a semi-autonomous part of Ukraine and it is gone
    from the Ukrainian republic now and the Russians will have it.
    I think that is an unacceptable position for the United States
    to take. Do you agree, General Dempsey?
        General Dempsey. I do. The 1994 Budapest Agreement, when
    Ukraine turned over its nuclear weapons, guaranteed its
    sovereignty and, as part of that territorial integrity,
    included Crimea. I do not find any ambiguity at all about that.
        Senator Wicker. Secretary Hagel, it is going to be the firm
    position of the United States that Russia needs to withdraw its
    troops, Crimea is part of Ukraine, and that that issue is not
    up for debate. Is that correct?
        Secretary Hagel. Russia has a basing rights agreement with
    Ukraine in Crimea. I think the President has been pretty clear
    on our position that the sovereign integrity of a sovereign
    nation has been violated.
        Senator Wicker. Right. Let me make sure that you are saying
    what I think you are saying. Russia has a base there and they
    are entitled to the rights given to them under the agreement
    between Ukraine and Russia.
        Secretary Hagel. They have troops there.
        Senator Wicker. But that does not give them any right
    whatsoever to occupy that part of the Crimean peninsula that is
    not on the base. Am I correct?
        Secretary Hagel. That is right.
        Senator Wicker. General Dempsey, we have had some
    information about the Russians violating the INF Treaty. You
    were not the Chairman of the Joint Chiefs of Staff in 2010, but
    if you had been aware of any potential Russian violations of
    the INF Treaty during Senate consideration of the New START
    treaty, you would have recommended that that information be
    briefed to the Senate. Would you not?
        General Dempsey. Yes. I would have probably made a
    recommendation that it be briefed in a closed, classified
    setting because the sources and methods of intelligence are
    fairly significant. But I certainly would have recommended that
    all available information be made available to you, the
    decisionmakers.
        Senator Wicker. When did you become aware of this
    violation?
        General Dempsey. I am aware of the allegation of a
    violation, and I am aware that the report will actually be
    submitted next month. I have not seen the report as of yet.
        Senator Wicker. Thank you, sir. Thank you to both of you
    for your service.
        I appreciate it, Mr. Chairman.
        Senator McCaskill. Thank you all.
        I know people have talked about you, Secretary Hale, and I
    thought of you several times over the previous weeks when there
    have been people who have accused me of my position on the
    sexual assault matter being because I am soft on the military.
    I thought of you because I do not know that you would
    characterize me that way. We have had some difficult exchanges
    over accountability within the military. I want to give you a
    little bit of time during my questioning to talk about the
    audit.
        I was really taken aback. Once the Marine Corps asserted
    audit readiness in 2008, it took 5 years. When the marines say
    they are ready, you assume they are ready, and that audit took
    5 years and multiple audits for them to finally get a clean
    opinion. I am a little worried that the rest of DOD understands
    what audit readiness means. I want to make sure we do not waste
    time and money chasing this prematurely when the basics have
    not been done.
        Do you have a sense that the Government Accountability
    Office report that went through the five key steps for
    readiness are now being addressed by the other branches as we
    prepare to roll out a declaration of audit readiness?
        Mr. Hale. Yes, I think so, Senator McCaskill. We learned a
    lot from the Marine Corps. But I also want to be upfront with
    you. We probably will not get a clean opinion the first year
    that we assert audit readiness. The auditors come in. They need
    to get comfortable with us. They need to learn our business,
    and we need to learn from them.
        But what I will tell you is, we need to get this DOD under
    audit with an external, independent auditor. We will learn so
    much more than if we continue as simply trying to do it within
    DOD.
        I believe that there is a gray area here, but if we are in
    that gray area where we think we are close enough, we ought to
    get going even if it takes a couple of years.
        Senator McCaskill. Believe me, I would be astounded and
    frankly worried about the auditors if you got a clean opinion
    in 1 year, but 5 years? Hopefully, we can do better than 5
    years.
        Mr. Hale. I think we can do better than that.
        Senator McCaskill. Okay.
        Thank you so much for your years of service in several
    different capacities to the greatest military in the world. I
    am very grateful. Lots of times, the folks with uniforms on,
    especially people who do what you do--it is not the glamorous
    job at DOD. It is a very unglamorous job, and you should get a
    lot of credit for the time and energy you have spent at it.
        Let us talk a little bit about the OCO and Afghanistan.
    Here is what I am really worried about, Secretary Hagel. I am
    worried that the Special Inspector General for Afghanistan
    Reconstruction has indicated to you that no more than 21
    percent of Afghanistan will be accessible for oversight by the
    end of this year. That is a 47 percent reduction since 2009. I
    hate to sound like a broken record, but the amount of money we
    put in infrastructure reconstruction in these countries, and
    the notion that we would continue to do that worries me,
    knowing upfront that there could be no oversight.
        I will be looking very carefully at the budget when it
    arrives after the elections to see if we are finally realizing
    that building their power grid and their water systems and
    their highways in an insecure environment is not a good use of
    our money. I would like you to comment on that.
        Overall, both you and General Dempsey, I continue to ask,
    where is the data that this stuff works in a counterinsurgency?
    By the way, most of the stuff we spent in Iraq is not
    operational, is in ruins, or it was blown up. I do not think we
    have had a great deal more success in Afghanistan. We started
    assuming that the military doing infrastructure projects was an
    effective way to fight in a counterinsurgency situation. I do
    not know that we can prove it works. Can you give me something
    that would give me comfort that we do not repeat this again in
    the next counterinsurgency encounter we have?
        Secretary Hagel. Senator, you have just laid out the whole
    set of realistic questions that concern all of us. We are
    dealing with the future of Afghanistan here in this context.
    From what we have learned in past experiences, as you correctly
    note, in Iraq, there are a lot of questions, and our Inspector
    General keeps bringing them up. These are factors that are
    going to have to, and will be, and are being, considered on
    future development assistance. Is it verifiable? Can it work?
    Where is the oversight? How do we know? All the questions, but
    you are right.
        General Dempsey. First, Senator, I do not know who called
    you soft on the military, but if you give me their email
    addresses, I would like to assure them that that is not the
    case. [Laughter.]
        Second, your question is a good one. I have a directorate
    in the Joint Staff responsible for lessons learned, and I will
    go back and dig up what we have on metrics demonstrating the
    connection between developmental projects and stability. It is
    something we have struggled with, especially early on in these
    two conflicts. We were playing catch-up right from the start. I
    think it is true, though, that in a counterinsurgency, the
    fundamental task is to separate the insurgents from the
    population, and certainly development, aid, and economic growth
    is one of the ways to do that. But I will give you a fuller
    answer for the record.
        [The information referred to follows:]

        A review of our Joint Lessons Learned Information System and 15
    organizations \1\ outside of the Joint Staff yielded anecdotal evidence
    of both a positive and a negative relationship between reconstruction
    activities and stability outcomes.
    ---------------------------------------------------------------------------
        \1\  Polled organizations included:
          Joint Staff
          Office of the Secretary of Defense for Policy
          U.S. Central Command
          U.S. Special Operations Command
          the Services
          International Security Assistance Force
          several military academia institutions
          Special Inspector General for Iraq Reconstruction
          Special Inspector General for Afghanistan Reconstruction
          Government Accountability Office
          Commander's Emergency Response Program
          Center for Strategic and International Studies
          International Security Assistance Force's Counterinsurgency
    Advisory and Assistance Teams
          Center for Complex Operations
          Peacekeeping and Stability Operations Institute
    ---------------------------------------------------------------------------
        Currently the Department of Defense has two ongoing rigorous,
    evidence-based studies: a 2012 independent review of the Commander's
    Emergency Response Program (CERP) in Afghanistan and a National Defense
    Authorization Act for Fiscal Year 2014 directed comprehensive
    examination of the lessons learned from the execution of CERP in both
    Iraq and Afghanistan.\2\
    ---------------------------------------------------------------------------
        \2\  Department of Defense funds infrastructure reconstruction
    projects in Iraq and Afghanistan through two mechanisms, Commander's
    Emergency Response Program and the Afghanistan Infrastructure Fund
    ---------------------------------------------------------------------------
        These studies will be completed in December 2014 and will provide a
    more analytical understanding of the complex relationship between
    development and stability.

        Senator McCaskill. Yes. I think it is really important we
    figure this out. I am not against aid. This thing morphed from
    the Commanders' Emergency Response Program to the Afghanistan
    Infrastructure Fund. We have gone back and forth. Is this a
    Department of State function? Is this a DOD function? Is this
    Active military or is this contractors? I am not sure that we
    have clear answers. I do not think we are looking carefully
    enough at the lessons learned to direct us going forward.
        Finally, I have some other questions for the record, but I
    am almost out of time.
        I know we have an answer from the readiness folks about how
    many O-6s we would need if the Gillibrand proposal became law.
    We now have a total that at least 74 O-6s would be needed just
    for disposition authority. Could you give us more guidance as
    to where you would have to pull them from? Would they come out
    of military judges, because you do not have enough? Would they
    come out of senior prosecutors? Would they come out of the
    defense attorneys? Would they come out of the staff judge
    advocate corps? What would be the plan in terms of filling that
    need if the proposal to shift all of those disposition
    authorities to lawyers in the military, in fact, became law?
        Secretary Hagel. We will provide that.
        [The information referred to follows:]

        The Military Services have not determined with precision how the
    judge advocate disposition authority billets would be staffed were
    S.1752 (``Military Justice Improvement Act of 2013'') be enacted into
    law. The Services have, however, determined the likely number of judge
    advocate disposition authorities each would require. It is useful to
    compare that figure to each Services' existing O-6 (colonel or Navy
    captain) judge advocate billets.
    U.S. Army
        The Army is both the largest and the most geographically dispersed
    of the Armed Forces. In every fiscal year since 2005, the Army has
    tried more general courts-martial than the other four Armed Forces
    combined. The Army estimates that implementing S.1752 would require 50
    full-time judge advocate disposition authority billets, which equals 40
    percent of the current 124 Active Duty Army O-6 judge advocate billets.
        Almost half of the Army's O-6 judge advocate billets--62 of 124--
    are as chief legal advisors to military commands and organizations.
    Fifty-nine of these are staff judge advocate positions (one of which is
    dual-hatted as the deputy commander of the U.S. Army Materiel Command
    and one of which is dual-hatted as the deputy chief counsel of the U.S.
    Army Research Development and Engineering Command).
        Twenty-six of the 124 billets are in the judiciary, including 17
    trial judges, 8 appellate judges, and the executive officer to the
    Chief Judge.
        Fifteen of the 124 billets are in headquarters leadership billets,
    including 8 chiefs of U.S. Army Legal Services Agency Divisions and the
    U.S. Army Legal Services Agency Deputy Chief, 5 chiefs of Office of The
    Judge Advocate General (JAG) divisions, and the Office of The Judge
    Advocate General executive officer.
        Six of the 124 billets are senior training and education positions,
    including 5 senior leadership positions at The Judge Advocate General's
    Legal Center and School, and another at the U.S. Army War College.
        Four of the 124 billets are senior joint positions at the
    Department of Defense (DOD), including 2 in the Defense Legal Services
    Agency, 1 heading the Office of Legal Policy of the Under Secretary of
    Defense for Personnel and Readiness, and 1 as the Deputy Legal Counsel
    to the Joint Chiefs of Staff.
        Four of the 124 billets are senior Headquarters Department of the
    Army positions at DOD, including the Chief of the Investigations and
    Legislative Division of the Office of the Chief Legislative Liaison, 2
    legal advisors in the Office of the General Counsel, and the Legal
    Advisor to the U.S. Army Inspector General Agency.
        The remaining seven billets include the Commander of the U.S. Army
    Claims Service, three chief counsel of contracting commands and one
    deputy chief counsel of a contracting command, the Deputy Chief Counsel
    of the U.S. Army Aviation and Missile Command, and one billet in the
    Office of Military Commissions.
    U.S. Navy
        The Navy estimates that implementation of S.1752 would require 9
    full-time judge advocate disposition authority billets, which equal 11
    percent of the current 81 Active Duty Navy O-6 strength. Ten of the 81
    Active Duty Navy JAG Corps captains are qualified as Experts under the
    Military Justice Litigation Career Track qualification program.
    Detailing nine of them as judge advocate disposition authorities would
    leave only one Military Justice Litigation Qualification Expert
    captain, meaning that almost all of the O-6 litigation supervision and
    judicial billets would have to be filled with officers who have not
    obtained the highest Military Justice Litigation Qualification.
        Twenty-one of the Navy's 81 O-6 judge advocates are staff judge
    advocates to military commands (including 3 combatant commands) and
    senior leaders.
        Fourteen of the 81 judge advocates are commanding officers or
    officers in charge of legal service offices, including 9 commanding
    officers of Region Legal Service Offices, 4 commanding officers of
    Defense Service Offices, and 1 officer in charge of a Defense Service
    Office detachment.
        Twelve of the 81 judge advocates are in the judiciary, including 6
    trial judges, 5 appellate judges, and the Chief Judge of the Department
    of the Navy.
        Eleven of the 81 judge advocates are in senior Office of The Judge
    Advocate General leadership positions, including 9 division directors
    in the Office of the Navy Judge Advocate General, the Senior Detailer,
    and the Executive Assistant to the Judge Advocate General.
        Five of the 81 judge advocates are in senior Department of the Navy
    legal positions, including 2 in the Office of the Inspector General, 2
    in Environmental Law, and 1 in Legislative Affairs.
        Three of the 81 judge advocates are chiefs of staff of litigation-
    related organizations: the Chief of Staff of Victims' Legal Counsel,
    the Chief of Staff of the Region Legal Service Office, and the Chief of
    Staff of the Defense Service Office.
        Three of the 81 judge advocates are in White House and National
    Security Council Staff positions.
        Three of the 81 judge advocates are on the Office of the Chief of
    Naval Operations Staff and the Joint Staff.
        The remaining nine judge advocates are the Commanding Officer of
    the Naval Justice School, the Director of the Defense Institute for
    International Legal Studies, three training/education Instructors, one
    in a Sending State Office, and two students.
    U.S. Marine Corps
        The Marine Corps estimates that implementation of S.1752 would
    require 8 full-time judge advocate disposition authority billets, which
    equals 25 percent of its 32 Active Duty Marine Corps O-6 judge advocate
    billets.
        Half of the Marine Corps O-6 judge advocate billets--16 of 32--are
    as staff judge advocates.
        Six of the 32 billets are leaders responsible for the delivery of
    legal services, including 4 Officers in Charge of Legal Service Support
    Sections (the Marine Corps' regional prosecution centers), the Officer
    in Charge of the Victim Legal Counsel Organization, and the Chief
    Defense Counsel of the Marine Corps.
        Four of the 32 billets are in the judiciary, including 2 circuit
    trial judges and 2 appellate judges.
        Two of the 32 billets are in senior Office of the Judge Advocate
    General of the Navy positions: the Assistant Judge Advocate General for
    Military Justice and the Director of the Navy-Marine Corps Appellate
    Government Division.
        Two of the 32 billets are in the Office of Military Commissions.
        The remaining two billets are in senior leadership positions in the
    Headquarters Marine Corps Judge Advocate Division: the Deputy Staff
    Judge Advocate to the Commandant of the Marine Corps and the Deputy
    Director of the Judge Advocate Division.
    U.S. Air Force
        The Air Force estimates that implementation of S.1752 would require
    7 full-time judge advocate disposition authority billets, which equals
    5.6 percent of the current 125 Active Duty Air Force O-6 judge advocate
    billets.
        Almost half of those billets--59 of 125--are staff judge advocates
    to military commands or organizations, including 10 Air Force Major
    Commands, U.S. Cyber Command, and U.S. Africa Command.
        Seventeen of the 125 billets fill leadership roles on Air Force
    Major Command staffs as deputy staff judge advocates and division
    chiefs of international and procurement law, as well as military
    justice.
        Sixteen of the 125 billets are in the judiciary, including 9 trial
    judges and 7 appellate judges.
        Seventeen of the 125 billets are senior leadership positions in the
    Air Force Legal Operations Agency, including the Vice Commander, the
    Commandant of the Judge Advocate General's School, 5 directors, and 8
    division chiefs, including the Special Victims' Counsel Chief.
        Seven of the 125 billets are headquarter leadership positions,
    including 5 Air Staff Directors within the Office of the Judge Advocate
    General, the Senior Air Staff Counsel to the Air Force Inspector
    General, and the Executive to the Judge Advocate General.
        Two of the 125 billets are senior joint positions within DOD,
    including the Deputy Legal Counsel to the Joint Chiefs of Staff and the
    Senior Military assistant to the Department of Defense General Counsel.
        Two of the 125 billets are senior leadership positions in the
    Office of the Secretary of the Air Force, including the Senior Military
    assistant to the Secretary of the Air Force and the Senior Legal
    Advisor to the Secretary of the Air Force Personnel Council.
        The remaining five billets include the Chief Defense Counsel and
    the Deputy Chief Prosecutor within the Office of Military Commissions,
    the General Counsel of the Army and Air Force Exchange Service, the
    Deputy Staff Judge Advocate to U.S. Transportation Command, and the
    Deputy Staff Judge Advocate to U.S. Forces Korea.

        General Dempsey. Could I add, though, Senator? Just to be
    clear, we really appreciate your leadership on this issue and
    we appreciate what Senator Gillibrand is doing too. If I
    thought it was just about resources, if I thought that was the
    answer, I would line up behind it. But fundamentally it is not
    about the resources. It is about accountability and
    responsibility in the right place in the system, and that is
    the commander.
        Senator McCaskill. There is no question about that. The
    reason I bring it up is because the amendment, for some
    inexplicable reason, prohibits any additional resources to be
    used. I do not know why that is in the amendment, but it is.
    You could not add more resources to it if you wanted to, if the
    proposal became law. That is why I think it is very important
    for us to know where these O-6s are going to come from.
        Chairman Levin. Senator Cruz?
        Senator Cruz. Thank you, Mr. Chairman.
        Mr. Secretary, General, thank you for being here. Thank you
    for your service. Thank you for your testimony today.
        Secretary Hagel, last week you stated, with respect to the
    National Guard versus Active Duty military, that increasing or
    protecting the Guard from cuts is not reasonable, and in
    particular, you stated that, ``we must prioritize readiness,
    capability, and agility.'' Setting aside readiness and agility
    for the moment, in your judgment, are the National Guard or the
    Reserve units truly less capable than their Active Duty
    components? Would you care to elaborate or explain your views
    on that?
        Secretary Hagel. I am sorry. Are they less capable, did you
    say? I am not sure I said less capable. Let me go back and get
    to the first part of your question, then I will get to the
    second part.
        I have said here a number of times this morning, Senator,
    the National Guard and the Reserve are going to continue to be
    a vital part of the national security enterprise. I have said
    that. I think Chairman Dempsey has been clear. We are all clear
    on that.
        Then if that is the case, as we are looking at framing a
    balanced way forward on our strategic interests, guidance, and
    how we protect this country, then we had to assess everyone's
    role. One of the points that I made, I had to carefully look at
    suggestions, recommendations, reductions, adaptations in every
    force, Air Force, Marine Corps, across the board which I did,
    at the recommendation, by the way, of our Chiefs. So it was not
    done unilaterally.
        I noted in my testimony that, comparing the Active,
    Reserve, and National Guard reductions, we protect the National
    Guard and Reserve in those reductions versus percentage of cuts
    to the Active, whether it is aviation brigades or whichever
    metric you want to apply to it. I hope that is clear.
        As to the second part of your question, when you look out
    at the future needs, assessments, threats, and challenges, the
    National Guard, as we know, has a couple of roles. Our Active
    Duty has but one responsibility and that is to be active,
    ready, agile, and go now if they need to. That is not the case
    with the National Guard and Reserve, not that they are not
    capable. They did a tremendous job in Iraq and Afghanistan. But
    there are different responsibilities, so we tried to balance
    those. I met with the Governors Council last week on this. We
    have talked to Governors about their responsibilities as to how
    they use their National Guard. That is some explanation that
    would be helpful to you, Senator, as to why the recommendations
    were made the way they were.
        Senator Cruz. Thank you, Mr. Secretary. I will share my
    view that certainly both the Guard and our Reserve are a
    critical part of our readiness and capability to defend this
    Nation.
        The first question is connected with the second question.
    Your budget proposed that the Army cut six brigade combat teams
    by 2019. That is an astounding amount of land combat power that
    is being proposed to be reduced, and in my view, the world has
    only become more dangerous, not less dangerous. I am very
    troubled by these cuts, diminishing our ability to defend our
    national security. It seems to me there are a great many other
    areas in the DOD budget that ought to be much higher candidates
    for cuts than reducing the men and women who are directly on
    the front lines who go directly to our warfighting capacity.
        For example, DOD continues to spend billions of dollars
    unnecessarily on alternative energy research programs. The Navy
    recently spent $170 million on algae fuel that costs four times
    as much as regular fuel, meaning potentially $120 million
    wasted. Instead of buying that algae fuel, which even the
    National Research Council says is currently not sustainable,
    DOD could instead field nearly a battalion's worth of Active
    Duty soldiers or even more National Guard troops.
        So the question I would ask, Secretary Hagel, is why in
    your judgment does it make more sense to cut Army infantry
    troops rather than cutting spending on algae fuel for the Navy?
        Secretary Hagel. I have just asked the Comptroller to give
    me a specific number.
        Mr. Hale. I will get it soon. I do not have that one in my
    head. I will get it for you for the record.
        [The information referred to follows:]

        The Navy has not spent $170 million on algae fuels. The Department
    of Defense (DOD) previously invested in algal biofuels research, and in
    2011 the Navy purchased algal biofuels (as part of a larger $12 million
    biofuels purchase) for the Rim of the Pacific Exercise Great Green
    Fleet demonstration in 2012. As a result of this demonstration, the
    Navy concluded that JP-5 and F-76 fuels containing 50/50 blends of
    hydro-processed esters and fatty acid-based biofuels are suitable for
    operational use.
        I believe the $170 million you are thinking of relates to the
    Advanced Drop-in Biofuels Production Project, which is being executed
    under the authorities of Title III of the Defense Production Act (DPA)
    (and is now budgeted at $160 million after various cuts). This project,
    co-sponsored by the Department of Energy, Department of Agriculture,
    and DOD, partners with the private sector to accelerate the development
    of cost-competitive advanced alternative fuels for both the military
    and commercial transportation sectors. Last May, four companies were
    selected to further develop their plans for refineries capable of
    supplying biofuel at a cost of less than $4 per gallon. For all phases
    of the project, private sector partners must provide a dollar-for-
    dollar match to any government funding they receive. None of the
    companies selected propose to use algae as a fuel feedstock.
        The DOD Alternative Fuels Policy for Operational Platforms, issued
    on July 5, 2012, creates clear guidelines on DOD's current and future
    alternative fuels investments and purchases. To date, DOD has only
    purchased alternative fuels for testing, certification, and
    demonstration purposes. The policy also formalized what was already the
    practice for all of the Military Services: that DOD will only purchase
    alternative fuels for use in military operations when they are cost-
    competitive with conventional fuels. This includes fuels that DOD
    procures from DPA award recipients.

        Secretary Hagel. But I do not think it is billions of
    dollars.
        Mr. Hale. I do not think it is multiple billions.
        Secretary Hagel. It is not billions of dollars.
        Senator Cruz. It is $170 million.
        Secretary Hagel. Okay, but that is a little different than
    billions. But that is not the essence of your question. I get
    it.
        We did have to look at different reductions in different
    areas. But on the first point on our troops, it is dangerous to
    make those cuts with brigades. We have hard choices to make,
    Senator, based on the reality of what is before us. But
    readiness, capability, and modernization are critically
    important to the troops who are asked to go in and who will
    continue to have the edge, and will always have the edge, over
    any adversary, over any enemy. That takes constant training.
    That is money. That is operations. That is all that goes into
    readiness.
        The technical edge and capability that they need to have
    and we want them to have takes money. What goes into that, the
    research and the science, also take money.
        We tried to balance everything in a way that made sense,
    again, to fulfill the requirements necessary to defend this
    country.
        Senator Cruz. Let me ask one more question because my time
    is expiring.
        DOD spent $117 million, again, nearly enough to field a
    battalion of Army combat power, on renewable energy projects
    that now face major delays or cancellation. For example, the
    Air Force spent $14 million on wind turbines in Alaska, and it
    turns out there is not any wind there. The Inspector General
    has recommended the Air Force shut downs the entire project
    altogether.
        Despite these problems, you mentioned a minute ago that
    $160 million was not billions. The Army is planning on awarding
    $7 billion in renewable energy projects in coming years. That
    is real money.
        It seems to me that the energy needs of our military should
    be derived by what is the most cost-effective and efficient
    energy to carry out our warfighting capacity. We ought to be
    looking at cutting overhead and unnecessary programs like algae
    fuel rather than reducing our warfighting ability, reducing the
    men and women who are able to serve in the Army and defend our
    Nation. Do you agree or disagree?
        Secretary Hagel. We are cutting overhead. We are doing the
    things that you suggested, and you are right.
        As to the Army's billions of dollars of a commitment to a
    program, I do not know specifically what you are talking about.
    We will find out. We will get back to you.
        [The information referred to follows:]

        For the Army to be combat ready, it must have access to secure,
    affordable energy. All Army energy efforts whether on our installations
    or in our maneuver formations are first and foremost focused on
    enhancing mission capability. This holds true for the Army's renewable
    energy projects. Every installation renewable energy project is
    designed to enhance energy security at a cost that is projected to be
    equal to or less than conventional grid power.
        The Army now spends over $1 billion annually on utility bills for
    our installations. Over the next 30 years, absent efficiency gains and/
    or lower cost energy, it is projected that the Army's total utility
    bill over this time period will be in excess of $40 billion. The Army's
    plan is to reallocate a portion of this amount to fund renewable energy
    projects on our installations. These projects are executed in concert
    with the private sector, with industry providing engineering and
    technical expertise along with capital funds to cover the costs of
    construction. Power is purchased from these projects using funds in the
    Army utility account. There are no additional appropriations required
    and no diversion from other accounts used for training or equipping.
        The $7 billion figure refers to the total contract ceiling of the
    Army Renewable Energy Multiple Award Task Order Contract (MATOC).
    Awards were made to a total of 48 companies, including 20 small
    businesses. MATOC projects will be owned, operated, and maintained by
    the selected task order awardees. The award recipients that are
    qualified through this process will be able to compete for future
    renewable energy task orders issued under the MATOC. As previously
    described, power purchased through the MATOC will be funded through the
    existing Army utility account over a term of up to 30 years, requiring
    no additional appropriated dollars.
        The Army currently has over 175 megawatts of renewable energy
    projects in the acquisition phase, all of which are expected to avoid
    future utility costs. Additionally, each of these projects enhances the
    energy security at our installations. Some projects will provide
    coverage of total installation energy requirements from on-site
    generation. Others will provide energy in emergency situations, making
    our installations' platforms more resilient, able to project military
    power, or respond to domestic emergencies. These and future investments
    in renewable energy will add to, not detract from, Army readiness.

        Secretary Hagel. Yes, the cheapest, most reliable, and most
    effective energy, since DOD is the largest energy consumer in
    the world, is a requirement, and we have to have the ability
    and the readiness and the access to that energy.
        I understand your point, and we have tried to cut where we
    do not need that kind of capability. More to the point, some of
    it may be a bit of a luxury, but research is important. I take
    your point and we will get to you on the specifics.
        Senator Cruz. Thank you, Mr. Secretary. I appreciate that.
    Thank you, gentlemen. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Cruz.
        I do not know if I am going to ask the exact same question
    that you are. I have a hunch that I am, Senator Kaine, but I
    think I am going to yield to you first, and then if you do not
    cover that issue the way I was going to cover it, I will do it
    later.
        Senator Kaine. Thank you, Mr. Chairman.
        As I finished my first round of questions, I was asking you
    what would be an indication of support for the President's
    budget that would trigger the willingness of DOD to move
    forward on those priorities. It is not likely that the Senate
    will pass a budget because we just passed a 2-year budget. I do
    not know that we need to get into that one now, but that is
    something that I think we need to continue to discuss and
    explore.
        I want to ask a question now about the worst-case scenario.
    I am opposed to sequestration. One of the first votes I casted
    when I arrived here was to not let sequestration go into effect
    in February 2013. I have worked on the Senate Budget Committee
    with my colleagues to provide as much sequester relief as we
    could find in 2014 and 2015, and I am going to keep doing it. I
    am going to keep trying to battle for what the President's
    proposed budget is with the $115 billion plus the $26 billion
    in sequester relief.
        However, the worst-case scenario: if Congress does not
    provide either an indication of support or actual support in
    lifting sequester cuts, it would still be the case that there
    is a statutory requirement for 11 carriers that, absent change
    in the statutory language, would be the law of the land. Is
    that not correct?
        Secretary Hagel. Senator, as I have said, and you would
    expect us to do, we will follow the law.
        Second point on this specific issue, carriers, or any other
    tough decision that has to be made: if we do not have the
    resources, then there will be further cuts somewhere, but those
    will be made just like this proposal we are all discussing
    specifically this morning, as well as the entire inventory. We
    follow the authorization and appropriations directive of
    Congress. We follow the law. These are recommendations.
        Senator Kaine. To follow up again, this is the worst-case
    scenario, you have one law, the sequester or the BCA caps. You
    have a second set of laws, that 11 carriers would be an example
    of one. There are other line items within the DOD budget that
    have a statutory requirement as well. There are other DOD
    spending items that are not statutorily mandated. But you might
    say that some of the non-mandated items, for purposes of our
    particular strategic challenge, might be more important than
    some of the statutory ones in terms of your own recommendation.
        But I just want to get down to it. If the worst-case
    happens, absent a change in the statute, we cannot switch
    national policy from 11 carriers to 10 carriers. Is that not
    correct?
        Secretary Hagel. Which I have already noted, that is right,
    yes.
        Senator Kaine. That is all of the questions I have, Mr.
    Chairman. Thank you for that opportunity for a second round.
        Chairman Levin. Thank you, Senator Kaine.
        Senator Inhofe.
        Senator Inhofe. Yes, thank you, Mr. Chairman.
        I do want to clarify a couple of things. What I was trying
    to do in my first 7 minutes was to make it very clear that I
    knew that it was not you two. I use your quotes. Your quote,
    Secretary Hagel, ``American dominance on the seas, in the
    skies, and space can no longer be taken for granted.'' Yours,
    General Dempsey, when you said that, ``we are on a path where
    the force is so degraded and so unready that it would be
    immoral to use force.''
        There is one area where we all agree, and I am talking
    about the uniforms and the secretaries and everybody else. We
    are down to an unacceptably low level compared to the threat
    that is out there. I attempted to get that across.
        Senator Graham came along with this 3.2 percent of GDP when
    it had been 5 percent during the times of peace. Since that
    time looking at the President's budget into the future, it
    goes, starting next year, down from 3.2 to 3.0, 2.8, 2.7, 2.6,
    2.5 and on down until it is 2.3. That is the plan that is out
    there right now. In terms of priority, it is totally
    unacceptable.
        I think that he did such a good job of using that, and
    certainly the line of questioning that came from our Senator
    from Texas, I would like to add to the examples that he used.
    $120 million for a solar farm in Fort Bliss. The $75 million in
    fiscal year 2014 appropriations for alternative energy
    research. The Navy contributed $160 million towards biofuel
    initiatives, retrofitting and building refineries in both
    fiscal year 2012 and fiscal year 2013. In 2011, it spent
    approximately $26 a gallon. He covered that one. He mentioned
    one I was not aware of and that is $117 million for Alaska wind
    energy.
        Now, when you start adding all this up, you are talking
    about really serious money. It may be true there is a big
    difference between millions and billions, but right now, this
    is the problem that we have. It is not you guys. It is the
    administration that does not have the priorities that you have
    stated, Mr. Secretary, that they have in terms of defending
    America as the number one priority. I used the examples. Yes,
    it may sound a little extreme that the amount of money he spent
    on his climate stuff would buy 114 new F-35s. I want to make
    sure all of that is in the record, and that was my intent, to
    make sure that people out there know that we have a really
    serious problem in terms of the direction this administration
    is taking our military in the face of, in my opinion, the
    greatest threat that we have ever faced in the history of this
    Nation.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Inhofe.
        Senator Sessions.
        Senator Sessions. Thank you, Mr. Chairman, and thanks to
    all of you for your service.
        I am the ranking member on the Senate Budget Committee, and
    sometimes our committees overlap, Mr. Chairman, in the concepts
    and issues that we face.
        I would say that there is no doubt that the restrictions in
    spending growth that we placed on DOD were greater than any
    other department. There is no doubt that you took real cuts and
    we are facing a dangerous cut this year. I am glad something
    could be worked out. I was not able to support the solution as
    written, but we needed to do something this year because it
    would have been very damaging, in my opinion, to the military.
    I want to say that.
        I hope, Secretary Hagel, that you, like most leaders in
    your announcement about spending, were putting everybody on
    notice a little bit. I hope that when you look at the numbers
    that have been put back in, the $35 billion this year, which
    DOD gets half of in actual money next year, that maybe all
    those cuts will not be as necessary as you suggested. Actually,
    I do not think you declared every one of those things would
    happen. But I think it is important for us to begin to distill
    where we are, how much you are going to have to reduce
    programs, personnel, and equipment, as well as what it will
    look like in the future.
        I think it is a healthy thing for you to lay out where you
    see things now, but I am hoping that you will not have to do
    all of those things, number one.
        Number two, I think you have already discussed the danger
    of anybody in the world believing that we are on such a pell-
    mell reduction that we are not going to be able to field an
    effective military force in the future. I believe you can do
    that even though I would like to see some of your reductions
    avoided.
        Have you commented on that? If you have, I do not want to
    repeat that question. But I think it is important that the
    world knows that we are going to be leaner, more efficient,
    more productive, and we are going to meet the challenges that
    we have to meet around the world.
        Secretary Hagel. I am glad you asked the question, Senator,
    and it is an important point and we really have not focused on
    it today.
        First, Chairman Dempsey, myself, and others have said
    publicly that the United States of America possesses the most
    lethal, strongest, most powerful military today in the history
    of the world. We will continue to have that kind of a military.
    We need that kind of a military to protect our interests.
        Now, that said, we also recognize what is coming, more
    sophisticated threats, asymmetric threats. You know those kinds
    of threats. We have to make sure that we have the resources to
    keep this military the best-led, best-trained, best-educated,
    best in form, with the most significant technological edge of
    any military we have ever had and that has ever been in the
    world. We can do that, but we are going to have to make some
    hard choices.
        You reference here in your comments the prioritization of
    what we are going to require in order to secure the interests
    of our country and the security of our country. To your point
    about this country still having the capability to defend itself
    and do the things that our citizens believe we can do, expect
    us to do, we have that capacity. We are going to continue to
    have that. But at the same time, the reality of limited
    resources puts further risk into how we do that.
        Senator Sessions. Secretary Hagel, thank you for talking to
    me about the announcement you made about the littoral combat
    ship (LCS). I hope that is a reduction we do not eventually
    have to make.
        I would just ask this. I may submit some written questions
    about it. But as I understood your statement, you believe that
    we need a different kind of ship after 32 LCSs were completed,
    but you also indicated that the LCS would be able to compete on
    price and capability with any other ship at that point. Is that
    correct? What would the Navy need as it brings its fleet back
    up to the 300 level?
        Secretary Hagel. To begin with, we need the capability that
    the LCS was designed to give us, the anti-submarine and mine
    sweeping capability. We are going to continue to go forward
    with the production commitment of 24. The Chief of Naval
    Operations recommended, in addition to that, another 8 to fill
    that capacity out, so I have authorized that number of 32.
        I have also said if we would build the full 52 LCS fleet,
    that represents our future Navy, a sixth of a 300-ship Navy.
    With the emerging technologies in weapons systems around the
    world and the LCS has limited capabilities, limited
    survivability, and limited combat power. But it was not
    designed for all that. Should we be examining whether we need a
    more up-gunned LCS that is more lethal and more survivable? I
    have asked the Navy to come back to me later this year, which
    they say they can do based on the testing and the analysis.
    There are two hulls being produced now, Senator. Maybe there is
    combination of the two. I do not know. I have put it back with
    the Navy. You come back to me, tell me what you think you would
    recommend we need.
        Senator Sessions. I understand. I just happened to be here
    as a new Senator and found myself as chairing the Seapower
    Subcommittee of this Full Committee of the U.S. Senate. What an
    august thing that was.
        Admiral Vern Clark advocated for this ship. We approved it.
    Over the years, it remains a prime priority of the Navy, so
    curtailing it, I think, is a mistake. But regardless of that, I
    feel like you will work your way through it, and I hope that
    you will not do anything that would adversely impact the
    ability of that ship to compete with other ships or whatever
    new capabilities and missions you think you need in the future.
        I may submit a few written questions on it.
        But thank you for sharing with me and being able to discuss
    that.
        Thank you, Mr. Chairman. I am very sorry that I was not
    able to be here throughout this important meeting.
        Chairman Levin. Thank you, Senator Sessions.
        Just one effort to clarify this big budget picture, and
    that has to do with this additional $115 billion for the last 4
    of the 5 years of the FYDP, which is being requested. What we
    again have been told orally is that if that money is
    forthcoming and paid for, funded, that then the Active end
    strength, for instance, in the Army would be 440,000 to
    450,000. The Guard would be 335,000. These are higher numbers
    than what is otherwise going to be the case. The same thing
    with carriers. There would be 11 instead of 10.
        Then when I asked whether or not you will give us the
    detail for the $115 billion that is going to show those higher
    numbers, the answer was no. What I do not understand is, if you
    are going to give us detail for the $115 billion, why would
    that detail not reflect the higher numbers for end strength and
    for the carrier? Why would that not be reflected in that
    detail? If you were not going to give us any detail, then I
    understand your answer, but you are going to give us detail.
        Secretary Hagel. I am going to answer again and then let
    the Comptroller go into it.
        Chairman Levin. Then I will give up because it is late, and
    your explanation may work with some other folks. It has not yet
    worked.
        Secretary Hagel. I do not know. Later explanations are not
    particularly more edifying than earlier explanations.
        But again, what drove the decision to do it this way was
    the reality of the uncertainty. I get the law. I get all that.
    Remember, these are recommendations that I make. Congress will
    make decisions. I had the recommendations of our leadership on
    this. I could not commit to all of these things, not having
    some assurance that I would have the capability with the
    resources to be able to fund these things.
        Chairman Levin. I understand that. But my question is this.
    You are going to give us, with that same uncertainty and
    without that assurance, a list as to where that $115 billion
    would go.
        Secretary Hagel. Yes.
        Chairman Levin. How can you give us a list of where the
    $115 billion would be spent if there is all this uncertainty,
    which there is? I think you are wise to be realistic. You get
    the reality of uncertainty. You cannot commit to these things,
    these larger numbers, without greater certainty. But you are
    still going to give us a list as to how you would spend it. I
    do not know, given the uncertainty, how you can give us any
    list. If you are going to give us a list, why can you not give
    us the higher end strength numbers and the carrier? That is
    what I am trying to understand.
        Secretary Hagel. Okay. Let me ask the Comptroller.
        Mr. Hale. I will take one more shot. It is a good question
    and a fair one, Mr. Chairman.
        The problem with the particular areas, carriers and end
    strength, takes a long time to plan. Sequestration remains the
    law of the land. We felt it was prudent to put a few of those
    items where we needed to think ahead how to do it at the lower
    levels, with the understanding that if we get an indication
    that you will appropriate at the President's budget level, we
    will change that plan. We can, I believe, within the resources.
    But we felt we should, for the sake of prudence, plan for these
    major items that take time to plan ahead in a worst case.
        Does that help?
        Chairman Levin. No.
        Mr. Hale. Not much.
        Chairman Levin. Just take the Army.
        Mr. Hale. I am willing to surrender.
        Chairman Levin. What is the end strength level for the Army
    in the 2015 FYDP? What is that number?
        Mr. Hale. Through fiscal year 2017, at fiscal year 2017
    they will be at 450,000. In 2018 and 2019, they go down to
    420,000.
        Chairman Levin. That is in the FYDP?
        Mr. Hale. It will be, yes. You do not have it yet, but yes.
        Chairman Levin. Thank you.
        Senator Sessions. What is the Army now?
        Mr. Hale. It will be, at the end of this year, about
    510,000.
        Senator Sessions. So by the end of next year, it will be--
    --
        Mr. Hale. No. By the end of fiscal year 2017, it will be
    down to about 450,000 under our FYDP plan.
        Chairman Levin. Under the FYDP, under the 5-year plan, it
    then goes down to 420,000.
        Mr. Hale. Correct. Planning ahead, if you give an
    indication of appropriating at the President's budget for
    fiscal year 2015 level, we will stop that drawdown at around
    450,000.
        Chairman Levin. That is something you are telling us, but
    that is not reflected in either the current budget document or
    in the document you are going to be giving to us as to how that
    $120 billion is going to be spent. Right?
        Mr. Hale. That is right because we felt we had to plan
    ahead.
        Chairman Levin. Got you.
        Senator Sessions. Secretary Hagel, I have looked at the
    numbers. I know DOD has taken serious reductions, but you got
    the hole filled in this year. You were going to take a $20
    billion reduction, and that would have been devastating. You
    have avoided that and got an increase. You got extra money put
    in next year. Under the BCA, after that, DOD in the other
    discretionary accounts is supposed to grow 2.5 percent a year.
        I am going to be looking at these numbers. I know you are
    going to have to tighten belts across the board and we allowed
    this tough decision to be made. Before we are talking about
    putting even more money in, in addition to Senator Murray's and
    Representative Ryan's legislation, we are going to have to see
    the numbers and be pretty specific about it. We are going to be
    looking at it. I just would say that to you.
        Mr. Hale. If I could just respond briefly. Last year's
    President's budget, in our view, fully funded the January 2012
    strategy. We are $31 billion below last year's plan in fiscal
    year 2014 this year and $45 billion below it in the budget----
        Senator Sessions. The President's plan, but what was the
    difference in the numbers?
        Mr. Hale. We have been flat for the last 3 years in nominal
    terms. It has been coming down in real terms.
        Senator Sessions. Does that include the increase that was
    in Murray-Ryan?
        Mr. Hale. Yes.
        Senator Sessions. You are flat this year from last year,
    not an increase?
        Mr. Hale. Correct.
        Chairman Levin. They have been flat for 3 years.
        Senator Sessions. Admiral Mullen told us the deficits are
    the greatest threat to our national security. He has been
    proven right.
        Chairman Levin. We have greater threats right now to our
    national security than our deficits. Our deficits are going
    down, but the threats are going up. I happen to disagree with
    Senator Sessions on that one.
        Senator Sessions. The reason defense is going down is
    because of the deficit.
        Chairman Levin. What you are asking for is very reasonable
    in terms of this additional $26 billion just for defense and
    $56 billion overall for defense and non-defense.
        We are going to be given the pay-for in the next couple of
    weeks, I believe, from the administration. Many of us have pay-
    fors which are perfectly reasonable to pay for what we need to
    do as a country, including closing some of these loopholes
    which are egregious, these offshore tax loopholes, these
    loopholes which allow the most profitable corporations in the
    country and the world to avoid paying taxes by shifting their
    intellectual property to tax havens, the loopholes which allow
    the hedge fund managers to be paying half the tax rate that the
    people who work for them pay. There are some unjustified tax
    loopholes in this tax code which we should close even if we had
    no deficit. But given the fact that we have real needs,
    including our security needs, which we must fund adequately,
    there are places we can fund this $26 billion for defense and
    the $56 billion overall.
        I hope that we will take the lead that the administration
    has given us on this budget and fund the full $56 billion.
    There will be differences over how, but whether we should do
    it, it seems to me, is absolutely clear. We will need some
    bipartisan cooperation in order to achieve that.
        You three have been terrific in terms of your patience. We
    are grateful for your service. We will thank you, I guess, for
    the last time, Secretary Hale, perhaps. There is a big smile on
    your face, which I do not know if that shows on the television
    or not. [Laughter.]
        With our thanks, we will now stand adjourned.
        [Whereupon, at 1:25 p.m., the committee adjourned.]
        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Carl Levin
                                biofuels project
        1. Senator Levin. Secretary Hagel and General Dempsey, what are the
    strategic advantages gained, if any, behind the Defense Production Act
    (DPA) Title III biofuels project, and do you support the President's
    goal of executing this project?
        Secretary Hagel. Catalyzing a domestic capability to produce cost-
    competitive, commercial-scale renewable fuels is an investment in the
    Nation's energy, economic, and environmental security. America needs a
    diversified, balanced portfolio of energy options. This is particularly
    true for the Nation's transportation sector, which relies almost
    exclusively on liquid, petroleum-based fuels.
        This is why I support the President's goal of executing the
    Advanced Drop-in Biofuels Production Project, using the authorities of
    Title III of the DPA. The project, co-sponsored by the Department of
    Energy (DOE), the Department of Agriculture, and the Department of
    Defense (DOD), partners with the private sector to accelerate the
    development of cost-competitive advanced alternative fuels for both
    military and commercial transportation sectors.
        DOD has a long history of contributing to national innovations to
    meet its defense mission. In this case, to guide these investments, we
    have issued a DOD Alternative Fuel Policy for Operational Platforms,
    which ensures that DOD will make bulk purchases of alternative fuels
    only if they are cost competitive and do not harm performance,
    compatibility, or greenhouse gas emissions.
        General Dempsey. America needs a diversified, balanced portfolio of
    energy options. This is particularly true for the Nation's
    transportation sector, which relies almost exclusively on liquid,
    petroleum-based fuels. Even as we have experienced very promising
    developments in the domestic oil and natural gas markets during this
    decade, oil prices remain tied to the global petroleum fuels market,
    and we remain dependent on imports for nearly 40 percent of the
    petroleum we consume. As long as that is the case, America will be
    tethered to the persistent economic and security challenges associated
    with global oil markets. That is why an enduring strategy to increase
    energy efficiency and develop a competitive domestic renewable fuels
    industry will help strengthen our national security, lower costs for
    consumers, and reduce environmental impacts.
        DOD has a long history of contributing to national innovations to
    meet its defense mission. As the Nation's single largest consumer of
    energy, DOD is pursuing these efforts with a strategic eye to its
    future. The military will need alternatives to petroleum to keep our
    supplies diverse, especially for the current fleet of ships, airplanes,
    and combat vehicles that will be with us for decades to come. It
    therefore makes sense for DOD, for its own interests and as a party of
    the overall national energy strategy, to play a role in these projects.

        2. Senator Levin. Secretary Hagel, can you explain the DOD policy
    on alternative fuel purchases and the objectives of that policy?
        Secretary Hagel. To create clear guidelines on DOD's alternative
    fuels investments and purchases both now and in the future, on July 5,
    2012, DOD released its Alternative Fuels Policy for Operational
    Platforms. The policy states that DOD's primary alternative fuels
    objectives are to ensure operational military readiness, improve
    battle-space effectiveness, and promote flexibility of military
    operations through the ability to use multiple, reliable fuel sources.
    All DOD investments in this area are subject to a rigorous, merit-based
    evaluation and are reviewed as part of DOD's annual operational energy
    budget certification process. Specifically, the policy:

        (1)  Lays out a process to coordinate future testing and
    certification activities.
        (2)  Sets important criteria for potential field demonstrations
    that require use of a new fuel beyond the certification process.
        (3)  Establishes criteria for ongoing bulk fuel purchases to meet
    our operational requirements, beyond certification, and demonstration
    activities.

        To date, DOD has only purchased alternative fuels for testing,
    certification, and demonstration purposes. The policy also formalizes
    what is already the practice for all of the Military Services: that DOD
    will only purchase alternative fuels for use in military operations
    when they are cost-competitive with conventional fuels.

                           renewable energy projects
        3. Senator Levin. Secretary Hagel, I understand that the Army is
    planning renewable energy projects with an energy capacity valued at $7
    billion in the coming years. Can you explain the nature of the
    contractual agreements contemplated, the direct funding cost, if any,
    to DOD for these agreements, and the savings projected to be achieved
    through these agreements?
        Secretary Hagel. The $7 billion figure refers to the total contract
    ceiling of the Army Renewable Energy Multiple Award Task Order Contract
    (MATOC). The power purchased through the MATOC will be funded through
    the existing Army utility account over a term of up to 30 years,
    requiring no additional appropriated dollars.
        The Army now spends over $1 billion annually on utility bills for
    our installations. During the next 30 years, absent efficiency gains
    and/or lower cost energy, it is projected that the Army's total utility
    bill will be in excess of $40 billion. The Army's plan is to reallocate
    a portion of this amount to fund renewable energy projects on our
    installations. These projects are executed in concert with the private
    sector, which provides engineering and technical expertise along with
    capital funds to cover the costs of construction. Power is purchased
    from these projects using funds in the Army utility account. There are
    no additional appropriations required and no diversion from other
    accounts.
        Awards under the MATOC were made to a total of 48 companies,
    including 20 small businesses. The award recipients that are qualified
    through this process will be able to compete for future renewable
    energy projects issued as task orders under the MATOC. MATOC projects
    issued as task orders will be owned, operated, and maintained by the
    selected task order contractors.
                                     ______

                  Questions Submitted by Senator Kay R. Hagan
                       maintaining technology superiority
        4. Senator Hagan. Secretary Hagel and General Dempsey, am I correct
    in understand that DOD made numerous difficult decisions in this budget
    request specifically in order to ensure that our modernization programs
    will preserve our technical superiority, since that is such an
    important objective?
        Secretary Hagel. As DOD developed the budget request, careful
    consideration was taken to balance readiness, force structure, and
    modernization, to include preserving our research and development (R&D)
    activities within the available budget. Our decade-long focus on
    counter insurgency campaigns of Iraq and Afghanistan, combined with
    fiscal constraints, have dampened the rate of new technological
    advances due to the emphasis on readiness and capability of today's
    forces. R&D investments made now in technology are necessary to provide
    this country the military capabilities of the future. Our budget
    request includes critical funding for R&D for areas such as the next
    generation high-performance engine and the next generation ground
    combat vehicle (GCV).
        General Dempsey. Yes, the President's fiscal year 2015 budget
    proposal outlines a range of realistic and responsible adjustments in
    specific areas DOD believes must be made to restore balance in the
    Joint Force, and ensure our modernization programs are adequately
    funded.
        These decisions include, but are not limited to:

             Air Force: Modernizing next-generation Air Force
            combat equipment--including fighters, tankers, and bombers--to
            maintain global power projection capabilities. To free
            resources for these programs as well as other investments in
            critical capabilities, the Air Force will reduce or eliminate
            capacity in some single-mission aviation platforms such as the
            A-10.
             Army: Restoring a balanced force over time for the
            Army--requiring reduction of all of its components, restructure
            of Army aviation, and concluding development of the GCV at the
            end of the current technology development phase of the
            program--to make available resources to invest in improvements
            to warfighting capabilities. These include selective upgrades
            of combat and support vehicles and aircraft, and investments in
            new technologies required for 21st century warfare.
             Navy: Maintaining a credible, modern, sea-based
            strategic deterrent and sustaining and enhancing asymmetric
            advantages over adversary threats. To free resources for these
            investments the Navy will reduce funding for contractor
            services by approximately $3 billion per year to return to 2001
            levels of contractor support.
             Marine Corps: Investing in critical modernization of
            amphibious capability by the Marine Corps. Resources for these
            investments will be freed up by a reduction in end strength to
            182,000 Active-Duty marines.

        5. Senator Hagan. Secretary Hagel and General Dempsey, am I correct
    in understanding that if sequestration continues after fiscal year
    2015, it will make it very difficult to maintain our technological
    advantage in the future?
        Secretary Hagel. Yes, technological superiority is not assured and
    continued sequestration will reduce the Nation's ability to maintain
    technological advantages in the future. Potential adversaries saw, with
    great interest, our demonstrated capabilities during this decade-long
    war and took action to improve their own capability and technology. The
    fiscal constraints of sequestration will negatively impact R&D funding,
    particularly if reductions in R&D are proportionally tied to force
    reductions. DOD needs to maintain engineering design teams that develop
    advanced defense systems, and to protect our R&D investments in
    capabilities and systems that will allow us to dominate future battles.
    Furthermore, R&D is not a variable cost. It drives the rate of
    modernization. It takes time to develop a new system, test it, and put
    it into production. Time lost from delayed R&D is not recoverable and
    enables adversaries the time to develop counter capabilities and
    methods.
        General Dempsey. Yes, if sequestration continues after 2015, the
    risks to our technological advantage will grow significantly. Our
    military would be unbalanced and eventually too small and
    insufficiently modern to meet the needs of our strategy. This will lead
    to greater risk of longer wars with higher casualties for the United
    States along with our allies and partners.
        Critical modernization programs would be broken under
    sequestration-level cuts, creating deficiencies in the technological
    capability of our forces despite the requirement that they be able to
    respond to a wide array of threats. These threats include substantial
    anti-access/area denial (A2/AD), cyberspace and space system
    challenges, as well as threats posed by adversaries employing
    innovative combinations of modern weaponry and asymmetric tactics.
    Development and fielding of critical warfighting capabilities,
    including advanced fifth-generation fighters, long-range strike assets,
    refueling aircraft, surface and undersea combatants, and precision
    weapons, would be at significant risk. Tradeoffs in critical
    capabilities would have to be made resulting in the delay, curtailment,
    or cancellation of some high-priority modernization programs, as well
    as many lower-priority programs.

        6. Senator Hagan. Secretary Hagel and General Dempsey, what do you
    believe would be the impact on our security if we were unable to
    maintain our military technology dominance over potential adversaries?
        Secretary Hagel. Over the past several decades, the United States
    and our allies have enjoyed a military capability advantage over any
    potential adversary. Today, we are seeing this advantage erode. Other
    nations are advancing in technologies designed to counter our
    demonstrated advantages. This is true in areas like electronic warfare,
    missiles, radio frequency, and optical systems operating in non-
    conventional bandwidths, counter space capabilities, longer range and
    more accurate ballistic and cruise missiles with sophisticated seekers,
    improved undersea warfare capabilities, as well as in cyber and
    information operations. While the United States still has significant
    military advantages, U.S. superiority in some key areas is at risk.
    Loss of superiority in these areas could result in an increased
    possibility of conflict and increased risk to national security.
        General Dempsey. The risks associated with the protection and
    advancement of our national interests will become significant if we are
    unable to preserve our military technology dominance over our potential
    adversaries. The return of sequestration-level reductions in fiscal
    year 2016 would likely leave our military unbalanced, and by 2021, too
    small and insufficiently modern to meet the needs of our strategy,
    leading to greater risk of longer wars with higher casualties for the
    United States, as well as our allies and partners.
                                     ______

                 Questions Submitted by Senator Mazie K. Hirono
     opportunity, growth, and security initiative to restore modernization
        7. Senator Hirono. Secretary Hagel, with the Opportunity, Growth,
    and Security Initiative (OGSI) investment of $26 billion, there are a
    variety of opportunities to include investments into sustainment,
    restoration, and modernization funding for our naval shipyards which
    are critical to our fleet, amongst them the Pearl Harbor Naval
    Shipyard. How will DOD prioritize the use of these investment funds for
    our shipyards versus other needs of DOD?
        Secretary Hagel. Similar to the Bipartisan Budget Act (BBA), the
    President wants to work with Congress, first, to provide a fully-paid
    for increase to the discretionary caps, and, second, to determine how
    best to allocate the additional funding. The OGSI provides Congress a
    fully-paid-for roadmap for how to make additional investments in both
    domestic priorities and national security, while providing specific
    examples of where additional investments are needed, including
    approximately $4.6 billion for facilities sustainment, restoration, and
    modernization. The administration looks forward to working with
    Congress to determine the specific investments that would be funded.

        8. Senator Hirono. Secretary Hagel, military construction (MILCON)
    funding in the Future Years Defense Program (FYDP) starting in fiscal
    year 2015 was requested at lower levels compared to the FYDP starting
    in fiscal year 2014. Approximately what amount of the $26 billion of
    OSGI, if made available, would replace the delta from the originally
    planned MILCON profile?
        Secretary Hagel. Similar to the BBA, the President wants to work
    with Congress, first, to provide a fully-paid for increase to the
    discretionary caps, and, second, to determine how best to allocate the
    additional funding. The OGSI provides Congress a fully-paid-for roadmap
    for how to make additional investments in both domestic priorities and
    national security, while providing specific examples of where
    additional investments are needed, including approximately $3 billion
    of MILCON funding. The administration looks forward to working with
    Congress to determine the specific investments that would be funded.

        risk to combatant commanders in a volatile security environment
        9. Senator Hirono. Secretary Hagel and General Dempsey, in your
    testimony, you mentioned more than once that we are facing risk and
    uncertainty in a dynamic and volatile security environment. You also
    mentioned that a smaller force strains our ability to respond
    simultaneously to more than one contingency operation. With the U.S.
    Pacific Command commander, as well as other combatant commanders,
    facing uncertainty in the future and with the potential need to respond
    to multiple contingencies, where will the future force assume the
    greatest risk?
        Secretary Hagel. Depending on budget levels, the future force would
    assume greatest risk in the near-term due to low levels of readiness.
    Many units today lack the training for full-spectrum operations. This
    will improve over time. Over the longer-term, as force structure is
    reduced, the risk will shift toward the ability to fight and win
    multiple contingencies while maintaining Homeland defense. The future
    force would assume the greatest risk in its most stressed case in which
    two overseas contingencies occur simultaneously and without notice.
    Such a low-probability but high-consequence event would stress the
    future force's ability to respond effectively to both contingencies,
    and to do so in a timely manner.
        Without notice, the force may not be ideally positioned within a
    region to respond to a threat. Depending upon the nature, scale, and
    duration of the conflicts, the future force may lack some capabilities
    that combatant commanders would want in their campaign plans. Key
    enablers, such as intelligence, surveillance, reconnaissance (ISR) and
    long-range strike platforms might be in particularly short supply.
        General Dempsey. First, I would like to reemphasize that today the
    U.S. military can conduct all of the missions outlined in my
    Quadrennial Defense Review (QDR) assessment. However, under certain
    circumstances, we could be limited by capability, capacity, and
    readiness in the conduct of several of these missions. Therefore, the
    U.S. military can meet the updated National Defense Strategy (NDS),
    although with higher levels of risk in some areas.
        In the next 10 years, I expect the risk of interstate conflict in
    East Asia to rise, the vulnerability of our platforms and basing to
    increase, our technology edge to erode, instability to persist in the
    Middle East, and threats posed by violent extremist organizations to
    endure. Nearly any future conflict will occur on a much faster pace and
    on a more technically challenging battlefield. In the case of U.S.
    involvement in conflicts overseas, the Homeland will no longer be a
    sanctuary either for our forces or for our citizens. Our operational
    plans require capability, capacity, and force readiness for a more
    difficult conventional fight and cannot be executed with a large force
    that is not ready in time or a ready force that is too small.
        Further, reductions in our capacity are unlikely to be completely
    mitigated by increased reliance on our allies and partners, as their
    military power is mostly in decline. Higher risk will also be assumed
    in achieving our objectives given the reality of our global
    responsibilities while the military objectives associated with meeting
    long-standing U.S. policy commitments are extraordinary and are growing
    in difficulty. Our present military advantage is diminishing and our
    ability to meet ambitious strategic objectives is complicated. As part
    of providing my best military advice, the Chiefs and I are working with
    the Secretary of Defense to refine and prioritize U.S. military
    objectives to align with the size and capabilities of our programmed
    force in order to drive down risk.

        10. Senator Hirono. Secretary Hagel and General Dempsey, if DOD
    would be unable to respond to multiple contingencies, what associated
    risks would the combatant commanders assume?
        Secretary Hagel. If U.S. forces were to be sized to respond to only
    one major contingency, we would find it difficult to sustain a credible
    deterrent posture in regions important to U.S. interests. If U.S.
    forces became engaged in a large-scale conflict, adversaries elsewhere
    may believe they could then act aggressively against U.S. and allied
    interests. Such a posture would undermine our status as the security
    partner of choice, reducing U.S. influence globally and risking
    instability. At sequester-level cuts, the U.S. military would be too
    small to implement the military strategy effectively, leading to
    greater risk of longer wars with potentially higher casualties for the
    United States and its allies and partners in the event of a conflict.
    This would likely embolden adversaries and undermine the confidence of
    allies and partners, which in turn could lead to an even more
    challenging security environment than we already face.
        General Dempsey. As stated in the 2014 QDR, if deterrence fails
    U.S. forces will be capable of defeating a regional adversary in a
    large-scale, multi-phased campaign while simultaneously denying the
    objectives of, or imposing unacceptable costs on--a second aggressor in
    another region. Accordingly, we will continue to provide a range of
    options to deter and respond to potential contingencies. In general, a
    smaller Joint Force will become more reliant on rapid Reserve
    mobilization, on maintaining high readiness levels for its Active
    Forces, and on adapting our operational concepts to better utilize our
    full range of technological and other advantages. Allies and partners
    may help to mitigate some of the risk, although it is not likely they
    will be able to cover all of our shortfalls. In the end, however, a
    contingency response that is not as vigorous or timely will entail a
    higher level of risk to the Nation and to the forces committed. In
    essence, we may be able to do fewer things simultaneously, and new
    contingencies may force us to take risk in other regions or for other
    security threats. Combatant commanders will need to be prepared for
    frequent adaptation in achieving objectives, in the ways they achieve
    results, and in the way they apply available resources.

                       asia-pacific rebalance investments
        11. Senator Hirono. Secretary Hagel and General Dempsey, the Asia-
    Pacific rebalance recognizes that future demographic, economic, and
    security concerns will need to be leveraged over time to address all
    facets of the rebalance. In light of this, we are investing more
    resources in our relationships in the region, engaging more at every
    level, and shifting assets to the region. Please outline specific
    examples of investments that we are making to ensure our partners and
    allies are assured of the Asia-Pacific rebalance.
        Secretary Hagel. DOD is engaging in several lines of effort to
    ensure we sustain our position in the Asia-Pacific region.
        These lines of effort are:

        1.  Modernizing alliances and partnerships. DOD is modernizing its
    alliances with our treaty allies. This includes working with Japan to
    revise the U.S.-Japan guidelines; updating the U.S.-Republic of Korea
    (ROK) Special Measures Agreement; supporting negotiations now under way
    to facilitate increased rotational presence of U.S. forces in the
    Philippines; supporting negotiations with Australia to establish a
    long-term agreement on a continuous U.S. rotational presence; and, with
    Thailand, continuing to implement the 2012 update of the Joint Vision
    Document.
        2.  Enhancing defense posture. DOD continues to work towards a
    posture that is geographically distributed, politically sustainable,
    and operationally resilient. These efforts include the continued
    realignment of U.S. forces within the ROK, moving forward on the
    Futenma Replacement Facility with Japan in Okinawa, and working jointly
    with Japan to develop Guam as a strategic hub. In addition, Singapore
    hosted the first rotation of a Littoral Combat Ship (LCS) last year.
        3.  Updating operational concepts and plans. DOD continues to
    develop and update the plans and concepts that will enable innovative
    use of our forces, if needed. Most relevant to the Asia-Pacific region
    is our continued work on the Joint Operational Access Concept and the
    Air-Sea Battle. Both are evolutions of more established concepts, and
    represent progress in creating a more effective joint force.
        4.  Investing in the capabilities needed to secure U.S. interests
    throughout the region. DOD is investing in a range of activities and
    initiatives that will contribute to U.S. capabilities in the Asia-
    Pacific region. In particular, we continue to invest in the fifth
    generation Joint Strike Fighter (JSF), the Virginia-class submarine and
    the Virginia Payload Module (VPM), the P-8A maritime patrol aircraft,
    the Broad Area Maritime Surveillance unmanned air system, the Unmanned
    Carrier Launched Air Surveillance and Strike System, a new long-range
    bomber, and the KC-46 tanker.
        5.  Strengthening multilateral cooperation and engagement. Over the
    past 5 years, DOD has invested significantly in the multilateral
    regional fora that are increasingly the center of gravity for security
    and foreign policy discussions. This includes DOD attendance at
    meetings of, and support for exercises by the Association of Southeast
    Asian Nations (ASEAN)-led ASEAN Regional Forum, and the ASEAN Defense
    Ministers' Meeting Plus.

        General Dempsey. In support of the rebalance to the Asia-Pacific,
    DOD will continue to work to modernize and update alliances; expand and
    deepen partnerships; and increase engagement throughout the region to
    enhance security and promote the capacity to respond to shared
    challenges. In the Asia-Pacific region, our strategy emphasizes the
    importance of our existing alliances, investing in long-term strategic
    partnerships within Asia, and expanding our networks of cooperation
    with emerging partners to ensure collective capability and capacity for
    securing common interests.
        DOD will work with allies to modernize capabilities and concepts to
    position the United States to face future challenges together. With
    existing allies, we will pursue the following initiatives and
    associated investments:

             Japan. Ensure the political sustainability of our
            presence in Okinawa, modernize U.S. forces in Japan (e.g., P-8
            antisubmarine aircraft and MV-22 tilt-rotor utility aircraft
            deployments, the addition of E-2D airborne early warning
            aircraft to Carrier Air Wing 5 in fiscal year 2016, as well as
            periodic F-22 fighter rotations), jointly develop Guam as a
            strategic hub, and deploy additional transportable radar
            surveillance (agreement secured).
             Korea. Evaluate the conditions for operational control
            transition and continue progress on Strategic Alliance 2015 and
            basing adjustments. Implement signed agreements to strengthen
            cooperation in space, cyberspace, and intelligence.
             Australia. Rotationally deploy Marine Corps and Air
            Force forces to Darwin and the Northern Territories
            respectively. Begin negotiations on a binding access agreement
            to support enhanced Marine Corps and Air Force rotational force
            presence. Continue to advance space cooperation with agreement
            to move an advanced, DARPA-developed Space Surveillance
            Telescope to Australia.
             Philippines. Negotiate Enhanced Defense Cooperation
            Agreement. Further assist in developing the Philippines'
            Maritime Domain Awareness and Maritime Security. Continue to
            support Philippines' counterterrorism efforts.
             Thailand. Implement Joint Vision Statement 2012,
            addressing the four pillars for U.S.-Thai cooperation;
            promoting stability in the Asia-Pacific and beyond, supporting
            Thai leadership in Southeast Asia, enhancing bilateral and
            multilateral interoperability and readiness, and building
            relationships and increasing coordination at all levels.
            Institutionalize Defense Strategic Talks for senior DOD
            policymakers.

        DOD will seek to enhance and deepen partnerships with countries
    throughout the Asia-Pacific to improve the region's capacity to respond
    to common challenges. Key initiatives/investments include:

             Singapore. Operationalize ISR/Maritime Security
            Capacity Building Concept; pursue U.S.-China-Singapore
            trilateral engagements; explore approaches for cooperation in
            intelligence, cyber, and information management.
             Indonesia. Enhance defense cooperation to increase the
            Indonesian military's capacity and capability to conduct
            external missions, particularly maritime security, humanitarian
            assistance/disaster relief, and peacekeeping. Continue DOD
            support for Indonesian defense reform efforts and strengthen
            nascent defense trade cooperation.
             India. Increase defense cooperation and trade. Begin
            negotiations on renewal of the 2005 (10-year) ``New Framework
            Agreement'' on defense cooperation. Explore nascent areas of
            engagement (i.e. space, cyber, counter-IED). Enhance policy
            oversight to the Defense Policy Group sub-groups, shoring up
            and protecting routine military-to-military engagements.
             China. Work with China to build a military-to-military
            meeting schedule for the coming years, continue the Strategic
            Security Dialogue and Defense Consultative Talks.
             Malaysia, Vietnam, Brunei, and the Pacific Islands.
            Increase U.S. operational access through enhanced outreach,
            including additional combined exercises, port visits, and other
            initiatives.
             ASEAN. Strengthen support for ASEAN's defense
            institutions. Institutionalize the ASEAN Defense Ministers
            Meeting (ADMM) Plus as the premier regional defense forum.
            Establish clear and shared objectives with our ADMM plus
            counterparts through dialogue such as the Secretary of
            Defense's April meeting with ASEAN Defense Ministers in Hawaii.
             Bangladesh, Nepal, Sri Lanka, and Southeast Asia.
            Expand engagement and security cooperation.
             New Zealand. Continue to revitalize the defense
            relationship with New Zealand following the 2012 lifting of
            restriction on military-to-military interactions. Expand mutual
            cooperation on initiatives developed during expanding annual
            military-to-military dialogues such as Defense Policy Dialogue
            and Bilateral Defense Dialogue. Build on New Zealand
            participation in exercises such as Rim of the Pacific.
             South China Sea. Continue to emphasize multilateral
            approaches and claimant state capacity building efforts in the
            region. Enhance regional capacity for maritime domain awareness
            and maritime security. Shape/enable claimant nations' ability
            to monitor and observe sovereign spaces and respond to
            activities within the South China Sea.
             Burma. Focus on incentivizing continued support for
            democratic reforms. Continue efforts to begin limited and
            calibrated engagement with the Burmese military.

                    cybersecurity vital to national security
        12. Senator Hirono. Secretary Hagel, cybersecurity plays a vital
    role in the security of our Nation and to DOD. With $5.1 billion in the
    fiscal year 2015 request, there are many opportunities to incorporate
    both Active and National Guard cyber units to play critical roles in
    cybersecurity. With cyber infrastructure in place with other government
    agencies on Oahu already, it would make sense for Reserve military
    forces to form a cadre of talented cyber warriors in the Pacific. The
    Hawaii Air National Guard is interested in standing up a new cyber
    unit. How do you envision the National Guard's contribution to this
    effort?
        Secretary Hagel. We have seen from more than 12 years of conflict
    the critical role the Reserve components, including the National Guard,
    play on the battlefield. As we emerge from these conflicts and face new
    and evolving threats in areas such as cyberspace, we will rebalance
    across the Joint Force to ensure that we have ready and capable forces.
    Part of that rebalance will include determining the right roles and
    missions for our Reserve component forces in cyberspace. We are working
    with the Department of Homeland Security and the States through the
    Council of Governors to improve our cooperative efforts on
    cybersecurity, which will aid DOD in prescribing appropriate roles for
    Reserve component forces. DOD is currently undertaking a cyber mission
    analysis as directed in the National Defense Authorization Act (NDAA)
    for Fiscal Year 2014 that will address these questions. I am personally
    engaged and will ensure that we complete this analysis on time.

                           special operations funding
        13. Senator Hirono. Secretary Hagel and General Dempsey, even as we
    draw down in Afghanistan, the proposal is to increase the number of
    Special Operations Command (SOCOM) personnel from 66,000 to 69,700.
    Will the primary missions of these personnel change?
        Secretary Hagel. The primary missions of Special Operations Forces
    (SOF) will not change. Our SOF operators will continue to execute the
    full spectrum of operations as necessary to meet national security
    requirements. What will change is the mix of those operations. As DOD
    redistributes forces from Afghanistan to support the Geographic
    Combatant Command plans, U.S. forces will become less engaged in combat
    operations and more engaged in building partner capacity, conducting
    humanitarian assistance, promoting theater security cooperation, and
    conducting limited peacekeeping, counternarcotics, and
    counterproliferation operations. These are missions we have continued
    to conduct globally during the last 13 years of war, but to a lesser
    degree due to requirements in Afghanistan and Iraq. DOD will continue
    to conduct counterterrorist operations as needed, and when directed,
    but the other missions mentioned above will take on a more prominent
    role for SOF.
        General Dempsey. The increase in SOCOM personnel will not change
    the primary missions of SOF even as we draw down in Afghanistan. Both
    factors, the force growth and draw down, will allow us to rebalance our
    commitment of these forces to support the enduring and emerging
    requirements of our geographical combatant commanders. Those missions
    will continue to span the full-range of military operations; a non-
    exhaustive list would include activities such as direct action,
    building partner capacity, and military information support operations.

        14. Senator Hirono. Secretary Hagel and General Dempsey, what do
    you envision the role of SOF to be in the future, and will it include
    items such as theater security cooperation, humanitarian assistance,
    and training with other military forces?
        Secretary Hagel. While U.S. forces are drawn down in Afghanistan,
    SOF will be reallocated into other theaters to support the Geographic
    Combatant Commands. As these redeployments progress and the types of
    operations diversify, DOD will remain committed to conducting
    counterterrorism operations where and when necessary. General Dempsey
    and I will continue to work closely with our partners and build their
    capabilities, enabling them to take a greater leadership role for
    security in their areas. Operations such as peacekeeping, small-scale
    stability operations, humanitarian assistance, counternarcotics, and
    counterproliferation will likely increase. Benefitting from 13 years of
    wartime experience, DOD will adapt to the new operating environment and
    employ a networked approach while capitalizing on the use of small-
    scale, distributed operations, fully integrated into combatant
    commanders' plans.
        General Dempsey. I anticipate the role of SOF to continue to
    address the broad span of security challenges facing our combatant
    commanders, including their theater security cooperation requirements
    and any foreign humanitarian assistance issues. In close coordination
    with other departments and agencies, and committed to supporting human
    rights vetting, training with other military forces remains fundamental
    as part of an approach to persistent engagement and building enduring
    partnerships.

                          accountability of commanders
        15. Senator Hirono. Secretary Hagel and General Dempsey, we hold
    our military commanders accountable to a much higher standard due to
    the level of trust and responsibility they have to care for their
    subordinates. What is your view on incorporating accountability for
    commanders based on command climate survey results for future command
    selection boards and incorporating the command climate survey results
    onto the commanders' fitness reports?
        Secretary Hagel. DOD has always held commanders accountable for the
    climate within their commands. However, to gauge command climate
    requires much more than just a survey report. It involves an assessment
    of several factors ranging from simple observations to performance on
    field exercises and training missions. In other words, command climate
    is only one of several dimensions of the high caliber of leadership we
    demand in today's commanding officers. For example, it is at least as
    important how a commander works to address and prevent issues that may
    create or lead to a destructive climate. Therefore, to include the
    survey results in the commander's fitness report would place too great
    of an importance on the survey, while minimizing other factors which
    are used to assess our commanders' leadership and abilities.
        General Dempsey. Yes, we do hold our military commanders to very
    high standards for the very reasons you mention. We have always held
    commanders accountable for the climate within their commands. However,
    to gage command climate requires much more than just a survey report.
    It involves an assessment of several factors ranging from simple
    observations to performance on training, exercises, resource
    management, in combat, and beyond. What is most important is how the
    commander works to prevent issues that create or can lead to an
    unhealthy climate.
                                     ______

                    Questions Submitted by Senator Tim Kaine
                           sequestration implications
        16. Senator Kaine. Secretary Hagel and Secretary Hale, as a result
    of the Budget Control Act (BCA), DOD was placed under reduced
    discretionary spending caps that have since been adjusted by the
    American Taxpayer Relief Act (ATRA) and BBA. These across-the-board
    cuts and reduced discretionary spending limits have had significant
    negative implications for readiness, operational capacity, and our
    military personnel and their families. The President's budget request
    for fiscal year 2015 contains $496 billion, consistent with the BBA. In
    addition, the fiscal year 2015 budget request includes an additional
    $26 billion through OGSI, the $115 billion adjustments through the
    FYDP, and additional spending cap adjustments through fiscal year 2021,
    the last year of the original BCA's sequestration mechanism.
    Considering the adjustments that have been made with respect to ATRA
    and BBA, what dollar amount and percentage of the original
    sequestration cut is DOD poised to absorb if no changes to the
    discretionary spending limits are enacted before fiscal year 2021?
        Secretary Hagel and Secretary Hale. The sequestration level
    reductions required by the BCA of 2011 between fiscal year 2013 and
    fiscal year 2021 were over $900 billion compared to the President's
    budget for fiscal year 2012. The changes to the original BCA, which
    were enacted by Congress for fiscal years 2013, 2014, and 2015,
    increased DOD's budget above the original sequestration levels by
    approximately $50 billion. DOD's President's budget request for fiscal
    year 2015 would provide approximately $150 additional billion above
    sequestration levels for fiscal year 2016 to fiscal year 2021. If the
    proposals in the President's budget for fiscal year 2015 were enacted
    through fiscal year 2021, DOD would absorb over $700 billion
    (approximately 80 percent) of the original reduction of over $900
    billion compared to the fiscal year 2012 budget.
        While the relief provided in fiscal years 2014 and 2015 is helpful
    in supporting readiness and some procurement accounts, DOD could still
    see up to 80 percent of the original BCA sequestration level reductions
    if nothing is done to eliminate sequestration in fiscal year 2016 and
    beyond. This will directly impact the current and future readiness of
    our Armed Forces.

        17. Senator Kaine. Secretary Hagel and Secretary Hale, with the
    adjustments made in ATRA and BBA coupled with the proposed OGSI and
    additional cap adjustments through fiscal year 2021 in the President's
    fiscal year 2015 budget request, what dollar amount and percentage of
    the original BCA sequestration cuts would DOD absorb if both proposals
    were enacted into law?
        Secretary Hagel and Secretary Hale. The sequestration level
    reductions required by the BCA of 2011 between fiscal year 2013 and
    fiscal year 2021 were over $900 billion compared to the President's
    budget for fiscal year 2012. The changes to the original BCA, which
    were enacted by Congress for fiscal years 2013, 2014, and 2015,
    increased DOD's budget above the original sequestration levels by
    approximately $50 billion. DOD's President's budget request for fiscal
    year 2015 would provide approximately $150 additional billion above
    sequestration levels for fiscal year 2016 to fiscal year 2021. If the
    proposals in the President's budget for fiscal year 2015 were enacted
    through fiscal year 2021, DOD would absorb over $700 billion
    (approximately 80 percent) of the original reduction of over $900
    billion compared to the fiscal year 2012 budget.
        While the relief provided in fiscal year 2014 and 2015 is helpful
    in supporting readiness and some procurement accounts, DOD could still
    see up to 80 percent of the original BCA sequestration level reductions
    if nothing is done to eliminate sequestration in fiscal year 2016 and
    beyond. This will directly impact the current and future readiness of
    our Armed Forces.

        18. Senator Kaine. Secretary Hagel and Secretary Hale, within the
    FYDP the adjustments made in ATRA and BBA coupled with the proposed
    OGSI and FYDP through fiscal year 2019, what dollar amount and
    percentage of the original BCA sequestration cuts would DOD absorb if
    both proposals were enacted into law?
        Secretary Hagel and Secretary Hale. The sequestration level
    reductions required by the BCA of 2011 were over $750 billion between
    fiscal year 2012 and fiscal year 2019 compared to the President's
    budget for fiscal year 2012. The changes to the original BCA, which
    were enacted by Congress for fiscal years 2013, 2014, and 2015,
    increased DOD's budget by approximately $50 billion. DOD's President's
    budget request for fiscal year 2015 provides $115 billion above the
    sequestration level for fiscal year 2016 to fiscal year 2019. If the
    proposals in the President's budget for fiscal year 2015 were enacted
    through fiscal year 2019, DOD would absorb over $500 billion
    (approximately 70 percent) of the original reduction of over $750
    billion compared to the fiscal year 2012 budget.

        19. Senator Kaine. Secretary Hagel and Secretary Hale, the
    statutory requirement 10 U.S.C. section 5062(b) mandates that DOD
    requires the Navy to a force of not less than 11 operational aircraft
    carriers. Should DOD not fund the 11 aircraft carrier fleet in its
    fiscal year 2016 budget submission, would DOD submit a legislative
    proposal requesting a change to statute?
        Secretary Hagel and Secretary Hale. If the fiscal year 2016 fiscal
    environment requires the Navy to reduce the carrier force, a
    legislative proposal would be submitted.

        20. Senator Kaine. Secretary Hagel and Secretary Hale, you
    repeatedly mentioned your desire for an ``indication'' that the
    sequester will be eliminated in fiscal year 2016 in order to fund to
    the requested top line of the FYDP. Short of enacting legislation that
    would repeal or replace the defense discretionary cuts set to take
    effect beyond fiscal year 2015, and given that Congress will likely not
    pass another budget until late in fiscal year 2015, can you elaborate
    on what signal from Congress would allow DOD to better plan for fiscal
    year 2016, including an 11 aircraft carrier fleet, higher Army Active,
    Guard, and Reserve component end strength, and Marine Corps Active end
    strength?
        Secretary Hagel and Secretary Hale. DOD could better plan for the
    fiscal year 2016 budget and beyond if a budget resolution were approved
    by early fall of 2014, which would indicate an intention to fund the
    defense discretionary budget above the funding limitations in current
    law.
                                     ______

               Questions Submitted by Senator Angus S. King, Jr.
                              army force structure
        21. Senator King. Secretary Hagel and General Dempsey, the FYDP
    requests an Army Active-Duty Force that, under a long-term
    sequestration scenario, could go as low as 420,000, a National Guard
    Force that could go as low as 315,000, and an Army Reserve Force that
    could go as low as 185,000. What analysis did DOD use to support both
    the total end strength numbers and the force structure mix between the
    Active Army and the Army National Guard?
        Secretary Hagel. DOD developed the 420,000, 315,000, and 185,000
    figures for the Active Army, the National Guard, and the Army Reserve,
    respectively, based on extensive analysis of the demands of existing
    strategy and the expected resourcing available under a long-term
    sequestration scenario. A key factor driving a reduction in the current
    size of the Army is that, in line with the existing strategy, DOD no
    longer sizes the force to conduct large-scale, prolonged stability
    operations.
        In the Strategic Choices and Management Review (SCMR), the QDR, and
    the development of the fiscal year 2015 President's budget, DOD
    assessed the force capacity and capabilities needed for our key
    missions related to Homeland support, deterrence and warfighting, and
    sustained global peacetime presence. DOD assesses higher end strength
    levels (440,000 to 450,000, 335,000, and 185,000 for the 3 components)
    offer reduced risk, but these levels are not affordable within BCA
    funding levels.
        General Dempsey. Building on the 2012 Defense Strategic Guidance
    (DSG), the SCMR analysis and 2014 QDR informed the defense rebalancing
    efforts in a period of increasing fiscal constraint. These cross-
    cutting efforts thoroughly assessed, prioritized, and balanced force
    capacity, capability, and readiness, resulting in the development of
    the President's budget for 2015. All of the Services, including the
    Reserve components, were represented during the SCMR, QDR, and program
    budget review processes. The analysis leads me to conclude that long-
    term sequestration drives us below force levels necessary to meet our
    security interests.

        22. Senator King. Secretary Hagel and General Dempsey, when making
    this analysis, how did you determine the relative cost and value in
    support of the NDS of Active Army and Army National Guard Forces with
    regard to their military capabilities, readiness levels, mobilization
    and deployment policies, availability, and costs, including incremental
    increase in costs to meet readiness and capabilities levels necessary
    to deploy?
        Secretary Hagel. Determining the right size and mix of Army
    components turns foremost on the ability to provide ready forces when
    needed to accomplish the mission. Though cost is often singled out for
    discussion, it is one of many factors used to determine the right mix
    of Active and Reserve component forces. Over the past year, DOD has
    conducted extensive analysis to assess the most cost-effective way to
    meet demands of the strategy within the constraints of our budget. This
    analysis took into account the unique and crucial capabilities of the
    Active component and the cost advantages of the Reserve component in
    carrying out selected, important missions.
        DOD has found that no single component is the most cost-effective
    across all missions. The Active Army is mainly sized to provide the
    combat forces and the selected key enabler assets for a no-notice
    conventional war, quick reaction forces for global crises, and
    peacetime presence in the form of forward stationed and rotational
    forces. The Army National Guard is sized to provide Homeland support,
    selected peacetime presence, early enabler forces such as logistics and
    transportation forces for a major conventional war, and late arriving
    combat forces should a war go longer than planned.
        General Dempsey. We intend to maintain the Reserve components as a
    full spectrum force capable of supporting their Homeland defense and
    other important missions and balanced against combatant command
    requirements. We carefully weighed warfighting requirements to meet
    operational plans to help determine the right mix of Active and Reserve
    component forces as well as those missions best suited for each
    component.

        23. Senator King. Secretary Hagel and General Dempsey, what is your
    assessment of the risk associated with these planned changes to the
    Total Army achieving the requirements of the NDS and providing support
    to civil authorities for Homeland defense or domestic emergency?
        Secretary Hagel. DOD has worked diligently to meet our Nation's
    pressing security needs, despite declining budgets. Our Total Army must
    provide global peacetime presence, be prepared to conduct no-notice
    major combat operations, and support the Homeland.
        The fiscal year 2015 President's budget supports our National
    Security Strategy. The reduced capacity and capabilities associated
    with BCA funding levels present higher risk levels, especially in our
    ability to conduct a major conventional war. In developing the budget,
    DOD paid particular attention to Homeland support needs, providing
    robust Army capacity, in particular. Given the necessity of budget
    cuts, I had to make tough decisions in concert with my top advisors
    (civilian and military) on how to best allocate key assets to balance
    risk across our strategic missions.
        An example is the Army helicopter restructure plan, which
    concentrates all Apache attack helicopters in the Active component to
    ensure sufficient capability for a no-notice conventional war and adds
    over 100 Blackhawk helicopters to the Reserve component. Unlike the
    Apaches, Blackhawks are highly useful in responding to natural
    disasters and other State-level challenges. General Jacoby, the U.S.
    Commander of U.S. Northern Command (NORTHCOM), noted the advantages of
    this plan related to Homeland support in his recent testimony to
    Congress.
        General Dempsey. My assessment of the risks posed by changes to the
    Total Army is informed by a Joint perspective that takes into account
    the synergy resident in Joint Operations. The risk to the three pillars
    of the QDR defense strategy will likely rise overall in the near-term
    because of readiness, regardless of approach, but our near-term efforts
    will reduce overall risk in the mid-term. The first pillar, Protect the
    Homeland, will experience less risk due to planned changes in the Total
    Army. The Army's major contributions as part of the Joint Force, are to
    defend against ballistic missiles, conduct chemical, biological,
    radiological, nuclear, and explosive missions, and to provide landpower
    for DOD support to Civil Authorities (DSCA). The first two missions are
    largely capability-driven and the proposed Army changes will not
    impinge on those capabilities. Additionally, I feel there is sufficient
    capacity to respond to threats so the risk to successfully executing
    those missions is low. The forces supplied for DSCA missions, most
    immediately and most proficiently, come from the National Guard
    operating under title 32 and, if necessary, Title 10. I am very
    confident that the risk to accomplishing DSCA mission objectives is
    low.
        When we discuss the other two pillars of the QDR defense strategy,
    there will be heightened risk. We will be less likely to be able to
    provide the necessary capacity of ready forces to help Build Security
    Globally. Over time, implementing the Army's Regionally Aligned Forces
    approach and readiness gains will decrease military risk to this
    pillar. The Total Army changes will have an impact on risk to the
    Project Power and Win Decisively pillar. The defense strategy takes
    risk in long-term stability operations, which are a fundamental feature
    of some major warplans. However, I believe that the risk to the initial
    stages of major campaigns will entail lower risk in the mid-term as the
    Army has time to reset and train for full spectrum operations.

        24. Senator King. Secretary Hagel and General Dempsey, what role
    did the Chief of the National Guard Bureau, Director or Acting Director
    of the Army National Guard, and their staffs play in the analysis,
    formulation of these end strength and force structure recommendations,
    and your decision to include them in your fiscal year 2015 FYDP?
        Secretary Hagel. The development of the fiscal year 2015 FYDP was a
    collaborative process with close involvement of all key stakeholders,
    including the Army National Guard and the National Guard Bureau. In
    developing the Army FYDP position, the Army National Guard provided
    representatives to every internal resourcing working group, and the
    Director of the Army National Guard participated in numerous decision
    meetings chaired by the Secretary of the Army. Additionally, the Vice
    Chief of Staff of the Army met with a number of Adjutant Generals on
    multiple occasions to garner their input.
        After the Army submitted its Service position to the Office of the
    Secretary of Defense (OSD) for review, the National Guard Bureau was a
    key participant in the DOD-wide discussion of issues. Issues, options,
    and rationale submitted by the National Guard Bureau were extensively
    discussed in working groups and in three- and four-star level
    deliberative sessions comprised of the Joint Staff, NORTHCOM, the OSD
    Staff, the Military Departments, and the National Guard Bureau. The
    recommendations from these key DOD stakeholders informed the decision
    on the Army National Guard end strength, force structure, and aviation
    restructure.
        General Dempsey. The National Guard was involved in numerous
    processes within DOD that examined end strength and force structure
    recommendations for the fiscal year 2015 FYDP, most notably the SCMR
    and the QDR. Additionally, senior leaders and staff from both National
    Guard Bureau and the Army National Guard regularly contribute to budget
    development through the Program Objective Memorandum process, the
    Deputy's Management Action Group, and Joint Chiefs of Staff Tank
    sessions.

        25. Senator King. Secretary Hagel and General Dempsey, how does
    your end strength and force structure plan accommodate the input or
    recommendations of the Chief of the National Guard Bureau or the
    Director or Acting Director of the Army National Guard?
        Secretary Hagel. The Army National Guard and National Guard Bureau
    were key stakeholders in the development of the fiscal year 2015
    President's budget. These organizations submitted issues, alternatives,
    and rationale that were discussed extensively in working groups and
    decision forums.
        Since no one Army component is the most cost-effective across all
    missions, there was no compelling rationale to make deep cuts in one
    component in order to preserve another. During the debate over
    resourcing options relating to force capacity and capability, my focus
    was on retaining our technological edge and maintaining adequately
    trained forces. If too many units are retained, DOD will be unable to
    adequately train and equip them, resulting in a hollow force that none
    of us desire.
        General Dempsey. Our force structure plan takes into careful
    consideration the recommendations brought forward by every member of
    the Joint Chiefs of Staff. This plan balances our current requirements
    with the pressing need to modernize our force, given limited resources.
    Specifically, the Chief of the National Guard Bureau provided input
    with respect to the Guard's domestic support requirements.
    Consequently, the plan prescribes relatively modest changes to National
    Guard force structure.

                             climate change impacts
        26. Senator King. Secretary Hagel, the 2014 QDR discusses some of
    the challenges posed by climate change, and Secretary of State Kerry
    recently called climate change ``perhaps the world's most fearsome
    weapon of mass destruction.'' How much should climate change be a
    driver of our national security concerns, and what steps is DOD taking
    to deal with its implications?
        Secretary Hagel. Climate change is a significant concern for DOD,
    affecting the operating environment as well the roles and missions that
    U.S. Armed Forces are directed to undertake. Increasing storm intensity
    will increase demands for humanitarian assistance and disaster
    response. The effects may increase the frequency, scale, and complexity
    of DOD's critical support to U.S. civil authorities. Rapidly melting
    Arctic ice creates new shipping lanes and expands the Navy's operating
    area. Climate change may also affect the weapons systems DOD buys,
    where we buy from, how they are transported and distributed, and how
    and where they are stockpiled and stored.
        Last year, DOD published the DOD fiscal year 2012 Climate Change
    Adaptation Roadmap, which identifies key vulnerabilities of certain
    missions to specific aspects of climate change and incorporates
    consideration of climate risk into existing guidance documents, such as
    updated policies on master planning and revised guidance on natural
    resources management. One significant effect of climate change is on
    critical U.S. facilities, such as the Norfolk Naval Base, which is
    already facing the challenges of sea-level rise. Moreover, although
    operational forces are not the focus of DOD's greenhouse gas reduction
    efforts, changes in how we use energy in weapons systems could enhance
    capabilities and reduce mission risks.
                                     ______

                 Questions Submitted by Senator James M. Inhofe
                               budget control act
        27. Senator Inhofe. Secretary Hagel, you have stated: ``We will
    look for a signal from Congress that sequestration will not be imposed
    in fiscal year 2016 and that the funding levels projected in the FYDP
    will be realized. If that happens, we will submit a budget that
    implements our desired force levels.'' What is the latest date for
    Congress to provide that signal for funding the desired force levels
    proposed in the fiscal year 2015 budget, and that also ensures the
    President's fiscal year 2016 budget is submitted on time on February 5,
    2016?
        Secretary Hagel. DOD could better plan for fiscal year 2016 budget
    and beyond if a budget resolution were approved by early fall of 2014,
    which would indicate an intention to fund the defense discretionary
    budget above the funding limitations in current law.

        28. Senator Inhofe. Secretary Hagel, what is the vehicle for that
    signal DOD is looking for?
        Secretary Hagel. DOD could better plan for fiscal year 2016 budget
    and beyond if a budget resolution were approved by early fall of 2014,
    which would indicate an intention to fund the defense discretionary
    budget above the funding limitations in current law.

                                  commissaries
        29. Senator Inhofe. Secretary Hagel, the President's budget request
    slashes the annual $1.4 billion commissary subsidy by $1 billion over 3
    years--down to $400 million. This is a big hit to the commissary
    system. Lower subsidies will lead to higher commissary prices for
    beneficiaries. I'm told the average savings commissaries provide to
    beneficiaries over commercial grocery stores is about 30 percent today.
    How much will average savings decline for military families if DOD
    reduces subsidies like the President desires?
        Secretary Hagel. Servicemember savings at all commissaries would be
    reduced from about 30 percent on average to about 10 percent. Even
    though patrons will be charged more to partially fund commissary
    operations, DOD continues to believe that commissaries serve an
    important role in the lives of military families, which is the reason
    no commissary is being closed.

        30. Senator Inhofe. Secretary Hagel, it seems to me that a young
    enlisted person with a family will be slammed hardest with higher
    commissary prices. That servicemember will see a big cut in purchasing
    power if much of his commissary savings vanish, and he'll consider that
    a big cut in overall compensation. If the President is so concerned
    about income inequality in our country as he says he is, then why does
    he want to penalize a young enlisted servicemember, someone on a lower
    income scale, by reducing his commissary savings and hurting his
    ability to provide for his family? Where is the fairness in that?
        Secretary Hagel. DOD remains committed to keeping the faith with
    those who are serving today, but the proper balance must be found to
    ensure we maintain our force structure, readiness, and modernization
    capabilities while adequately compensating our personnel. Commissaries
    provide a valued service to our people, especially younger military
    families and retirees. For this reason, DOD is not directing any
    commissaries to close. DOD has no desire to penalize any servicemember.
    DOD commissaries can continue to provide a reasonable savings compared
    to the retail grocery business even after these changes.

                                    tricare
        31. Senator Inhofe. Secretary Hagel, the President's budget request
    includes higher TRICARE co-pays and deductibles for military retirees
    under age 65, first ever TRICARE for Life enrollment fees, first ever
    co-pays for health care services provided in military hospitals, higher
    pharmacy co-pays, and co-pays for Active Duty family members. DOD has
    told us that TRICARE beneficiaries use more health services than
    persons in comparable civilian health plans. How will TRICARE fee
    increases and introduction of first ever TRICARE fees impact
    utilization of health care services?
        Secretary Hagel. Our proposed TRICARE design is based on an
    industry proven structure that directs patients to the right level of
    care and reduces overutilization with the right provider at the right
    time. The proposed financial incentives are intended to direct patients
    in two ways: first, it promotes primary care services over urgent care
    over emergency care (today, for example, no cost-sharing for emergency
    room (ER) care has led to as much as double the use of ER services
    compared to that of commercial health plan subscribers). Second, the
    financial incentives also promote care in military facilities over
    other venues (and network care over non-network care). This change
    modernizes TRICARE to reflect contemporary health plan design,
    simplifies administration, and improves the management of the health
    benefit.
        It is important to note that copayments for civilian care for
    Active Duty families were included in the military health plan since
    1967 (originally 20 percent of the allowable charge), and continued for
    33 years. In 2001, Congress eliminated co-payments for Active Duty
    families enrolled in TRICARE Prime. This proposal restores copayments
    for Active Duty families but at modest levels, and below rates first
    established nearly 50 years ago.

        32. Senator Inhofe. Secretary Hagel, with targeted co-pay increases
    you are trying to motivate beneficiaries to use DOD's least costly
    health option--military treatment facilities (MTF). But, you also
    propose first-ever co-pays in military hospitals and clinics. How does
    the introduction of co-pays in MTFs encourage beneficiaries to use MTFs
    instead of civilian healthcare?
        Secretary Hagel. The financial incentives included in this proposal
    are structured to promote care in MTFs (which has either no or the
    lowest out-of-pocket costs for beneficiaries) over network care (which
    have moderate but higher out-of-pocket costs) over non-network care
    (which has the highest out-of-pocket costs). They are also structured
    to encourage beneficiaries to use primary care over more costly--
    regardless of MTF or private facility--emergency care. As demonstrated
    in the private sector, the co-pay structure influences behavior to
    utilize the most efficient and effective resource for care.

        33. Senator Inhofe. Secretary Hagel, are MTFs currently structured
    and staffed to accept a large influx of beneficiaries who may choose to
    use those facilities in the future?
        Secretary Hagel. The Military Health System (MHS) wants our
    beneficiaries to use the direct care system whenever and wherever we
    have the capacity and capability to serve their health care needs. The
    leadership of MHS believes that they have this capacity and capability
    to accept more care delivered within the direct care system. DOD's
    proposal provides beneficiaries with financial incentives to select
    MTFs over civilian network care. Of course, the size of our medical
    facilities and the specialty care available varies from location to
    location, but we want our beneficiaries to select MTFs wherever
    possible.

        34. Senator Inhofe. Secretary Hagel, in your analysis, how many new
    beneficiaries can MTFs accept before demand for services outstrips the
    capacity of MTFs to provide care?
        Secretary Hagel. Our MTF capacity depends on a number of factors,
    including the size of the facility, the specialty care available, and
    the type of patient (e.g., very healthy to very complex). The bottom
    line is that DOD wants our beneficiaries to select MTFs wherever they
    have the capacity and capability to serve the health care needs of
    servicemembers and their families.

        35. Senator Inhofe. Secretary Hagel, you have said that DOD will
    simplify and modernize TRICARE in the future. After you simplify
    TRICARE, will you still need Managed Care Support Contractors, with
    their vast provider networks, to manage healthcare delivery in the
    private sector, and if so, how will that work?
        Secretary Hagel. Yes, DOD intends to maintain contracted TRICARE
    networks. The proposals put forward provide clear advantages for
    beneficiaries to use TRICARE networks. The proposed approach also
    simplifies the process by which beneficiaries can access civilian
    network providers by eliminating the requirement for prior
    authorizations before seeking care.

        36. Senator Inhofe. Secretary Hagel, how much money does TRICARE
    simplification save DOD?
        Secretary Hagel. DOD projects $10.8 billion in savings between
    fiscal years 2016 and 2025 compared to the current TRICARE design.

                  servicemember reaction to benefit reductions
        37. Senator Inhofe. General Dempsey, what has been the reaction of
    the Services' Senior Enlisted Advisors (SEA) towards reductions in
    commissary and TRICARE benefits? Are SEAs 100 percent on board with
    these changes?
        General Dempsey. Overall, the SEAs recognize the need to more
    efficiently manage the operation of our commissaries and that the
    proposed increase in TRICARE out-of-pocket costs are necessary to
    ensure the force remains in balance. It is my sense that our force is
    incredibly accepting of change. They are less understanding of
    uncertainty and piecemeal solutions. They want and deserve
    predictability.

        38. Senator Inhofe. General Dempsey, how will compensation and
    benefit changes impact recruitment and retention in the future?
        General Dempsey. DOD's military and civilian leaders conducted
    substantial analysis to arrive at our proposed package of compensation
    adjustments. DOD concluded that, even after making these changes and
    slowing the growth in military compensation, DOD will still be able to
    recruit and retain a high quality force and offer generous,
    competitive, and sustainable benefits.

                                housing expenses
        39. Senator Inhofe. Secretary Hagel, you announced that tax-free
    housing allowance growth will slow from its current rate of 100 percent
    of housing expenses until it covers an average of 95 percent of housing
    expenses with a 5 percent out-of-pocket contribution. How much savings
    will DOD realize from the 5 percent out-of-pocket contribution to
    housing expenses?
        Secretary Hagel. DOD estimates that significant cost savings will
    be realized through removing renter's insurance from the basic
    allowance for housing (BAH) computation and gradually increasing the
    out-of-pocket percentage to 5 percent over 3 years (2015 to 2017).
    These changes are estimated to provide approximately $391 million in
    cost savings for fiscal year 2015, with cost savings increasing to
    approximately $1.3 billion in fiscal year 2019.

        40. Senator Inhofe. Secretary Hagel, why was 5 percent chosen as
    the optimal out-of-pocket contribution level?
        Secretary Hagel. DOD's proposal to gradually slow the growth rate
    of the tax-free BAH was a difficult but necessary decision if, in this
    era of constrained budgets, DOD is to achieve a proper balance between
    competitive pay and benefits for servicemembers and the quality of
    service they experience. These changes will be phased in over several
    years to allow our military members time to adjust, and will generate
    estimated savings of $390 million in fiscal year 2015 and approximately
    $1.3 billion in fiscal year 2019.
        DOD's military and civilian leaders carefully considered several
    possible options to generate savings--savings needed to help close
    serious resource shortfalls in training, maintenance, and equipment--in
    the BAH program. Of the options considered, slowing BAH growth until an
    average member's out-of-pocket expenses for rent and utilities reached
    5 percent would achieve an appropriate and reasonable balance between
    DOD's need to achieve savings in the BAH program, and the need to
    continue to offer generous, competitive, and sustainable package of
    military pay and benefits. The other options were discarded either
    because they generated almost no savings, or because they caused too
    much of an impact on members' pay. DOD believes that even after making
    these changes to BAH and the other proposed compensation changes, it
    will still be possible to recruit and retain a high-quality ready
    force.
        To be clear, these choices were not easy and no one will dispute
    that they are not popular. But if DOD continues on the current course
    without making the modest compensation adjustments DOD has proposed
    now, the choices only grow more difficult and painful down the road. I
    believe that Congress and DOD owe it to the men and women in uniform,
    who do so much for their country, to adopt these proposals and thereby
    ensure that they have the training and equipment they need to succeed
    in battle now and into the future.

        41. Senator Inhofe. Secretary Hagel, the budget request notes that
    DOD will no longer be providing reimbursements for renter's insurance.
    At what point did DOD begin to reimburse for renter's insurance?
        Secretary Hagel. Renter's insurance first became part of housing
    allowances with the introduction of the Variable Housing Allowance in
    1980.

        42. Senator Inhofe. Secretary Hagel, what was the reason for
    originally providing reimbursements for renter's insurance?
        Secretary Hagel. Renter's insurance was originally included in the
    Variable Housing Allowance, and later carried over to the BAH, to
    provide equity between what servicemembers received in base housing and
    what would be covered in compensation for off-base housing. Because
    servicemembers could claim reimbursement for personal property damaged
    in government-owned housing, renter's insurance was included in
    establishing rates for locality-based housing allowances.

                              savings realignments
        43. Senator Inhofe. Secretary Hagel, Under Secretary of Defense
    (Comptroller) Robert Hale indicated that the fiscal year 2015 BBA
    savings of $500 million had already been realigned into other accounts
    prior to the partial repeal of section 403 of the BBA. Why was this
    money moved in advance of the budget request for fiscal year 2015?
        Secretary Hagel. As part of the fiscal year 2015 budget review
    process, DOD adjusted the budget estimates to reflect the savings
    associated with section 403 of the BBA (Public Law (P.L.) 113-67)
    shortly after it became law on December 26, 2013. With the subsequent
    enactment of section 10001 of the Consolidated Appropriations Act, 2014
    (P.L. 113-76) on January 17, 2014, which exempted medically retired
    members and their families as well as survivors of members who die
    while on Active Duty from the adjusted cost-of-living allowance formula
    enacted by section 403, DOD again adjusted the budget estimates to add
    back the roughly $55 million per year impact of the exemptions.
    However, by the time P.L. 113-82 was enacted on February 15, 2014,
    grandfathering all personnel who entered service before January 1,
    2014, from the section 403 formula, it was too late for DOD to add back
    the associated funding impact as budget systems were already locked and
    final production of the fiscal year 2015 budget request materials had
    begun.

        44. Senator Inhofe. Secretary Hagel, can you identify the specific
    accounts these funds were realigned into?
        Secretary Hagel. Given that DOD was in the process of adjusting the
    budget estimates by the roughly $45 billion reduction from the fiscal
    year 2015 level in the fiscal year 2014 President's budget request to
    the BBA level when the section 403 savings adjustments were
    incorporated, it is not possible to identify the specific accounts
    these funds were realigned into. However, it is likely that the funds
    were reallocated to help fill holes in various readiness and
    modernization efforts.

        45. Senator Inhofe. Secretary Hagel, why was this money moved
    quickly after the passage of the BBA while DOD knew that Congress was
    working on plans to repeal section 403?
        Secretary Hagel. Due to the lead times required to produce the
    annual budget request, DOD was attempting to reflect current law at the
    time of the budget submission by incorporating changes in a timely
    manner after enactment. Unfortunately, by the time it was clear
    additional legislation partially repealing section 403 would be passed
    and enacted, budget systems were already locked.

                              military retirement
        46. Senator Inhofe. Secretary Hagel, you noted in your speech that
    you agree with me that we must wait for the results of the Military
    Compensation and Retirement Modernization Commission (MCRMC) before
    pursing further military retirement reforms. I was very pleased to hear
    that. Do you still stand firm on the principle of grandfathering those
    currently serving and retired into any changes you may propose as a
    result of the Commission work?
        Secretary Hagel. Yes. Just as Congress mandated grandfathering for
    military retirement when it established the MCRMC, I support full
    grandfathering. To do otherwise would indeed break faith with our
    servicemembers.

        47. Senator Inhofe. General Dempsey, you have noted previously that
    you believe piecemeal changes to reform can cause harm and that a
    holistic approach is the best model. I agree with you. Can you explain
    why making piecemeal changes would hurt the morale of our military
    personnel?
        General Dempsey. Individuals join the military for a variety of
    reasons, but all understand that their service entitles them to certain
    pays and other benefits. Members also understand if they continue
    serving for a full career, they may become entitled to retired pay and
    to the continuation of other benefits they enjoyed during a career.
        Enlistment contracts and other agreements to serve explicitly state
    that there are no guarantees that these pays and benefits will remain.
    Instead, members serve and accept as a matter of faith that the
    Government of the United States (particularly Congress and DOD) will
    care for them and their families while they put the Nation's interests
    ahead of their own. The government may make changes to any aspect of
    military compensation and benefits at any time; and, depending on the
    nature or extent of the change(s), these may be seen as perfectly
    acceptable to the Force. For example, slowing the military pay growth,
    to include the most recent 1 percent annual basic pay raise, has
    generally been accepted without rancor by the Force. However, if
    changes are perceived as cuts that are too large, or beyond what is
    considered normal, the government jeopardizes the continuing goodwill
    of those who serve. Such unacceptable reductions made to longstanding
    pays and benefits can result in disappointment, frustration, and anger,
    which in turn can lead to reduced productivity or even discontinued
    service. This is especially true if these changes are abrupt and
    unexpected. For those too near retirement to let their feelings dictate
    leaving, the view that the government broke faith with them may result
    in poorer performance, antagonistic feelings, and even negative
    influences on prospective recruits. For these reasons, DOD remains
    concerned about how changes to military compensation and benefits are
    considered and implemented, as it focuses on maintaining the All-
    Volunteer Force. As DOD considers changes to compensation, it
    recognizes that pay and benefits are an area where we must be
    particularly thoughtful to ensure we are able to recruit and retain the
    force needed for tomorrow.

                     misconceptions of health care for life
        48. Senator Inhofe. General Dempsey, you previously stated that
    there is no guarantee of health care for life in the military. You also
    stated that you were unsure how our servicemembers got the idea that
    they would be guaranteed health care for life. How do you think
    servicemembers got the idea that they would have health care for life
    guaranteed to them?
        General Dempsey. Though efforts to locate authoritative
    documentation of such promises have not been successful, many military
    health care beneficiaries, particularly military retirees, their
    dependents, and those representing their interests, state that they
    were promised ``free health care for life at military facilities'' as
    part of their ``contractual agreement'' when they entered the Armed
    Forces.
        My sense is the belief of ``free for life'' is rooted in inaccurate
    word of mouth exchanges rather than any fact. Congressional report
    language and recent court decisions have rejected retiree claims
    seeking free care at military facilities as a right or entitlement.
    These have held that the current medical benefit structure made up of
    military health care facilities, TRICARE, and Medicare provide lifetime
    health care to military members, retirees, and their respective
    dependents. Nevertheless, claims continue to be made, particularly by
    those seeking additional benefits from DOD or attempting to prevent an
    actual or perceived reduction in benefits.

        49. Senator Inhofe. General Dempsey, what can the Services do
    differently in the recruitment stage to inform individuals of their
    future benefits prior to joining the Services?
        General Dempsey. Each of the Services packages its recruiting
    materials differently. However, in general, the health packages
    presented are based on the existing plan at the time of recruitment and
    should be represented as such. DOD and the Services do not and cannot
    present hypothetical or implied benefits to prospective recruits.

                               efficiency savings
        50. Senator Inhofe. Secretary Hagel, the President's budget states
    DOD is expecting to achieve approximately $94 billion in efficiency
    savings over the next 5 years. Two of the key initiatives which are
    listed as contributing to this goal are the acquisition reforms created
    by the Better Buying Power and achieving the statutory auditable
    financial statements objectives. Exactly how much of the $94 billion
    will be achieved from each of these respective initiatives?
        Secretary Hagel. The acquisition reform initiatives of all the
    Military Services will result in contracting efficiencies estimated to
    save $30 billion over the fiscal year 2015 to fiscal year 2019 period.
    The Navy accounts for over half of these savings, concentrating on R&D,
    knowledge-based, and communication services contracts. DOD's audit
    readiness initiative's primary focus is on budgetary information and
    accountability of mission critical assets. Meeting these priorities
    will help ensure that DOD makes the best use of every dollar, but does
    not result in actual savings that are included in the $94 billion of
    efficiency savings.

        51. Senator Inhofe. Secretary Hagel, the President's budget states
    DOD is expecting to achieve approximately $94 billion in efficiency
    savings over the next 5 years. The efficiency savings will also be
    created by a reduction in contracting funding. Is the number of
    contractors to be reduced or the amount spent on contractors to be
    reduced?
        Secretary Hagel. The contracting efficiencies are estimated to save
    $30 billion over the fiscal year 2015 to fiscal year 2019 period. These
    savings are measured in dollars and result from overall reductions in
    contract funding commensurate with reductions in force structure and
    implementation of cost-effective contracting initiatives.

        52. Senator Inhofe. Secretary Hagel, why is the Navy going to bear
    a disproportionate burden of this funding reduction?
        Secretary Hagel. DOD is committed to achieving budgetary savings
    from more effective use of resources across all components. DOD has
    reviewed all budgetary areas for potential improvements and identified
    efficiency savings across all areas. Each component has initiatives
    tailored to their specific acquisition programs. The Navy initiated
    specific acquisition reform initiatives concentrated on R&D, knowledge-
    based, and communication services contracts. Whereas, the Army
    identified reductions that could be made associated with reduced
    military manpower.

        53. Senator Inhofe. Secretary Hagel, going forward, how will DOD
    and the Services perform the functions previously performed by
    contractors?
        Secretary Hagel. DOD's challenge is to define the right mix of
    military, civilians, and contracted services needed to reflect new
    strategic priorities and evolving operational challenges. DOD's
    sourcing of functions and work among military, civilian, and contracted
    services must be consistent with workload requirements, funding
    availability, readiness, and management needs, as well as applicable
    laws and guidance. Going forward, DOD continues to be committed to
    defining the right workforce mix and properly insourcing functions
    previously performed by contractors that are either inherently
    governmental functions or are more efficiently performed by civilians.

        54. Senator Inhofe. Secretary Hagel, in May 2010, then-Secretary of
    Defense Robert Gates launched a DOD-wide initiative to save $100
    billion from fiscal years 2012 to 2016 by cutting overhead and reducing
    unnecessary programs. How much money was actually saved through this
    initiative?
        Secretary Hagel. DOD is committed to cutting overhead and reducing
    unnecessary programs. The military departments continue to track their
    progress in achieving fiscal year 2012 efficiency initiatives, which
    are estimated to total $105 billion over the fiscal years 2012 to 2016
    period. Their current plans as of December 2013 indicate that each
    military department is projected to achieve 93 percent or more of their
    initial goals or $104 billion over the fiscal years 2012 to 2016
    period.

        55. Senator Inhofe. Secretary Hagel, what steps were taken to
    ensure you are not double-counting these cuts with the current round of
    efficiencies?
        Secretary Hagel. The efficiency initiatives identified in each
    President's budget reflect the proposed cuts relative to the funding
    levels estimated in the immediately preceding budget. Accordingly, the
    proposed cuts for each budget or each round of efficiencies do not
    double count the funding reductions previously proposed and reflected
    in prior budgets; the money is gone from those programs.

        56. Senator Inhofe. Secretary Hagel, is your $94 billion in
    efficiency savings a realistic goal given prior efficiencies
    initiatives?
        Secretary Hagel. Yes, the efficiency savings proposed in the fiscal
    year 2015 budget are ambitious, but reflect a realistic goal. The
    components continue to track their progress in achieving their prior
    efficiency initiatives for the fiscal year 2012 budget ($150 billion)
    and the fiscal year 2013 budget ($60 billion). The Military
    Departments' current plans as of December 2013 indicate that 93 percent
    or more of their fiscal year 2012 budget goals over the fiscal years
    2012 to 2016 period are estimated to be achieved, and the defense-wide
    agencies also project that 84 percent or more of their fiscal year 2012
    budget goals are estimated to be achieved over this time period. DOD is
    committed to cutting overhead and implementing more effective use of
    resources.

                             science and technology
        57. Senator Inhofe. Secretary Hagel, you have stated that, ``the
    development and proliferation of more advanced military technologies by
    other nations means that we are entering an era where American
    dominance on the seas, in the skies, and in space can no longer be
    taken for granted.'' Do you believe the President's budget will allow
    the United States to maintain the technological superiority we have
    enjoyed for decades?
        Secretary Hagel. While I believe that maintaining technological
    superiority is vital to our national security, the fiscal year 2015
    budget has increased risk to maintaining this superiority. In the
    fiscal year 2015 budget request, DOD's top line in the base budget
    remains flat at $496 billion in fiscal year 2015, the same as the
    fiscal year 2014 enacted budget. In developing the budget, there are
    three major accounts DOD can trade: force size, readiness, and
    modernization. We cannot reduce force size instantaneously, especially
    while we still have combat troops deployed in Afghanistan. Our budget
    reduces force size through the FYDP, but those savings will not be
    realized until the force size comes down later in the FYDP. This means
    readiness and modernization accounts will pay for the bulk of the
    decrease. In the fiscal year 2015 budget request, we had to make hard
    choices in these two accounts. In constant dollars, research,
    development, test, and evaluation (RDT&E) declines 1.1 percent from
    fiscal year 2014 to fiscal year 2015 and another 1 percent over the
    FYDP. This level shows a real intent to protect modernization within
    the budget submission. Under the BCA, the risk would be much larger.

        58. Senator Inhofe. Secretary Hagel, how did you conclude that $12
    billion annually is enough to spend on science and technology (S&T)?
        Secretary Hagel. Deciding the level of investment for S&T is all
    about risk management for the future force. One thing that is important
    for S&T is relative stability in the investment level. The cost to
    develop new systems is not tied to force size, so we cannot cut back on
    S&T as the force size comes down without real consequences. Based on
    historical averages, it was concluded that the right S&T investment is
    around $12 billion. Over this FYDP, S&T investment is a little lower
    until force size balances out. Our fiscal year 2015 request drops to
    $11.52 billion, which is a reflection of the current tough budget
    conditions. The S&T program has developed a number of key, emerging
    technologies, with advances in future capabilities, such as directed
    energy where DOD is deploying a high energy laser on the USS Ponce in
    the summer of 2014 and a new class of turbine engines that offers the
    promise of a 25 percent reduction in fuel use. S&T investments have
    also led to the development of new classes of high performance radars,
    as well as rapid development of unmanned aerial systems. In short,
    maintaining stability in S&T is important to our future force
    capability.

        59. Senator Inhofe. Secretary Hagel, Under Secretary of Defense for
    Acquisition, Technology, and Logistics Frank Kendall has said,
    ``Complacency is a problem'' and ``China is modernizing in a very
    strategic and focused way that directly challenges our capabilities.''
    Is China a greater technological threat now than it was 5 years ago? Is
    this because of China's modernization or because of cuts to our own
    military?
        Secretary Hagel. There are several factors allowing China (and
    other nations) to close the technology-based capability differences
    with the United States. First, China has focused its modernization in
    specific areas such as electronic warfare, ballistic and cruise
    missiles, and counter-space capabilities, to name a few. By working
    against specific U.S. systems, the Chinese have been able to close the
    gap with respect to those systems. The second reason is that the United
    States has spent the last decade focused on counterinsurgency. These
    two factors, coupled with the current budget pressures, led me to
    conclude what I stated in my February 24, 2014, budget rollout: ``the
    development and proliferation of more advanced military technologies by
    other nations means that we are entering an era where American
    dominance on the seas, in the skies, and in space can no longer be
    taken for granted.'' This risk is due to both the rate of China's
    modernization and cuts to DOD funding.

        60. Senator Inhofe. Secretary Hagel, can you explain how your A2/AD
    strategy will account for this increased threat?
        Secretary Hagel. U.S. long-term economic and security interests are
    inextricably linked to developments in the Asia-Pacific region, and DOD
    will continue to prioritize investments in those capabilities most
    relevant to the region. U.S. defense investment continues to emphasize
    preserving our status as the preeminent military power in the Asia-
    Pacific region, despite resource constraints. The President's budget
    submission for fiscal year 2015 accomplishes this by investing in
    advanced combat aircraft, including the F-35 and the Air Force's Long-
    Range Strike Bomber program, as well as modern surveillance systems,
    resilient space and command and control architectures, and undersea
    warfare to increase the Joint Force's ability to counter A2/AD
    challenges. The strategy also calls for developing new operational
    concepts, such as dispersal basing, for projecting power in the A2/AD
    environment. Additionally, DOD will continue to deepen collaboration
    with key allies and partners as they develop future forces and
    capabilities to counter more sophisticated adversaries.

                       modernization of aircraft carriers
        61. Senator Inhofe. Secretary Hagel, in previous remarks you have
    indicated that a final decision on whether or not to retain 11 carriers
    and perform the refueling overhaul for the USS George Washington will
    not be made until next year as part of DOD's fiscal year 2016 budget.
    What is included in the fiscal year 2015 FYDP for decommissioning, and
    can you provide that amount by fiscal year?
        Secretary Hagel. The President's budget 2015 submission includes
    funding for inactivation of the ship and associated system equipment,
    including the aircraft and personnel. This budget profile assumes that
    inactivation of USS George Washington (CVN 73) commences in October
    2016.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                          Fiscal Year
                                                      --------------------------------------------------     FYDP
                                                         2015      2016      2017      2018      2019
    ----------------------------------------------------------------------------------------------------------------
    MPN..............................................     323.7     198.5     165.5      90.7      33.0        811.4
    DHAN.............................................      14.8       9.5       6.3       2.7       0.7         34.0
    APN - Termination Fees for MH-60Rs...............         -     250.0         -         -         -        250.0
    O&M NR/RPN - Fleet Logistics.....................      11.8         -         -         -         -         11.8
    O&M N - Air Operations...........................     109.2         -         -         -         -        109.2
    O&M N - 1B1B (Ship Ops)..........................      30.6      11.2         -         -         -         41.8
    O&M N - 1B4B (Ship Maintenance)..................      97.0         -         -         -         -         97.0
    O&M N - 2B2G (Inactivation)......................      46.0     211.0     719.0      50.0      35.0      1,061.0
    ----------------------------------------------------------------------------------------------------------------
      Funding Request in PB15........................     633.1     680.2     890.8      43.4       8.7      2,416.1
    ----------------------------------------------------------------------------------------------------------------

        This profile includes $46 million in fiscal year 2015 for advance
    planning to support defueling preparations and is work common to either
    path: inactivation or overhaul.
        The Military Personnel-Navy funding profile supports full manning
    of the CVN 73 and the associated Carrier Air Wing (CVW) in fiscal year
    2015, with declining manning across the FYDP representing the profile
    necessary to man CVN 73 during inactivation and reduce the Navy
    inventory by one CVW beginning in fiscal year 2016. The Defense Health
    Accrual-Navy account is a non-appropriated transfer fund that is DOD's
    contribution to the Medicare-Eligible Retire Health Care Fund for the
    future Medicare-Eligible health care costs of current servicemembers.
    The cost is based on the average personnel strength and actuarial rate
    estimates.
        The reduction of 1 CVW eliminates the need for 16 MH-60Rs in fiscal
    year 2016, cancelling the multiyear procurement and resulting in
    termination costs for line shutdown. This action is reversible and will
    be a fiscal year 2016 budget decision dependent on whether funding is
    reduced to BCA levels in fiscal year 2016 and beyond.
        Fleet logistics funding represents a reduced Reserve aviation
    posture associated with a smaller carrier fleet. Air operations and
    ship operations represent the full cost of operating CVN 73 until
    arrival in Norfolk in December 2015. Ship maintenance funding
    represents a minimal maintenance event sufficient to operate safely on
    the return to Norfolk.

        62. Senator Inhofe. Secretary Hagel, what is the amount, by fiscal
    year, that would be needed to retain this ship and ensure it serves out
    its 50-year service life?
        Secretary Hagel. The total FYDP cost to retain and overhaul USS
    George Washington (CVN 73) with its associated air wing, logistics,
    manpower, and training is $8.1 billion. Less the inactivation funding
    already included in the fiscal year 2015 budget submission the
    additional FYDP cost is $7 billion, as detailed in the table below.

    ----------------------------------------------------------------------------------------------------------------
                                                                      Fiscal Year
                                             ------------------------------------------------------------    FYDP
                                                 2015        2016        2017        2018        2019
    ----------------------------------------------------------------------------------------------------------------
    CVN.....................................      $816.2    $2,226.0    $2,244.2      $243.3      $310.7    $5,840.4
    CVW.....................................      (43.3)       870.6       225.1       210.0       212.0     1,474.4
    Logistics/Manpower/Training.............        69.4       181.5       166.3       168.2       207.3       792.6
    ----------------------------------------------------------------------------------------------------------------
    Cost to retain..........................       842.2     3,278.1     2,635.7       621.5       730.0     8,107.4
    Less Inactivation Funding...............      (46.0)     (211.0)     (719.0)      (50.0)      (35.0)   (1,061.0)
    ----------------------------------------------------------------------------------------------------------------
    Net Cost to retain CVN 73...............      $796.2    $3,067.1    $1,916.7      $571.5      $695.0    $7,046.4
    ----------------------------------------------------------------------------------------------------------------

        Because the advance planning contract that supports either
    inactivation or refueling has not yet been awarded, changes to the cost
    estimate and schedule will need to be reevaluated as part of the fiscal
    year 2016 budget preparation.

                           acquisition of the ddg-51
        63. Senator Inhofe. Secretary Hagel, the DDG-51 is currently being
    acquired under a 5-year (fiscal years 2012 to 2016) multiyear
    procurement contract. Is DOD planning to cut in the next flight
    upgrade, Flight-3, for the DDG-51 during the current 5-year multiyear
    procurement contract? If so, won't this significant configuration
    change reduce some of the projected cost savings?
        Secretary Hagel. DOD plans to begin procurement of the Flight III
    upgrade using an Engineering Change Proposal (ECP) beginning with one
    of the two Flight IIA ships procured in fiscal year 2016, and continue
    Flight III upgrades with the two Arleigh Burke (DDG 51) Flight IIA
    ships procured in fiscal year 2017. These three Flight III upgraded
    ships are currently identified as Flight IIA ships in the multi-year
    procurement (MYP) contract. However, the cost savings certified with
    the MYP request did not include planned Flight III ECP costs in the
    savings calculation. The Flight III ECP, including the Air and Missile
    Defense Radar (AMDR) and the upgraded AEGIS Weapon System to support
    AMDR, will be procured using contracts negotiated separately from the
    ship MYP contract actions. These planning assumptions isolated the
    Flight III ECP costs from affecting the projected savings for the ship
    MYP.

                      acquisition of littoral combat ship
        64. Senator Inhofe. Secretary Hagel, this budget reflects your
    decision to undertake a contract pause for the LCS program and pause at
    32 ships. Are the first 2 ships which were procured with RDT&E funding
    counted as a part of that 32-ship fleet?
        Secretary Hagel. Yes. My February 24, 2014, memorandum states no
    new contract negotiations for beyond 32 ships will go forward until
    completion of a directed study on small surface combatant options. This
    includes the first two LCS procured using RDT&E funds. Changes
    necessary to the small surface combatant program of record in fiscal
    year 2019 and beyond will be informed by the study I directed.

        65. Senator Inhofe. Secretary Hagel, does your budget include any
    development funding in fiscal year 2015 to begin preliminary concept
    design of a new FF-X frigate?
        Secretary Hagel. No. Funding begins in fiscal year 2016 for the
    Future Small Surface Combatant to conduct a design and feasibility
    study leading to an award around fiscal year 2022. The FYDP includes a
    total of $80 million of RDT&E for this effort. These funds will be used
    if the study determines the need for a new ship design. Additional
    funds outside of the FYDP will be necessary to complete this effort.

                               cyber acquisition
        66. Senator Inhofe. Secretary Hagel, I understand the budget
    includes over $5 billion in fiscal year 2015 for cyber. Can you explain
    how that figure was determined?
        Secretary Hagel. The fiscal year 2015 cyberspace operations budget
    request is approximately $5.1 billion. There is no single, unified
    cyber budget in DOD, but we have undertaken efforts over the last few
    years to develop better mechanisms for identifying cyberspace
    operations funding within DOD's budget construct. DOD uses the Office
    of Management and Budget's taxonomy, which supports common government-
    wide reporting of cyber-related activities. DOD's estimate was
    developed in coordination with DOD components and is comprised of
    resources associated with the components' defensive and offensive cyber
    activities, to include funding that supports U.S. Cyber Command and the
    Service's cyber commands, information assurance and operational
    resiliency, computer network defense, cyber identity and access
    management, cryptographic key production and management, cross domain
    capabilities, cyber workforce development, cyberspace operations, and
    cyber S&T.

        67. Senator Inhofe. Secretary Hagel, can you provide what was spent
    on cyber in prior years as well as what is now projected over the
    fiscal year 2015 FYDP?
        Secretary Hagel.

             Fiscal Year 2013: $4.1 billion*
    ---------------------------------------------------------------------------
        \*\Fiscal Year 2013 and Fiscal Year 2014 amounts include Overseas
    Contingency Operations funds
    ---------------------------------------------------------------------------
             Fiscal Year 2014: $5.1 billion*
             Fiscal Year 2015: $5.1 billion
             Fiscal Year 2016: $5.4 billion
             Fiscal Year 2017: $5.4 billion
             Fiscal Year 2018: $5.3 billion
             Fiscal Year 2019: $5.4 billion

        Note: All dollars are in current year dollars

                         space/unmanned aerial vehicles
        68. Senator Inhofe. Secretary Hagel, I understand the budget
    includes approximately $7 billion in fiscal year 2015 for space. How
    much is included in the budget for the acquisition and support of
    unmanned aerial vehicles (UAV)?
        Secretary Hagel. The fiscal year 2015 budget request includes $7.2
    billion for space acquisitions and $2.4 billion UAV acquisitions.

        69. Senator Inhofe. Secretary Hagel, can you explain how both the
    space and UAV estimates were determined, and provide what was spent in
    prior years, as well as what is now projected over the fiscal year 2015
    FYDP?
        Secretary Hagel. The space and UAVs estimates meet DOD's space and
    UAV requirements, and represent the best allocation of resources and
    requirements in these critical areas. The amounts requested or planned
    for space and UAV acquisitions from fiscal year 2013 through fiscal
    year 2019 are shown below:

                                                                    [In billions of dollars]
    --------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Fiscal Year
                                                                  ------------------------------------------------------------------------------------------
                                                                       2013         2014         2015         2016         2017         2018         2019
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    Space........................................................        $7.3         $7.1         $7.2         $6.9         $7.3         $7.4         $7.2
    UAV..........................................................         3.3          2.1          2.4          3.2          2.6          2.7          2.3
    --------------------------------------------------------------------------------------------------------------------------------------------------------

        70. Senator Inhofe. Secretary Hagel, given greater emphasis on both
    space and UAVs, is it time to consider restructuring the budget to have
    separate appropriations for space and UAV acquisitions?
        Secretary Hagel. It is not necessary to have separate
    appropriations for space and UAV acquisitions. Over the last decade,
    DOD has made a concerted effort to clearly identify the acquisition of
    space and UAV programs in specific procurement budget lines and R&D
    program elements in order to provide more transparency and better
    tracking of those investments. The current budget structure provides
    adequate oversight and the necessary flexibility to properly execute
    these important programs.

                            virginia payload module
        71. Senator Inhofe. Secretary Hagel, the budget includes funding
    for the development of the Virginia-class submarine extended payload
    module. This effort would lead to a 25 percent increase in the ship's
    length. What would be the first year of procurement for the VPM?
        Secretary Hagel. This advance engineering work will enable the
    Department of the Navy to consider incorporating the VPMs in the Block
    V Virginia-class contract scheduled for award in early fiscal year
    2019.

        72. Senator Inhofe. Secretary Hagel, is funding included in the
    FYDP for procurement of the Virginia-class submarine extended payload
    module?
        Secretary Hagel. No, funding is not included in the FYDP for
    procurement of the Virginia-class submarine with the VPM. The
    President's budget for fiscal year 2015 requests continued VPM R&D,
    providing an option to start procurement as part of the Block V
    contract scheduled for award in early fiscal year 2019.

                               f/a-18 procurement
        73. Senator Inhofe. Secretary Hagel, a couple of years back, the
    Navy expressed concerns over a fighter gap. The Navy was concerned
    delays to the JSF F-35 carrier variant would lead to a fighter aircraft
    gap as earlier models of the F/A-18 reached the end of their service
    life. Is there still a problem that would require continued procurement
    of F/A-18E/F models?
        Secretary Hagel. No. The Navy continues to manage its JSF inventory
    to ensure it meets future requirements. To mitigate delays in the F-35
    program, the Navy increased its procurement objective of F/A-18E/F from
    462 aircraft to 563 aircraft. Also, the Navy successfully extended the
    life of over 100 F/A-18A-D with its High Flight Hour Inspection program
    and is working to extend the life on another 100+ aircraft. Due to the
    additional F/A-18E/F inventory and extended service life on the F/A-
    18A-D, the Navy believes there is sufficient life in its existing JSF
    inventory making any projected shortfall manageable until F-35 reaches
    full operational capability. Therefore, the Navy does not have a
    requirement to procure additional F/A-18E/F aircraft at this time.

                           quadrennial defense review
        74. Senator Inhofe. Secretary Hagel, on page 25 of the 2014 QDR it
    states: ``Consequently, we will complete a comprehensive assessment of
    all installations to assess the potential impacts of climate change on
    our missions and operational resiliency and develop and implement plans
    to adapt as required.'' What does that mean and how much is that going
    to cost?
        Secretary Hagel. DOD is currently conducting a baseline survey to
    identify vulnerabilities to extreme weather events today and to what
    degree. The survey includes current vulnerabilities to inundation/
    flooding, temperature extremes, drought, wildfire, and wind, as well as
    identifying current sea level impacts, potential vulnerabilities if
    levels rise, and the reference datum used for the analysis. This will
    enable us to identify where more comprehensive and region or
    installation specific assessments are needed to determine what adaptive
    responses are the most appropriate.
        To date, DOD has spent about $60,000 on surveying our
    installation's vulnerability to current impacts of extreme weather.
    When we have completed the baseline surveys of all sites (anticipated
    in late 2014), the Services will then identify their priorities for
    further assessment. The cost of this next phase of vulnerability
    assessment will depend upon the number of sites and will be phased
    across the FYDP, potentially as part of the overall mission assurance
    assessment process. Installation specific adaptation plans will be
    developed as needed, but will be integrated with installation master
    planning criteria already in place.
                                     ______

                 Questions Submitted by Senator Roger F. Wicker
                                  shipbuilding
        75. Senator Inhofe. Secretary Hagel, the Honorable Robert O. Work,
    the Deputy Secretary of Defense, told this committee in his
    confirmation hearing on February 25, 2014, that he believes the U.S.
    shipbuilding industrial base is solid but under pressure. In fact,
    there are thousands of vendors who support shipbuilding nationwide,
    whose future is in jeopardy under the administration's budget request.
    Further, there are some 3,500 shipbuilders who would lose their jobs
    over the next couple of years at Ingalls Shipyard under DOD's budget
    plan. I am very concerned about the shipbuilding industrial base, and
    strongly believe that if we lose these folks who have spent several
    decades in this business, our national defense is at risk. As a result
    of this misguided approach which is entirely budget driven, and not
    driven by strategy, our Navy and Marine Corps will be woefully
    unprepared to protect and defend our country, support our allies across
    the globe, and respond to critical humanitarian needs and disasters.
    While you have indicated an obvious gap in the LCS capability and
    survivability, do you anticipate expanding the number of ship
    procurement in the DDG-51 restart program, a much better platform?
        Secretary Hagel. In order to meet the DSG, which includes the
    Navy's force structure assessment requirement of 306 ships, the Navy
    must maintain 52 total small surface combatants and 88 large surface
    combatants. Because of these requirements, DOD does not plan on
    increasing the number of Arleigh Burke DDG 51 ships as a result of my
    decision to review the LCS program prior to contracting for more than
    32 ships. LCS capability and survivability will be reviewed in order to
    ensure the Navy has a small surface combatant that meets the
    requirements against emerging threats. Regardless of the configuration
    of the small surface combatant that follows LCS, this procurement
    program must still produce 52 total small surface combatants. This
    procurement result will be just as beneficial for the shipbuilding
    industrial base as a whole while also ensuring the DSG requirements are
    met.

        76. Senator Inhofe. Secretary Hagel, does your budget include any
    development funding in fiscal year 2015 to begin preliminary concept
    design of a new FF-X frigate class platform?
        Secretary Hagel. No. Funding begins in fiscal year 2016 for the
    Future Small Surface Combatant to conduct a design and feasibility
    study leading to an award around fiscal year 2022. The FYDP includes a
    total of $80 million of RDT&E for this effort. These funds will be used
    if the study determines the need for a new ship design. Additional
    funds outside of the FYDP will be necessary to complete this effort.

        77. Senator Inhofe. Secretary Hagel, you have asked the Navy to
    conduct further capability assessment and undertaken a contractual
    pause for the LCS program. When that assessment is complete, do you
    anticipate a retrofit for the existing LCS platforms for any gaps
    identified?
        Secretary Hagel. Until the capability assessment is completed and
    an understanding of the operational differences and affordability of
    the planned changes is known, it is too early to determine if the
    current ships will be retrofitted.

        78. Senator Inhofe. Secretary Hagel, as the Marine Corps pivots
    back to their expeditionary roots, they have expressed a need for more
    amphibious ships. Do you anticipate expanding the number of San
    Antonio-class ships to meet that requirement?
        Secretary Hagel. DOD is currently looking ahead to when the LSD 41
    Whidbey Island-class and LSD 49 Harpers Ferry-class amphibious ships
    begin to retire. In anticipation of replacing those ships, DOD is
    evaluating the concept for future amphibious operations and the
    resources required to transport and support the Marine Corps in
    amphibious operations. The Analysis of Alternatives will complete this
    spring and includes leveraging the LPD 17 San Antonio design as an
    option; however, no materiel solution has been identified at this time.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                                missile defense
        79. Senator Ayotte. Secretary Hagel and General Dempsey, in section
    227 of the NDAA for Fiscal Year 2013 and section 239 of the NDAA for
    Fiscal Year 2014, there is a requirement for DOD to develop a
    contingency plan for the potential deployment of a third missile
    defense site on the east coast of the United States. Are you aware of
    this requirement?
        Secretary Hagel. Yes. The Missile Defense Agency (MDA) complied
    with section 227(a) of the NDAA for Fiscal Year 2013 (P.L. 112-239),
    and it is currently fulfilling the requirement for an Environmental
    Impact Statement (EIS) as set forth in section 237(b). On January 31
    and February 4, 2014, Vice Admiral James D. Syring, USN, Director, MDA,
    briefed congressional professional staff members on the current status
    of the siting study. This resulted in the public release of four sites
    MDA included in the EIS. MDA, in conjunction with the warfighter, is
    developing the section 227(d) contingency plan; section 227(c) is not
    applicable as none of the sites under consideration have an existing
    Ballistic Missile Defense System related EIS. As required by section
    239 of the NDAA for Fiscal Year 2014 (P.L. 113-66), Vice Admiral Syring
    will provide the congressional defense committees an update in July
    2014.
        General Dempsey. Yes. As directed by Congress, DOD identified four
    possible locations in the eastern United States to conduct
    environmental impact studies for possible construction of a third
    interceptor site. The environmental impact studies are ongoing and
    should take approximately 2 years to complete.
        Additionally, DOD continues to assess the current and future
    ballistic missile threat to the Homeland as well as our current and
    planned ballistic missile defense capabilities. This analysis supports
    a holistic review of all potential options, including a third
    interceptor site and sensor capability and architecture improvements.
    Ultimately, the results will inform DOD's investment strategy to
    provide both an operationally effective and fiscally responsible
    ballistic missile defense of the Homeland as well as to develop the
    contingency plan requested in the NDAA for Fiscal Year 2013.

        80. Senator Ayotte. Secretary Hagel and General Dempsey, will you
    ensure that U.S. Strategic Command (STRATCOM) is working with MDA and
    NORTHCOM to develop this contingency plan without delay?
        Secretary Hagel. MDA closely coordinates all aspects of the
    continental United States interceptor site effort with STRATCOM,
    NORTHCOM, and the Joint Functional Component Command for integrated
    missile defense. The siting study and the EIS will inform the
    contingency plan. MDA expects to finalize the plan once the EIS is
    complete. The contingency plan includes, but is not limited to, site
    specific cost estimate(s), integrated master schedule(s), facility
    requirements document, and acquisition strategy.
        General Dempsey. Yes. DOD is committed and focused on providing an
    operationally effective and fiscally responsible ballistic missile
    defense for the Homeland to counter the threat. DOD's leadership is
    actively involved in this process and is coordinating closely with all
    stakeholders to include STRATCOM, MDA, and NORTHCOM, to develop a sound
    contingency plan for a third interceptor site. Additionally, we are
    assessing the current and potential threats as well as our own
    capabilities to ensure we can effectively defend the United States
    against the evolving ballistic missile threats.

        81. Senator Ayotte. Secretary Hagel and General Dempsey, when can
    we expect to receive this contingency plan?
        Secretary Hagel. As the NDAA requires, the MDA will provide an
    update on the plan within 180 days. The plan will be finalized as the
    EIS progresses over the next 24 months.
        General Dempsey. DOD will provide a detailed briefing of the
    current status of efforts on the timeline as directed by section 239 of
    the NDAA for Fiscal Year 2014. Due to the ongoing environmental impact
    studies and missile defense analytical reviews, it is premature to
    speculate on an exact date for contingency plan release. However, as
    the NDAA requires, MDA will provide an update on the plan within 180
    days of the completion of the site evaluation study, and the plan will
    be finalized as the EIS progresses over the next 24 months.

                         general officer retirement pay
        82. Senator Ayotte. Secretary Hagel and General Dempsey, the NDAA
    for Fiscal Year 2007 made significant changes to the pay authorities
    for flag officers. The 2007 legislation provided incentives for senior
    officers to continue serving by extending the basic pay table from a
    cap at 26 years to provide increases in longevity pay out to 40 years
    of service. According to one press report by USA Today using 2011
    numbers, this could result in a four-star officer retiring with 38
    years of experience receiving $84,000, or 63 percent, more per year in
    retirement than previously allowed. The 2007 changes not only increased
    longevity pay for senior officers but also allows senior officers
    retiring with 40 years of service to receive 100 percent of their
    Active Duty pay. Unlike the cap on annual pay, there is currently no
    cap on retired pay for these senior officers. Was the purpose of this
    legislation to encourage combat experienced one- and two-star admirals
    and generals to continue to serve during a time of war?
        Secretary Hagel. At the time the legislation was enacted, DOD was
    losing 75 percent of the general and flag officer corps 3 or more years
    prior to their mandatory retirement date. Research published by RAND in
    2004 indicated compensation was inadequate for longer careers.
        At the time of the change, with the exception of cost-of-living
    increases, most O-9s and O-10s were serving for over a decade without
    increases in salary or retired pay. RAND determined the opportunity
    costs of continued service to lifetime earnings were substantial.
        Comparing the 5-year period before the legislative changes to the
    5-year period following the changes, indicates that O-9 and O-10
    officers are staying for longer careers.
        DOD does not object to review of or recommendations regarding
    retired pay calculations for general and flag officers. However,
    because of the complexity of the military retirement system, any
    proposal for change should be done in the context of a holistic review
    of the system and should come from the congressionally-established
    MCRMC.
        General Dempsey. We think the MCRMC should look at all elements of
    military compensation reform, including all pay grades.
        At the time the legislation was enacted, DOD was losing 75 percent
    of the general and flag officer corps 3 or more years prior to their
    mandatory retirement date. Research published by RAND in 2004 indicated
    compensation was inadequate for longer careers.
        At the time of the change, most O-9s and O-10s were serving for
    over a decade without increases in salary or retired pay, with the
    exception of cost-of-living increases. RAND determined the opportunity
    costs of continued service to lifetime earnings were substantial.

        83. Senator Ayotte. Secretary Hagel and General Dempsey, do you
    believe this program is still necessary, given the fact that we have
    withdrawn from Iraq and we are withdrawing most of our troops from
    Afghanistan?
        Secretary Hagel. DOD does not object to review of or
    recommendations regarding retired pay calculations for general and flag
    officers. However, because of the complexity of the military retirement
    system, any proposal for change should be done in the context of a
    holistic review of the system and should come from the congressionally-
    established MCRMC.
        General Dempsey. We do not object to review of or recommendations
    regarding retired pay calculations for General and Flag Officers.
    However, we think the MCRMC should look at all elements of military
    compensation reform, including all pay grades.

        84. Senator Ayotte. Secretary Hagel what is the justification, if
    any, for keeping this in place?
        Secretary Hagel. DOD does not object to review of recommendations
    regarding retired pay calculations for general and flag officers.
    However, because of the complexity of the military retirement system,
    any proposal for change should be done in the context of a holistic
    review of the system and should come from the congressionally-
    established MCRMC.

        85. Senator Ayotte. Secretary Hagel, is DOD recommending the repeal
    of this provision? If not, why not?
        Secretary Hagel. DOD does not object to review of or
    recommendations regarding retired pay calculations for general and flag
    officers. However, because of the complexity of the military retirement
    system, any proposal for change should be done in the context of a
    holistic review of the system and should come from the congressionally-
    established MCRMC.

                          base realignment and closure
        86. Senator Ayotte. Secretary Hagel, on February 24, you said that
    if Congress blocks your request for another Base Realignment and
    Closure (BRAC) round, DOD ``will have to consider every tool at our
    disposal to reduce infrastructure.'' What specific tools are you
    referring to?
        Secretary Hagel. DOD has the authority to close and realign
    military installations outside of a congressionally-authorized BRAC
    round provided that action does not trigger the thresholds established
    in either section 2687 or section 993 of title 10, U.S.C. If the action
    exceeds the thresholds in the statute, DOD still has the authority to
    undertake the action, but only after satisfying the study and
    congressional reporting requirements and waiting the specified period
    of time required by each section.

        87. Senator Ayotte. Secretary Hagel, if Congress does not authorize
    a BRAC round for 2017, do you commit that you won't undercut the will
    of Congress and attempt to implement a BRAC through other means?
        Secretary Hagel. DOD only has the authority to undertake a BRAC
    round if Congress authorizes it to do so. If Congress rejects our 2017
    request, DOD will have to explore the viability of using the authority
    that Congress has already provided DOD to close and realign military
    installations--section 2687 of title 10.

                                 bowe bergdahl
        88. Senator Ayotte. General Dempsey, in January, it was reported
    that the United States received footage of Sergeant Bowe Bergdahl, USA.
    Can you provide an update on Sergeant Bergdahl's situation, as well as
    DOD's efforts to find him and bring him home?
        General Dempsey. DOD is aware of a proof-of-life video. Searching
    for and rescuing captured servicemembers are top priorities for the
    U.S. Armed Forces. We remain fully committed to the safe return of
    Sergeant Bergdahl. DOD and other U.S. Government agencies are
    continuing to undertake efforts to facilitate his return. The Secretary
    has designated the Office of the Secretary of Defense for Policy as
    DOD's lead for coordinating and synchronizing DOD's extensive
    activities ranging from interface with the Bergdahl family, to recovery
    efforts, to interagency coordination.

                                   dod audit
        89. Senator Ayotte. Secretary Hagel, in your prepared statement,
    you say that, ``DOD remains committed to becoming fully audit-ready by
    2017, and to achieving audit-ready budget statements by September.'' Do
    you believe the Air Force will meet this objective by September?
        Secretary Hagel. I am optimistic the Air Force will meet DOD's goal
    of having audit-ready budget statements by September 30, 2014. The
    entire DOD is, indeed, committed to being fully audit-ready by 2017. As
    a prelude to that goal, I expect most of DOD's budget statements to be
    asserted as audit-ready or be under audit by the end of this fiscal
    year.
        Although significant audit-readiness challenges remain across DOD,
    the Air Force is particularly challenged because of having to work
    largely in a legacy environment. Further, the Air Force's Financial
    Improvement and Audit Readiness (FIAR) consulting contract was under
    protest for nearly 8 months. That said, Air Force senior leaders are
    committed to doing everything possible to be audit-ready by the end of
    fiscal year 2014, and my team will continue to monitor Air Force
    progress and offer support or assistance, as required.
        The Air Force long-term plan to mitigate legacy system challenges
    is the full deployment, by 2017, of the Defense Enterprise Accounting
    Management System for Air Force general funds. As well, to minimize
    delays resulting from the FIAR support contract protest, the Air Force
    implemented a rigorous and systematic process for testing key financial
    controls. With its use in fiscal year 2013, the Air Force tested over
    10,000 transactions in different business areas, applying over 57,100
    test attributes. Success rates improved from 40 to 90 percent or better
    on many of the samples. These overall test results and my staff's
    constant collaboration with the Air Force give me confidence that the
    Air Force will reach its audit-readiness goals by September 2014.
                                     ______

                  Questions Submitted by Senator David Vitter
                                 army drawdown
        90. Senator Vitter. Secretary Hagel and General Dempsey, in the
    QDR, General Dempsey acknowledged the Nation is accepting the most risk
    in our land forces, pointing out that ``time is a defining factor,''
    and you ``strongly recommend a comprehensive review of the Nation's
    ability to mobilize its existing Reserves.'' Considering last year's
    force structure realignments, including the Army 2020 process to reduce
    the Active end strength from 570,000 (45 brigade combat teams) to
    495,000 (33 brigade combat teams) and new plans to go to 440,000 or
    potentially fewer, do you believe the Army is cutting too much too
    quickly, causing an over-reliance on the Army Reserve component during
    a potential future conflict?
        Secretary Hagel. DOD relies on the total force--Active, Reserve,
    and National Guard--to meet the needs of the defense strategy. Today,
    total Army end strength is more than 1,000,000. However, the force is
    out of balance. We cannot afford to sustain a ready and modern Army of
    this size. Reducing total end strength to 980,000 will allow us to
    restore balance over time among capacity, readiness, and modernization.
    As a result, the force will be able to support the defense strategy,
    albeit with increased risk to some missions.
        The pace of planned Army reductions will enable the Army to realize
    savings rapidly while not breaking the Army force, although the Army
    will experience readiness and modernization shortfalls in the near-
    term. DOD needs the flexibility to size and structure all elements of
    the Total Force in a manner that most efficiently and effectively meets
    mission requirements.
        General Dempsey. We have assessed our ability to execute the
    strategy with the force structure programmed by the Services, and we've
    determined we can do it, but at higher risk. As a result of the
    extensive analysis we performed to determine the appropriate mix of
    Active, National Guard, and Reserve Forces, we intend to maintain the
    Reserve components as a full spectrum force in addition to their
    Homeland defense and other important missions. We carefully weighed
    warfighting requirements to meet operational plans to help determine
    the right mix of Active and Reserve component forces as well as those
    missions best-suited for each component.
        As force structure changes are made within both Active and Reserve
    components, we will continue to assess the impact of these changes and
    make adjustments as necessary to maintain the health of the force,
    retain an effective balance of Active and Reserve Forces, and maintain
    the capability necessary to meet our defense strategy.

        91. Senator Vitter. General Dempsey, it is my understanding that in
    order to meet the new end strength numbers, the Army is planning to
    accelerate some previously planned end strength reductions. Do you
    believe that, as future changes take shape and effect, it is important
    for DOD to take into account ongoing restructuring changes from the
    2013 realignment before moving forward with further cuts?
        General Dempsey. The restructuring from the 2013 realignment were
    considered as the Services determined the force structure necessary for
    the execution of the defense strategy. Now that the necessary end state
    has been identified, it is critical to carry out the reductions as
    quickly as possible to help restore the force balance across capacity,
    capability, and full spectrum readiness as soon as possible.
                                     ______

                    Questions Submitted by Senator Mike Lee
                             report on efficiencies
        92. Senator Lee. Secretary Hagel, a Government Accountability
    Office (GAO) report published this January on the 2012 DOD initiative
    to realize $178 billion in efficiency savings over 5 years stated that
    the establishment of performance measures and collection of performance
    data has, `` . . . largely occurred on an ad hoc basis and vary by
    efficiency initiative because DOD has not established a requirement for
    performing such evaluations. As a result, DOD lacks a systematic basis
    for evaluating the impact of its efficiency initiative on improving
    program efficiency or effectiveness.'' Can you give me a status update
    on this efficiency initiative, and is DOD creating performance metrics
    to measure the effectiveness of its efficiency programs?
        Secretary Hagel. DOD is committed to cutting overhead and
    implementing more effective use of resources. The $178 billion of
    savings in the fiscal year 2012 President's budget over the fiscal
    years 2012 to 2016 period was later adjusted to $150 billion after
    removing economic assumptions. The $150 billion consists of about $105
    billion for the military departments and the remainder for the defense-
    wide initiatives. According to the military departments' current plans
    as of December 2013, each military department is projected to achieve
    93 percent or more of their initial goals or $104 billion over the 5-
    year period. According to the defense-wide agencies' current plans,
    most of their initial goals are projected to be achieved without
    delays. The initial efficiencies did not include reporting of
    performance metrics to measure the efficiency initiatives, but DOD is
    committed to and strives to better measure performance metrics on
    current initiatives.

                          consolidating infrastructure
        93. Senator Lee. Secretary Hagel, you have asked for a BRAC round
    in 2017. If Congress does not allow for a BRAC round, how much will you
    be spending per year on unnecessary infrastructure?
        Secretary Hagel. DOD has a parametric projection of the savings
    associated with a BRAC round in 2017. If DOD is able to reduce our
    infrastructure by 5 percent--a reasonable assumption given the excess
    capacity identified in previous studies and plans for further force
    structure reductions--then estimate recurring savings of approximately
    $2 billion a year.

        94. Senator Lee. Secretary Hagel, how would this BRAC round be
    different than the BRAC in 2005, which, according to GAO, cost about
    $14.1 billion, or 67 percent, over the original estimate? What changes
    would you institute to ensure that such a cost increase does not happen
    again?
        Secretary Hagel. Simply put, we cannot afford another $35 billion
    BRAC round. However, the key factor that drove the cost of the last
    BRAC round was the willingness of DOD, the BRAC Commission, and
    Congress to accept recommendations that were not designed to save
    money. The reality is that there were really two parallel BRAC rounds
    conducted in 2005: one focused on transformation and one focused on
    efficiency.
        Last year, an analysis of the payback from BRAC 2005
    recommendations was conducted and found that nearly half of the
    recommendations from the last round were focused on taking advantage of
    transformational opportunities that were available only under BRAC--to
    move forces and functions where they made sense--even if doing so would
    not save much money. In BRAC 2005, 33 of the 222 recommendations had no
    recurring savings and 70 recommendations took over 7 years to pay back.
    They were pursued because the realignment itself was important, not the
    savings.
        This ``Transformation BRAC'' cost just over $29 billion and
    resulted in a small proportion of the savings from the last round, but
    it allowed DOD to redistribute its forces in ways that are otherwise
    extraordinarily difficult outside of a BRAC round. It was an
    opportunity that DOD seized and Congress supported while budgets were
    high. The remaining recommendations made under BRAC 2005 paid back in
    less than 7 years, even after experiencing cost growth.
        This ``Efficiency BRAC'' cost only $6 billion (out of $35 billion)
    with an annual payback of $3 billion (out of $4 billion). This part of
    BRAC 2005 paid for itself speedily and will rack up savings for DOD in
    perpetuity. It was very similar to previous BRAC rounds and very
    similar to what we envision for a future BRAC round. In today's
    environment, a $6 billion investment that yields a $3 billion annual
    payback would be extraordinarily welcome. In today's environment, we
    need an ``Efficiency BRAC.''

        95. Senator Lee. Secretary Hagel, is DOD considering consolidation
    and reduction of infrastructure at foreign bases outside of Europe?
        Secretary Hagel. DOD is in the midst of a comprehensive review of
    our European infrastructure to create long-term savings by eliminating
    excess infrastructure, recapitalizing astutely to create excess for
    elimination, and leveraging announced force reductions. DOD is
    analyzing infrastructure relative to the requirements of the defined
    force structure, emphasizing military value, operational requirements,
    joint utilization, and obligations to our allies. This analysis should
    be completed in late spring and a classified report outlining the
    findings will be completed soon thereafter.
        While DOD continues to shift its operational focus and forces to
    the Asia-Pacific region, it does not intend to conduct a similar
    consolidation effort in the Pacific because there are not as many bases
    there and existing bases are widely spread-out.

                               religious liberty
        96. Senator Lee. Secretary Hagel, last year there were concerns
    about materials from the Southern Poverty Law Center (SPLC) being used
    by the Defense Equal Opportunity Management Institute (DEOMI) which
    listed groups that support traditional marriage, such as the Family
    Research Council, Catholic Family and Human Rights Institute, and the
    Traditional Values Coalition as hate groups in the same category as the
    Ku Klux Klan and neo-Nazis. A DOD spokesperson last month stated that
    they have removed some of the SPLC material from their instruction, but
    will still use it as a resource. Why is DOD continuing to use a group
    that defines traditional marriage supporters as hate groups as a
    training resource?
        Secretary Hagel. DOD does not endorse the SPLC nor references or
    uses SPLC materials in our student training materials. DOD includes
    disclaimers, as appropriate, when referencing all non-DOD material in
    our DEOMI education and training materials for instructors. Likewise,
    DOD does not endorse, support, maintain, or retain lists of hate groups
    advanced by the SPLC or any other entity. However, in order to maintain
    academic rigor in our equal opportunity educational programs and to
    obtain a strategic global perspective, DOD uses information from
    various non-DOD sources (including the SPLC) to inform its DEOMI
    instructors on certain relevant topics.

               new strategic arms reduction treaty implementation
        97. Senator Lee. Secretary Hagel, when will DOD make a decision on
    the strategic nuclear forces structure to comply with the New Strategic
    Arms Reduction Treaty (START)?
        Secretary Hagel. The administration will make a decision on the New
    START treaty force structure prior to the beginning of fiscal year
    2015. As soon as a decision has been reached, Congress will receive a
    full briefing.

        98. Senator Lee. Secretary Hagel, it has been over 3 years since
    the New START treaty was ratified. Why has the decision on force
    structure taken so long to make?
        Secretary Hagel. A decision is not required until the end of fiscal
    year 2014 in order to meet the New START treaty implementation
    deadline. We are using the available time to consider the full range of
    options and to allow for maximum flexibility in the event that
    unforeseen events occur prior to the New START treaty implementation
    deadline.

        99. Senator Lee. Secretary Hagel, when did DOD start planning for
    its new force structure to implement the New START treaty?
        Secretary Hagel. DOD has been conducting both direct and indirect
    planning and evaluation for a final New START treaty force structure
    decision since the Senate provided its advice and consent to
    ratification on December 22, 2010. DOD will make a decision on the New
    START treaty force structure before the beginning of fiscal year 2015.

        100. Senator Lee. Secretary Hagel, why have you endorsed further
    reductions, as the President called for in his 2013 Berlin speech, when
    we have not made structure decisions to comply with the New START
    treaty?
        Secretary Hagel. After a comprehensive review of our nuclear
    forces, the President determined that we can ensure the security of the
    United States and our allies and partners and maintain a strong and
    credible strategic deterrent while safely pursuing up to a one-third
    reduction in deployed strategic nuclear weapons from the level
    established in the New START treaty. The nature of any such negotiated
    cuts remains to be determined. The administration remains committed to
    maintaining a robust nuclear triad for the foreseeable future and any
    further negotiated cuts with Russia, however unlikely at present, would
    not alter that commitment.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            THURSDAY, MARCH 6, 2014

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

                  U.S. CENTRAL COMMAND AND U.S. AFRICA COMMAND

        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, Manchin,
    Donnelly, Kaine, King, Inhofe, McCain, Wicker, Ayotte, Fischer,
    and Lee.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody. The committee
    meets this morning to receive testimony on the President's
    fiscal year 2015 budget proposal from General Lloyd J. Austin
    III, USA, the Commander of U.S. Central Command (CENTCOM), and
    General David M. Rodriguez, USA, the Commander of U.S. Africa
    Command (AFRICOM).
        Gentlemen, we thank you for your testimony and, even much
    more important, for your service to our country. Please convey
    to all of those with whom you work this committee's thanks for
    their service and sacrifice, as well as our thanks to your
    families.
        The geographic commands that you lead present our Nation
    with significant ongoing diplomatic, political, and security
    challenges, but our entire military faces a more fundamental
    challenge, and that is significant budget reductions, with the
    looming possibility of renewed and damaging sequestration. We
    need to hear from our witnesses today about the impact of
    budget pressures on their commands and their people, an impact
    that we know is significant.
        General Austin, President Obama recently took an important
    step on Afghanistan, informing President Karzai that, although
    the United States remains committed to an ongoing partnership
    with Afghanistan after this year, that President Karzai's
    refusal to sign a Bilateral Security Agreement (BSA) that he
    had already agreed to means that we must begin planning for the
    full withdrawal of U.S. troops that would be necessary in the
    absence of such an agreement. I continue to believe that it is
    in our interest to continue supporting Afghanistan's National
    Security Forces (ANSF) beyond 2014 in order to secure the hard-
    won and impressive gains of the past decade. I also believe
    that we should give up on President Karzai, who has proven
    himself to be an unreliable partner, and, instead, we should
    await his successor's decision on whether to sign a BSA.
        Another significant challenge is the situation in Syria, a
    crisis not just for the people of Syria, but for our friends
    and allies coping with serious tragedy and serious instability.
    General Austin, we hope to hear your thoughts on the conflict's
    impact, in Syria and beyond, on Syria's compliance, or lack of
    compliance, with its commitments regarding chemical weapons,
    and on options for U.S. policy, going forward.
        Instability in Syria has had significant consequences for
    Iraq, where the flow of extremist elements from Syria, combined
    with the Maliki Government's own misguided pursuit of narrow
    sectarian goals, have contributed to a violent and a disturbing
    conflict. So, General Austin, we'll ask you about how the
    United States can help bring about an end to the conflict, what
    role we can play in supporting Iraqi security forces, and how
    we might encourage the Maliki Government to govern more
    inclusively.
        Al Qaeda and its affiliates remain a persistent threat for
    CENTCOM and AFRICOM, and we'd appreciate an update from both of
    you on U.S. efforts to confront this threat, both through U.S.-
    led counterterrorism operations and through support to our
    friends and allies, including our efforts to help partners
    build their own capacities to protect their people from the
    threat of transnational terrorists.
        A particular area of focus for the committee this year is
    intelligence, surveillance, and reconnaissance (ISR) assets,
    given the Department's decision to reduce its planned capacity
    for around-the-clock unmanned combat air patrol. We will seek
    input from our combatant commanders on this issue, from all of
    them. Our witnesses today will be especially important to our
    work, given the importance of ISR capabilities in their area of
    responsibility (AOR).
        General Rodriguez, in addition to the threats posed by
    violent extremists, there are a multitude of other security
    challenges in your AOR, including responding to requests from
    the State Department for additional security forces and
    evacuation support, training African peacekeepers for their
    deployments to the many multilateral peacekeeping operations
    across the continent, assisting in the training and equipping
    of dozens of militaries on the continent, and enabling and
    supporting the multilateral effort to remove the leaders of the
    Lord's Resistance Army (LRA) from the battlefield, and also
    supporting the French military in their operations against
    extremists in Mali and operations to halt further atrocities in
    the Central African Republic. So, we are interested in any
    targeted funding or authorities that may be needed for carrying
    out those missions that are in your responsibility.
        Both of your testimonies this morning are important to our
    consideration of these and other issues. We thank you for
    joining us today, for your service.
        I will turn now to Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        We've spent a lot of time recently talking about the
    growing threats in the U.S. national security around the world.
    Nowhere are these threats more significant than in the two
    areas that are before us today. The men and women of AFRICOM
    and CENTCOM are tasked with confronting some of the most vexing
    threats our Nation faces. However, massive cuts in the national
    security budget are making their jobs even more difficult.
        This is certainly true in AFRICOM. General Rodriguez, we
    spent a lot of time talking about this. Your AOR encompasses
    now 54 countries, if my count is right, since the South Sudan
    came in, and spans over 12 million square miles. These
    countries are confronted with a wide array of challenges,
    ranging from a growing al Qaeda threat to feeble governments
    and rising violence. Despite a surplus of challenges across the
    continent, AFRICOM suffers from persistent resource shortfalls,
    as no assigned forces lack sufficient ISR and mobility support,
    and relies on manpower from other combatant commanders.
    Additionally, a lack of basing and strategic access to the
    continent continues to hamper your ability to engage with
    partners and respond to the crises and contingencies in a
    timely manner.
        General Austin, the challenges you face are no less
    daunting. Iran continues to pose one of the greatest threats to
    our Nation. I have often said this is something that we have
    known for a long time. It seems like the public and a lot of
    the media come along, and they are surprised. But, we have
    known--our intelligence has told us the coming capability by
    2015 of delivery-system end, as well as a weapon. Additionally,
    Iran is developing more complex anti-access and area-denial
    weapons, and current nuclear negotiations have done nothing to
    halt the pursuit of an Intercontinental Ballistic Missile and
    nuclear weapons capability.
        The rest having to do with Karzai, I agree with the
    chairman.
        So, that'll be the end of my statement.
        Chairman Levin. Thank you so much--thank you, Senator
    Inhofe.
        Let me first say that we have three votes starting at 11:20
    a.m. today, so we'll try to make a guess as to how many
    Senators are able to get here, and then we will figure out what
    the length of time for the first round will be at that point.
        Let me start with you, General Austin.

      STATEMENT OF GEN LLOYD J. AUSTIN III, USA, COMMANDER, U.S.
                            CENTRAL COMMAND

        General Austin. Good morning. Chairman Levin, Ranking
    Member Inhofe, distinguished members of the committee, I want
    to thank you for the opportunity to appear here today to
    discuss the current posture and state of readiness of CENTCOM.
        I appreciate your continued and strong support of our men
    and women in uniform and their families, and I look forward to
    talking about them and about the exceptional contributions that
    they are making on behalf of this command and our Nation.
        I am pleased to be here alongside my good friend, General
    David Rodriguez. I will join him in making a few brief opening
    comments, and then I will be prepared to answer your questions.
        I have been in command of CENTCOM for about a year now, and
    it has been an incredibly busy and productive period. We dealt
    with a number of significant challenges, to include the
    revolution in Egypt, the civil war in Syria that is severely
    impacting neighboring countries, Iranian aggression and malign
    activity, the perennial fight against al Qaeda and other
    violent extremist organizations, and, of course, our top
    priority, which is the operation in Afghanistan.
        The central region is an area fraught with turmoil,
    political instability, social upheaval, and economic
    stagnation. While some may view it as a perpetual trouble spot,
    I do not believe that to be the case. When I look around the
    region, I do see great potential for lasting improvement. But,
    progress requires a clear understanding of the challenges and
    the particular circumstances.
        Much of what is occurring in the CENTCOM AOR is a
    manifestation of the underlying currents at play in that
    strategically important part of the world, and foremost among
    them are the growing ethnosectarian divide, the struggle
    between moderates and extremists, the rejection of corruption
    and oppressive governments, and an expanding youth bulge
    comprised of young, educated, unemployed, and often
    disenfranchised individuals. By understanding these currents,
    which are the root causes of the disruptive and destructive
    behaviors in the region, we and others are able to help
    mitigate the effects. We are also able to identify and pursue
    the many opportunities that are present amidst the challenges.
    That has been, and will remain, our focus at CENTCOM.
        What occurs in the central region has shown to have
    significant and lasting impact on the global economy and on our
    vital interests and those of our partner nations. Thus, it is
    critical that we continue to do what is necessary to maintain
    our influence and access, and to contribute to strengthening
    the regional security and stability. We are also focused on
    building the capacity and capability of our allies while
    further improving our military-to-military relationships.
        I have traveled extensively over the past year throughout
    the Middle East and South and Central Asia, and I have talked
    at great length with senior government and military officials
    about the challenges, any opportunities present in the region,
    and I can assure you that the opinion and the support of the
    United States is still widely sought and highly valued. Our
    regional partners have seen what we are able to accomplish, and
    they respect and appreciate our leadership. Our military
    relationships are as strong as they have ever been, and they
    are, indeed, the foundation of America's strategic partnerships
    with almost every country in our AOR.
        The year ahead provides significant opportunities for the
    United States, together with our partners and allies, both in
    the region and beyond, opportunities to achieve diplomatic and
    military successes that will further contribute to improved
    security and stability in our AOR.
        Certainly, while we remain pragmatic, we are also hopeful
    that the opportunity provided by the P5+1 and the Joint Plan of
    Action, for example, will have a positive outcome and one that
    could fundamentally change the region for the better. We are
    likewise encouraged by the tremendous progress made by the
    Afghans and the opportunity that exists to establish a lasting
    partnership with the people of that country. It is a
    partnership that we want to have, going forward. The people of
    Afghanistan have made it clear that they want the same thing.
    These are just two examples. The reality is that there are a
    number of opportunities present in the region, and the CENTCOM
    team stands postured and ready to do our part to pursue them
    while also addressing the various challenges that exist in that
    complex and most important part of the world.
        Ours is a very challenging mission, and it is made even
    more difficult by the realities of the fiscal environment. But,
    given the enormity of the stakes, we will do what is required,
    and we will continue to work closely with, and support the
    efforts of, our colleagues across the interagency to ensure a
    whole-of-government approach that provides for a lasting and
    positive outcome.
        Ladies and gentlemen, America's soldiers, sailors, airmen,
    marines, and coastguardsmen, and their families, have worked
    exceptionally hard over the past 13 years. I have had the great
    honor of serving beside them in combat. I have been privileged
    to lead them as they did difficult work under some of the most
    difficult conditions in the world. I have been humbled by their
    acts of absolute selflessness as they made enormous sacrifices
    on almost a daily basis in support of the mission and in
    support of one another. I am incredibly proud of them, and I
    know that you are, as well.
        Chairman Levin, Ranking Member Inhofe, members of the
    committee, thank you for continuing to provide the
    capabilities, authorities, and resources that we need to
    effectively execute our mission in the strategic environment
    that I have described. Most important, again, thank you for the
    strong support that you've consistently shown to the service
    men and women and their families, particularly those associated
    with CENTCOM. I look forward to answering your questions.
        [The prepared statement of General Austin follows:]
               Prepared Statement by GEN Lloyd J. Austin III, USA
                                  introduction
        The Central Region, comprised of 20 countries in the Middle East
    and Central and South Asia, is geographically vast and holds as much as
    60 percent of the world's proven oil reserves and plentiful natural gas
    reserves. Both of which will remain vital to the global energy market,
    to the economic health of our allies and partners, and to the United
    States. This strategically important region also claims major sea lines
    of communication for international commerce and trade, including the
    critical maritime chokepoints of the Strait of Hormuz, the Suez Canal,
    and the Bab el-Mandeb Strait. The region is rich in history and
    culture, and there are numerous ethnic groups, languages, and
    traditions represented. It is also home to three of the world's five
    major religions. All things considered, events that occur there have
    considerable and far-reaching impacts. The past has clearly shown that
    when the region experiences any degree of strife or instability, every
    country there and others around the globe--to include the United
    States--feel the effects. Specifically, what happens in the Central
    Region influences the global economy and affects, in ways big and
    small, our vital interests and those of our partner nations, namely, as
    President Obama affirmed before the United Nations in September 2013:
    the free flow of resources through key shipping lanes; the defense of
    our Homeland against the pervasive and persistent threat of terrorism
    and extremism; and, the prevention of the proliferation of weapons of
    mass destruction. Thus, it is critical that we do what is necessary to
    bolster security and stability in this most important part of the
    world. It is for this same reason that we continue to confront external
    aggression against our allies and partners.
        In this context, in 2014, the United States finds itself at a
    strategic inflection point. Though problems abound in the Central
    Region, perspective is everything. In the decisive year ahead resides a
    real chance for the United States, together with our partners and
    allies, to achieve diplomatic and military successes and thereby
    generate much-needed positive momentum in the Middle East and Central
    and South Asia. To do so, we must widen our collective perspectives and
    look beyond the challenges that exist and seize the many opportunities
    that are present throughout the region. The U.S. Central Command
    (CENTCOM) team is fully committed to doing so and to ensuring that our
    efforts contribute to an effective whole-of-government approach to
    advancing and safeguarding U.S. vital interests in the region and
    around the globe.
        We, at CENTCOM, remain always ready to seize available
    opportunities, while responding to contingencies and providing support
    to our partners and allies. We remain always vigilant to ensure that we
    avoid strategic surprise. At the same time we remain engaged and
    present, while doing all that we can to improve security and stability
    throughout the Central Region, in part by helping our partners to build
    military capability and capacity. This work is being done each day by
    the dedicated and hardworking men and women of this command, including
    more than 94,000 U.S. soldiers, sailors, airmen, marines,
    coastguardsmen, and civilians selflessly serving and sacrificing in
    difficult and dangerous places. They--and their families--are doing an
    extraordinary job. They are and will remain our foremost priority.
        This past year has been an active one for CENTCOM. In Afghanistan,
    we expect to complete our transition from combat operations to our
    train, advise, and assist (TAA) and counterterrorism (CT) missions by
    the end of 2014. The Afghans have taken the lead on nearly all security
    operations and are showing considerable capability and fortitude. While
    our diplomats continue to pursue a bilateral security agreement (BSA)
    with the Government of the Islamic Republic of Afghanistan (GIRoA), our
    retrograde and base closures remain on schedule.
        Pending further policy decisions, while we are readying for the TAA
    and CT missions, we remain prepared to implement the full-range of
    options with respect to our post-2014 presence. Meanwhile, we continue
    to provide critical assistance to the Egyptian Armed Forces in the
    Sinai. We also have been doing what we can to manage the effects of the
    ongoing civil war in Syria. Of particular concern is the growing
    refugee crisis affecting millions of people in Syria and neighboring
    countries, namely Lebanon, Turkey, Jordan and Iraq. We also developed
    strike options in response to Syrian President Bashar al Assad's use of
    chemical weapons. The credible threat of the use of military force
    ultimately contributed to the diplomatic option currently being
    implemented. We are hopeful that a positive outcome to the crisis in
    Syria will be reached. We continue to undertake contingency planning to
    address a variety of potential scenarios. This also holds true of our
    efforts with regard to Iran, where we support the U.S. Government
    policy combining diplomacy, economic pressure, and the resolve to keep
    military options on the table. In the past several months, we supported
    embassy ordered departures from Egypt, Lebanon, Yemen, and South Sudan.
    We continue to do all that we can to counter the growing terrorist
    threat emanating from the region, and we are assisting our partners in
    their efforts to build greater capability and capacity to defend their
    sovereign spaces. Finally, we conducted and participated in 52
    multilateral and bilateral training exercises held in the CENTCOM area
    of responsibility (AOR), along with many of our allies and partners.
        As we look ahead, our goal is to build upon our past achievements.
    We recognize that we must do all that we can to address the challenges
    and also pursue the opportunities present in the Central Region. At
    CENTCOM, we are appropriately postured, and have adopted a theater
    strategy and a deliberate approach that we are confident will enable us
    to accomplish our mission.
                               centcom's mission
        CENTCOM's mission statement is: ``With national and international
    partners, CENTCOM promotes cooperation among nations, responds to
    crises, and deters or defeats state and non-state aggression, and
    supports development and, when necessary, reconstruction in order to
    establish the conditions for regional security, stability and
    prosperity. ``
                             strategic environment
        Developing nations within the region are plagued by poverty and
    violence, mired in political discord, beset by ethnic and religious
    tensions, stressed by resource competition and economic stagnation, and
    strained by a 'youth bulge' that both impels and reinforces popular
    discontent, and drives demands for political and social reforms. All
    combine to imperil our vital national interests and those of our
    trusted partners and allies.
    ``Underlying Currents''
        To effectively address the challenges present in the Central
    Region, we must understand and take into account the full range of
    forces, or what I refer to as the ``underlying currents,'' at play in
    this strategically important part of the world. Attitudes and behaviors
    in the Middle East are driven by these political, economic and socio-
    cultural currents. They are fueling many of the tensions and conflicts
    across the CENTCOM AOR. Each of them, or some combination thereof, is
    directly contributing to the chaos, volatility, and violence that we
    are seeing in many regional countries. The principal underlying
    currents are:
        Growing ethno-sectarian divide--we are seeing a significant
    increase in ethno-sectarian violence in the Middle East. More so than
    in the past, groups are coalescing around ethnic or sectarian issues,
    rather than national identity. This is causing a fracturing of
    institutions (e.g., governments, militaries) along sectarian lines and
    associated rifts among mixed populations (e.g., Sunni, Shia). If
    allowed to continue unabated, this type of regional sectarian behavior
    soon could lead to a decades-long sectarian conflict stretching from
    Beirut to Damascus to Baghdad to Sanaa.
        At present, we are seeing this divide playing out between several
    ethno-sectarian groups. The one that is growing the widest and most
    dangerously is the Sunni-Shia divide. At the same time, there is the
    ongoing Arab-Kurd divide, which has worsened in Iraq. Lastly, there is
    the ongoing Arab-Israeli divide. These and other similar
    confrontations, such as those between Pashtun and other ethnicities in
    Afghanistan and Pakistan and between Muslims and Hindus, are
    emotionally charged and will prove difficult to resolve. There is deep-
    seated distrust among these groups and this continues to hinder any
    attempts at reconciliation. These relationships are also affected, in
    many cases, by territorial disputes, proxy activity, violence, and
    regional instability.
        Struggle between Extremists and Moderates--of significant concern
    is the growing struggle across the region between Extremists and
    Moderates. The growing activism of radical elements is of particular
    concern to the United States and our partner nations because the
    beliefs and practices espoused by many of these groups do not align
    with our values or the values of the majority of the populations in
    that part of the world. The dangers polysyllabic extremism are on the
    rise throughout the Central Region. To effectively address this threat
    it is necessary to counter the ideas that often incite extremism. We
    also need to do all that we can to limit ungoverned spaces by ensuring
    that countries develop the capability and capacity to exercise greater
    control over their sovereign territories. Central to our strategy are
    our efforts to promote moderate elements and participatory governance
    and build security capacity to facilitate improved stability.
        Rejection of corruption and oppressive governments--The Arab Spring
    movement reflects a widespread desire for freedom and reform. People
    want change and they want to have a say in their fate. In many ways,
    the global expansion of technology triggered this upheaval because more
    people were able to see alternatives on the television and the
    Internet, and this made them increasingly intolerant of their own
    circumstances and oppressive governments. The conditions that caused
    this shift to come about still exist throughout the CENTCOM AOR. In
    fact, it is likely that what we have seen to date is only the beginning
    of a long period of change. Citizens in many countries are rejecting
    autocratic rule and publicly expressing their opinions and frustrations
    with their governments and leaders. Social media sites, such as
    Facebook and Twitter, have provided people with a public voice, and
    they are expressing their discontent and the strong desire for
    political reform with increased frequency. The desire for change and
    for increased freedom and reforms is likely to become even more
    pronounced in the Central Region in coming months and years.
        The ``Youth Bulge''--Stability in the region is further complicated
    by the growing population of young, educated, largely unemployed and,
    in many cases, disenchanted youth. This ``youth bulge'' in many
    respects breeds and reinforces discontent and drives demands for
    political and social reforms. This demographic is of particular concern
    given its size; over 40 percent of the people living in the region are
    between the ages of 15 and 29. These young, energetic, and dissatisfied
    individuals want change. They want greater autonomy, the right of self-
    determination, and increased opportunity. They are will to voice their
    opinions publicly without fearing the consequences of their actions.
    Unfortunately, these disillusioned young people also represent ripe
    targets for recruitment by terrorist and extremist groups.
        We must be able to recognize and understand these and possible
    other ``underlying currents'' at play in the Central Region if we hope
    to effectively manage the challenges that are present and also pursue
    opportunities by which to shape positive outcomes in that part of the
    world. It may not be possible to halt or reverse the trends. However,
    the effects may be mitigated if properly addressed.
                     top 10 u.s. central command priorities
        Looking ahead to the next year, CENTCOM will remain ready, engaged
    and vigilant-effectively integrated with other instruments of power;
    strengthening relationships with partners; and supporting bilateral and
    multilateral collective defense relationships to counter adversaries,
    improve security, support enduring stability, and secure our vital
    interests in the Central Region. In support of this vision, the command
    remains focused on a wide range of issues, activities, and operations
    relevant to the CENTCOM AOR, including our Top 10 priority efforts:

             Responsibly transition Operation Enduring Freedom and
            support Afghanistan as a regionally integrated, secure, stable
            and developing country;
             Prevent the proliferation of weapons of mass
            destruction and, as directed, disrupt their development and
            prevent their use;
             Counter malign Iranian influence, while reducing and
            mitigating the negative impact of proxies;
             Manage and contain the potential consequences of the
            Syrian civil war and other ``fault-line'' confrontations across
            the Middle East to prevent the spread of sectarian-fueled
            radicalism threatening moderates;
             Defeat Al Qaeda (AQ), deny violent extremists safe
            havens and freedom of movement, and limit the reach of
            terrorists;
             Protect lines of communication, ensure free use of the
            global commons, and secure unimpeded global access for legal
            commerce;
             Develop and execute security cooperation programs,
            leveraging military-to-military relationships that improve
            bilateral and multilateral partnerships and build
            interdependent collective partnered ``capacities";
             Lead and enable the continued development of bilateral
            and multilateral collective security frameworks that improve
            information sharing, integrated planning, security and
            stability;
             Shape, support, and encourage cross-combatant command,
            interagency, and partner/coalition programs and approaches,
            while making the best use of military resources; and,
             Maintain and improve our ready and flexible
            headquarters, capabilities, protected networks, and forces
            enabled by required freedom of movement, access, and basing to
            support crisis response
               u.s. central command challenges and opportunities
        There are significant opportunities present amidst the challenges
    that reside in the Central Region.
    Challenge (Afghanistan)
        Operations in Afghanistan remain our top priority. Our goal is to
    conduct a successful transition in Afghanistan while also helping to
    achieve a capable and sustainable Afghan National Security Force
    (ANSF). Equally important are our continued efforts in support of
    ongoing CT missions. We must maintain pressure on terrorist networks to
    avoid resurgence in capability that could lead to an attack on our
    Homeland or our interests around the globe. If the United States and
    Afghanistan are unable to achieve a BSA, we will move rapidly to
    consider alternatives for continuing a security cooperation
    relationship with Afghanistan. Unfortunately, in the wake of such a
    precipitous departure, GIRoA's long-term viability is likely to be at
    high risk and the odds of an upsurge in terrorists' capability
    increases without continued substantial international economic and
    security assistance.
        We are currently focused on four principal efforts: (1) Completing
    the transition and retrograde of U.S. personnel and equipment out of
    Afghanistan; (2) Maintaining the safety and security of U.S./Coalition
    troops and personnel; (3) Supporting continuing CT efforts that are
    contributing to the defeat of al Qaeda (AQ) and other violent extremist
    groups, including the Haqqani Network; and, (4) Advising, training and
    assisting the ANSF, while also helping them to prepare to provide
    security in support of the April 2014 scheduled national elections.
        Our retrograde operations remain on-track, with the vast majority
    of movement conducted via ground through Pakistan. We have several
    means for conducting retrograde available to us, including multiple
    ground routes through Pakistan and the Northern Distribution Network
    (NDN) in Central Asia, Russia, and the Caucasus. We use multiple modes
    of transport to maximize our efficiency and, in some cases, retrograde
    solely via air routes. However, movement in this region is quite
    difficult, principally due to terrain and conditions on the ground.
    While base closures and materiel reduction are proceeding as planned,
    our Services' equipment reset will likely continue into 2015.
        The surest way to achieve long-term stability and security in this
    region is a self-sustaining security force. Our continued presence--if
    a BSA is concluded--complemented by NATO's presence, will enable us to
    assist our Afghan partners through a critical period of transition. It
    would also serve to further reassure allies and partners of U.S. and
    Western military staying power.
        It truly is remarkable all that U.S., Afghan, and coalition forces
    have accomplished in Afghanistan over the past 12+ years. The ANSF has
    dramatically improved its capability and capacity. Today, their forces
    are comprised of nearly 344,000 Afghans [352,000 authorized],
    representing every ethnicity. They are leading nearly all security
    operations throughout the country and actively taking the fight to the
    Taliban. The campaign also has had a positive impact on education,
    literacy levels, and women's rights throughout much of the country.
    Some of these effects, particularly the increase in literacy levels,
    are irreversible.
        There is still much work to be done by the government and people of
    Afghanistan. Enduring success will require the Afghan Government to
    continue to enhance its capabilities in the wake of a successful
    transfer of power following the scheduled national elections to be held
    in April 2014. This represents the critical first step in the country's
    political transition. They will also have to make a more concerted
    effort to counter corruption. If the Afghan leadership does not make
    the right decisions going forward, the opportunities that they have
    been afforded could easily be squandered. Furthermore, the return of
    instability and diminished security and even tyranny will affect
    Afghanistan, as well as the surrounding Central Asian states and the
    region as a whole. We have been in Afghanistan for nearly 13 years,
    representing the longest period of continuous conflict fought by our
    Nation's All-Volunteer Force. Together with our Afghan and coalition
    partners, we have invested lives and other precious resources to
    improve security and stability in that country. Going forward, we want
    to do all that we can to preserve those hard-earned gains.
    Opportunity (Afghanistan)
        Our intent is to maintain an enduring relationship with the Afghan
    military as we work together to preserve improved security and
    stability in the region. Our continued presence--if a BSA is
    concluded--will enable us to train and advise Afghan security forces
    and further improve their capability and confidence during a critical
    period of transition. Our presence would also allow us to maintain
    much-needed pressure on al Qaeda.
        There also exists an opportunity to normalize our relationships
    with Afghanistan and Pakistan, while also improving relations between
    these two countries in a way that will enhance regional security. We
    should encourage them to find common ground in their efforts to counter
    the increasingly complex nexus of violent extremist organizations
    operating in their border regions.
        The past 12+ years in Afghanistan have witnessed incredible growth
    and maturation in CENTCOM's collaborative partnerships with U.S.
    European Command (EUCOM) and the North Atlantic Treaty Organization
    (NATO). Now, as operations wind down in that country, we should look to
    identify areas of common interest that would benefit from our continued
    collaboration. Certainly the convergence of our shared interests with
    those of Central and South Asia (CASA) states, specifically in the
    areas of CT, counter-proliferation (CP), and counter-narcotics (CN),
    provides a place from which to effectively engage and shape regional
    stability, especially in the context of a reduced U.S.-international
    presence in Afghanistan post-2014.
    Challenge (Syria)
        We are also focused on the conflict in Syria. It represents the
    most difficult challenge that I have witnessed in my 38-year military
    career. What started as a backlash against corruption and oppressive
    authoritarian rule has now expanded into a civil war. Nearing its third
    full year, the conflict appears to have reached, what I would
    characterize as a ``dynamic stalemate'' with neither side able to
    achieve its operational objectives.
        The conflict is further complicated by the presence of chemical
    weapons (CW), the tremendous influx of foreign fighters and a
    humanitarian crisis that affects millions of people in Syria and in
    neighboring countries; and is exacerbated by the Assad regime's
    deliberate targeting of civilians and denial of humanitarian access. We
    are collaborating with our interagency partners in developing solutions
    to the pressing humanitarian crisis that threatens the stability of
    Lebanon, Jordan, Turkey and Iraq. Meanwhile, the credible threat of the
    use of military force, initiated by the United States in response to
    the regime's use of CW, prompted President Assad to agree to destroy
    all such weapons in Syria under the direct supervision of the
    Organization for the Prohibition of Chemical Weapons. Thus far, the
    Assad regime has missed milestones set by the international community
    to transport priority chemicals to the Syrian coast for removal and
    destruction. The regime must follow through on its obligation to
    eliminate its chemical weapons program. Meanwhile, we remain committed
    to facilitating a negotiated political solution, which remains the only
    way to sustainably resolve the conflict.
        Support and engagement by the United States and others is needed to
    bolster the broader regional effort in response to the conflict in
    Syria. This sentiment was consistently echoed by regional leaders
    during my recent engagements. Nearly all partners, both in and out of
    the region, have expressed growing anxiety with respect to the violent
    extremists operating from ungoverned space within Syria. The flow of
    foreign fighters and funding going into Syria is a significant concern.
    When I took command of CENTCOM in March 2013, the Intelligence
    Community estimated there were 800-1,000 jihadists in Syria. Today,
    that number is upwards of 7,000. This is alarming, particularly when
    you consider that many of these fighters will eventually return home,
    and some may head to Europe or even the United States better trained
    and equipped and even more radicalized. At the same time, extremists
    are exploiting the sectarian fault line running from Beirut to Damascus
    to Baghdad to Sanaa. Left unchecked, the resulting instability could
    embroil the greater region into conflict. Several nations are pursuing
    independent actions to address this threat. We will continue to support
    our partners in order to protect our vital interests and theirs as
    well.
    Opportunity (Syria)
        Much effort is being put forth by U.S. Government elements and
    others to achieve the desired diplomatic or political solution to the
    crisis in Syria. This work must continue in earnest. The widespread
    violence and tremendous human suffering that is occurring in Syria and
    in neighboring countries will likely have far-reaching and lasting
    consequences for the region. In the near-term, work to remove or
    destroy declared CW materials from Syria is underway. Successfully
    removing these weapons would create additional decision space that
    could enable us to do more to address other difficult challenges
    present inside that country. If the flow of foreign fighters could be
    curbed significantly, and the support provided to the regime by
    Lebanese Hezbollah (LH), Iranian Qods Forces and others was stopped or
    greatly reduced, it could lead to a break in the stalemate and an
    eventual resolution to the conflict.
    Challenge (Iran)
        We continue to pay close attention to Iran's actions. As a result
    of the understandings reached with the P5+1, Iran has taken specific
    and verifiable actions for the first time in nearly a decade that
    halted progress on its nuclear program and rolled it back in key
    respects, stopping the advance of the program and introducing increased
    transparency into Iran's nuclear activities. Despite this progress,
    significant concerns do remain. In addition to the threat posed by
    Iran's nuclear program, there is growing anxiety in the region and
    beyond concerning the malign activity being perpetrated by the Iranian
    Threat Network (ITN), which consists of Qods Force, Ministry of
    Intelligence and Security, regional surrogates, and proxies. We are
    seeing a significant increase in Iranian proxy activity in Syria,
    principally through Iran's support of LH and the regime. This is
    contributing to the humanitarian crisis and significantly altered
    political-societal demographic balances within and between the
    neighboring countries of Lebanon, Turkey, Jordan, and Iraq. There is
    also widespread unease with respect to the counter-maritime, theater
    ballistic missile and cyber capabilities possessed by Iran. Each of
    these represents a very real and significant threat to U.S. and our
    partners' interests. Going forward, we should look to employ nuanced
    approaches in dealing with these distinct challenges, while providing
    the means necessary to enable our partners to do their part to address
    them, both militarily and diplomatically.
    Opportunity (Iran)
        Progress towards a comprehensive solution that would severely
    restrict Iran's nuclear weapons 'breakout' capacity has the potential
    to moderate certain objectionable Iranian activities in non-nuclear
    areas (e.g., ITN, theater ballistic missile, cyber). If the P5+1 are
    able to achieve a long-term resolution with respect to Iran's nuclear
    program, that would represent a step in the right direction, and
    present an unprecedented opportunity for positive change.
    Challenge (Counterterrorism)
        While we have made progress in counter-terrorism (CT), violent
    extremist ideology endures and continues to imperil U.S. and partner
    interests. Al Qaeda and its Affiliates and Adherents (AQAA) and other
    violent extremist organizations (VEOs) operating out of ungoverned
    spaces are exploiting regional turmoil to expand their activities.
    Among the VEOs present in the region, AQAA pose the most significant
    threat. In recent years, AQ has become more diffuse, entrenched, and
    interconnected. While AQ core is less capable today, the jihadist
    movement is in more locations, both in the Central Region and globally.
    This expanding threat is increasingly difficult to combat and track,
    leaving the U.S. Homeland and our partners and allies more vulnerable
    to strategic surprise. At the same time, we are increasingly concerned
    about the expanding activity of extremist elements operating in
    sovereign spaces, to include Iraq, Egypt and Syria. These elements
    threaten U.S. interests because they foment regional instability and
    create platforms from which to plot actions targeting our Homeland.
    Many of these extremist elements are highly capable and clearly
    maintain the intent to conduct future attacks on the U.S. Homeland and
    our interests around the globe. In particular, we must keep pressure on
    AQ elements operating in Eastern Afghanistan, in Pakistan's federally
    Administered Tribal Areas (FATA) and Yemen, and elsewhere. CENTCOM will
    continue to support our partners' CT efforts. Our collaboration,
    particularly through joint combined exercises and training events,
    helps to build our partners' capability and confidence, and thereby
    contributes to increasing governance over ungoverned spaces. This, in
    turn, helps to deny terrorists and extremists freedom of movement.
    Opportunity (Counterterrorism)
        The main strength of most VEOs is their extremist ideology, which
    shows no signs of abating. Ideology transcends personalities and
    persists even after key leaders are killed. This threat cannot be
    eliminated simply by targeting individuals. To defeat AQ and other
    VEOs, we must defeat the ideas that often incite extremism, while also
    guarding against ungoverned spaces and conditions that allow those
    ideas to flourish. Our continued presence and active engagement is the
    most effective way that we can help our partners build greater
    capability and capacity to meet these threats. We must also look at
    realigning our critical resources, recognizing that by developing a
    structure that provides for greater agility and speed of action we will
    go a long way towards improving our posture and security in the face of
    this growing threat.
    U.S. Engagement in the Central Region
        There is a widely-held misperception that the United States is
    disengaging from the Middle East in order to focus our efforts and
    attention elsewhere around the globe. To the contrary, the United
    States fully intends to maintain a strong and enduring military posture
    in the Central Region, one that can respond swiftly to crisis, deter
    aggression and assure our allies. However, the differing perception
    held by some must not be overlooked. If not effectively countered, the
    perceived lack of U.S. commitment could affect our partners'
    willingness to stand with us and thereby create space for other actors
    to challenge U.S. regional security interests. We must assure our
    regional partners of our continued, strong commitment and demonstrate
    our support through our actions and active presence.
                             a regional perspective
        Today, the Central Region is experiencing a deep shift, the total
    effects of which will likely not be known for years to come. In some
    parts of the Levant, into Iraq, and even as far as Bahrain, we see a
    more obvious and accelerating Sunni-Shia sectarian contest. The
    increasing violence, unresolved political issues, and lack of inclusive
    governance have weakened Egyptian and Iraqi internal stability, as well
    as each country's regional leadership potential. The outcomes of the
    situations in Egypt, Iraq, Bahrain, Yemen and Syria will largely
    determine the future regional security environment. Poor outcomes will
    create additional seams and ungoverned spaces that will be exploited by
    malign actors, including al Qaeda.
    Around the Region: 20 countries, 20 stories
        If we want to achieve lasting effects in the Central Region we must
    view the challenges present in the 20 countries that make up the
    CENTCOM AOR in the context of the ``underlying currents'' at play and
    in view of the interconnectedness of behaviors and outcomes. Equally
    important, we must take care not to simply respond to or manage the
    challenges that exist. We must also pursue the many opportunities
    present in the region, understanding that it is principally through
    these opportunities that we will achieve diplomatic and military
    successes in specific areas. These successes will, in turn, serve as
    ``force multipliers.'' The compounding progress and momentum achieved
    will enable us to increase stability in the region and enhance security
    on behalf of the United States and our partners around the globe.
        Below are synopses of the current state of affairs in each of the
    20 countries in the CENTCOM AOR minus Afghanistan, Syria, and Iran
    which were addressed in the previous section, ``CENTCOM Challenges and
    Opportunities'' (see pages 9-15):
    The Gulf States
        We enjoy strong relationships with our partners in the Gulf States
    and will continue to engage with them, both bilaterally and as a
    collective body through the Gulf Cooperation Council (GCC). This
    collaboration enhances U.S. security, as our capabilities are made more
    robust through enhanced partner capacity and, ultimately, working ``by,
    with, and through'' the GCC. This is currently on display and paying
    dividends at the Combined Air Operations Center in Qatar and the
    Combined Maritime Operations Center in Bahrain. It is important that we
    continue to support Gulf States' efforts as they work to address crises
    emanating from Syria, Yemen, Iraq and elsewhere; internal political
    challenges; growing ethno-sectarian and extremist violence; demographic
    shifts; and, Iranian hegemonic ambitions. We remain focused on
    improving their capabilities specific to ballistic missile defense,
    maritime security, critical infrastructure protection and
    counterterrorism. We have also strongly advocated increased ballistic
    missile defense cooperation among the GCC states and are beginning to
    see increased interest and progress.
        In December, at the Manama Dialogue held in Bahrain, Secretary of
    Defense Hagel announced several new initiatives designed to further
    strengthen cooperation between the United States and our GCC partners.
    First, DOD will work with the GCC on better integration of its members'
    missile defense capabilities, acknowledging that a multilateral
    framework is the best way to develop interoperable and integrated
    regional missile defense. Second, the Defense Department intends to
    expand its security cooperation with partners in the region by working
    in a coordinated way with the GCC, including the sales of U.S. defense
    articles to the GCC as an organization. Third, building upon the U.S.-
    GCC Strategic Cooperation Forum and similar events, Secretary Hagel
    invited our GCC partners to participate in an annual U.S.-GCC Defense
    Ministerial, which will allow the United States and GCC member nations
    to take the next step in coordinating defense policies and enhancing
    our military cooperation. All of these initiatives are intended to help
    strengthen the GCC and regional security, and CENTCOM intends to fully
    support them. Through our continued presence in the region, training
    and equipping programs, and further expansion of multilateral exercises
    and activities, we are setting conditions for increased burden-sharing.
    Ultimately this will enable us to remain better postured to respond to
    crises or contingency operations, while also providing a counterbalance
    to the potential threat posed by Iran.
        For decades, security cooperation has served as the cornerstone of
    the United States' relationship with Saudi Arabia. Now, as we face
    compounding security challenges in the Middle East, Saudi Arabia is
    taking a more independent and outspoken role in safeguarding its
    interests in the region. Still, despite recent policy disagreements
    pertaining to Syria, Egypt and Iran, the United States and Saudi Arabia
    continue to work closely together to contend with violent extremist
    groups operating in ungoverned spaces, proliferation of weapons of mass
    destruction (WMD), the humanitarian crisis emanating from Syria and
    other challenges threatening regional security and stability. Our
    support of Saudi Arabia in enhancing its defense capabilities will
    serve to further deter hostile actors, increase U.S.-Saudi military
    interoperability and, in so doing, positively impact security and
    stability in the region, as well as the global economy.
        A long-time partner and strong ally in the region, Kuwait provides
    critical support for U.S. troops and equipment, and it is playing a
    significant role in the retrograde of equipment from Afghanistan. For
    the first time, Kuwait committed to hosting the U.S. multilateral
    exercise, Eagle Resolve 2015, which will further bolster regional
    cooperative defense efforts. Kuwait continues to struggle with
    significant political challenges that threaten internal stability.
    Meanwhile, they have made progress in reconciling longstanding issues
    with neighboring Iraq, thereby contributing to improved stability in
    the region. Looking ahead, we can expect to enjoy strong relations with
    the Kuwaiti military, built upon many years of trust shared since the
    liberation of Kuwait in 1991.
        The United Arab Emirates (UAE) is a valued, contributing partner
    with whom we share a historically strong military-to-military
    relationship. The UAE remains solidly committed to a collective defense
    of the region and has taken the lead in providing air and missile
    defense capabilities for the Gulf. The Emiratis recent combined U.S.
    Army Tactical Missile Systems live-fire exercise demonstrated yet
    another important capability added to its formation. Given their
    potential to enhance the AOR's stability by providing leadership and
    military capability, they most certainly merit our continued close
    engagement and tangible foreign military sales (FMS) support.
        We share a close and robust partnership with Qatar. They host and
    provide critical support to two of our forward headquarters and
    facilities. Over the past several months, Qatar has experienced some
    friction with GCC partners, namely Saudi Arabia and UAE, principally
    due to Qatar's perceived support of the Muslim Brotherhood in Egypt and
    radical jihadist groups operating in Syria. Despite this, Qatar
    represents a voice able and willing to take a lead in the GCC's ongoing
    pursuit of improved regional stability and security. Qatar's multiple
    FMS requests and renewed Defense Cooperation Agreement provide tangible
    examples to this end. They warrant our continued close engagement and
    support.
        Bahrain remains an important partner and one of the greatest
    bulwarks against Iranian malign influence in the region. We have a
    longstanding close military-to-military relationship with Bahrain, one
    of four partners with whom we share a bilateral defense agreement, in
    addition to UAE, Kuwait, and Jordan. Bahrain provides key support for
    U.S. interests by hosting the U.S. Navy's Fifth Fleet and U.S. Naval
    Forces Central Command, and by providing facilities and infrastructure
    for U.S. forces engaged in regional security operations. Despite their
    efforts in The National Dialogue, Bahrain's Sunni-dominated government
    and Shia opposition have failed to achieve a political compromise. This
    effort has been complicated by radical elements supported by Iran.
    Frequent public protests have created further opportunities for
    external actors to enflame tensions. This has led to miscalculation,
    non-proportional responses to perceived threats, and a hardening of
    both government and opposition positions. We must maintain a pragmatic
    policy that supports Bahrain while encouraging adherence to human
    rights. We are starting to see a logical hedging by Bahrain as it seeks
    assistance from others, specifically China. The current PMS holds may
    be perpetuating this behavior. In the wake of the successful Manama
    Dialogue, held in December 2013, we have an opportunity to work with
    the Bahrainis to address these and other challenges and, in so doing,
    further improve internal and regional security and stability.
        Oman continues to play a steadying role and provides a voice of
    moderation in the region. The country also provides the United States
    and our allies and partners with critical regional access.
        We value our shared appreciation of the situation in the Gulf. At
    the same time, we recognize that Oman seeks to maintain a constructive
    relationship with its close neighbor, Iran. Recent terror threats from
    al Qaeda in the Arabian Peninsula (AQAP) have stimulated closer
    cooperation between Oman and the United States specific to
    counterterrorism. We will continue to support and, where possible,
    expand upon these collaborative efforts.
        Iraq, positioned between Iran and Saudi Arabia, remains at the geo-
    strategic center of the Middle East and the historically preeminent
    Shia-Sunni fault-line. Over the past year, the country's security
    situation has deteriorated significantly with violence reaching levels
    last seen at the height of the sectarian conflict (2006-2008). The
    principal cause of the growing instability has been the Shia-led
    government's lack of meaningful reform and inclusiveness of minority
    Sunnis and Kurds. The situation is further exacerbated by the active
    presence of al Qaeda (through the Islamic State of Iraq and the Levant)
    and the steady influx of jihadists coming into Iraq from Syria. This
    has come to a head most recently in key areas ofAnbar Province. In
    response to this immediate threat, CENTCOM, with Congressional support,
    was able to meet urgent materiel requirements through the PMS process
    (e.g., small arms, rockets, Hellfire missiles). Leveraging this
    opportunity, we continue to expand security cooperation activities
    aimed at strengthening our military-to-military ties. Examples include
    inviting the Iraqis to participate in regional exercises, such as Eager
    Lion, and facilitating support for Iraq from nations other than Iran,
    such as Turkey and Jordan. Now one of the world's largest producers of
    oil, Iraq has the potential to become a prosperous country and a leader
    and proactive enabler of regional stability. However, it will be unable
    to achieve its potential without first achieving a sustainable level of
    stability and security. This will require major internal political
    reform, and the sincere inclusion of the Sunnis and Kurds into the
    political process that will significantly curb violence across the
    country.
        In Yemen, President Hadi worked faithfully through the political
    transition plan mandated by the 2011 GCC-brokered agreement. The
    successful conclusion of the National Dialogue was a major achievement.
    However, it represents one of many steps required to establish a more
    representative government. While Hadi continues to exhibit sound
    leadership and a strong commitment to reform, he is facing an
    increasingly fragile security situation impacted by secessionists in
    the south, a growing AQAP threat and escalating violence between proxy-
    funded Houthis and Salafists. We are working closely with the Yemeni
    Ministry ofDefense to restructure the military and security apparatus
    to effectively deal with these national security threats. We will
    persist in our efforts to strengthen our relationship in the face of
    the very serious threat posed by terrorists groups operating out of
    ungoverned spaces. We also will continue to provide support to the
    national unity government and to the Yemeni Special Forces focused on
    reducing those opportunities that enable violent extremists groups to
    hold terrain, challenge the elected government and prepare to conduct
    operations elsewhere in the region and against the U.S. Homeland.
    The Levant
        Over the past 3 years, countries bordering Syria have absorbed more
    than 2 million refugees. This is causing considerable internal domestic
    problems. However, these partner nations continue to show tremendous
    compassion and resiliency in response to this devastating humanitarian
    crisis. We will keep doing all that we can to support them. Meanwhile,
    the expanding brutality, as illustrated by the Assad Regime's 21 August
    2013 chemical weapons attack in the suburbs of Damascus, has drawn the
    focus and ire of the international community. Fracture of opposition
    forces and the increasing prominence of radical Islamist elements on
    the battlefield further adds to the tremendous complexity of the
    problem set in Syria. The direct involvement of Iran and LH fighters
    also is complicating and enflaming this expanding conflict. This
    growing crisis must be addressed and will require the efforts of
    regional partners and the international community, recognizing that,
    allowed to continue unabated, it will likely result in a region-wide
    conflict lasting a decade or more.
        The Government of Lebanon's recent formation of a cabinet ended a
    10-month political stalemate. While this positive development could
    lead to a better functioning government, violence is unlikely to
    subside until the Syria conflict is resolved. Currently, Lebanon is
    threatened by growing instability inside the country, as evidenced by
    increasing incidents of sectarian violence, including car bombs. This
    is due to a variety of contributing factors, including poor governance,
    Lebanese Hezbollah's involvement in the Syria conflict, which has
    resulted in a cycle of retaliatory violence, and the significant influx
    of Sunni refugees from Syria. This is negatively impacting the delicate
    sectarian balance in the country. The Lebanese Armed Forces (LAF), a
    multi-confessional and national security force, is striving to contain
    the spread of violence. However, its ability to do so is increasingly
    strained. We continue to work closely with our military counterparts in
    addressing their growing security demands. Our expanded support of the
    LAF, specifically through foreign military financing (FMF), the Global
    Security Contingency Fund and other train and equip funds, represents
    our best method for enhancing their capability and capacity to meet
    current and future security challenges.
        Jordan remains one of our most reliable regional partners, as
    demonstrated by our formal defense agreement, their direct support to
    Afghanistan, participation in multilateral exercises and support for
    the Middle East Peace process. Jordan continues to struggle with
    growing instability, primarily stemming from the crisis in Syria. The
    influx of hundreds of thousands of Syrian refugees has placed a heavy
    burden on Jordan's Government and economy. There is also increasing
    concern regarding the growing threat to the region posed by violent
    extremists. As a consistent moderate voice, Jordan is an exemplar in
    the region. We will continue to work closely with Jordan to address our
    shared challenges. I have dedicated a forward presence, CENTCOM
    Forward-Jordan, to assist the Jordanian Armed Forces in their efforts.
    The U.S. goals are to help ease the burden on the Nation's economy and
    enhance its overall stability and security situation.
        While Egypt is an anchor state in the Central Region, it has
    experienced a considerable amount of internal turmoil in recent months.
    The change in government in July 2013, was prompted by growing popular
    unrest with the Morsi government because it proved unwilling or unable
    to govern in a way that was fully inclusive. The interim government has
    made some strides towards a more democratic and inclusive government,
    primarily through the lifting of the state of emergency (14 November
    2013) and the successful conduct of a public referendum on the
    constitution (14-15 January 2014). However, despite the progress made
    on the political roadmap, the interim Egyptian government has made
    decisions inconsistent with inclusive democracy--through restrictions
    on the press, demonstrations, civil society, and opposition parties.
    The interim government has yet to tackle the dire and pressing economic
    problems that are greatly affecting the country and its people. Absent
    significant economic reforms or sustained levels of external financial
    support from the Gulf, Egypt's economy will continue to falter. As the
    political transition continues, Egypt is also facing heightened
    extremist attacks in the Sinai and the Nile Valley. The military and
    security services have heightened counterterrorism operations in the
    Sinai, but continue to struggle to contain this threat.
        We maintain a historically strong military-to-military relationship
    with the Egyptian Armed Forces and will continue to work with them to
    advance our mutual security interests. Given the importance of Egypt's
    stability to overall security and stability in the region, we should
    continue to support the political transition and encourage pursuit of
    necessary economic reforms. CENTCOM will continue to work closely with
    the Egyptian military to improve its ability to secure Egypt's borders
    and to help it to counter the threat posed by extremists in the Sinai
    and the Nile Valley.
    Central and South Asia
        The Central and South Asia (CASA) states are in the midst of a
    crucial period as ISAF reduces its presence in Afghanistan and
    completes the shift from combat operations to the current train, advise
    and assist mission in support of Afghan security forces. There is
    growing uncertainty regarding long-term U.S. and NATO commitment to
    Afghanistan and the region post-2014. There is also concern with
    respect to Afghanistan's ability to preserve the gains achieved and to
    maintain long-lasting security and stability in the absence of U.S. and
    coalition forces. As a result, we are seeing a number of complex
    hedging activities by Afghanistan and neighboring states looking to
    protect their individual interests. This behavior highlights the
    importance of adjusting our strategy in the CASA region as we look to
    support our partners and also confront the significant threats of
    narcotics trafficking, proliferation of WMD and terrorism.
        We continue to look for opportunities to mature military-to-
    military relationships among the Central Asian states, ideally helping
    them to move beyond rivalries and towards finding common ground for
    increased bilateral and multilateral cooperation.
        Al Qaeda continues to operate in Pakistan's FATA and, to a lesser
    extent, areas of eastern Afghanistan. Continued pressure on Al Qaeda in
    Afghanistan and Pakistan also increases the chances that AQ will be
    displaced to less restrictive areas in the CASA region that would
    provide AQ and other violent extremists with safe havens from which to
    facilitate terror networks, plan attacks, pursue WMD, etc. Meanwhile,
    other regional actors, to include Russia, China, and Iran, are
    attempting to expand their spheres of influence in the CASA region for
    security and economic purposes. Longstanding tensions between Pakistan
    and India also threaten regional stability as both states have
    substantial military forces arrayed along their borders and the
    disputed Kashmir Line of Control.
        In Pakistan, we face a confluence of persistent challenges that
    have long hindered the efforts of the Pakistan government to fight
    terrorism and our ability to provide needed assistance. Central to
    Pakistan's struggles is its poor economy and burgeoning ``youth
    bulge.'' Given these conditions, radicalism is on the rise in settled
    areas and threatens increased militant activity and insurgency in parts
    of Pakistan where the sway of the state traditionally has been the
    strongest. At the same time, terrorist attacks and ethno-sectarian
    violence threaten the government's tenuous control over some areas.
    Further compounding these internal challenges is Pakistan's strained
    relationships with its neighbors.
        The U.S.-Pakistan military-to-military relationship has improved
    over the past 2 years, reflecting increased cooperation in areas of
    mutual interest including the defeat of AQ, reconciliation in
    Afghanistan and support for Pakistan's fight against militant and
    terrorist groups. Greater security assistance, training, support and
    operational reimbursement through the Coalition Support Fund have
    enhanced Pakistan's ability to conduct counterinsurgency (COIN)/CT
    operations. In November 2013, we held the second strategic-level
    Defense Consultative Group meeting, focused primarily on implementing a
    framework for promoting peace and stability based on common COIN and CT
    interests. The Out-Year Security Assistance Roadmap will focus on
    enhancing Pakistan's precision strike, air mobility, survivability/
    counter-improvised explosive device capability, battlefield
    communications, night vision, border security and maritime security/
    counter-narcotics capabilities. Additionally, we are nesting these
    initiatives within our Military Consultative Committee, which finalizes
    our annual engagement plan and the CENTCOM exercise program. The end
    result will be a synchronization of activities aimed at helping
    Pakistan build capabilities in support of our common objectives across
    all security cooperation lines of effort. While we continue to
    strengthen our cooperation in areas of mutual interest, we are engaging
    with Pakistan where our interests diverge, most notably with respect to
    the Haqqani Network which enjoys safe haven on Pakistan soil.
        Our relationship with Uzbekistan is advancing in a deliberate,
    balanced way driven by shared regional security concerns. We have
    resumed Special Forces training and initiated a non-binding 5-year
    framework plan. Our bilateral training conducted in June 2013 focused
    on CT and CN and renewed collaboration in support of shared interests.
    The Uzbeks also continue to provide support for operations in
    Afghanistan, principally by allowing access to NDN routes. While the
    Uzbeks prefer to work bilaterally, we see significant potential in
    their expressed desire to contribute positively to regional stability.
    Our security cooperation programs are carefully managed so as not to
    upset the regional military balance.
        Our relationship with Tajikistan continues to improve against the
    backdrop of significant security challenges. They are supporting
    operations in Afghanistan by allowing transit along the Kyrgyz
    Republic, Kazakhstan and Tajikistan route of the NDN. Additionally,
    they have shown their support for broader security initiatives,
    including CT, CN and border security. Tajikistan's lengthy border with
    Afghanistan and the associated access to ungoverned spaces presents
    difficulties for the country's security forces. Enhancing Tajikistan's
    ability to secure this border against narco-traffickers and VEOs is
    vital to ensuring internal and regional stability. Our modest
    investment of resources in support of their force modernization efforts
    is primarily focused on enhancing the country's capability to address
    security challenges while encouraging the continued professional
    development of its defense. This will contribute to the protection of
    our shared interests from the threat of VEOs.
        We are redefining our relationship with the Kyrgyz Republic as we
    ascertain the full impact of the planned July 2014 closure of the Manas
    Transit Center and termination of our Framework Defense Cooperation
    Agreement. A new Framework Agreement will be necessary to maximize
    U.S.-Kyrgyz Republic security cooperation. Until such an agreement is
    reached, our security cooperation activities will likely decrease.
    While these challenges have limited our ability to further develop our
    military-to-military relationship, we continue to pursue all
    opportunities where our interests align, particularly in the areas of
    CT and border security.
        Our relationship with Kazakhstan continues to mature and has great
    potential for expansion. In 2012, we signed a 5-Year Military
    Cooperation Plan (2013-2017) and a 3-Year Plan of Cooperation in
    support of Kazakhstan's Partnership for Peace Training Center.
    Kazakhstan's Ministry of Defense is transforming its forces from a
    traditional Soviet-style territorial defense role into a western-
    modeled expeditionary, professional and technologically advanced force
    capable of meeting threats in the post-2014 security environment.
    Kazakhstan is the most significant regional contributor to stability
    and security in Afghanistan. They have pledged grants to the ANSF fund
    after 2014, while also offering technical service support for ANSF
    equipment and providing educational opportunities in Kazakhstan for
    young Afghans. In August 2013, we conducted Steppe Eagle, an annual
    multinational peacekeeping exercise co-sponsored by the United States
    and Kazakhstan. This exercise facilitated the continued development of
    the Kazakhstan Peacekeeping Brigade. Once the brigade is operational,
    Kazakhstan intends to deploy subordinate units in support of U.N.
    peacekeeping operations as early as this year. Kazakhstan remains an
    enduring and reliable partner, well positioned to serve as bulwark for
    increased stability within the region.
        Turkmenistan is a valued partner and enabler for regional
    stability. Of note is their support of Afghanistan where they are
    contributing through a series of bilateral development projects. They
    also permit DOD humanitarian assistance overflights. While the United
    States and Turkmenistan share numerous regional interests, their policy
    of positive neutrality governs the shape and pace of our security
    assistance relationship. Turkmenistan remains committed to self-imposed
    restrictions on military exchanges and cooperation with the United
    States and other nations in order to maintain its neutrality. Our
    security assistance relationship has seen modest growth as we help
    Turkmenistan to further develop its border security forces and the
    capabilities of the Turkmen Caspian Sea Fleet. However, we do not
    foresee any changes to their policy, so it is likely our interactions,
    though productive, will remain limited.
        Central Asia's position, bordering Russia, China, Iran, and
    Afghanistan, assures its long-term importance to the United States. By
    improving upon our military-to-military relationships we will be better
    able to maintain access and influence, counter malign activity, protect
    lines of communication and deny VEOs access to ungoverned spaces and
    restrict their freedom of movement. Going forward, initiatives will be
    tailored to transform our current limited transactional-based
    relationships into more constructive cooperative exchanges based on .
    common interests and focused on training and equipping them to conduct
    more effective CT, CP, and CN operations.
                             our strategic approach
        CENTCOM' s goal is to effect incremental, holistic improvements to
    Central Region security and stability, in part, by shaping the
    behaviors and perceptions that fuel regional volatility. The intent is
    to generate a cumulative impact that de-escalates conflicts, mitigates
    confrontations and sets conditions for durable peace, cooperation, and
    prosperity throughout the region. Our strategic approach is defined by
    the ``Manage-Prevent-Shape'' construct.
        Our priority effort is to Manage operations, actions and activities
    in order to de-escalate violent conflict, contain its effects, maintain
    theater security and stability and protect U.S. interests and those of
    our partners. At the same time, we recognize that our charge is not
    simply to wage today's wars for a period. Rather, our goal is to
    achieve lasting and improved security and stability throughout the
    Middle East and Central and South Asia. We do so by managing the
    current conflicts, while also taking measures to Prevent other
    confrontations and situations from escalating and becoming conflicts.
    At the same time, we are pursuing opportunities and doing what we can
    to effectively Shape behaviors, perceptions and outcomes in different
    areas. These efforts cross the entire theater strategic framework
    (near-, mid-, long-term actions).
        Our ability to effectively employ our Manage-Prevent-Shape
    strategic approach is largely dependent upon the capabilities and
    readiness of our forward deployed military forces, working in concert
    with other elements of U.S. power and influence. These elements include
    our diplomatic efforts, both multilateral and bilateral, and trade and
    energy. Equally important are our efforts aimed at building regional
    partners' capability and capacity and also strengthening our bilateral
    and multilateral relationships, principally through key leader
    engagements and training and joint exercise programs. The long-term
    security architecture of the Central Region demands that our partners
    be capable of conducting deterrence and defending themselves and our
    common security interests. This can only be accomplished if we maintain
    strong military-to-military relationships and build on existing
    security frameworks; recognizing that we cannot surge trust.
    Leverage Partnerships
        In an effort to counter the ``underlying currents'' that are the
    root cause of violence and instability in the Central Region, we must
    leverage the ability and willingness of key regional leaders to
    influence behaviors. By encouraging certain states to adopt more
    moderate positions, for example, while promoting the efforts and voices
    of others that are already considered moderate, we may be able to limit
    the impact of radical Islamists. Likewise, by limiting the availability
    of ungoverned spaces, we may diminish the reach and effectiveness of
    violent extremists operating in the region. We cannot force a universal
    change in behaviors. But, we can set the right conditions and promote
    the efforts of influential states and regional leaders who may, through
    their words and actions, achieve significant and lasting improvements.
    Building Partner Capacity
        Building partner capacity (BPC) is a preventative measure and force
    multiplier. Our goal is for our partners and allies to be stronger and
    more capable in dealing with common threats. Joint training exercises,
    key leader engagements and PMS and FMF financing programs all represent
    key pillars of our BPC strategy. When compared to periods of sustained
    conflict, it is a low-cost and high-return investment that contributes
    to improving stability throughout the Central Region while lessening
    the need for costly U.S. military intervention. Tangible by-products
    include increased access, influence, enhanced interoperability and
    improved security for forward-deployed forces, diplomatic sites and
    other U.S. interests. Working ``by-with-and through'' our regional
    partners, whenever possible, also serves to enhance the legitimacy and
    durability of our actions and presence and allows for increased burden
    sharing.
    Training and Joint Exercise Programs
        The CENTCOM Exercise Program continues to provide meaningful
    opportunities to assist with BPC, enhance unity of effort and shape
    occasions for key leader engagements throughout the AOR. During fiscal
    year 2013 and first quarter of fiscal year 2014, four of the five
    CENTCOM component commands developed or continued existing exercises
    covering the full spectrum of CENTCOM Theater Security Cooperation
    Objectives. This past year, CENTCOM executed 52 bilateral and
    multilateral exercises. Our successful training efforts included the
    Eagle Resolve exercise, which was hosted by Qatar and included naval,
    land, and air components from 12 nations, as well as 2,000 U.S.
    servicemembers and 1,000 of their counterparts. Our Eager Lion 2013
    exercise in Jordan involved 8,000 personnel from 19 nations, including
    5,000 U.S. servicemembers. The International Mine Countermeasures
    Exercise 2013, conducted across 8,000 square nautical miles stretching
    from the North Arabian Gulf through the Strait of Hormuz to the Gulf of
    Oman, united some 40 nations, 6,500 servicemembers, and 35 ships in
    defense of the maritime commons.
        In addition to military-to-military engagement, the exercise
    program achieved a number of objectives, including: demonstrating
    mutual commitment to regional security; combined command, control and
    communications interoperability; integrating staff planning and
    execution of joint combined operations; the development of coalition
    warfare; the refinement of complementary warfare capabilities; the
    enhancement of U.S. capability to support contingency operations; and
    the maintenance of U.S. presence and basing access and overflight in
    the region. Fiscal year 2014-2016 exercise focus areas will be:
    enhanced U.S./coalition interoperability; CT/critical infrastructure
    protection; integrated air and missile defense; counter WMD; and,
    maritime security, with an emphasis on mine countermeasures.
                          critical needs and concerns
        The realities of the current fiscal environment will have a lasting
    impact on CENTCOM headquarters (HQs), our 5 component commands and 18
    country teams, and these realities must be confronted soberly,
    prudently and opportunistically. The cumulative effects of operating
    under successive continuing resolutions and budget uncertainty have
    created significant obstacles to both CENTCOM headquarters and the
    CENTCOM AOR in terms of planning and execution. Persistent fiscal
    uncertainty hinders efficient and timely implementation of operational,
    logistical, tactical and strategic milestones and objectives.
                             required capabilities
        For the foreseeable future, turbulence and uncertainty will define
    the Central Region, and vitally important U.S. national interests will
    be at stake. Therefore, it is necessary that CENTCOM be adequately
    resourced and supported with the authorities, equipment, capabilities
    and forces required to address existing challenges and to pursue
    opportunities. Among the specific capabilities required are:
    Forces and Equipment
        Forward-deployed rotational and permanently-assigned joint forces,
    fighter and lift assets, surveillance platforms, ballistic missile
    defense assets, naval vessels, ground forces, and cyber teams that are
    trained, equipped, mission-capable and ready to respond quickly are
    indispensable to protecting our vital interests and reassuring our
    partners in the region. It is likewise essential that we maintain the
    strategic flexibility required to effectively respond to contingencies.
    Information Operations (IO)
        Our adversaries continue their reliance on the information domain
    to recruit, fund, spread their ideology and control their operations.
    Our investments in IO thus far have made it CENTCOM's most cost-
    effective method and the top non-lethal tool for disrupting terrorist
    activities across the Central Region. Our military information support
    operations programs provide critical non-kinetic capabilities designed
    to conduct a range of activities. Our Regional Web Interaction Program,
    for example, provides non-lethal tools to disrupt ongoing terrorist
    recruitment and propaganda. The requirement to employ IO will persist
    beyond major combat and counter-insurgency operations. We will need to
    maintain the technological infrastructure, sustained baseline funding
    and continued investment to allow for further development of this
    valuable tool.
    Ballistic Missile Defense (BMD)
        The theater ballistic missile threat is increasing both
    quantitatively and qualitatively. The threat from short-, medium-, and
    intermediate-range ballistic missiles in regions where the United
    States deploys forces and maintains security relationships is growing
    at a rapid pace, with systems becoming more flexible, mobile,
    survivable, reliable, and accurate. This trajectory is likely to
    continue over the next decade. We must be ready and capable of
    defending against missile threats to United States forces, while also
    protecting our partners and allies and enabling them to defend
    themselves. Our capability and capacity would be further enhanced
    through the acquisition of additional interceptors and BMD systems.
    However, the global demand exceeds supply. Therefore, the United States
    should continue to pursue investments in relocatable ground- and sea-
    based BMD assets balanced against U.S. Homeland defense needs.
    Intelligence, Surveillance, Reconnaissance (ISR) Assets
        We have enjoyed, for the most part, air supremacy for the last 12+
    years while engaged in Operations Iraqi and Enduring Freedom. Now, we
    are out of Iraq and in the process of transitioning forces from
    Afghanistan. However, VEOs, principally Al Qaeda and other proxy actors
    continue to pose a significant and growing threat in the Central
    Region. Ascertaining the intentions and capabilities of these various
    elements is not an easy task. As airborne ISR and other collection
    assets diminish in the region, our knowledge will lessen even further.
    Now, more than ever, a persistent eye is needed to gain insight into
    threats and strategic risks to our national security interests. In many
    ways, collection in anti-access/area denial environments presents the
    toughest problem for the future. It simply cannot be overemphasized
    that human intelligence, satellite and airborne assets, and other
    special collection capabilities remain integral to our ability to
    effectively counter potential threats.
        Combined military intelligence operations and sharing is a critical
    component of CENTCOM operations. Over the past decade, intelligence
    community sharing policies have enabled near-seamless operations with
    traditional foreign partners. Over the last year, we have seen an
    increase in military intelligence collaboration with regional allies
    who bring new and unique accesses and insights into the actions and
    plans of our adversaries. These increasingly important regional
    partnerships are possible because of the close working relationship
    CENTCOM's intelligence directorate maintains with the Office of the
    Director of National Intelligence. The progressive intelligence sharing
    authorities that we possess were provided by Director Clapper's team. I
    will continue to ask the intelligence community's senior leaders to
    emphasize the production of intelligence in a manner that affords
    CENTCOM an opportunity to responsibly share it in a time-sensitive
    environment with our most trusted partners in order to enable increased
    bilateral and multilateral planning and operations.
    Appropriately Postured
        We sincerely appreciate Congress' continued support for
    capabilities required to sustain future operations in the Central
    Region and to respond to emerging situations; these include:
    prepositioned stock and munitions; a streamlined overseas military
    construction process that supports our necessary posture and security
    cooperation objectives; continued contingency construction and
    unspecific minor military construction authorities; increased sea-
    basing capabilities; and airfield, base, and port repair capabilities
    needed to rapidly recover forward infrastructure in a conflict. These
    capabilities enable our effective and timely response to the most
    likely and most dangerous scenarios in the Central Region. They also
    support our efforts to shape positive outcomes for the future.
    Cyber Security
        In the coming month and years, CENTCOM will need to be able to
    aggressively improve our cyber security posture in response to advanced
    persistent threats to our networks and critical information. As the
    cyber community matures, we will plan, coordinate, integrate and
    conduct network operations and defensive activities in cooperation with
    other U.S. Government agencies and partner nations. Key requirements,
    resourcing and training and awareness for adequate cyber security
    remain at the forefront of CENTCOM's cyber campaign. This campaign
    entails a multi-disciplined security approach to address a diverse and
    changing threat, adequate resourcing at appropriate operational levels
    to enable the rapid implementation of orders and a command and control
    framework that aligns with the operational chain of command.
        DOD requires redundant and resilient communications in this AOR. We
    ask for your continued support in sustaining the investments we have
    made to make our information technology and communications
    infrastructure resilient, as these programs are currently 97 percent
    Overseas Contingency Operations (OCO) funded. In addition, we are
    assisting our regional partners in building their capacity and
    expertise in the cyber domain as we are heavily reliant on host nation
    communications infrastructure across the Central Region. With Congress'
    backing, we will continue to focus on cyber security cooperation as a
    key part of our theater strategy.
    Enduring Coalition Presence at CENTCOM headquarters
        We enjoy a robust coalition presence at CENTCOM headquarters that
    currently includes 55 nations from 5 continents. These foreign officers
    serve as senior national representatives, providing CENTCOM with a
    vital and expedient link to our operational and strategic partners.
    Their presence and active participation in the command's day-to-day
    activities assists the commander and key staff in retaining military-
    to-military relations with representatives of a country's chief of
    defense. Coalition presence also enables bilateral and multilateral
    information sharing, while maintaining a capability to rapidly develop
    plans to support military and humanitarian operations. It is a
    capability that we should retain, though I am currently looking to
    reshape and refocus the coalition as an enduring entity, post-2014.
    While their continued presence will require an extension of current
    authorities and funding, it represents a strong investment that aligns
    with and directly supports CENTCOM' s mission in what is a
    strategically critical and dynamic area of responsibility.
                       required authorities and resources
        We appreciate Congress' continued support for the following key
    authorities and appropriations. They remain critical to our
    partnerships, access, interoperability, responsiveness and flexibility
    in the dynamic CENTCOM area of responsibility.
    Building Partner Capacity
        Continued support for flexible authorities is needed to effectively
    react to urgent and emergent threats. Global Train and Equip and Global
    Security Contingency Fund authorities demonstrate the ability of DOD
    and the Department of State to work together to effectively build
    partner capacity. The NDAA for Fiscal Year 20l4 extends authority for
    DOD to loan specific equipment to partners through Acquisition and
    Cross-Servicing Agreements (ACSA) through December 2014. We strongly
    endorse and support making this authority permanent and global as an
    integral part of all ACSAs since it facilitates greater integration of
    coalition forces into regional contingencies and enhances security
    cooperation. Finally, continued support for our exercise and engagement
    efforts is necessary to maintain and enhance partnerships that are
    critical to ensuring and defending regional stability, which supports
    our national military and theater campaign strategies within the
    CENTCOM AOR.
    Foreign Military Financing and Sales (FMF and FMS)
        Our need for continued congressional funding of FMF programs that
    support CENTCOM security cooperation objectives cannot be overstated.
    We appreciate congressional support for interagency initiatives to
    streamline the PMS and FMF process to ensure that we remain the partner
    of choice for our allies in the region and are able to capitalize on
    emerging opportunities.
    Coalition Support (CF)
        Authorities, such as Global Lift and Sustain, are critical to our
    ability to provide our partners with logistical, military, and other
    support, along with specialized training and equipment. Continuing to
    provide this support is vital to building and maintaining a coalition,
    which in turn reduces the burden on U.S. forces and increases
    interoperability.
    DOD Counter-Drug and Counter-Narcotics Authorities
        CENTCOM uses existing worldwide DOD Counter-Drug (CD) authorities
    to provide support for Afghanistan security force development of U.S.
    Government agency law enforcement. These authorities provide wide
    latitude to support our law enforcement agencies in building reliable
    CD security partners. Funding under these authorities represents one of
    the largest sources of security assistance for Central Asia, and it
    provides leverage for access, builds security infrastructure, promotes
    rule of law, and reduces funding for violent extremists and insurgents
    in the Central Region. The majority of CENTCOM's CD funding is through
    OCO appropriations; however, the program must endure in order to
    sustain these cooperative law enforcement activities in Afghanistan and
    Central Asia. Finally, to maintain the additional gains we have made in
    disrupting the flow of VEOs and illicit narcotics trafficking, we must
    maintain our counter-narcotics programs in the Central Asian states.
    Resourcing Afghanistan Transition
        In addition to the efforts referenced above, several key
    authorities and appropriations are essential to maintaining our
    momentum in the Afghanistan transition and will remain critical in the
    future environment as we shape the region to prevent crises; these
    include:
        The Afghanistan Security Forces Fund (ASFF) is the cornerstone of
    our strategy and essential to ensuring the ANSF are capable of
    providing for the security and stability of their country after the
    conclusion ofOperation Enduring Freedom. It is from the authorities and
    funding ofASFF that we provide assistance to the ANSF through the
    procurement of equipment and supplies, services, specialized training,
    and facility and infrastructure support, as well as salaries for the
    352,000 members of the ANSF and 30,000 Afghan local police. Continued
    sustainment of the ANSF will prove the key component of the post-2014
    train and advise mission in Afghanistan.
        We will also need to honor our commitments to the Afghan people and
    complete the critical infrastructure projects we began under the Afghan
    Infrastructure Fund (AIF), as part of the Afghan counterinsurgency
    campaign. These projects focus on power, water and transportation as we
    transition out ofAfghanistan and set the conditions for a long-term
    security relationship. Many key AIF projects will reach completion
    post-2014.
        Commander's Emergency Response Program (CERP) funds enable
    commanders on the ground to provide urgent humanitarian relief and
    reconstruction to maintain security and promote stability during
    transition. We need this funding to continue, albeit at a much reduced
    level, as long as U.S. forces are on the ground in Afghanistan to
    ensure our commanders have the full spectrum of capabilities at their
    disposal.
        Overseas Contingency Operations (OCO)-funded Accounts. For over a
    decade, the full range of military operations in the Central Region has
    been funded through contingency appropriations. By nature, OCO funding
    is temporary. However, many of our missions in the region will endure
    despite their initial ties to Operations Iraqi Freedom, New Dawn, and
    Enduring Freedom. To do so we will need to develop an enduring approach
    to resourcing the defense strategy in the CENTCOM AOR.
                         the u.s. central command team
        Over the course of my 38-year military career, one truth has held
    constant: provided the right resources and equipment, people can and
    will successfully accomplish any mission given to them. During three
    deployments to Iraq and one to the most incredible and selfless things
    in support of operations and one another. They continue to humble and
    inspire me each and every day.
        At CENTCOM, people absolutely are our most important assets. The
    soldiers, sailors, airmen, marines, coastguardsmen, and civilians, and
    their families who make up our world-class team are doing an
    outstanding job, day-in and day-out, selflessly serving and sacrificing
    in support of the mission at our headquarters in Tampa and in forward
    locations throughout the Central Region. We absolutely could not do
    what we do without them, and they will maintain our strong and
    unwavering support. In addition to making sure that they have the
    necessary resources, equipment, and authorities, we remain 100 percent
    committed to doing everything we can to take care them, both on-and
    off-duty.
    Suicide Prevention
        Suicide Prevention remains a top priority across all levels of
    leadership at CENTCOM HQs and throughout the CENTCOM AOR, to include
    among the ranks of our deployed servicemembers. We are fully committed
    to ensuring access to the full range of available resiliency building
    and suicide prevention assets and resources. We continue to partner
    with our Service force providers to educate leaders and servicemembers,
    both at home and abroad, on behavioral health issues, available
    resources and ongoing efforts to decrease the stigma often associated
    with seeking and receiving treatment. All efforts retain the singular
    focus that the loss of even a single servicemember from suicide is one
    too many.
    Sexual Assault Prevention and Response
        Over the past year, the Sexual Assault Prevention and Response
    program has taken center stage in our endeavor to provide an
    environment free from sexual assault and discrimination. Ongoing
    efforts throughout CENTCOM focus on increased training and awareness in
    coordination with victim advocates and victim assistance, and we will
    continue to actively pursue, investigate and prosecute sexual assaults
    as warranted. In the unfortunate event that a sexual assault occurs,
    the victim's physical and emotional needs are immediately addressed,
    whether or not he or she opts for restricted or unrestricted reporting
    of the assault. The military cannot afford such attacks from within and
    you can be assured that this is and will remain a top priority for all
    personnel assigned to or associated with this command.
                                   conclusion
        The year ahead is certain to be a decisive one throughout the
    Middle East and Central and South Asia. The region is more dynamic and
    volatile than at any other time. What will unfold will inevitably
    impact the global economy, as well as the security of U.S. vital
    interests and those of our partner nations. Therefore, it is imperative
    that we continue to do all that we can to help keep things in CENTCOM's
    AOR as stable and secure as possible. To this end, in the coming year,
    we will pursue stronger relationships with and among our partners and
    allies. We will view the various challenges in the region through a
    lens that takes into account the ``underlying currents'' at play. We
    will manage existing conflicts, while helping to prevent confrontations
    and situations from becoming new conflicts. At the same time, we will
    vigorously pursue opportunities, recognizing that it is through them
    that we will shape positive outcomes and achieve improved security,
    stability and prosperity in the region and beyond. We also will
    actively support the efforts of our colleagues in other U.S. Government
    departments and agencies; realizing that, while we may employ different
    methods, we are in pursuit of many of the same goals and objectives.
        The tasks ahead will prove extremely challenging, yet they are
    absolutely worthy of our collective efforts and sacrifices. Given the
    enormity of the stakes, we must--and we will--work together to enable a
    Central Region where improved security leads to greater stability and
    prosperity for all people, throughout this strategically important part
    of the world and around the globe, including here at home.
        CENTCOM: Ready, Engaged, Vigilant!

        Chairman Levin. Thank you very much, General Austin.
        General Rodriguez.

       STATEMENT OF GEN DAVID M. RODRIGUEZ, USA, COMMANDER, U.S.
                             AFRICA COMMAND

        General Rodriguez. Chairman Levin, Ranking Member Inhofe,
    distinguished members of the committee, thank you for the
    opportunity to update you on the efforts of AFRICOM.
        I am honored to be testifying with my good friend and
    fellow soldier, General Austin, today; and, in light of the
    growing connections between our AOR, I think it is fitting that
    we are appearing before this committee together.
        AFRICOM is adapting our strategy and approach to address
    growing opportunities and threats to U.S. national interests in
    Africa. In the near term, we are working with multinational and
    interagency partners to address the immediate challenges of
    violent extremism and regional instability, including threats
    to U.S. personnel and facilities.
        In the past year, we have seen progress in regional and
    multinational cooperation in counterterrorism, peacekeeping,
    maritime security, and countering the LRA. The activities of
    the African Union mission in Somalia, French, African Union,
    and United Nations activities in Mali, and the African Union's
    Regional Task Force Against the LRA, are examples of this
    progress.
        Despite this progress, al-Shabaab remains a persistent
    threat in East Africa and is conducting more lethal and complex
    attacks, as demonstrated by the Westgate Mall attacks in
    Nairobi last September and an attack on the Somali presidential
    palace last month.
        Terrorist groups in North and West Africa are more actively
    sharing resources and planning attacks; and, while piracy rates
    are stable after a steep decline in East Africa, they remain at
    concerning rates in West Africa in the Gulf of Guinea.
        Our tailored contributions to building capacity and
    enabling partners are critical to mitigating immediate threats
    in countries like Somalia and Mali. By supporting the gradual
    development of effective and democratic African security
    institutions and professional forces that respect civilian
    authority, our shaping activities also reduce the likelihood of
    U.S. involvement in future interventions in Africa.
        Our expanding security challenges in Africa and their
    associated opportunity costs make it vitally important that we
    align resources with priorities across the globe, strengthen
    and leverage partnerships, and increase our operational
    flexibility. Sharpening our prioritization and deepening
    partnerships will help to mitigate risks and increase our
    effectiveness in the dynamic security environment we face.
        Now, our Nation is going to face tough decisions about
    risks and tradeoffs in the future, and AFRICOM will continue to
    work collaboratively with other combatant commands and the
    joint staff to provide our best military advice to inform
    decisions about managing risk in our AOR and beyond.
        I thank this committee for your continued support to our
    mission and the men and women of AFRICOM. I am also grateful
    for your support to their families, whose quiet service and
    sacrifice enable their loved ones to work hard every day to
    make a difference for our Nation.
        Thank you, and I am prepared to take your questions.
        [The prepared statement of General Rodriguez follows:]
               Prepared Statement by GEN David M. Rodriguez, USA
                                  introduction
        U.S. Africa Command is adapting our strategy and approach to
    address increasing U.S. national interests, transnational security
    threats, and crises in Africa. The African continent presents
    significant opportunities and challenges, including those associated
    with military-to-military relationships. Regional instability and
    growth in the al Qaeda network, combined with expanded responsibilities
    for protecting U.S. personnel and facilities, have increased our
    operational requirements. While our activities can mitigate immediate
    security threats and crises, reducing threats to the United States and
    the costs associated with intervention in Africa will ultimately hinge
    on the long-term development of effective and democratic partner nation
    security institutions and professional forces that respect civilian
    authority. The development of democratic security institutions and
    professional forces will be most effective if undertaken in the broader
    context of civilian-led efforts to strengthen governance and the rule
    of law. Together, these efforts will support enduring U.S. economic and
    security interests.
        In the near term, we are working with African defense leaders,
    multinational organizations, European allies and interagency partners
    to address the immediate threats of violent extremism and regional
    instability. African partners are increasingly leading regional
    security efforts, and we are making significant progress in expanding
    collaboration and information-sharing with African and European
    partners as we help to build capacity and enable partner activities. We
    are working closely with other combatant commands and U.S. Government
    agencies to increase our operational flexibility.
        The opportunity costs associated with addressing immediate threats
    and crises have made it more challenging to pursue our broader
    objective of expanding the positive influence of effective and
    professional African security forces. We accomplish this primarily
    through military-to-military engagement with countries that have the
    greatest potential to be regional leaders and influencers in the
    future. This includes countries already on positive long-term
    trajectories, as well as those that face a long road ahead in building
    trusted security institutions that enable responsive governance and
    economic progress. Strengthening relationships with current and
    potential regional powers is key to shaping the future security
    environment to advance our enduring national interests of security,
    prosperity, values, and promoting international order.
        Our expanding operational requirements and their associated
    opportunity costs make it vitally important that we align resources
    with priorities across the globe, strengthen and leverage partnerships,
    and further enhance our operational flexibility. In fiscal year 2013,
    we conducted 55 operations, 10 exercises, and 481 security cooperation
    activities, making Africa Command an extremely active geographic
    command. We are pleased with what we have been able to accomplish with
    modest responses tailored to support local requirements, despite being
    one of the smallest combatant commands. Modest investments, in the
    right places, go a long way in Africa.
                             strategic environment
        Africa is on the rise and will be increasingly important to the
    United States in the future. With 6 of the world's 10 fastest growing
    economies, a population of 1 billion that will double by 2050, and the
    largest regional voting bloc in multilateral organizations, Africa's
    global influence and importance to the national interests of the United
    States and our allies are significant--and growing. Perceptions of the
    United States are generally positive across the African continent,
    providing natural connections on which to build and pursue shared
    interests.
        In spite of many upward trends, Africa's security environment
    remains dynamic and uncertain. While the continent's expanding
    political, economic, and social integration are positive developments
    as a whole, they are also contributing to Africa's increasing role in
    multiple transnational threat networks, including the global al Qaeda
    network and drug trafficking networks reaching into the Americas,
    Europe, the Middle East and South Asia. Countering the growing activity
    of the al Qaeda network in Africa and addressing instability in key
    nations are our primary near-term challenges. The collective aftermath
    of revolutions in Libya, Tunisia, and Egypt, including uncertain
    political transitions, spillover effects, and exploitation by violent
    extremist organizations of under-governed spaces and porous borders,
    are key sources of instability that require us to remain vigilant in
    the near term. In the long term, our military-to-military engagement
    can help to reinforce and shape relations with those countries that
    have the greatest potential to positively influence security on the
    African continent, now and in the future.
    Growth of the al Qaeda Network in Africa
        Instability in North and West Africa has created opportunities for
    extremist groups to utilize uncontrolled territory to destabilize new
    governments. The network of al Qaeda and its affiliates and adherents
    continues to exploit Africa's under-governed regions and porous borders
    for training and movement of fighters, resources, and skills. Like-
    minded extremists with allegiances to multiple groups increasingly
    collaborate in recruitment, training, operations, and financing across
    Africa and beyond. Terrorists are learning their trade abroad,
    returning to their countries with hard-earned skills that increase
    their lethality. North Africa is a significant source of foreign
    fighters in the current conflict in Syria. Syria has become a
    significant location for al Qaeda-aligned groups to recruit, train, and
    equip extremists, who may also present threats when they return home.
    The increasingly syndicated and active violent extremist network in
    Africa is also linked to core al Qaeda, which is on a downward
    trajectory, and al Qaeda in the Arabian Peninsula, which is resurging
    and remains intent on targeting the United States and U.S. interests
    overseas. Multinational efforts are disrupting terrorist training,
    operations, and the movement of weapons, money, and fighters, but the
    growth and activity of the violent extremist network across the African
    continent continue to outpace these efforts. Additional pressure in
    east Africa and the Sahel and Maghreb regions, including efforts to
    counter violent extremist ideology and promote improved governance,
    justice, and the rule of law, are required to reduce the network.
    Regional Instability
        Current conflicts across the African continent vary widely in
    character, but share a few basic traits: complexity, asymmetry, and
    unpredictability. The internal instability associated with weak states
    can trigger external consequences that draw responses from the United
    States, African partners, and the broader international community. Weak
    governance, corruption, and political instability are often mutually
    reinforcing. Food insecurity and access to natural resources, including
    water, can exacerbate state weakness, drive human migration, and
    heighten social disruptions and regional tensions. The cumulative
    effects of instability in Africa draw considerable resources from
    countries and regional organizations on the continent, as well as the
    broader international community; nearly 80 percent of United Nations
    peacekeeping personnel worldwide are deployed in missions in Africa. In
    some countries, the failure of governments to deliver basic services to
    the people and enforce the rule of law has fueled distrust and fear in
    the government and security forces. Where a country lacks good
    leadership, external actors have only a modest capacity to positively
    influence the country's future. Where there is leadership that has the
    best interests of the country at heart, the United States and other
    partners can apply judicious measures to help the country move forward.
    Regional and Global Integration
        Political shocks and post-revolutionary transitions in North Africa
    continue to reverberate throughout the greater Mediterranean Basin and,
    by extension, the Middle East, Europe, and Sub-Saharan Africa. Africa
    is increasingly important to our European allies, who are directly
    affected by the rising economic and political influence of some African
    countries, as well as the symptoms of instability emanating from other
    countries. Many European allies view Africa as the source of their
    greatest external security threats, including terrorism, illegal
    migration, human smuggling and trafficking, and drug and arms
    trafficking. Our support to allies in addressing mutual security
    challenges in Africa may influence their willingness and ability to
    help shoulder the burden in future conflicts in other areas of the
    world. The African continent's energy and strategic mineral Reserves
    are also of growing significance to China, India, and other countries
    in the broader Indian Ocean Basin. Africa's increasing importance to
    allies and emerging powers, including China, India, and Brazil,
    provides opportunities to reinforce U.S. security objectives in other
    regions through our engagement on the continent. While most African
    countries prefer to partner with the United States across all sectors,
    many will partner with any country that can increase their security and
    prosperity. We should be deliberate in determining where we leave gaps
    others may fill.
                                    mission
        Africa Command, in concert with interagency and international
    partners, builds defense capabilities, responds to crisis, and deters
    and defeats transnational threats in order to advance U.S. national
    interests and promote regional security, stability, and prosperity.
                                    approach
        We believe efforts to meet security challenges in Africa are best
    led and conducted by African partners. We work with partners to ensure
    our military efforts support and complement comprehensive solutions to
    security challenges that leverage all elements of national and
    international power, including civilian efforts to gradually strengthen
    governance, justice and the rule of law.
        We work closely with African and European partners to shape the
    security environment, share information, address immediate mutual
    threats, and respond to crisis. We coordinate with U.S. Government
    agencies and U.S. Embassies to ensure our activities support U.S.
    policy goals and the efforts of U.S. Ambassadors. We also work closely
    with other combatant commands, especially European Command, Central
    Command, Special Operations Command, and Transportation Command, to
    mitigate risk collaboratively, including through force-sharing
    agreements; by sharing intelligence, surveillance, and reconnaissance
    assets; and by posturing forces to respond to crisis. The trust and
    teamwork between multinational and interagency partners is vital to the
    success of collective action.
        Military activities are executed by Defense Attache Offices,
    Offices of Security Cooperation, and six subordinate headquarters, some
    of which are shared with U.S. European Command: U.S. Army Africa and
    Southern European Task Force, U.S. Naval Forces Europe and Africa, U.S.
    Marine Forces Europe and Africa, U.S. Air Forces in Europe and Air
    Forces Africa, U.S. Special Operations Command Africa, and Combined
    Joint Task Force-Horn of Africa.
        Africa Command's activities support partner efforts in six
    functional areas: countering violent extremist organizations and the
    networks that support them; building defense institutions and forces;
    strengthening maritime security; supporting peace support operations;
    supporting humanitarian and disaster response; and countering illicit
    flows of drugs, weapons, money, and people. The command assists in the
    development of defense institutions and forces as part of a broader
    U.S. Government effort. Our contributions also support the development
    of the African continental and regional security architecture. The
    capacities we help to build can strengthen the ability of our partners
    to combat wildlife poaching and illegal, unreported, and unregulated
    fishing. Our long-term advisory relationships with militaries in
    fragile states help build and support local capacities as our partners
    make gradual progress toward stability, in their own ways and at a pace
    they can sustain.
        Africa Command's primary tools for implementing our strategy are
    military-to-military engagements, programs, exercises, and operations,
    which are supported by our strategic posture and presence on the
    continent.

             Our engagements support bilateral relationships
            managed by U.S. Ambassadors and play a critical role in
            strengthening military-to-military relations in a region where
            we have little forward presence.
             Our programs and combined exercises strengthen defense
            institutions and the effectiveness of U.S. and partner forces.
            They also build trust and confidence, enhance interoperability,
            and promote adherence to the rule of law and respect for human
            rights. When planned appropriately, combined training and
            exercises can also help to preserve and enhance the readiness
            of U.S. and partner forces.
             Our operations are closely coordinated with regional
            and interagency partners and other combatant commands. When
            possible, our operations are planned and executed with the
            military forces of local partners, with the United States in a
            supporting role. In certain cases, our tailored advise, assist,
            and accompany teams help to enhance the effectiveness of
            partner operations, with lower risk to U.S. forces.
             Our strategic posture and presence are premised on the
            concept of a tailored, flexible, light footprint that leverages
            and supports the posture and presence of partners and is
            supported by expeditionary infrastructure. Our single enduring
            presence in the region is at Camp Lemonnier in Djibouti, which
            provides a critical platform for our activities, as well as
            those of Central Command, Special Operations Command, and
            Transportation Command. The operational challenges of
            conducting our activities across Africa, and their associated
            risks, are significant. Our limited and highly dispersed
            presence on the continent makes intelligence, surveillance and
            reconnaissance; mobility; medical support; and personnel
            recovery capabilities especially important to our mission, and
            I expect these requirements to grow in the future. As we look
            to future requirements, diversifying our posture to include a
            maritime capability would increase operational flexibility in
            support of crisis response and other high-priority missions.

        To address future requirements and mitigate risk to our national
    interests in Africa, we are pursuing the following actions, which focus
    on increasing collaboration with partners, enhancing operational
    flexibility, and closing key gaps:

             Strengthening strategic relationships and the
            capabilities and capacities of partners, including by investing
            in developing defense institutions and providing robust
            training and education opportunities.
             Expanding communication, collaboration, and
            interoperability with multinational and interagency partners,
            to enable increased alignment of strategies and resources and
            avoid inefficiencies.
             Adapting our posture and presence for the future to
            reduce risk to mission and personnel, increase freedom of
            movement, expand strategic reach, and improve our ability to
            respond rapidly to crisis. Leveraging and supporting the
            posture and presence of partners are critical elements of our
            approach.
             Working with the intelligence community to improve our
            ability to share information rapidly with multinational and
            interagency partners, with the goal of making this the norm,
            rather than the exception.
             Leveraging combined training and exercises to
            strengthen interoperability and maintain readiness of U.S. and
            partner forces.
             Utilizing flexible, tailorable capabilities, including
            the Army's Regionally Aligned Force; the Marine Corps' Special
            Purpose Marine Air Ground Task Force; and Special Operations
            Forces and General Purpose Forces advise and assist teams
            embedded in institutional, strategic, operational, and tactical
            headquarters to strengthen partner capability and support
            regional, African Union, and United Nations peace operations.
             Increasing operational flexibility by developing
            additional force-sharing agreements with other combatant
            commands and working with U.S. Embassies to seek diplomatic
            agreements to facilitate access and overflight.
             Working with the Joint Staff and Office of the
            Secretary of Defense to pursue the increased assignment and or
            allocation of forces by properly registering the demand signal
            for critical capabilities.
             Working with the Joint Staff and Office of the
            Secretary of Defense to address gaps in key enablers, including
            mobility and intelligence, surveillance, and reconnaissance, to
            support partnered and unilateral operations.
             Leveraging strategic communications and military
            information support operations as non-lethal tools for
            disrupting the spread of violent extremist ideology,
            recruitment, and messaging.
                              immediate priorities
    Countering Violent Extremism and Enhancing Stability in East Africa
        Al Qaeda affiliate al-Shabaab remains a persistent threat in
    Somalia and East Africa. African Union Mission in Somalia (AMISOM) and
    Somali forces have been challenged in regaining the momentum against
    al-Shabaab, which responded to losses of territory by conducting
    asymmetric attacks in Somalia and Kenya.
        AMISOM's recent increase in force strength and the integration of
    Ethiopia, which played a major role in multinational security efforts
    in Somalia last year, are positive developments that will help AMISOM
    and Somali forces to more effectively counter al-Shabaab, particularly
    if the international community is able to source key enablers.
        U.S. and partner efforts in Somalia focus on strengthening the
    ability of AMISOM and Somali forces to disrupt and contain al-Shabaab
    and expand state-controlled areas to allow for the continued
    development of the Federal Government of Somalia. The international
    community is also supporting the development of security institutions
    and forces in Somalia, to set the conditions for the future transfer of
    security responsibilities from AMISOM to the Somali National Army and
    Police.
        U.S. support to preparing AMISOM troop contributing countries for
    deployment to Somalia has enhanced partner capacities in peacekeeping
    and counterterrorism operations. The United States continues to support
    AMISOM troop contributing countries in preparing for deployment,
    primarily through contracted training funded by the Department of State
    and increasingly supported by military mentors and trainers. Our
    military efforts have expanded in the past year to include planning and
    coordination with AMISOM and multinational partners, primarily through
    a small U.S. military coordination cell in Somalia, which is also
    conducting assessments to inform future security cooperation proposals.
    Precise partnered and unilateral operations continue to play limited
    but important roles in weakening al-Shabaab, and the support and
    collaboration of Central Command and Special Operations Command,
    including through force-sharing arrangements, have been critical to the
    effectiveness of operations in Somalia.
        In waters off Somalia, piracy rates remain stable following recent
    steep declines. Piracy and armed robbery at sea in the western Indian
    Ocean and Gulf of Aden have decreased significantly since 2011,
    reflecting the combined effects of multinational military operations,
    the capture and prosecution of many suspected pirates, and improved
    industry security measures, including the use of armed guards. In 2013,
    0 ships were hijacked in 9 attempted attacks in the region, compared to
    27 hijackings in 166 reported attempts in 2011. Success in counter-
    piracy efforts in the western Indian Ocean, another area of strong
    collaboration with Central Command, may offer useful lessons for the
    Gulf of Guinea, where maritime crime rates remain at concerning levels.
        We will continue working with multinational and interagency
    partners, as well as other combatant commands, to support efforts to
    reduce the threat posed by al-Shabaab in Somalia and maintain
    improvements in maritime security in the western Indian Ocean. We will
    also look for opportunities to support the development of Somali
    defense institutions and forces.
    Countering Violent Extremism and Enhancing Stability in North and West
            Africa
        In North and West Africa, we have made some progress in forging
    regional and multinational cooperation to combat the spillover effects
    from revolutions in Libya, Tunisia and Egypt. These revolutions,
    coupled with the fragility of neighboring states, continue to
    destabilize the region. The spillover effects of revolutions include
    the return of fighters and flow of weapons from Libya to neighboring
    countries following the fall of the Qadhafi regime, and the export of
    foreign fighters from North Africa to the Syrian conflict. Terrorist
    groups in North and West Africa have expanded their operations,
    increasing threats to U.S. interests. al Qaeda affiliates and
    adherents, and other terrorist groups, have formed a dispersed network
    that disregards borders and uses historic trading routes to exploit
    vast areas of weak government control. al Qaeda affiliates and
    adherents operating in North and West Africa include al Qaeda in the
    Islamic Maghreb (AQIM), Ansar al-Shari'a in Benghazi, Ansar al-Shari'a
    in Darnah, Ansar al-Shari'a in Tunisia, and Moktar Belmoktar's al-
    Mulathameem Brigade, which has morphed into al-Murabitun.
        Among the countries in the region that have recently experienced
    revolutions, Tunisia appears best poised to succeed in its transition
    to a new government, and its military has been a stabilizing factor
    through the transition. In Libya, the security situation is volatile
    and tenuous, especially in the eastern and south-western parts of the
    country. Militia groups control significant areas of territory and
    continue to exert pressure on the Libyan government, which is
    challenged to provide basic security and services. We are supporting
    Libyan efforts to improve internal security by participating in a
    multinational effort to support modest defense institution building and
    the development of security forces, to include General Purpose and
    Special Operations Forces. We are currently in the planning stages and
    expect to begin program implementation later this year.
        In many places in the region, U.S. assistance is having positive
    effects on strengthening the counterterrorism and border security
    capacities of regional partners and maintaining pressure on terrorist
    organizations. In Mali, French and African forces reduced the territory
    controlled by AQIM and other terrorist groups last year and provided
    space for democratic progress, including elections. Thirty-five
    countries, including 16 African countries, have pledged troops to the
    United Nations Multidimensional Integrated Stabilization Mission in
    Mali (MINUSMA). U.S. support has enabled MINUSMA and French operations
    to secure key cities and disrupt terrorist organizations. The
    Department of State has led U.S. efforts to support the preparation of
    African troop contributing countries for MINUSMA deployment with non-
    lethal equipment and pre-deployment training supported by U.S. military
    mentors and trainers. U.S. forces are also advising and assisting
    MINUSMA forces. Mali faces a key security transition this year as
    French forces reduce in the country and Malian and MINUSMA forces
    assume greater security responsibilities.
        In addition to supporting partner efforts to stabilize Mali, our
    programs and exercises are helping our regional partners disrupt and
    contain the threat posed by Boko Haram. Boko Haram continues to attack
    civilian and government facilities in northern Nigeria and has extended
    its reach into parts of Cameroon, Niger, and Chad. Nigeria has relied
    on a primarily military approach to counter Boko Haram; we are working
    with Nigeria and drawing on lessons from U.S. experience in counter-
    insurgency efforts to support efforts to develop a more comprehensive
    approach that respects universal human rights and ensures perpetrators
    of violence are brought to justice.
        We are actively increasing regional cooperation with African and
    European partners, including in information-sharing and combined
    training, exercises, and operations. Our cooperation builds security
    capacity and can help to reinforce our partners' willingness to advance
    our shared interests. Our enabling support to French operations in Mali
    is advancing collective security interests while also reinforcing this
    critical trans-Atlantic security relationship. In addition to
    participating in the strong and growing multinational cooperation
    across North and West Africa, we continue to work with the Department
    of State and the U.S. Agency for International Development through the
    Trans-Sahara Counterterrorism Partnership to build longer-term,
    comprehensive regional counterterrorism capacity.
        Enhancing regional approaches will be essential to effectively
    addressing the root causes of instability and countering the growth and
    freedom of movement and action of terrorist elements across the
    network. As part of this, deepening our cooperation with African and
    European partners will enhance our mutual ability to leverage combined
    posture and presence to address immediate threats in the region. As we
    work with partners to support the development of democratic security
    institutions and professional forces, parallel progress in civilian-led
    efforts to strengthen governance, the criminal justice sector, and the
    rule of law will be critical to sustainable progress. We are grateful
    for Congress' continuing support for the foreign operations
    appropriations that make these latter efforts possible, and enable a
    ``whole-of-government'' approach in this critical region.
    Protecting U.S. Personnel and Facilities
        While we have the responsibility to help protect all U.S. personnel
    and facilities on the African continent, our activities this past year
    focused heavily on supporting the Department of State in strengthening
    the security of high threat, high risk diplomatic missions in 15
    locations across North, East, West, and Central Africa. The sheer size
    of Africa and the continent's limited infrastructure constrain the
    rapid deployment of crisis response forces to many of these locations,
    posing significant risks to mission and personnel.
        Our current response forces consist of Army Regionally Aligned
    Force and Marine Corps Special Purpose Marine Air Ground Task Force
    elements, a Fleet Anti-Terrorism Support Team, and a Commander's In-
    extremis Force. The majority of our response forces are based in
    Europe, with the exception of the Regionally Aligned Force element
    known as the East Africa Response Force, which is based at Camp
    Lemonnier, Djibouti.
        Recent operations to support the Department of State in securing
    U.S. personnel and facilities in South Sudan tested our crisis response
    capabilities. As the situation in South Sudan unfolded, indications and
    warnings provided by intelligence, surveillance, and reconnaissance
    proved vital to understanding the situation and informing the timely
    repositioning of assets. The East Africa Response Force provided
    security augmentation to the U.S. Embassy, and the Central Command
    Crisis Response Element and the Special Purpose Marine Air Ground Task
    Force-Crisis Response assisted in evacuation operations. This was a
    strong joint and interagency effort that included robust support from
    the Army, Navy, Air Force, Marines, and Special Operations Forces, as
    well as other combatant commands and the U.S. Intelligence Community.
    Our ability to deploy forces rapidly reflected the unique circumstances
    of the situation, including sufficient advance warning to allow the
    prepositioning of response forces near South Sudan, and was not
    representative of the speed with which we would typically be able to
    respond to requests from the Department of State to secure U.S.
    personnel or facilities throughout the continent.
        We are working with the Department of State to refine crisis
    indicators, work toward a common understanding of decision points and
    authorities for evacuation operations, and identify options to improve
    response times. Developing additional expeditionary infrastructure to
    enable the rotational presence of response forces at locations where we
    currently have limited or no presence would increase our ability to
    reduce response times, given sufficient advance warning of crisis.
    Enhancing Stability in the Gulf of Guinea
        Despite modest increases in regional capabilities and cooperation
    in the past year, maritime criminal activities in the Gulf of Guinea
    remain at concerning levels. Maritime insecurity in the Gulf of Guinea
    continues to negatively affect commerce, fisheries, the marine
    environment, food security, oil distribution, and regional economic
    development.
        Several West African littoral countries, including Nigeria and
    Senegal, are addressing maritime threats actively and encouraging
    greater regional cooperation. The Economic Community of Central African
    States and the Economic Community of West African States are also
    promoting regional cooperation to address maritime crime, including by
    establishing combined patrols. Regional cooperation and
    interoperability are essential, given the threat and the small size of
    naval forces relative to the area of waters to be patrolled.
        Africa Command will continue to work with Gulf of Guinea partners
    to build capacity and conduct combined operations through initiatives
    like the Africa Partnership Station, the African Law Enforcement
    Partnership, and counter-narcotics programs. Our maritime security
    exercises facilitate regional maritime cooperation and
    interoperability. These efforts support and complement civilian
    initiatives that address the root causes of maritime crime by
    strengthening governance and criminal justice systems and promoting
    economic development.
        The political will of African Governments and the development of
    comprehensive approaches to maritime security that emphasize civilian
    security and law enforcement elements will be critical to improving
    regional maritime security.
    Countering the Lord's Resistance Army
        The Lord's Resistance Army (LRA) is one of several persistent
    destabilizing influences in central Africa and has created significant
    humanitarian challenges. The African Union Regional Task Force against
    the LRA, led by Uganda and with advice and assistance from the United
    States, is reducing the threat posed by the LRA to populations in
    central Africa. In the last 6 months alone, U.S. forces provided
    enabling support to 33 partner operations that disrupted LRA activities
    and significantly increased pressure on the LRA. Military operations,
    combined with robust efforts by civilian agencies and non-governmental
    organizations, have resulted in increased defections, the capture of
    key LRA leaders, and decreased threats to civilian populations.
    Additional enablers would allow our partners to respond more rapidly to
    actionable intelligence and improve the effectiveness of their
    operations.
                              long-term priorities
        To be effective in our pursuit of enduring effects, our activities
    must be nested within a broader U.S. Government effort. Often, they are
    also nested within a multinational effort. Our priorities for military-
    to-military engagement are the African countries with the greatest
    potential, by virtue of their population, economy, and national power,
    to influence the continent positively in future decades. With countries
    already on positive trajectories as regional leaders and influencers,
    we can focus on strengthening military-to-military relationships to
    build capacity together. For others whose success is less certain,
    engagement and shaping by the international community can help to
    gradually enhance governance and security trends.
        We recognize that if integrated into comprehensive strategies, the
    activities we conduct to address our immediate priorities help
    strengthen partner capacities and shape the regional security
    environment for the longer term. They also influence relationships and
    perceptions of the United States in ways that can affect our ability to
    address future challenges. As we address our immediate priorities, we
    must also dedicate efforts to tending to our long-term priorities.
    Working with the range of international and interagency partners to
    effectively shape a more peaceful and secure future will reduce the
    likelihood of the United States and our partners being perpetually
    entwined in addressing immediate security threats.
                                   conclusion
        Africa's importance to our national interests of security,
    prosperity, democratic values, and international order continues to
    grow. While the security environment in Africa will remain uncertain
    for the foreseeable future, we have an imperative to find effective
    ways to address increasing threats to our security. We also have an
    opportunity to make judicious investments that make security more
    sustainable while also furthering enduring U.S. interests. The
    increasing convergence of U.S. security interests in Africa with those
    of African partners, European allies, and the broader international
    community provides opportunities to significantly enhance multilateral
    cooperation as we work toward long-term stability and security.
    Improving trust and collaboration, and maintaining patience and
    consistency in our collective efforts, will improve the likelihood of
    our collective success.
        A dynamic security environment and economy of force region call for
    disciplined flexibility--the ability to flex based on a general
    alignment of resources to strategy, a clear understanding of the
    management of risks, and realistic assumptions about what our posture
    and relationships can support. Sharpening our prioritization across the
    globe, deepening cooperation with partners and allies to better
    leverage combined efforts, and adhering to disciplined flexibility will
    help to mitigate risks and increase our efficiency. Our Nation will
    have to make increasingly tough decisions about risks and tradeoffs in
    the future. The Africa Command team will continue to work
    collaboratively with other combatant commands and the Joint Staff to
    provide our best military advice to inform decisions about managing
    risk in our area of responsibility and beyond.
        Thank you for your continued support to the soldiers, sailors,
    marines, airmen, coastguardsmen, civilians, and contractors of Africa
    Command.
        We will go forward, together.

        Chairman Levin. Thank you very much, General Rodriguez.
        I think we can get a 7-minute round in before 11:20 a.m.,
    so let's try that.
        General Austin, relative to Afghanistan, last month
    President Obama informed President Karzai that, because of his
    refusal to sign the BSA, that President Obama was ordering our
    military to begin prudent planning for a full withdrawal of
    U.S. troops from Afghanistan, should such a drawdown be
    required by the end of this year.
        First of all, do you agree, General, that the legal
    protections that are provided by the BSA are essential if we
    are going to have a U.S. military presence in Afghanistan after
    2014?
        General Austin. Yes, sir, I do. It is important to have the
    adequate protections and immunities for our troops if they are
    going to continue to operate in theater.
        Chairman Levin. General, as you plan for that possible
    total drawdown of U.S. military forces, when is the latest date
    by which the Bilateral Security Agreement could be signed
    without causing significant disruptions or risks to our ability
    to carry out a total-withdrawal option?
        General Austin. Sir, as we go into the summer months, I
    would say in midsummer, we will experience moderate risk. As we
    go beyond that timeframe--July-August timeframe--the risk
    increases substantially.
        Chairman Levin. Okay, thank you.
        Now, General, a number of us on this committee have been
    concerned about proposals to reduce the size of the ANSF. A
    recent study by the Center for Naval Analyses concluded that
    proceeding with a drawdown of the ANSF, as announced at the
    Chicago Summit, would put our policy goals for Afghanistan at
    risk. This recent study by the Center for Naval Analyses
    recommends that, based on the likely security conditions in
    Afghanistan after 2014, that the ANSF should be maintained near
    their current size of around 374,000, which includes army,
    national police, and Afghan local police, at least through
    2018.
        Now, would you agree that, given the current conditions on
    the ground in Afghanistan, that a cut in the size of the ANSF
    could put at risk our policy goals in Afghanistan and the
    significant progress that has been made over the last decade?
        General Austin. I do agree, sir. I think it is prudent to
    maintain the current size for a period going forward, as I have
    indicated to you before. Again, our planning factor was 352,000
    ANSF, plus the addition of a number of local police, as you
    have indicated, added to that, brings you up to that number of
    372,000.
        Chairman Levin. General Austin, relative to recent events--
    or, apparently, rhetoric at least--about the Pakistan army
    being prepared to move into North Waziristan in Pakistan to
    take on the safe havens which violent extremists have taken--
    put in place in that part of Pakistan, has the Pakistan
    military indicated any willingness to you or, as far as you
    know, have they indicated to people that you have confidence
    in, that they are willing to go after those extremists,
    including the Haqqani Network?
        General Austin. Yes, sir. I was just recently in Pakistan
    and met with the new Chief of Staff of the Army and the
    Chairman of their Joint Chiefs of Staff, and also Secretary of
    Defense. The leadership indicated that there is a willingness
    to conduct operations in North Waziristan if they cannot
    resolve things through negotiations. The Haqqani Network would
    clearly be a part of that. They have indicated that they would
    work with us to counter the actions of the Haqqani Network. So,
    I am encouraged by the new leadership that is on board there.
        Chairman Levin. I hope it is true. It is long overdue.
        My final question for you, General Austin, is whether or
    not--in order to change the momentum on the battlefield in
    Syria so that Assad is under greater pressure, should we train
    more vetted elements of the Syrian opposition to be capable of
    changing the balance of power on the battlefield?
        General Austin. Sir, that is a policy decision whether or
    not to do that. From my perspective as a military man, I think
    that our helping to train and equip additional opposition
    forces would be value added and would indeed put more pressure
    on Assad.
        Chairman Levin. Thank you.
        General Rodriguez, you have a significant requirement, I
    believe, for ISR in your AOR. I am wondering what percentage,
    if you can tell us, of your ISR needs or requirements are
    currently being met.
        General Rodriguez. Sir, last year it was 7 percent. It is
    up 11 percent now. But, I would also like to take that for the
    record, to give you a broader context of some of the other
    things that we are doing to mitigate that, that will help put
    that in better context.
        Thank you.
        [The information referred to follows:]

        [Deleted.]

        Chairman Levin. Is the bottom line, even with a better
    context, that you could use some significant additional ISR?
        General Rodriguez. Yes, sir, absolutely.
        Chairman Levin. All right.
        General Rodriguez, what do you see as the major impediments
    to AFRICOM working with the Somali National Army? Are there
    legal obstacles there? What are the impediments? Why is that
    not happening?
        General Rodriguez. Sir, for the first time in many years,
    we have put our first people on the ground in Somalia, so we
    have three people there working with African Union Mission in
    Somalia (AMISOM). One of the challenges in building the Somali
    National Army is the incoherence of the international effort.
    They have troop-contributing nations from AMISOM, they have
    Turkey, they have a European Union training mission, and it is
    not as coherent as it needs to be. We recommend that we
    continue to coordinate those efforts in a better manner. For
    that, we are looking to have a few more people on the ground to
    support that effort.
        Chairman Levin. Thank you so much.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Ladies, do you want to bring up that chart, on both sides?
        [The chart referred to follows:]

        Senator Inhofe. First of all, let me ask both generals.
    Does it look to you like al Qaeda is on the run?
        General Austin. Sir, we have been able to apply pressure
    against the al Qaeda network. I think their activity has
    decreased. We've had good effects. Where we have not had
    constant pressure, we have seen their activity increase in
    places in my region, like Syria, recently, in Iraq, and in
    other places around the corridor.
        Senator Inhofe. Okay, that is fine.
        General Rodriguez, you see the chart, which I showed you in
    my office, and I think you agree that is an accurate chart.
        We break down the various terrorist organizations and place
    them on that chart. I think it is one that all of the members
    up here should look at.
        Is that accurate?
        General Rodriguez. Yes, sir. Just for a little bit more
    precision, over in eastern Libya we have two groups of Ansar
    al-Sharia in Benghazi and Darna, and that is the fastest
    growing area for that type of----
        Senator Inhofe. Yes. See, and this is the problem in
    Africa, because you can have an accurate chart and, 2 days
    later, it changes.
        General Rodriguez. Yes, sir.
        Senator Inhofe. That is what is happening in Africa now. We
    have known for a long time, as the pressure takes place in the
    Middle East, that the squeeze is there, and terrorism goes down
    through the Horn of Africa and Djibouti, and starts spreading
    out. That is a problem you have.
        When I look at Africa, and I look at how long it takes to
    get from one place to the other, I am very glad that we have
    AFRICOM. It used to be parts of three different commands. But,
    now that it is there, I have never thought of it as adequately
    resourced. You are a dependent upon CENTCOM and EUCOM for a lot
    of your ability to confront these problems. It seems to me that
    every time something comes up where we have a solution--look at
    the LRA situation. I first became acquainted with that up in
    Gulu. It looks like, hopefully, we are going to draw that to a
    close. But, when South Sudan's erupted, you had to pull a lot
    of the resources out of one area to go to another area. In
    fact, when I was there in January, at the AFRICOM headquarters,
    I was briefed that only 12 percent of the AFRICOM requests for
    ISR are being met, due to the resource shortfalls. Now, that is
    pretty troubling to me. Is that troubling to you?
        General Rodriguez. Yes, sir, it is. It also limits the
    flexibility. So, when South Sudan erupted, we had to take the
    effort away from the LRA, as well as some counterterrorist
    efforts in East Africa, to support those efforts.
        Senator Inhofe. Yes. The distances. This is another
    problem. You talk about one country and moving to another
    problem area. You are not talking about next door. You are
    talking about hundreds and hundreds of miles between these
    things. Where do you think your biggest intelligence gaps are?
        General Rodriguez. Sir, our biggest intelligence gaps are
    out in northwest Africa that really stretches from northern
    Mali to eastern Libya.
        Senator Inhofe. Yes. Which types of ISR assets are the ones
    that are troubling you the most in terms of shortfalls?
        General Rodriguez. Sir, the shortfalls range from wide-area
    surveillance, that the Joint Surveillance and Target Attack
    Radar System (JSTARS) provides to that platform, to the long-
    range remotely piloted vehicles that we need to be able to
    cover that vast range.
        Senator Inhofe. Okay.
        When they talk about having another Base Realignment and
    Closure (BRAC) round here, it seems like the easy thing, of
    course, because it does not have to come to anyone's particular
    State or district, is to do it in western Europe or in some of
    the European facilities. One of them that bothers me quite a
    bit is Vicenza, because I understand that could be scheduled
    for closing. Now, I know, General Austin, that is not in
    Central, that is right on the edge, though, in EUCOM. Do you
    share my concern over our ability--I can remember when, going
    into northern Iraq, we were not able to go through Turkey with
    our people. We had to drop them in from Vicenza. They have come
    to the rescue many times before. Do you have any thoughts about
    that particular installation, in what a potential loss that
    could be to your capabilities in your commands?
        General Austin. Sir, I think that, as you have indicated,
    we have called upon the European capability to augment what we
    are doing in the CENTCOM area, on a number of occasions. That
    includes our operations in Iraq, Afghanistan, and throughout.
    So, any loss of capability there, I think, we would all be
    concerned about.
        Senator Inhofe. Do you agree with that?
        General Rodriguez. Yes, sir, I absolutely agree. We depend
    on all those bases, all that support from our European allies.
    It also helps us with our partners working together so that--I
    think that support's critical to the mission that we have in
    AFRICOM.
        Senator Inhofe. Yes. Right down the road from there, from
    Vicenza, we spent a lot of money in getting--fixing up that
    deployment area, and we watch that on a regular basis. Now we
    have that, and, even though it is not located in Vicenza, it is
    there to serve Vicenza, in the event that they should be called
    on again, as they were before, to northern Iraq.
        General Austin, about a month ago, I was in Afghanistan.
    The story is not told the way it should be told, in my opinion.
    I see all the great things that are going on there that were
    not there before. I know people do not like to--this is not
    nation-building, but when you stop and realize that about 10
    million Afghans are in school now, 42 percent of them are
    women. There were none before. You have 17 universities now.
    There were only two under the Taliban. As we went through Kabul
    with our military aircraft, there wasn't one gate open. I can
    remember, there were no commercial airlines there before. So--
    12,000 miles of roads and all of that stuff. Do you agree that
    it has been much more successful there than a lot of people--
    and the polling looks good. The polling actually is 80 percent
    supporting of the Afghan National Army. What is your opinion of
    that?
        General Austin. Sir, I absolutely agree. To your point, as
    you look at the city of Kabul now--and the first time you went
    there was probably, what 500,000 people or so, and now it is
    millions of people. The infrastructure has improved, businesses
    are growing, the economy is expanding. I was there when we
    stood up the second battalion of army in Afghanistan, and now
    as you fast-forward, a combined Afghan security force of
    340,000-plus that are well-equipped and well-trained. So, it is
    an impressive story, and I think that story is not being told
    adequately.
        Senator Inhofe. Yes, I agree with that.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        Thank you, gentlemen, for your service and for the service
    of your commands.
        General Austin, with respect to Syria, we have, over the
    last several years, tried to organize a very senior-level
    response to the Assad regime. That has had various and
    decidedly mixed results. Is the emphasis now, or should the
    emphasis now, be looking at smaller units, smaller commanders
    on the ground, and then trying to build a more capable,
    coherent resistance that way? Should be abandon the top-down
    strategy and then go to a more bottom-up strategy?
        General Austin. Yes, sir, I think you actually have to do
    both. I think you--certainly, you cannot be successful without
    a coherent effort at the lower level. But, going beyond that, I
    think you have to have unity of command and unity of effort
    that links these elements together.
        Senator Reed. I agree, but I think that has been a very
    difficult goal to achieve. I think, frankly, we have not seen
    that coherence yet, not within the structures we have been
    dealing with explicitly and publicly, and most especially not
    on the ground. Part of that, I think, is vetting people in an
    area in which you are not going to find a lot of secular
    moderates who are also capable commanders--just an impression,
    at least. So, how do we organize this coherent counterforce to
    Assad, and at what level? I agree, nice to have a top-down
    strategy, but I think we are looking for a way to improve the
    coherence. Let me stop there.
        General Austin. Yes, sir. I think, to your point, you
    really do have to have vetted, trained, and well-equipped
    forces at the bottom level. So my forces have not been a part
    of that effort, but I think that more energy applied there,
    would create more capacity, going forward.
        Senator Reed. Thank you very much, General.
        General Rodriguez, you have a wide geographic area of
    command. You have rising groups that are radicalized, et
    cetera. Can you generally characterize the focus of these
    groups? Is it local, is it regional? Are you--I am sure you
    are--paying careful attention to any groups that have
    transnational or international objectives? Can you give an idea
    of your focus on these issues?
        General Rodriguez. Yes, sir. We will start over in the
    east, sir. Al-Shabaab obviously has transnational intentions.
    The continuing efforts of the AMISOM partners has at least
    stymied that, despite the fact that they continue the
    asymmetric attacks, but they also have aspirations to attack
    western interests.
        As you head around to the northwestern region, where we
    have about five of the terrorist organizations, they are from
    al Qaeda in the Islamic Maghreb in the west to Ansar al-Sharia,
    in Darna, in the east. Most of those are regional.
        The concern for our European partners is the immigration of
    movement from those areas into southern Europe and then down,
    as you work in--the Nigerian area of Boko Haram, is mainly
    locally against Nigeria. It is spreading out a little bit, to
    two or three countries out on the edge of that, mostly for
    support, but that's really a local effort. Then, the LRA is
    really just about that local effort also, sir.
        Senator Reed. Thank you very much. I think you remind us
    that one of the issues that we have to deal with is the
    exfiltration of individual fighters, et cetera, and that is
    something that is a diplomatic challenge more than, at this
    point, a military challenge.
        General Rodriguez. Yes, sir, it is. We are working with our
    partners across U.S. Special Operations Command (SOCOM) and
    CENTCOM to understand what goes on, because those foreign
    fighters, at this point in time, many of them moved to Syria,
    and we are concerned, obviously, that they harden their skills
    and their tactics, techniques, and procedures (TTP), then move
    back out to their home countries, which is also is a concern
    for us.
        Senator Reed. Thank you.
        General Austin, again, I return to your area of operation,
    and that is--you have spoken, I think, already about the
    critical issues that are facing us in timelines in Afghanistan.
    Can you take regional perspectives and give us some insights
    about the present view of Pakistan? My sense was, years ago
    they were awaiting our departure; in fact, saw it as an
    opportunity for them to--and my impression lately is that they
    might have changed their perspective, given the radicalization
    of TTP and the blending of the terrorist groups that they are
    facing.
        General Austin. Thanks, sir. Certainly, I think that the
    threat that the TTP has presented certainly has changed their
    thinking in a number of areas, and they do consider that to be
    a significant threat.
        I am very encouraged by the new leadership in Pakistan, the
    new military leadership. I recently met with the Chief of the
    Army, the Chairman of the Joint Chiefs. Again, I think they
    want a relationship, going forward, that is more than
    transactional. I think they want a long-term, good
    relationship. At least from the military side of the house,
    that is what I get. I think they are sincere about it. So, I am
    very encouraged by what I am listening to and some of what I am
    seeing.
        Now, the jury is still out. We have a long way to go, but I
    think our relationship is trending positive in a number of
    areas.
        Senator Reed. Thank you very much.
        Thank you, Mr. Chairman.
        Thank you, gentlemen.
        Chairman Levin. Thank you very much, Senator Reed.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        I thank the witnesses for their wonderful service to our
    country. They are great leaders, and we are very proud of their
    outstanding work.
        General Austin, in a hearing last week before this
    committee, the Director of National Intelligence, General
    Clapper, said, ``President Assad remains unwilling to negotiate
    himself out of power.'' Do you agree with that statement?
        General Austin. I do, sir. I think he sees himself in a
    position of advantage right now.
        Senator McCain. In other words, the situation will probably
    endure unless the momentum on the battlefield changes more
    significantly against Bashar Assad. Would you agree with that?
        General Austin. I do, sir.
        Senator McCain. So, under the current circumstances, do you
    see any reason to believe that this change in momentum will
    occur?
        General Austin. I do not see that in the near term, sir.
        Senator McCain. Thank you. So, there really isn't a
    diplomatic solution.
        General Austin, do we have intelligence that shows us where
    they are assembling these horrible barrel bombs that they are
    dropping on people?
        General Austin. We have a general idea of where they would
    be assembling them, sir. I will tell you that, because of a
    number of reasons, specific and detailed intelligence about
    what is going on inside of Syria is lacking, in my view.
        Senator McCain. The reason I asked that question is pretty
    obvious. It seems to me that if we could have a way of taking
    out, in a surgical effort, those places where they are being
    put together, it certainly would prevent a lot of horrible
    things that are being done to innocent civilians.
        Do you believe that the best course of action now, as far
    as Afghanistan is concerned, is just to wait until the
    elections? Would you agree it is pretty obvious that further
    negotiations with Karzai are a waste of time?
        General Austin. Sir, it is very doubtful, in my view, that
    President Karzai will sign an agreement. So, I think the best
    course of action is to continue to look beyond and be prepared
    to negotiate with the next administration.
        Senator McCain. Thank you. Have you made a recommendation
    as to the size, troop strength, and mission of any residual
    force we would leave behind, in an agreement with Afghanistan?
        General Austin. Yes, sir, I have. The President is in the
    process of making a decision. I would ask not to reveal what my
    specific recommendation has--or, was. But, General Dunford and
    I have been consistent in saying that we think that a force the
    size of 8,000 to 12,000, plus Special Operations Forces, would
    be about the right size to conduct the type of things that we
    think ought to be conducted, going forward.
        Senator McCain. Do you have any idea why the administration
    wouldn't just convey that to Congress and the American people?
        General Austin. Sir, the President has a lot more things to
    consider than I do.
        Senator McCain. I see. I think that's a legitimate comment.
        General Rodriguez, is al Qaeda a growing or receding threat
    in the AFRICOM area?
        General Rodriguez. Sir, in the AFRICOM AOR, it continues to
    grow in the northwest. It is in about a treading-water effort
    in East Africa. So, it is, overall, continuing to move out.
        Senator McCain. General Austin, is al Qaeda a growing or
    receding threat in the CENTCOM area?
        General Austin. Yes, sir. In those places where we have
    maintained pressure on the networks, I think we have retarded
    their growth, but you've seen, in Syria, in Iraq, in a couple
    of other places, that their efforts have actually expanded,
    they have grown.
        Senator McCain. Must be very personally painful to you, as
    it is to me, to see the black flags of al Qaeda flying over the
    city of Fallujah, where we made such enormous sacrifice.
        General Austin. Yes, sir, it is. We would hope that the
    Iraqis do the right things to reestablish control over their
    sovereign territory. They have to get after this. Al Qaeda is a
    common enemy for both of us, and, if we can help them in any
    way, then I think we should.
        Senator McCain. The Syria-Iraq border has become a haven
    for, and transit point for, al Qaeda, isn't that correct?
        General Austin. It is, sir. One of the things that I just
    recently met by videoteleconferencing with the Iraqi senior
    general officer leadership, and one of the things I continue to
    hammer home with them is, they have to control the flow of
    foreign fighters across the border. Otherwise, the threat in
    Iraq will continue to grow.
        Senator McCain. That was my next comment about foreign
    fighters, for both you and General Rodriguez, because they are
    coming from all over. Surprisingly, a lot of them are coming
    from Tunisia, which I do not quite understand. But, General
    Clapper testified, 7,500 foreign fighters, and they are
    literally from all over the world. I think, General Austin, we
    would agree that there is some rejection of these foreign
    fighters by certain elements and people within Syria, so if
    there is such a thing as ``digging for the pony,'' that is a
    little bit of good news. But, doesn't this really pose a
    significant long-term threat, when someday this conflict in
    Syria ends. I have no idea when. But, then they go home. They
    are better fighters, they are more indoctrinated, they have
    established a network. Isn't this something, and I am
    interested in General Rodriguez's comments, too, because a lot
    of them came from areas under his operational command that
    should be very concerning to us, long term? Could I ask both
    generals to answer?
        General Austin. It should be, and is, sir. It is not only
    concerning to us, as you've indicated, it is concerning to the
    leadership in the region. On two occasions, I have pulled
    together the Chiefs of Defense to discuss this issue and other
    issues in the region, and I can tell you firsthand that they
    are very concerned about what capability these foreign fighters
    bring back to their countries of origin. They want to work
    together to do some intelligence-sharing, increase situational
    awareness, and do what we can to retard the growth of this
    element inside of Syria. I think that is a good first step, if
    we can get folks knitted a bit closer together and working on
    this.
        The SOCOM commander has joined in with me and is helping to
    lead this effort. So, I am hopeful, again, it will not solve
    the problem inside of Syria, but, if we can retard the growth a
    bit, I think it would be value added.
        General Rodriguez. Yes, sir, estimates are, a couple
    thousand have headed to Syria from across just North Africa
    itself. The countries are concerned. We have worked with a
    couple of them. Some of them have prevented people from
    leaving. But, the challenge is, the porous borders are going to
    continue in North Africa, and it is a concern for each and
    every one of them.
        Senator McCain. My time is expired, but have they prevented
    them from coming back?
        General Rodriguez. The challenge with preventing them from
    coming back has not been met very well because of the porous
    borders in eastern Libya. So, it is not going well.
        Senator McCain. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator McCain.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        General Austin, General Rodriguez, thank you for your
    extraordinary leadership for our country. We are incredibly
    grateful to you.
        General Rodriguez, in regards to al Qaeda, when you look at
    their presence in the Middle East and those areas, and you look
    at their presence in AFRICOM, is it simply a growing presence
    in AFRICOM? Is there any zero-sum situation here, or do you see
    it growing in AFRICOM as well as the same are growing in the
    Middle Eastern region?
        General Rodriguez. Sir, if the challenges right now with
    the insecurity in Libya is where the al Qaeda adherents and
    affiliates are growing fastest. That extends across northwest
    Africa toward northern Mali, because of the vast ungoverned
    spaces out there. In eastern Africa, where the continued
    pressure is on AMISOM, that has not grown like it has in
    northwest Africa.
        Senator Donnelly. In regards to China and weapon sales
    there, in August 2012 the Washington Post stated, ``Africa is
    quite an important market for the Chinese arms industry, and
    weapons from China have surfaced in a number of areas in
    AFRICOM.'' I was wondering how China's arms sales affect your
    mission, and whether we are trying to coordinate with them or
    discussing with them how to stop this.
        General Rodriguez. To date, we have not coordinated with
    China how to change the equation on the counterterrorism front.
    Most of their efforts do support some of the U.N. missions with
    security forces in Africa, and most of the effort from China
    that we see is economic effort to extract the minerals.
        Senator Donnelly. General Austin, if we wind up not having
    a BSA signed, how will a zero option affect Regional Command
    (RC)-East and RC-South in Afghanistan?
        General Austin. Sir, I think it would be problematic. It
    would be bad for the country of Afghanistan, as a whole. I
    think that, without our fiscal support, and certainly without
    our mentorship, we would see, immediately, a much less
    effective ANSF. Over the long term, we could possibly see a
    fracturing of that force.
        I would go further to say that it would be problematic for
    the region. I think that what we would see over time and very
    quickly is hedging activity as each of the countries in that
    subregion really move to protect their interests. That would be
    somewhat destabilizing for the region, as a whole.
        Senator Donnelly. That was actually going to be my next
    question. In particular, with one country, with Pakistan, what
    do you think the difference between a zero option and a
    residual force would mean to Pakistan? How do you think the
    leaders of that country--how would they view the two different
    options?
        General Austin. I can tell you what the leadership tells
    me, sir, when I talk to them, is that they are concerned about
    having a well-equipped force on their border that is losing
    control, losing oversight, losing leadership. What the future
    of that could possibly bring is very troubling for them. You
    would expect that they would begin to hedge a bit more to
    protect themselves along their borders.
        Senator Donnelly. I had asked this yesterday, but wanted to
    check with you, sir. In regards to a timeframe as we head
    toward December, if we are in August and the elections are
    still not squared away at that point and there are runoffs and
    we still do not have a BSA, is there a time where you look up
    and you go, ``Come September 15th, we will not be able to
    implement our plan to transition to a residual force by the end
    of December,'' or, ``Come October 1st, it makes it even more
    difficult''? The time situation has to be starting to be
    something that you look at and go, ``How do we make this
    work?''
        General Austin. Yes, sir, and it is a question of risk and
    how much risk leadership is willing to accept. As you have
    indicated, as you go beyond August into the fall, the risk
    increases. My job is to continue to convey that level of risk--
    the level of risk, to the leadership. As we move down that
    road, it will be up to the leadership to make that decision.
        Senator Donnelly. In Iraq and with Maliki, how, if any,
    does CENTCOM mitigate the Iranian influence over Maliki, over
    his government? We just saw stories that Iraq was purchasing
    weapons from Iran. It seems, instead of trying to bring the
    groups together, they just seem to be getting further apart,
    which causes more fracture. Is there anything CENTCOM can do to
    try to mitigate that Iranian influence?
        General Austin. What we want to do, sir, is have a good
    relationship with Iraq, moving forward. We also want for Iraq
    to take a leadership position one day in the region. It has the
    capability to do that.
        Iraq will have a relationship with Iran, because it shares
    a border with them. I think just having known Prime Minister
    Maliki for a long time, I think he understands that he has to
    have a relationship with them, but he also clearly understands
    that he needs to have, and wants, a relationship with the
    United States. I think he's constantly trying to strike a
    balance there.
        Senator Donnelly. If I could, just as a final question, the
    Army is now composed 90-percent-plus Shia. Is Maliki capable of
    making the tough choices that need to be made to try to keep
    the country together?
        General Austin. We certainly would hope so, sir. Certainly
    our Ambassador and our Assistant Secretary of State, Brett
    McGurk, both of them continuously provide him advice and
    counsel that we need to move forward and embrace the Sunnis a
    bit more. Most recently, we have seen him commit to training a
    couple of battalions of Sawa, or what we used to call Sons of
    Iraq----
        Senator Donnelly. Sure.
        General Austin. Tribal elements--and--in the hope of
    incorporating those elements into the police and into the army.
    We've encouraged them to move out smartly with that, because I
    think that will convey some good intent, goodwill. Most
    recently, we have seen the startup of a training effort in
    Habbaniyah that's focused on training some of those tribal
    elements.
        Senator Donnelly. Thank you so much, to both of you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator Fischer, I believe, is next.
        Senator Fischer. Thank you, Mr. Chairman.
        General Austin, first of all, I would like to thank both
    you and General Rodriguez for your service to our country, and
    also for the men and women who serve under you. We so
    appreciate the sacrifices they make, as well as their families
    make. So, please convey to them our thanks and our gratitude.
        General, can you tell me what the status is with Syria's
    delivery of chemical weapons?
        General Austin. Yes, ma'am. To date, they are about 36
    percent complete with the effort. They are behind the original
    projection, but I think there are many that would admit that we
    are probably further along than many would have thought that we
    would be while we are doing this in the midst of a civil war.
        Senator Fischer. You do not anticipate that they will meet
    that June 30th deadline, then? Or do you?
        General Austin. I think it is hard to say, ma'am. I am
    certainly hopeful that they will. I think it will be difficult.
    But, I think the important thing is for us to continue to
    emphasize the importance of getting this done. I think if we
    can get it done--certainly, it will not solve all the problems
    in Syria, but it will make a very complex set of problems one
    problem set less complex.
        Senator Fischer. Are the Syrians forthcoming in working on
    this problem and challenge that we are facing right now with
    the weapons, or do you feel they are holding back in any way?
        General Austin. I would defer to the Intelligence Community
    to provide you an assessment there.
        I think that they have been, for the most part,
    forthcoming. To what degree, again, I think that is a question
    better answered by the Intelligence Community.
        Senator Fischer. Once the stockpile is removed, what is
    going to happen to those facilities?
        General Austin. I think that as a part of the agreement,
    the facilities are supposed to be disabled or destroyed.
        Senator Fischer. Okay.
        The Central Intelligence Agency (CIA) Director, John
    Brennan, had testimony here earlier this year, and he indicated
    that al Qaeda-affiliated groups have safe havens in Syria and
    Iraq, where they train. Director of National Intelligence (DNI)
    Clapper stated that the Intelligence Community believes that
    these groups have aspirations to attack the United States. Do
    you agree with that?
        General Austin. I certainly would say, ma'am, that, with
    respect to the ungoverned space that currently exists in
    Syria--and we know that there are al Qaeda elements there--if
    that continues, we would certainly expect that, over time,
    there would be elements that would want to export terror to the
    region, to western Europe, and to our Homeland.
        Senator Fischer. Can you put a timeline on that, at all,
    when you feel this would become a definite threat to our
    Homeland?
        What suggestions you would have in countering that?
        General Austin. No, ma'am. I cannot make a prediction.
    Anytime I see that number of extremists in one location, I am
    concerned about the immediate time going forward. Certainly, I
    cannot predict when a threat would materialize, but I would
    say, if you just look at the growth of these elements inside of
    Syria over the past year, they have grown at an exponential
    rate. Unless we do something to retard that rate of it, and
    prepare ourselves to counter this threat going forward, then I
    think we are going to have a significant issue.
        Senator Fischer. How do you characterize the level of
    Iranian and Russian support for the Assad regime?
        General Austin. I think the Iranians are really doing a lot
    with the Quds Force elements to enable the regime. I think,
    also, we have seen Hezbollah openly declare that they are in
    support of Assad. We know that the Iranians are supportive of
    Hezbollah. So, I would say that support is substantial.
        Senator Fischer. Have you seen any increase in the level of
    support in say, in the last year?
        General Austin. I think we have. I think that, as the
    opposition has grown in capability a bit, the reaction to that
    is an increase in proxy activity by Iran. So, they have doubled
    down, so to speak, on their level of effort.
        Senator Fischer. Okay, thank you, sir.
        General Rodriguez, how would you characterize al Qaeda's
    network and coordination throughout Africa?
        General Rodriguez. They continue to deepen their
    coordination and their transfer of resources, as well as
    skills, throughout Africa.
        Senator Fischer. Do you think there's a free flow of arms
    and terrorists across many areas?
        General Rodriguez. Yes. The biggest challenge we have is
    all the arms, ammunition, and explosives from Libya that
    continue to move throughout the region in northwest Africa,
    ma'am.
        Senator Fischer. That flow of arms in and out of Libya, is
    that impacting the strength of al Qaeda throughout the
    continent?
        General Rodriguez. It is. It continues to support them
    throughout northwest Africa.
        Senator Fischer. How much support are they receiving from
    the drug trade? How do you counter that?
        General Rodriguez. Ma'am, we work with our interagency
    partners, as well as the nations, to try to stem that flow.
    That drug network has actually gotten a little bit worse
    recently, because it used to be really from South America up
    through western Africa; now from southeast Asia, it also comes
    east to west. So, that network continues to grow apace.
        As far as how much that contributes to the resourcing, I
    think that more of the resourcing, quite frankly, is done
    locally from ransom, from criminal activities--some of that are
    drug, but it is not the primary thing that the al Qaeda or the
    terrorist network is fueled by.
        Senator Fischer. Okay.
        General Rodriguez. Thank you.
        Senator Fischer. Thank you very much. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Fischer.
        Senator King.
        Senator King. Perhaps you gentlemen could discuss which was
    the superior class of West Point, 1975 or 1976. I notice that
    you share that experience. [Laughter.]
        A lot of discussion of al Qaeda and Senator Inhofe's map,
    which I think is quite important for us to review. Given the
    growth of al Qaeda or like groups, what is our long-term
    strategy? The strategy of decapitating the organization in the
    last 7 or 8 years succeeded for a while, but clearly this
    phenomenon is metastasizing. Are we going to be able to defeat
    this threat by simply killing more people, or do we need some
    alternative strategy?
        General Rodriguez, you are in the middle of that situation
    in North Africa.
        General Rodriguez. Yes, sir.
        Senator King. I want some larger thinking than just
    military drone strikes and other options of that nature.
        General Rodriguez. Yes, sir. Sir, it is going to take a
    comprehensive approach from all the interagency and the
    multinational efforts there to do it. It's going to be a long
    effort, because you have to build the capacity, long-term, for
    law enforcement to handle this. So, we are working hard to do
    that. But, I think the long-term way ahead is to build that
    capacity in those host nations to mitigate that threat.
        In the interim, we have to continue to support the efforts
    to keep the pressure on them, because when the pressure is on
    them, they are not able to increase their capacity at the rate
    and speed that they have in a couple of places in a very free-
    flowing, well-resourced, and ungoverned space.
        Senator King. But, do we have any analysis of why people
    are joining these organizations, why young people are joining
    them, why they are getting people? Obviously, they have skilled
    people in bombmaking and those kinds of technologies. What is
    driving this? What is underneath it? Is it all religion? Is it
    poverty? How do we cut off the recruiting end of it?
        General Rodriguez. It is a combination of those things.
    Obviously, the ideology is a large part of it, but it is also
    the disenfranchised people who do not see opportunities for
    themselves or their families in the future.
        Senator King. A related question, General Austin. I would
    suggest, gentlemen, that we all need to collectively be
    thinking about this, because if you kill one, and two come
    back, that's an endless task.
        General Austin--and I think you touched on this in answers
    to Senator Donnelly's questions--how do we get it through to
    Maliki that he has to stop suppressing the Sunnis or he, in
    fact, is creating an al Qaeda opportunity in places like
    Fallujah?
        General Austin. Sir, I think that is becoming ever more
    clear to the Prime Minister as each day goes by. I think that
    he is taking some steps to reach out to the Sunni population a
    bit more and incorporate more Sunnis into the police and the
    army. But, again, he has to do it faster. So, there is a lot of
    work to be done here. I think he realizes that this work has to
    be done. We are just hopeful that he'll move quicker.
        Senator King. Generals, I am on the Intelligence Committee,
    I have to be a little careful here, but there's a difference in
    intelligence analysis about the future of Afghanistan. Are you
    confident that, if we maintain that 8,000 to 12,000 troop, with
    some financial support, that Afghanistan is not going to return
    to the Taliban within the foreseeable future?
        General Austin. If the Afghan Security Forces continue to
    progress--I do not think the Taliban can defeat the Afghan
    Security Forces. I do not think that there's anybody, sir.
        Senator King. That's a big ``if.'' You started the sentence
    with ``If the security forces continue to progress.'' Do you
    think that's likely?
        General Austin. I think it is likely if we continue to do
    the right things.
        I would also say that probably nobody can guarantee that
    they are going to continue to move forward and things are going
    to get better, but certainly this approach, or an approach that
    allows us to remain with them and to continue to train and
    mentor them, gives us our best chance at being successful. I
    think that what we hope would happen here is that they would be
    able to provide the security for the country that would allow
    the political institution to mature. If that can happen and
    they can go after the corruption a bit more, I think things
    begin to fall into place. So, we are hopeful that they will.
        Senator King. I am hopeful, as well, and I certainly hope
    you're right.
        Question to both of you, gentlemen. I presume your day
    starts with some kind of intelligence briefing about what is
    going on in your region. Does that briefing include material
    from the CIA, the National Security Agency (NSA), and the
    civilian intelligence agencies?
        General Rodriguez?
        General Rodriguez. Yes, it does. We have a full complement
    of the Intelligence Community representatives in the
    headquarters, and it goes through the full range of the
    Intelligence Community capabilities from the NSA, DNI,
    everybody.
        Senator King. So, you feel there is good coordination. What
    worried me is the breadth of our intelligence activities, it is
    very costly. I want to be sure that the data's getting to you
    and you do not just see military intelligence, for example.
        General Rodriguez. No, sir, we see all of it.
        Senator King. That's very reassuring.
        General Austin, I know Israel is not within your command,
    but the question I am going to ask relates, to some extent, to
    that. For many years, an irritant in the region--I think
    ``irritant'' is too minor a word--has been the situation with
    the Israelis and the Palestinians. To what extent do you
    believe that a settlement between the Israelis and the
    Palestinians would diminish tension in the Middle East,
    generally?
        General Austin. I think that it would be a significant
    accomplishment, sir, and I think it would diminish tensions
    throughout. It won't solve all the problems, but every leader
    that I talk to in the region really believes that if we can
    move forward on this, it would be significant, it would be a
    clear sign of progress, a promotion of goodwill. I think,
    clearly, it would be much value added. Again, it will not solve
    every problem in the Middle East, but I think it would be very
    helpful.
        Senator King. Thank you. That's important testimony. I
    appreciate it, gentlemen.
        Chairman Levin. Thank you, Senator King.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        General Austin, you have stated previously that we have a
    really difficult time understanding what is going on, on the
    ground in Syria. I think that is a fair statement. It is not a
    very transparent place, there is a civil war going on. Do you
    have a high, low, or medium confidence as to whether or not
    Assad is keeping some chemical weapon stockpiles out of our
    reach?
        General Austin. I have a low confidence level, sir.
        Senator Graham. Given his behavior, it is likely he would
    try.
        General Austin. That would be my next statement, sir, that
    he was the person that's responsible for the death of 140,000
    people, so----
        Senator Graham. It is not much of a stretch, he may cheat
    on an agreement.
        General Austin. Yes, sir, he's our bona fide bad guy.
        Senator Graham. Yes, okay, good answer.
        The Sunni Arab states are in your jurisdiction, is that
    correct, in your theater of operation?
        General Austin. Yes, sir.
        Senator Graham. What is the likelihood, based on your
    understanding of the region, that the Sunni Arab states would
    respond to any agreement with the Iranians that allowed an
    enrichment capability, even if it were under the guise of
    commercial peaceful purposes? If the Iranians were given the
    right to enrich by the international community, do you fear
    that one of the consequences would be that the Sunni Arab
    states would claim an equal right?
        General Austin. I do think that we would probably see that,
    sir. I think that there is a level that certainly they would be
    much more comfortable with. I think the way that this proceeds
    will all depend upon how transparent we are with them and how
    much we engage them up front, in terms of what we are trying to
    accomplish.
        Senator Graham. One of the fears I have--and I think that's
    a very good answer--I was in Munich Security Conference several
    weeks ago, back in January or February, and I asked the Sunni
    Arab leaders, ``If the Iranians are given the right to enrich,
    would you claim an equal right?'' They all told me yes. My
    concern is, the North Korean model did not work so well. Giving
    them capability in trying to contain it is a very difficult
    enterprise in countries like North Korea and Iran. Do you agree
    with that?
        General Austin. Yes, sir.
        Senator Graham. So, it seems to me that we need to
    understand that any agreement with the Iranians that allows
    them to enrich uranium is probably going to lead to
    proliferation of enrichment in the Mid-East, which I think
    would be clearly a disaster. That is just my personal view.
        Detainees in Afghanistan. I want to compliment you, General
    Dempsey and Secretary Hagel for standing by General Dunford's
    side, having his back. The 65 detainees that were released by
    Karzai recently, do you agree with the estimation by General
    Dunford they represent a real threat to our security in
    Afghanistan?
        General Austin. I do, sir.
        Senator Graham. Do you believe it would be helpful if
    Congress spoke loudly and clearly about this issue, reinforcing
    the command's position?
        General Austin. I do, sir. Let me go one step further and
    thank you and the other Members of Congress for what you have
    already done. It clearly has been value added, in terms of
    conveying the message to the leadership in the region.
        Senator Graham. I think you had some really good questions
    coming from my colleagues on the Democratic side. The idea of a
    Afghanistan without a residual force, do you think we would
    have an Iraq in the making if we just basically left no one
    behind?
        General Austin. Sir, I think that conditions would change
    very rapidly in the region. I think, again, what I worry about
    is hedging activity from the other states in the region that
    would create regional instability. I worry about a new
    government, new leadership in a newly elected government here,
    trying to get their feet up under them, with a security
    apparatus that is unsure about where it is going and does not
    have the resources, there are a number of elements that could
    come together to cause concern.
        Senator Graham. Do you believe, given the track we are on
    with the Afghan security forces, an adequate residual force
    would embolden their confidence, would deter the Taliban's
    future plans, and would create momentum at a time we need it in
    Afghanistan?
        General Austin. I do, sir.
        Senator Graham. All right.
        Now, you gave some testimony, in response to Senator
    Fischer, that I thought was accurate and compelling. The
    Director of National Intelligence has told this committee, and
    the country as a whole, that there are up to 26,000 al Qaeda
    fighters enjoying safe haven inside of Syria, and that the
    likelihood that an attack on our allies in western Europe, our
    interests in the region, and even the Homeland, is growing with
    the more numbers and the larger the sanctuary. You agree with
    that. Is that correct?
        General Austin. I do, sir.
        Senator Graham. So, I want every Member of the Senate to
    understand that we are being told by our military leaders and
    our Intelligence Community that there is a threat to the
    Homeland building, and our allies and our interests in the
    region, from 26,000 al Qaeda fighters enjoying safe haven in
    Syria.
        Very quickly, how do we get them out of there without
    somebody confronting them?
        General Austin. Sir, they do not come out unless someone
    does something about it. The best solution is for some form of
    government to be established in Syria that will reestablish
    control over the sovereign territory of Syria.
        Senator Graham. Right. The Syrian military, whatever new
    military they have after this political transition, would have
    very little capability. You agree with that? At least in the
    early years?
        General Austin. I think they will be challenged, yes, sir.
        Senator Graham. I do not think we need boots-on-the-ground
    in Syria at all, quite frankly. But, I do believe we have
    capabilities that could be deployed against al Qaeda, in
    conjunction with people in the region, that could diminish the
    threat we face from al Qaeda. Do you agree with that?
        General Austin. I do, sir, and I think your point to the
    fact that this is a regional issue is really important. The
    more that we can get help from the regional partners there, I
    think the better outcome.
        Senator Graham. Yes. An al Qaeda presence in Syria is not
    good news for many people in the region, so they have an
    interest, along with ours. So, I have always believed you look
    at al Qaeda as Germany first and Assad as Japan, because we
    have two real problems inside of Syria. The one that presents
    the most direct threat to me is the al Qaeda presence. I hope
    we will deal with it.
        Thank you for your service.
        General Rodriguez, if sequestration fully goes into effect
    over the next 10 years, what kind of effect would it have on
    your command in AFRICOM to be relevant and to have an American
    presence to secure our interests? What are those interests?
        General Rodriguez. Senator, if sequestration goes through,
    I think everybody has talked about the incredible impact it
    would have on readiness of the forces to deploy. For the region
    in Africa, we would be hugely impacted by the air and the
    mobility assets that help us range the issues that we have in
    Africa. So, I would worry about that, mostly, if that
    continued, at the sequestration levels.
        For Africa, what interests the United States has is the 6
    of the 10 fastest growing economies which are in Africa. It is
    a huge economic impact on both the people in Europe as well as
    the people in the Far East. Then, the other thing is that the
    huge increase in personnel and people growth will create a
    powerhouse of opportunity for development in the future.
        Chairman Levin. Thank you, Senator Graham.
        Senator Manchin.
        Senator Manchin. Thank you, Mr. Chairman.
        Thanks again, to both of you, for your service and
    outstanding service to our country.
        General Austin, starting with you. President Karzai
    insisted the United States must jumpstart peace talks with the
    Taliban insurgency and end raids and strikes before he signs
    the BSA. Pakistan, I think, tried to hold peace talks with the
    Taliban. We see how badly that had gone. The Taliban seemed to
    use false pretense in order to stall the negotiations, hoping
    that they can wait out until we withdraw. I am hoping that
    maybe you could give me an insight into what President Karzai
    thinks that he might accomplish by negotiating with the Taliban
    and if he must know there is no room for him or for democracy
    if the Taliban have their way. For him to go down this path so
    many years with us and take the turn that he is taken now, you
    can understand why those of us--some of us, maybe, sitting
    here--have seen this to be a futility, the, ``Why do we still
    fool with that place or that man or anybody that comes after
    him?''
        General Austin. Sir, I wish that I could give you some
    insight into what the President of Afghanistan is thinking,
    but, unfortunately, I cannot. I agree with you that the effort
    to negotiate a settlement with the Taliban will be a very
    challenging effort that will take some degree of time.
        Again, there is reason to be hopeful, to your question
    about why we should be hopeful. I think that, based upon the
    things that we have done and what we see in Afghanistan right
    now, in terms of the progress, I think we can all be hopeful.
    But, again, I think we should look beyond and really begin to
    focus on trying to work with the next administration.
        Senator Manchin. Maybe you can also give me an update on
    the negotiations with Iran, for us to go in there and have
    unfettered access. Are we getting unfettered access to seeing
    their centrifuges and what they are doing, the capabilities?
    Are they destroying any of their large, or, their highly-
    enriched uranium? Have we been as successful in that?
        General Austin. Sir, I defer to our representatives who are
    in that negotiation process currently to provide you with an
    accurate assessment of how we are doing and what we are doing.
    But, from the reporting that I am seeing, I think that we have
    every indication to believe that they are being cooperative,
    they are doing what the initial agreement called for them to do
    in the early stages, in terms of the down-blending of enriched
    uranium and access by the inspectors. But, again, they are in
    the middle of a negotiation.
        Senator Manchin. I noticed you answered, concerning on
    Syria, what success we might be having, if any, or to what
    degree, on securing the chemical weapons and disposing of them.
    I know one of our colleagues were very hopeful that that is on
    a time track to be successful. If not, how far behind are we?
        If we are looking at Syria with chemicals, we are looking
    at Iran with nuclear, and what would that proliferate the
    region if we allow Iran to have this? It is going to be, I
    would think, a proliferation for that whole part of the world.
        General Austin. Absolutely, sir. An Iran with a nuclear
    weapon is a very dangerous situation, not only for the region,
    but also for the world. Certainly, I have every reason to
    believe that our leadership's been clear about what our policy
    is--I have every reason to believe that we are going to stand
    by that policy, going forward.
        Senator Manchin. I want to ask the question about Ukraine.
    Are we prepared to move, militarily, into Ukraine for the
    support of that government that we have acknowledged?
        General Austin. Sir, I would be out of my lane there to
    answer a question about Ukraine. Ask Phil Breedlove to
    probably----
        Senator Manchin. I think both of you all know the strength
    of our Defense Department, with having the ability to go in
    that direction, if need be. Or have the Russians already
    calculated we will not go down that route?
        General Austin. I think our leadership's been clear early
    on that they are looking for other options to deal with this
    problem, other than the military options. Certainly, we have
    great capacity in our military, but I think, from their
    perspective, from what I have seen and heard reported, that
    there are better tools to use in this endeavor.
        Senator Manchin. Okay.
        Then, General Rodriguez, South Sudan has seen thousands
    killed in fighting between government troops and rebel forces,
    and the United States has been active in supporting South
    Sudan's independence, but it is a very dangerous situation for
    the South Sudan's citizens, especially since peace talks
    between the rebels and the government seem to be on hold right
    now. What engagement does AFRICOM have in this situation? What
    do you think the United States could do to assist?
        General Rodriguez. Sir, we continue to engage the Sudan
    People's Liberation Army (SPLA) on a military-to-military level
    to continue to have them take into account their people and
    their forces, because part of the SPLA, of course, has
    splintered off to split with the rebels, so that we continue to
    encourage them to get together, just like the diplomatic corps
    is working to get the opponents and the leadership together
    there.
        The best thing that we can do, militarily, is to continue
    to coordinate with our partners in the region to ensure that
    they do not do anything that will upset or make it worse. So,
    the Ugandans, who have forces in there, we are working with
    them to ensure that they do not do anything to have a negative
    impact.
        Senator Manchin. Thank you.
        One final question, sir, to either one. I think, on Syria,
    have we been able to identify any of the rebels that we would
    consider to be now friendly, or ones we should engage with or
    arm or work with?
        General Austin. This has been a challenge throughout, sir,
    but I would say that--my portfolio does not include----
        Senator Manchin. We see all those stars there; we just
    think you have all the answers. [Laughter.]
        General Austin. Yes, sir. But, to be short, yes, there are
    elements in Syria that we can work with, going forward.
        Senator Manchin. I'll finish up. I know that in Syria, at
    first, some of my colleagues said, ``if we would have gotten
    involved first, we could have identified who would have been
    more of an ally for us to fight Assad's regime.'' Since that
    didn't materialize, and as it is splintered apart, I am
    concerned now--and the only thing I have heard said among
    people of knowledge, that if we start disbursing weapons, we
    can be assured of one thing: all sides will have American
    weapons.
        General Austin. Certainly, you have to be prudent about
    what you do and how you do it, sir, and I think the vetting of
    folks that you want to support is critical to this overall
    effort.
        I would also say that it requires teamwork, not only on our
    part, but on the part of all the folks that are in the region,
    all the countries that are in the region. I think if there is
    better unity there, in terms of who to support and how to
    support them, I think that this gets better in a hurry.
        Senator Manchin. Thank you both, very much.
        Chairman Levin. Thank you, Senator Manchin.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to thank both of you for your distinguished service
    to our country, and your leadership, particularly with the
    challenges we have heard about today for our country.
        I wanted to ask you, General Austin, the Commission on
    Wartime Contracting found in--it was in a report issued in 2011
    that as much as $60 billion of U.S. Government contracting
    funds had been wasted or misspent in Iraq and Afghanistan and
    was actually provided as the second largest source of income
    for insurgents, was actual U.S. contracting dollars. As a
    result of that, I think you know I worked with then-Senator
    Brown to introduce S. 341, what's called the ``No Contracting
    with the Enemy'' language to give DOD the authority to cut
    through the red tape to be able to terminate contractors that
    were colluding with insurgents much sooner in a much more
    efficient fashion.
        Then, this year we have also updated that authority in work
    done in this committee. I worked with Senator Blumenthal to
    expand this authority to other combatant commands. We have
    already saved money doing this. Can you give me an update on
    where we are with terminating contracts, keeping money--
    taxpayers' dollars--out of the hands of our enemies with
    respect to this authority?
        General Austin. Yes, ma'am. To date, we have terminated 11
    contracts, totaling about $31 million. There are others that
    are in the process right now that we continue to review. This
    is a comprehensive review that requires the input of a number
    of different elements.
        I would say an important part of this process, though, is
    the prescreening that now goes on before we enter into the
    contract negotiation. I think that has been instrumental in
    slowing down or eliminating a number of opportunities that the
    enemy would have had to bleed off more money.
        Senator Ayotte. I am hoping to visit Afghanistan soon, and
    one of the concerns I have is that Task Force 2010 has now been
    moved out of Afghanistan, and I am concerned that, as I
    understand it, with the transition of many of our forces
    leaving, that we will actually, in some instances, be relying
    more heavily on contractors. Therefore, the screening process
    becomes very important, as you identified, but also the ability
    to terminate contracts if there is a mistake made on screening.
        So, what is the thought process of taking Task Force 2010
    out of Afghanistan, where I think there will be even more
    contractors that we really need to make sure that we are not
    allowing taxpayers' dollars to get in the wrong hands?
        General Austin. As we go forward and we are required to
    shrink our footprint, there are decisions that we have to make
    about what we must keep and what we cannot keep and what we can
    do from other locations. What we have to do is be more prudent
    about our policies and procedures, in terms of entering into
    the contracts at the front end. I think, again, this is helpful
    in also screening the contractors.
        Certainly, it makes it more challenging if they are not in
    theater, but we are going to have to rely on our leadership a
    bit more to help out in this endeavor.
        Senator Ayotte. I would say this. In terms of the work done
    by Task Force 2010, I think it is really important that this is
    a core function, because, if we are going to ask taxpayers to
    provide any more money there, just to make sure that it is
    getting in the right hands. So, I hope that, as we look at the
    footprint, this may be something that we are considering, of
    having them on the ground to make sure that our dollars are
    used wisely.
        I wanted to ask you, General Rodriguez--certainly, just
    hearing both of your testimony today about the growing presence
    and threat of al Qaeda is very chilling. You are serving during
    very challenging times. In your written statement, General
    Rodriguez, you said that al Qaeda affiliates and adherents
    operating in North Africa include Ansar al-Sharia in Benghazi
    and Ansar al-Sharia in Darna. So, these groups obviously are
    associated with al Qaeda. Is that true?
        General Rodriguez. Yes.
        Senator Ayotte. Recently, as I understand it, in January,
    the State Department designated Ansar al-Sharia in Benghazi and
    Ansar al-Sharia in Darna as foreign terrorist organizations. Is
    that true?
        General Rodriguez. Yes, ma'am.
        Senator Ayotte. The recent January Bipartisan Senate
    Intelligence Committee report that was issued on a bipartisan
    basis about the attacks on our consulate on September 11, 2012,
    that obviously killed four brave Americans, that said in that
    report, that individuals affiliated with Ansar al-Sharia
    participated in the attacks on our Consulate. There have also
    been press reports of members of Ansar al-Sharia quite openly
    operating within Libya, including, I guess, having coffee in
    cafes and things like that.
        So, I guess my question to you, General Rodriguez, is--
    certainly, now based on the designation of Ansar al-Sharia in
    Benghazi as a foreign terrorist organization, as well as Ansar
    al-Sharia in Darna--to the extent that we have intelligence
    that these individuals participated in the attacks on our
    consulate on September 11, 2012, my question is: do we have the
    legal authority to make a targeted strike, as we have done, for
    example, in places like Yemen, against these individuals, who
    are clearly affiliated with al Qaeda, have participated in an
    attack that obviously killed four brave Americans in a
    terrorist attack? So, foreign terrorist organizations,
    designated as such, have killed Americans. Why haven't we taken
    a targeted attack? How come we haven't taken greater action
    there?
        General Rodriguez. Ma'am, the lead Federal agency for that
    is the Federal Bureau of Investigation. We continue to support
    them with all the collection that we do and we can do. I have
    to tell you, it is a tough area to operate in, because of the
    distance and the support.
        The rest of the question, ma'am, I would like to take for
    the record and I will talk to you offline or----
        Senator Ayotte. Or in a classified setting?
        General Rodriguez. Yes, ma'am.
        [The information referred to follows:]

        General Rodriguez, PDASD Reid (SOLIC), and Brigadier General Cross
    (CJCS General Counsel) met with Senator Ayotte on April 9, 2014, in a
    classified setting in the Capitol. The meeting answered the insert for
    the record (IFR) emanating from Senator Ayotte's question to General
    Rodriguez on March 6, 2014. The subject of the IFR and meeting was
    Foreign Terrorist Organizations in Libya.

        Senator Ayotte. I appreciate it. Thank you. I think this is
    an important issue, particularly now that we have clearly
    designated them a foreign terrorist organization.
        General Rodriguez. Yes, ma'am.
        Senator Ayotte. Thank you.
        General Rodriguez. You are welcome.
        Chairman Levin. Thank you, Senator Ayotte.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chair.
        Thanks, to both of our witnesses, for your helpful
    testimony today and your service.
        General Austin, I think I am right on this, my memory from
    our earlier discussions, you were the Commander of U.S. Forces
    in Iraq at the time of the completion of U.S. withdrawal in
    December 2011, correct?
        General Austin. I was, sir.
        Senator Kaine. I know, from talking with Iraqi Government
    leadership, how well your service there was regarded. The U.S.
    Government and military was in negotiation with Iraq at the
    time about whether the United States would maintain some
    residual force in Iraq past December 2011. But, because we
    could not reach an agreement with the Iraqi Government that
    satisfied even minimal criteria on our side, basically they
    really didn't want us to stay. We ended up doing that full
    withdrawal in December 2011. Do I have the facts basically
    correct?
        General Austin. Yes, sir.
        Senator Kaine. So, you must have a little bit of a feeling
    now, as the head of CENTCOM, that you have seen this movie
    before, with respect to the discussion in Afghanistan about a
    BSA and the maintenance of some post-withdrawal residual force.
        General Austin. Yes, sir. There is a difference, though. If
    I may?
        Senator Kaine. Please.
        Senator Kaine. The difference is that whereas, the Iraqi
    people were not really excited about us staying there; the
    leadership, to include the Prime Minister, were not excited
    about it, either. The difference is that, in Afghanistan, the
    people want this. We have seen that, by the vote of a loya
    jirga. The leadership that we talk to, that is around the
    President, the senior military, all of them think that this is
    a good idea. We have even seen some of our adversaries in the
    region say it is a good idea, for the sake of the stability of
    the region. Certainly, there are other regional leaders
    throughout the region that really think that, in order to
    stabilize Afghanistan, going forward, and the region, this is
    something that we ought to do.
        Senator Kaine. In fact, General Austin, not only is there
    relatively strong support in Afghan civil society for us
    remaining, there are some signs that Iraqi leadership has
    regrets about their decisions at the end of that period in
    2011. You and I were together in Bahrain at a security council,
    the Manama Security Dialogue in December 2013, and Iraqi
    Foreign Minister Zabari was part of a panel and commented very
    openly, ``Afghanistan should not make the mistake that Iraq
    made, that we made, in dealing with the Americans and in trying
    to find a way to have a post-combat operation residual
    presence. We did not want it, and the United States withdrew,
    and we regret it now because of what is going on there.''
    Foreign Minister Zabari has said this publicly, and has even
    indicated that he has made these same statements to President
    Karzai. You understand that, as well.
        General Austin. I have not heard that, specifically, until
    just now, sir, but there are indications that--there are folks
    now that see the tremendous value of having a good, strong
    relationship with us. I think, if you talked to the Prime
    Minister today, he would say that, ``We have a relationship, we
    have a Strategic Framework Agreement that we have not fully
    exploited, and we ought to take a serious look at that.'' That
    can be the foundation to build upon, going forward, for other
    things.
        Senator Kaine. I hope that the Afghan public, the military,
    the other leadership, loya jirga, et cetera--I do think their
    will is very strong that we continue in this residual presence.
    I think your answers to Senator McCain about, ``It may not be
    productive to have additional discussions with President
    Karzai, but those discussions do need to continue with the new
    government''--I strongly support it.
        General Austin, you have indicated, I believe, that you
    think Syria is one of the most complicated situations you have
    seen during your entire military career. DNI Clapper has
    testified recently before hearings in the Senate, and he
    indicated that he viewed the battlefield situation in Syria as
    a stalemate. Some of your earlier testimony was Assad's team
    thinks they are winning. But, do you basically look at the
    situation, as you understand it in Syria now--do you think
    either side can win in the foreseeable future? Assad may gain
    ground or lose ground. Or, do you tend to think that it is in a
    long-term stalemate mode?
        General Austin. I think operationally, sir, it is a
    stalemate, and I think that it will remain a stalemate for some
    time to come. It will wax and wane, in terms of activity, but,
    I think, by and large, for the foreseeable future, I expect
    that it will be a stalemate.
        It is dynamic, however. Whereas, operationally, one side
    will have a temporary upper hand, another side--it will go back
    and forth. The humanitarian situation on the ground will
    continue to atrophy. I think that, if left unchecked, the
    foreign fighter population will continue to grow in that area.
    Again, the refugee situation will continue to put pressure on
    the neighboring states: Jordan, Lebanon, Iraq, and Turkey.
        Senator Kaine. Thank you.
        General Rodriguez, in responding to Senator King's question
    about the bigger picture, ``What is the way to defeat this
    proliferation of al Qaeda-connected groups?''--you said,
    ultimately, you needed a multipronged strategy to deal with
    disenfranchised people, people who do not feel like they have
    hope. They live in countries where the systems of government or
    the economies do not lead them to believe that they have a path
    to success. That is the beginning of some of this recruiting
    effort.
        AFRICOM is different than the other commands, in that you
    organize, in a very kind of multipronged way, with other
    partners, whether it is U.S. Agency for International
    Development (USAID), intelligence agencies, trade agencies.
    Talk a little bit about how, in your work in AFRICOM, that form
    of organization where these multipronged agencies are engaged
    is helpful to the work that you do.
        General Rodriguez. Yes, sir, thank you.
        The interagency feature of AFRICOM is a huge help, and
    because of the people from all of those agencies, whether it be
    USAID or the DNI, as you mentioned, we are able to do a good
    job of coordinating the efforts and reaching out to leverage
    all the capabilities of the U.S. Government and to help to
    communicate and coordinate across those boundaries that we all
    have.
        Senator Kaine. Great. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Kaine.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Just one follow-up, because I have already had my turn, but
    on a subject, General Austin, that has not been talked about
    yet. I think we all agree that Israel is our best friend in the
    region, and we all understand that, back in 1979, when they had
    the Accords, that there has not been a problem between the
    countries of Egypt and Israel during that entire time.
    Currently, the Egyptian military appears to be engaged in a
    tough counterterrorism fight in the Sinai. I would ask you,
    first, would you agree that the Egyptians have significantly
    increased their efforts in the Sinai, and that the fight
    against extremists there is important to the security of both
    Egypt and Israel?
        General Austin. Sir, I would agree that they have
    intensified their efforts. I would also agree that this fight's
    important, not only for the country of Egypt, but potentially
    for the region as a whole.
        Senator Inhofe. Okay. I appreciate that, and I agree with
    that. There's a lot of misunderstanding, back when we had the
    argument about the Apache helicopters. But, I'll ask you. From
    the military perspective, would the resumption of the delivery
    of the Apache helicopters assist the Egyptians in their efforts
    to fight terrorism?
        General Austin. First, sir, I'll say that I support the
    President's policy. But, from a military perspective, just
    looking at what the Egyptians have done in the Sinai and the
    equipment that they are using, the Apache has been very
    instrumental in their efforts there.
        Senator Inhofe. Is that ``yes''?
        General Austin. That's a yes, sir.
        Senator Inhofe. Thank you very much.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you.
        Any additional questions? Senator King? Senator Kaine?
        Senator King. One.
        Chairman Levin. Senator King.
        Senator King. One additional question.
        General Austin, you heard my exchange with General
    Rodriguez about how do we deal with the larger question of the
    expansion of al Qaeda? I just wondered if you had thoughts on
    that, since you've been fighting this battle off and on for
    some time. How do we develop a long-term winning strategy?
        General Austin. I certainly agree with my colleague, here,
    Dave Rodriguez. We have been fighting together for a long time.
    I think we see things about alike.
        This is a whole-of-government approach by many governments.
    So, I think this is an idea that we have to counter over time;
    and, in order to defeat an idea, you need a better idea. So, I
    think we have to work together, as a government, with other
    governments to really get after this. I also think we have to
    get after the causes that allow those ideas to flourish. In
    conjunction to what Dave said earlier, you have to continue to
    put pressure on the networks, you have to be faster and more
    agile than they are, you have to be lethal, where required.
    But, again, that will only solve a part of the problem. It
    requires a much more comprehensive approach, and I think that,
    going forward, we need to do better at that.
        Senator King. A similar but somewhat unrelated question. It
    seems to me that the rise of the Sunni jihadists in Syria
    create a geopolitical opportunity for us, in the sense that it
    aligns our interests with Iran and Russia. All three of us are
    threatened by al Qaeda-like and al-Nusra-like institutions. To
    the extent that the civil war in Syria continues and the
    radicalization of the opposition continues to be in none of
    those three major countries' interests. Do you see an
    opportunity there that perhaps Iran and Russia, who are Assad's
    principal patrons, might, at some point in the reasonably near
    future, say, ``Hey, we are for Assad, but we see this as a
    breeding ground for terrorists that are going to come back and
    bite us in Chechnya or in Iran''? Do you see what I am driving
    at, that there may be some--that this may be an area where we
    can do some negotiation to solve this problem in Syria because
    of the commonality of interests?
        General Austin. Yes, sir, I would not go so far as to say
    that we currently have common interests with Iran, as with
    respect to Syria.
        Senator King. I realize that term is weird to hear, but we
    do have a common enemy, in this case.
        General Austin. I would agree that there is an opportunity
    here, sir, that, if we can solve this problem, then it will
    begin to facilitate the solution of a number of other problems
    in the region. But, it will require the cooperation of Russia
    and other countries in the region in order to get this done.
        Senator King. You have just made the point, I think, that
    the Assad regime is almost wholly dependent, is it not, on the
    support of Russia and Iran?
        General Austin. They are very dependent, yes, sir.
        Senator King. Thank you, Mr. Chairman.
        Chairman Levin. Thank you.
        I wonder if you, just briefly, would agree with me that, in
    addition to the problem of the al Qaeda, their leadership,
    their ideology, part of the problem is the support they get
    from some very well-heeled elements. Those madrassas in
    Pakistan that produced the extremists that attacked us and
    helped to provide a safe haven in Pakistan, those madrassas are
    funded by some very well-heeled, wealthy elements that have an
    extreme ideology. So, it is not just disenfranchised folks
    here. It's not just poverty that is a problem here, it is also
    an element in that ideology that is a problem as well and we
    need to deal--in terms of a more comprehensive picture, we
    would better understand that, and then also try to figure out
    ways to deal with that. Would you agree with that?
        General Austin. Yes, sir, I would. This activity requires
    money, to your point, and lots of money. To better understand
    the activity, you have to be able to follow the money. So, it
    therefore requires a whole-of-government approach.
        I am encouraged by what I am hearing and seeing, that there
    is an interest on the part of the Pakistani Government to have
    better control over what is being taught in the madrassas. I
    think that is a positive step, going forward, that will help to
    get after this.
        Chairman Levin. There's a lot of Gulf money that's coming
    into those madrassas, as well, was not there? Is not there?
        General Austin. Yes, sir.
        Chairman Levin. Okay.
        Generals, both, thank you. We really appreciate your
    service and your testimony.
        We'll stand adjourned.
        [Whereupon, at 11:24 a.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator James M. Inhofe
                future u.s. nuclear reductions/cluster munitions
        1. Senator Inhofe. General Austin, the Department of Defense (DOD)
    2008 Policy on Cluster Munitions and Unintended Harm to Civilians
    affirmed that cluster munitions have a clear military utility,
    providing distinct advantages against a range of targets, and resulting
    in less collateral damage than unitary weapons. It also acknowledged
    the need to minimize the unintended harm to civilians and civilian
    infrastructure associated with unexploded ordnance (UXO) from cluster
    munitions. The policy therefore required that after 2018, the military
    departments and combatant commands only employ cluster munitions
    containing sub-munitions that, after arming, do not result in more than
    1 percent UXO across the range of intended operational environments. I
    understand that the Air Force Sensor-Fuzed Weapon (SFW), a next-
    generation area weapon, was designed and has been further modified to
    achieve these policy objectives. While initial blocks of SFWs procured
    by the Air Force approached but did not meet the 1 percent UXO rate,
    the more recent Preplanned Product Improvement (P3I) version has been
    validated to have a UXO rate significantly below 1 percent, making it
    the only air-launched cluster munition in the U.S. inventory that
    complies with DOD's 2008 policy. Additionally, I understand that the
    P3I version comprises less than half of the SFW inventory. What value
    do you put on area weapons in deterring enemy forces from considering
    massing military assets to attack U.S. and allied forces?
        General Austin. I continue to find value in area weapons as an
    effective means to deter and, if required, engage massed enemy assets.
        While cluster munitions provide a distinct advantage against a
    range of targets, U.S. Central Command (CENTCOM) takes careful
    consideration regarding the negative impacts of potential collateral
    damage and UXO, but considers the risk as low related to other
    battlefield vulnerabilities. In the context of Afghanistan, where U.S.
    and allied forces often find themselves engaged in close proximity to
    civilian populations, cluster munitions have little utility. Possible
    collateral damage from the use of such area weapons would likely be
    counter-productive to longer-term counterinsurgency objectives.

        2. Senator Inhofe. General Austin, is it anticipated that area
    weapons would contribute in defending against hostile action by Iranian
    land and/or maritime forces, should deterrence fail?
        General Austin. If we are confronted with hostile action by Iranian
    forces, I anticipate scenarios where area weapons would be required to
    effectively defend against that threat. In the past, we have seen
    examples of enemy tactics where using a combination of area and unitary
    weapons would provide us the best ability to defeat an attacking force.
    This combination of area and unitary weapons is particularly useful
    when dealing with an unpredictable adversary.

        3. Senator Inhofe. General Austin, what capability does the SFW
    provide that other munitions in the U.S. inventory cannot in this
    environment?
        General Austin. Similar to other area weapons, the SFW can be
    employed to efficiently and effectively engage area and imprecisely
    located targets. However, the SFW is superior to other area weapons
    containing submunitions because it is comprised of submunitions that
    have improved reliability. This improved reliability provides for a
    ``cleaner'' battlefield by reducing the risk from UXO. The P3I version
    of the SFW is currently the only weapon that incorporates submunitions
    that meet the 1 percent UXO rate prescribed by the 2008 DOD Policy on
    Cluster Munitions.

        4. Senator Inhofe. General Austin, I have learned that both the
    Navy and the Air Force are exploring the capabilities offered by the
    maritime variant of the SFW (CBU-105 D/B). Given the threat that this
    variant can address and the relevance of the Joint Staff's Air-Sea
    Battle Concept in this regard, can you expedite the process and
    generate efficiencies if this effort going forward were pursued and
    financed jointly?
        General Austin. Discussions regarding the process and any
    efficiencies of a joint procurement strategy are better answered by
    those who are involved in the Program of Record. With respect to the
    Central Region, I believe the currently planned product improvement
    program, if delivered no later than 2018, as prescribed by the 2008 DOD
    Policy on Cluster Munitions, is sufficient. If however, the threat in
    our area of responsibility (AOR) increases or the funding/fielding plan
    precludes on-time delivery, the option to request expedited delivery
    through the Joint Emergent Operational Need process remains a course of
    action. In the meantime, I will continue to track the progress of this
    weapon system and address it in my Program Budget Review or Integrated
    Priority List, if appropriate.

        5. Senator Inhofe. General Austin, what type of consequences would
    you foresee if U.S. forces could rely only on unitary systems to defend
    against an Iranian ground or maritime attack?
        General Austin. I judge that relying solely on unitary systems to
    defend against an Iranian ground or maritime attack will increase the
    risk of losses to friendly forces as well as increase time to achieve
    our operational planning objectives. Targets such as fast attack craft,
    maneuvering ground forces, and aircraft on parking aprons can move
    quickly, avoiding standoff and indirect fire weapons. In addition,
    their size can make them practically invulnerable to anything other
    than a near direct hit from a unitary weapon. In these instances,
    cluster munitions provide a distinct advantage over unitary systems.

        6. Senator Inhofe. General Austin, what costs in terms of
    protecting friendly forces, materiel, and dollars would be incurred?
        General Austin. To date, we have not accomplished the detailed
    analysis required to accurately quantify related costs from relying
    solely on unitary weapons. Additionally, the preponderance of our
    operational focus has been on counter-insurgency and counter-terrorism
    and the use of cluster munitions in support of those missions is
    extremely rare.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                                  intelligence
        7. Senator Chambliss. General Rodriguez, of the 28 embassies
    worldwide that are deemed high risk, 15 are in Africa. As the Vice
    Chairman of the Senate Select Committee on Intelligence, I would like
    to know how well-connected to the Intelligence Community are you with
    regards to current threat assessments and analyses?
        General Rodriguez. [Deleted.]

        8. Senator Chambliss. General Rodriguez, how will proposed budget
    cuts impact your capabilities with regards to the security of Americans
    serving in your AOR?
        General Rodriguez. [Deleted.]

                 joint surveillance target attack radar system
        9. Senator Chambliss. General Austin and General Rodriguez, the
    Joint Surveillance Target Attack Radar System (J-STARS) platform
    provides you with vital surveillance in the form of Ground Moving
    Target Indication (GMTI) to support targeting and attack operations.
    The President's budget proposal calls for a 40 percent reduction in our
    J-STARS fleet presumably to fund the acquisition of a replacement
    platform. Can the Air Force meet your battle management command and
    control requirements with this proposed reduction in aircraft?
        General Austin. I cannot speak to the specifics of the Air Force's
    J-STARS fleet. However, I am confident that as we reset our posture in
    the CENTCOM AOR, the Air Force will continue to effectively support our
    surveillance and battle management command and control requirements.
        General Rodriguez. [Deleted.]

        10. Senator Chambliss. General Austin and General Rodriguez, can
    you speak to the importance of having the GMTI capability available in
    your AORs?
        General Austin. GMTI, particularly when used in concert with other
    sensors, plays a significant role in supporting ground troops with
    real-time information and is in use across the CENTCOM AOR to track
    ground movement of possible insurgent or foreign fighters. In addition,
    GMTI supports maritime operations, protecting U.S. and coalition
    military vessels, and is further utilized in the active monitoring of
    commercial ship traffic and the free-flow of trade in the region.
        General Rodriguez. [Deleted.]

                                      a-10
        11. Senator Chambliss. General Austin, from my discussions with
    Army personnel in Afghanistan and with those who recently returned from
    Afghanistan, I've gained an even greater appreciation for the role the
    A-10 has played in providing close air support (CAS) as well as forward
    air control and combat search and rescue (CSAR) support in your theater
    of operations. The Air Force announced this week plans to divest its
    entire inventory of A-10 aircraft. Do you personally support this plan?
        General Austin. The Services are best suited to make these kinds of
    decisions based on strategic priorities and missions. As we plan for
    future contingencies within the current fiscally-constrained
    environment, I believe the Services are looking to determine how best
    to balance needed capabilities with future requirements. There are a
    number of platforms in the Air Force's inventory able to provide CAS,
    including F-16s and F-15Es. With or without the A-10, I am confident
    the Air Force will continue to provide CAS and support other missions,
    as required.

        12. Senator Chambliss. General Austin, in your opinion, how will it
    impact soldiers on the ground and their confidence in the Air Force to
    support them?
        General Austin. In a combat zone, soldiers are often concerned that
    they will have adequate CAS, forward air control and personnel recovery
    assets when and where they need them.
        Although many soldiers are most familiar with the A-10, it is not
    the only platform used for CAS, forward air control, and personnel
    recovery operations. In fact, in Afghanistan, aircraft other than the
    A-10 have flown approximately 80 percent of these missions. In addition
    to the A-10, the Air Force also has the F-15E, F-16, B1, B-52 and soon
    will have the F-35. It's also worth noting that these aircraft have
    much higher transit speeds than the A-10, thus enabling a much quicker
    response to troops in contact with hostile forces in Afghanistan. As
    troops continue to train and conduct joint operations with the Air
    Force, they will gain further confidence in the available platforms and
    munitions and their ability to meet mission requirements.

        13. Senator Chambliss. General Austin, can you speak to the
    flexibility of the A-10 in performing not just CAS, but also forward
    air control, ground attack, and CSAR missions?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force, however, the airmen who fly the
    aircraft have performed well in a variety of missions in both
    Afghanistan and Iraq.

                                  afghanistan
        14. Senator Chambliss. General Austin, we are fast approaching the
    arbitrary 2014 deadline for transitioning out of Afghanistan, and still
    no concrete plan has been offered for review by the administration.
    Furthermore, DOD's budget request did not include a firm request for
    Overseas Contingency Operations (OCO) funds. Under Secretary of Defense
    (Comptroller) Robert Hale stated last week that a separate and final
    OCO request will be sent to Congress in the months following the troop
    level announcement by the President. I believe that to be grossly
    inadequate as it does not allow your planners time to strategize for
    future operations in Afghanistan and the military reset operations that
    OCO funds. What is your plan to mitigate that impact?
        General Austin. Late last year, CENTCOM developed and submitted a
    contingency plan for post-2014 Afghanistan activities and validated
    detailed planning assumptions to ensure our efforts were vetted with
    the Services, the Joint Staff, and the National Security Council. This
    plan was developed assuming that President Karzai would sign the
    Bilateral Security Agreement. Unfortunately, that did not occur. We
    continue to reassess and refine our planning pending presidential
    guidance as our number one priority, until an enduring presence
    decision is made.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
          surging al qaeda threat--mismatch between threats and budget
        15. Senator Ayotte. General Rodriguez, in your written testimony,
    you say that the activity of the al Qaeda network in Africa is growing
    and you describe that threat as one of your primary near-term
    challenges. You describe the violent extremist network in Africa as
    increasingly syndicated and active. You also state that al Qaeda in the
    Arabian Peninsula, which has connections in Africa, is ``resurging and
    remains intent on targeting the United States and U.S. interests
    overseas.'' You go on to state that, ``terrorist groups in North Africa
    and West Africa have expanded their operations, increasing threats to
    U.S. interests.'' Yet, in your statement's conclusion, you describe the
    U.S. Africa Command (AFRICOM) AOR as an ``economy of force region.''
    Doesn't that mean you are being forced to manage with fewer resources
    than you need?
        General Rodriguez. The current funding level is sufficient to
    accomplish our mission, with some risk. We refer to our AOR as an
    ``economy of force region'' as we feel we can achieve effective results
    with relatively small expenditures, if we have sufficient operational
    flexibility, match resources to priorities, and leverage allies and
    partners. As an example, our maritime exercise Obangame Express in the
    Gulf of Guinea incorporates ships from European and African nations to
    augment 1 U.S. vessel to provide maritime awareness training for 21
    nations plus 2 African regional organizations. Additionally, our
    relationships with our allies and partners have allowed us to leverage
    their Intelligence, Surveillance, and Reconnaissance (ISR) and
    intelligence capabilities, which has helped to mitigate shortfalls that
    increase risk to our mission.

        16. Senator Ayotte. General Rodriguez, what resources necessary to
    accomplish your mission do you currently lack?
        General Rodriguez. [Deleted.]

        17. Senator Ayotte. General Rodriguez, what are your leading
    concerns regarding resource shortfalls?
        General Rodriguez. [Deleted.]

        18. Senator Ayotte. General Rodriguez, if we under-resource
    AFRICOM, what are some of the potential risks and dangers to our
    national security interests?
        General Rodriguez. In the near-term, under-resourcing AFRICOM would
    reduce the command's ability to counter immediate threats to U.S.
    national security interests, including the increasing activity of
    African al Qaeda affiliates and adherents, and illicit trafficking
    networks. It would reduce the command's ability to support operations
    to protect U.S. personnel and facilities. We would likely see
    reductions in ISR, resulting in reduced information on the activities
    of organizations who might be actively planning to target U.S. citizens
    and our interests overseas, including U.S. diplomatic and military
    personnel. We could also see reductions in personnel recovery, medical,
    mobility, and response force readiness and capabilities affecting our
    ability to rapidly respond to crises. In the long-term, under-
    resourcing the command would reduce our ability to strengthen military-
    to-military relationships in support of broader U.S. economic,
    political, and security objectives.

                           russian activity in syria
        19. Senator Ayotte. General Austin, how would you describe Russia's
    support for Assad?
        General Austin. Russia continues to provide full spectrum support
    to the Assad regime, including advanced weapon systems and a myriad of
    military aid to bolster Syria's defensive capabilities and Damascus'
    operations against Syrian opposition forces. In addition, Russia
    provides Syria political cover in the international arena, particularly
    at the UN Security Council, and Russia's naval presence in the Eastern
    Mediterranean basin is a persistent planning consideration for CENTCOM.

        20. Senator Ayotte. General Austin, what kind of weapons has Russia
    provided Assad?
        General Austin. We know Russia has provided Assad advanced, modern
    air defense and coastal defense systems and has likely also delivered
    small arms ammunition, rockets, and multiple rocket launchers that
    Assad's forces are using to target opposition fighters.

        21. Senator Ayotte. General Austin, has Russia provided S-300
    advanced anti-aircraft missiles to Assad?
        General Austin. At this time we have no indications Russia has
    delivered S-300 missiles or launchers to Syria.

        22. Senator Ayotte. General Austin, has Russia provided Assad's
    forces training?
        General Austin. Yes, Russia and Syria maintain a longstanding
    military relationship that includes military training. Syrian military
    leaders frequently attend technical and leadership schools in Russia,
    and Syrian operators are trained by Russians on Russian-manufactured
    weapons systems. Of note, while Russian military forces maintain a
    continued presence in Syria, it remains unclear if they are providing
    counterinsurgency training.

        23. Senator Ayotte. General Austin, are Russian trainers or
    military personnel in Syria training Assad's forces?
        General Austin. We believe Russian trainers are instructing Assad's
    forces on how to operate Russian-produced weapons systems. However, we
    have not been able to confirm if Russian advisors are providing advice
    or training to Syrian combat operations against the opposition.

        24. Senator Ayotte. General Austin, how would Russia view Assad's
    fall?
        General Austin. While I do not believe the Russian Government is
    intensely loyal to Assad personally, I do believe they would like to
    retain Syria as a Middle Eastern ally and important defense export
    customer. Russia also maintains its only out of area naval facility at
    Tartus, Syria. Given this and other equities, prior to supporting any
    type of transition plan, I think it likely that Moscow would seek
    assurances that any alternative to Assad would protect Russia's
    interests in Syria.

                           dynamic stalemate in syria
        25. Senator Ayotte. General Austin, in your written testimony, you
    state that Syria ``represents the most difficult challenge that I have
    witnessed in my 38-year career.'' You went on further to state that, ``
    . . . I would characterize [the conflict in Syria] as a dynamic
    stalemate with neither side able to achieve its operational
    objectives.'' Can you explain further what you mean by a dynamic
    stalemate?
        General Austin. By dynamic stalemate, I mean that the Assad regime
    and the opposition are tactically and operationally at a stalemate.
    They continue to exchange gains and losses on the battlefield with
    neither able to inflict a decisive defeat on the other. As a result,
    unless something happens to shift momentum in one's favor, the conflict
    is likely to remain in a stalemate for the foreseeable future. At the
    same time, there is a dynamic element to the crisis at large.
    Specifically, the increased proxy actor involvement, the expanding flow
    of foreign fighters, the presence of chemical weapons, and the impact
    of the growing refugee crisis on neighboring countries is significantly
    impacting Syria and the surrounding areas. While the conflict may
    remain in a stalemate (tactically and operationally), the overall
    situation is likely to develop into a region-wide crisis if these other
    elements are not effectively addressed.

        26. Senator Ayotte. General Austin, the former CENTCOM commander,
    General Mattis, said that the fall of Assad would be the ``biggest
    strategic setback for Iran in 20 years.'' Do you agree with that
    statement?
        General Austin. I'm not certain I would characterize the potential
    fall of Assad as the ``biggest strategic setback for Iran in 20
    years.'' However, I do agree that Assad's fall would significantly
    impact Iran's credibility and level of influence in the region. The
    resulting instability could expose tension and fractures among hard-
    liners within Iran's government. The sunk cost of significant
    investments made to the Assad regime could also impact Iran's ability
    to fund and gain support for proxy activity in other parts of the
    region.

        27. Senator Ayotte. General Austin, how would the fall of Assad
    impact Iran?
        General Austin. They would likely lose their only state partner in
    the region. The sunk cost of investments made to Syria could impact
    Iran's ability to fund and gain support for other proxy activity. It
    would represent an operational setback and it would inevitably limit
    Iran's reach in parts of the region. However, they would likely
    continue to pose a threat with their Qods Force activity, cyber and
    ballistic missile capabilities, and maritime presence. I would further
    assess that if Assad falls, Iran's strategic ambition of regional
    hegemony would not be derailed.

        28. Senator Ayotte. General Austin, do you believe it is in the
    interests of the United States for the Assad regime to fall?
        General Austin. I believe it is in the interests of the United
    States, the Central Region, and the Syrian people, that Syria
    transition responsibly to a new and stable government that is
    representative of the Syrian people, capable of effective governance,
    and capable of legitimately representing Syria in the international
    forum. We would much prefer a responsible transition to a government as
    described, as opposed to the fall of Assad, since a fall denotes a
    subsequent period of uncertainty, instability, and even increased
    violence.

        29. Senator Ayotte. General Austin, what is CENTCOM currently doing
    to help bring about the fall of Assad?
        General Austin. CENTCOM's current focus is to support the U.S.
    Government's efforts in achieving a diplomatic or political solution to
    the Syrian conflict. We continue prudent planning on a variety of
    options that could enable the U.S. to do more in addressing other
    difficult challenges present inside Syria. Our goal is to provide
    policymakers with sufficient decision space and present credible
    military response options should they be required to ensure Syrian
    compliance with United Nations/Organization for the Prohibition of
    Chemical Weapons efforts to rid Syria of chemical weapons. We also
    continue to strengthen bilateral defense relationships with nations
    adjacent to Syria and most impacted by the conflict, in order to
    protect our vital interests and mitigate spillage from Syrian
    instability. We also continue to support United States Agency for
    International Development efforts to provide humanitarian assistance to
    Syrian refugees and decrease instability inside the host nations.

        30. Senator Ayotte. General Austin, what more would the United
    States and our partners have to do to end this stalemate and bring
    about Assad's fall?
        General Austin. The decision to do more with respect to Syria is a
    policy decision. Absent a shift in the dynamics on the battlefield, the
    Syrian stalemate is likely to continue indefinitely. There are a few
    options that would limit risk to the United States while possibly
    helping to bring about the necessary shift in the battlefield dynamics.
    For instance, efforts to train and equip select moderate opposition
    forces to enhance their effectiveness could help tilt the momentum in
    their favor, thereby placing increased pressure on Assad. Additionally,
    intelligence sharing and border security initiatives aimed at curbing
    the flow of extremist foreign fighters into Syria would aid in diluting
    extremist views and countering Assad's narrative that he is justified
    in fighting Islamic extremism. Putting diplomatic pressure on Russia,
    Iran, and Lebanese Hezbollah to restrict their support to Assad would
    further limit the regime's capabilities.

               iranian intercontinental ballistic missile threat
        31. Senator Ayotte. General Austin, as you know, the Director of
    National Intelligence, James R. Clapper, has said that the Iranians are
    pursuing two systems that could have intercontinental ballistic missile
    (ICBM) capability as early as 2015. On February 27, Admiral Haney
    testified before the Senate Armed Services Committee at the U.S.
    Strategic Command posture hearing that, ``Iran is still believed
    capable of fielding a long-range ballistic missile that could hit the
    United States by next year.'' What is your assessment of Iran's ICBM
    programs?
        General Austin. There are many factors to consider, but Iran does
    have ongoing space launch vehicle programs that incorporate technology
    potentially applicable to intercontinental ballistic-class missiles.
    Such launch vehicles could be capable of ICBM ranges, if configured as
    such. Actual fielding of an ICBM is likely several years away due to
    the significant technical complexities inherent in space launch vehicle
    development.

                                      a-10
        32. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many Mission Reports (MISREPS)
    have been filed by A-10s?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        33. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many CAS employments with nine
    lines?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        34. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many MISREPS have been filed
    by F-16s, F-15Es, and B-1s?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        35. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many CAS employments with nine
    lines for the same time period for F-16, F-15E, and B-1s?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        36. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many Civilian Casualty
    (CIVCAS) events has the B-1 been associated with?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        37. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many CIVCAS events has the B-1
    caused?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        38. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many CIVCAS events has the A-
    10 been associated with?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        39. Senator Ayotte. General Austin, from January 1, 2002, to
    January 1, 2014, in the CENTCOM AOR, how many CIVCAS events has the A-
    10 caused?
        General Austin. CENTCOM does not maintain this data. This question
    is best answered by the Air Force.

        40. Senator Ayotte. General Austin, if the A-10 is withdrawn from
    service, what aircraft will be fitted with LARSv12 CSAR functionality
    and assume rescue mission commander duties?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force.

        41. Senator Ayotte. General Austin, if the A-10 is withdrawn from
    service, what are the lowest weather minimums that F-16s and F-15Es
    will be allowed to operate under?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force.

        42. Senator Ayotte. General Austin, is CENTCOM requesting A-10
    capabilities after December 31, 2014?
        General Austin. In fiscal year 2015, CENTCOM is requesting 12 x A-
    10s, or appropriate fighter or attack platform, capable of performing
    CSAR/Personnel Recovery Command and Control mission sets.

        43. Senator Ayotte. General Austin, please list all Air Force
    fighter aircraft being requested in fiscal year 2015.
        General Austin. Generally, CENTCOM requests capabilities to meet a
    wide range of operational requirements, leaving it up to the Services
    to determine the platform or unit that will support the missions. Based
    on the capabilities required in the CENTCOM AOR in fiscal year 2015 and
    the historical support from the Air Force, we anticipate the following:

         1.  12 x F-16
         2.  12 x Fighters (F-16CJ)
         3.  18 x F-22 (prepare to deploy order)
         4.  24 x F-15C (prepare to deploy order)
         5.  24 x F-16CJ (prepare to deploy order)
         6.  18 x F-16 (prepare to deploy order)
         7.  12 x F-15E
         8.  12 x Fighters (F-16 Series)
         9.  6 x F-22 (when sourced, prepare to deply order decrements by
    six)
        10.  24 x F-15E (prepare to deploy order)
        11.  12 x A-10s or CSAR/Personnel Recovery Command and Control
    Capability
        12.  6 x F-15E or Kinetic Strike Capability

        44. Senator Ayotte. General Austin, were A-10 capabilities
    requested by CENTCOM in fiscal year 2014?
        General Austin. Yes, A-10 capabilities were requested in fiscal
    year 2014 and are currently operating in Afghanistan, executing CAS and
    CSAR mission sets.

        45. Senator Ayotte. General Austin, with respect to a potential
    swarm-boat threat in the Persian Gulf, which Air Force aircraft can
    attack swarming boats with a ceiling below 5,000 feet?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force.

        46. Senator Ayotte. General Austin, with respect to a potential
    swarm-boat threat in the Persian Gulf, which Air Force aircraft can
    attack swarming boats with a ceiling below 1,500 feet?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force.

        47. Senator Ayotte. General Austin, in the CENTCOM AOR, which CAS
    weapon would an F-15E or an F-16 use when the weather ceiling is below
    5,000 feet?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force.

        48. Senator Ayotte. General Austin, in the CENTCOM AOR, which CAS
    weapon would an F-15E or an F-16 use when the weather ceiling below
    1,500 feet?
        General Austin. Operational parameters for specific aircraft are
    best addressed by the Air Force.
                                     ______

                    Questions Submitted by Senator Mike Lee
                                      iran
        49. Senator Lee. General Austin, an Iranian negotiator, Abbas
    Arachi, stated earlier this month that his country would not negotiate
    with the west on its ballistic missile program, and General Flynn of
    the Defense Intelligence Agency told this committee that Iran could
    have an ICBM by 2015. This is an issue that has not been addressed in
    the interim deal between the United States and Iran. Do you believe
    that continued progress of the Iranian ICBM program is a threat to the
    United States?
        General Austin. Yes, I do. Iran already has the largest inventory
    of ballistic missiles in the Middle East and continues to make
    incremental progress in its development of space launch vehicles, which
    could be applied to an ICBM program. Unhindered, Iran may eventually be
    capable of fielding a missile with a range of 10,000 km, which would
    enable it to threaten the U.S. Homeland. Achieving such a capability
    within the next several years is unlikely, as Iran still faces numerous
    technical hurdles inherent to space launch vehicle and/or ICBM
    development. However, their continued pursuit of this capability does
    pose a long-term threat to the United States.

        50. Senator Lee. General Austin, should the Iranian ICBM program be
    something that is addressed in the final agreement that we are
    negotiating with Iran?
        General Austin. This ultimately represents a policy decision.
    However, I am concerned about Iran's expanding ballistic missile
    program, which includes efforts to develop space launch vehicles and,
    possibly, ICBMs. These weapons could serve as strategic delivery
    systems for a future nuclear weapon. Thus, any agreement that limits
    Iran's ballistic missile program and long-range delivery capabilities
    would benefit U.S. interests.

        51. Senator Lee. General Austin, what is the military assessment of
    Iranian support of terrorist networks and has this changed any since
    the election of President Rouhani or the announcement of the interim
    agreement this fall?
        General Austin. Despite Tehran's more positive engagement with the
    international community, Iranian support to terrorist networks as a way
    of pursuing regional goals continues. There has been no obvious change
    to Iranian support to terrorism since the election of Ruhani or the
    announcement of the interim agreement in late 2013. The Israeli
    interdiction of an Iranian weapons shipment destined for Gaza
    demonstrated Iran's continued support to Palestinian terrorist
    elements. Further, a Bahraini interdiction of explosively formed
    penetrators and other weapons destined for Bahraini militant groups
    committed to destabilizing Bahrain also illustrated that Iran has not
    slowed its support of terrorist and insurgent groups in the region
    despite the improved atmosphere in nuclear negotiations.

                               al qaeda/terrorism
        52. Senator Lee. General Austin and General Rodriguez, recent
    attacks in the Middle East and North Africa, such as the attack in
    Benghazi, highlight the evolution of al Qaeda over the past decade into
    decentralized, regional organizations in places like Syria, Libya,
    Somalia, and Yemen, with differing agendas and goals. What is the level
    of coordination between these groups or control from a central
    leadership?
        General Austin. Al Qaeda has evolved in its ability to conduct
    attacks in more theaters, particularly since the Arab Awakening. Al
    Qaeda leverages its diffusion as a source of strength and the growing
    connectivity and coordination among al Qaeda's nodes has enabled the
    movement's survival and expansion. Simultaneously, al Qaeda affiliates
    pursue local agendas in support of the movement's broader strategic
    goals. While al Qaeda senior leadership may not control day-to-day
    operations in theater, its strategic guidance is critical to the
    movement's cohesion.
        There are two trends solidifying al Qaeda senior leader's
    significant influence over the diffuse nodes of the movement. First, al
    Qaeda features a growing cadre of geographically dispersed leadership.
    The al Qaeda ``core'' is no longer limited to the Afghanistan-Pakistan
    region, rather, its deputy leader now is in Yemen and senior leadership
    figures are active in Syria and North Africa. This dispersal allows al
    Qaeda's central leadership to be better informed and react more quickly
    in support of al Qaeda nodes in dynamic environments. Second, al
    Qaeda's affiliates and allies continue to support the movement's global
    agenda and seek central leadership guidance to frame local objectives.
        There also remains a high level of coordination between al Qaeda's
    nodes. Al Qaeda has fostered connectivity among its affiliates and
    allies over the past decade, spawning a network with entrenched
    redundancy and cooperation. Despite counterterrorism pressure on al
    Qaeda's core in Afghanistan and Pakistan, the network has grown as the
    movement becomes increasingly interconnected and more resistant to
    counterterrorism pressure. Al Qaeda affiliates share facilitation
    nodes, funding, and guidance. We expect this coordination extends to
    attack planning, terrorist tactics, and improved technology and
    weapons. Furthermore, the affiliates are now the movement's center of
    gravity for expanding coordination. The affiliates drive continued
    expansion, establishing new relationships with emerging groups, and
    overseeing the acquisition of new nodes and individuals on behalf of
    central leadership.
        General Rodriguez. [Deleted.]

        53. Senator Lee. General Austin and General Rodriguez, do you
    believe these extremist groups are more focused on regional goals, such
    as overthrowing governments or establishing control of territory, or on
    attacking U.S. targets?
        General Austin. At the heart of al Qaeda's Grand Strategy is a
    flexible, two-pronged approach to topple regional apostate governments
    and attack U.S. targets and interests. Historically, al Qaeda levels of
    effort toward regional goals and their desire to attack U.S. targets
    have changed as the movement adapted. However, this is not an ``either/
    or'' strategy. In fact, these goals are not mutually exclusive and can
    be pursued in tandem. Additionally, the focus on regional goals and
    attacking the U.S. both contribute to al Qaeda's overarching strategic
    objective, which is the reestablishment of an Islamic Caliphate
    throughout the Middle East and North Africa.
        General Rodriguez. [Deleted.]

                                     syria
        54. Senator Lee. General Austin, the Organization for the
    Prohibition of Chemical Weapons and the international community are
    working under last year's agreement to remove chemical weapons from
    Syria, though progress is slower than the timeline agreed upon. What do
    you believe is the biggest national security threat to the United
    States currently stemming from the Syrian crisis?
        General Austin. The most direct threat to our national security is
    the increasing flow of foreign fighters into Syria. Last year, there
    were 800 or so; now there are in excess of 8,000. They are traveling to
    Syria from the West, North Africa, Europe, and throughout the Middle
    East. The concern is that most of them will return to their countries
    more radicalized and with weapons and valuable experience gained. It is
    possible they will target the west and/or our partners nations. Foreign
    extremists are also taking advantage of the war-torn environment in
    Syria and establishing training and recruitment camps, thus increasing
    capability and building an external framework to facilitate operations
    against the United States and the west.

        55. Senator Lee. General Austin, we are aware that extremist groups
    in Syria, such as the al Nusra front, have ambitions to attack the U.S.
    Homeland, and are also working with moderate groups that we have been
    supporting. I understand that the situation on the ground is fluid, but
    can we guarantee that the assistance we are supplying to moderates in
    Syria are not being used by or to the benefit of extremist groups who
    want to attack the United States?
        General Austin. No, we cannot guarantee the assistance we provide
    doesn't fall into the wrong hands. Undoubtedly, some weapons and funds
    flowing into Syria wind up in the hands of extremists such as Al Nusrah
    Front or the Islamic State of Iraq and Levant (ISIL).
        Al Nusrah Front works closely with all factions of the opposition
    and is often aware of logistics and humanitarian shipments into Syria.
    At times they even acquire and disseminate these shipments to the local
    populace. This, in turn, benefits Al Nusrah Front in the propaganda
    war.
        ISIL continues to fight the opposition for territory and resources,
    often hijacking weapons, materiel, and humanitarian aid shipments for
    its own use. ISIL has acquired advanced weapons and is using them in
    Syria, and has introduced them in the ongoing fight in Iraq's Anbar
    Province.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            THURSDAY, MARCH 13, 2014

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

                U.S. NORTHERN COMMAND AND U.S. SOUTHERN COMMAND

        The committee met, pursuant to notice, at 9:39 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, Udall,
    Manchin, Donnelly, Kaine, King, Inhofe, McCain, Sessions,
    Chambliss, Ayotte.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody. The committee
    meets this morning to consider the posture of our two combatant
    commands in the western hemisphere, and we are pleased to
    welcome General Charles ``Chuck'' H. Jacoby, Jr., USA,
    Commander, U.S. Northern Command (NORTHCOM) and Commander/North
    American Aerospace Defense Command; and General John F. Kelly,
    Commander, U.S. Southern Command (SOUTHCOM).
        Thank you both for the long service that you have provided
    to our country, your leadership, and please pass along our
    gratitude to the men and women, military and civilian, with
    whom you work, as well as their families, for the great support
    that they provide.
        One of the three strategic pillars of the National Defense
    Strategy highlighted in the recent Quadrennial Defense Review
    is to, ``protect the Homeland, to deter and defeat attacks on
    the United States, and to support civil authorities in
    mitigating the effects of potential attacks and natural
    disasters.'' That sums up the mission of NORTHCOM. We look
    forward to hearing how General Jacoby is implementing this
    strategic priority and what impact the budget caps imposed by
    the Budget Control Act (BCA) are having on this mission.
        General Jacoby is responsible for the operation of Homeland
    Ballistic Missile Defense (BMD), the Ground-Based Midcourse
    Defense (GMD) System, which has had several flight-test
    failures caused by problems that need to be corrected and
    demonstrated before we deploy more interceptors. We would be
    interested in his views on the need for testing and improving
    our GMD system, particularly its sensor and discrimination
    capabilities, and on improving its future kill vehicles with a
    new design.
        In its mission to provide defense support to civil
    authorities, NORTHCOM works closely with other Federal agencies
    and with the Governors and the National Guard. We hope to hear
    how the budget request, his budget request, will affect the
    command's ability to respond to natural and manmade disasters,
    and to promote regional security through our security
    partnerships with Canada and Mexico, including efforts with
    Mexico to reduce the twin scourges of violence and illicit
    trafficking of drugs, money, weapons, and people.
        Both of our witnesses face the threat of transnational
    criminal organizations (TCO); organizations that breed
    instability, corruption, and violence throughout the region,
    undermining democratic institutions in civil society with their
    illicit trafficking operations. General Kelly, your prepared
    opening statement goes so far as to call these TCOs
    ``corporations.'' We look forward to your views on the
    effectiveness of our law enforcement, military, and
    intelligence efforts to take on those entities.
        General Kelly, as a result of funding restrictions required
    by the budget caps, the Military Services have reduced their
    support of your requirements substantially, and I hope that you
    will provide our committee with an understanding of the choices
    that you've had to make in mitigating the impact of funding
    cuts. As an example, last year you reported the success of
    Operation Martillo, which fused intelligence and operations
    efforts to take on illicit drug trafficking, and the results of
    that operation were impressive. However, under current and
    proposed funding levels, I understand the Navy will have little
    choice but to reduce the deployments that would support the
    continuation of that operation.
        SOUTHCOM faces a multitude of other security challenges,
    including training and equipping militaries of friendly
    nations; training and equipping peacekeepers for deployment to
    multilateral peacekeeping operations across the globe;
    enabling, advising, and supporting Colombian military and law
    enforcement operations; monitoring the activities of Russia,
    China, Iran, and nonstate actors in the hemisphere; growing
    political instability in Venezuela; and responding to requests
    from the Department of State (DOS) for additional security
    forces and evacuation support. We would be interested, General,
    in any targeted funding or authorities that may be needed to
    carry out those missions.
        Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        I think we all know that, now more than ever, the threats
    we face are no longer confined to geographic boundaries that
    divide our combatant commands. What happens in Latin America,
    in the Middle East, in Asia and Africa, directly impacts the
    security of the U.S. Homeland.
        General Jacoby, this reality is reflected in your prepared
    remarks, where you state that, ``The U.S. Homeland is
    increasingly vulnerable to an array of threats around the
    world.'' This is particularly true with regards to Iran and
    North Korea. North Korea continues to engage with provocative
    actions, including military exercises, nuclear tests, and the
    development of a road mobile missile system. Additionally, the
    recent agreement with Iran has done nothing to halt the
    regime's pursuit of nuclear weapons and their nuclear weapon
    capability and the means to deliver it to our shores. That is
    why I remain committed to pushing efforts to increase the
    reliability of our GMD system, including the development of a
    new kill vehicle for our Ground-Based Interceptors (GBI), as
    well as an additional radar system for the east coast, which we
    actually had started, at one time.
        In our hemisphere, violence is escalating throughout
    Central and South America and Mexico as a result of ruthless
    criminal organizations. These groups command multibillion-
    dollar networks that smuggle drugs, weapons, humans, and just
    about anything else that'll make money. Today, their reach
    extends far beyond Latin America. They now operate in Africa,
    Europe, and Asia, and they have presence in more than 1,200
    cities in the United States.
        So, I look to both of our witnesses today to update the
    committee on the growing threat from these groups and what's
    being done to combat their spread.
        General Kelly, SOUTHCOM has long suffered from resources
    shortfalls. Sequestration is going to make it a lot worse. You
    say in your statement that budget cuts over the next 10 years
    will have a ``disproportionally large impact'' on your
    operations to exercise in engagement activities and that our
    relationships, leadership, and influence in the region are,
    ``paying the price.'' I hope you will talk more in detail about
    that, and that neither of you will try to sugar-coat the
    problems that we are facing today.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        General Jacoby.

     STATEMENT OF GEN CHARLES H. JACOBY, JR., USA, COMMANDER, U.S.
       NORTHERN COMMAND, AND COMMANDER, NORTH AMERICAN AEROSPACE
                            DEFENSE COMMAND

        General Jacoby. Chairman Levin, Senator Inhofe,
    distinguished members of the committee, thank you for the
    opportunity to appear before you today.
        It is a pleasure to be here once again with my friend and
    fellow Combatant Commander, John Kelly of SOUTHCOM, and I have
    with me today my senior enlisted leader, Command Star Major Bob
    Winzenreid.
        On behalf of the soldiers, sailors, airmen, marines,
    coastguardsmen, and trusted civilian teammates of NORTHCOM and
    North American Aerospace Defense Command (NORAD), I appreciate
    this committee's continuing support of our unique and important
    missions.
        I would like to begin by acknowledging the importance of
    the 2-year reprieve offered by the Bipartisan Budget Act (BBA)
    of 2013. It enabled short-term readiness fixes and selected
    program buybacks of significant importance to the Homeland.
    However, the challenge of the BCA and sequestration remains,
    hampering our ability to plan and decide strategically,
    frustrating our efforts to find innovative solutions to complex
    national security challenges, and reminding us that the recent
    BBA only postpones, but does not eliminate, the risk to our
    future readiness and ability to meet the missions specified in
    the Defense Strategic Guidance of 2012. We need your help in
    Congress for a permanent fix to the BCA of 2011.
        Of particular concern was the Department of Defense (DOD)
    hard choice to implement the furlough of our dedicated civilian
    teammates as a cost-cutting measure. This decision compromised
    morale, unsettled families, and caused us to break a bond of
    trust, one that is absolutely critical to the accomplishment of
    our mission. Equally unsettling, NORAD's ability to execute its
    primary mission of aerospace defense of the Homeland has been
    subject to increased risk, given the degradation of U.S. combat
    Air Force readiness. With the vigilance and the support of Air
    Combat Command and the U.S. Air Force, we've been able to
    sustain our effective day-to-day posture, but that comes at the
    cost of overall U.S. Air Force readiness, which continues to
    hover at 50 percent.
        As the world grows increasingly volatile and complex,
    threats to our national security are becoming more diffuse and
    less attributable. While we stand constant vigil against
    asymmetric network threat activities, Russian actions in the
    Ukraine demonstrate that symmetric threats remain. Ultimately,
    crises originating elsewhere in the world can rapidly manifest
    themselves here at home, making the Homeland more vulnerable
    than it has been in the past.
        I agree with Director of National Intelligence Clapper, al
    Qaeda and TCOs continue to adapt, and they do so much more
    quickly than we do. To deter and defeat these globally
    networked threats, it is imperative that we prioritize our
    support to our partners in the law enforcement community and
    the international community. Their forward efforts help keep
    these TCOs from transforming into large-scale threats to the
    Homeland.
        Another critical enabler to successfully defending the
    Homeland is strategic intelligence and warning. The recent
    compromise of intelligence information, including the
    capabilities of the National Security Agency, profoundly impact
    how we defend the Homeland against both symmetric and
    asymmetric adversaries.
        With regard to missile defense, tangible evidence of North
    Korean and Iranian ambitions confirms that a limited ballistic
    missile threat to the Homeland has matured from a theoretical
    to a practical consideration. Moreover, we are concerned about
    the potential for these lethal technologies to proliferate to
    other actors.
        To address these possibilities, we are also working with
    the Missile Defense Agency (MDA) to invest in a tailored
    solution to address the challenges that advancing missile
    technologies impose on our BMD system architecture.
        In addition to the issues mentioned thus far, NORTHCOM and
    NORAD continue to work to address a variety of other challenges
    to our missions across the approaches to North America. With
    seasonal ice decreasing, the Arctic is evolving into a true
    strategic approach to the Homeland. Therefore, we continue to
    work with our premier Arctic partner, Canada, and other
    stakeholders, to develop our communications, domain awareness,
    infrastructure, and presence in order to enable safety,
    security, and defense in the far north.
        Defending the Homeland in depth requires partnerships with
    all of our neighbors: Canada, Mexico, and the Bahamas. Our
    futures are inextricably bound together, and this needs to be a
    good thing in the security context. The stronger and safer they
    are, the stronger our partnerships, the safer we all are,
    collectively. This creates our common competitive security
    advantage for North America.
        For civil support, NORTHCOM stands ready to respond to
    national security events as a core DOD mission and to provide
    support to lead Federal agencies for manmade or natural
    disasters. Our challenge remains to not be late to need. The
    men and women of NORTHCOM and NORAD proudly remain vigilant and
    ready as we stand watch over North America and adapt to the
    uncertainty of the global security environment and fiscal
    realities.
        I am honored to serve as their commander, and thank this
    committee for your support of our important missions. I look
    forward to your questions.
        Thank you.
        [The prepared statement of General Jacoby follows:]
             Prepared Statement by GEN Charles H. Jacoby, Jr., USA
        Chairman Levin, Ranking Member Inhofe, distinguished members of the
    Committee, thank you for the opportunity to report on the posture and
    future direction of U.S. Northern Command (NORTHCOM) and North American
    Aerospace Defense Command (NORAD). Our integrated staffs carry on a
    legacy of over 55 years of continental defense under NORAD, and
    NORTHCOM's 11 years of safeguarding the Homeland through innovative
    programs, robust partnerships, and continual improvement. The nation is
    well served by the commands' professionals who are focused on
    deterring, preventing, and if necessary, defeating threats to our
    security.
                                  introduction
        This is a time of dynamic unpredictability for the Department of
    Defense (DOD). As the world grows increasingly volatile and complex,
    threats to our national security are becoming more diffuse and less
    attributable. This evolution demands continuous innovation and
    transformation within the Armed Forces and the national security
    architecture. Meanwhile, fiscal constraints have further compelled us
    to rethink our strategies, reorient the force, rebalance risk across
    competing missions, and take uncommon actions to achieve spending
    reductions. Particularly troubling, in dealing with sequestration last
    year, we broke faith with our civilian workforce. Implementing
    furloughs as a cost-cutting measure compromised morale, unsettled
    families, and understandably caused many DOD civilians to reevaluate
    their commitment to civil service by undermining one of the most
    significant competitive advantages the DOD offers its civilian
    workforce, stability.
        While we must deal realistically with limited budgets, the Homeland
    must be appropriately resourced to protect our sovereignty, secure
    critical infrastructure, offer sanctuary to our citizens, and provide a
    secure base from which we project our national power. As a desired
    target of our adversaries, the Homeland is increasingly vulnerable to
    an array of evolving threats. Thus, we should not give ground when it
    comes to defense of the Nation and the protection of North America.
    NORTHCOM and NORAD are priority investments in national security that
    should not be compromised as a consequence of the budget environment.
    When Canada was confronted with similar fiscal pressures to those
    encountered here, they fully resourced NORAD. Holding up our end of
    shared defense through NORAD honors Canada's commitment, and is a key
    element of our Nation's competitive advantage across an uncertain
    global landscape.

        Homeland defense depends on readiness and preparedness. The
    dedicated professionals from the Intelligence community, including the
    National Security Agency (NSA) and other organizations, provide vital
    indications and warnings enabling the continued security and defense of
    our Nation. The recent and potential future compromises of intelligence
    information, including the capabilities of the NSA, an agency with
    which NORAD/NORTHCOM relies on with an effective operational
    partnership, profoundly disrupts and impacts how we deter terrorists
    and defend the Homeland.
        Further, although I am encouraged by the short-term stability
    obtained by recent passage of the Bipartisan Budget Act of 2013, the
    shadow of sequestration still looms over key strategic decisions
    concerning how we defend the Nation over the next two decades. Should
    sequestration return in 2016, it would lead to a situation where combat
    readiness and modernization could not fully support current and
    projected requirements to defend the Homeland. Underinvestment in
    capabilities which sustain readiness increases our vulnerability and
    risk. The nation deserves better than a hollow force lacking the
    capability or capacity to confront threats.

        Distinct from other geographic combatant commands, we must observe
    and comply with domestic legal and policy requirements as a condition
    of operating in the Homeland. Under the direction of the President and
    Secretary of Defense, NORTHCOM and NORAD deliver effective, timely DOD
    support to a wide variety of tasks in the Homeland and ultimately
    defend our citizens and property from attack. Our commands work in an
    environment governed by domestic laws, and guided by the policies,
    traditions, and customs our country has developed over centuries in the
    use and roles of Armed Forces at home. We also hold the obligation of
    serving citizens with deservedly high expectations for decisive action
    from the military in times of need. In this environment, it is
    imperative we retain the ability to outpace threats and maintain all-
    domain situational awareness to allow greater decision space for
    strategic leaders. The commands' approach is to defend the Homeland
    ``forward'' and in-depth through trusted partnerships with fellow
    combatant commands, our hemispheric neighbors, and the interagency
    community. We carry out our primary missions of Homeland defense,
    security cooperation, and civil support with a focus on preparation,
    partnerships, and vigilance.
                                homeland defense
        NORTHCOM and NORAD are part of a layered defense of the Homeland
    designed to respond to threats before they reach our shores. Our
    national security architecture must be capable of deterring and
    defeating traditional and asymmetric threats including aircraft,
    ballistic missiles, terrorism, and cyber-attacks on economic systems
    and critical infrastructure. In the maritime domain, advances in
    submarine-launched cruise missiles and submarine technologies challenge
    our Homeland defense efforts, as does our aging undersea surveillance
    infrastructure. Additionally, we recognize the Arctic as an approach to
    the Homeland and must account for emerging concerns and opportunities
    related to greater accessibility and human activity in the region. We
    support the Federal response to many threats facing the Nation which
    are primarily security or law enforcement related, while ultimate
    responsibility for defending against and defeating direct attacks by
    state and non-state actors rests with DOD.

    Aerospace Warning and Control
        In the performance of our aerospace missions, including Operation
    Noble Eagle, Norad defends North American airspace and safeguards key
    national terrain by employing a combination of armed fighters, aerial
    refueling, Airborne Warning and Control System (AWACS) surveillance
    platforms, the National Capital Region Integrated Air Defense System,
    and ground-based Air Defense Sector surveillance detection
    capabilities. We regularly exercise our three NORAD Regions and
    NORTHCOM components through Exercise Vigilant Shield.
        Over the past year, we launched fighters, AWACS, and tankers from
    the Alaskan and Canadian NORAD Regions in response to Russian Long-
    Range Aviation. These sorties, as in the past, were not identified on
    international flight plans and penetrated the North American Air
    Defense Identification Zone. Detect and intercept operations
    demonstrated our ability and intent to defend the northern reaches of
    our Homelands and contribute to our strategic deterrence of aerospace
    threats to the Homeland.
        NORAD regions are an integral part of our Homeland defense mission.
    Their capability to provide mission-ready aircraft and pilots across
    all platforms plays a critical role in our common defense with Canada.
    The ability of NORAD to execute our primary mission is placed at
    significant risk given the degradation of U.S. Combat Air Force
    readiness, which hovers at 50 percent. The lack of ready forces is
    directly attributable to the fiscal pressure placed on readiness
    accounts and the subsequent challenges our Air Force Service Provider
    faces to execute modernization and recapitalization programs.
        We are partnering with the Air Force to take decisive steps to
    restructure forces and regain readiness by innovatively making every
    training sortie count. However, I am concerned about our mid- and long-
    term capability to deliver the deterrent effects required of NORAD. If
    the Budget Control Act persists beyond fiscal year 2015, the
    extraordinary measures being undertaken by the Air Force to preserve
    readiness may not be enough to assure that combat forces can satisfy
    NORAD requirements. Reversing current negative readiness trends will
    require considerable time and expense to return squadrons to mission-
    ready status. For example, one of only two annual Air Force Weapons
    Instructor Courses, and two Red Flag exercises, were cancelled this
    past year which will have an enduring impact on the readiness,
    training, and preparedness of our Air Force. Now more than ever, the
    Air Force's efforts to seek an appropriate balance between readiness
    today and tomorrow will have a key impact on NORAD's current and future
    success.

    Missile Defense
        We remain vigilant to nations developing the capability to threaten
    our Homeland with ballistic missiles. While tensions have subsided for
    the time being, North Korea continues to ignore United Nations
    resolutions and seeks international recognition as a nuclear-armed
    state, which we oppose. North Korea again showcased its new road-mobile
    Intercontinental Ballistic Missile (ICBM) during a military parade this
    past July. Similarly, while Iran does not yet possess a nuclear weapon
    and professes not to seek one, it is developing advanced missile
    capabilities faster than previously assessed. Iran has successfully
    orbited satellites, demonstrating technologies directly relevant to the
    development of an ICBM. Tangible evidence of North Korean and Iranian
    ambitions reinforces our understanding of how the ballistic missile
    threat to the Homeland has matured from a theoretical to a practical
    consideration. Moreover, we are concerned about the potential for these
    lethal technologies to proliferate to other actors.
        I remain confident in our current ability to defend the United
    States against ballistic missile threats from North Korea or Iran.
    However, advancing missile technologies demand improvement to the
    Ballistic Missile Defense System architecture in order to maintain our
    strategic advantage. We are working with the Missile Defense Agency
    (MDA) on a holistic approach to programmatically invest in tailored
    solutions. A steady-testing schedule and continued investment are
    needed to increase reliability and resilience across the missile
    defense enterprise. We are pursuing a more robust sensor architecture
    capable of providing kill assessment information and more reliable
    Ground-based Interceptors (GBI). Additionally, we are deliberately
    assessing improvements to the Nation's intelligence collection and
    surveillance capability in order to improve our understanding of
    adversary capability and intent. Finally, we recognize the
    proliferation of threats that will challenge BMD inventories. Over
    time, missile defense must become an integral part of new deterrence
    strategies towards rogue states that balance offensive as well as
    defensive capabilities.
        In March 2013, the Secretary of Defense announced plans to
    strengthen Homeland Ballistic Missile Defense by increasing the number
    of GBIs from 30 to 44, and deploying a second TPY-2 radar to Japan.
    NORTHCOM is actively working with our mission partners to see that
    these activities are completed as soon as possible. We are supporting
    MDA's study evaluating possible locations in the United States, should
    we require an additional missile defense interceptor site. When
    required based upon maturity of the threat, a third site will enable
    greater weapons access, increased GBI inventory, and increased
    battlespace against threats, such as those from North Korea and Iran.
    Choosing a third site is dependent on numerous factors including
    battlespace geometry, sensors, command and control, and interceptor
    improvements. Finally, with the support of Congress, we are making
    plans for deployment of a new long-range discriminating radar and
    assessing options for future sensor architecture.
        Our ability to detect, track, and engage airborne threats,
    including emerging cruise missile technology, was the principal focus
    of our recently completed Defense Design for the National Capital
    Region. Next winter we will begin a 3-year Joint Land Attack Cruise
    Missile Defense Elevated Netted Sensor (JLENS) operational exercise at
    Aberdeen Proving Ground, establishing a new capability to detect and
    engage cruise missiles at range before they threaten the Washington,
    DC, area. NORAD will combine JLENS capabilities with the Stateside
    Affordable Radar System into the existing air defense structure. These
    capabilities can point to a next generation air surveillance capability
    for Homeland cruise missile defense.
    Maritime
        NORAD conducts its maritime warning mission on a global scale
    through an extensive network of information sharing on potential
    maritime threats to the United States and Canada. Our execution of this
    mission continues to mature--we issued 14 maritime warnings or
    advisories in 2013, 6 more than the previous year. Through NORTHCOM's
    cooperative maritime defense, we gain and maintain situational
    awareness to detect, warn of, deter, and defeat threats within the
    domain.
        In 2013, to improve capability and enhance Homeland command and
    control relationships in the maritime domain, U.S. Fleet Forces Command
    was designated U.S. Naval Forces North, providing NORTHCOM with an
    assigned naval component on the east coast. We are also working in
    parallel with U.S. Pacific Command to close seams for command and
    control on the west coast. These initiatives support DOD's strategic
    pivot to the Asia-Pacific and account for the increased pace of Russian
    and Chinese maritime activity in our area of responsibility (AOR),
    including their forays into the Arctic.
    NORAD Strategic Review
        Consistent with my priority to advance and sustain the bi-national
    military command, at the direction of the Chairman of the Joint Chiefs
    of Staff and Canada's Chief of the Defence Staff, we recently initiated
    a NORAD Strategic Review. The Review intends to capitalize on existing
    synergies and identify opportunities to evolve NORAD into an agile,
    modernized command capable of outpacing the full spectrum of threats.
    The review identified promising opportunities to improve operational
    effectiveness, several of which can be implemented immediately. For
    example, we can realize benefits from aligning the U.S. and Canadian
    readiness reporting processes and by collaborating closely on
    continental threat assessment and capability development processes.
    The Arctic
        The Arctic, part of the NORAD area of operations and NORTHCOM AOR,
    is historic key terrain for DOD in defense of North America. With
    decreasing seasonal ice, the Arctic is evolving into a true strategic
    approach to the Homeland. Arctic and non-Arctic nations are updating
    their strategies and positions on the future of the region through a
    variety of international forums and observable activities. Russia,
    after decades of limited surface activity, significantly increased its
    naval operations in the high north. This activity included multi-ship
    exercises as well as an unprecedented amphibious landing and
    reestablishment of a long-closed airbase in the New Siberian Islands.
    Also, China recently achieved formal observer status on the Arctic
    Council; continues diplomatic, scientific, and trade initiatives with
    Nordic nations; and is making progress on a second polar icebreaker.
    While potential for friction exists, the opening of the Arctic presents
    an historic opportunity to solidify and expand strategic partnerships
    and cooperation.
        We fulfill our responsibilities as the DOD's advocate for Arctic
    capabilities by working with stakeholders to develop military
    capabilities to protect U.S. economic interests, maritime safety, and
    freedom of maneuver. We prepare for attendant security and defense
    considerations should countries and commercial entities disagree over
    sea-transit routes and lucrative natural resources. Secretary Hagel's
    comments on this subject are pertinent, ``Throughout human history,
    mankind has raced to discover the next frontier. Time after time,
    discovery was swiftly followed by conflict. We cannot erase this
    history. But we can assure that history does not repeat itself in the
    Arctic.'' To this end, we are pursuing advancements in communications,
    domain awareness, infrastructure, and presence to outpace the potential
    challenges that accompany increased human activity.
        The Department's desired end state for the Arctic is a secure and
    stable region where U.S. national interests are safeguarded, the U.S.
    Homeland is protected, and nations work cooperatively. With Canada as
    our premier partner in the Arctic, NORAD and NORTHCOM seek to improve
    our binational and bilateral abilities to provide for defense, safety,
    security, and cooperative partnerships in the Arctic. To enhance these
    endeavors, I continue to support accession to the Law of the Sea
    Convention, which would give the United States a legitimate voice
    within the Convention's framework.
    Exercises/Lessons Learned
        To ensure our readiness for Homeland defense missions, we rely on a
    robust joint training and exercise program to develop and refine key
    capabilities. In the last 2 years, we incorporated other combatant
    command and multinational participation in our major exercises like
    Vigilant Shield, which more closely approximates how we expect to
    respond to real-world contingencies or crises. An integrated approach
    also ensures we work in unison with our domestic and international
    partners to reinforce mutual response capabilities and sustain our
    ability to project power.
        Additionally, NORTHCOM and NORAD, while postured to respond to
    unwanted Russian aerospace activity, conducted a successful annual Air
    Control exercise with the armed forces of the Russian Federation. Known
    as Vigilant Eagle, this exercise simulated fighter aircraft from the
    United States, Canada, and Russia working cooperatively to intercept a
    hijacked passenger aircraft traveling between the three nations. Once
    intercepted, we transferred control of the aircraft to Russia to escort
    the plane as it landed in their territory. This combined exercise
    expanded dialogue and cooperation, sustained defense contacts, and
    fostered understanding among our governments and militaries.
                              security cooperation
        Defending the Homeland in depth requires partnership with our
    neighbors--Canada, Mexico, and The Bahamas--to confront shared security
    concerns and guard the approaches to the continent and the region.
        The U.S.-Canada NORAD Agreement is the gold standard for
    cooperation between nations on common defense. Our security partnership
    with Canada has pushed out the protected perimeter of our Homelands to
    the furthest extents of the continent. Their meaningful contributions
    to the defense of North America through NORAD, and globally through the
    North Atlantic Treaty Organization, make Canada an indispensable ally.
    Defending together is the principal competitive advantage we enjoy in
    defending our Homelands.
        In the rest of our AOR, theater security cooperation activities
    focus on being the defense partner of choice in working on common
    regional security issues. The proliferation and influence of
    Transnational Criminal Organizations (TCOs) pose social, economic, and
    security challenges for the United States, Canada, Mexico, and The
    Bahamas. A related threat is the potential for Middle Eastern and other
    terrorist organizations to exploit pathways into the United States by
    using their increased presence in Latin America and exploiting the
    destabilizing influence of organized crime networks. Our efforts to
    counter transnational organized crime focus on providing support to our
    U.S. law enforcement partners, other U.S. Government agencies, and our
    military partners in the AOR. Theater security cooperation activities
    involve detailed and collaborative planning with our partners'
    militaries and Federal agencies. Throughout the process, we remain
    respectful of our partners' national sovereignty and frame our
    initiatives with that in mind.
    Canada
        In addition to ongoing activities in NORAD, our security
    cooperation with Canada includes all-domain awareness; regional partner
    engagement; cross-border mitigation support of chemical, biological,
    radiological, and nuclear incidents; and combined training and
    exercises. Over the past year, we began discussing cooperative efforts
    in cyber and concluded an action plan for further cooperation in the
    Arctic.
        Last June, the Chairman of the Joint Chiefs of Staff hosted
    Canada's Chief of the Defence Staff in a first-ever Defense Chiefs
    Strategic Dialogue. The Chairman and Chief agreed to pursue several
    initiatives over the next year, including the NORAD Strategic Review,
    ongoing NORTHCOM and NORAD cooperative efforts on regional engagement,
    cyber, and combined training; our relationship has never been stronger.
    Mexico
        A strong security relationship with Mexico is a critical strategic
    imperative reflecting the power of our shared economic, demographic,
    geographic, and democratic interests. An enduring partnership with a
    secure and prosperous Mexico is a necessary precondition to the long-
    term security and prosperity of the United States and the Western
    Hemisphere. Our nations share responsibility for disabling and
    dismantling the illicit criminal networks that traffic narcotics and
    other contraband into the United States, and illegal weapons and
    illicit revenues into Mexico. TCOs continue to establish support zones,
    distribute narcotics, and conduct a wide variety of illicit activities
    within the United States, corrupting our institutions, threatening our
    economic system, and compromising our security. International and
    interagency pressure on these networks is essential to reduce the
    threat posed to our citizens and allow for the strengthening of rule of
    law institutions for hemispheric partners.
        At the request of the Government of Mexico, while being mindful of
    Mexican sovereignty, we partner with the Mexican Army (SEDENA) and Navy
    (SEMAR) on security issues of mutual interest. NORTHCOM provides
    focused engagements, professional exchanges, military equipment, and
    related support that advance common goals. Our engagements further
    mutual trust, enhance collaboration, and increase mutual capability to
    counter transnational threats and meet our many common security
    concerns. Recent successes include Quickdraw, a tactical-level exercise
    that tested the capabilities of U.S., Canadian, and Mexican maritime
    forces in joint response to illicit activities; subject matter expert
    exchanges enabling participants to learn and refine best military
    practices; and bilateral and multilateral conferences achieving broader
    coordination on issues such as natural disasters, pandemics, and search
    and rescue.
        NORTHCOM continues to grow our relationship with SEDENA and SEMAR
    with their participation in exercises. Mexico is a partner in Exercise
    Ardent Sentry, our joint-field exercise focused on civil support and
    disaster assistance. Additionally, Exercise Amalgam Eagle was conceived
    around a coordinated U.S.-Mexico response to a simulated hijacking
    situation--similar to exercise Vigilant Eagle mentioned earlier.
    The Bahamas
        The Royal Bahamas Defence Force is a trusted partner on our ``third
    border'' and our cooperative engagement with them continues to grow.
    The Bahamas provides a historic route for human smuggling and the
    smuggling of drugs and contraband into the U.S. due to its extensive
    size, small population, inadequate surveillance capability, and limited
    defense and police forces. This presents a pointed vulnerability to
    U.S. security and defense.
        Our security cooperation efforts in The Bahamas are aimed
    specifically at better detection of human smuggling and the smuggling
    of drugs and contraband, improved communications interoperability, and
    increased disaster response capabilities. We recently completed air and
    maritime sensor deployments to the southern islands. These deployments
    confirmed the presence of illegal traffic flow through the Windward
    Passage. We secured funding for a permanent radar to assist with
    detection and tracking of suspect platforms in an effort to stem the
    flow of drugs, illegal migrants, and illicit materials. Our challenge
    is to prevent The Bahamas from returning to the TCO corridor it was in
    the 1980s and 1990s.
        Due to the susceptibility of The Bahamas to natural disasters such
    as hurricanes and flooding, NORTHCOM is collaborating with the National
    Emergency Management Agency of The Bahamas to enhance targeted disaster
    preparedness and response capacities. In December 2013, we completed
    construction and transferred possession of an Emergency Relief
    Warehouse to augment the warehouse previously donated by U.S. Southern
    Command. Additionally, we provided training and equipment to outfit the
    warehouses and enhance operational capacities. These facilities serve
    not only to assist our partner nation, but also to support the safety
    and security of the 35,000 American residents and more than 5 million
    U.S. tourists who visit The Bahamas annually.
    Human Rights
        NORTHCOM is committed to promoting an institutional culture of
    respect throughout the command and the AOR. Human rights considerations
    are factored into all our policies, plans, and activities and are an
    important component in our strategic engagement with partner nations
    and interagency relationships. The NORTHCOM human rights program is
    working with partner nations to develop new programs of instruction on
    human rights, both in-country and at U.S.-based military education
    centers.
    Western Hemisphere Institute for Security Cooperation (WHINSEC)
        Our regional engagement is enhanced by the efforts of WHINSEC,
    which continues to provide professional education and training to Latin
    America's future military leaders. The education offered by WHINSEC is
    a strategic tool for NORTHCOM's international engagement, providing the
    most effective and enduring security partnering mechanism in the
    Department. Highlighting their commitment to the program, for the first
    time, Canada has detailed an instructor to WHINSEC.
                  defense support of civil authorities (dsca)
        NORTHCOM stands ready to respond to national security events and to
    provide support, as a DOD core task, to lead Federal agencies for man-
    made or natural disasters. Our efforts focus on mitigating the effects
    of disasters through timely, safe, and effective operations in
    accordance with the National Response Framework. Although American
    communities display great resiliency in the face of tragedy, the scale
    of some events exceed the response capacity of local first responders
    and state and Federal resources. Through an extensive network of
    liaison officers embedded in our headquarters and Defense Coordinating
    Officers throughout the United States, we collaborate with interagency,
    intergovernmental, and nongovernmental partners to plan and execute the
    rapid, agile, and effective employment of DOD supporting resources with
    a mantra of not being late to need. This includes our partnership with
    the Joint Improvised Explosive Device Defeat Organization whose
    capabilities and expertise are of great value to us and our interagency
    partners.
    Dual-Status Commanders (DSCs)
        Last year, NORTHCOM continued to advance and refine the DSC
    program. Dual-Status Command is a military command arrangement to
    improve unity of effort with state and Federal partners for DSCA
    missions. The Secretary of Defense, with consent of affected state
    governors, authorizes specially trained and certified senior military
    officers to serve in a Federal and state status and in those separate
    capacities, command assigned Federal and state military forces employed
    in support of civil authorities. In 2013, DSCs for Colorado's Black
    Forest fire and Front Range floods strengthened NORTHCOM's close
    collaboration with the National Interagency Fire Center (NIFC), Federal
    Emergency Management Agency (FEMA), National Guard Bureau (NGB), and
    respective State National Guard Joint Force Headquarters. We continue
    to support the evolution and maturation of the DSC construct.
        As part of the DSC Program, in collaboration with the NGB, NORTHCOM
    conducts regular training for selected senior military officers through
    the Joint Task Force Commander Training Course and the DSC Orientation
    Course. We conduct State National Guard staff training and exercise
    programs through over 55 separate exercise events annually. Through
    2013, we have trained and certified over 244 DSCs.
    Council of Governors
        As a designated participant of the Council of Governors, I engaged
    in Council meetings this past year that helped advance important
    initiatives of the Council's ``Unity of Effort'' Action Plan, including
    continued development and implementation of the DSC command structure
    and development and sharing of support to civil authority shared
    situational awareness capabilities. I have also supported collaboration
    with the States, through the Council, on DOD's cyber force structure
    and a framework for State-Federal unity of effort on cybersecurity.
    NORTHCOM and NORAD embrace the Council's initiatives throughout the
    year and incorporate them in operations, training and exercises,
    technical projects, and conferences. As an example, we recently hosted
    a conference on cyber challenges with The Adjutants General (TAGs)
    which provided a venue to better understand state and local cyber
    concerns and helped inform Service approaches to the future cyber
    force.
    Special Security Events
        We support the Department of Homeland Security (DHS) and the U.S.
    Secret Service (USSS) in the planning and execution of National Special
    Security Events (NSSEs). NORTHCOM and NORAD partnered with USSS,
    Federal Bureau of Investigation (FBI), and FEMA to provide support to
    two NSSEs in 2013: the Presidential Inauguration and the State of the
    Union Address. Our support to the USSS and U.S. Capitol Police
    consisted of medical, communications, ceremonial, and Chemical,
    Biological, Radiological, Nuclear (CBRN) response forces.
        NORTHCOM and NORAD also assisted in several other high profile
    events. We partnered with the FBI, U.S. Immigration and Customs
    Enforcement, and FEMA for Super Bowl XLVII by providing aerospace
    warning and control, consequence management capability, CBRN planners,
    and liaison officers. We also coordinated with the West Virginia
    National Guard and Boy Scouts of America for the 2013 National Scout
    Jamboree by providing ground transportation, medical support,
    preventive medicine, and air traffic control. Lastly, we partnered with
    the USSS and Department of State to provide explosive ordnance disposal
    teams, explosive detector dog teams, aerial coverage, and
    communications for the United Nations General Assembly.
    CBRN Response Enterprise
        The continued effort by terrorists to acquire and employ CBRN
    weapons in the Homeland is well documented. The cumulative effects of
    globalization allow people and products to traverse the globe quickly,
    and the relative anonymity offered by the internet reduces technical
    obstacles to obtaining and developing CBRN terror weapons. In addition
    to a terrorist attack, we remain concerned for a domestic accident or
    anomaly involving CBRN materials.
        NORTHCOM continues to expand its relationships with NGB and whole-
    of-government partners to make significant strides in our ability to
    respond to a CBRN event by increasing the overall readiness of the
    Nation's CBRN Response Enterprise. Though the enterprise is fully
    operational, NORTHCOM continues to refine its requirements to achieve
    operational and fiscal efficiencies. Exercises are critical in this
    endeavor. Vibrant Response is our joint exercise centering on training
    and confirmation of CBRN Enterprise forces. Last year's exercise, held
    at Camp Atterbury, IN, was a tremendous success, maximizing
    opportunities for tactical lifesaving integration and synchronization
    at all levels of local, State, and Federal response.
    Wildland Firefighting
        NORTHCOM maintains the utmost readiness to support NIFC requests
    for suppression of wildfires that threaten lives and property
    throughout America. For over 40 years, as part of the national wildland
    firefighting (WFF) effort, DOD has provided support with C-130 aircraft
    equipped with the Modular Airborne Firefighting System (MAFFS) flown by
    the Air National Guard and U.S. Air Force Reserve. This past season, 4
    C-130 airlift wings (3 Guard and 1 Reserve) reinforced the National WFF
    effort through application of fire retardant on 46 federally mission-
    assigned fires.
        When the Black Forest fire erupted less than 16 miles from NORTHCOM
    and NORAD headquarters, we and a host of State and local partners, were
    well-prepared to meet the needs of our citizens. We maintained
    situational awareness as Fort Carson responded within 2 hours under
    Immediate Response Authority, as the Colorado National Guard engaged
    with helicopters and high-clearance trucks, tenders, and fire trucks.
    The 302nd Air Wing MAFFS quickly provided direct support from Peterson
    Air Force Base.
        Later in the fire season, at the request of NIFC, we provided
    Incident Awareness and Assessment capability and MAFFS to the
    California Rim Fire, which threatened both the San Francisco critical
    power infrastructure and Yosemite National Park. Employment of a
    Remotely Piloted Aircraft (RPA) provided the unique capability to see
    through the fire's smoke plumes to improve command and control, as well
    as gain situational awareness on the fire's impact area. Use of the RPA
    demonstrated, with proper oversight, its outstanding capability to
    support a domestic scenario and showcased its potential to save lives
    and infrastructure.
    Colorado Flood Response
        The 100-year flood of 2013 quickly tested the capacity of county
    and state resources in Colorado when rainfall inundated the Front
    Range, causing catastrophic flooding affecting 17 counties and
    resulting in disaster declarations in 14 counties. Helicopter crews
    from the Colorado National Guard, Wyoming National Guard, and 4th
    Infantry Division from Fort Carson, again acting in Immediate Response
    Authority, flew in difficult weather around the clock, working in
    parallel with ground teams to evacuate 3,233 civilians and 1,347 pets.
    The Colorado floods provided the first-ever opportunity to transition
    forces working under Immediate Response Authority by local commanders
    to a DSC for employment under a Federal mission. This successful
    transition maintained unity of effort in accordance with the National
    Response Framework and National Incident Management System. Alongside
    our Federal, State, and National Guard mission partners, as well as the
    private sector, NORTHCOM continues to develop and improve relationships
    enabling us to understand and rapidly respond to citizens in need.
    Defense Support of Civil Authorities Playbooks
        An earthquake along the San Andreas fault, Cascadia Subduction
    zone, or New Madrid fault, just to name a few, could lead to a complex
    catastrophe that immediately becomes a national-level challenge.
    Hurricane Sandy gave us a glimpse of what impact such a catastrophe
    could have on our Nation. So as not to be late to need, we are working
    with key stake holders (FEMA, NGB, and TAGs), in order to script likely
    initial response actions. I call these scripts ``playbooks,'' and due
    to the maturity of the Southern California Catastrophic Earthquake
    Response Plan, NORTHCOM is utilizing this scenario to develop the first
    one--with other states and regions to follow. This integrated response
    planning initiative will facilitate the most effective, unified, and
    rapid solutions; minimize the cascading effects of catastrophic
    incidents; and ultimately save lives.
                       emerging mission areas/initiatives
    Special Operations Command North (SOCNORTH)
        SOCNORTH is a newly established Theater Special Operations Command
    (TSOC) aligned as a subordinate unified command of NORTHCOM. This TSOC
    organizational alignment is consistent with existing constructs
    established in the other geographic combatant commands, with United
    States Special Operations Command (SOCOM) retaining responsibility for
    manning, training, and equipping special operations forces. We aligned
    special operations activities throughout North America under a single
    commander, providing me with a flag officer who is operationally
    accountable for designated operations within our AOR. SOCNORTH also
    leverages SOCOM's global network for partnerships and information
    collaboration in support of executing our Homeland defense mission and
    enabling our partner nations. SOCNORTH operations conducted within the
    United States are in support of the appropriate Federal agencies and in
    accordance with applicable laws and policy.
    Cyber
        Malicious cyber activity continues to be a serious and rapidly
    maturing threat to our national security. Over the past year, various
    actors targeted U.S. critical infrastructure, information systems,
    telecommunications systems, and financial institutions. As malicious
    cyber activities grow in sophistication and frequency, we believe an
    attack in the physical domain will be preceded by or coincident with
    cyber events. Of particular concern is the recent release of classified
    information.
        The security breach of NSA intelligence not only created risk and
    enabled our adversaries in environments where forces are actively
    engaged in combat, it diverted attention to threat analysis and
    mitigation efforts which would otherwise be focused on protecting the
    Homeland, which is ultimately the confluence and aim point of threat
    networks. This act informed our adversaries about risks and
    vulnerabilities in the United States, and will almost certainly lead
    some of our most sophisticated and elusive adversaries to change their
    practices against us, minimizing our competitive advantage, and
    reducing the defense of not only the Nation but also the approaches to
    the Homeland. It also enabled the potential compromise of military
    capabilities and operations, further reducing the advantage held by our
    country. These breaches require us to acknowledge a potential
    vulnerability in the Homeland, and question our operational security
    that underpins our planning and posture.
        To integrate cyberspace operations for our commands and to foster
    an integrated operational cyberspace planning environment, we stood up
    a Joint Cyberspace Center. Within a year, we will begin receiving
    additional defensive capabilities to better protect our enterprise and
    missions. We are integrating defensive cyberspace operations into our
    concept plans, which will improve operational effectiveness and
    continue to increase the scope and scale of cyber play in our national-
    level exercises. We remain committed to strengthening our partnerships
    with key stakeholders--such as DHS, U.S. Strategic Command, U.S. Cyber
    Command, NSA, and the National Guard--demonstrated by our January 2014
    Cyber TAG Conference.
                                   conclusion
        Our Nation depends on NORAD and NORTHCOM to defend our Homeland and
    cooperate with our partners to secure global interests. The security of
    our Homeland is continually challenged by symmetric and asymmetric
    threats across all domains. Despite fiscal challenges, we must maintain
    our advantages and resiliency through enhancing international
    partnerships, providing Defense Support of Civil Authorities, and
    ensuring the defense of the Nation and North America. The security of
    our citizens cannot be compromised. As the military reorganizes and
    reduces capacity and capability while confronting existing and emerging
    threats, I believe we must not ``break'' the things that give the
    military its competitive advantage: ``jointness'' to include training
    and exercises; the All-Volunteer Force; our national industrial
    capability; our time-trusted concept of defending the Nation forward;
    and lastly our critical alliances and partnerships.
        Threats facing our Homeland are more diverse and less attributable
    than ever. Crises that originate as regional considerations elsewhere
    in the world can rapidly manifest themselves here at home. No combatant
    command operates in isolation; events outside the Homeland have
    cascading effects on the security of North America and its approaches.
    The men and women of NORTHCOM and NORAD remain diligent and undeterred
    as we stand watch over North America and deliver an extraordinary
    return on investment to the taxpayer. I am honored to serve as their
    commander and thank the committee for your support of this necessary
    investment in our national security. I look forward to your questions.

        Chairman Levin. Thank you very much, General Jacoby.
        General Kelly.

    STATEMENT OF GEN. JOHN F. KELLY, USMC, COMMANDER, U.S. SOUTHERN
                                COMMAND

        General Kelly. Chairman Levin, Senator Inhofe, and
    distinguished members of the committee, thank you for the
    opportunity to speak here today about SOUTHCOM's soldiers,
    sailors, airmen, coastguardsmen, and my tremendous civilian
    workforce, including our contractors.
        I want to associate myself with Chuck's comments about the
    impact of furlough and budget cuts on these tremendous
    patriots. They just do not happen to wear uniforms. Their
    morale is high. I do not know why it is, because they are
    seemingly on the edge of criticism and pay cuts or furloughing
    on a regular basis, but it remains high, and they do a really
    effective job.
        I am pleased to be here today with Chuck Jacoby, and I look
    forward to discussing how our commands integrate our unique
    capabilities to ensure the seamless forward defense of the
    Homeland.
        Mr. Chairman, I consider myself fortunate to work in this
    part of the world. Latin America and the Caribbean are some of
    our very staunchest partners, ready and willing to partner
    across a broad range of issues. Most nations in this part of
    the world want our partnership, they want our friendship, they
    want our support, they want to work with us, and they want our
    engagement to address shared challenges and transnational
    threats. For more than 50 years, SOUTHCOM has done exactly
    that. We have engaged with our partners, we have helped build
    strong, capable military and security forces that respect human
    rights and contribute to regional security. We have worked with
    the interagency and international community to secure the
    southern approaches of the United States.
        We have accomplished a lot, even in these days when I have
    very few forces assigned and very limited resources to work
    with. But, the severe budget cuts are now reversing the
    progress and forcing us to accept significant risks. Last year,
    we had to cancel more than 200 very effective engagement
    activities in numerous multilateral exercises. Because of asset
    shortfalls, we are unable to get after 74 percent of suspected
    maritime drug trafficking. I simply sit and watch it go by.
    Because of service cuts, I do not expect to get any immediate
    relief, in terms of assets to work with in this region of the
    world. Ultimately, the cumulative impact of our reduced
    engagement will not be measured in the number of canceled
    activities and reduced deployments, it will be measured in
    terms of U.S. influence, leadership, and relationships in a
    part of the world where our engagement has made a real and
    lasting difference over the decades.
        In closing, Mr. Chairman, I want to mention the rest of the
    SOUTHCOM family. I would say that not all patriots are in
    uniform. First, I would like to talk about the law enforcement
    partners I have: the Federal Bureau of Investigation (FBI), the
    Drug Enforcement Agency (DEA), the Immigration and Customs
    Enforcement (ICE), and the Customs and Border Protection (CBP),
    all of the Department of Homeland Security (DHS) crowd. They
    live very dangerous lifestyles down in my region of the world,
    and I suspect in Chuck's as well, and they do magnificent work
    for the Nation.
        Next, I want to talk about the Departments that we work
    with: Treasury, Commerce, and Justice. Again, they follow the
    money of these TCOs, and do a superb job.
        Finally, DOS. I have 10 nations in my part of the world
    that do not have Ambassadors assigned right now, and that very
    definitely hobbles my ability to interact with some of these
    nations. In particular, Colombia, Trinidad, Tobago, and Peru.
    These are some of our very closest partners. Until, frankly, I
    have someone in the position to work with, our efforts in those
    nations--and again, they are tremendous partners--our efforts
    are hobbled.
        With that, sir, I look forward to answering any of your
    questions.
        [The prepared statement of General Kelly follows:]
                 Prepared Statement by Gen. John F. Kelly, USMC
                                  introduction
        Chairman Levin, Ranking Member Inhofe, and distinguished members of
    the committee: I appreciate the opportunity to appear before you today
    to discuss U.S. Southern Command's efforts in Central America, South
    America, and the Caribbean.
        Mr. Chairman, members, even our significantly reduced engagement
    continues to yield dividends in a region of increasing importance to
    our national interests. While other global concerns dominate the
    headlines, we should not lose sight of either the challenges or
    opportunities closer to home. In terms of geographic proximity, trade,
    culture, immigration, and the environment, no other part of the world
    has greater impact on daily life in our country than Latin America and
    the Caribbean.
        During my first year in command, I established four priorities for
    U.S. Southern Command--continuing humane and dignified detention
    operations at Joint Task Force Guantanamo, countering transnational
    organized crime, building partner capacity, and planning for
    contingencies--all of which I look forward to discussing with you
    today. I thank the Congress for recognizing U.S. Southern Command's
    vital role in defending our southern approaches and building enduring
    partnerships with the Americas. I remain concerned, however, by the
    impact of budget cuts on our ability to support national security
    interests and contribute to regional security.
        Over the next 10 years, the Services are reducing deployments of
    personnel, ships, and aircraft in the context of tightening fiscal
    constraints. As an economy of force combatant command, these reductions
    have a disproportionately large impact on our operations, exercises,
    and engagement activities. Insufficient maritime surface vessels and
    intelligence, surveillance, and reconnaissance platforms impair our
    primary mission to detect threats and defend the southern approaches to
    the U.S. Homeland. Similarly, reductions in force allocation severely
    limit our security cooperation activities, the primary way we engage
    with and influence the region. Sequestration only exacerbated these
    challenges, and while its near-term effects may have been mitigated,
    this reprieve is temporary. As the lowest priority geographic combatant
    command, U.S. Southern Command will likely receive little, if any,
    ``trickle down'' of restored funding. Ultimately, the cumulative impact
    of our reduced engagement will be measured in terms of U.S. influence,
    leadership, and relationships in the Western Hemisphere. Severe budget
    constraints have serious implications for all three, at a time in which
    regional security issues warrant greater attention.
                      overview of regional security issues
    Transnational Organized Crime
        Mr. Chairman, members, transnational organized crime is a national
    security concern for three primary reasons. First, the spread of
    criminal networks is having a corrosive effect on the integrity of
    democratic institutions and the stability of several of our partner
    nations. Transnational criminal organizations threaten citizen
    security, undermine basic human rights, cripple rule of law through
    corruption, erode good governance, and hinder economic development.\1\
    Second, illicit trafficking poses a direct threat to our Nation's
    public health, safety, and border security. Criminal elements make use
    of the multitude of illicit pathways in our hemisphere to smuggle
    drugs, contraband, and even humans directly into the United States.
    Illegal drugs are an epidemic in our country, wasting lives and fueling
    violence between rival gangs in most of our Nation's cities. The third
    concern is a potential one, and highlights the vulnerability to our
    Homeland rather than an imminent threat: that terrorist organizations
    could seek to leverage those same smuggling routes to move operatives
    with intent to cause grave harm to our citizens or even quite easily
    bring weapons of mass destruction into the United States. I would like
    to briefly talk about each concern in greater detail to underscore the
    magnitude of the threat posed by transnational organized crime.
    ---------------------------------------------------------------------------
        \1\ Director of National Intelligence, James R. Clapper. Statement
    for the Record: Worldwide Threat Assessment of the U.S. Intelligence
    Community. Senate Select Committee on Intelligence, March 12, 2013.
    ---------------------------------------------------------------------------
        Destabilizing Effects in the Region
        The unprecedented expansion of criminal networks and violent gangs
    is impacting citizen security and stability in the region. Skyrocketing
    criminal violence exacerbates existing challenges like weak governance;
    as a United Nations report recently noted, despite improvements, Latin
    America remains the most unequal and insecure region in the world.\2\
    In some countries, homicides are approaching crisis levels. High levels
    of violence are driving Central American citizens to seek refuge in
    other countries, including the United States. Driven by economic
    pressures and rising criminal violence, the number of Hondurans,
    Guatemalans, and Salvadorans attempting to cross the U.S. Southwest
    border increased 60 percent in 2013.\3\
    ---------------------------------------------------------------------------
        \2\ United Nations Development Programme. Human Development Report
    for Latin America 2013-2014.
        \3\ Information provided by U.S. Customs and Border Protection.
    ---------------------------------------------------------------------------
        This challenge, however, extends far beyond a threat to public
    safety; some areas of Central America are under the direct influence of
    drug trafficking organizations. These groups use their illegally gained
    wealth to buy off border agents, judges, police officers, and even
    entire villages. This criminal power and the enormous flow of crime-
    generated profits are serious threats to the stability of democratic
    institutions, rule of law, and the international financial system.
    Corruption also poses an indirect threat to U.S. national security
    interests, as corrupt government officials in the region can be bribed
    to procure official documents such as visas or citizenship papers and
    facilitate travel of special interest aliens. In my view, this
    vulnerability could be exploited by any number of actors seeking to do
    us harm.
        Illicit Trafficking to the United States
        The U.S. Southern Command area of responsibility is the
    distribution hub for drug trafficking destined for the United States.
    The majority of heroin sold in the United States comes from either
    Colombia or Mexico, and we are seeing a significant increase in heroin-
    related overdoses and deaths in our country.\4\ Additionally, opium
    poppy production now appears to be increasing in Guatemala. Thousands
    of tons of precursor chemicals are trafficked into our hemisphere from
    China, aiding Mexican-based drug cartels that are extending production
    of U.S.-bound methamphetamine into Guatemala, Nicaragua, and
    potentially other Central American countries. With an estimated $84
    billion in annual global sales,\5\ cocaine trafficking remains the most
    profitable activity for criminal networks operating in the region, as
    the Andean Ridge is the source of every single ounce of cocaine
    consumed on the planet.\6\ Upon landfall in Central America, bulk
    cocaine is broken down into multiple smaller shipments for transit into
    Mexico and the United States, making large interdictions at the U.S.
    border extremely difficult, despite the heroic efforts of local law
    enforcement, U.S. Customs and Border Protection, and U.S. Immigration
    and Customs Enforcement. If bulk shipments are not interdicted before
    making landfall, there is almost no stopping the majority of this
    cocaine as it moves through Central America and Mexico and eventually
    lands on street corners across America, placing significant strain on
    our Nation's health care and criminal justice systems and costing
    American taxpayers an estimated $193 billion in 2007 alone, the most
    recent year for which data is available.7,8
    ---------------------------------------------------------------------------
        \4\ U.S. Department of Justice Drug Enforcement Administration.
    2013 National Drug Threat Assessment.
        \5\ United Nations Office of Drugs and Crime. Estimating illicit
    financial flows resulting from drug trafficking and other transnational
    organized crime, 2011.
        \7\ Note: Upon landfall in Central America, bulk cocaine is broken
    down into multiple smaller shipments for transit into Mexico and the
    United States, making large interdictions extremely difficult.
        \8\ National Drug Intelligence Center (2011). The Economic Impact
    of Illicit Drug Use on American Society. Department of Justice.
    ---------------------------------------------------------------------------
        Cocaine trafficking remains the predominant security challenge
    throughout the entire region, and I am growing increasingly concerned
    by the situation in the Caribbean.

              According to U.S. Customs and Border Protection, there was a
            483 percent increase in cocaine washing up on Florida's shores
            in 2013 compared to 2012.

        Due in part to counterdrug asset reductions, some old routes appear
    to be reviving, including ones that lead directly into Florida. In
    2013, U.S.-bound cocaine flow through the Caribbean corridor increased
    to 14 percent of the overall estimated flow; this number is likely
    higher and will continue to grow, but we lack a clear picture of
    cocaine flow due to asset shortfalls. The discovery of cocaine
    processing lab equipment in the Dominican Republic suggests criminal
    organizations may be seeking to broaden production in the Caribbean.
    This may be an indication of an emerging trend, similar to what we saw
    in Central America in 2012. Additionally, the Caribbean is particularly
    vulnerable to the violence and insecurity that often comes with illicit
    trafficking and organized crime. As trafficking from the Dominican
    Republic into Puerto Rico has increased, so too have violence, crime,
    and corruption. Once cocaine successfully reaches Puerto Rico, it has
    reached the U.S. Homeland; most of the cocaine arriving in Puerto Rico
    is successfully transported into the continental United States.
    According to the DEA, traffickers are also transporting Colombian
    heroin, often via Venezuela, to Puerto Rico for onward shipment to
    Miami, New York, and Houston.
        Mr. Chairman, gone are the days of the ``cocaine cowboys.''
    Instead, we and our partners are confronted with cocaine corporations
    that have franchises all over the world, including 1,200 American
    cities,\9\ as well as criminal enterprises like the violent
    transnational gang Mara Salvatrucha, or MS-13, that specialize in
    extortion and human trafficking. The Federal Bureau of Investigation
    (FBI) has warned that MS-13 has a significant presence in California,
    North Carolina, New York, and Northern Virginia, and is expanding into
    new areas of the United States, including Indian reservations in South
    Dakota.
    ---------------------------------------------------------------------------
        \9\ U.S. Department of Justice, Drug Enforcement Administration.
    2011 National Drug Threat Assessment.
    ---------------------------------------------------------------------------
        Additionally, migrant smuggling organizations are increasingly
    active in the Caribbean, as new laws in Cuba and erroneous perceptions
    in Haiti of changes in U.S. immigration policy have led to increased
    migration flows. Smuggling networks are expanding in the Eastern
    Caribbean, as Cubans and Haitians attempt to reach the United States
    via Puerto Rico or the U.S. Virgin Islands. These networks are
    opportunistic and easily expand into other illicit activities, such as
    the drug trade, special interest alien smuggling, and human
    trafficking, including exploiting vulnerable migrants by subjecting
    them to forced labor, a form of modern-day slavery. In 2012, the
    International Labor Organization estimated that 20.9 million people are
    victims of forced labor worldwide.\10\ Foreign nationals are trafficked
    for sex and labor, as well as for commercial sex acts, into the United
    States from many countries around the world, including Central America,
    South America, and the Caribbean.\11\
    ---------------------------------------------------------------------------
        \10\ ILO Global Estimate of Forced Labour, ILO. See: http://
    www.ilo.org/wcmsp5/groups/public/--ed--norm/--declaration/documents/
    publication/wcms--182004.pdf
        \11\ U.S. Department of State Office to Monitor and Combat
    Trafficking in Persons. 2013 Trafficking in Persons Report. Retrieved
    from: http://www.state.gov/documents/organization/210742.pdf.
    ---------------------------------------------------------------------------
        It has been many years since U.S. Southern Command supported a
    response to a mass migration event, but I am concerned by the trends we
    are seeing, especially in Haiti, where we have witnessed a 44-fold
    increase in Haitian migrants in the Mona Passage. As of February 2013,
    more than 2,000 Haitians had been documented trying to use this narrow
    passage as a migration vector, compared to less than 200 in the past 8
    years combined. Smuggling operations have a high human toll; rough seas
    endanger the lives of rescuers and migrants and have resulted in the
    death of more than 50 Haitians to date. Thankfully, the Dominican
    Republic is an important partner in stemming migration flows, and they
    are working hard to reach a solution on the issue of the roughly
    200,000 Haitians residing in the Dominican Republic. However,
    additional increases in migration would place additional burdens on
    already over-stretched U.S. Coast Guard and Dominican Republic assets.
    Absent resource adjustments, stemming these smuggling operations and
    preventing future loss-of-life will pose major challenges to the United
    States and our Caribbean partners.
        Crime-Terror Convergence
        Clearly, criminal networks can move just about anything on these
    smuggling pipelines. My concern, Mr. Chairman, is that many of these
    pipelines lead directly into the United States, representing a
    potential vulnerability that could be exploited by terrorist groups
    seeking to do us harm. Supporters and sympathizers of Lebanese
    Hezbollah are involved in both licit and illicit activities in the
    region, including drug trafficking. Additionally, money, like drugs and
    people, has become mobile; it is easier to move than ever before, and
    the vast global illicit economy benefits both criminal and terrorist
    networks alike. Clan-based, Lebanese Hezbollah-associated criminal
    networks exploit free trade zones and permissive areas in places like
    Venezuela, and the Argentina, Brazil, and Paraguay Tri-Border to engage
    in money laundering and other illegal endeavors, as well as recruitment
    and radicalization efforts. The exact amount of profits generated by
    these illicit activities in the region is unclear, but it is likely--
    and at least--in the tens of millions of dollars.
    External Actors: Iran and Islamic Extremist Groups
        Lebanese Hezbollah has long considered the region a potential
    attack venue against Israeli and other Western targets, and I remain
    concerned that the group maintains an operational presence there.
    Lebanese Hezbollah's partner and sponsor, Iran, has sought closer ties
    with regional governments, largely to circumvent sanctions and counter
    U.S. influence. As a state-sponsor of terrorism, Iran's involvement in
    the Western Hemisphere is a matter for concern. Additionally, members,
    supporters, and adherents of Islamic extremist groups are present in
    Latin America. Islamic extremists visit the region to proselytize,
    recruit, establish business venues to generate funds, and expand their
    radical networks. Some Muslim communities in the Caribbean and South
    America are exhibiting increasingly extremist ideology and activities,
    mostly as a result from ideologues' activities and external influence
    from the Middle East, Africa, and South Asia. Mr. Chairman, we take all
    these activities seriously, and we and our partners remain vigilant
    against an evolution in capability of any group with the intent to
    attack the United States, our interests, or our allies. I remain
    concerned, however, that U.S. Southern Command's limited intelligence
    assets may prevent full awareness of the activities of Iranian and
    terrorist support networks in the region.
    Other External Actors
        Mr. Chairman, there has been a great deal of attention on the
    increased regional influence of so-called ``external actors'' such as
    China and Russia. Ultimately, we should remember that engagement is not
    a zero-sum game. Russia and China's expanding relationships are not
    necessarily at our expense. However, if we want to maintain our
    partnerships in this hemisphere and maintain even minimal influence, we
    must remain engaged with this hemisphere. Budget cuts are having a
    direct and detrimental effect on our security cooperation activities,
    the principal way we engage and promote defense cooperation in the
    region. The cumulative effect of our reduced engagement is a relative
    but accelerated decline of trust in our reliability and commitment to
    the region. Our relationships, our leadership, and our influence in the
    Western Hemisphere are paying the price.
        Russia continues to build on its existing strategic partnerships in
    Latin America, pursuing an increased regional presence through arm
    sales, counterdrug cooperation, and bilateral trade agreements. Last
    year marked a noticeable uptick in Russian power projection and
    security force personnel in the region. It has been over 3 decades
    since we last saw this type of high-profile Russian military presence:
    a visit by a Russian Navy Interfleet Surface Action Group to Cuba,
    Nicaragua, and Venezuela, and the deployment of two Russian long-range
    strategic bombers to Venezuela and Nicaragua as part of a training
    exercise.
        As part of its long-term strategy for the region, China is also
    expanding relationships in Latin America, especially in the Caribbean.
    In contrast to the Russians, Chinese engagement is focused primarily on
    economics, but it uses all elements of national power to achieve its
    goals. Major investments include potentially $40 billion to construct
    an alternative to the Panama Canal in Nicaragua and $3 billion to Costa
    Rica and Caribbean nations for myriad infrastructure and social
    development projects. China is the single biggest source of financing
    to Venezuela and Ecuador, due to China's thirst for natural resources
    and contracts for Chinese state-owned companies. Chinese companies hold
    notable investments in at least five major ports and are major vendors
    of telecommunications services to 18 nations in the region. In the
    defense realm, Chinese technology companies are partnering with
    Venezuela, Brazil, and Bolivia to launch imagery and communications
    satellites, and China is gradually increasing its military outreach,
    offering educational exchanges with many regional militaries. In 2013,
    the Chinese Navy conducted a goodwill visit in Brazil, Chile, and
    Argentina and conducted its first-ever naval exercise with the
    Argentine Navy.
        Mr. Chairman, I am often asked if I view engagement by these
    ``external actors'' as a direct threat to the United States. Generally
    speaking, I see potential for greater partnership with China in areas
    such as humanitarian assistance and disaster response. However, I would
    like to see the Chinese place greater emphasis on respecting human
    rights--like we do--as part of their overall engagement efforts in the
    region. The U.S. Government continues to encourage China to address
    shared security challenges in a positive way, such as taking concrete
    steps to address the massive illicit trafficking of counterfeit
    pharmaceuticals and precursor chemicals used for methamphetamine and
    heroin production in Central America and Mexico. While Russian
    counterdrug cooperation could potentially contribute to regional
    security, the sudden increase in its military outreach merits closer
    attention, as Russia's motives are unclear. Given its history, the
    region is sensitive to any appearance of increased militarization,
    which is why it is important that Russia and China promote their
    defense cooperation in a responsible, transparent manner that helps
    maintain hemispheric stability and hard-won democratic gains.
                               command priorities
        Mr. Chairman, the U.S. military plays an integral role in a whole-
    of-government approach to address many of these regional security
    issues. To advance the President's vision and the Department of
    Defense's policy for the Americas in a resource-constrained
    environment, U.S. Southern Command focuses our efforts on four
    priorities. We can accomplish quite a lot with relatively modest
    investment, but continued budget limitations imperil our ability to
    build on this progress.
    Priority: Detention Operations
        Mr. Chairman, I want to speak for a moment about the most important
    people at Guantanamo: the outstanding men and women that are part of
    the Joint Task Force at Guantanamo Bay. First, I want to make clear--we
    who wear the uniform are responsible for one thing at Joint Task Force
    Guantanamo: detention operations, a mission of enormous complexity and
    sensitivity. We do not make policy; we follow the orders of the
    President and Secretary of Defense with the utmost professionalism and
    integrity.
        I have never been prouder of any troops under my command than I am
    of the young military professionals who stand duty day and night at
    Guantanamo, serving under a microscope of public scrutiny in one of the
    toughest and most unforgiving military missions on the planet. These
    young men and women are charged with caring for detainees that can
    often be defiant and violent. Our guard and medical forces endure
    constant insults, taunts, physical assaults, and splashing of bodily
    fluids by detainees intent on eliciting a reaction.
        In response, each and every military member at Guantanamo exhibits
    professionalism, patience, and restraint. This is the story that never
    gets written: that our servicemembers treat every detainee--even the
    most disruptive and violent among them--with respect, humanity, and
    dignity, in accordance with all applicable international and U.S. law.
    Our troops take very seriously their responsibility to provide for the
    detainees' safe and humane care. In my opinion, this story is worth
    telling, because our country needs to understand that the young
    Americans sent by the President and the Congress to do this mission are
    exceptional; they live and work by an unbreakable code of honor and
    courage and are among the best 1 percent of their generation.
        Mr. Chairman, as you are aware, I am responsible not just for the
    welfare of my troops, but also for the welfare of every detainee under
    my care at Joint Task Force Guantanamo. Over the past year, we
    implemented improvements to enhance the well-being of the detainees. To
    adequately address the complex medical issues of the aging detainee
    population, we expanded and emphasized detailed reporting within our
    comprehensive system to monitor the health, nutrition, and wellness of
    every detainee. Last year, some detainees went on self-proclaimed
    ``hunger strikes,'' although many of these detainees continued to
    consume meals--maintaining or even gaining weight throughout the
    ``strike''--and were at no medical risk. We have transitioned away from
    publicly releasing tallies of such hunger strike claims, which in our
    experience had served to encourage detainee non-compliance and had left
    the public with a very distorted picture of the overall health of the
    detainee population.
        We continue to support ongoing military commissions, habeas corpus
    proceedings, periodic review boards, and visits by congressional and
    foreign government delegations and nongovernmental organizations like
    the International Committee of the Red Cross. We have taken steps to
    reduce costs and expenses wherever possible, while continuing to
    maintain the level of humane care that makes Joint Task Force
    Guantanamo a model for detention operations worldwide. We reduced the
    cost of the program supporting the detainee library by 45 percent, and
    reduced contract requirements and expenses in the Intelligence and
    Security Program, saving an estimated $6.1 million per year. We also
    worked with the International Committee of the Red Cross to provide
    expanded Skype capability to improve detainees' regular communication
    with family members, at no cost to U.S. taxpayers.
        Concerns
        Although detention operations have not been adversely affected by
    budget cuts, I remain concerned by two issues at Guantanamo: advanced
    medical care and deteriorating infrastructure. Although Naval Station
    Guantanamo and detainee hospitals are capable of providing adequate
    care for most detainee conditions, we lack certain specialty medical
    capabilities necessary to treat potentially complex emergencies and
    various chronic diseases. In the event a detainee is in need of
    emergency medical treatment that exceeds on-island capacity, I cannot
    evacuate him to the United States, as I would a servicemember.
        As a former commander once remarked, we have not been doing
    detention operations at Guantanamo for 12 years, we have been doing
    them for 1 year, 12 times. The expeditionary infrastructure put in
    place was intended to be temporary, and numerous facilities are showing
    signs of deterioration and require frequent repair. First and most
    urgently, some facilities are critical to ensuring the safety and
    welfare of our troops stationed at Joint Task Force Guantanamo and for
    the continued humane treatment and health of the detainees. For
    example, the mess hall--a temporary structure built in the 1990s to
    support mass migration operations--is at significant risk of structural
    failure and is corroding after 11 years of continuous use, with holes
    in the roof and structural support beams. This facility must provide
    food services to all detainees and over 2,000 assigned personnel on a
    daily basis. As another example, the High Value Detention Facility is
    increasingly unsustainable due to drainage and foundation issues.
    Additionally, I am concerned over inadequate housing for our troops.
    This housing has other long-term requirements even after detention
    operations at Guantanamo end; it will be utilized by Naval Station
    Guantanamo to support a full range of title 10 missions and nationally-
    directed contingency requirements for disaster response or mass
    migration. I am working within the Office of the Secretary of Defense
    to find solutions to these ongoing facility issues.
    Priority: Countering Transnational Organized Crime (CTOC)

              On October 5, 2013, a U.S.-contracted aircraft carrying on
            U.S. servicemember, four Department of Defense contractors, and
            a Panamanian Air National guardsman crashed in Colombia,
            killing four crew members, three of whom were U.S. citizens.
            The crew was monitoring coastal drug trafficking lanes in the
            Western Caribbean in support of Operation Martillo.

        In response to the challenges posed by the spread of transnational
    organized crime, U.S. Southern Command is working with our interagency
    partners to counter the threats posed by criminal networks and illicit
    trafficking, focusing on those networks that threaten citizen safety in
    the region and the security of the United States. Mr. Chairman, our
    contribution to this effort is relatively small but important, and
    comes with real sacrifice. In 2013, the crash of a counternarcotics
    flight in Colombia led to the tragic death of Air Force Master Sergeant
    Martin Gonzales, two other dedicated American contractors, and a
    Panamanian officer, and the serious injury of the two pilots,
    highlighting the true human cost of this fight. The individuals who
    died will be remembered for their service and their commitment to
    fighting drug trafficking and criminal networks whose products are
    killing so many of our countrymen and women every year.
        Support to CTOC Efforts in Central America
        Last year, we redirected our focus to Central American security
    institutions involved in appropriate defense missions like border and
    maritime security. This refinement capitalizes on minimal Department of
    Defense resources, while also being sensitive to perceptions of
    militarization of the region. We are prioritizing our support to
    interagency counter-threat finance efforts and expanding our focus on
    converging threats, including illicit trafficking via commercial
    shipping containers, which could be exploited to move weapons of mass
    destruction into the United States. By supporting the targeting of key
    illicit financial nodes and commercial linkages, we aim to help degrade
    the capacities of both criminal and terrorist groups.
        Now entering its third year, Operation Martillo continues to
    demonstrate commitment by the United States, our partner nations and
    European allies to counter the spread of transnational criminal
    organizations and protect citizens in Central America from the
    violence, harm, and exploitation wrought by criminal networks. However,
    force allocation cuts by the Services are taking their toll on
    operational results; in 2013, Operation Martillo disrupted 132 metric
    tons of cocaine, compared with 152 metric tons of cocaine in 2012, due
    to limited assets. On a positive note, the operation has led to
    improved interoperability and increased partner nation contributions.
    Our partners helped prevent 66 metric tons of cocaine from reaching the
    United States last year; 50 percent of Joint Interagency Task Force
    South's successes would not have occurred without the participation of
    partner nations. Limited and declining Department of Defense assets
    will influence the next phase of the operation, as Operation Martillo's
    original objectives may no longer be achievable. In the year ahead, we
    will seek to employ non-traditional solutions, within our current
    authorities, to partially mitigate detection and monitoring shortfalls.
    However, lack of assets will continue to constrain the operation's full
    effectiveness, and has the potential to be perceived as lack of
    political will on the part of the U.S. Government to continue this
    fight.

                 Operation Martillo Fiscal Year 2013 Disruptions
    Cocaine...................................  132,191 kgs
    Marijuana.................................  41,232 lbs
    Bulk cash.................................  $3.5 million
    Conveyances...............................  107

        Interagency Partnerships
        Our CTOC efforts focus on providing support to our law enforcement
    partners. These partnerships ensure a whole-of-government approach to
    both operations and capacity building efforts. To mitigate asset
    shortfalls, we rely heavily on the U.S. Coast Guard and Customs and
    Border Protection, which now provide the bulk of the ships and aircraft
    available to disrupt drugs bound for the United States. The heroic men
    and women of DEA's Foreign Deployed Advisory and Support Team provide
    critical support to partner nation interdiction operations, and we are
    fortunate to have nine DEA Special Investigative Units working to
    improve regional law enforcement capacity. In my view, DEA is a known,
    essential partner, and their focus on building the investigative and
    intelligence capacities of vetted law enforcement units complements our
    own efforts to professionalize regional defense and security forces.
        In late 2013, U.S. Southern Command and the Treasury Department
    created a Counter-Threat Finance Branch, an analytical unit that will
    map illicit networks, combat the financial underpinnings of national
    security threats in the region, and support the development of targeted
    financial measures and U.S. law enforcement actions.

              U.S. Southern Command has 34 representatives from 15
            different Federal agencies assigned and embedded in our
            headquarters staff.

        As one example, we provided analytic support to the Treasury
    Department's financial sanctions against Los Cachiros in Honduras. We
    also work with Immigration and Customs Enforcement to aggressively
    target criminal networks that traffic in special interest aliens and
    contraband throughout the region. Additionally, U.S. Southern Command
    and the FBI expanded their analytic partnership to include the FBI's
    International Operations and Criminal Investigative Divisions. This
    enhanced partnership helps both agencies further develop partner nation
    capacity in countering transnational organized crime. We also partnered
    with the Department of Homeland Security to provide network analysis in
    support of Operation Citadel, which targeted the movements of illicit
    proceeds in Central America. In Colombia, we are working with the Joint
    Improvised Explosive Device Defeat Organization to assist our Colombian
    partners in countering the threat of improvised explosive devices
    (IEDs) used by terrorist groups like the FARC. Finally, we are also
    coordinating with the Department of State's Bureaus of International
    Narcotics and Law Enforcement and Western Hemisphere Affairs to explore
    the possibility of providing logistical support to regional law
    enforcement operations.
        Impact of Budget Cuts--CTOC
        Severe budget constraints are significantly degrading our ability
    to defend the southern approaches to the United States. Sequestration
    merely compounds the ongoing challenge of limited and declining U.S.
    Government maritime and air assets required for detection, monitoring,
    and ``end-game'' interdiction missions. Irrespective of sequestration
    cuts, we face a sharp downturn in availability of large surface assets
    such as U.S. Navy frigates and U.S. Coast Guard High Endurance Cutters,
    which face decommissioning or are approaching the end of their expected
    lifespan. The eighth and final U.S. Coast Guard National Security
    Cutter, which will be delivered in the next few years, will be a
    critical asset to U.S. Government efforts to protect our southern
    approaches.
        Mr. Chairman, the impact of diminishing asset allocation will
    continue to impede our mission even if sequestration is reversed; our
    operational effectiveness is directly proportional to the number of
    assets we can put against detection, monitoring, and interdiction
    operations.

              In 2013, Joint Interagency Task Force South was unable to
            take action on 74 percent of actionable illicit trafficking
            events due to lack of assets.

        When better resourced several years ago, we were able to disrupt a
    significant amount--more than 240 metric tons--of cocaine heading
    towards the United States. Last year, 20 more metric tons of cocaine
    reached the United States due to reduced asset availability, a number
    that will increase inversely as the availability of U.S. Government
    assets decreases.
        Other Issues
        Additionally, I remain concerned over the planned construction of
    wind farm sites in North Carolina that will interfere with our
    Relocatable Over-The-Horizon Radar (ROTHR) radar system in Virginia. I
    am also concerned over wind projects in Texas that will impact ROTHR
    systems in that state. These wind farms could and likely will adversely
    impact our ROTHR systems, the only persistent wide-area surveillance
    radars capable of tracking illicit aircraft in Latin America and the
    Caribbean. We are working within the Department of Defense and with
    developers and stakeholders to develop potential mitigation solutions,
    but I have little confidence we will succeed.
    Priority: Building Partner Capacity
        Having strong partners is the cornerstone of U.S. Southern
    Command's engagement strategy and is essential for our national
    security. Capable and effective partners respect human rights, share in
    the costs and responsibilities of ensuring regional security, and help
    us detect, deter, and interdict threats before they reach the U.S.
    Homeland. Our persistent human rights engagement also helps encourage
    defense cooperation, trust, and confidence, which cannot be surged when
    a crisis hits, and cannot be achieved through episodic deployments or
    chance contacts. Trust must be built, nurtured, and sustained through
    regular contact.
        Engagement with Colombia
        Our partner Colombia has paid the ultimate price in terms of their
    blood and national treasure to bring the FARC--who have been serial
    human rights violators for decades--to the negotiating table.

              According to a Colombian nongovernmental organization,
            between 2001 and 2009, nearly 750,000 women were victims of
            sexual violence, rape, and enslavement at the hands of
            illegally armed groups like the FARC.

        The Colombians have fought heroically for a peaceful, democratic
    Colombia, which will be a powerful symbol of hope and prosperity, but
    it is far too soon to declare victory. Mr. Chairman, it is absolutely
    imperative we remain engaged as one of our strongest allies works to
    consolidate its hard-won success. To that end, U.S. Southern Command is
    providing advice and assistance to the Colombian military's
    transformation efforts, as it works to improve interoperability and
    transition to an appropriate role in post-conflict Colombia. With
    Colombia increasingly taking on the role of security exporter, we are
    facilitating the deployment of Colombian-led training teams and subject
    matter experts and attendance of Central American personnel to law
    enforcement and military academies in Colombia as part of the U.S.-
    Colombia Action Plan on Regional Security Cooperation. This is a clear
    example of a sizeable return on our relatively modest investment and
    sustained engagement.
        Engagement in South America
        In Peru, U.S. Southern Command and the DEA are working together to
    support Peru's ongoing efforts against the Shining Path, which are
    beginning to yield significant operational successes.

              In 2013, U.S. Southern Command facilitated the delivery of
            lifesaving medicine to 140 patients in Brazil following a
            tragic nightclub fire.

        An investment of 6 U.S. personnel, who trained combat medical
    instructors from Peru and El Salvador, resulted in the training of over
    2,000 members of the Peruvian and Salvadoran military, including
    Salvadoran soldiers destined for stability operations in Afghanistan,
    Lebanon, and Haiti. We are working with Chile on capacity-building
    efforts in Central America and exploring possible future engagements in
    the Pacific. In Brazil, broader bilateral challenges have affected our
    defense relations. Our military-to-military cooperation at the
    operational and tactical levels, however, remains strong, and we are
    committed to supporting the United States' growing global partnership
    with Brazil. We continue to engage with Brazilian security forces in
    the run-up to the 2014 World Cup and 2016 Olympics. Brazil participated
    in several of our multinational exercises last year, including playing
    a leading role in PANAMAX, which focuses on the defense of the Panama
    Canal.
        Engagement in Central America
        In 2013, U.S. Southern Command provided critical infrastructure and
    operational support to the new Guatemalan Interagency Task Force, which
    has contributed to significant disruption of illicit trafficking along
    the Guatemalan-Mexican border and is now viewed by the Government of
    Guatemala as a model for future units. In collaboration with U.S.
    Northern Command, we are planning initiatives in Guatemala and Belize
    to support Mexico's new southern border strategy. I recently visited
    Guatemala and was struck by the government's strong commitment to work
    with human rights groups and strengthen its democratic institutions,
    while also doing its part to stem the massive flow of illicit
    trafficking heading to our country. Unfortunately, current legislative
    restrictions on provisions such as Foreign Military Financing and
    International Military Education and Training, found in the fiscal year
    2014 Consolidated Appropriations Act, limit the United States' ability
    to fully engage with the Guatemalan military and security forces. In
    another example of successful interagency partnerships, Joint Task
    Force Bravo supported the Belizean Defence Force and DEA in the
    eradication of 100,446 marijuana plants and the seizure of 330 pounds
    of marijuana.
        Along Panama's Pacific Coast, we constructed three key maritime
    facilities and are providing counternarcotics training to Panamanian
    coast guard and maritime security forces. Mr. Chairman, I applaud the
    Government of Panama in their handling of last year's smuggling
    incident involving Cuban military equipment aboard a North Korean
    vessel. We are fortunate to have partners like Panama that are
    committed to ensuring international security. Finally, I am
    particularly proud of our support to the third deployment of members of
    the El Salvador Armed Forces to Afghanistan. Augmented by the New
    Hampshire National Guard, the Salvadoran unit returned this past
    December from serving as a Police Advisory Team that provided training
    to Afghan security forces. Like Panama, El Salvador is just one example
    of the outstanding partners we have in this part of the world--partners
    that are doing their part to ensure peace and security within and
    beyond their borders.
        Engagement in the Caribbean
        Throughout Central America and the Caribbean, U.S. Southern Command
    has constructed or improved partner nation naval and coast guard
    operating bases and facilities and delivered more than $3 million in
    counternarcotics training and non-lethal equipment, including a total
    of 42 high-speed interceptor boats provided since 2008 that have
    supported Joint Interagency Task Force South (JIATF-S) interdiction
    operations. In support of the Caribbean Basin Security Initiative
    (CBSI), we are working to improve maritime patrol and intercept
    capabilities of our Caribbean partners. Through CBSI, a maritime
    Technical Assistance Field Team (TAFT)--comprised of joint Coast Guard
    and Department of Defense personnel--provides hands-on technical
    assistance, in-country mentoring, and training to 13 CBSI partner
    nations, with the goal of helping these countries develop accountable
    and sustainable engineering, maintenance, and logistics and procurement
    systems. The TAFT program is a collaborative interagency effort funded
    by the U.S. Department of State, using Foreign Military Financing and
    INCLE funding. In Haiti, the government is committed to improving its
    disaster response capabilities. Haiti continues to make gradual social
    and economic progress after 2010's devastating earthquake, and the
    Government of Haiti is committed to improving its disaster response
    capabilities. Led by Brazil and comprised of a multinational force that
    includes personnel from Uruguay, Chile, and Guatemala, the United
    Nations Stabilization Mission in Haiti (MINUSTAH) has played a critical
    role in Haiti's efforts to rebuild, working with the Haitian National
    Police to ensure security. As MINUSTAH draws down, I see a continued
    need for international engagement in Haiti to guarantee lasting
    stability.
        Cooperation on Counterterrorism
        We also work with the interagency, U.S. Embassy Country Teams, and
    our partner nations to counter the encroachment of both Sunni and Shia
    Islamic extremism, recruitment, and radicalization efforts that support
    terrorism activities. We conduct multiple engagement efforts--including
    Joint Combined Exchange Training, subject matter expert and
    intelligence exchanges, counterterrorism-focused exercises, and key
    leader engagements--here in the United States and in countries
    throughout the region. Sustained engagement helps build relationships,
    an essential tool in the fight against terrorism. Through intelligence
    and counterterrorism cooperation, our partners are better able to
    mitigate terrorist threats before they can cause mass destruction,
    destabilize a country, or reach the U.S. Homeland.
        Human Rights and Defense Professionalization
        Everything we do at U.S. Southern Command begins and ends with
    human rights. Mr. Chairman, a lot of people talk about human rights,
    but the U.S. military does human rights. We live it. We teach it. We
    enforce it. U.S. Southern Command's Human Rights Initiative continued
    to break new ground in 2013, promoting dialogue and cooperation between
    regional military forces and human rights groups and strengthening
    institutional capacity in Guatemala and Honduras. Since its inception,
    our Human Rights Initiative has helped promote reform throughout the
    region, and the results speak for themselves. Military forces serving
    democratic governments in the region understand, and take seriously,
    their responsibility to respect and protect human rights. Ten partner
    nations have formally committed to implementing the Human Rights
    Initiative, building an institutional culture of respect for human
    rights within their militaries.
        U.S. Southern Command also promotes human rights through law of
    armed conflict programs led by the Defense Institute of Legal Studies
    and through academic institutions like the Perry Center for Hemispheric
    Defense Studies, the Western Hemisphere Institute for Security
    Cooperation, and the Inter-American Air Forces Academy.

              In 2013, 1,417 students from the region participated in the
            International Military Education Training (IMET) program, an
            invaluable investment in future defense leaders.

        Additionally, the entire premise of the International Military
    Education and Training (IMET) program promotes an environment conducive
    to students learning and sharing U.S. values and democracy, with human
    rights portions embedded in nearly every course. Mr. Chairman, IMET is
    one of our most valuable engagement tools; professional military
    education improves how our partners work with us in a joint,
    interoperable world. Participants not only better understand our
    culture; they share our perspective, and want to work with us to
    advance U.S. and regional interests.
        Cyber Security and Information Operations
        In the region, U.S. Southern Command works to ensure the continued
    security of Department of Defense networks and communication
    infrastructure. We are also slowly making progress in strengthening
    regional cyber defense and information operations capabilities. In
    2013, U.S. Southern Command, working with the Perry Center, brought
    together strategy and policy officers from the region to share
    information on current cyber security threats. Colombia, Chile, and
    Brazil have each expressed interest in sharing ``lessons learned'' on
    building effective cyber security institutions. Through Operation
    Southern Voice, 50 information operation practitioners from 11 Western
    Hemisphere countries shared capabilities and best practices. In the
    year ahead, we are partnering with Colombia to build information-
    related capabilities in Guatemala and Panama, and with U.S. Northern
    Command to do the same in Mexico.
        Multinational Exercises and Humanitarian Assistance
        U.S. Southern Command's multinational exercise and humanitarian and
    civic assistance programs encourage collective action and demonstrate
    our values and commitment to the region. Last year's Unitas and
    Tradewinds exercises helped improve interoperability among our
    hemisphere's maritime forces. During our annual humanitarian and civic
    assistance exercises New Horizons and Beyond The Horizons, U.S. forces
    improved their readiness and provided medical care to 34,677 patients
    in El Salvador, Panama, and Belize.

              In 2013, we executed 140 minimal cost projects and worked
            with local populations and nongovernmental organizations to
            construct and supply schools, community shelters, clinics, and
            hospitals.

        These humanitarian missions are one of the most effective tools in
    our national security toolkit, and one that I believe warrants greater
    employment. In any given year, we are able to send around 700 medical
    professionals to the region; Cuba, in contrast, sends around 30,000,
    mostly to Venezuela. In 2013, our collaboration with the private sector
    and nongovernmental organizations resulted in contributions of $4.3
    million in gifts-in-kind and services to our humanitarian activities.
    Mr. Chairman, I cannot overstate the importance of these types of
    activities by the U.S. military, especially in terms of influence and
    access. As Secretary Hagel noted, our humanitarian engagement offers
    the next generation of global citizens direct experience with the
    positive impact of American values and ideals.
        Perceptions of ``Militarization''
        Mr. Chairman, I want to close this section by responding to the
    perception by some that our engagement is ``militarizing'' the region.
    In my view, these concerns reflect a misunderstanding of the actual
    role the U.S. military plays in this part of the world. As an example,
    our Special Operations Forces are among the most qualified, culturally
    sensitive, and linguistically capable trainers in the U.S. military,
    and above all, they excel at building trust and forging personal
    relationships that are essential to supporting our national interests.
    Whether it's a small team at the tactical level or an official
    engagement at my level, all our efforts are focused on
    professionalizing military and security forces, to help our partners
    become more accountable to civilian authority, more capable, and to
    above all respect the human rights of the citizens they are charged to
    protect. Our efforts are part of a whole-of-government approach--
    involving DEA, Department of Justice, Department of Homeland Security,
    Department of State, and many others--to strengthen governance and
    foster accountable, transparent, and effective institutions throughout
    the Western Hemisphere.
        Mr. Chairman, engagement by the U.S. military can make a real and
    lasting difference, especially in terms of promoting respect for human
    rights. Ultimately, if we want regional militaries to honor, respect,
    and accept civilian control and demonstrate an institutional culture of
    respect for human rights, that message must come from a military that
    lives by that code. For the U.S. military, our own training begins and
    ends with human rights; it is at the center of everything we do and an
    integral part of every interaction with partner nations. I regularly
    meet with human rights groups in Washington and throughout the region,
    and human rights is a major theme in every engagement with my
    counterparts in regional militaries.
        Throughout the world, the U.S. military has a unique network of
    alliances and partnerships, and our regional approach can provide a
    framework for engagement by the broader U.S. interagency. Thanks in
    part to our efforts, Colombia is now a beacon of hope and stability
    with one of the most highly professionalized militaries in the region;
    Central America is now the focus for numerous interagency initiatives;
    the Caribbean now routinely shares information in support of
    international counterdrug operations; and perhaps most importantly,
    today the hemisphere is characterized by militaries under civilian
    control that recognize their fundamental responsibility to respect
    human rights. In my mind, there is no more valuable return on
    engagement than that.
        Impact of Budget Cuts--BPC
        In fiscal year 2013, we began seeing the initial effects of
    sequestration, which resulted in drastic force allocation cuts by all
    the Services. In turn, reduced availability of forces adversely
    impacted our execution of plans and engagement activities. Severe
    budget constraints are affecting our established military-to-military
    relationships that took decades to establish, limiting our ability to
    build on the progress I just described. Mr. Chairman, let me be frank:
    reduced engagement risks the deterioration of U.S. leadership and
    influence in Central America, South America, and the Caribbean.
        In fiscal year 2013, budget uncertainty caused the cancellation of
    four major exercises, including Fuerzas Comando--one of only two
    exercises focused on counterterrorism--and 225 engagement activities
    that are critical to building capable and effective defense and
    security forces in the region. The Navy's cancelled deployment of
    Continuing Promise was felt throughout the region; it is our single
    most impactful humanitarian mission, demonstrating U.S. values and
    creating goodwill and positive views towards our country. We rely
    heavily on the National Guard's State Partnership Program to conduct
    our activities, and the cancellation of 69 events was detrimental to
    our efforts to maintain long-term security relationships. Reductions in
    force allocation also created significant gaps in persistent Civil
    Affairs coverage. The cancellation of Civil Affairs deployments has
    created a loss of credibility with our partner nations and our partners
    in U.S. Embassies in the region, who have questioned U.S. Southern
    Command's ability to fulfill our commitments. Finally, the Perry
    Center, which helps build capacity at the ministerial level, is facing
    a severe 50 percent cut in funding over the several upcoming fiscal
    years.
    Priority: Planning for Contingencies
        Lastly, planning and preparing for possible contingencies is one of
    U.S. Southern Command's core missions. Every year, we regularly
    exercise our rapid response capabilities in a variety of scenarios,
    including responding to a natural disaster, mass migration event, an
    attack on the Panama Canal, or evacuating American citizens. In 2013,
    we conducted our Integrated Advance exercise, which focuses on
    improving coordination with interagency partners in response to a mass
    migration event in the Caribbean. On this issue, we are fortunate to
    have an excellent exercise, operational, and planning relationship with
    Homeland Security Task Force Southeast, and together we work to defend
    the southern approaches to the United States. That mission, however,
    continues to be significantly impacted by force allocation cuts.
        Impact of Budget Cuts--Contingency Response
        Mr. Chairman, our ability to respond to regional contingencies such
    as a mass migration event or natural disaster was impaired in 2013, a
    trend that could continue in 2014. U.S. Southern Command has minimal
    assigned and allocated forces, and we rely on the Services--especially
    the Navy--to ``surge'' forces and assets when a crisis hits. As the
    Services absorb large reductions to their budgets, this will affect
    U.S. Southern Command's ability to immediately respond to crises and
    disasters, which could lead to preventable human suffering and loss-of-
    life. As I mentioned earlier, I am deeply concerned by the uptick in
    Haitian migration in the Mona Passage and the continued scarcity of
    U.S. Government assets in the Caribbean. As currently resourced, U.S.
    Southern Command faces considerable challenges to rapidly support a
    mass migration response.
                                   our people
    Headquarters Budget
        Mr. Chairman, as you can see, we can accomplish a lot with a
    relatively small portion of the Department of Defense budget. Last
    year, the forced furloughs of 572 civilian employees had a significant
    impact on our ability to conduct our missions. Fortunately, the
    temporary budget reprieve should spare our workforce the pain of
    furloughs in fiscal year 2014 and fiscal year 2015, but continued
    budget uncertainty will likely lead to an inevitable ``talent drain''
    as our best and brightest civilian employees seek more stable
    employment opportunities. Although we appreciate the near-term budget
    solution, the long-term challenge of sequestration has not been
    resolved. It has merely been deferred.
    Partial Mitigation to Budget Cuts
        Per guidance from the Office of the Secretary of Defense, U.S.
    Southern Command must strive for a goal of 20 percent reductions in our
    headquarters budget and military and civilian personnel by fiscal year
    2019. Combined with the potential of continued sequestration, resource
    cuts require a fundamental relook at what U.S. Southern Command will
    and will not be able to do with limited resources.

              To ensure our workforce has mission-critical capabilities,
            our Joint Training Program offered training opportunities to 85
            military and civilian joint staff officers, and also delivered
            cultural training to enhance our interactions in the region.

        Due to ongoing resource constraints, I have directed a
    transformation effort at our headquarters to look holistically at our
    strategy and resources. Limited defense dollars must be applied wisely,
    and we are seeking to preserve our core military missions and
    functions. As we work through this process, we will continue to
    emphasize our partnerships with the interagency, nongovernmental
    organizations, and private sector to help mitigate ongoing fiscal
    challenges. U.S. Southern Command has proven success in this area,
    averaging $16 million in return on investment annually from this
    collaboration, all of it directly impacting our missions.
    Support Services
        U.S. Southern Command's most important resource is its Soldiers,
    Sailors, Airmen, Marines, Coast Guardsmen, and civilian employees. The
    safety and security of our people is of utmost importance, and I am
    concerned by the severe funding cuts to the security force that guards
    our headquarters. Additionally, my assigned servicemembers, especially
    junior enlisted personnel, continue to face significant financial
    hardships trying to make ends meet under the current Cost of Living
    Allowance--a mere $28 for an E3 and just $33 for an E9--in Miami, one
    of the most expensive cities in the world, especially when it comes to
    car and home insurance rates.\12\ Compounding this concern is the
    uncertainty over military compensation and reductions in retirement
    benefits.
    ---------------------------------------------------------------------------
        \12\ UBS. Pricings and Earnings Report, Edition 2012. Geneva:
    September 2012; Center for Housing Policy. Losing Ground: The Struggle
    for Middle Income Households to Afford the Risings Costs of Housing and
    Transportation. October 2012. According to apartment market research
    firm AXOIMetrics, the average effective rent (which includes
    concessions) in Miami is $1,269 per month, compared to the United
    States as a whole at $964. According to the Joint Center for Housing
    Studies at Harvard University, the Miami rental market has the greatest
    share of severely cost-burdened renters (i.e. renters who pay more than
    half their income to rent) in the country.
    ---------------------------------------------------------------------------
        Our family support services also face significant funding strains,
    forcing us to breach sacred promises to our Armed Forces families. We
    take suicide prevention very seriously at our headquarters, and last
    year we delivered four separate programs aimed at preventing suicides
    and raising awareness. However, the Army was forced to decrement
    support services at nearly every installation and facility, including
    U.S. Army Garrison Miami. As a result, our Substance Abuse and Suicide
    Prevention Programs have lost the Clinical/Treatment Program and will
    lose both the Prevention Program Coordinator and the Suicide Program
    Manager/Employee Assistance Coordinator by 2015.
                                   conclusion
        Mr. Chairman, in closing I would like to offer a personal
    observation from my first year in command. This region does not ask for
    much. Most nations in this part of the world want our partnership, our
    friendship, and our support. They want to work with us, because they
    recognize that we share many of the same values and interests, many of
    the same challenges and concerns. Some of my counterparts perceive that
    the United States is disengaging from the region and from the world in
    general. We should remember that our friends and allies are not the
    only ones watching our actions closely. Reduced engagement could itself
    become a national security problem, with long-term, detrimental effects
    on U.S. leadership, access, and interests in a part of the world where
    our engagement has made a real and lasting difference. In the meantime,
    drug traffickers, criminal networks, and other actors, unburdened by
    budget cuts, cancelled activities, and employee furloughs, will have
    the opportunity to exploit the partnership vacuum left by reduced U.S.
    military engagement. Thank you.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Levin. Thank you both very much.
        We will have a 7-minute first round. I think we may have
    votes during the morning. Is that still true, do we know? Not
    scheduled yet, so it could happen.
        General Jacoby, let me start with you. Your prepared
    statement says that, ``I remain confident in our current
    ability to defend the U.S. ballistic missile threats from North
    Korea or Iran.'' Does our current GMD system cover all of the
    United States, including the east coast, against missile
    threats from North Korea and/or Iran?
        General Jacoby. Senator, yes, it does.
        Chairman Levin. In your prepared statement, you also
    mentioned the need to improve our Homeland missile defense
    system architecture in order to maintain our strategic
    advantage. I have a number of related questions relative to
    that architecture and how we can improve it.
        Looking at priorities, which is the more important
    investment priority for our Homeland missile defense system at
    this time, to improve the sensor and discrimination capability
    and overall system reliability or to build an additional
    interceptor site on the east coast?
        General Jacoby. Senator, I believe our first available
    dollar goes to better sensors that would give us more
    discrimination. I also believe that our intelligence collection
    against potential adversaries that can field Intercontinental
    Ballistic Missiles (ICBM) and weapons that could reach the
    Homeland is critical, as well.
        Chairman Levin. Do you agree, as proposed in the budget
    request as mandated last year by Congress, that we should
    deploy a new long-range discriminating radar to improve defense
    of the Homeland against North Korean missile threats?
        General Jacoby. Senator, yes, I do.
        Chairman Levin. Do you also agree, as proposed in the
    budget request and as recommended by Congress last year, that
    we need to redesign our GMD kill vehicle for the future to make
    it more reliable, robust, producible, and effective?
        General Jacoby. Yes, Senator, I do. It is an important
    priority, to redesign the kill vehicle.
        Chairman Levin. Is it still correct that there is no
    current requirement to deploy an additional missile defense
    interceptor site in the United States?
        General Jacoby. Senator, based on where the threats are to
    the east coast, I do not believe we need to make that decision
    at this time.
        Chairman Levin. General, the budget request proposes a
    restructuring of Army aviation that would transfer Black Hawk
    helicopters to the National Guard for its numerous Homeland
    missions, such as disaster response and transfer in lieu of the
    Black Hawk's transfer, Apache armed attack helicopters, to the
    Active component for overseas combat missions. Do you support
    that proposal, and if so, why?
        General Jacoby. Senator, this is a tough issue for the
    Chief of Staff of the Army. He has made a courageous decision
    to restructure, driven by the fiscal realities of the budget.
    Speaking as the NORTHCOM Commander, that aviation restructuring
    works to NORTHCOM's advantage. I do not have an attack
    helicopter requirement in the Homeland, but anytime our
    Governors and our Adjutants General can get hold of more lift,
    such as Black Hawks or light utility, such as the Lakota, that
    is a good thing. I believe that that is the result of the
    aviation restructuring program.
        Chairman Levin. Is it something that makes sense to you?
        General Jacoby. From the NORTHCOM requirements standpoint,
    it makes sense.
        Chairman Levin. Do you know whether General Grass, the
    Chief of the National Guard Bureau, supports this proposal?
        General Jacoby. I am not sure exactly what General Grass'
    position is on this, but I know he's been in discussions with
    the Chief of Staff on it.
        Chairman Levin. All right.
        General, we have had some flight test failures with both
    models of kill vehicles, and last year, when Secretary Hagel
    announced the decision to deploy 14 additional GBIs in Alaska
    by 2017, he said that, before we deploy the additional GBIs, we
    need to have confidence from successful intercept flight
    testing that the kill vehicle problems have been corrected. Do
    you agree with that?
        General Jacoby. Senator, I agree and support flight
    testing.
        Chairman Levin. Before we actually deploy.
        General Jacoby. That's correct.
        Chairman Levin. That we should have some successful
    intercept flight testing first, to make sure that those
    problems have been corrected?
        General Jacoby. That's DOD's commitment, and I support that
    commitment to test successfully before additional deployment.
        Chairman Levin. General Kelly, let me ask you about
    intelligence, surveillance, and reconnaissonance (ISR)
    requirements in your area of responsibility (AOR). Does your
    AOR have an airborne ISR requirement?
        General Kelly. Yes, Senator, it does. I am tasked, under
    title 10, to detect and monitor the drug flow that comes up
    from Latin America and flows into the United States. There are
    a lot of complicated parts to that, but one of the key parts is
    ISR. I do not have enough. We take what we can get. Some of the
    ISRs that are very effective working for me are, frankly,
    aircraft that are on training flights, Joint Surveillance
    Target Attack Radar System (JSTARS), even bombers that come
    down and work for us. They are on training flights, but what
    they provide me, in terms of a picture of what's moving across
    the Caribbean, is tremendously helpful, and really a game
    changer, particularly when JSTARS shows up. But, we also don't
    have enough, but we have Navy P-3s flying out of primarily El
    Salvador. I have a couple of ISR airplanes that are under my
    contract. We also have CBP airplanes from DHS flying P-3s,
    again out of El Salvador. I do not have enough. I could use
    more. But, what I have, I use very effectively. Yes, Senator.
        Chairman Levin. What percentage of your ISR requirement is
    being met today?
        General Kelly. ISR requirements, I would estimate about
    half. But, that is only one part of the equation, in terms of
    the drug interdiction, Senator.
        Chairman Levin. All right. Under the fiscal year 2015
    budget, the Air Force is going to cap the fleet of unmanned
    aerial systems which are, namely, the Predator and the Reaper
    drones. They are going to reduce that growth in that fleet from
    65 to 55 combat air patrols. Is that something which will make
    it more difficult for you to meet your full ISR requirement?
        General Kelly. Senator, I do not get any of those systems,
    generally speaking, right now. I was actually hoping yesterday
    that as the war in Afghanistan and the Middle East started to
    wind down, and those assets maybe be made available, I was
    hoping to get some of those. So, I was very disappointed
    yesterday when I heard that we are going in that direction
    because I really could use a lot more ISR.
        Chairman Levin. Thank you.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Natalie, would you turn that chart around?
        General Kelly, you are familiar with this chart. I just
    want to make sure everybody has a copy in front of them. It is
    very significant, I think. It tells the story. The yellow
    denotes the DHS flight hours in support of SOUTHCOM; the
    orange, the DOD flight hours; the light blue, the DHS ship
    hours; the dark blue, the DOD ship hours; and the red denotes
    the cocaine seizures. Now, the thing that is interesting about
    this chart is I would ask, first of all, is this accurate?
        General Kelly. It is accurate, yes, Senator.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Inhofe. Okay. If you look at seizures, there is a
    direct relationship with the assets that are out there. This is
    what really bothers me, because you have made a statement, I
    think it was in our office to some of our staff, that you can
    see 75 percent of the cocaine trafficking heading toward the
    United States, but you cannot interdict it. Is that accurate?
        General Kelly. Yes, sir. To define the word ``see,'' I have
    a lot of assets that are fused together--intelligence assets
    from all across the U.S. Government, every agency of the U.S.
    Government, not just the military. I've got radars that give me
    a very----
        Senator Inhofe. Yes. Oh, yes, but you know they are there.
        General Kelly. They are there, yes, sir. I watch them go
    by.
        Senator Inhofe. If you had the assets to do it, you could
    interdict them.
        General Kelly. I could interdict them.
        Senator Inhofe. Yes. So, we have a lot of this stuff coming
    into the United States that would not otherwise be coming in.
        General Kelly. That is correct.
        Senator Inhofe. Can you quantify that?
        If you take all of them that you have interdicted, what
    percentage would that be of what you would suspect would be
    coming.
        General Kelly. On the high seas, after it leaves Colombia,
    I suspect we get about 20 percent that is moving towards the
    United States.
        Senator Inhofe. That is all that we get.
        General Kelly. That is all that we get.
        Senator Inhofe. So, 80 percent is coming into the United
    States.
        General Kelly. Right.
        Senator Inhofe. I know that bothers you. It bothers me. It
    should bother everyone up here. What kind of assets would you
    need to cut that 80 percent down to--reverse those figures--
    down to 20 percent, maybe?
        General Kelly. Anything that floats that can land a
    helicopter on. I do not need warships, necessarily. In fact, if
    you look in fiscal year 2013, the only reason we got 132 tons
    is because we have very good outside-the-theater allies: the
    Dutch, the French, the Canadians, and the United Kingdom. We
    got a fair amount of takeoff of a Dutch oiler that just
    happened to have a helicopter on it that we put a law
    enforcement person on the helicopter.
        Senator Inhofe. But, as far as ships that you own that are
    ours?
        General Kelly. Right now, I have one Navy ship working for
    me and four Coast Guard cutters that are DHS down in the area
    of operations, but only two of them are working the drug issue;
    the other two are off in the West Indies, dealing with other--
    --
        Senator Inhofe. Is it likely you would not even have the
    one, in the event that we have to go through sequestration?
        General Kelly. I would definitely not have one if we went
    through sequestration.
        Senator Inhofe. That is a frightening thought.
        You made a brief comment about the ISR, but we sit at this
    panel with all the other commands too, and this is a problem
    that is just not your problem, it is everyone's problem. In
    U.S. Africa Command, for example, we had adequate ISR assets in
    the Central African Republic for the Lord's Resistance Army
    (LRA), and then, when the problem exploded up in South Sudan,
    then they just had to take those assets and move them up there.
    They are not replacing them. Is that what you are finding when
    something new happens and you have a new need, do you have to
    take it from someplace else?
        General Kelly. Again, Senator, I get almost nothing, in
    terms of what I really need.
        Senator Inhofe. Okay.
        General Kelly. Sometimes, we get a phone call about a
    bomber mission next week, and, ``Can you use these guys to come
    down and do some ISR over the Caribbean?''--and we will take
    it.
        Senator Inhofe. Yes.
        General Jacoby, you mentioned on the Arctic icecap and some
    of the things that are going on there. I am sure you agree that
    the actual volume of ice in the Arctic is increasing, but the
    problem is, it's in the center. The problems that you're having
    are around the perimeter. Is that somewhat accurate?
        General Jacoby. Senator, the total ice exposure in the
    Arctic is going down. It has been going down.
        Senator Inhofe. The exposure, but the volume is not going--
    we can talk about that later, but I do want to show you the
    evidence of that. I would still say, though, it is a problem,
    because it is in the perimeter, where the problem is that you
    are addressing.
        General Jacoby. I would summarize by just saying the Arctic
    is increasingly accessible to human activity.
        Senator Inhofe. We went through this long thing about the
    GBI in Poland, with the radar and the Czech Republic. I can
    remember, probably every member up here on this committee who
    was serving at that time worked with Poland and the Czech
    Republic, and they took a huge risk, at that time, when they
    made the agreement. In fact, Vaclav Klaus made that statement.
    His statement was, ``Are you sure, if we do this, that you are
    not going to pull the rug out from under us?''--which we did.
    Now we have a problem on the east coast. You say that you are
    not ready yet to make a recommendation. But they are studying
    it right now, aren't they?
        General Jacoby. Senator, that is correct. Thanks to the
    National Defense Authorization Act (NDAA) that directed us to
    do an assessment, MDA has assessed various potential locations
    for a third site. They have down-selected to four that best
    meet the requirements for a third site. Now they are doing
    environmental impact statements on all four.
        Senator Inhofe. Is it true that we are relying more on
    Alaska right now in terms of the east coast?
        General Jacoby. We are almost completely relying on Alaska.
        Senator Inhofe. You always hear the term ``You shoot and
    then you look and then you shoot again.'' I have always been
    very comfortable with what we have on the west coast, but there
    does not seem to be a sense of urgency, as I see it, so maybe I
    am overlooking something. Isn't it true that the concept of
    ``shoot and look and then have a second shot,'' which gives me
    a lot of comfort on the west coast, is not something that they
    can do from Alaska for the east coast?
        General Jacoby. We currently do not have a shoot-assess-
    shoot capability.
        Senator Inhofe. Thank you.
        General Jacoby. That's correct.
        Senator Inhofe. Thank you. That's very disturbing.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        I want to thank both of you for your service to the
    country.
        General Kelly, what is the dollar value of the 75 percent
    that continues to go through, if you happen to know offhand?
        General Kelly. I do not know offhand. I could get that
    estimate for you.
        [The information referred to follows:]

        The wholesale value of the 75 percent of cocaine that is not
    interdicted is approximately $9.7 billion. The value increases as the
    product gets closer to the point of sale. The actual street value
    varies, driven by local market factors.

        General Kelly. But, just understand that cocaine, as it
    flows into the United States, is the big moneymaker for the
    cartels. Cocaine is the big moneymaker. Their profits that come
    out of the United States every year, not just from cocaine but
    mostly from cocaine, is $85 billion in profit. So, obviously,
    every kilo I can take out of the flow is less profit for them,
    and it's a huge profit margin.
        Senator Donnelly. What is the cost to staff up--and again,
    I am not holding you to the numbers; do not get me wrong. But,
    if you had a ballpark--say, ``Here's the plan to stop this''--
    what do you think the additional cost would be?
        General Kelly. I would tell you I think more in terms of
    ships. Right now, I hit 132 tons last year, for 1.5 percent of
    the total U.S. Government counter-narcotics budget--1.5
    percent. I got 132 tons. Everything else that gets taken off
    the market, to include all of the law enforcement activity in
    the United States of America, pales in comparison.
        Senator Donnelly. How many more ships do you need?
        General Kelly. My requirement is for 16 vessels of some
    kind that can fly a helicopter off the back. I can do it with a
    barge or I can do it with an aircraft carrier, 16 vessels that
    I can land a helicopter on because end game is done by
    helicopters. It is a law enforcement end game that I support,
    but it is done by a helicopter, and it has to fly off some
    vessel, something that floats.
        Senator Donnelly. How do you think it would change what's
    going on in our country, in relation to the drug war?
        General Kelly. Not all, from cocaine, sir, but 40,000
    people a year in the United States die from drugs, costs our
    country $200 billion. A huge amount of our law enforcement
    effort in our country is devoted to drugs. Frankly, the more
    you can take off the market, you drive the cost up, the
    availability down, and, who knows, just using basic arithmetic,
    maybe more young people are not exposed to drug use.
        Senator Donnelly. Is there any way that you could provide
    to this committee--you told us you need X number of ships--
    ``Look, if I had this stuff, I could get this done''?
        General Kelly. I can provide you that, yes, sir.
        Senator Donnelly. If you could do that, that would be
    terrific.
        General Kelly. I'll take that for the record, yes, sir.
        [The information referred to follows:]

        My fiscal year 2016 requirements to meet the Office of National
    Drug Control Policy's 40 percent interdiction goal are:

             16 flight-deck equipped ships:

                     3 long-range ships, flight-deck equipped with
                    embarked helicopters capable of day and night airborne
                    use-of-force, and embarked law enforcement detachments.
                    These ships do not need to be warships; however,
                    suitable sourcing solutions include U.S. Navy Cruisers
                    and Destroyers, and U.S. Coast Guard High Endurance
                    Cutters and National Security Cutters.
                     13 medium-range ships, flight-deck equipped
                    with embarked helicopters capable of day and night
                    airborne use-of-force, and embarked law enforcement
                    detachments. These ships do not need to be warships;
                    however, suitable sourcing solutions include U.S. Navy
                    Frigates and Littoral Combat Ships, and U.S. Coast
                    Guard Medium Endurance Cutters.

             8 coastal patrol boats capable of navigating in
            shallow, littoral waters; no embarked helicopter.
             1 submarine.
             20,600 annual flight hours of wide-area surveillance
            capability.
             24,150 annual flight hours of maritime patrol
            capability.
             10,700 annual flight hours of short-range air tracker
            capability.

        Senator Donnelly. Thank you.
        Another thing that concerns me and I am sure it concerns
    you, too: One of the ways we have always had such great
    relations with other countries and with their military is
    training together, having them working with us. From what I
    understand, correct me if I am wrong that the Chinese are
    working with some of the other countries now, as well. Is that
    a concerning situation to you?
        General Kelly. Chinese are very active. They are mostly
    economics. They trade and sell items where we cannot sometimes.
    But, they are very active. The Latin Americans do not and
    neither do I see that, looking at it holistically, as a
    problem, because it is, to them, economics.
        That said, with economics comes influence. If a given
    nation is trading primarily with the Chinese--and again, the
    Chinese are very different than us, in that they do not
    consider things like human rights, which we do, and should.
    They do not consider things like environmental impact on
    projects. We do, and should. They do not. They are easier, if
    you will, to work with. With that comes influence. That is what
    concerns me about the Chinese.
        The Russians are also increasingly active in the area. They
    are working with countries that want to partner with the United
    States, particularly on the drug fight, but cannot, for a lot
    of different reasons, these restrictions, so that Russians not
    nearly as much, and certainly not economically, as the Chinese.
    But, the Russians are flying long-range bomber missions there.
    They have not done that in years. They did this, this year. We
    have not had a Russian ship in the Caribbean since 2008; we had
    a task force of three come, about 6 months ago, and now there
    are two still there. Two additional have come. So, they are on
    the march. That is Russia. They are working the scenes where we
    cannot work, and they are doing a pretty good job with the
    influence.
        Senator Donnelly. What do you see taking place in the
    foreseeable future in Venezuela?
        General Kelly. I think we are watching it come apart
    economically. I think they have the number-two oil reserves in
    the world, yet they cannot get going on their oil. They are
    attempting to reorganize themselves economically. It is not
    working. Politically, I see a real degradation in what used to
    pass as Venezuelan democracy. There is less and less of that
    now. My hope is, as we watch it--and I am in contact with the
    DOS as well as the Embassy--my hope is that the Venezuelan
    people somehow settle this themselves without it getting really
    out of control with an awful lot more violence. But that is up
    to them, I think.
        Senator Donnelly. Have you reached out to their military at
    all?
        General Kelly. We have no contact with their military.
        Senator Donnelly. Okay.
        General Kelly. I am not allowed to contact their military.
    They are not interested in contact with us.
        Senator Donnelly. Okay.
        General Jacoby, as you look at our border areas--and we
    have heard some folks talk about Mexican police, Mexican people
    in uniform coming across our border. Have you seen any of that?
    Or is that something that is of concern as we look forward?
        General Jacoby. Senator, it would always be a concern if
    there was incursion by another armed force or another security
    force. I do know that that happens occasionally. I will tell
    you that we developed a very close relationship between one of
    my forces, Joint Task Force-North (JTF-N), along with CBP, and
    have routine border meetings. When we have an incident like
    that, we have mechanisms to work it through, to see if we need
    to make adjustments to how we are doing business. I do not feel
    threatened by it.
        Senator Donnelly. I am out of time. One last thing I wanted
    to ask: Would you say, if you are looking at it, things are
    getting better in our relations with the Mexican officials in
    that area or worse?
        General Jacoby. They are getting better, Senator.
        Senator Donnelly. Thank you very much.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        I thank the witnesses, and I thank them for their great
    service to our Nation.
        General Jacoby, I think I pay as close attention to what is
    happening on the border as most anyone, because of obvious
    geographic location of my State. But, I must say, I was
    ``surprised'' to learn that, in the south Texas part of our
    border, that 82 percent of the illegal border crossers that
    were apprehended were what we call OTM, ``other than Mexican,''
    non-Mexican citizens. Isn't that a dramatic shift over the last
    period of time?
        General Jacoby. Senator, I do think it is rather dramatic,
    and I think that there are important aspects to that, that we
    need to bore into. But, I know the exact statistics you are
    talking about, and they are a tremendously interesting change
    in illicit trafficking that's going on, on the border.
        Senator McCain. Isn't it logical, then, to at least
    speculate that, if you get this large number of people who are
    not Mexican, who come from countries all over the world--
    admittedly, the bulk of them are Central American, I understand
    that--but, you still have very large numbers who are from
    countries all over the world. Wouldn't it be safe to at least
    be concerned about the possibility or likelihood of terrorists
    or people who want to come across our border not to get a job
    or a better life, but to do something bad?
        General Jacoby. Senator, I think that is a very important
    problem. I completely agree. These are illicit distribution
    networks, and they will traffic whatever is the best market for
    them to traffic in. Right now, large numbers of OTMs are
    crossing the border. I think, across the whole border, it's 45
    percent are OTM, with large numbers of people from special-
    interest countries. So, I think this is a national security
    issue, and we are partnering closely with DHS on it. But, also,
    more importantly, to partner with Mexico and the other
    countries in the region, because that is a highway. It is a
    highway with a lot of branches and a lot of on-ramps and off-
    ramps, and most of it is coming directly to our border. We have
    to work that whole highway into General Kelly's AOR, as well as
    mine.
        Senator McCain. General Kelly, moving into your area, one
    of the real vulnerabilities here is the southern border of
    Mexico, and people who, with relative ease, come across that
    border from very economically poor countries in Central
    America. If there's no real prohibition for their crossing the
    southern border, then these OTMs find it much easier to enter
    this country. Is that a correct assessment?
        General Kelly. Absolutely, Senator, it is entirely true.
        Senator McCain. So, it is of great concern to you, the
    economic and literally criminal takeover, or near takeover, of
    these countries in Central America.
        General Kelly. Yes, sir. One of the things--the spike that
    you referred to in the number that are coming across the
    border--many of those are Hondurans, Guatemalans, El
    Salvadorans that are fleeing the violence, the drug-generated
    violence in those countries. Now, General Jacoby, him on his
    side of the border, with the Mexicans on my side of the border
    in the last year, we have encouraged the Guatemalans--and I
    think the Senator knows I am very restricted in dealing with
    some of these countries because of some past issues.
        Senator McCain. Especially Nicaragua.
        General Kelly. Actually, we have almost no contact with
    Nicaragua. Certainly, Guatemala, very restricted in dealing
    with them and with Honduras. But, we are working hard on that
    northern Guatemalan border. We have helped them establish some
    interagency task forces. Looking pretty good. I just traveled
    down there, and they are working with the Mexicans on their
    side. So, we are doing what we can to seal that border. But,
    you are right.
        Senator McCain. General Jacoby and General Kelly, because
    of our experiences in Iraq and Afghanistan, we have the
    technology to surveil our entire border, wouldn't you agree
    with that statement?
        General Jacoby. I agree, Senator.
        General Kelly. Absolutely.
        Senator McCain. It is a matter of devoting the resources to
    it. It is not a matter, as it may have been some years ago,
    that we really were incapable. Would you agree with that,
    General?
        General Jacoby. I agree, Senator. I think the same can be
    said on Mexico's southern border.
        Senator McCain. We could help them with the technology that
    could help dramatically improve their security.
        General Jacoby. Senator, I know it is one of President Pena
    Nieto's top security issues, and we would be very happy to help
    them with it. I have spent time on that border, and understand
    the challenges of it.
        Senator McCain. General Kelly, it is disturbing to hear you
    say, with refreshing candor, that you are watching drugs being
    transported into this country. That is a correct statement that
    you made?
        General Kelly. Yes, Senator, it is.
        Senator McCain. So, I think that Senator Donnelly mentioned
    it, we would very much like to have your opinion as to what is
    needed so that, when you see those drugs being transported,
    that you have the capability to intercept. Could you give the
    committee that in writing? Because we will be taking up an
    authorization bill, and maybe we can do something to give you
    the ability, at least when you see drugs being illegally
    transported, that you would have the capability to do something
    about it.
        General Kelly. Yes, Senator, we will do that. Easy.
        [The information referred to follows:]

        My fiscal year 2016 requirements to meet Office of National Drug
    Control Policy's 40 percent interdiction goal are:

             16 flight-deck equipped ships:

                     3 long-range ships, flight-deck equipped with
                    embarked helicopters capable of day and night airborne
                    use-of-force, and embarked law enforcement detachments.
                    These ships do not need to be warships; however,
                    suitable sourcing solutions include U.S. Navy Cruisers
                    and Destroyers, and U.S. Coast Guard High Endurance
                    Cutters and National Security Cutters.
                     13 medium-range ships, flight-deck equipped
                    with embarked helicopters capable of day and night
                    airborne use-of-force, and embarked law enforcement
                    detachments. These ships do not need to be warships;
                    however, suitable sourcing solutions include U.S. Navy
                    Frigates and Littoral Combat Ships, and U.S. Coast
                    Guard Medium Endurance Cutters.

             8 coastal patrol boats capable of navigating in
            shallow, littoral waters; no embarked helicopter.
             1 submarine.
             20,600 annual flight hours of wide-area surveillance
            capability.
             24,150 annual flight hours of maritime patrol
            capability.
             10,700 annual flight hours of short-range air tracker
            capability.

        Senator McCain. General Jacoby, you and I had an
    interesting conversation yesterday about the effects of drugs
    and the legalization and all that. I guess my question is, has
    the legalization of marijuana in some U.S. States affected the
    drug trade? What effect do you think legalization has on these
    transnational cartels?
        General Jacoby. Senator, of course, what a State decides to
    do is a political issue and the concerns of the citizens of
    that State. I will not speak for John, but I think he would say
    the same thing--that our partners that we have been leaning on
    really hard for cooperation in counternarcotics efforts are
    concerned about that, and they talk to us about it, and they
    are often upset about it. So, that is an important wrinkle to
    the relationships.
        I would also say that we need to be mindful that much of
    what crosses our border is marijuana, and that these cartels
    make a lot of money off a lot of different things, and we have
    to be careful to make sure that anything that we legalize does
    not enrich and empower a very strong network of very tough
    adversaries in the TCO business.
        Senator McCain. General Kelly?
        General Kelly. In my part of the world, sir, my partners
    look at us in disbelief. As General Jacoby says, we've been
    leaning on these countries a long time. Particularly in the
    Central American countries, the impact that our drug
    consumption, our drug demand has had on these countries pose an
    existentialist threat, frankly, to their existence. They are in
    disbelief when they hear us talking about things like
    legalization, particularly when we still encourage them to stay
    shoulder to shoulder with us in the drug fight in their part of
    the world. ``Hypocrite'' sometimes works its way into the
    conversation, the word ``hypocrite.''
        Senator McCain. Very interesting.
        I thank both the witnesses, both for their service and
    their candor.
        I thank you.
        Chairman Levin. Thank you, Senator McCain.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        Thank you, gentlemen, for your service and the service of
    all in your commands.
        General Jacoby, we talked briefly, previously, and in the
    context of Admiral Rogers' recent appearance before the
    committee, about the new dimension of cyber. Cyber is part of
    what is going on in the Ukraine, cyber is now a fully developed
    dimension of any type of conflict. The sense that I have is
    that we are not doing the kind of detailed planning that we
    need. I know you had a 2014 Cyber Conference with The Adjutants
    General (TAGs). You have your TAGs involved. But considering
    all your relationships with DHS, the National Guards, et
    cetera--you are in a position to either be a host or to
    stimulate this--you might just discuss the notion of a
    comprehensive training exercise. I made the allusion, in a
    previous hearing, to the Louisiana maneuvers of 1940. But, now
    we are talking about financial utilities, public utilities,
    commercial enterprises, all these that have to be factored in.
    So, your comments would be appreciated.
        General Jacoby. Senator, one of the things NORTHCOM is very
    good at and we enjoy doing is hosting conferences and hosting
    training events. What we achieve there are partnerships. I
    cannot think of any dimension of defending the Homeland or
    securing the Homeland that will require strong and new
    partnerships more than cyber. I know I look like I am old
    enough to have done the Louisiana maneuvers, but I know exactly
    what you mean. It is a comprehensive war game that really
    fundamentally changed the way the Army thought about its
    doctrine and its capabilities.
        That would well serve us, to do that. There are some
    important exercises that do take place. Frankly, we work with
    the Guard on Cyber Guard, and that is a really effective
    exercise. But, this is a whole-of-government problem, and
    eventually we have to give you feedback to tell you where, in
    the end, we may need legislative help and policy help and
    regulation help to really sort our way through how to be
    effective across all the dimensions of the cyber challenge.
        So, Senator, that is a great idea, and we will discuss that
    further.
        Senator Reed. Obviously, it is a resource issue, and it
    might even be getting the direction from DOD to do that, so let
    us know if we can help, because I think it is a positive step.
    As we spoke previously, it not only identified doctrinal errors
    and operational needs, it also illuminated leaders who were
    quite capable of dealing with an issue. That was translated
    pretty quickly by General Marshall.
        General Kelly, any thoughts on this notion?
        General Kelly. In my part of the world, I would tell the
    Senator that most countries, particularly the more developed
    countries with solid and really increasingly successful
    economies, are very concerned about this issue. One of the
    results of the revelations that came out about our activities
    is, they all understand now how really dangerous the world is,
    in terms of cyber, and how really unprepared they were. Some of
    them thought they were in the ballpark of preparation. They
    understand now that they are in kindergarten in comparison to
    what other players in the world can do to them. It is a great
    concern in SOUTHCOM, yes, sir.
        Senator Reed. Let me ask a question to both of you. I will
    begin with General Kelly this time. Your operations are
    dependent upon many agencies outside of DOD. In terms of budget
    ceilings and the episodic nature of our authorizations and
    appropriations, my sense is that pressure is felt even more
    keenly in some of these civilian agencies that sometimes do not
    have the same emotional appeal to Congress, in terms of
    funding, that DOD uniformed personnel have. Have you seen that?
    Have you heard that from your colleagues? Are there critical
    missions that they are not performing that, frankly, are so
    critical to your role that, even if you have resources, you'd
    like to see them used by the other folks?
        General Kelly. Yes, Senator. SOUTHCOM is probably the most
    interagency-intensive of all of the combatant commands, because
    of just the nature of the work and the nature of the world that
    I work in. So, all of these agencies, particularly the law
    enforcement agencies and DOS, are experiencing the budget cuts.
    Once again, it is all about presence, it is all about having
    DEA and FBI and Treasury in embassies all over the world to
    make connections and to work the issues in support of U.S.
    foreign policy. DOS, I have already mentioned the fact that I
    am light on a number of very critically important Ambassadors--
    not that they work for me. All of that is a direct result of
    the budget cuts. You are right, we hear more about what it does
    to the military and less about what it does to our partners,
    but it is, in many cases, for me more of a problem when I see
    my interagency partners cut.
        Senator Reed. General Jacoby, your comments?
        General Jacoby. Yes, Senator. We work in the Homeland, and
    so, in most things, except for the very important defend tasks
    that we do, we work in support of agencies. I will tell you
    that there are some agencies where it is not just that their
    budgets have been cut--and most of them have--but the
    expectations of what they can perform for the country.
        The best example I can think of is within the Department of
    Agriculture, the National Interagency Fire Center (NIFC)
    responsible for firefighting--huge responsibilities, much
    greater expectation for them to be successful, not just at
    managing fires, but fighting fires. So, if I had a dollar to
    give, I would give it to the brave men and women that are
    fighting our fires out there, and some of the help that they
    might need. We are in support of them, but they have the lead.
        Other organizations, CBP, their air and maritime
    organization, they help me do my NORAD mission. They have lost
    flight hours, they have lost flight capability, and there are
    gaps and seams in the aerial surveillance of the border because
    of that. So, that is another organization.
        Every commander out there would love to have some more
    Coast Guard ships. Great partners with law enforcement
    capability. It is a natural fit as we work together across
    safety and security issues.
        Senator Reed [presiding]. Thank you very much, gentlemen.
        The chairman has asked me to recognize the next speaker,
    and, because we do not have any Republican colleagues, Senator
    Udall, you are recognized.
        Senator Udall. Thank you, Mr. Chairman.
        Good morning, gentlemen. Thank you for being here.
        General Jacoby, I want to focus on you and your command, if
    I might, and I want to say a special word of thanks to your
    tremendous team at NORTHCOM, and you, yourself.
        We have had quite a year in 2013 in Colorado. We were hit
    with the devastating fires and floods. I have long said, ``Come
    hell or high water, Coloradans are ready,'' and we saw both,
    and experienced both, and it was terrible. The damage that you
    saw firsthand, I have seen firsthand, included thousands of
    Coloradans being forced from their homes. We lost lives as
    well. That was beyond tragic.
        But if it were not for your efforts to train dual-status
    commanders and establish procedures for coordination between
    State and Federal civilian agencies, working with the Active
    Duty and the Guard troops that we are so grateful to have in
    Colorado, the toll would have been far worse. I know you know
    that, and everybody in Colorado knows that.
        I want to give you a couple of examples. I believe we had
    Army aircraft from Fort Carson in the air within an hour, the
    first signs of smoke in the Black Forest, followed shortly by
    Colorado Guard helicopters. Then there were C-130s dropping
    retardant within a day. Then, last fall, the Colorado Guard
    evacuated thousands of Coloradans from waters that were rising
    faster than you can possibly imagine. I actually couldn't get
    home to my own home that Thursday night. Then, that Guard
    effort was able to communicate effectively with all the other
    agencies that came running to help.
        I just want to underline again that there are just so many
    examples, they are countless, of how your commitment to prior
    planning and coordination between agencies made a critical
    difference when a unified response was needed the most. You did
    the hard work in advance, you refined the process, based on
    lessons learned from other response operations. Colorado owes
    you a great debt, General Jacoby.
        The soldiers and sailors, airmen and marines,
    coastguardsmen and civilians, both American and Canadian, who
    serve with you have my deep and lasting thanks for continuing
    to stand watch over all of us. I really want to get that on the
    record.
        Thank you.
        General Jacoby. Thank you, Senator.
        Senator Udall. Can you now, in that context, describe
    NORTHCOM's efforts to prepare for this year's fire season? Are
    there any gaps in response capacity? What needs to be done on
    the State and local level to prepare for what likely will be
    another bad year for wildfires?
        General Jacoby. Senator, we felt really good about being up
    in the air in an hour, but if you lost your home in that hour,
    that's not fast enough. So, we have to continue to refine the
    process.
        I did mention, to Senator Reed's question that I believe
    the NIFC deserves huge credit for the great work that they are
    doing. They could use more money so that they can fearlessly
    ask for help. What we have done is, we have strengthened our
    relationship. They understand better the capabilities that can
    be brought to bear across the whole of government, and we have
    developed important relationships with incident commanders. We
    are going to provide liaison teams to incident commanders to be
    more effective, to be quicker in responding. The old-fashioned
    5,000 infantrymen with shovels and boots, we are going to add
    to that with bulldozers, unmanned aerial vehicles with infrared
    sensors and other capabilities, to make that whenever needed,
    at the disposal of our partners, who really do the lead work in
    firefighting.
        So, we continue to make advancement. It is all about not
    being late to need, and it is all about being able to identify
    a requirement and answer the call of our partners as quickly as
    possible.
        Senator Udall. Let me ask a specific question in that
    context. Do you have concerns about the decision of the Air
    Force to retire C-130H aircraft, when it comes to the domestic
    firefighting mission?
        General Jacoby. Senator, the Air Force has a million tough
    decisions to make with the budget realities. I just found out
    yesterday about the cut to the 302nd wing at Peterson Air Force
    Base. I will tell you, though, that it is not just the C-130s.
    The real issue for us in firefighting are the mechanisms that
    slide into the back of the C-130.
        Senator Udall. Right.
        General Jacoby. Those we will not lose. We will have the
    same number of firefighting apparatus that fit on the C-130s.
        To me, the biggest concern would be crews. Now, those are
    terrific crews, they are fearless men and women. It is as tough
    flying as any flying.
        Senator Udall. It is a form of combat, isn't it, when you
    are flying?
        General Jacoby. It is. I have flown with them.
        Senator Udall. Yes.
        General Jacoby. It is tough flying. It is close to the
    ground, it is an intense environment. I want to make sure that
    those squadrons are not disadvantaged by loss of folks that
    form those crews. I will be talking to the Air Force about this
    as soon as I get a chance.
        Senator Udall. Great. I look forward to being your partner
    in that. I know all Coloradans, again, are with you in this
    important mission.
        Let me turn to the Arctic. We met, yesterday. Thank you for
    taking the time to visit my office. In the time we have left,
    talk a little bit about what are your greatest challenges and
    what are our opportunities in the Arctic, going forward. You
    have about a minute and a half to tell us all there is to know.
    [Laughter.]
        General Jacoby. Senator, you are already helping me with
    the most important thing. We are generating some enthusiasm for
    the opportunities and our responsibilities in the Arctic. I
    have had a lot more questions on it this year as I have moved
    around the Hill, and I am grateful for that.
        This year, we had the President's strategy and
    implementation guidance roll out. We had the Secretary's
    strategy rolled out. We are pushing on more open doors than
    we've pushed on before in thinking about the Arctic. The lack
    of hard timelines is tough for us, but we think we have an
    understanding of what the capability gaps are, and I have
    directed my JTF Commander up in Alaska to begin campaign
    planning with his partners to ensure that we start identifying
    capabilities and requirements that we will need to translate
    into programs in the next 7 to 10 years so that, when the
    Arctic really does become a viable approach to the Homeland, we
    have capabilities that we will need to be effective in the
    Arctic.
        Senator Udall. Again, I look forward to working with you on
    that front.
        I want to note just for the record, that I think the
    ratification of the Law of the Sea Treaty would be crucial to
    playing a more active role in the Arctic. I know there are some
    in the Senate who do not see it that way, but experts across
    the spectrum believe we need to ratify that treaty, and ratify
    it quickly. I just want to put my own point of view on the
    record.
        Thank you, gentlemen, for being here. I look forward again
    to seeing you under the best of circumstances here, General
    Jacoby. No fires, at least not in my home State. So, thank you.
        Chairman Levin [presiding]. Thank you, Senator Udall.
        Senator Cruz.
        Senator Cruz. Thank you, Mr. Chairman.
        General Jacoby, General Kelly, thank you very much for
    being here. Thank you for your decades of service to our Nation
    and your vigilant defense at a time when the threats to America
    and the threats across the world seem to be growing.
        I have a series of questions. I want to start, General
    Jacoby, with a question that you and I had an opportunity to
    visit about yesterday in my office, and I appreciated your
    coming by to visit. I have a longstanding concern about the
    threat of an electromagnetic pulse (EMP) attack on the United
    States. As we see nuclear proliferation, we see nations like
    Iran that seem hell-bent on acquiring nuclear weapons capacity.
        The question I wanted to ask you is: What is your
    assessment of the impact an EMP attack could have on the United
    States, and how prepared are we to deal with that?
        General Jacoby. Senator, EMP is a real concern with
    detonation of any weapon of mass destruction (WMD), like a
    nuclear warhead. So, I think that it is a known fact that it
    can have a large impact and a wide impact on electronic devices
    of all types. Probably the most worrisome would be
    communications, energy infrastructure control mechanisms. So,
    for a long time, we have understood that threat, but we do not
    have good, hard science yet, or modeling, on what might be the
    large-scale effects of that. I have worked with the Defense
    Threat Reduction Agency, and we are going to try to bore into
    that question so we have more hard evidence of that. There
    really are not good ways to model that or to see the effects of
    it, but we know that it exists. Of course, an air device would
    be more devastating to us than a ground-based device.
        What we have to do now is make sure that the infrastructure
    upon which we rely the most for our defense infrastructure is
    EMP-hardened. We have known that for a while. It is
    extraordinarily expensive to do that. My command center in
    Cheyenne Mountain in Colorado remains a viable and important
    part of our national command-and-control system, simply
    because--if for no other reason--it is completely EMP-hardened.
        These are important questions to think about across all of
    our critical infrastructure. We have come up with a project, a
    science and technology demonstration, the Smart Power
    Infrastructure Demonstration for Energy Reliability and
    Security, which tries to describe how, with our critical
    infrastructure, we can create micro-grids and self-healing
    energy systems. A lot more work has to be done on that, and it
    has to be partnered with private industry as well.
        Senator Cruz. Would you agree that, right now, the risk is
    unacceptably high, in terms of the impact of an EMP attack? If
    a nuclear weapon were detonated in the atmosphere above the
    eastern seaboard, the capacity--setting aside the impact on our
    military assets--simply on the civilian side, if it took down
    the electrical grid, could impose catastrophic economic harm
    and, potentially, the loss of unspeakable numbers of civilians
    lives if the electrical grid went down for a long period of
    time and food delivery was significantly impaired? Would you
    agree that that risk is highly worrisome?
        General Jacoby. Senator, I think it is worth us worrying
    about, and I do not think we know enough to describe the
    correct degree of risk. It is sufficient risk that we should be
    considering it. I would say that the most important thing we do
    is make sure that we are continuing to collect the intelligence
    that would warn us of an EMP risk, and, if an EMP risk was to
    increase. Frankly, we need to do better modeling so that we can
    exercise against a denied environment because of the effects
    that we know EMP can create.
        Senator Cruz. I guess another potential area to deal with
    that threat is to improve our capacity with regard to missile
    defense. I am sure you saw the recent news out of Israel. Just
    yesterday, 40 rockets were fired from Gaza into southern
    Israel. In the NDAA for the last year, the Senate Armed
    Services Committee required DOD to study missile defense
    threats from the south, such as from the Gulf of Mexico. Can
    you discuss this threat and what NORTHCOM has or needs in order
    to deal with this potential threat?
        General Jacoby. Senator, thanks. We have worked on that,
    and we have a test that we are conducting right now, called
    Joint Deployable Integrated Air and Missile Defense, where what
    we are doing is, we are discovering how to integrate current
    systems, such as Aegis, Patriot, F-15s, F-16s, and CF-18s, to
    quickly bring together packages within the United States and to
    be able to engage across a spectrum of cruise missiles or
    short-range ballistic missiles. The last tests we ran last
    year, we focused on the Gulf of Mexico.
        I can give you more details, because some of that is
    classified, how we ran that test, but I can tell you that we
    have found that we have both some significant challenges in
    doing that, but we also have some opportunities to use existing
    systems more effectively to do that.
        In particular, though, I think that the cruise missile
    threat portion of that, we are working on very hard.
        Senator Cruz. Thank you, and I look forward to those
    continued conversations.
        Let me shift to the issue of immigration and border
    security. I remain greatly concerned about the terrorist threat
    from our southern border that illegal immigration presents. In
    2001, the CBP apprehended over 300,000 people unlawfully
    crossing the southern border. Nearly 50,000 of those
    individuals were OTM. Of those, 255 were aliens from countries
    designated special-interest countries. How would you assess the
    threat to national security and our potential vulnerability to
    terrorism, given the current state of border security?
        General Jacoby. Senator, specifically, I agree completely
    that the vulnerabilities that the illicit trafficking networks
    or TCOs exploit with a variety of goods, such as drugs,
    weapons, et cetera, is a national security problem. I believe
    that we should consider that terrorists can ride on that
    distribution network as easily as drugs, weapons, or people.
        I assess this as an important national security issue, and
    we play an important role in supporting our partner agencies,
    like CBP, ICE, and DEA, in really effective ways to help make
    sure we know who's trying to get across the border. More
    importantly, what are these organizations that reach deep into
    Mexico, Central America--actually, some of them are global--how
    do we put pressure on those networks, disrupt them, dismantle
    them, and prevent them from using our strength, which is our
    border, and turning it into a vulnerability?
        Senator Cruz. Thank you, General.
        My time is expired, but, with the Chairman's indulgence, if
    I could ask one more question of General Kelly.
        General Kelly, we are seeing troubling reports about the
    Venezuelan Government, with the possible assistance from Iran
    and Cuba, using cyber tools against their own people. What
    tools does SOUTHCOM have to make sure to limit the influence
    and assistance that the Iranians and Cubans can have helping
    governments or other actors from attacking South Americans?
        General Kelly. Senator, SOUTHCOM doesn't have a great cyber
    infrastructure, as of yet. With that said, obviously the U.S.
    Government has tremendous cyber capability, and I know--above
    the classification, certainly, of this discussion--I know that
    the larger American Government institutions are looking hard at
    that. You're right, it is--every evidence that they are using
    cyber, in one way or another, to try to control what's going on
    in their country.
        Senator Nelson [presiding]. Senator King.
        Senator King. Thank you, Mr. Chairman.
        General Jacoby, I want to follow up a bit on Senator
    Udall's questions about the Arctic. I believe, given the
    drastic receding of the size of the icepack--about 50 percent
    over the last 40 years, as I understand it--creates an entirely
    new circumstance in the Arctic. What kind of lead investments
    and decisions should we be making now to take account of both
    the opportunities and the challenges that that creates for us?
        General Jacoby. Thanks, Senator. One of the challenges is
    the Arctic ice numbers are variable, and the most important
    factor is that over time, it has greatly receded, and there is
    no indication that that will stop. So, at some point, I think
    we have to plan against what's going to happen. The Arctic is
    going to be more accessible to human activity, whether it's
    merchant shipping or naval activity, more flights over the
    Poles, et cetera. There is great interest, globally, in how to
    exploit the Arctic. As an Arctic nation, with our premier
    partner Canada, we have sat down and spent quite a bit of time
    talking about what the time horizon is we should be looking at?
        The way we've conceptualized this--and I think it's
    supported by the President's strategy and the Secretary's
    recently released strategy--in terms of 5, 10, and 15 years.
    Right now, because of the fiscal environment, it's really
    important that we think, for the next 5 years, about defining
    the requirements that we believe that we will have in the
    future in the Arctic. Most of those requirements are within
    capability gaps that we can clearly see, one of them being
    communication above 60. It's difficult. It's hard. Passing data
    is a tough requirement above 60 degrees north. So, we know
    that's important.
        Domain awareness. It used to be that just the NORAD radars
    were sufficient. That's all we really needed to see. But now we
    need maritime surveillance, we need undersea surveillance, we
    need to know what's happening in space above the Arctic. So we
    have a domain awareness issue: surveillance, detection, and
    tracking. For me, as the NORAD Commander, it's across what we
    would say the joint engagement sequence is.
        Then we have to think hard about what infrastructure and
    then presence--and it would be seasonal, but increasing as the
    ice-free season would increase. I think we can approach this in
    a very logical fashion.
        Senator King. You mentioned infrastructure. My
    understanding is we have 1 heavy-duty icebreaker, Canada has 5,
    the Soviets have 17, including 5 or 6 that are nuclear-powered.
    It sounds like icebreakers might be a piece of infrastructure
    that we need to be thinking about.
        General Jacoby. I agree with Admiral Papp. I think
    icebreakers are going to become increasingly important. The
    challenge is they take a long time to build and they are very
    expensive. Trying to pace this in a way that you are providing
    icebreaking capability as the maritime environment----
        Senator King. Do you see the Northwest Passage as becoming
    a commercial passage between the Pacific and the Atlantic?
        General Jacoby. Senator, I think it's clear that we will
    have passages and that we will have increased maritime
    activity. We already have. Now, it's not statistically
    significant, given the overall merchant traffic in the world
    today, but it is greatly increased over the past few years, and
    we should expect it to do so as it becomes more and more
    economically viable to do so. I think this is really going to
    be incentivized by the economics of it.
        Senator King. Now, Senator Udall completed his questioning
    with a statement of his support of the ratification of the Law
    of the Sea Treaty, but he didn't give you a chance to give your
    views on that. I'd like you to opine, if you could, on what you
    see the value of the Law of the Sea Treaty in dealing with
    these multiple challenges and questions in the Arctic.
        General Jacoby. Senator, I've testified, along with the
    Vice Chairman and other combatant commanders, that we think it
    would be valuable for us, as combatant commanders, to have the
    country be part of that treaty. I understand it's a complex
    issue and that there are many other factors. But, from my
    standpoint as a combatant commander, when I attend the Arctic
    Chiefs of Defence conferences and those kinds of things, it
    would be valuable to have that moral authority to be a member
    of that treaty.
        Senator King. Now, the unspoken country that we have not
    been discussing here is Russia. They are the other major Arctic
    country. Is there any indication thus far of friction in this
    area with Russia? Are there issues and confrontations of any
    kind, or is that something that we are simply anticipating
    because of the resources that are up there?
        General Jacoby. The Russian navy is much more active in the
    Arctic. They have reopened Arctic bases that they've had in the
    past, and they have transited their own north route along the
    coast of Russia with major warships, as they have not done in
    the past.
        As the NORAD Commander, we've been active in the Arctic for
    decades, and we've continued to ensure that Russian strategic
    aircrafts are met and escorted if they come close to our
    airspace. We have not had any elements of friction. I think
    it's just something that we should anticipate that, in a
    competitive economic environment that could grow in the Arctic,
    that we will have to do the things that we always have to do to
    ensure freedom of navigation and security of our citizens and
    our businesses that will be operating in the Arctic.
        Senator King. Thank you very much.
        General Kelly, to go from the Arctic to equator, do you see
    evidence of increased activity in Latin America, China, Russia,
    Iran, countries that have at least been, if not adversaries,
    not exactly friends in that area? How does that affect your
    posture in that region?
        General Kelly. This came up before, Senator, but the
    Chinese are very active, mostly trade. Iranians are
    increasingly active. Our take on that, and the DOS take as
    well, is that they are really looking for ways to circumvent
    the restrictions that are against them. On a more military--I
    am paid to worry--on the military side----
        Senator King. I am glad you are.
        General Kelly. Yes. On the military side, I believe they
    are establishing, if you will, lily pads for future use, if
    they needed to use them. They are opening embassies in cultural
    centers and things like that, which gives them a footprint on
    it. Not too worrisome right now, but we are watching closely.
    Then, finally, the Russians, not nearly as active economically,
    but they do work very hard to sell their equipment to almost
    any country that does not want to partner with the United
    States--places like Cuba, Nicaragua, Venezuela, they are very
    active in.
        But what they bring to the table is a fair amount of
    rhetoric, some weapons sales. This year as an example, they
    deployed a long-range bomber to our part of the world. Haven't
    done that in many, many, many years. They've deployed now two
    separate sets of navy ships, and they have not done that since
    2008, and they've done it twice this year.
        Senator King. Not only do you not have a lot of military
    assets, I understand you are actually losing some--frigates and
    Coast Guard's high-endurance. So, your capacity is diminishing.
    Is that correct?
        General Kelly. It is, yes, sir. I misspoke a little while
    ago. The key to most of us in this business is ISR, however you
    do it. I misspoke a little while ago and said I am only getting
    about 50 percent of what I need. I am actually getting about 5
    percent of what I need. The point is, I cannot see if I do not
    have the assets.
        They are active, they are doing different things. China's
    mostly economic; Iran, nefarious, but I do not know quite yet
    what they are up to; and then, of course, the Russians are just
    trying to sell equipment and get influence. No bases yet, but
    they are--there is some chatter, in the open press from the
    Russians, that they want to establish at least four to five
    support facilities, probably on already existing Nicaraguan
    airfields or Venezuelan airfields, for just future deployments
    of their assets.
        Senator King. Five percent is not a very encouraging
    number, General.
        General Kelly. We do a lot with 5 percent, but we could do
    a lot more with more.
        Senator King. Thank you very much.
        Thank you both, gentlemen.
        Senator Nelson. Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I would say 5 percent is jaw-dropping, frankly, in terms of
    the threats that you've just talked about, of ISR capability. I
    think this is something that we'd better address as a
    committee.
        Let me just follow up with regard to what's happening in
    Venezuela. You just said that you could see the Russians
    perhaps developing--did you say flight capability or a base of
    some form in Venezuela?
        General Kelly. Senator, they are talking about opening--and
    this has been in the open press--some support facilities,
    probably not an opening of base, but rather putting, say,
    maintenance facilities or something like that.
        Senator Ayotte. But, they could launch from them?
        General Kelly. Oh, absolutely.
        Senator Ayotte. Yes. Well, that's very troubling.
        What role is Russia playing right now in what's happening
    in Venezuela with the oppression that we've seen from the
    Venezuelan Government by President Maduro. Curious what role,
    if any, the Russians are playing there. Also, I would like to
    know what role the Cubans are playing in Venezuela right now
    with the oppression we see there of the Venezuelan people.
        General Kelly. Of the two countries, Senator, the Cubans,
    far and away, have much more influence and presence in
    Venezuela. Some people argue far more presence. We all know the
    nature of the Cuban state, and I think we see the Venezuelan
    state going in that direction. The Cubans are certainly very
    supportive in what they do, militarily. They have a lot of
    military advisors, a lot of medical people, and things of that
    nature.
        The Russians, not so much. They have a presence there, but
    not nearly anything approaching what the Cubans have.
        Senator Ayotte. Just to be clear, the Cubans are actually
    on the ground, aren't they, helping President Maduro, in terms
    of what's happening in the oppression of the Venezuelan people
    right now?
        General Kelly. They have a presence, in terms of military
    advisors and intelligence advisors and things like this. Yes,
    Senator.
        Senator Ayotte. Very troubling.
        Let me ask you, I know you've gotten a number of questions,
    both of you, about drug-trafficking issues, and I believe
    Senator Donnelly asked you about cocaine. In my State, we have
    a heroin epidemic right now. I see this as incredibly
    troubling. We've seen a dramatic increase in the number of drug
    deaths in New Hampshire, and I do not believe New Hampshire is
    unique with regard to what's happening right now with heroin.
        Can both of you give me a sense of what's being done, in
    terms of countering TCOs with regard to heroin and access to
    heroin? Also, I was just in the DHS. Secretary Johnson was
    before that committee, and I asked him about this. How are we
    coordinating, if you think about the efforts between DHS,
    NORTHCOM, SOUTHCOM, and also State and local partners? How are
    we all working together on this issue that I really think is an
    epidemic?
        General Kelly. First of all, heroin has moved out of the
    inner-city, the working-class neighborhoods of America, and
    certainly is now in the suburbs. Unfortunately--and I'll speak
    frankly, as a guy that grew up in a very drug-infested part of
    Boston as a kid and saw most of my friends die, mostly of
    heroin overdoses--all of a sudden, it's gotten attention,
    because Hollywood actors are dying of it, or, as I say, it's
    moved into the suburbs of America. It's an epidemic. I think in
    the last 5 years the consumption of heroin has increased by
    leaps and bounds.
        Senator Ayotte. New Hampshire had a 70 percent increase in
    drug deaths on this.
        General Kelly. A vast majority of heroin that's consumed in
    the United States is actually produced in Latin America. The
    poppies are now grown in places like Guatemala and Colombia,
    places that we try to work with, but again, have tremendous
    restrictions on how much. The poppies are grown here, the
    heroin is produced primarily in Mexico and then moved across
    the border. The distribution network that it rides on is the
    same network that works cocaine, the same network that works
    methamphetamines.
        I just met last week with Secretary Johnson, myself, on
    this issue. I also met last week with the head of the FBI on
    this issue. We do coordinate a lot. But as one of Secretary
    Johnson's staffers said to me, the place to fight this stuff is
    not on the 1 yard line, and that's the Mexican-American border.
    The place to fight it is on the other end of the field. That's
    really down in Latin America.
        I'll turn to Chuck, because he works the Mexican piece more
    than I do.
        Senator Ayotte. Thank you.
        General Jacoby. It's very troubling the way the
    adaptability of the TCOs can move from one product to the next.
    So, obviously, heroin's become more profitable, it's easier to
    transport, and they now have production and processing
    facilities closer to the market. This is a good market value
    for them, to be pushing heroin.
        I am heartened by the activities of the Mexican security
    forces, particularly the marines and the Mexican Secretariat of
    National Defense. They've gone after cartel leaders. They've
    gotten the cartel leader of the Zetas, the Gulf, and Sinaloa in
    recent takedowns. But taking down leaders is really necessary,
    but not sufficient in putting pressure on these networks that
    are so powerful and so adaptable that they can change market
    strategies, distribution networks, and products that are
    flowing across them.
        At the border specifically, which should be the last line
    of defense, we have JTF-N that works directly for NORTHCOM,
    and, through JTF-N, we provide a variety of military support to
    law enforcement agencies along the border. It's very well-
    received, it's high payoff for our soldiers, sailors, airmen,
    and marines that provide that support. I believe that a dollar
    that we put against helping our partners be better on the
    border against this threat to our country is a huge savings in
    how we defend and respond to problems within the country.
        It is good work for us to do. It's well-coordinated. But,
    it's wholly dependent on the amount of counternarcotics funding
    that we receive to do that each year.
        Senator Ayotte. I was going to ask you, what more do we
    need to do?
        General Jacoby. I received $9.5 million this year in
    funding to support Federal authorities on the southwest border.
        Senator Ayotte. Just to be clear before we leave this
    topic, these networks that we are talking about, are these not
    also networks that are supporting terrorist funding, they are
    supporting human trafficking? You cannot separate the two to
    say somehow there's one network that's just trafficking drugs
    and then there's another network doing all these other horrific
    activities, which are obviously just as bad for the country?
        General Jacoby. It's my opinion that that is exactly how we
    should view these networks.
        Senator Ayotte. They are a direct threat to our country,
    not just obviously the threat we face to our people and to our
    children with regard to what happens with heroin addiction, but
    also just in terms of terrorism threats, human trafficking, all
    the other issues related, correct?
        General Jacoby. I believe the President's statement in July
    of 2011, when he identified these organizations as threats to
    national security, that's exactly what he meant. Many of these
    organizations have reached a state of power and global
    influence that they exceed the capacity of most of our
    partners' law enforcement to deal with it.
        Senator Ayotte. Thank you both for your leadership.
    Appreciate it.
        Chairman Levin [presiding]. Thank you, Senator Ayotte.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman.
        Thanks to our witnesses today.
        My quick calculation suggests that the two of you bring
    about 78 years of military service to the table. Not to make
    you feel old, and I am sure you could give me the year, month,
    day, hour, minute, second, but it is an amazing track record
    that you both bring.
        I am troubled by aspects of the testimony that I would
    describe as follows: miserly allocation of resources in these
    two commands, especially in SOCOM; increasing activity by Iran,
    Russia, and China to gain influence in the theater; 10 partners
    with whom we do not have Ambassadors now, either because the
    White House has not sent forward nominations or the Senate
    hasn't confirmed them. You could certainly understand these
    partners, who are some of our most loyal partners, who most
    want to work with us, who have a close cultural connection with
    us, whose citizens often move to the United States--you could
    understand many of these partners wondering if we've replaced
    the Monroe Doctrine of a past day with an indifference doctrine
    today.
        Our country has had a history of defining our military and
    foreign policy of an east-west access. We need to be paying
    attention to our north-south access. We're saying we are
    pivoting to Asia, but, by all intents, China's pivoting to the
    Americas, and we are losing influence in a region where we
    shouldn't be.
        In the Senate Foreign Relations Committee, we recently met
    with the President of Peru, and he was talking about the
    Chinese economic influence, and he said, ``We'd much rather do
    business with you, because we feel the cultural connections are
    so strong and we have some suspicions of what Chinese
    intentions are. If they are engaged and you are not, we are
    going to do business with the folks who are showing interest.''
    I think this testimony today underscores some of these
    concerns.
        Just a few questions, to hop around. General Kelly, in
    Venezuela, what is your assessment of the loyalty of the
    Venezuelan military to the current political leadership? I know
    you're under a lot of restrictions, in terms of your
    interaction, but I'd just be interested in your professional
    opinion about that.
        General Kelly. I think they are loyal to themselves, and
    they are just standing by and watching what's taking place.
    They have not been used very much in any of the crowd-control
    activities. I think that tells you something about what, maybe,
    the government thinks about where the military might go. They
    are trying to control things with the police and in other ways.
    Right now, I think the military is certainly loyal to the
    current government, but I think there's probably stresses and
    strains in there, and certainly opinions within the
    organization as to what the way ahead is. For right now, I
    think a loyalty is to the government.
        Senator Kaine. General Jacoby, how about the current status
    of the U.S.-Mexico military-to-military relationship?
        General Jacoby. Senator, thanks. I am very proud of our
    military-to-military relationship. There were a lot of people
    that wondered, when there was a change of administration, how
    would that relationship, which is relatively new, survive. It
    has done more than survive. In the last 3 years, our
    interaction and engagements have increased by 500 percent with
    the Mexican military, across a wide variety of things. In
    fiscal year 2013, we had 151 engagements. We shared training
    opportunities with over 3,700 Mexican marines and soldiers.
    This is a strong, deepening relationship that I think is going
    to serve both the citizens of the United States and Mexico well
    in the future.
        Senator Kaine. Thank you.
        General Kelly, you and I talked yesterday about a
    particular passion of mine, the country of Honduras, where I
    lived in 1980 and 1981. I've been discouraged in visits to
    Honduras. It was dangerous when I lived there; it was a
    military dictatorship. Now it's a small-d democracy, but it's a
    lot more dangerous, and people that I know who were afraid then
    are more afraid now because of the tremendous effect of the
    narcotrafficking on that country, the hollowing out of the
    institutions of the court system and the police.
        Give us your initial assessments of the new President of
    Honduras, and the efforts he's undertaking to try to get the
    security situation under control.
        General Kelly. As far as the country goes, by the U.N.
    figures, it is the most dangerous country on the planet. The
    U.N. figures murders per 100,000. The United States has 3
    murders per 100,000. Western Europe is 1 murder per 100,000.
    Interesting enough, Venezuela is 79 murders per 100,000, and
    Honduras is up around 86 murders per 100,000.
        The effect of the drug trafficking today, but, more
    importantly, the impact on the institutions--the effect of the
    drug trafficking as it flows through Honduras, which is not a
    consumer nation, making its way to the United States
    consumption demand has essentially destroyed most of the
    institutions of the government. The police are all but
    ineffective. The judicial system, all but ineffective.
    Interestingly enough, the only real institution that is
    respected and trusted in the country is the military, and
    that's who we want to work with. Frankly, they are doing well
    in many areas. But again, we are restricted because of some
    past practices.
        The new President, when he became the President-elect, he
    asked to see me in Miami. We had a very small meeting over
    dinner at a private residence, and he laid out, in his mind,
    what he was thinking about for the future of his country. This
    is, I think, a powerful indicator of where he wants to go. What
    did he talk about? He talked about extraditing criminals out of
    his country to the United States. He talked about human rights.
    He talked about cleaning up his police somehow. He talked about
    reestablishing the institutions of government that just simply
    do not work--his legal justice system, his tax system, all of
    these kinds of things.
        I then visited him 3 weeks after that in Honduras, after he
    had taken over as President, met with his entire national
    security team, with the Ambassador, then met with him and his
    smaller national security team. He asked me to help him develop
    plans and how he can more effectively deploy his military to
    get after the drugs that flow through his country on the way to
    our country because of the demand in our country. He wants to
    help us fight our problem, and he's very serious, I think, in
    that attempt.
        Senator Kaine. It is painful to contemplate that American
    demand has turned this country, which is one of America's
    staunchest allies, into the most dangerous nation on the
    planet. It's pathetic to think that that's true.
        General Kelly. It also goes, Senator, for Guatemala, for El
    Salvador, 77,000 deaths in Mexico in the last 7 years. This is
    a cancer that we have to get after, because if we do not care
    about the consumption in our own country, which we do, but if
    we are willing to tolerate a certain level of it in our own
    country, what is it doing in these other countries that simply
    cannot deal with the cartels, the violence, and the profits
    that come out of our country, and buy off entire countries.
        Senator Kaine. Thank you very much. Thank you, Mr.
    Chairman.
        Chairman Levin. Thank you so much, Senator Kaine. Senator
    Sessions.
        Senator Sessions. Thank you.
        Thank you both for your service to the country. I agree
    with many of the Senators, General Kelly, that we need to have
    more focus on our friends and allies and some of our
    adversaries in the south. We just need to do a better job
    there. We cannot be too firmly distracted to the Middle East
    and other areas that we ignore our own neighborhood.
        General Jacoby, thank you for your excellent service.
    During your appearance before the House committee on February
    26, before the Russians moved into Crimea--you were asked about
    cruise missiles, and you said, ``We have been directed by the
    Secretary''--Secretary Hagel, I believe you're talking about--
    ``to ensure that we are also looking at how to provide
    effective defense against cruise missiles in a way that
    outpaces any threats to and include Russians.''
        First, let me ask you: Are the Russians capable of nuclear-
    arming a cruise missile? How do you see the threats? What
    should we do about it?
        General Jacoby. Thanks, Senator. No, that was Secretary
    Panetta that directed us to do that. I think it was a result of
    one of our Homeland defense scenarios that we were briefing him
    on. It's a long--we've been tracking, for a number of years,
    Russia's continued investment in improved cruise missile
    technology.
        They've had cruise missiles for decades. They've armed
    their bombers in the past with cruise missiles. They are just
    about ready to begin production on a new variety of cruise
    missiles that are more effective. They are longer-range, better
    capabilities. I'd be glad to answer some of the specifics on
    those capabilities in a secure setting.
        We watch the Russians really closely. That's in our NORAD
    hat. We have for decades. They are also capable of introducing
    cruise missiles into a theater from submarines. They've just
    begun production of a new class of quiet nuclear submarines
    specifically designed to deliver cruise missiles.
        It's always been our strategy for defending the Homeland to
    account for the capabilities of state threats; not so much
    their intention, but their capabilities. That is always part of
    our game plan, and we watch--even though we have had, in the
    past, opportunities to cooperate with the Russians on various
    activities along our periphery, we have always had our eyes
    wide open and made sure that we were able to deter future
    threats from Russia.
        Senator Sessions. I believe the New York Times recently
    wrote that some of their actions with cruise missiles could be
    in violation of the Intermediate-Range Nuclear Forces Treaty
    that the United States had with the Soviet Union. Can you give
    us any insight into that?
        General Jacoby. Senator, I think that would be a correct
    question for DOS and for DOD to address, from the treaty
    standpoint.
        I will tell you that we consider cruise missiles, and have
    long considered cruise missiles, an aerospace threat that falls
    within our NORAD agreement with Canada to defend against. We
    consider that to be a threat that we include in all of our
    defense plans for North America.
        Senator Sessions. Yesterday, I saw an article by Mr.
    Clifford May, who's the head of the Foundation for the Defense
    of Democracies, and he indicated, which I think is
    fundamentally correct, that we need to make it clear that any
    era of weakness is over and that we intend to defend the United
    States. Nuclear-armed cruise missiles can, in effect, violate
    treaties, could, in effect, create additional threat to the
    United States, and we'll have to respond to it, and I think you
    would be willing to do that.
        The first recommendation Mr. May made said to demonstrate
    to the world that we understand what's happening is that we
    need to strengthen our missile defense system. I think that's a
    valuable comment.
        I noticed that Senator Rubio has offered a resolution
    expressing the sense of Congress that the President should hold
    the Russian Federation responsible or accountable for any
    violations of this treaty. That may be a resolution we should
    consider and pass.
        I think it's important for us to make clear that we get
    this new situation, that the reset is not there, that our
    failure to move in Poland with a missile defense system may
    have sent a wrong message to Russia. I am worried about that.
        There are limits on what we can do. I am not suggesting
    otherwise. The events in Crimea are just a disaster. Nothing
    good is going to--we'll never be able to get back to square
    one, no matter what happens. I am really troubled about that.
        Mr. Chairman, in the proposal to assist the Ukraine with $1
    billion loan and the second part, which was to establish a new
    relationship concerning the International Monetary Fund,
    particularly that aspect of it, there's a proposal in the
    legislation that cleared the Foreign Relations Committee, that
    would take about $150 or $170 million from the military. Some
    of that was Air Force missile money, some of it is Army
    aircraft money.
        The last thing we need to be doing at this point in time is
    taking money from DOD. We've already reduced their budget to
    the degree that I am--I know we are all concerned may have gone
    too far. I am going to be looking at that closely, but, the
    main point is that, yes, we want to be helpful to the Ukraine.
    I would like to make this loan happen, but it really does need
    to be paid for in a proper way. We certainly do not need to be
    cutting DOD, their aircraft and their missile capabilities.
        Thank you. My time is up.
        Senator Nelson [presiding]. Senator, in a lot of the
    testimony that has been here, we have had an alarming statistic
    about all of the drugs and the human trafficking and the
    potential terrorist trafficking through these drug lords and
    drug cartels that are coming out of Venezuela and Ecuador, and,
    in large part, coming into Honduras and then broken down and
    sent north and ultimately end up in our country.
        As long as you're talking about assets that are needed, one
    of the assets that is very clear to come out of the testimony
    of this hearing is that General Kelly only has 5 percent of the
    ISR assets in order to track all of these movements. Five
    percent of what he needs. This is undermining our country, not
    only with the drugs, but the potential terrorists, as well as
    the human trafficking that is coming in. Before you came in,
    there was testimony here also that this is not just the
    traditional cocaine that used to come out of Colombia; it's now
    heroin.
        General Kelly, I think Senator Sessions is putting the bee
    on another part of the globe, Crimea, and the need for assets,
    we have the need right here in the western hemisphere. Any
    concluding comment that you want to make on your ISR assets?
        In Key West, they have a JTF that tracks all of this. It's
    headed by a Coast Guard admiral, but it has every agency of the
    U.S. Government down there. But the problem is, you cannot
    track it if you do not have the assets.
        General Kelly?
        Senator Sessions. Senator from Florida, I just would say,
    you've studied this over a number of years, as I have. We've
    watched it carefully, and I think your insights are most
    valuable. I thank you for raising those.
        Senator Nelson. General Kelly, what comment would you like
    to add?
        General Kelly. Yes, sir. Senator, if I could just really
    highlight, before I comment on the ISR, we have tremendous
    partners that we work with, and I cannot say enough about the
    heroic efforts of, particularly, Colombia. What they've done
    with their country with their fight in the last 12 to 15 years,
    with no American blood and with very little American money,
    they've done it themselves, and they've funded it themselves.
    Peru is another strong partner. Chile and others. Panama,
    unbelievable partner. Honduras, Guatemala. We're restricted in
    working with El Salvador, but they are strong, strong, strong
    partners. In addition to the Canadians, the U.K.--all of them
    add to this. If we didn't have them working with us in this, we
    would not have an effective interdiction detection and
    monitoring campaign. It simply would not be worth doing it if
    we didn't have these partners working with us, because we just
    do not have nearly sufficient U.S. assets in ISR. Then, of
    course, end-game Coast Guard cutters and/or--something that
    floats--Coast Guard cutters or U.S. Navy ships of some kind. It
    just wouldn't be worth doing it with so----
        Of the six geographical combatant commands, I am the least
    priority, and I understand that there are other priorities in
    the Pacific and the Persian Gulf and places like that. So, we
    do the very best we can with what we get.
        Senator Nelson. Of course, you remember the days, 10 and 20
    years ago, when Colombia was a narcostate. Of course, there is
    a tremendous success story. That success story happened, in
    large part, because of the cooperation of the Colombian
    Government and the U.S. Government, with the U.S. Government
    offering an awful lot of assets and assistance.
        So it shifts, and it shifts into Venezuela, it shifts into
    Ecuador. But, that doesn't stop the movement of drugs north. It
    is what it is.
        Let's talk just a little bit about Venezuela. Last evening
    in the Senate, we passed a resolution that says that the U.S.
    Government ought to go after the assets and the visas of the
    people that are responsible for the deaths in Venezuela in the
    demonstrations. Now, you had testified earlier that that was
    primarily National Guard in Venezuela, some private
    entrepreneurs that are getting involved, whether you call them
    paramilitary, whatever they are. How far up the chain of
    command in the military do you think this goes to? Do you
    think, if we suddenly start yanking visas and freezing their
    assets in the United States--most of those assets, I might say,
    is in my State of Florida--what kind of effect would that have,
    if we flesh out this resolution by the Senate passing some
    legislation?
        General Kelly. Senator, it's outside my area of expertise,
    but I would tell you that, as I watch the Venezuelan military
    watch what's going on, eventually they'll make a decision, one
    way or the other, as to what's happening internally to their
    country. We have no relationship, unfortunately, with the
    Venezuelan military, because I am restricted. The fact is that
    the Chavez Government, and now Maduro, has no interest in it
    and has prohibited it, which is unfortunate. They are watching
    and waiting. I would say, the more you can tighten up on their
    freedom of movement or their bank accounts in other parts of
    the country, the more effect it will have on their thinking,
    relative to the future.
        It's a situation that is obviously just coming apart in
    front of us. Unless there's some type of a miracle, that either
    the opposition or the Maduro Government pulls out, they are
    going down a catastrophic hole, in terms of economics, in terms
    of democracy and things like that.
        Again, it's one of the most violent countries in the
    world--79 deaths per 100,000. That puts it way at the top of
    violence in the world, and is only surpassed, really, by
    Honduras, which is violent for another reason, or Guatemala,
    which is violent for another reason. I think anything of that
    nature that would put pressure on them will cause them to start
    thinking in terms of a better future.
        Senator Nelson. I hope we are coming after them, because
    they've had it both ways. They kill their own people, they
    allow the free conduct of narcotraffic, and, at the same time,
    they love to have their condominiums and bank accounts in
    Miami. So, I can tell you, this Senator is going to urge coming
    after them.
        Senator Inhofe, you wanted to ask another question, and
    then I'll close this out.
        Senator Inhofe. Okay, that's fine, Mr. Chairman. I
    appreciate it.
        Let me, first of all, say that the Law of the Sea Treaty
    has been mentioned by several people. I've been involved in the
    other side of that since--I am measuring it in decades now, not
    years. I do not think that's a good place. I do not want to
    leave the impression that somehow there's unanimity up here on
    that issue.
        General Kelly, you say in your statement that declining
    resources are resulting in less engagement with our partners,
    that our relationships, our leadership, and our influence in
    the western hemisphere are paying a price. If the United States
    is not engaged, that creates a vacuum, right? Who's filling
    that vacuum?
        General Kelly. It does, Senator. The Chinese, the Russians
    in different ways and, to a degree, Iran.
        Senator Inhofe. Yes. That's very concerning to me, and I
    think it's one that we are concerned about how the partners in
    the region perceive us, but it's more important than just that,
    because it does open the door for others who do not have our
    best interests at heart.
        Now, General Jacoby, I think I mentioned this to you when
    you were in my office. It just seems like the MDA, in their
    effort to develop a contingency deployment plan for a third
    site, they aren't doing anything. They are not complying with
    deadlines, in my opinion. Are you in a position to try to
    cooperate in a way that might encourage them to move on with
    this thing? As I understand the status report is due to
    Congress within 6 months.
        General Jacoby. Senator, yes, I am. Based on the
    conversations that I've had here up on the Hill, I am in
    contact with Admiral Syring. He understands he has a
    responsibility to provide that contingency plan.
        Senator Inhofe. Yes. We're going to look at this and call
    you back, and him back, and try to get this thing done.
        You and I talked a little bit, General Kelly, about what's
    happening down in Mexico. We've talked about the border
    problem. I've been down there. I've told you, in my office,
    that for 30 years I was a builder and developer down in that
    part of south Texas, so I am very familiar with the area down
    there, and also familiar with what is happening on the border
    now with all the terrorist activity, the drug cartels, and all
    of that. If people are coming to the island they cannot drive,
    they have to take an airplane into Brownsville, TX.
        I see that as a relation. You're talking about the
    military-to-military cooperation we are getting. Would the
    military-to-military cooperation give us any kind of an
    opportunity to try to correct the terrorism on the border?
        General Kelly. Senator, I was involved in that conversation
    a little while ago with you, but really General Jacoby, I
    think, is in a better position to answer the question.
        Senator Inhofe. Sure.
        It's right on the border there.
        General Kelly. Right.
        Senator Inhofe. You're both involved in in that activity.
        General Kelly. Yes, sir.
        Senator Inhofe. Go ahead, Chuck.
        General Jacoby. Yes, Senator, it's a really vexing problem,
    because it demonstrates how, across the border, the TCOs can
    create zones where they have freedom of action. There is one
    there, as you've described.
        Just as General Kelly has talked about the heroic efforts
    of our partners in his AOR, so do we have heroic efforts by the
    CBP and by the other law enforcement agencies that are
    operating on the border.
        Senator McCain referred to Brownsville in terms of how he
    was surprised that 80 percent of the illicit people that are
    crossing the border there aren't Mexicans, they are from other
    places. So, this is very troubling, and I think it's a national
    security problem for us; if not now, in the future.
        Senator Inhofe. Yes. I am not really referring to, though,
    the problem with those crossing the border as much as I am the
    terrorist acts that are taking place along the border. I will
    not mention the name of it, because they might hear me and
    change that, but there is only one community on the border
    where they do not have that taking place right now, that I know
    of. Get down further in Mexico, it is not a problem, but you
    are talking about an issue there that is extreme hardship. It
    hurts Mexico more than it hurts us.
        General Jacoby. Right.
        Senator Inhofe. So, in terms of that type of activity
    that's on the border--not coming across the border, but is
    right next door.
        General Jacoby. Right. We've worked hard to establish
    relationships with Mexican military forces on the opposite side
    of the border, and we continue to develop relationships. We've
    built communications systems so that we can talk back and
    forth. But, there is persistent crime, and a lot of it is the
    lack of effective law enforcement. It's why the Pena Nieto
    administration is----
        Senator Inhofe. It seems like it's the law enforcement that
    is the problem, not the military.
        General Jacoby. Right.
        Senator Inhofe. Maybe the military should engage in that
    end of it, too. I do not know. I just want you to consider me a
    friend who's concerned about that also, and anything new that
    comes up, if you'd put me in on it, and I'll try to help. Okay?
        General Jacoby. Yes, Senator, we will.
        Senator Inhofe. All right.
        Thank you, Mr. Chairman.
        Senator Nelson. General Kelly, going back to Venezuela,
    since, under the resolution that passed last night, the
    President of the United States would make the decision on who
    the visas would be yanked and the assets frozen, should there
    not be some high-level people in Venezuela that would start to
    be concerned that they cannot make their trips to Miami and
    stash their cash outside of Venezuela?
        General Kelly. You hit a point up there, Senator. There's
    an awful lot of real estate being taken off the market in Miami
    right now that's being bought up fast and furious by Venezuelan
    wealthy people. Not suggesting that all of them are involved in
    this, not suggesting all of them are in the government, but
    there's a real flight, I think, in terms of at least that money
    from Venezuela.
        Another thing to look at, and it's a data point for you.
    Virtually all of the flights--the cocaine flights, 100 percent
    of the cocaine flights, about 20 percent of the cocaine flow is
    produced in Colombia. Colombia does tremendous things. Then
    it's moved into Venezuela, and it's flown out of Venezuela on
    airfields, and they make their way north. Someone knows about
    that. Someone in the military knows about that, certainly
    someone in the government knows about that. Of course, there
    are some high-level government officials that have been by our
    Department of the Treasury going after the money, have named
    some of them as kingpins in the whole thing. From a drug point
    of view, there's some real rot at the top.
        Any pressure, I think, that our country could put on their
    country to start to treat their people decently and to start to
    step back from the road that they are on would be very helpful
    to some very wonderful people in Venezuela.
        Senator Nelson. Before I close this out, General Jacoby, we
    had some commentary from Senator Cruz a while ago with regard
    to the explosion of a nuclear weapon off the east coast, up in
    the air. Of course, what that would do in the EMP, it would
    wreak havoc on our government facilities that are not hardened,
    as well as all the private facilities. That is obvious, and
    that's always a threat. Would it not--under present conditions,
    it would pretty much have to take a nation-state that could
    explode a nuclear weapon in the air to cause such havoc. What
    that is, is the opening of a major war. Give us your rendition
    of that.
        General Jacoby. I think the most likely source of an EMP--
    an aerial EMP would be a nation-state. One of the benefits of
    having a limited missile defense, especially the variety that
    we've chosen, midcourse, where we would seek to destroy any
    threat to the Homeland in midcourse, I think that that would be
    the most likely scenario that we would see an EMP event. Making
    sure that we have the intelligence collection that tells us
    they have a weapon, they have an ICBM capability, and then the
    system that we have in place, optimizing it over time so that
    we can feel confident that we can shoot that down, is really
    the best way to go about worrying of that particular threat.
        I do think that we should never take our eye off the ball,
    that terrorist networks and other networked threats to the
    Homeland would love to get a hold of a WMD. So, I do not think
    we should ever discount that as a possibility. But, it would be
    less likely today to have that as a cause of EMP than a aerial
    burst delivered by a state actor.
        Senator Nelson. If such a nuclear device with a terrorist
    were exploded--and, in this case, you're suggesting on the
    ground someplace--to what degree would that cause the EMP that
    could damage a lot of these private systems that our economy is
    so dependent upon?
        General Jacoby. Senator, I am sure there would be EMP
    associated with any nuclear burst. I am not in a position, nor
    do I think we have good, hard scientific facts on what would be
    the extent of the EMP. I think our critical issue, up front,
    would be the blast effects, the shock effects, and the heat
    effects that are associated with a nuclear blast, and we'd have
    our hands full with radiation and other factors, as well.
        Senator Nelson. Sadly, we have to talk about these
    possibilities, but that's part of the threat that we are facing
    today.
        Gentlemen, thank you for your service to our country, thank
    you for a most illuminating hearing.
        The hearing is adjourned.
        [Whereupon, at 11:43 a.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator James M. Inhofe
                          security assistance programs
        1. Senator Inhofe. General Kelly, I've long been one of the
    strongest supporters in the Senate of security assistance programs to
    build the capacity of our partners. In your area of responsibility
    (AOR), programs such as the International Military Educational Training
    (IMET) program, the Joint Combined Exchange Training, and the various
    counternarcotics authorities like sections 1004, 1021, and 1033, are
    vital tools for engaging with and building the capacity of our partners
    as well as maintaining U.S. influence in the region. How important are
    the various security assistance programs to your efforts in the U.S.
    Southern Command (SOUTHCOM) AOR?
        General Kelly. Security assistance programs are vital to
    maintaining positive relationships with our partners in the Western
    Hemisphere. Foreign Military Financing (FMF), IMET, Global Peace
    Operations Initiative (GPOI), and other counternarcotic authorities are
    important tools for strengthening defense institutions and bolstering
    the Quadrennial Defense Review goal for building security globally. FMF
    enables access and influence, and in Central America has helped to
    combat the complex web of Transnational Criminal Organizations (TCO).
    Through the development of maritime capabilities throughout Central
    America and the Caribbean, FMF improved their capabilities to combat
    TCOs. Security assistance also supports the modernization of partner
    nation (PN) forces and focuses both on technology and people. The IMET
    program invests in human capital to reinforce U.S. principles such as
    respect for human rights, rule of law, and civilian control of the
    military. Many IMET alumni have risen to positions of prominence within
    their respective country's militaries and ministries. The GPOI program
    allows SOUTHCOM to build peacekeeping capability in selected PNs,
    facilitating their deployment to and performance in United Nations
    (U.N.) peace operations. The deployment of our GPOI PNs reduces the
    burden on the U.S. military, as our GPOI partners supporting the United
    Nations Stabilization Mission in Haiti have done.
        In countering TCOs, security assistance programs are particularly
    important with the shrinking budgetary environment. SOUTHCOM has seen a
    marked decrease in ship days and flying hours provided by the
    interagency and Service Departments (U.S. Coast Guard, U.S. Navy, and
    U.S. Air Force) to support counterdrug operations. As U.S. Government
    assets have decreased, the reliance on our PNs to fill the gap has
    increased. The key tool SOUTHCOM leverages to build the capability and
    capacity of our PNs is the security assistance program. SOUTHCOM uses
    three specific congressional authorities: section 1004, which allows
    the Department of Defense (DOD) to provide support and train PN Law
    Enforcement Agencies/Military engaged in counterdrug operations;
    section 1021, which authorizes DOD to provide support to Colombia's
    efforts against the FARC; and section 1033, which authorizes DOD to
    provide non-lethal equipment to specified PNs. Through the application
    of these critical authorities, we have seen a significant increase in
    PN participation in counterdrug operations. Our main focus is in the
    maritime arena, because approximately 80 percent of the overall drug
    flow to the United States is through this domain. We are working
    closely with our PNs to emplace the basic infrastructure needed for
    sustainment of their maritime assets, to establish an integrated
    command and control system, and to provide the boats, spare parts, and
    trained crews needed.
        The importance of security assistance in the SOUTHCOM AOR cannot be
    overstated as it allows us to engage in such a manner that sets the
    stage to prevent crises we see in other parts of the world.

        2. Senator Inhofe. General Kelly, the fiscal year 2014 Omnibus
    Appropriations Act included an expansion of human rights vetting
    requirements, also known as the Leahy Law. How does the Leahy Law
    impact your ability to engage with partners in the region?
        General Kelly. Respect for human rights is a prerequisite for
    security assistance to military and security forces in our PNs. At
    SOUTHCOM, everything we do begins and ends with human rights--it is a
    fundamental part of our engagement with our counterparts. SOUTHCOM is
    the only combatant command with a dedicated Human Rights Office, and
    prioritizes the integration of respect for human rights in all its
    activities and engagements. As a commander, I fully support and agree
    with the spirit of the Leahy Law, and am committed to its compliance.
        Changes made to the language of the Leahy Law for DOD-funded
    assistance in January 2014 expand the number and type of activities for
    which vetting is required, to now include ``training, equipment, and
    other assistance'' (adding equipment and other assistance). The law
    also provides an exception clause for disaster relief, humanitarian
    assistance, and national emergencies. Policy guidance on implementation
    of the changes, and circumstances where the exception clause can be
    used, is still pending, and thus the direct impact on our engagements
    with PNs is still unknown. However, the latest changes will likely tax
    the already overburdened and under-resourced DOD and Department of
    State (DOS) entities involved in the vetting process, resulting in an
    increase in the number of cancelled or delayed events. Moreover, these
    stricter and broader vetting requirements, without a clear remediation
    policy, create circumstances where we are de facto prohibited from
    supporting partners' military. This is leading our partners to seek out
    security partnerships with nations that do not condition assistance on
    human rights, such as Russia and China.

        3. Senator Inhofe. General Kelly, are there ways that the vetting
    process can be made more efficient and responsive to our security
    interests while preserving our commitment to the rule of law and human
    rights?
        General Kelly. A clearly defined remediation process would enable
    U.S. Government officials to relay to the PN the exact steps required
    in order to reinstate security assistance. In addition, I believe there
    should be an exception to vetting requirements that is very narrowly
    drawn, such as permitting human rights and rule of law training with
    certain units that have not passed the vetting process, but restricting
    the unit's access to security assistance, or conditioning security
    assistance based on human rights performance. As currently written, the
    Leahy Law prohibits us from engaging with the very countries that would
    benefit most from human rights training and that are most focused on
    remediating historical human rights violations.
        This type of exception has been written into the law under other
    conditions on security assistance, separate from Leahy Law vetting
    procedures. For example, of the 2014 International Narcotics Control
    and Law Enforcement and FMF Program funds for Honduras, 35 percent of
    the funding is restricted until certain conditions have been met by the
    Government of Honduras. However, assistance that is utilized
    specifically to promote transparency, anti-corruption, and the rule of
    law within the military and police forces is exempt from this
    restriction. By contrast, no such exception was included for security
    assistance to Guatemala. Consequently, we have had to cancel a human
    rights training course scheduled for fiscal year 2014 for the
    Guatemalan Army due to issues that have nothing to do with the human
    rights performance of the Guatemalan military.
        Permitting narrow, conditioned exceptions avoids the serious,
    unintended consequences of the law that do not further our country's
    security interests or commitment to democratic values and ideals.

        4. Senator Inhofe. General Kelly, I understand that there are some
    units the United States is prohibited from engaging with because of
    alleged human rights violations that occurred decades ago. Is this
    true?
        General Kelly. Yes. Conditions on security assistance to Guatemala
    originally came as a response to the Guatemalan military's human rights
    record during the 36-year internal armed conflict (1960-1996). Since
    the signing of the Peace Accords in 1996, the Guatemalan military's
    human rights record has been excellent. The Guatemalan Army of today is
    not the Army of the past, and the Guatemalan Government and military
    have taken important steps that demonstrate commitment to human rights.
    For example, the Guatemalan military began formal participation in the
    SOUTHCOM-sponsored Human Rights Initiative (HRI) in 2004. HRI is
    SOUTHCOM's capacity-building program focusing on human rights with our
    PN militaries. Significant human rights achievements by the Guatemalan
    military include the creation of a Human Rights Office within the
    Ministry of National Defense and incorporating human rights training at
    all centers of instruction and schools for officers and soldiers at all
    levels.
        Despite these significant achievements, I am effectively prohibited
    from providing assistance to the Guatemalan Army due to conditions on
    assistance in place for actions committed by an Army that no longer
    exists. Moreover, there is a perception that the U.S. Congress
    continues to ``move the goalposts'' with regards to the precise steps
    that must be taken in order for these conditions on assistance to be
    removed. For example, in the fiscal year 2014 Omnibus Appropriations
    Act, additional conditions were placed on security assistance for the
    Guatemalan military for issues that have nothing to do with the
    military's human rights performance.
        The Guatemalan military is an excellent partner and is fighting our
    counterdrug fight for us at great cost in blood, committed to human
    rights reform, with a generally clean human rights record since 1996.
    Maintaining--and now even further tightening--the human rights
    conditions on assistance to the Guatemalan Army despite significant
    progress over decades sends a message that the U.S. Government does not
    recognize or value human rights efforts and progress by our PNs.

        5. Senator Inhofe. General Kelly, is there a process to remediate
    such units and if so, how does this process work?
        General Kelly. There is currently no official remediation policy
    that has been agreed upon by both DOS and DOD, thus making it extremely
    difficult for a unit that has been denied security assistance due to
    Leahy Law to again become eligible for U.S. Government security
    assistance. The need for an official remediation policy is urgent.
    Current guidance is vague and subjective, making it near-impossible to
    explain to PNs the appropriate steps that must be taken in order for
    assistance to be restored. In the past, DOD has deferred to DOS for all
    vetting processes and decisions. However, the continued lack of an
    effective remediation policy has led to a DOD-wide effort, in
    consultation with DOS, to develop remediation policy guidance for
    reengaging certain PNs with security forces who have units that have
    been denied assistance under the Leahy Law in an effort to bring about
    the conditions that would allow for the lifting of such restrictions.

        6. Senator Inhofe. General Kelly, are you aware of any partner
    units within the SOUTHCOM AOR that have ever been successfully
    remediated?
        General Kelly. SOUTHCOM is aware of one recent case. In 2013,
    security assistance to all four units of Special Operations Command
    (COES) of the Honduran armed forces was suspended due to credible
    information implicating the COES commander of human rights violations
    prior to his assuming command of COES. Three of the four units that
    comprise the brigade had passed vetting procedures and were considered
    eligible for U.S. security assistance prior to the individual taking
    command of the brigade. The individual was subsequently removed from
    the position as commander of the brigade, at which time the three units
    again became eligible for security assistance as long as they pass
    normal vetting procedures.
        This example is a very unusual example of ``remediation,'' as it
    has been SOUTHCOM's understanding that the removal of a commander of a
    unit who does not pass vetting procedures does not necessarily
    constitute ``all corrective steps'' required under the law. Clearer
    guidance from DOD and DOS on the different steps that a PN must take in
    order to remediate a unit is urgently needed.
                                     ______

                  Questions Submitted by Senator Jeff Sessions
                              littoral combat ship
        7. Senator Sessions. General Kelly, is the Navy's Littoral Combat
    Ship (LCS) important to your plans and operations in SOUTHCOM?
        General Kelly. For fiscal year 2016, successful execution of my
    statutory responsibility to detect and monitor maritime and aerial
    transit of illegal drugs into the United States requires a total of 24
    surface vessels, 16 of which are flight-deck equipped ships with
    embarked helicopters. While the specific platform type is not critical,
    the LCS is an acceptable sourcing solution for this capability.

        8. Senator Sessions. General Kelly, what are the operational
    impacts of less LCS in SOUTHCOM?
        General Kelly. The primary impact of fewer ships for SOUTHCOM is an
    increase in the amount of cocaine that makes it unimpeded to U.S.
    markets due to less detection and monitoring and less endgame support
    capability. An additional impact will be the negative impact of our
    ability to both effectively, and rapidly, respond to potential
    humanitarian crises such as mass migration events and natural
    disasters.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                 joint surveillance target attack radar system
        9. Senator Chambliss. General Kelly, we have previously discussed
    the importance of the Joint Surveillance Target Attack Radar System
    (JSTARS) in your AOR and how it is being utilized to interdict drug
    trafficking. During your testimony before the House Armed Services
    Committee in February, you described JSTARS as being ``a game-changer
    over the Caribbean.'' How will a 40 percent reduction in JSTARS
    capacity impact your ability to perform your mission which is already
    hampered by the lack of available intelligence, surveillance, and
    reconnaissance (ISR)?
        General Kelly. Current Service JSTARS capacity already precludes
    the Chairman from allocating this capability to SOUTHCOM with any
    significant presence. With competing requirements for the Pacific and
    Arabian Gulf, I can only deduce that additional cuts to the Services'
    airborne wide area search capability will make it harder for me to gain
    an allocation.
        As Navy and Coast Guard surface assets continue to dwindle, it is
    more important for us than ever to increase the effectiveness of those
    that remain available. Our historical data shows that a ship alone has
    a 9 percent detect rate. When we add a rotary element, maritime patrol
    aircraft (MPA), and airborne wide area surveillance (WAS) assets such
    as JSTARS to the mix we increase that ship's effectiveness to 70
    percent.
        Our fiscal year 2016 total MPA and WAS requirement is 55,400 flight
    hours. For reference, next fiscal year we expect a DOD MPA allocation
    of 6,600 hours via a combination of contracted MPA and U.S. Navy P-3
    hours, and approximately 9,000 MPA hours from our Customs and Border
    Protection and Coast Guard interagency partners. We currently have no
    dedicated WAS assets, and JSTARS' massive instantaneous radar coverage
    and battlefield persistence makes it our top choice to help fill our
    WAS allocation gap.

        10. Senator Chambliss. General Kelly, with such a massive area of
    operations, how do you ensure key areas maintain engagement,
    considering the lack of resources?
        General Kelly. Given SOUTHCOM's current ISR sourcing levels, we are
    unable to provide adequate ISR coverage of our AOR. The JIATF-S Joint
    Operating Area (JOA), our primary JOA for detection and monitoring
    illicit trafficking, covers 42 million square nautical miles, is
    roughly 12 times the size of the continental United States, and
    encompasses not only the SOUTHCOM AOR but also crosses the AOR
    boundaries of four other U.S. combatant commands.
        We cannot mitigate the impact of ISR shortfalls across the broader
    reaches of the JOA using current allocated ISR assets and are only able
    to focus on a small fraction (10 percent) of the entire JIATF-S JOA.
    We must prioritize ISR assets missions against the highest
    concentrations of the illicit trafficking threat, leaving much of the
    JOA uncovered and creating a permissive environment along the main
    approaches to the United States. This prioritization and the need to
    mitigate ISR shortfalls precipitated Operation Martillo, the
    multinational regional effort to counter illicit trafficking in the
    Central American littorals and the means through which JIATF-S conducts
    the majority of their information sharing and engagement.
        To cover our full responsibility or to mitigate the impact of
    shortfalls, we must reinforce our ability to hunt for the threat across
    the wide areas of water space in the JOA and to create as near a
    persistent dwell over the primary threat vectors as possible.
    Capabilities that top the list are long range ISR, specifically
    maritime target detection capabilities found on Air Force JSTARS, Navy
    P-3 AIP (and its P-8 follow-on), Customs and Border Protection P-3
    Long-Range Tracker-Maritime, and Coast Guard HC-130. These platforms
    and their sensors have proven successful in detection and monitoring
    roles in SOUTHCOM's AOR. Increasing their presence in our theater will
    allow SOUTHCOM and JIATF-S to mitigate the shortfalls of the other
    resources needed to be successful executing assigned missions.

        11. Senator Chambliss. General Kelly, you have noted before the
    need for more imagery intelligence, wide area coverage, sensor
    integration, signals intelligence, moving target indicators, layered
    ISR architecture and management tools, and biometrics. Do you believe
    you are getting the kind of support that you need from DOD and the
    Intelligence Community (IC) in terms of prioritizing and acquiring
    these assets?
        General Kelly. We recognize that DOD and the IC have to prioritize
    limited resources. However, SOUTHCOM airborne ISR requirements have
    historically been sourced at 5 percent, which represents a small
    fraction of the total DOD globally allocated airborne ISR assets. This
    limited airborne ISR allocation does not provide SOUTHCOM with
    sufficient ISR capacity to carry out its statutory mission to detect
    and monitor transit of illegal drugs, support PN efforts to disrupt
    threat networks in Central America, and maintain our enduring support
    to Colombia. Options for mitigation of ISR coverage gaps with national
    technical means (NTM) are limited, as NTM in the AOR is constrained in
    orbitology, sensor optimization, capability, and processing times.
    Additionally, threats which have significant impact in the SOUTHCOM AOR
    have historically had a low priority on the IC's National Intelligence
    Priorities Framework. Combined, these critical shortfalls have driven
    SOUTHCOM to accept risk for so long that we no longer adequately
    understand the operational environment sufficiently to determine the
    risk we are assuming.
        While airborne ISR and NTM are the traditional methods to identify
    and disrupt threat networks, a fully integrated biometrics program in
    the AOR should also be considered essential to identify threat networks
    and secure the southern approaches to the United States. There are
    currently no programmed resources (funding or personnel) to support the
    combatant commands in their identity intelligence mission. DOD is
    currently drafting guidance on combatant commanders' authority to
    transfer biometric and other identity information and equipment to
    foreign partners. This guidance will help us address some of the
    biometrics challenges we face with our PNs.

             western hemisphere institute for security cooperation
        12. Senator Chambliss. General Jacoby and General Kelly, you both
    mentioned the Western Hemisphere Institute for Security Cooperation
    (WHINSEC) in your opening statements and acknowledged the importance of
    this program in building enduring military-to-military relationships. I
    am pleased to sit on the WHINSEC Board of Visitors with you both and I
    appreciate your personal involvement with that institution. I would
    appreciate any additional thoughts you have regarding how the training
    that the personnel receive at WHINSEC has allowed them to be more
    capable of confronting TCOs in the western hemisphere.
        General Jacoby. WHINSEC directly supports my theater and strategic
    objectives to build enduring military-to-military relationships and
    providing mobile training teams to provide instruction abroad. I
    appreciate the hard work of the faculty at WHINSEC to ensure their
    curriculum supports our desired end states through direct interaction
    with my staff. Of note, within our current Theater Campaign Plan, one
    of our five operational approaches is ``Countering TCOs.'' This Theater
    Campaign Plan provides the basis for WHINSEC's course offerings, which
    also is designed to support the strategic objectives of U.S Northern
    Command (NORTHCOM) in implementing the National Security Strategy in
    the Western Hemisphere. WHINSEC's efforts impact capacity building with
    our PNs that over time will allow these partners and allies to actively
    contribute to the defense of North America.
        General Kelly. WHINSEC has proven to be an outstanding resource in
    our mission of building partner capacity in Latin America and the
    Caribbean and it directly supports U.S. Government policies. WHINSEC
    teaches several courses that specifically address issues pertaining to
    the military mission of supporting civil authorities by assisting in
    providing for the security of the population confronting threats from
    TCOs. A sample of these courses are: Civil-Affairs Operations Course,
    International Operational Law Course, Combating TCO Course,
    Intelligence Analysis of Transnational Operations Course, and Human
    Rights Instructor Course, among others. These courses are taught in
    Spanish by personnel experienced in the situation that our PN students
    are currently facing in their countries and armed forces. Furthermore,
    WHINSEC provides an opportunity to expose our PN students to U.S.
    customs and values, build strong life-long relationships with up-and-
    coming PN officers and NCOs, and reinforce the subordination of a
    professional military to a constitutionally-elected civil authority.
    WHINSEC has developed and implemented meaningful and effective training
    in military professionalism that includes democratic values, human
    rights, ethics, and stewardship. This training has made the program a
    valuable tool in our security cooperation arsenal.

        13. Senator Chambliss. General Jacoby and General Kelly, as we
    continue to focus on strengthening the security capacities of our
    partners in South America and Central America, what additional roles
    can WHINSEC play to increase our cooperation?
        General Jacoby. I firmly believe that as WHINSEC transitions to
    greater PN funded training, it will increase our ability to engage with
    the next generation of the Western Hemisphere's military leaders. This
    new initiative ensures our partners financially contribute to their
    training and have a vested interest in the quality of training
    received, which in turn has increased the number of students that are
    able to attend WHINSEC programs. It also provides greater engagement
    opportunities for all of NORTHCOM's PNs and increases the focus on
    interagency solutions to security concerns within the hemisphere, thus
    enabling WHINSEC to be a force multiplier for the long-term. Lastly,
    WHINSEC has recently offered the Peace Keeping Operations Course for
    U.N. Staff Officers, taught in English and easily exportable to all
    NORTHCOM PNs. Courses such as this reflect the role WHINSEC plays in
    improving cooperation among PNs.
        General Kelly. WHINSEC has proven to be an outstanding resource in
    our mission of building partner capacity in Latin America and the
    Caribbean and it directly supports U.S. Government policies. Challenges
    in our area of operations have demonstrated the need to continue
    exploring all possible avenues that would assist in improving regional
    security as well as defend the Homeland. In light of diminishing
    resources, we must be able to capitalize on synergies gathered from the
    Joint, Interagency, Intergovernmental, and Multinational environment.
    Regional security would be enhanced through the participation in
    security issues from all partners across the AOR. WHINSEC is an asset
    that assists us in improving the way PNs participate and collaborate in
    regional issues. In addition to everything we do with WHINSEC, they
    could assist us in demonstrating the value of jointness in our PNs'
    armed forces, fostering regional and international contact among
    professional military students, and promoting the coordination between
    PN militaries and their respective government agencies.

                                 air force cuts
        14. Senator Chambliss. General Jacoby, in your statement you
    referenced the ability of the Air Force to provide mission-ready
    aircraft and pilots across all platforms as playing a critical role in
    our defense. The proposed fiscal year 2015 budget includes a reduction
    of 976 Air Force fighter, attack, mobility, and ISR aircraft across the
    Future Years Defense Program with the potential to retire even more
    depending on the future of sequestration. Have you had an opportunity
    to examine the proposed Air Force aircraft retirements, particularly
    with respect to fighter and ISR aircraft, and if so, what is your
    assessment of how these retirements may affect the NORTHCOM's and the
    North American Aerospace Defense Command's abilities to carry out your
    Aerospace Control Alert mission and combat the emerging air threats you
    mentioned in your statement?
        General Jacoby. We are still assessing the impacts of Service
    reductions and are working with Joint Staff to look across all Service
    reductions/delays to assess the cumulative effect and risk to
    Department-wide capacity in support of our air and cruise missile
    defense requirements for Homeland operations.
        At President's budget fiscal year 2015 levels, I am confident we
    can accomplish our missions within planned force structure. The
    Bipartisan Budget Act (BBA) provided much-appreciated relief in fiscal
    year 2014 and fiscal year 2015; however, I remain concerned about the
    long-term impacts if sequestration remains in fiscal year 2016.
    Specifically, fighter, AWACS, and tanker aircraft are used for
    Operation Noble Eagle to ensure air sovereignty and air defense of
    North America. Additionally, reducing airlift capability will impact
    our ability to move personnel and equipment in support of our Concept
    of Operations Plans (CONPLANs). I am also concerned from a NORTHCOM
    perspective with the manned ISR aircraft reductions, as they support
    multiple missions, particularly Defense Support of Civil Authorities
    and Theater Security Cooperation.

        15. Senator Chambliss. General Jacoby, if you have any concerns in
    this area, have you communicated them to the Air Force and other DOD
    leaders?
        General Jacoby. Yes, I have conveyed my concerns to Air Force and
    DOD leadership in various venues. For instance, I met with Secretary of
    Defense Hagel recently to discuss adjustments we made to one of our
    Homeland defense CONPLANs to develop a more resource-informed approach
    that can still adequately accomplish our mission sets. We will continue
    to dialogue with DOD and the Air Force to make sure we have required
    capabilities.

        16. Senator Chambliss. General Jacoby, how confident are you that
    the Air Force will be able to provide the required aircraft for the
    Aerospace Control Alert mission over the next 10 to 15 years?
        General Jacoby. As our adversaries continue to modernize their
    weapons systems (e.g., cruise missiles and unmanned combat aerial
    vehicles), we need to ensure we outpace these evolving capabilities to
    achieve mission success. Procuring Fifth Generation fighters (e.g. F-
    35) and modernizing legacy fighters to counter emerging threats will be
    vital. We also need to ensure we have the required airlift, airborne
    early warning aircraft, and tankers to support our Aerospace Control
    Alert mission.
        The BBA gave us 2 years of relief. I remain concerned, however,
    about the long-term impacts if sequestration returns in fiscal year
    2016, as there will once again be a quick and dramatic readiness
    impact, similar to fiscal year 2013. The fiscal year 2015 President's
    budget prioritized Homeland defense as the number one priority for DOD,
    so we are in fairly good shape in our commands. But all that comes at
    the expense of overall U.S. Air Force readiness, which continues to
    hover at 50 percent. You do not make that up--it reduces our
    competitive advantage. The long-term impacts of sequestration do not
    allow for most effective strategic choices for the future.

                           regionally aligned forces
        17. Senator Chambliss. General Kelly, the Georgia National Guard's
    48th Infantry Brigade Combat Team is deploying 20 soldiers to Guatemala
    this spring to provide security assistance under the Army's Regionally
    Aligned Forces (RAF). Would you please elaborate on the importance of
    the RAF in strengthening existing and pursuing new partnerships?
        General Kelly. Before elaborating on the importance of the RAF, it
    should be noted that RAF engagements are conducted under the theater
    security cooperation program funded by DOD versus security assistance,
    which is funded by DOS. The RAF is helping improve our contribution to
    building trust and understanding with U.S. partners and allies that can
    lead to greater coalition effectiveness. The Overseas Deployment for
    Training Program, a program that requires training to be focused on
    U.S. troops, provides a venue for conducting security cooperation where
    soldiers will have more opportunities to work with and exchange
    experiences and lessons learned with their host nation counterparts.
    Guatemala has been partnered with the National Guard since 2002,
    averaging six engagements annually to support emergency operations
    subject matter exchanges for disaster response. Specifically, units
    from Georgia's 48th Infantry Brigade Combat Team enabled SOUTHCOM to
    enhance civil-military engagement for border security capacity building
    along the Guatemala-Mexico border. U.S. Infantry units participating in
    Overseas Deployments for Training alongside border police and peer
    Guatemalan Infantry (all units are required to be, and have been,
    vetted per the Leahy Amendment) will enhance the state partner mission.
    This is important to shaping the environment and hedging against
    transnational criminality along Guatemala's borders. Enhanced
    relationships strengthen PN will and capacity from a foundation built
    from National Guard partnering.

        18. Senator Chambliss. General Kelly, would you please speak in
    general terms to the role of the National Guard in the RAF mission?
        General Kelly. The Army National Guard RAF units provide a range of
    capabilities that can be brought forward under the Overseas Deployment
    Training Program (focused on training U.S. units) that uniquely employs
    citizen-soldier skills. The role of rotational and scalable National
    Guard RAF brings many benefits, such as providing predictable and
    dependable support to the geographic combatant commands, while
    strengthening relationships and interoperability between U.S. and PN
    forces. The National Guard RAF units can conduct U.S.-focused training
    in theater alongside vetted peer formations with PNs such as Guatemala,
    Honduras, and El Salvador in order to provide presence and build
    relationships. A great example showing the role of the National Guard
    in the RAF concept is the Georgia National Guard's 48th Infantry
    Brigade Combat Team, the first National Guard to execute missions under
    the RAF program. The 48th Infantry Brigade Combat Team is conducting
    U.S.-focused infantry unit training in Central America in support of
    SOUTHCOM's effort to strengthen alliances and enhance border security.
    Specifically, these National Guardsmen, who are also civilian law
    enforcement officers in addition to their military occupations, are
    ideally suited to train alongside personnel in Guatemala's new
    Interagency Task Force. Guatemala's effort to counter TCOs is a joint
    civil-military effort. As such, SOUTHCOM's use of a RAF unit for
    overseas training capitalizes on the citizen-soldier role of the
    National Guard and perfectly complements the mission capabilities
    required to conduct security cooperation.
                                     ______

                    Questions Submitted by Senator Roy Blunt
                                cyber capability
        19. Senator Blunt. General Jacoby, given the increasingly active
    cyber warfare environment, what are the current and/or planned
    combatant command requests for cyber capabilities to support your
    mission set, and specifically cyber capabilities provided by National
    Security Agency (NSA)-certified Red Teams?
        General Jacoby. NORTHCOM has cyber capability that provides defense
    of our networks, heavily leveraging U.S. Cyber Command (CYBERCOM) and
    Defense Information Systems Agency (DISA) for support. We rely
    extensively on our DISA Computer Network Defense Service Provider,
    which supports actions to protect, monitor, analyze, detect, and
    respond to unauthorized activity detected by DISA-monitored network
    sensors. In addition, the Cyber Mission Forces (CMF) planned for
    NORTHCOM will provide full spectrum cyber capability to improve support
    to assigned missions. These forces will be available over the next few
    years.
        We routinely plan for and use NSA-certified Red Team capabilities
    to support Tier 1 Level exercises to assess the skills of our network
    defenders, which also provide after-action feedback to assist with
    mitigating vulnerabilities. NSA Red Teams will test the operational
    capability of CMFs assigned to NORTHCOM. The NORTHCOM Cyber Protection
    Teams to be fielded in the next few years will also have organic Red
    Team capabilities, such as penetration and threat emulation, to defend
    our critical mission systems and networks.

        20. Senator Blunt. General Jacoby, what entities fulfill or are
    planning to fulfill these combatant command requests?
        General Jacoby. NORTHCOM, through our Joint Cyberspace Center, has
    assigned forces currently performing network defense of our
    headquarters networks and mission systems. We also leverage DISA
    support to provide monitoring of possible adversary activity trying to
    exploit our systems. In the future, Cyber Protection Teams being
    fielded over the next few years for NORTHCOM will bolster the security
    and mitigation capability of our networks and mission systems,
    providing a more robust and agile cyber capability that will allow us
    to operate in a degraded cyber environment.

        21. Senator Blunt. General Jacoby, please describe NORTHCOM's
    coordination, support, and dependency of National Guard cyber
    capabilities. In addition, please describe these elements as they
    relate to NORTHCOM exercises or NORTHCOM participation in other joint
    exercises that incorporate cyber, such as Cyber Guard, Cyber Flag,
    Global Thunder, and Vigilant Shield.
        General Jacoby. NORTHCOM is focused on timely access to the
    capabilities necessary to execute our assigned missions and will
    certainly make use of National Guard cyber capabilities as part of
    Total Force cyber capabilities.
        NORTHCOM, in partnership with the National Guard Bureau, maintains
    awareness of command, control, communications, and computer information
    and cybersecurity of National Guard units participating in Vigilant
    Shield exercises. This year, 2014, will represent NORTHCOM's initial
    participation in CYBERCOM's Exercise Cyber Guard. In the future,
    NORTHCOM's Ardent Sentry and CYBERCOM's Cyber Guard exercises will
    complement each other. Next year, 2015, NORTHCOM will participate in
    Vigilant Shield, Cyber Flag, and Global Thunder exercises, and these
    exercises will be integrated, providing a broader, multi-domain
    simulation that will benefit all participants.

        22. Senator Blunt. General Jacoby, pertaining to your fiscal year
    2015 posture statement, would you please elaborate on the types of
    defensive capabilities you plan to acquire and receive as part of the
    NORTHCOM Joint Cyberspace Center?
        General Jacoby. As part of the broader cyber mission forces,
    NORTHCOM is scheduled to receive Cyber Protection Teams designed to
    focus on real-time cyber defense of priority missions, assess cyber
    terrain, and conduct risk analyses on protected missions. Additionally,
    these teams will identify adversary maneuver and mitigation options in
    and across cyber key terrain to protect critical mission systems. The
    Joint Cyberspace Center will plan, coordinate, synchronize, and direct
    the Cyber Protection Team efforts to assure NORTHCOM missions.

        23. Senator Blunt. General Jacoby, what entities will be providing
    these defensive capabilities to NORTHCOM?
        General Jacoby. NORTHCOM has organic low-density/high-demand cyber
    defense capabilities that are bolstered by DISA and CYBERCOM
    capabilities. U.S. Strategic Command (STRATCOM)/CYBERCOM will provide
    Cyber Protection Teams that are organized, trained, and equipped by the
    Services to support combatant commands.

        24. Senator Blunt. General Jacoby, please summarize your
    coordination and partnership with several of NORTHCOM's key
    stakeholders: the Department of Homeland Security (DHS), STRATCOM,
    CYBERCOM, NSA, and the National Guard.
        General Jacoby. We consider these key stakeholders critical to
    mission success as cyber partners and have routine, daily contact with
    them, specifically in information-sharing of malicious cyber activity
    and threat awareness. Improved awareness reduces operational risk
    through early detection and mitigation. The level of sharing among all
    partners is excellent.

        25. Senator Blunt. General Jacoby, what actions and/or outcomes
    were expressed in the after-action plan following the January 2014
    Conference on Cyber Challenges you hosted along with The Adjutants
    General (TAG)?
        General Jacoby. The key outcome from our January 2014 TAG
    Conference is general consensus among the participants that DOD cyber
    capabilities should be seamless across the Active and Reserve
    components. We also discussed broader cyber support that the National
    Guard may be able to offer to NORTHCOM's Homeland Defense and Defense
    Support of Civil Authorities mission areas. We will continue to work
    with these partners to make the best use of available capabilities.

        26. Senator Blunt. General Jacoby, given your key position in
    coordinating within DOD, with the National Guard Bureau, State TAGs,
    and DHS, are there current frameworks, arrangements, or potential
    initiatives that would support an intersection of cyber and
    intelligence missions to reduce duplication, enhance unity of effort,
    and increase coordination among these partners?
        General Jacoby. NORTHCOM works very closely with our partners
    within DOD (e.g., National Guard Bureau, CYBERCOM, and NSA) and outside
    DOD (e.g., DHS, Federal Bureau of Investigation, DOS, and Canada) on
    cyber and intelligence issues, including information-sharing, unity of
    effort, and improved cooperation among interagency and international
    partners.
        One potential initiative that may eventually support the
    intersection of cyber and intelligence missions is the Joint Action
    Plan for State-Federal Unity of Effort on Cybersecurity that DHS and
    the Council of Governors are currently finalizing. It will establish
    principles and actions for State-Federal unity of effort to strengthen
    the Nation's security and resilience against cybersecurity threats.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            TUESDAY, MARCH 25, 2014

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

                   U.S. PACIFIC COMMAND AND U.S. FORCES KOREA

        The committee met, pursuant to notice, at 9:34 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, Manchin,
    Shaheen, Hirono, Kaine, King, Inhofe, McCain, Sessions, Wicker,
    Ayotte, and Graham.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody.
        Today we receive testimony on the posture of U.S. forces in
    the Asia-Pacific region. On behalf of the committee, I would
    like to welcome Admiral Samuel J. Locklear III, USN, the
    Commander of U.S. Pacific Command (PACOM), and General Curtis
    M. (``Mike'') Scaparrotti, USA, the Commander of United Nations
    Command (UNC), Combined Forces Command (CFC), and U.S. Forces
    Korea (USFK).
        Gentlemen, the committee appreciates your long years of
    faithful service and the many sacrifices that you and the
    families that you are a part of make for our Nation. We greatly
    appreciate the service of the men and women, military and
    civilian, who serve with you in your commands. Please convey to
    them our admiration and our appreciation for their selfless
    sacrifice and dedication.
        Last year, General James D. Thurman, USA, was unable to
    testify at this hearing because of the heightened tension on
    the Korean peninsula. General Scaparrotti, we are glad that you
    were able to make it this year.
        Today's hearing is particularly timely as North Korea has
    again engaged in saber-rattling and dangerous rocket and
    missile launches, including the one just a few weeks ago. Kim
    Jon-un's regime has so far followed the same destructive
    policies as its predecessors, pursuing its nuclear weapons and
    ballistic missile programs with callous disregard for the well-
    being of its own people and the region. Even China, despite its
    longstanding relationship with North Korea, has joined in
    United Nations (U.N.) condemnation of the North Korean regime's
    dangerous behavior and has supported new sanctions. We look
    forward to hearing General Scaparrotti's views on recent
    developments on the Korean peninsula and additional steps that
    might be taken to promote stability and peace.
        At a time of increasing fiscal austerity within the
    Department of Defense (DOD), China has announced that it is
    increasing its official military budget for 2014 to almost $132
    billion, which is a 12 percent increase over last year, making
    that country's military spending the second largest in the
    world after the United States. China's pursuit of new military
    capabilities raises concerns about its intentions, particularly
    in the context of the country's increasing willingness to
    assert its controversial claims of sovereignty in the South
    China and East China Seas. China's belligerence and
    unwillingness to negotiate a maritime code of conduct with its
    Association of Southeast Asian Nations (ASEAN) neighbors raise
    doubts about its representations that China is interested in a
    peaceful rise. We were dismayed by China's unilateral
    declaration of an air identification zone last year that did
    not follow proper consultations with its neighboring countries
    and that includes the air space over the Senkaku Islands, which
    are administered by Japan.
        In addition, China's lack of regard for the intellectual
    property rights of the United States and other nations is a
    significant problem for the global community. China is the
    leading source of counterfeit parts, both in military systems
    and in the commercial sector. In addition, China appears to
    have engaged in a massive campaign to steal technology and
    other vital business information from American industry and
    from our Government. China's apparent willingness to exploit
    cyberspace to conduct corporate espionage and to steal trade
    and proprietary information from U.S. companies should drive
    our Government and businesses to come together to advance our
    own cybersecurity. We also have grave concerns that China's
    cyber activities, particularly those targeting private
    companies that support mobilization and deployment, could be
    used to degrade our ability to respond during a contingency.
    Our committee will soon release a report on cyber intrusions
    affecting U.S. Transportation Command contractors.
        The administration continues to rebalance toward the Asia-
    Pacific region to meet these challenges. Substantial
    realignments of U.S. military forces in South Korea and Japan
    are ongoing, as are initiatives to increase U.S. presence in
    Southeast Asia, especially in Singapore and the Philippines.
    The U.S. relationship with Australia is as strong as ever, as
    evidenced by the continued plans for successive rotations of
    U.S. marines to Darwin, Australia.
        With respect to the planned realignment of U.S. marines
    currently on Okinawa, the Governor of Okinawa approved the
    landfill permit for the Futenma Replacement Facility (FRF) at
    the end of last year. Nonetheless, I believe that moving
    forward with the construction of infrastructure facilities on
    Guam must await the final Environmental Impact Statement and
    the actual record of decision. Once those actions are completed
    and we have been provided the final master plans, including
    cost estimates and a time schedule, we will be better able to
    judge the feasibility of the plans. So while I support the
    restationing of some marines from Okinawa to Guam and Hawaii,
    it needs to be done in a fiscally and operationally sound
    manner.
        Of course, we must consider all of these challenges and
    initiatives in the Asia-Pacific region against the backdrop of
    our current budget constraints. Admiral Locklear and General
    Scaparrotti, we would be interested in your assessments of the
    budget reductions on your abilities to meet your mission
    requirements.
        Again, we very much appreciate both of your joining us this
    morning. We look forward to your testimony on these and other
    topics.
        Senator Inhofe?

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        I think we all know that the world is getting more
    dangerous, and the Pacific is no exception. North Korea's
    erratic leader continues to engage in provocative actions,
    including military exercises, nuclear and missile tests, and
    the development of a road mobile missile system. China declares
    unilateral air defense identification zones and makes
    provocative moves to blockade ships and claims sovereignty over
    vast tracks of the South China Sea.
        Despite the growing danger, the massive cuts to our
    national security budget, we are making the jobs of Admiral
    Locklear and General Scaparrotti more difficult. While the
    Chinese defense budget grows at 12 percent, Secretary Hagel
    tells his commanders: ``American dominance on the seas, in the
    skies, and in space can no longer be taken for granted.'' That
    is the first time in my life that we have heard something like
    that.
        Our domain dominance has eroded due to the diversion of
    resources from defense to the President's domestic agenda over
    the last 5 years, and that has consequences in our society.
    Less capable and less dominant U.S. forces make it more
    difficult for our men and women in uniform to handle crises. As
    we are seeing around the world today, a less capable U.S.
    military makes it more likely that the crises will erupt.
        Those who advocate drastically slashing the defense budget
    and a total retreat from international engagement put the
    security of the Homeland at risk. More aggressive adversaries
    and less capable U.S. military forces are a recipe for
    disaster. The dismantling of our national security over the
    last 5 years has led to the growth of extremists in Syria,
    Iraq, Iran, Putin's annexation of Crimea, and has invited
    increased Chinese belligerence in the East China and South
    China Seas.
        The strategy of rebalance to the Pacific implies an
    increase in presence and resources. That is just not true. It
    is not happening. I have specific questions to ask about that.
        I look forward to Admiral Locklear's frank assessment of
    how the rebalance is perceived in the region. I have some
    specific questions about that. I am concerned that the
    retreating tide of U.S. leadership and the defense capability
    will encourage Kim Jong-un to be more aggressive.
        General Scaparrotti, we need to hear from you as to how
    this readiness problem that grounds airplanes, ties up ships,
    and cancels ground training will impact your combat capability.
    I do not remember a time in my life when I have seen this type
    of thing happening. I remember so well when it all started, and
    it all started back with the $800 billion. People talk about
    entitlements now, but this was not entitlements. This was non-
    defense discretionary spending that took place. Now we are
    paying for it and have been paying for it for the last 5 years.
        So it is a crisis we are in. You men are the right ones to
    be there to try to meet these crises. I appreciate the fact
    that you are willing to do that.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Admiral?

     STATEMENT OF ADM SAMUEL J. LOCKLEAR III, USN, COMMANDER, U.S.
                            PACIFIC COMMAND

        Admiral Locklear. Mr. Chairman, Senator Inhofe, and
    distinguished members of the committee, thank you for the
    opportunity to appear before you today.
        For 2 years, I have had the honor and privilege of leading
    the exceptional men and women, military and civilian,
    throughout PACOM. They are not only skilled professionals
    dedicated to the defense of our great Nation, but within PACOM,
    they serve as superb ambassadors and truly represent the values
    and strengths that make our Nation great. We continue to work
    to ensure that they are well-trained, well-equipped, and well-
    led to meet the challenges we are facing in the 21st century. I
    want to publicly thank them and their families for their
    sacrifices.
        When I spoke to you last year, I highlighted my concern for
    several issues that could challenge the security environment
    across the PACOM area of responsibility (AOR), the Indo-Asia-
    Pacific. Those challenges included the potential for
    significant humanitarian assistance/disaster relief events, an
    increasingly dangerous and unpredictable North Korea, the
    continued escalation of complex territorial disputes, growing
    challenges to our freedom of action in the shared domains of
    sea, air, space, and cyberspace, growing regional transnational
    threats, and the significant challenges associated with China's
    emergence as a global economic power and a regional military
    power.
        During the past year, we have been witness to all of these
    challenges and our forces have been very busy securing the
    peace and defending U.S. interests throughout over half the
    globe. We have done our very best to remain ready to respond to
    crises and contingency, although we have assumed greater risk.
    We have maintained focus on key aspects of the rebalance to the
    Asia-Pacific, strengthening our alliances and partnerships,
    improving our posture and presence, and developing the concepts
    and capabilities required by today's and tomorrow's security
    environment. We have done this against the backdrop of
    continued physical and resource uncertainty and the resultant
    diminishing readiness and availability of our joint force.
        I would like to thank the committee for your continued
    interest and support. I look forward to your questions.
        [The prepared statement of Admiral Locklear follows:]
               Prepared Statement by ADM Samuel J. Locklear, USN
        Chairman Levin, Senator Inhofe, and distinguished members of the
    committee, thank you for this opportunity to present an update on the
    U.S. Pacific Command (PACOM). I have had the privilege of leading
    soldiers, sailors, airmen, and marines for over 2 years in the Asia-
    Pacific and the Indian Ocean region; these young men and women are
    doing great things in support of the United States, allies and partners
    throughout a region critical to U.S. national interests. In concert
    with our allies and partners, PACOM balances historical, geographic,
    and cultural factors against modern day political and economic events
    in an ever-evolving effort to manage friction and conflict in the most
    militarized region in the world. PACOM's actions in our Nation's
    rebalance toward the Asia-Pacific region are a visible and enduring
    demonstration of U.S. commitment to the region. Our actions are
    reflected in a continued and steady investment in forces,
    infrastructure, and engagement in the Indo-Asia-Pacific and are
    designed to defend the homeland, strengthen and modernize our alliances
    and partnerships, maintain our access to the global commons, deter
    aggression, and prevent the proliferation of weapons of mass
    destruction.
                              security environment
        Since last year's testimony before this committee, four critical
    leadership transitions have been completed, seven national elections
    were conducted on democratic principles, and the region is readying for
    free and open elections in two of the most populous countries on earth.
    When I last testified, Xi Jinping had just assumed the position as
    China's new President, completing the formal leadership transition in
    China. Since then President Xi put forward a comprehensive agenda of
    domestic, economic, and social reforms. In North Korea, Kim Jong Un is
    beginning his third year in power. The recent purge of his uncle, Chang
    Song-Taek and frequent reshuffling of military commanders suggest that
    the struggles between new and old guards are not fully resolved. To the
    south, Republic of Korea (ROK) President Park Geun-Hye continues to
    strengthen the U.S.-ROK alliance and to maintain a path to peaceful
    reunification of the Korean peninsula. In Japan, Prime Minister Shinzo
    Abe implemented policies such as establishing a National Security
    Council and passing the Secrets Protection Act that allow it to better
    address the persistent and emerging security challenge of the next
    decade.
        The last year saw elections in Australia, Bangladesh, Bhutan,
    Cambodia, the Maldives, and Mongolia. In Bangladesh and Cambodia, the
    results were strongly contested and are not fully resolved, creating
    uncertainty and political instability. A sharp political division
    continues in Thailand, despite new elections. Next on the horizon are
    important national elections in India in May and Indonesia in April and
    July. Burma continues to undergo its dramatic democratic and economic
    transition, including the release of over 1,000 political prisoners and
    the possibility of a national ceasefire agreement.
        The countries of the Asia-Pacific region are not only more stable
    politically; they are also more engaged in multilateral political
    organizations and economic institutions. A multilateral security
    architecture--comprised of groups such as the Association of Southeast
    Asian Nations (ASEAN) and regional actors collaborating on issues
    ranging from humanitarian assistance to maritime security to
    counterterrorism--is emerging to help manage tensions and prevent
    conflict. ASEAN has grown in this leadership role under Brunei's
    chairmanship in 2013, and hopefully has opportunities to grow even more
    under 2014 Chairman Burma. We've seen encouraging examples of states
    using international fora to resolve disputes peacefully, such as the
    Philippines using the United Nations Tribunal on the Law of the Sea
    (ITLOS) to argue its case against China's territorial claims in the
    South China Sea, and Thailand's and Cambodia's pledge to abide by the
    International Court of Justice's recent decision in their longstanding
    border dispute.
        Indo-Asia-Pacific economies increasingly drive the world economy.
    Forty percent of global economic growth is attributed to this region.
    Yet the area is still home to some of the most devastating poverty on
    earth. As with other parts of the world, the divide between ``haves''
    and ``have-nots'' grows wider, leading to political and economic
    disenfranchisement and disturbing population shifts across borders. The
    International Organization for Migration estimates that 31.5 million
    people in Asia have been displaced due to economic disparities. These
    hardships are further aggravated by intense competition for natural
    resources. In an area home to more than half the earth's population,
    demand for food, water, and energy is increasing. Friction caused by
    water shortages is evident between India and Pakistan, India and
    Bangladesh, and China and Southeast Asia. Much of the region is unable
    to adequately provide for their own food requirements, highlighting the
    need for stable, plentiful supplies through international commerce. The
    same is true for energy supplies. Disruption of these supplies or
    unexpected price increases quickly strain many governments' ability to
    ensure their people's needs are met.
    North Korea
        North Korea remains our most dangerous and enduring challenge. As
    many Indo-Asia-Pacific countries seek to achieve greater prosperity,
    improve compliance and adhere to regional and international law, and
    strive for stable relations, North Korea remains isolated and unstable.
    North Korea's pursuit of nuclear weapons and ballistic missiles, in
    contravention of its international obligations, constitutes a
    significant threat to peace and security on the Korean Peninsula and in
    Northeast Asia.
        During last year's posture hearings, the region was in the middle
    of a North Korean ``provocation campaign''--a calculated series of
    North Korean actions designed to escalate tensions and extract
    political and economic concessions from other members of the Six-Party
    Talks. This campaign began with a satellite launch, in December 2012,
    which was particularly concerning because it violated UN Security
    Council resolutions and verified technology necessary for a three-stage
    Intercontinental Ballistic Missile (ICBM). North Korea continued its
    campaign through last spring. They conducted another underground
    nuclear test, threatened the use of a nuclear weapon against the United
    States, and concurrently conducted a mobile missile deployment of an
    Intermediate Range Ballistic Missile, reportedly capable of ranging our
    western most U.S. territory in the Pacific. Though we have not yet seen
    their ``KN08'' ICBM tested, its presumed range and mobility gives North
    Korea a theoretical ability to deliver a missile technology that is
    capable of posing a direct threat to anywhere in the United States with
    little to no warning. In addition, North Korea pledged to ``readjust
    and restart'' facilities at Yongbyon Nuclear Research Center--including
    the plutonium-production reactor that has been shut down for the past 6
    years.
        Consistent with previous provocation cycles, recently, North Korea
    then shifted to a more conciliatory approach and has expressed claimed
    that it is willing to talk to the United States either bilaterally or
    within the Six-Party Talks framework with no concrete steps towards
    required denuclearization obligations or even negotiate on the issue of
    denuclearization.
        North Korea's role in weapons proliferation remains troubling.
    North Korea continues to violate United Nations Security Council
    resolutions against selling weapons and weapon-related technologies
    around the globe. The July 2013 Panamanian confiscation of a North
    Korean ship loaded with fighter aircraft and other weapons from Cuba in
    direct violation of U.N. sanctions is one example. While it has become
    harder to sell to traditional customers such as Iran and Syria, North
    Korea is attempting to open new markets in Africa and South America.
    North Korea's proliferation activities defy the will of the
    international community and represent a clear danger to the peace,
    prosperity, and stability of the Asia-Pacific region
    Natural Disasters
        The Indo-Asia-Pacific region is the world's most disaster-prone
    with 80 percent of all natural disaster occurrences. It contends with
    more super-typhoons, cyclones, tsunamis, earthquakes, and floods than
    any other region. This past year, a super typhoon hit the Philippines,
    severe flooding and a major earthquake in New Zealand, devastating
    flooding in India and Nepal, another earthquake in the Sichuan Province
    of China, and flooding and drought in the Marshall Islands. During
    Operation Damayan in the Philippines, we joined the Multi-National
    Coordination Center (MNCC) as an enabler to relief efforts coordinated
    by the Government of the Philippines, a testament to the importance of
    capability building initiatives and theater security cooperation. Our
    Center for Excellence in Humanitarian Assistance and Disaster Relief
    serves as a clearing house for information and best practices in
    disaster relief and supporting preparedness efforts throughout the
    region. We also stand ready to respond to the all too frequent vectors
    of disease that plague this region. Large populations, dense living
    conditions, and poor sanitary conditions in many Indo-Asia-Pacific
    nations create optimal conditions for the rapid spread of human- or
    animal-borne diseases. Regional information sharing and rapid response
    to health crises is improving, but the danger remains high.
    Territorial Disputes
        The primacy of economic growth, free trade, and global financial
    interdependency keeps outright inter-nation conflict at bay. The most
    likely scenario for conflict in this part of the world is a tactical
    miscalculation that escalates into a larger conflict. There is no more
    likely stage for this scenario than the complex web of competing
    territorial claims in the East and South China Seas. Competing
    territorial claims in East is a significant and growing threat to
    regional peace and stability. The use of Coast Guards and an implicit
    rule set imposed by Japanese and Chinese leadership signaled that
    neither country wants escalation. China's declaration in November of an
    Air Defense Identification Zone in the East China Sea encompassing the
    Senkakus immediately raised tensions. As Chinese and Japanese
    reconnaissance and fighter aircraft increasingly interact, and China
    flies unmanned aerial vehicles over the area the chances for
    miscalculation or misunderstanding remain high. PACOM continues to
    watch this situation very closely.
        Territorial disputes in the South China Sea are even more complex.
    No less than seven claimants have overlapping claims in this oil, gas,
    and mineral rich sea. By far the most excessive claim is China's, which
    extends to almost the entire South China Sea and includes other
    claimants' Exclusive Economic Zones in the region, up to and sometimes
    including the 12nm territorial sea. China's activities in the South
    China Sea appear to consist of slowly increasing its naval and air
    presence in the region, meeting and checking any activity by any of the
    more aggressive claimants in the disputed areas, and providing
    political and economic incentives to quiet the other claimants. As
    evidence of this policy, China increased its maritime presence in 2013
    and now maintains three continuous Coast Guard patrols in the South
    China Sea, backed up by regular transits of Chinese Navy warships.
    Attempts by other claimants to assert claims and prevent Chinese
    actions that seek to assert operational superiority provide the
    potential for miscalculation.
        Through multilateral forums, PACOM supports the U.S. position
    advocating for adjudication of claims by duly constituted international
    bodies and multilateral solutions. Unlike other nations involved in
    this and similar disputes, China consistently opposes international
    arbitration, instead insisting on bilateral negotiations--a construct
    that risks China's domination of smaller claimants. The activities by
    multilateral forums to adopt international codes of conduct for the
    South China Sea and those efforts to legally adjudicate claims need our
    support.
    Cyber
        Cyberspace is growing not only in its importance relative to the
    flow of global commerce but also in its importance to our ability to
    conduct military operations--making it an attractive target for those
    seeking to challenge the economic and security order. Cyber threats
    come from a diverse range of countries, organizations, and individuals.
    China is rapidly expanding and improving its cyberspace capabilities to
    meet their national and military objectives, as are others, including
    North Korea and Russia, not to mention rogue groups and individuals who
    are increasingly enabled by technology. These actors seek to exploit
    our vulnerabilities by gaining unauthorized access to our networks and
    infrastructure on a daily basis. Potential adversaries are actively
    probing critical infrastructure throughout the United States and in
    partner countries.
    Violent extremism
        Periodic eruptions of religious, ethnic, political, and separatist
    violence continues to plague some of our closest partners in the
    region, limiting our engagement efforts. India, Bangladesh, Indonesia,
    Thailand, and the Philippines are all working against a confluence of
    criminal and extremist networks that enable transnational facilitation
    of people, material, and money across the region to support various
    causes which threaten regional peace and prosperity. A sustained effort
    to build and enhance the capacity of our allies and partners is the
    cornerstone of our counter terrorism strategy in South and Southeast
    Asia. We are encouraged by the persistent pressure that our partner
    nations are placing on these networks. Through close and continuous
    cooperation we have eroded localized insurgencies and degraded
    transnational extremist organizations with global reach such as al
    Qaeda, Lashkar-e Tayyiba, and Hezbollah.
        The movement of terrorist networks as they seek safe havens and
    target new areas is a potential challenge. Despite modest gains over
    the past few years, India-Pakistan relations are promising but fragile
    and the cease fire violations along the Line of Control in 2013 are
    certainly cause for concern. Barring another major terror attack in
    India, a conflict between these two nuclear powers is remote, but
    continued violence along the contentious border will erode the
    political space to improve relations. Looking further beyond the
    immediate term, we should remain guardedly optimistic that India and
    China--the two largest Asian powers--value the economic benefits of
    cooperation and will strive, in New Delhi's words, ``for peace and
    tranquility on the border as the foundation of a stable relationship.''
    Chinese Military Modernization and Intent
        While we recognize and understand China's desire to develop a
    military commensurate with its diverse interests. The United States
    remains committed to preserving regional peace and security, to meet
    our security commitments to our regional allies, and guaranteeing free
    access to the sea, air, and space domains. We are meeting that
    challenge by improving our military-to-military relationships with
    China, while steadfastly standing by our friends and allies in the
    region. Although U.S./China military-to-military ties are improving, we
    will need ever more transparency and understanding of Chinese military
    intentions and capabilities if we are to minimize friction and avoid
    conflict in the future.
        The Chinese military continues to pursue a long-term, comprehensive
    military modernization program designed to improve the capability of
    its armed forces to project power to fight and win a short-duration,
    high-intensity regional military conflict. While preparing for
    potential conflict in the Taiwan Strait appears to remain the principal
    focus of their military investment, China's interests have grown and it
    has gained greater influence in the world, with its military
    modernization increasingly focused on expanding power projection
    capabilities into the East China Sea, South China Sea, the Western
    Pacific, and even the Indian Ocean. This expansion, in part, is focused
    on developing the capabilities to deny U.S. access to the Western
    Pacific during a time of crisis or conflict and to provide the means by
    which China can bolster its broad maritime claims in the region.
        Chinese military operations are expanding in size, complexity,
    duration and geographic location. During 2013, the Chinese People's
    Liberation Army (PLA) Navy conducted the highest number of open ocean
    voyages and training exercises seen to date. This included the largest
    ever Chinese military naval exercise observed outside the first island
    chain and into the Western Pacific, highlighting an enhanced power
    projection capability and increased ability to use military exercises
    to send political messages to regional allies and partners and others
    in Asia.
        This expansion in Chinese military power projection is driven by
    the rapid modernization of Chinese military capabilities. Over the
    course of the last year, the PLA continued large-scale investment in
    advanced short- and medium-range conventional ballistic missiles, land-
    attack and anti-ship cruise missiles, counter-space weapons, military
    cyberspace capabilities, and improved capabilities in nuclear
    deterrence and long-range conventional strike, advanced fighter
    aircraft, integrated air defenses, undersea warfare, and command and
    control. China's first aircraft carrier, the Liaoning, began to
    integrate its air wing and conduct flight operations.
        China's advance in submarine capabilities is significant. They
    possess a large and increasingly capable submarine force. China
    continues the production of ballistic missile submarines (SSBN). The
    platform will carry a new missile with an estimated range of more than
    4,000 nm. This will give the China its first credible sea-based nuclear
    deterrent, probably before the end of 2014.
                              allies and partners
        The United States' five treaty allies the PACOM AOR, Australia,
    Japan, Republic of Korea, Philippines and Thailand, each play a
    critical role in addressing aspects of these challenges. The bilateral
    relationships we build with our allies is key to mutual defense but
    also form the basis for multilateral security arrangements that can
    strengthen efforts to address Asia-Pacific security challenges.
        Australia: Our alliance with Australia anchors peace and stability
    in the region. The Australians take a leading role in regional security
    issues, and we are coordinating our Theater Campaign Plan with their
    Regional Campaign Plans to synchronize and optimize our mutual efforts.
        PACOM is working closely with the Australian Defence Staff to
    advance U.S. force posture initiatives including the Marine Rotational
    Forces in Darwin and dispersed rotational U.S. Air Force capabilities
    at Royal Australian Air Force bases. Increased rotational presence in
    Australia with a more robust bilateral training and exercise program
    continues to enhance U.S.-Australia interoperability and regional
    stability.
    Japan
        The alliance between our two countries is stronger than ever. PACOM
    remains ready to carry out the U.S. security commitment to Japan
    through a full range of military capabilities. U.S. Forces Japan and
    Japanese Self Defense Forces (JSDF) collaborate and work towards
    greater shared responsibilities in realistic training, exercises,
    interoperability and bilateral planning. With the 2006 establishment of
    the Japanese Joint Staff, U.S. Forces Japan is building a close
    relationship to enhance interoperability and information sharing. The
    October, 2013 agreement by our ``2+2'' Security Consultative Committee
    (SCC) to review the U.S.-Japan Defense Cooperation Guidelines for the
    first time since 1997 should enable the JSDF to play a greater role in
    both the defense of Japan and in response to contingencies further
    afield. We will continue to maintain a robust military presence in
    Japan in order to meet future security. Last year, the Marines replaced
    aging CH-46 helicopters with MV-22 Ospreys and recently the Government
    of Japan approved a land-fill permit on Okinawa to allow the
    construction of a new airfield that will facilitate improved posture of
    U.S. Marine aircraft. The U.S. Navy has begun the gradual replacement
    of P-3 maritime patrol aircraft with the newer and more capable P-8s.
    We will continue to deploy well-equipped, highly trained and ready
    forces along with our newest equipment to best support Japan and the
    region.
        During North Korea ballistic missile provocations last year, the
    United States and Japan worked very closely to defend against potential
    threats. It became apparent to both PACOM and Japan that we need an
    additional TPY-2 radar in Japan to provide intelligence, surveillance
    and reconnaissance (ISR) against missile threats. This will serve to
    provide early warning of missile threats to improve defense of the U.S.
    Homeland, our forces forward deployed, and to Japan.
        We continue to work with Japan and the Republic of Korea (ROK)
    towards a trilateral military-to-military arrangement capable of
    addressing North Korea provocations. Trilateral military-to-military
    exercises and operations will improve each participant's understanding
    of the mutual challenges and shared opportunities that exist in and
    around the Korean peninsula.
    Philippines
        PACOM is identifying opportunities, informed by a proposed
    Agreement on Enhanced Defense Cooperation with the Philippines, for an
    enhanced rotational presence of U.S. forces to improve the training and
    capability of both our forces. U.S. forces are assisting the Philippine
    force efforts to improve its maritime security capabilities. Key
    Philippine efforts include improving Maritime Domain Awareness through
    development of long-range aircraft and waterborne patrols within the
    Philippines' Economic Exclusion Zone and enhancing integration among
    the National Coast Watch system.
        The typhoon response in November provided evidence of the strength
    of the U.S.-Philippines alliance. During Operation Damayan, U.S.
    military relief operations assisted the people of the Philippines. More
    importantly, the Philippines Armed Forces were well-prepared for the
    emergency. Their participation in two previous DOD-sponsored
    humanitarian assistance/disaster response (HA/DR) planning exercises
    enabled a rapid damage assessment to response and recover execution
    process. PACOM continues to stand by our ally as they undergo recovery
    efforts.
    Republic of Korea
        The U.S. and ROK alliance remains strong. For 61 years, we have
    worked together to provide peace and stability in Northeast Asia, and
    we continue to work to enhance our relationship and collective
    capabilities. We recently concluded negotiations for the 9th Special
    Measures Agreement (SMA) and have developed a new cost sharing
    arrangement that will be in place through 2018.
        The United States and ROK have agreed to transfer Operational
    Control on a conditions- and milestones-based timeline, and
    deliberations are ongoing to ensure we are developing the right
    capabilities for the alliance. We believe that the best way to ensure
    deterrence and maintain the strength of the alliance is through
    development of combined capabilities to respond vigorously to any
    future North Korean provocation.
    Thailand
        Thailand, with whom we have the oldest treaty in Asia, demonstrates
    a willingness and capability to be a regional leader. Their efforts
    assist in addressing several issues including negotiating competing
    South China Sea maritime claim disputes, serving as an enabler for
    engaging Burma, and encouraging trilateral engagements. Thailand is
    committed to increased responsibility for regional security matters.
        Activities with the Thai military, including the annual Cobra Gold
    exercise, the largest and longest running joint/combined exercise of
    its kind, are the means by which we remain tightly aligned with
    Thailand. The Thais have expanded this formerly bilateral U.S.-Thai
    exercise into a premier multilateral event with a dozen participant
    countries from around the region.
    Singapore
        Singapore is designated a ``Major Security Cooperation Partner,'' a
    title that reflects the value of our bilateral relationship. Singapore
    is critical to U.S. presence in Southeast Asia. Their continued
    commitment to U.S. military presence in the region is underscored by
    their support of the Navy's Littoral Combat Ship (LCS) rotational
    deployments. Singapore's Changi Naval Base, with its modern shore
    infrastructure and command and control center, is a key enabler of LCS
    and provides critical support to other key other forward operating
    naval forces.
    India
        India continues its rise as a regional and emerging global power.
    Its increasing, positive presence in the Asia-Pacific and Indian Ocean
    region as security provider is an important factor in regional
    stability. Last year, PACOM participated in the U.S.-India Strategic
    Dialogue and looks forward to India's participation in this year's Rim
    of the Pacific (RIMPAC) exercise.
        India has had impressive growth in defense trade with the United
    States, purchasing C-17s, C-130Js, and P-8s. As we look to mature our
    defense relationship, there is further opportunity for growth in
    defense sales, co-development and co-production under the aegis of the
    U.S. India Defense Trade and Technology Initiative. These systems would
    expand India's capabilities to provide for their own security and help
    their efforts to be a security provider for the region.
    New Zealand
        We continue to improve our relationship with New Zealand. PACOM
    recently co-hosted with our New Zealand counterpart an Inaugural
    Bilateral Defense Dialogue and we plan follow-on dialogue this summer.
    We will be conducting 22 joint military-to-military exercises with New
    Zealand this year. We have revised our policy to allow their warships
    to visit our global military ports on a case-by-case basis and look
    forward to New Zealand's participation in this summer's RIMPAC
    exercise.
    Oceania
        PACOM remains engaged by assisting the Pacific island nations to
    build capacity to detect, deter, and seek redress for illegal
    activities within their Exclusive Economic Zones (EEZ) and have
    enhanced expansion of selected partner Coast Guard ship rider
    agreements to include U.S. Navy ships. In addition to EEZ control,
    capacity-building for effective HA/DR response remains PACOM's focus
    for the Oceania sub-region. PACOM has increased the regional
    understanding of the area's security concerns through regular
    participation in the Pacific Island Forum as a mechanism to discuss
    mutual security issues.
    Association of Southeast Asian Nations (ASEAN)
        PACOM has expanded combined and joint training and exercises in the
    region, notably with Indonesia, Malaysia, and other ASEAN members.
    There has been success using multilateral forums to build partner
    capacity in humanitarian assistance and disaster relief, intelligence
    cooperation, counter narcotics, maritime security, maritime domain
    awareness and cyber security and peacekeeping operations.
        ASEAN's goal to develop a code of conduct for the South China Sea,
    and the efforts of some ASEAN nations to adjudicate claims using
    international bodies are positive initiatives which we support. PACOM
    will continue to explore ways to support the ASEAN Defence Ministers'
    Meeting (ADMM) and ASEAN Regional Forum for addressing common security
    challenges. The recent ADMM Counter-Terrorism Exercise is an example of
    successful collaboration with regional partners on transnational
    threats. Other multilateral engagements such as the recent event in
    Brunei focused on military medicine and maritime collaboration in areas
    of counter-piracy, search and rescue, and Humanitarian Assistance and
    Disaster Relief (HA/DR). The recently concluded ADMM-Plus multilateral
    peacekeeping (PKO) exercise in the Philippines focused on force
    generation, sustainment and logistics, and field operations.
        Improving partner relations remains vital toward building
    multilateral cooperation arrangements. The multilateral forums of ASEAN
    provide an ideal mechanism to build multilateral capabilities. The ADMM
    forum is beginning to formalize those relationships to address the
    region's security challenges. In fact, the U.S. Secretary of Defense is
    hosting the next ADMM forum in Hawaii. There are also key ASEAN member
    countries building close bilateral military relationships which can
    greatly enhance regional stability. For example, in adherence to the
    2013 U.S.-Vietnam Comprehensive Partnership, we will continue to assist
    Vietnam in developing its non-lethal defense capabilities in
    specialized areas such as maritime security, search and rescue,
    disaster management, and peacekeeping.
    U.S.-China Relationship
        The last year has seen some progress in improving the cooperative
    aspects of our military-to-military relationship with China. There are
    three major areas of military-to-military engagement opportunities with
    the Chinese. First, we use current mechanisms to exchange views on the
    international security environment and expand common understanding of
    common problems, including discussions on Iran and North Korea. U.S.
    and Chinese participation in the Fullerton Forum, the Strategic
    Security Dialogue in Singapore, along with China's invitation to join
    the PACOM Chiefs of Defense Conference are examples of forums for
    discussing common problems.
        Second, we work to develop increased institutional understanding.
    The Mid-Level Officers Exchange is a program where the Peoples'
    Liberation Army (PLA) and PACOM host a delegation of each other's field
    grade officers to better understand cultural, linguistic, and
    historical factors. A group of officers from the PACOM staff and
    components traveled in early March to three cities in China, at the
    PLA's invitation, to gain an appreciation of how their military
    organizations and institutions work.
        Third, we can build areas of mutual cooperation. The Military
    Maritime Consultative Agreement (MMCA) dialogues are held to exchange
    views on maritime domain safety. Chinese ships recently completed a
    port visit berthing in Pearl Harbor last November. Sixty-three PLA
    soldiers participated in Humanitarian Assistance training at a Hawaiian
    training area. Next year, the Chinese are scheduled to reciprocate and
    will host a similar number of U.S. soldiers. The Chinese participation
    in the Cobra Gold exercise, as well as their upcoming participation in
    the world's largest naval exercise, RIMPAC, illustrates a growing
    effort to include China in large multilateral activities to increase
    awareness and cooperation. All of the activities were scoped to ensure
    they fall within Congressional guidance regarding U.S. and China
    military-to-military interaction.
                                   resources
        Budget uncertainty has hampered our readiness and complicated our
    ability to execute long-term plans and to efficiently use our
    resources. These uncertainties impact our people, as well as our
    equipment and infrastructure by reducing training and delaying needed
    investments. They ultimately reduce our readiness, our ability to
    respond to crisis and contingency as well as degrade our ability to
    reliably interact with our allies and partners in the region.
        The PACOM joint forces are like an `arrow.' Our forward stationed
    and consistently rotational forces--the point of the `arrow'--represent
    our credible deterrence and the ``fight tonight'' force necessary for
    immediate crisis and contingency response. Follow-on-forces from the
    continental United States required for sustained operations form the
    `shaft of the arrow.' Underpinning these forces are critical platform
    investments and the research and development needed to ensure our
    continuous dominance. Over the past year we have been forced to
    prioritize readiness at the point of the arrow at the great expense of
    the readiness of the follow-on force and the critical investments
    needed for these forces to outpace emerging threats, potentially
    eroding our historic dominance in both capability and capacity.
        Due to continued budget uncertainty, we were forced to make
    difficult short-term choices and scale back or cancel valuable training
    exercises, negatively impacting both the multinational training needed
    to strengthen our alliances and build partner capacities as well as
    some unilateral training necessary to maintain our high-end warfighting
    capabilities. These budgetary uncertainties are also driving force
    management uncertainty. Current global force management resourcing, and
    the continuing demand to source deployed and ready forces from PACOM
    AOR to other regions of the world, creates periods in PACOM where we
    lack adequate intelligence and reconnaissance capabilities as well as
    key response forces, ultimately degrading our deterrence posture and
    our ability to respond.
                        posture, presence, and readiness
        Driven by the changing strategic environment, evolving capabilities
    of potential competitors, and constrained resourcing, we have changed
    the way we plan for crises, internationalized the PACOM headquarters to
    better collaborate with allies and partners, and created a more agile
    and effective command and control architecture--a command and control
    architecture that can seamlessly transition from daily routine business
    to crisis. Strategic warning times in the PACOM AOR are eroding and key
    to addressing this is our ability to rapidly assess and shape events as
    crises emerge. This approach places a premium on robust, modern, agile,
    forward-deployed forces, maintained at the highest levels of readiness,
    and capable of deploying rapidly.
        PACOM is doing much to prepare the force for 21st century threats.
    Our components are looking at new ideas for employment of forces to
    better fit the needs and dynamic nature of the Indo-Asia-Pacific and to
    send a powerful and visible message of our commitment across the
    region. The Marine rotational force deployments to Darwin, the USS
    Freedom (the first Littoral Combat Ship rotating through Singapore),
    and rotational deployments of F-22s to Japan and F-16s to South Korea
    are just a few examples of these efforts. Likewise, U.S. Army Pacific
    is currently exploring a future employment model that helps us work
    with allies and partners, using existing exercises and engagements as
    the foundation.
        Critical to continued success in the PACOM AOR is properly setting
    the theater to ensure a full range of military operations can be
    supported by the necessary forces postured, capabilities, and
    infrastructure.
        Forward pre-positioning (PREPO) is a vital. Agile, responsive and
    sustained operations demand a resilient network of capabilities to
    deploy and sustain my most demanding contingency plan required forces.
    While we have made some strides to address current theater issues, I
    remain focused on building capacity in these areas:

             Army PREPO stocks: Fiscal Year 2016-2020 sustainment
            funding to ensure reliability/availability.
             PREPO Fuel: Continue to build capacity for forward
            positioned stocks.
             PREPO Munitions: Remove expired assets to create space
            for needed resources.
             PREPO Bridging: Procure additional resources to
            enhance capacity.
             Combat Engineers: balance Active/Reserve mix to meet
            plan timelines.

        Our $1.4 billion fiscal year 2014 military construction (MILCON)
    program supports operational capability requirements to base MV-22s in
    Hawaii and an additional TPY-2 radar in Japan, and improve theater
    logistics and mobility facilities. Coupled with active and passive
    defense measures, MILCON pays for selective hardening of critical
    facilities and the establishment of aircraft dispersal locations to
    improve critical force and asset resiliency. Projects like the General
    Purpose and Fuel Maintenance hangers and the command post at Guam are
    examples. Continued targeted investments are needed to support ``next
    generation'' systems such as the Joint Strike Fighter, address airfield
    requirements, and co-locate mission support and maintenance facilities
    which enhance readiness, improve mission response and reduce costs
    associated with returning aviation assets to CONUS. Support for other
    dispersed locations like those in Australia also offer increased
    security cooperation opportunities, deepening our already close
    alliance. Additional sites we are considering in the Commonwealth of
    the Northern Marianas Islands offer expanded opportunities for training
    and divert airfields as well.
        Many of our bases, established during World War II or in the early
    years of the Cold War, require rehabilitation. Infrastructure
    improvement programs like MILCON, Host-Nation Funded Construction
    (HNFC), and Sustainment, Restoration and Modernization (SRM) ensure the
    readiness of forces and facilities needed to meet the challenges of a
    dynamic security environment. In addition to continuing the outstanding
    support Congress has provided for MILCON, we ask for consideration to
    fully fund Service requests for SRM, which contribute directly to the
    readiness of critical ports/airfields, command/control/communication,
    fuel handling and munitions facilities.
        Continued engagement by the U.S. Army Corps of Engineers (USACE)
    further supports our objectives. USACE's unique expertise builds
    capacity in critical areas, including disaster response and water
    resource management, and their Planning and Design (P&D) funding
    directly supports the HNFC program. fiscal year 2015 P&D funding for
    USACE ($20 million) will enable efficient utilization of billions of
    dollars of HNFC in Japan and Korea, ensuring our base sharing approach
    supports current budget trends.
        Cooperative Security Locations (CSLs) are important to our ability
    to respond agilely in the Indo-Asia-Pacific. CSLs are enduring
    locations characterized by the periodic (non-permanent) presence of
    rotational U.S. forces. Although many of these locations, like Thong
    Prong Pier in Thailand, provide important strategic access, we lack the
    authorities to make low cost improvements. Increased funding to enable
    low cost improvements would enhance our security cooperation
    effectiveness with key allies and partners in the region. To address
    this gap, we are requesting a new $30 million `Security Cooperation
    Authority', managed by the Joint Staff under the MILCON appropriation.
    The new authority will provide us the flexibility to rapidly fund CSL
    development in support of DOD priorities in theater.
        PACOM posture is also dependent on the need to build stronger
    Security Cooperation capacities with our partners.
        Engagement resources like Foreign Military Financing (FMF) and
    International Military Education and Training (IMET) are also powerful
    engagement resource tools. FMF and IMET are critical to demonstrating
    U.S. commitment to priority regional security concerns such as maritime
    security and disaster relief; enabling troop contributing countries to
    participate in peacekeeping and coalition operations; and providing
    professionalization opportunities in support of deeper partnerships
    with the United States and U.S. interests, including strengthening
    democratic values and human rights. Two other tools that help build
    capacity are the Global Security Contingency Fund (GSCF) and the Excess
    Defense Articles (EDA) program. GSCF is a broad-based pilot program
    (ending in 2015) that allows improved interagency security cooperation.
    I highly encourage you to continue this authority beyond 2015,
    especially considering the benefits from the $40 million GSCF
    allocation largely applied to the Philippines' law enforcement and
    maritime security capabilities, including the establishment of the
    Interagency Maritime Technical Training Center. The EDA program also
    allows us to build vital capabilities, but current statute limits
    transfer of certain ships to partner nations. Equally important is
    continued Congressional support of the Combatant Commander Exercise
    Engagement Training Transformation Program. These resources enable
    funding for joint exercises and engagement that sustain force
    readiness, strengthen alliances, expand partner networks, and prepare
    for a full range of military operations. The Asia-Pacific Center for
    Security Studies remains a uniquely effective executive outreach tool
    to convey our strategic interests to multi-national audiences and needs
    our continued support.
        Expansion of the DOD's State Partnership Program (SPP) run by the
    National Guard Bureau has begun in the Indo-Asia-Pacific. Recent
    collaborative efforts to fully integrate SPP into our Security
    Cooperation programs have led to the successful introduction of five
    Bilateral Affairs Officers and the establishment of DOD's newest
    partnership (Nevada-Tonga). We now have 8 of 66 SPP programs worldwide
    (Mongolia, Philippines, Indonesia, Vietnam, Cambodia, Bangladesh,
    Thailand, and Tonga). In order to meet theater objectives and
    opportunities in 11 additionally identified Asia-Pacific nations, we
    continue to establish new partnerships in the region.
        To sustain our current technological superiority, we must rapidly
    develop affordable and innovative capabilities that force our potential
    adversaries to respond with more costly solutions--costly in terms of
    money, time and resources. Our ability to successfully develop
    innovative capabilities will ensure we continue to be the world's most
    dominant and lethal fighting force. In order to meet this challenge,
    innovative approaches through affordable/high payoff science and
    technology programs as well as through innovation and experimentation
    must be accelerated. Specifically, the unique challenges in terms of
    distance and threat require we maintain our technological advantages in
    areas such as--mobility, unmanned platforms, long-range strike, ISR,
    sub-surface capabilities, cyber, space, and missile defense.
        We continue to look for opportunities to leverage the capabilities
    and resources of our allies and partners. Sharing and co-development of
    technologies with allies, as well as conducting experimentation and
    demonstrations within the operationally relevant environments offered
    by our partners will help to achieve this goal. PACOM will continue to
    work closely with our partners, and allies, generating capabilities
    that achieve regional security.
        PACOM's success depends on our ability to accurately assess the
    theater security environment with penetrating and persistent ISR and
    domain awareness. These capabilities depend on resourcing for agile
    command and control of ISR; modernized sensors and platforms with the
    reach to excel in a non-permissive environment; and secure, assured
    means for sharing critical information with our allies, partners, and
    our forces. The nexus for leveraging these capabilities--the PACOM
    Joint Intelligence Operations Center--also requires modernization of
    aging and dispersed infrastructure which is costly to operate and
    sustain.
        PACOM continues as a global leader in intelligence and cyber
    systems. It has established and is maturing the Joint Cyber Center-
    Pacific, which plans, integrates, synchronizes and directs theater
    cyberspace operations. The aim is to set the theater for cyberspace
    operations, provide assured command and control and information sharing
    with joint and inter-organizational partners and forces, and direct
    regional cyber missions to meet PACOM objectives. PACOM continues to
    work with DOD counterparts to receive additional cyber forces and build
    appropriate mechanisms to command and control such forces across all
    operations.
        Agile and resilient C4 (Command, Control, Communication, and
    Computers) capabilities are critical for assuring our ability to
    maintain communications and situational awareness; command and control
    forward deployed forces; and coordinate actions with coalition
    partners. This holds particularly true for PACOM, which must overcome
    the ``Tyranny of Distance'' posed by the vast Indo-Asia-Pacific region.
    From moving supplies in support of a humanitarian assistance/disaster
    relief effort to full spectrum coalition operations, modern joint
    forces depend upon assured command and control and interoperability.
        Future globally integrated operations will require even more
    integrated communications with mission partners on a single security
    classification level with a common language. Therefore, a more
    defensible and secure C4 cyber architecture designed to communicate
    with mission partners is needed. PACOM was recently designated to lead
    Increment 2 of the Joint Information Environment (JIE), which will
    accommodate Service networks and joint/coalition warfighting networks
    in a standard network infrastructure with improved security
    capabilities. JIE will further strengthen collective cyber security in
    the region and will redefine joint/coalition communications, establish
    a credible cyber defense posture, and improve staff efficiency and
    support. We have already expanded traditional communications
    interoperability forums with Korea, Japan, Singapore, Thailand, and the
    Philippines to include cyber defense.
                                   conclusion
        At PACOM, we are committed to maintaining a security environment
    that protects and defends U.S. interests throughout the Indo-Asia-
    Pacific region. If adequately resourced, we will make efficient use of
    these resources in order to ensure we are properly postured and ready
    to respond to any crisis that threatens U.S. interests. I would like to
    thank the committee on behalf of the many men, women, and their
    families that live and work in the Indo-Asia-Pacific Theater for all
    your continued support and I look forward to answering your questions.

        Chairman Levin. Thank you so much, Admiral.
        General Scaparrotti?

    STATEMENT OF GEN CURTIS M. SCAPARROTTI, USA, COMMANDER, UNITED
       NATIONS COMMAND/COMBINED FORCES COMMAND/U.S. FORCES KOREA

        General Scaparrotti. Chairman Levin, Ranking Member Inhofe,
    and distinguished members of the committee, I am honored to
    testify today as the Commander of the UNC, CFC, and USFK. On
    behalf of the servicemembers, civilians, contractors, and their
    families who serve our great Nation in Korea, thank you for
    your support.
        After 6 months in command, I am confident that the combined
    and joint forces of the United States and the Republic of Korea
    (ROK) are capable and ready to deter and, if necessary, respond
    to North Korean threats and actions. We know how real the North
    Korean threat is as 4 years ago tomorrow, North Korea fired a
    torpedo sinking the South Korean ship Cheonan killing 46
    sailors. That terrible day is a constant reminder that standing
    with our Korean ally, we cannot allow ourselves to become
    complacent against an unpredictable totalitarian regime.
        The Kim Jong-un regime is dangerous and has the capability,
    especially with an ever-increasing asymmetric threat, to attack
    South Korea with little or no warning. North Korea has the
    fourth largest military in the world with over 70 percent of
    its ground forces deployed along the Demilitarized Zone. Its
    long-range artillery can strike targets in the Seoul
    metropolitan area where over 23 million South Koreans and
    almost 50,000 Americans live. In violation of multiple U.N.
    Security Council resolutions, North Korea continues to develop
    nuclear arms and long-range missiles. Additionally, the regime
    is aggressively investing in cyber warfare capabilities.
        North Korea brings risk to the world's fastest growing
    economic region which is responsible for 25 percent of the
    world's gross domestic product (GDP) and home to our largest
    trading partners.
        Against this real threat, our Nation is committed to the
    security of South Korea and to our national interests. Our
    presence and your support of our troops give meaning to this
    commitment. They are a key component of the Nation's rebalance
    to the Asia-Pacific region. Together, the alliance's commitment
    to each other enable stability and prosperity now and in the
    future.
        In the spirit of this commitment, we are working closely
    with the South Korean military to develop its capabilities and
    combined command, control, communications, computers, and
    intelligence systems, an alliance counter-missile defense
    strategy, and the procurement of precision-guided munitions,
    ballistic missile defense systems, and intelligence,
    surveillance, and reconnaissance platforms. Readiness is my top
    overarching priority.
        To ensure that we are focused on the right things at the
    right time, I have developed five priorities:
        First, sustain and strengthen the alliance.
        Second, maintain the armistice to deter and defeat
    aggression and be ready to fight tonight.
        Third, transform the alliance.
        Fourth, sustain force and family readiness.
        Fifth, enhance the UNC-CFC-USFK team.
        An essential part of this is a positive command climate
    that focuses on the covenant between the leaders and the led
    and our mission together.
        At the core of mission success is the close relationship we
    share with our South Korean partners. We benefit from an
    important history forged on many battlefields, shared
    sacrifices, and democratic principles. Over the past 60 years,
    we have built one of the longest standing alliances in modern
    history. We will continue to ensure a strong and effective
    deterrence posture so that Pyongyang never misjudges our role,
    commitment, or capability to respond as an alliance.
        I am extremely proud of our joint force and their families
    serving in the ROK. I sincerely appreciate your continued
    support for them and for our crucial alliance. I look forward
    to your questions. Thank you.
        [The prepared statement of General Scaparrotti follows:]
              Prepared Statement by GEN Curtis M. Scaparrotti, USA
                                  introduction
        Mr. Chairman and distinguished members of the Committee, I am
    honored to testify as the Commander of the United Nations Command
    (UNC), United States-Republic of Korea (ROK) Combined Forces Command
    (CFC), and U.S. Forces Korea (USFK). On behalf of the servicemembers,
    civilians, contractors, and their families who serve our great nation
    in Korea, I thank you for your support. Our enduring military presence
    in Korea prevents war and preserves stability in a region critical to
    U.S. security. The U.S.-ROK Alliance protects both of our Nations'
    vital interests by protecting our citizens, advancing our values, and
    enabling prosperity.
        In 2013, we marked the 60th anniversaries of the Armistice
    Agreement that suspended the Korean War and the signing of the U.S.-ROK
    Mutual Defense Treaty. The U.S.-ROK Alliance is among history's most
    successful partnerships, providing the foundation for regional
    stability and prosperity. For 60 years, our Alliance has succeeded in
    preserving the Armistice Agreement, promoting democracy, and providing
    stability for the people of South Korea and the region. The Alliance is
    strong, but we will not allow ourselves to be complacent--we are and
    will remain ready. In the year ahead, we will face challenges and
    opportunities particularly in adapting the Alliance to changes in the
    North Korean threat.
        North Korea remains a threat that is continually increasing its
    asymmetric capabilities amid a declining, yet large conventional force.
    Kim Jong-un is firmly in control despite his family's legacy of failure
    and the suffering of the North Korean people. The Kim regime threatens
    the United States and South Korea, where more than 114,000 Americans
    reside. North Korea's actions hold at risk a regional trade network
    that supports 2.8 million U.S. jobs and $555 billion in U.S. exports.
        Thanks to the support of our national leaders and the American
    people, USFK's presence is a strong commitment to South Korea and
    preserves stability and prosperity. USFK, a modern, capable, and
    forward-deployed force, stands ready to support our Nation's interests
    and defend our ally.
                             strategic environment
        U.S. security and prosperity depend on stable relationships with
    regional partners and allies, and regional stability depends on
    enduring U.S. presence and leadership. The Asia-Pacific region produces
    a quarter of the world's gross domestic product and is home to a
    quarter of the world's population, as well as the world's largest
    military and economic powers. These nations face the challenge of
    interdependence, relying on the United States for stability while
    increasingly relying on China economically. In the face of strategic
    change and military threats, the United States is the constant that
    provides stability and a framework for conflict avoidance and
    resolution.
    Security Developments
        Northeast Asia contains four of the world's six largest militaries.
    Regionally, China has heightened regional influence while pursuing a
    comprehensive military modernization program. This development is
    taking place against a backdrop of historical antagonism and growing
    territorial claims.
    Economic Center of Gravity
        The Asia-Pacific region is an economic center of gravity
    indispensible to the U.S. economy and our ability to maintain global
    leadership. In 2013, the region was responsible for 40 percent of
    global economic growth, with U.S. trade increasing by 22 percent
    between 2008 and 2012. In 2012, exports reached $555 billion, a 31
    percent increase since 2008 supporting 2.8 million American jobs. The
    region invested $422 billion in the United States by the end of 2012,
    up 31 percent since 2008. The Korea-U.S. Free Trade Agreement is
    providing tangible benefits and is expanding a critical U.S. trading
    relationship, one that topped $130 billion in goods and services in
    2012. The region's economic prosperity, in turn, relies on the
    stability that enduring U.S. leadership and military presence provide.
    The China Factor
        China's reshaping of the region's strategic landscape impacts the
    security of both Koreas. While concerned about China's growing
    assertiveness and lack of transparency, South Korea is committed to
    deepening relations with China, its largest trading partner, in a
    manner that does not compromise the health of the U.S.-ROK Alliance.
    South Korea sees China as playing a critical role in shaping North
    Korean behavior. However, China's near-term focus on stability and
    concerns about the future of the U.S.-ROK Alliance render it unlikely
    to take measures that could destabilize North Korea. Despite strains in
    the Sino-North Korean relationship, the Kim regime continues to rely on
    China for resources, as well as diplomatic cover to constrain
    international efforts to pressure North Korea to denuclearize and alter
    its aggressive behavior.
                                  north korea
        North Korea remains a significant threat to United States'
    interests, the security of South Korea, and the international community
    due to its willingness to use force, its continued development and
    proliferation of nuclear weapon and long-range ballistic missile
    programs, and its abuse of its citizens' human rights, as well as the
    legitimate interests of its neighbors and the international community.
    Last year at this time, North Korea embarked on a series of
    provocations including a satellite launch, nuclear test, and the
    deployment of a road mobile intermediate range ballistic missile, all
    in violation of U.N. Security Council resolutions. Recently, the United
    Nations Commission of Inquiry on North Korean Human Rights detailed
    North Korean abuses, assessed their impact, and made recommendations.
    North Korea's growing asymmetric capabilities present the U.S.-ROK
    Alliance with a challenging and complex threat.
    Coercive Strategy
        The Kim Jong-un regime's overriding interest is ensuring its
    survival. To achieve this, North Korea employs a coercive strategy,
    using force or the threat of force in an attempt to influence the
    United States and South Korea. The Kim regime seeks to maintain
    internal security, develop a strong military deterrent, and pursue
    coercive diplomacy to compel acceptance of its nuclear program. Rather
    than seeking rapprochement with the international community, North
    Korea deliberately isolates itself. The Kim regime's strategic campaign
    is calculated, but risky. Escalatory acts involving nuclear
    development, missile tests, and military posture changes near the
    Demilitarized Zone (DMZ) carry with them elements of uncertainty and
    the potential for miscalculation, and rapid and unintended escalation.
    Conventional Capabilities
        North Korea continues to place priority on its military readiness.
    The Korean People's Army (KPA)--an umbrella organization comprising all
    Military Services--is the fourth largest military in the world. It
    fields approximately one million troops; 4,100 tanks; 2,100 armored
    vehicles; and 8,500 pieces of field artillery in addition to over 700
    combat aircraft, 420 patrol combatants at sea, and 70 submarines. Over
    the past 3 decades, the regime has incrementally positioned the
    majority of this force within 90 miles of the DMZ, where they are
    postured for offensive or defensive operations. This means that they
    can strike targets within the Seoul Metropolitan Area where over 23
    million South Koreans and almost 50,000 American citizens live.
    Asymmetric Capabilities
        While North Korea's massive conventional forces have been declining
    due to aging and lack of resources, and likely realizing that it cannot
    counter the Alliance head on, North Korea is emphasizing the
    development of its asymmetric capabilities. North Korea's asymmetric
    arsenal includes several hundred ballistic missiles, a large chemical
    weapons stockpile, a biological weapons research program, the world's
    largest special operations forces, and an active cyber warfare
    capability.

             Nuclear arms and ballistic missiles. North Korea
            continues to develop nuclear weapons and ballistic missiles in
            violation of multiple United Nations Security Council
            Resolutions. Today, it fields SCUD and Nodong missiles that are
            able to strike the entire Korean Peninsula and U.S. bases in
            Japan that also support UNC forces should they be called upon
            to defend the ROK. It is investing heavily in longer-range
            missiles with the potential to target the U.S. Homeland. North
            Korea shows little regard for the fact that the possession of,
            pursuit of, and threat to use nuclear weapons and their means
            of delivery are the primary barriers to its inclusion in the
            international community and productive economic integration.
             Cyber capability. North Korea employs computer hackers
            capable of conducting open-source intelligence collection,
            cyber-espionage, and disruptive cyber-attacks. Several attacks
            on South Korea's banking institutions over the past few years
            have been attributed to North Korea. Cyber warfare is an
            important asymmetric dimension of conflict that North Korea
            will probably continue to emphasize--in part because of its
            deniability and low relative costs.

    Internal Situation
        North Korea is a dictatorship under Kim Jong-un. He demonstrated
    his willingness to use his internal security agencies last year by
    arresting and very publicly purging Jang Song-taek, his uncle by
    marriage and a powerful member of the regime's inner circle. Though
    this event inspired wide speculation in the press, we do not believe it
    is a sign of instability--it was a calculated and deliberate action by
    Kim Jong-un to demonstrate his control of the regime.
        Nevertheless, long-term trends continue to challenge the regime's
    internal stability. The level of military readiness places a tremendous
    economic burden on North Korea's population. North Korea's economy
    shows little improvement, and South Korea has declared that it will no
    longer provide substantial aid without first re-establishing trust.
    Additionally, in spite of the regime's efforts to control it, the
    influx of external information continues to grow. The regime will face
    increasing challenges to the control of information, which could
    gradually weaken the effectiveness of its internal propaganda.
    Outlook
        For the foreseeable future, North Korea will remain an isolated and
    unpredictable state willing to use violent behavior to advance its
    interests, attempt to gain recognition as a nuclear power, and secure
    the regime's continuation. The regime needs to portray the United
    States as an enemy to distract its population from economic hardship,
    government brutality, and systemic incompetence. Therefore, a shift to
    a truly conciliatory posture toward the United States is unlikely. We
    remain concerned about the potential for a localized, violent act
    against South Korea, which could start a cycle of response and counter-
    response, leading to an unintended, uncontrolled escalation and a wider
    conflict. Also, we assess that North Korea has already taken initial
    steps towards fielding a road-mobile intercontinental ballistic
    missile, although it remains untested. North Korea is committed to
    developing long-range missile technology that is capable of posing a
    direct threat to the United States. Our Alliance with South Korea
    continues to be the critical linchpin required to deter North Korean
    aggression and to maintain stability.
                               republic of korea
        South Korea is a modern, prosperous democracy empowered by the
    creative drive and hard working spirit of its people. South Korea is
    poised to increase its regional and global influence to the benefit of
    both our Nations. Against this backdrop in February 2013, President
    Park Geun-hye took office with a four-dimensional strategy focusing on
    Economic Democratization (domestic reforms to enable sustainable
    economic growth), the Trust-Building Process or Trustpolitik (North-
    South relations), the Northeast Asia Peace Initiative or Seoul Process
    (increase ROK regional influence and leadership), and Active Defense
    and Military Reform (counter North Korean provocations and threat). She
    committed significant time and energy in recalibrating South Korean
    policy toward North Korea, while she strengthened the ROK's
    international influence and leadership as a rising middle power across
    the diplomatic, informational, military, and economic spectrum.
    President Park is a staunch supporter of our Alliance, and she is
    committed to enhancing South Korea's ability to respond to provocation,
    and deter or defeat North Korean aggression.
    Inter-Korean and Foreign Relations
        President Park deftly managed relations with North Korea in the
    face of North Korean aggressiveness and leadership turbulence. The ROK
    deterred provocations (with visible U.S. support) and resisted acceding
    to North Korean demands. South Korea's management of North-South
    relations and Trustpolitik are moving ahead in a manner that seeks to
    avoid creating new vulnerabilities. In February, the Koreas conducted
    their first family reunions since 2010. This was a positive,
    humanitarian event for the families of both countries who remain
    separated since the Korean War. Through the Seoul Process, South Korea
    seeks to increase its international influence and leadership, and
    President Park held 37 meetings with other heads of State, including
    President Obama.
    Concerns About U.S. Commitment
        We are committed to the defense of South Korea, and continue to
    demonstrate that commitment with additive rotational units to Korea,
    extended deterrence, and priority in defense resources and emphasis--
    second only to Afghanistan. However, due to a history of foreign
    invasions and the continuing North Korean threat, South Korea is
    concerned about adjustments in U.S. security strategy, particularly
    about reduction of U.S. commitment or resources. Confidence in U.S.
    commitment will play an important role in how South Korea designs and
    executes its defense strategy, and postures and structures its
    military.
    Republic of Korea Military
        The South Korean military is a capable, modern force operating in
    an effective partnership with U.S. forces. The North Korean threat
    remains its primary focus, but Seoul is increasing its ability to
    contribute to international security. Beginning with the Vietnam War,
    Seoul has contributed to several U.S. and U.S.-led international
    coalitions, most recently with combat service and civilian
    reconstruction support in Iraq, Afghanistan, and South Sudan, as well
    as deployments to support multinational anti-piracy and non-
    proliferation operations. More than 1,100 South Korean military members
    are deployed to 12 U.S.-led or U.N.-mandated missions.

             Military Strategy. South Korean military strategy
            calls for a rapid and robust response to North Korean
            provocations. The South Korean military is focused on
            protecting its people, believing that a commitment to a firm
            and immediate response to North Korean violence is essential to
            deterrence and self-defense. I am concerned about the potential
            for miscalculation and escalation, and I believe that both our
            Nations are best served through an Alliance response based on
            seamless and rapid consultation through mutually agreed-upon
            processes. To mitigate these concerns, we are enhancing our
            crisis management and escalation control measures through
            exercises and the bilateral Counter Provocation Plan we signed
            last year.
             Manning and Budget. The South Korean military has an
            Active-Duty Force of 639,000 personnel augmented by 2.9 million
            reservists. Demographics are driving its military to reduce
            manning to 517,000 active duty servicemembers at some point in
            the 2020s. South Korea plans to offset this reduction in force
            with capability enhancements, including high technology
            weapons. South Korea has the 12th largest defense budget in the
            world with a 2014 budget of $32.7 billion. Although Seoul
            continues to expand defense spending--this year's defense
            budget represents a 4 percent increase over 2013, 14.5 percent
            of the overall national budget, and 2.49 percent of Gross
            Domestic Product--it still has not been able to meet the
            ambitious defense spending objectives of its current long-range
            defense plan, prompting a re-evaluation and re-prioritization
            of defense acquisition priorities and future force posture.
             Capabilities and Force Improvement. The Republic of
            Korea is making tough choices on military capabilities,
            attempting to achieve a number of security objectives. While
            the North Korean threat remains its priority, South Korea is
            also factoring the defense of sea lines of communication and
            maritime exclusive economic zones, balancing other regional
            powers, and building its domestic defense industries. South
            Korea has acquired impressive new capabilities that enhance the
            Alliance's qualitative edge over North Korea, including F-15K
            fighters and AH-64E Apache heavy attack helicopters. It could
            further increase its edge by following through with its
            commitments to procure Patriot PAC-3 ballistic missile defense
            systems and Global Hawk, and pending procurement decisions on
            F-35 Joint Strike Fighters.

        Combined Forces Command (CFC) continues to encourage South Korea to
    develop and implement new joint and combined command, control,
    communications, computers and intelligence, surveillance, and
    reconnaissance (C4ISR) capabilities that are fully interoperable with
    the United States. This includes a balanced approach that accounts for
    systems, networks, organizations, and human capital. CFC is placing
    special emphasis on missile defense, not only in terms of systems and
    capabilities, but also with regard to implementing an Alliance counter-
    missile strategy required for our combined defense.
                                 three commands
        As the senior U.S. military officer in Korea, I lead three
    commands: the United Nations Command (UNC), Combined Forces Command
    (CFC), and U.S. Forces Korea (USFK). Each Command has distinct, but
    mutually supporting missions and authorities.
    United Nations Command
        As the UNC Commander, I am charged with leading an 18-nation
    coalition in maintaining the Armistice to ensure a cessation of
    hostilities until a final peace settlement is achieved. UNC maintains
    the Armistice by reducing the prospect of inadvertent clashes and
    miscalculations particularly within the DMZ and along the Northern
    Limit Line. This requires that I carefully balance the UNC Armistice
    maintenance responsibilities with the CFC responsibilities to defend
    South Korea. Should conflict resume and require an international
    response, as the UNC Commander, I am responsible for the operational
    control and combat operations of UNC member nation forces. We leverage
    our UNC Rear Headquarters ties with Japan to promote ROK-U.S.-Japan
    military engagements by educating military and civilian leaders about
    the criticality of Japan's support to the Alliance in times of
    conflict. Last year saw the return of Italy to UNC, and other Sending
    States are increasing their participation in exercises and in our
    permanent UNC staff. UNC remains as vibrant today as when it was
    originally chartered.
    U.S.-ROK Combined Forces Command
        As the Commander of CFC, I am responsible for deterring North
    Korean aggression and, if deterrence fails, leading combined U.S.-ROK
    forces in the defense of the Republic of Korea. CFC enables us to
    organize, plan, and exercise U.S. and ROK forces to ensure that CFC is
    ready to ``Fight Tonight''--not just a slogan, but a mindset. CFC
    serves a purpose beyond that of other military commands; it embodies
    the military dimension of the Alliance that enables Americans and
    Koreans to fight as a unified force.
    U.S. Forces Korea
        As the Commander of USFK, I am responsible for organizing,
    training, and equipping U.S. forces on the Peninsula to be agile,
    adaptable, and ready to support CFC and UNC, as well as U.S. Pacific
    Command (PACOM). USFK continues to support the ROK-U.S. Mutual Defense
    Treaty and serves as a stabilizing force and a visible manifestation of
    the U.S. commitment to South Korea. As a joint, sub-unified command of
    PACOM, USFK is responsible for supporting the combatant command's
    pursuit of U.S. theater and national level objectives. USFK is a member
    of the broader U.S. team that synchronizes and works Korea issues,
    including PACOM, the Joint Staff, the Office of the Secretary of
    Defense, the U.S. Embassy, the Interagency, and the Intelligence
    Community.

             Ground Forces. As USFK's ground component force,
            Eighth Army (8A) uses modernized ground combat power to deter
            threats to U.S. interests in Korea in full partnership with the
            South Korean Army. In 2013, U.S. Army Pacific established a
            Coordination Element on the Peninsula to provide additional
            synchronization. The new Army Regionally Aligned Force effort
            ensures CONUS-based forces are better prepared to respond to
            regional requirements. In late 2013 and early 2014, the Army
            dispatched additive rotational forces to Korea as a means to
            strengthen combat readiness. These rotational forces arrive in
            Korea fully manned and trained, and they minimize
            transportation costs by leaving their equipment in Korea for
            the next unit in the rotation. Eighth Army's enhanced readiness
            and presence in Korea represent a powerful U.S. commitment to
            deterrence and warfighting capability.
             Air Forces. The 7th Air Force is stationed in the
            Republic of Korea to apply air and space power in the Korean
            Theater of Operations (KTO). In 2013, 7th Air Force made
            advancements in command and control systems, fielding an
            improved version of the Theater Battle Management Core System.
            This new system enhances our ability to command and control
            thousands of coalition sorties in one of the world's most
            complex battle spaces. In August, the 7th Air Force Commander
            assumed the role of Area Air Defense Commander for the KTO.
            Despite resource constraints in 2013, 7th Air Force made
            progress in enhancing deterrence and defense through Theater
            Support Packages (TSP), exercises, training, and command and
            control enhancements. Last year, 7th Air Force hosted three
            TSPs augmenting our capabilities and demonstrating U.S.
            resolve. They continued to improve combined airpower
            capabilities by executing two Max Thunder exercises, and
            trained the ROK Air Force for its first-ever deployment out of
            country to integrate with U.S. and multinational forces.
             Naval Forces. The deployment and presence of the U.S.
            Navy's most modern combat platforms in the Pacific Region
            provides enhanced capabilities (air, surface, undersea) in the
            maritime domain. The U.S. Navy is committed to sending our most
            modern platforms to the Pacific Region. The routine presence in
            the KTO of carrier strike groups demonstrates U.S. commitment
            and staying power, reassures allies, and deters adversaries.
            The routine deployment of expeditionary strike groups allows us
            to conduct combined amphibious operations and advance the
            command and control capabilities of the ROK and U.S. Marine
            Air-Ground Task Force.
             Marine Forces. U.S. Marine Corps Forces, Korea
            (MARFOR-K) is a service component headquarters assigned to
            USFK. It coordinates support from U.S. Marine units that come
            primarily from the III Marine Expeditionary Force (MEF) located
            in Japan. MARFOR-K maintains a close relationship with the ROK
            Marine Corps and helps ensure that combined planning and
            training events are of optimal benefit to both countries. In
            2013, we conducted 11 combined Korea Marine Exercise Program
            events that ranged from platoon to battalion size and spanned
            the gamut of military operations. U.S. and ROK Marine combined
            training includes Exercise Ssang Yong, one of the most
            comprehensive amphibious exercises in the world. MARFOR-K
            ensures that USFK remains ready to integrate forward-based U.S.
            Marine forces that would be critical in the early hours and
            days of a crisis.
             Special Operations Forces. Special Operations Command,
            Korea (SOCKOR) serves as our Theater Special Operations Command
            (TSOC) for Korea, providing command and control for all U.S.
            Special Operations Forces (SOF) in Korea. SOCKOR maintains
            continual engagement with the South Korean Army Special Warfare
            Command, its Naval Special Warfare Flotilla's SEALs, its Air
            Force SOF fixed wing, and its Army rotary wing SOF units.
            SOCKOR also serves as the UNC's subordinate headquarters that
            commands and controls all U.N. SOF during training exercises
            and in the event of crises or war.
                               u.s.-rok alliance
        For over 60 years, we have stood together with the Republic of
    Korea in an Alliance for our common defense and increasingly rooted in
    mutual prosperity. We benefit from a rich combined military history and
    shared sacrifices. Our South Korean ally appreciates that the U.S.
    provided the security and assistance that enabled South Korea's hard
    earned success and liberty. Today, the Alliance stands as one of
    history's strongest and most effective military partnerships, one that
    has evolved to include regional and global security interests. In the
    coming year, we will continue to collaborate in addressing the
    challenges of Alliance transformation, enhancing counter-provocation
    capability, and implementing the counter missile strategy consistent
    with the Revised Missile Guidelines (RMG) and the bilateral Tailored
    Deterrence Strategy (TDS).
    Strong Relationships
        Our greatest strength rests in our close, daily cooperation built
    on trust. We have transparent and candid relationships that enable our
    ability to address tough warfighting and interoperability issues. We
    will continue to nurture the strong relationships that provide us with
    the mutual understanding, respect, and habits of cooperation required
    to preserve decision space and options during provocations or crisis.
    Alliance Transformation. The U.S. Office of the Secretary of Defense
    and ROK Ministry of National Defense are holding working group meetings
    to clarify South Korea's proposed conditions and prerequisites for
    wartime operational control (OPCON) transition and to review the
    bilaterally agreed upon pathway to OPCON transition in Strategic
    Alliance 2015. As the bilateral group continues its work, I remain
    focused on our combined readiness, and especially on enhancing the
    critical South Korean military capabilities identified in Strategic
    Alliance 2015. As they deliberate, we remain committed to preserving
    the benefits and advantages of being combined while ensuring that we
    are positioning the Alliance for long-term sustainability and
    operational effectiveness, and that we are doing so in a fiscally-sound
    manner.
    Authorities and Consultation
        Our consultative procedures remain robust and through these
    mechanisms, including the annual Security Consultative Meeting (SCM)
    and Military Committee Meeting (MCM), we continue to deepen our
    relationships and ensure that our military receives synchronized
    national-level direction. Our bilateral strategic documents define U.S.
    authorities within the Alliance and codify authorities for the Command
    to plan, train, and maintain readiness, as well as assume command
    should South Korea request that we do so in times of crises or war.
    These ensure the United States retains a voice and a stake in decisions
    and actions taken on the Korean Peninsula.
    Burden Sharing
        Earlier this year, the Alliance concluded a new cost sharing
    agreement called the Special Measures Agreement (SMA), which will be in
    effect through 2018. Under the SMA, South Korea will help offset the
    costs of stationing U.S. forces in Korea by providing support for
    labor, supplies, services, and construction. For 2014, Seoul will
    provide $867 million in cost sharing support. SMA contributions also
    stimulate the South Korean economy through salaries and benefits to
    host nation workers, supply and service contracts, and local
    construction work. SMA support plays a critical role in developing and
    maintaining force readiness.
    Counter Missile Capabilities
        The United States and South Korea are implementing a comprehensive
    Alliance counter missile strategy based on detecting, defending,
    disrupting, and destroying North Korean missile threats. The strategy
    calls for the development of new South Korean ballistic missiles with
    increased ranges as well as enhanced ISR capabilities, including
    unmanned aerial vehicles. South Korea continues to implement the
    Revised Missile Guidelines (RMG), an important element in increasing
    Alliance capabilities to defend both South Korea and the United States.
    While we are making progress in implementing the RMG and countering the
    North Korean missile threat, we must continue to work toward enacting
    combined command and control processes to integrate our respective
    capabilities.
    Tailored Deterrence
        In October 2013, the U.S. Secretary of Defense and ROK Minister of
    National Defense signed the bilateral Tailored Deterrence Strategy
    (TDS). The TDS is a significant milestone in the U.S.-ROK security
    relationship, and establishes an Alliance framework for ensuring
    deterrence against North Korean nuclear and weapons of mass destruction
    (WMD) threat scenarios. The TDS is not an operational plan, nor does it
    call for preemptive strikes or specific responses to North Korean
    actions. The TDS identifies a variety of capabilities that allow the
    Alliance to explore and implement options to enhance deterrence.
    Operationalizing Deterrence
        In 2013, U.S. Pacific Command and U.S. Strategic Command dispatched
    strategic platforms to the KTO, including Carrier Strike Groups, Ohio
    Class guided-missile and Los Angeles Class attack submarines, F-22
    fighters, and B-52 and B-2 bombers. These operations reassured the
    South Korean people of our commitment and provided a tangible
    demonstration of extended deterrence.
    Exercises
        Exercising our joint, combined, and multinational forces is an
    important component of readiness and is fundamental to sustaining and
    strengthening the Alliance. CFC and the ROK Joint Chiefs of Staff
    conduct three major annual exercises. Exercises Key Resolve and Foal
    Eagle (Feb/Mar) and Ulchi Freedom Guardian (Aug) provide the primary
    and most effective means to ensure combined readiness and deterrence--
    we must sustain them despite budget and resource constraints. Our
    exercises are a key opportunity to work through warfighting and
    interoperability issues, and enable the Alliance to adapt to the
    changing strategic environment, including progressing toward South
    Korean leadership in the defense of the Peninsula.
    Readiness and Challenges
        As a global military priority--second only to Afghanistan--and
    despite fiscal and resource limitations, we have maintained a high
    state of readiness. However, I am concerned about shortfalls in
    critical areas including C4ISR, missile defense, critical munitions,
    and the readiness of follow-on forces. North Korea's forward deployed
    posture and demonstrated expertise in denial and deception present
    significant challenges. We can meet these challenges better by
    increasing ISR assets and analytic capability, and we are working to do
    so both with our on-Peninsula U.S. forces and ROK forces. I am
    encouraged by South Korean efforts to address missile defense
    limitations; however, effective solutions require a composite of
    integrated systems and capabilities. Next, we do not have sufficient
    stocks of some critical munitions and thus need to increase and
    maintain our on-Peninsula stock. Finally, fiscal limitations will
    impact the training and readiness of follow-on forces. Any delay in the
    arrival or reduction in readiness of these forces would lengthen the
    time required to accomplish key missions in crisis or war, likely
    resulting in higher civilian and military casualties.
    A Bright Future Together
        President Obama and President Park reaffirmed last year the ``2009
    Joint Vision for the Alliance of the United States of America and the
    Republic of Korea.'' This landmark vision lays out an ambitious
    Alliance expansion. We will continue to encourage South Korea to
    develop stronger military-to-military relations with our other key
    allies and partners in the region. The Republic of Korea, as the 12th
    largest economy in the world with a modern military, is seeking to
    expand its role in regional and international security, and we look
    forward to increasing our global partnership as outlined in the 2009
    Joint Vision statement.
                           vision 2014 and priorities
        The Command will work to implement my priorities of strengthening
    the Alliance, maintaining the Armistice, and taking care of our people.
    We will remain vigilant against the North Korean threat, and we will
    strive to create enduring regional and global stability and prosperity.
        My priorities are straightforward: Sustain and Strengthen the
    Alliance; Maintain the Armistice: Deter and Defeat Aggression--Be Ready
    to ``Fight Tonight''; Transform the Alliance; Sustain Force and Family
    Readiness; and Enhance the UNC, CFC, and USFK Team.
    Sustain and Strengthen the Alliance
        America is fortunate to have committed and capable friends, and I
    have had the privilege of working alongside many of our Allies across a
    range of circumstances. This is my first time serving in South Korea.
    The South Korean military is impressive and is one of the most capable
    and best trained militaries in the world. South Korea is a true ally,
    willing to share burdens and make sacrifices in pursuit of our common
    values and interests. The coming year will provide an opportunity to
    strengthen our Alliance. Together, our Alliance can ensure a strong and
    effective deterrence posture so that Pyongyang never misjudges our
    role, our commitment, or our capability to respond to aggression. We
    are also working to expand the scope of trilateral security cooperation
    between the United States, South Korea, and Japan, thereby sending a
    strong message to Pyongyang. Relationships matter, and it is our people
    who more than anything else make possible our unity of purpose and
    action. So, we will reinforce the principle of working toward Alliance
    solutions to Alliance issues, and in the spirit of the Alliance, we
    will move ``Forward Together.''
    Maintain the Armistice: Deter and Defeat Aggression--Be Ready to
            ``Fight Tonight''
        Tightly linked to strengthening the Alliance is the imperative of
    maintaining the Armistice and deterring aggression. Being ready to
    ``Fight Tonight'' means that if deterrence fails, the Alliance is ready
    to defeat aggression. The key to readiness is ensuring that U.S. and
    ROK forces are properly trained and equipped, and that follow-on forces
    are fully trained and capable of deploying on a tight timeline. Failure
    to maintain a high level of readiness leads to strategic risk against a
    well-armed North Korea possessing asymmetric capabilities. Despite
    fiscal and resource limitations, the forces in Korea maintain a high
    state of readiness.
    Alliance Transformation
        We will continue to press forward on Alliance transformation,
    focusing on achieving the goals set forth in Strategic Alliance 2015
    (SA 2015), the roadmap for Alliance transformation into a ROK-led
    command structure. We designed SA 2015 to set conditions for a
    successful, enduring, and stronger Alliance. We must modernize our
    force posture and command and control to adapt to the changing NK
    threat in a manner that is sustainable and operationally effective. We
    will place increased emphasis on enhancing our cyber and special
    operations capabilities and will study lessons learned and
    technological advancements for application in the Korean Theater.
    Sustain Force and Family Readiness
        My final two priorities are linked--sustaining force and family
    readiness is enabled by our efforts to enhance the team. The challenge
    of limited warning and decision space increases the criticality of
    training and readiness. Readiness applies not only to our combat forces
    but our families as well. Our people are most effective when their
    families are cared for and in balance. The personnel turbulence caused
    by 1-year tours and our Nation's fiscal issues compound the magnitude
    of this challenge. We are working to address the issue of personnel
    turbulence by being very discerning with how we allocate command-
    sponsored tours and in the use of rotational forces. I ask for your
    assistance in supporting the best force we can sustain in Korea and the
    corresponding support for our families.
    Enhance the UNC, CFC, and USFK Team
        I am instilling a command climate based on valued team members,
    teamwork, standards, discipline, and balanced lives. This includes
    encouraging spiritual, family, physical, professional, and personal
    balance and resilience. My vision for our command climate is upholding
    the covenant between the leader and the led. One of the most important
    aspects of leading and taking care of our servicemembers is my
    commitment to combating sexual assault and sexual harassment. We are
    unwavering in our commitment to doing so, and I know this resonates at
    every level of our command. In and of itself, sexual assault is
    deplorable and unacceptable, and undermines the trust that is required
    to operate effectively as a team.
                                    closing
        The U.S.-ROK Alliance remains strong with an important future. The
    UNC/CFC/USFK Command and its dedicated men and women are ready every
    day to deter the North Korean threat, and if necessary, they are ready
    to fight and win. I am honored to have the opportunity to lead this
    dedicated joint, combined, and multinational force in one of the most
    vital regions of the world. We have a serious mission against a real
    threat, and as the USFK Commander, I deeply appreciate each American
    who has volunteered to serve far from home to support a close ally,
    protect American interests, and demonstrate American leadership and
    willingness to stand up to those who would threaten our way of life.
    Mr. Chairman, again, thank you for this chance to meet with you and
    your committee, and I look forward to working together.

        Chairman Levin. Thank you very much, General.
        Let us try 7 minutes for our first round.
        Admiral, let me start with you. As you noted in your
    written testimony, China's declaration in November of an air
    defense identification zone (ADIZ) in the East China Sea
    encompassing the Senkaku Islands immediately raised tensions.
    Now, while the declaration of that identification zone has not
    affected U.S. military operations in the area, there is a
    concern that China is attempting to change the status quo in
    the East China and South China Seas by taking these kinds of
    incremental steps to assert territorial claims.
        Admiral, let me start by asking you this question: Has
    China's declaration of that identification zone changed the
    status quo between China and Japan with regard to their
    respective claims to the Senkaku Islands?
        Admiral Locklear. From my observation, first, as you
    correctly stated, it has not changed our operations at all and
    we do not recognize it or comply with it.
        I have not seen any change in the activities of our allies,
    the Japanese self-defense force, as they pursue operations in
    that area based on the proclamation of the ADIZ by the Chinese.
        Chairman Levin. Admiral, what is your assessment of China's
    pursuit of anti-access/area denial (A2/AD) capabilities? What
    are the implications of such capabilities on the ability of
    other nations, including the United States, to move freely in
    the international waters of the western Pacific?
        Admiral Locklear. We have known for some time that the
    People's Liberation Army (PLA) have been pursuing technologies
    and capabilities that would allow them to potentially control
    the access in the areas around their borders, particularly in
    the sea space. Those technologies specifically, I believe, are
    directed at what they perceive as potential U.S.
    vulnerabilities as we maintain our forces forward. We have, for
    many years, built our security environment around aircraft
    carriers forward, forward bases with our allies. We rely
    heavily on cyber and on space capabilities because we operate a
    long distance from home. We rely on a long line of logistics
    support necessary to be that far forward and to maintain a
    peaceful security environment.
        I would say that the A2/AD capabilities that we observed
    are being pursued by the PLA go after, either directly or
    indirectly, what they perceive as potential U.S.
    vulnerabilities. Whether they ever intend to use them with us
    or against us or against an ally, the concern also is that
    these technologies will proliferate and they will further
    complicate the global security environment.
        Chairman Levin. Admiral, what is your assessment of China's
    cyber activities that are directed towards the United States?
    What can you tell us about their use of cyberspace to target
    U.S. defense contractors?
        Admiral Locklear. In the cyber world, there are a lot of
    bad actors. It is not just China, but specifically since we
    look at this, we have known for some time that there has been
    state-sponsored activity to try to look at and to try to get
    into defense contractors and then to work that backwards to try
    to either develop an advantage or to better understand any
    vulnerabilities that we may have.
        So we watch this very carefully. We are becoming more and
    more aware of activities such as this on a global scale. I
    believe that the steps we are taking to build cyber forces that
    are capable to build on what I believe is our advantage in
    cyberspace, I believe we have a considerable advantage compared
    to the rest of the main actors in the world. Our advantage is
    only going to increase as we put these capabilities in place.
        Chairman Levin. Okay, Admiral, let me switch topics to the
    FRF on Okinawa. There has now been some progress in that area.
    Do you believe that 10 years is a reasonable timeline for the
    construction of that facility? Do you believe that the
    Government of Japan and the Marine Corps are committed to
    adequately maintaining the current Futenma Air Station until
    the FRF is completed?
        Admiral Locklear. The facility at Camp Schwab that will
    ultimately replace Futenma, we are happy with the decision that
    was made by the signing of the landfill permit. It was another
    step forward in making this a reality. By all estimations I
    have seen, 10 years is a reasonable amount of time. It could
    actually be done faster. I believe that there are those who
    would like to see it done faster particularly within the
    Japanese Government.
        I believe currently the funding is in place to believe that
    Futenma remains safe and adequately operated. I can assure you
    it will be a priority. We do not want to see that facility
    degrade to the point that it puts our operations at risk.
        Chairman Levin. Thank you.
        General, let me ask you about this same issue of North
    Korea. Are the Chinese in your judgment unwilling or unable to
    exert pressure on the North Koreans to agree to preconditions
    to restart the Six Party Talks?
        General Scaparrotti. Mr. Chairman, based on those that I
    have talked to in the region, to include South Koreans and
    their contacts, I believe we have seen some result of China's
    pressure on North Korea in the rhetoric of Kim Jong-un in the
    past several months, particularly after the assassination of
    his uncle. I believe they can put some pressure, and we have
    probably seen a result of some of that.
        However, I think there is much more that they could do as
    most of North Korea's banking and much of their commerce comes
    through China. To this point, they have been unwilling to take
    any more steps, as far as I can tell.
        Chairman Levin. Thank you.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        In the Stars and Stripes this morning, there was a good
    article. I ask now that it be made a part of the record.
        [The information referred to follows:]

        Senator Inhofe. It talks about what is happening to our
    capabilities in that area. Admiral Locklear, you are quoted
    here as saying the resources currently at your disposal are
    insufficient to meet operational requirements. I appreciate
    that statement.
        Admiral Locklear, it is my understanding that 50 percent of
    the Navy's 300 ships, or about 150, were expected to be in the
    Pacific theater initially. Is that right?
        Admiral Locklear. We have had about 50 percent historically
    for a number of years.
        Senator Inhofe. Okay. This does not take a long answer
    here.
        As part of that rebalance now, they would expect that to go
    up so that it would be around 180 instead of 150. This is the
    point I am trying to get. Because of what is happening now and
    sequestration coming, it would be 60 percent of a smaller
    number, coming out with the same number of ships available in
    that theater of 150. Do you follow me here?
        Admiral Locklear. I follow you, yes, sir.
        Senator Inhofe. Our partners over there, our allies, Japan,
    Korea, and Australia--while they were expecting that we would
    have 150 ships, increasing to 180, and yet it ends up being
    150. Is this something that they will appreciate, or do they
    believe that we have the kind of problems that we have?
        Admiral Locklear. I cannot speak for how they feel about
    it, but my expectation is that they are very watchful of how
    the U.S. defense budget will play out in the long run.
        Senator Inhofe. We have said that our friends will not
    trust us and our enemies will not fear us. This was in the
    Middle East. I am beginning to think that we are going to have
    the same situation in that theater also.
        Admiral, the Chinese ballistic capable submarines that can
    hit the United States from the east Asian waters will begin
    patrols this year, and the Chinese defense budget is expected
    to grow by 12 percent.
        I am reminiscent of the days back in the 1990s, when we
    were cutting down our military by about 40 percent. At that
    time, China was increasing by around 200 percent. That was over
    that decade in the 1990s. I am seeing some of the same things
    happen here: the priorities of our country versus the
    priorities of China.
        I have always been concerned about China and their
    capabilities. Secretary Hagel said American dominance on the
    seas, in the skies, and in space can no longer be taken for
    granted. Does that concern you as much as it concerns me,
    Admiral?
        Admiral Locklear. I think in the context of globally, the
    Chinese military and the growth of the military will not be a
    global competitor with U.S. security for a number of decades,
    depending on how fast they spend and what they invest in.
        The biggest concern is regionally where they have the
    ability to influence the outcome of events around many of our
    partners and our allies by the defense capabilities that they
    are pursuing.
        Senator Inhofe. Yes. The quote that I read out of this
    morning's Stars and Stripes, was that accurate?
        Admiral Locklear. I have not read the article, but what you
    quoted is accurate.
        Senator Inhofe. Judging from our discussions in my office,
    I think that is an accurate quote, and I think people need to
    talk about it.
        General, we are looking now at a new Kim Jong-un. You and I
    talked in my office. My concern has been that he is less
    predictable than his predecessor. Would you agree with that?
        General Scaparrotti. Yes, Senator, I would.
        Senator Inhofe. Do you think by being less predictable that
    that would translate into a greater threat?
        General Scaparrotti. Yes, Senator, I do.
        Senator Inhofe. I agree with that because you cannot tell.
    Sometimes, we talk about the days of the Cold War when we had
    two super-powers and both of us were predictable. The less
    predictable we are, the greater threat it is to us, I think,
    particularly now with the drawdowns that we are suffering and
    the limited capabilities that we are giving you to do a job.
        So with this person there, in your opinion, are sanctions,
    diplomatic pressure, and appeasement with the shipments of food
    and oil that have been our policy tools likely to halt North
    Korea's further development and proliferation of nuclear
    weapons?
        General Scaparrotti. Senator, I think that it is an
    appropriate step in terms of our continued sanctions, but I do
    not believe that at present they will be enough to convince him
    that he should denuclearize.
        Senator Inhofe. I do not think so either. I agree with your
    statement. Getting back to the unpredictability, I do not think
    this guy is deterred by that type of action.
        We also talked in my office about another problem. I think
    the forces on the peninsula that would be needed to fight
    immediately are combat-ready. My concern is with the follow-on
    forces. I would like to have you share with us whether you are
    as concerned about that today as I am.
        General Scaparrotti. Senator, as you stated, the forces on
    the theater have been fully resourced despite the budget
    constraints that we have had. I am happy with that and
    appreciative of it.
        Senator Inhofe. At the expense of a follow-on force.
        General Scaparrotti. That is correct, sir.
        I am concerned about the readiness of the follow-on forces.
    In our theater, given the indications and warnings, the nature
    of this theater and the threat that we face, I rely on rapid
    and ready forces to flow into the peninsula in crisis.
        Senator Inhofe. It is because throughout your career, you
    have been able to rely on that and you are not now.
        Do you agree with General Amos, when he said we will have
    fewer forces arriving less-trained, arriving later to the
    fight? This would delay the buildup of combat power, allow the
    enemy more time to build its defenses, and would likely prolong
    combat operations altogether. This is a formula for more
    American casualties. Do you agree with that?
        General Scaparrotti. I do, Senator, yes.
        Senator Inhofe. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Inhofe.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        Admiral, General, thank you so much for your service.
        Admiral, what is the current status of China's hypersonic
    weapons projects?
        Admiral Locklear. They have demonstrated the technology in
    tests that were visible to the world earlier this year. How
    fast that they can actually put that into an operational
    capability is unknown, but it could take several years to do
    that.
        Senator Donnelly. Do you think they currently have the
    ability to strike U.S. assets in the continental United States?
        Admiral Locklear. I think they have the ability to look at
    and to understand and, through satellite imagery and everything
    else, to have views of the United States. What they are going
    to ultimately do with hypersonic capability as it relates to
    their long-range deterrent, I do not know.
        Senator Donnelly. How would you characterize China's
    attempts to disseminate technology to Iran and North Korea?
    Full speed ahead, or what would you say?
        Admiral Locklear. In the case of North Korea, which General
    Scaparrotti and I spend a lot of time looking at, to some
    perspective, North Korea is an ally of China and they are
    closely aligned from a military perspective and have been for a
    number of years. I know that there has been some progress made
    as far as the Chinese supporting the sanctions. I cannot tell
    you how much they are abiding by that, but my sense is that
    there has been a close relationship on military capability and
    military equipment for some time and probably will continue.
        Senator Donnelly. How would you see the pace of Chinese
    cyber attacks this year, coming up 2014, the first quarter so
    far, and for the rest of the year? We saw an extraordinary
    amount in 2013, and how would you compare, first, the volume
    and then next would be the quality or the targets involved?
        Admiral Locklear. I think after we made it fairly public
    that we had knowledge of what was happening from some of the
    factions in China, for some period of time, there was a
    decrease. But there are still lots of cyber attacks that occur,
    as I said earlier, not only from China but other places in the
    world, and those number of attacks, as the cyber world becomes
    more complicated, are on the rise.
        Senator Donnelly. General Scaparrotti, what is your
    estimate of North Korea's efforts in cyber attacks?
        General Scaparrotti. Senator, North Korea is, along with
    their other asymmetric means, investing in cyber capability.
    Presently at this time, they have been known to use their cyber
    capability. Here a year ago, we believe it was North Korea that
    had the impact in South Korea's median banking institutions.
    Presently, it is disruption of services, disruption of Web site
    capability, but they are focused on it and their capabilities
    are gaining.
        Senator Donnelly. General, again on another issue. Can you
    provide us with the current status of the relocation of forces
    to Camp Humphreys?
        General Scaparrotti. Yes, sir. Our relocation has begun. We
    are moving forces according to the land partnership plan from
    the north, which we call Area 1, north of Seoul and also from
    the Yangsan area predominantly, and they are moving to two
    hubs, one around Humphreys, one around Diego. Presently, we
    have not begun the initial movements. They will begin this
    year. The majority of our forces will move in 2016.
        At Humphreys, we are at 13 percent construction and about
    67 or so percent underway. So the build is well underway, and
    we are on track to move the majority of our forces in 2016.
        Senator Donnelly. Is there any viable short-term solutions
    to having enough adequate housing within a 30-minute drive to
    Camp Humphreys?
        General Scaparrotti. Senator, just last week, we had a
    housing industry seminar in Seoul in order to both inform and
    also gain information from private industry in Korea. As to the
    capability to provide housing within the 30-minute area, which
    is our policy of Humphreys, our recent surveys tell us that
    there is not the capacity right now. We were actually looking
    to see what the capacity to build is.
        Senator Donnelly. Admiral, in regards to counterfeit parts,
    so much is going on with China. Have you seen any indication
    that they are trying to address that problem or trying to
    identify or help us to track these counterfeit parts?
        Admiral Locklear. I have not.
        Senator Donnelly. General, in regards to the North Korean
    regime, do you believe Kim Jong-un is controlling the military
    in the country or do you think he is a front for their
    military?
        General Scaparrotti. Senator, I believe that Kim Jong-un is
    clearly in charge. He has appointed himself as the supreme
    leader through the constitution, and the actions that he has
    taken with respect to the change, particularly in the military
    in terms of leadership are clear, and I believe he is in
    charge.
        Senator Donnelly. In regards to that same topic, how much
    influence do the Chinese have on him? If they push, does he
    follow their lead or is it still his call at the end of the
    day?
        General Scaparrotti. Senator, I believe they have the
    capacity to influence him. They have shown it in small ways.
    But I think from what I have seen, he also is an independent
    actor and will tend to go his own way, which I believe has
    frustrated China as well from just what I have read and know
    from others that have been there.
        Senator Donnelly. Thank you both for your service. My time
    is up. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Donnelly.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        General, thank you for your answer to Senator Inhofe's
    question about your ability to carry out your responsibilities.
    As you say, your forces under your command are operationally
    ready, but we see more and more indications of fewer and fewer
    units of the U.S. Army that are operationally ready. That must
    be of great concern for you in case of the unthinkable, and
    that is an outbreak of conflict. Is that correct?
        General Scaparrotti. Yes, sir, that is correct. On the
    Korean peninsula, the nature of the fight is potentially high
    intensity combat and the time and space factors also present a
    tough problem for us. The delivery of ready forces on a
    timeline is important.
        Senator McCain. Admiral Locklear, would you agree that
    China's efforts are underway to change the balance of power in
    at least the western Pacific?
        Admiral Locklear. I would agree.
        Senator McCain. That may be carried out in an incremental
    fashion such as the requirement for an ADIZ over the East China
    Sea, the acquisition of an aircraft carrier, in other words,
    incremental steps that probably would not sound too many alarm
    bells. What do you think their strategy is to assert their
    influence and dominance of that part of the world?
        Admiral Locklear. Yes, sir. Their maritime strategy is
    pretty clear. They do not hide it from anybody. They have
    certainly tailored their defense spending heavily in the
    maritime domain. It is an incremental strategy. It is not to be
    done, I think, all at one time. But my sense is, they look at
    their strategy and they look at the current status in the South
    China Sea, and I think they believe they are on their strategy.
        Senator McCain. The fact that there has not been at least
    the expectations of the unfortunately called pivot has not
    become a reality--that must be some factor in their impressions
    of us.
        Admiral Locklear. First of all, I think in the long run a
    relationship between the United States and China, and even a
    military-to-military relationship, is in the best interest of
    everyone. They watch very carefully the United States. We have
    guaranteed the security there for many years that helped their
    rise as well. They are very much interested in our alliances,
    the status of those alliances, the Status of Forces Agreement
    that we have there, the capabilities of those forces. So, yes,
    it does matter to them.
        Senator McCain. The announcement of a 12.2 percent increase
    in defense spending by China is certainly a contrast in our
    defense spending, and traditionally much of their increases in
    defense spending have not been transparent. Is that correct?
        Admiral Locklear. I believe that there are more defense
    expenditures than what they report annually.
        Senator McCain. What is the likelihood, in your view--and
    this is a very difficult question--of a confrontation between
    China and Japan over the Senkaku Islands?
        Admiral Locklear. I like to stay away from hypotheticals.
        Senator McCain. Yes, you do. I do not want to ask you that.
    But certainly many of their actions have been very provocative.
    Would you agree with that?
        Admiral Locklear. I would agree that their actions have
    been provocative and in many cases, an attempt to change the
    status quo.
        Senator McCain. Does the Littoral Combat Ship (LCS) meet
    your operational requirements?
        Admiral Locklear. The LCS has a long history of why we
    built that ship for what reason, and it has a shallow draft. It
    has speed. It was designed to operate in littorals. It was
    designed to have changeable payloads. It was designed to have a
    small crew. It was designed to be able to be forward deployed
    and rotated. So the operational concept--yes, it does. But it
    only meets a portion of what my requirements are.
        Senator McCain. Is there a lesson learned in the recent
    reduction in the plans for acquisition of the LCS?
        Admiral Locklear. I think that if you talk about a Navy
    that is the size of 320 or 325 ships, which is what I would say
    would be an assessment some have made, is necessary for the
    global environment you are in having 50 or 55 LCSs makes a lot
    of sense because there are a lot of places in the world where
    you can use them. But if you are talking about a budget that
    can only support a Navy much smaller than that, then having
    that heavy of a reliance on LCS does not make that much sense.
    I can understand why the reduction was made, but I am still a
    supporter of the LCS and what it can do.
        Senator McCain. General, what are we to make of all these
    recent firings of short-range missiles out to sea by the North
    Koreans?
        General Scaparrotti. Sir, I think Kim Jong-un had several
    reasons for those firings over time since February 21. I think,
    first of all, there is a small contingent of that. It was a
    part of the normal winter training cycle. They have done that.
    I say a small contingent because this has been very different
    than in the past. The remainder, I think, were demonstrations
    both for his regime and for demonstration to the people of
    capability. The other was a demonstration for us, the alliance,
    and the ROK, in terms of their capability to do that on short
    notice with very little warning.
        Senator McCain. One is rather formidable that they have
    been testing.
        General Scaparrotti. Yes. It consisted of Scuds and then
    also an experimental materials research laboratory that they
    tested as well.
        Senator McCain. How capable is that?
        General Scaparrotti. That is a capable system, and it is
    one that can provide a good munition in rapid fire.
        Senator McCain. I thank the witnesses and thank you for
    your service.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator Reed.
        Senator Reed. Thank you, Mr. Chairman.
        Thank you, gentlemen, for your service.
        Admiral, Chinese strategy--can you describe it? Is it a
    combination of the ability to project forces and area denial,
    or is it exclusive to one of those dimensions? Or is it
    something else?
        Admiral Locklear. I think that it is heavily reliant on an
    area denial or counter-intervention strategy which would be
    designed to be able to keep someone else out and for them to
    have dominant influence.
        However, we are seeing a more global outreach, a more
    forward deployed. We have seen successful PLA operations in the
    Gulf of Aden in counter-piracy operations, I believe, to their
    credit. They have a significant force deployed today, a number
    of ships and airplanes in support of the lost Malaysian
    airliner. We are seeing longer deployments, longer what we call
    out-of-area deployments by their submarines.
        I do not know that that is necessarily something that
    should alarm us, though, because they are a global economic
    power, and as their economic interests grow, their security
    interests will grow and they are going to need a bigger navy
    and bigger assets to ensure that their security is maintained.
        Senator Reed. The point you raise--they have been very
    active in submarine construction. They have a fairly expansive
    fleet of both ballistic missile submarines and attack
    submarines, and they are building more. They have old Russian
    submarines. Are you noticing a surge in terms of their
    submarine capabilities ahead of surface ships?
        Admiral Locklear. Certainly, they have a credible submarine
    force today. They are in the process of modernizing that
    submarine force, and I think that in the next decade or so,
    they will have a fairly well-modernized force. I am not sure of
    the exact number, but probably 60 to 70 submarines, which is a
    lot of submarines, for a regional power.
        Senator Reed. They might represent the most sophisticated
    technological platforms that the Chinese have in terms of their
    seaborne platforms?
        Admiral Locklear. I would say that they are on par. They
    have good sophistication in their surface ships as well. Their
    air defense systems are very capable, and certainly they have a
    very credible missile technology that is among the best in the
    world.
        Senator Reed. General Scaparrotti, how would you evaluate
    the readiness of the ROK forces to fight in a joint effort with
    U.S. forces on the ground under your command, obviously, as
    U.N. Commander?
        General Scaparrotti. Yes, Senator. I would rank them very
    highly. They are a modern, capable force. Their officer corps
    is well-trained, a conscript army, but they have good training
    for their soldiers, sailors, airmen, and marines as they come
    in. I have been out with all of their Services in the 6 months
    I have been there, and they work well together. As an alliance
    we work well together as well.
        Senator Reed. Do you have informal contact with Chinese
    counterparts and a perspective on what their attitude is
    towards the regime in Pyongyang today?
        General Scaparrotti. No, I do not, Senator.
        Senator Reed. So you do not have any even informal contact?
        General Scaparrotti. Negative.
        Senator Reed. Essentially, your intelligence is coming from
    the Intelligence Community and the diplomatic community about
    what the attitude is of the Chinese towards the North Korean
    regime.
        General Scaparrotti. Yes, sir, and also from the
    ambassadors and officers that are members of the U.N. Command
    that I have as well, and that is a good source of information
    because some of those also have embassies or offices in North
    Korea.
        Senator Reed. Would you comment on what your perception is?
    I know you have limited information, but do you have a
    perception of what their attitude is? Are they supportive or
    upset about them or questioning the North Korean regime?
        General Scaparrotti. What I understand is that they are
    frustrated, that they were surprised, for instance, by the
    execution of Chang Song-taek, and they are attempting to ensure
    that KJAU in the regime does not create instability on their
    border.
        Senator Reed. Admiral, let me turn to the issue of
    amphibious capabilities in Asia. The Marine Corps was engaged
    in counter-insurgency operations for more than a decade in
    Afghanistan and Iraq. They are now, with this pivot, coming
    back in. Can you comment about the capability to conduct
    amphibious operations in the Pacific?
        Admiral Locklear. Yes, Senator. We have had a good return
    of our marines back to the Asia-Pacific region, particularly as
    the activities in the Middle East wind down in Afghanistan.
    Under my combatant command, I have five amphibious readiness
    groups. I have four in San Diego and one in Sasebo, Japan.
        The reality is that to get marines around effectively, they
    require all types of lift. They require the big amphibious
    ships, but they also require connectors. I have asked for
    additional amphibious lift be put into the Pacific, and that
    request is under consideration.
        Senator Reed. Without that lift, you would be challenged to
    simply conduct opposed amphibious assault.
        Admiral Locklear. The lift is the enabler that makes that
    happen. So we would not be able to do, as you suggest.
        Senator Reed. Thank you, sir.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Reed.
        Senator Sessions.
        Senator Sessions. Thank you, Mr. Chairman.
        General Scaparrotti, having observed your plans in base
    relocation in Korea, tell us the number of troops you are
    looking to house there and whether or not families will be
    accompanying the soldiers.
        General Scaparrotti. Yes, sir. I will focus mostly on
    Humphreys. As we relocate predominantly Humphreys, the largest
    base that we will have there, we will relocate forces, and they
    will go from about 9,000 to approximately 24,000 in that area.
    In terms of families, it would be, in terms of command-
    supported families in that area, about 2,700.
        Senator Sessions. So most of the soldiers will be deployed
    without families?
        General Scaparrotti. That is correct. In Korea, Senator,
    the predominance of our force are on unaccompanied tours.
        Senator Sessions. Now, what would be the total force
    strength in Korea?
        General Scaparrotti. 28,500, sir.
        Senator Sessions. This new basing would allow that to house
    them adequately. I think current housing is inadequate, and I
    think the relocation is smart. I think you could be leaner and
    more effective with this relocation. Are you on track?
        General Scaparrotti. I agree with you. We are on track
    fundamentally. We are not exactly on the timeline primarily
    because of construction, about a 3-month lag on that. But I
    think we will be okay.
        Senator Sessions. Admiral Locklear and General Scaparrotti,
    we are facing real budget problems. There is just no doubt
    about it. Admiral Mullen told us the greatest threat to our
    national security is our debt. The latest projections from the
    Congressional Budget Office indicate that in 5 years interest
    on our debt will surpass the defense budget, and that in 10
    years, we will be paying $880 billion in interest on our debt.
    So all of us have to confront that fact.
        I am uneasy and very troubled by the fact, it seems to me,
    that DOD has disproportionately taken reductions. However,
    colleagues, there are no further cuts in the future under the
    budget plan that we modified with the Murray-Ryan bill. Our
    numbers for the base defense budget for fiscal year 2015 is
    $495 billion. The peak in fiscal year 2012 was $530 billion. So
    we are down $35 billion in actual dollar spending from where we
    were at our peak, but that remains flat for 2 years and then
    begins to grow at the rate of about $13 billion a year.
        So I am worried about where we are. I am worried what kind
    of damage this may do to the military. But all of us have to be
    realistic that you are not going to be able to expect that
    Congress is just going to blithely add a lot of new spending.
    We do not have the money, and our fundamental threat that is
    impacting America now is debt. The interest payment is the
    fastest growing item in our budget, and it is just terribly
    dangerous to us.
        Admiral Locklear, on the LCS, one of the things that we are
    worried about with regard to China is their sophisticated
    expansion of their submarine capability and even nuclear
    submarines. That ship is designed and will be utilized in anti-
    submarine warfare. Will it not?
        Admiral Locklear. One of the three capabilities that was in
    the original design was an anti-submarine warfare capability.
        Senator Sessions. Are we where we need to be in terms of
    technology to identify and monitor submarine activity?
        Admiral Locklear. I would say my assessment across the
    joint force is that we are where we need to be, and understand
    the places where we need to go.
        Senator Sessions. With regard to mines, modern mines are
    threats to us and could deny access to entire areas of the
    ocean. This ship is designed to be capable of being an
    effective anti-mine ship, the LCS.
        Admiral Locklear. That is correct. I believe that was the
    first mission capability that was going to be put into place.
        Senator Sessions. You mentioned in a symposium recently
    that it has taken up to 17 years to get a new ship brought on
    line. I know that is hard to believe, but it historically seems
    to be about accurate. Is that a concern if we were to design a
    new ship--the length of time and the cost of developing that
    ship?
        Admiral Locklear. I actually got that quote from Admiral
    Wayne Meyer who was basically the father of Aegis. He
    instructed me one day that from the time you think about a ship
    until you actually operate it, it is called a 17-year locust he
    told me. He said it takes 17 years by the time the bureaucracy
    works itself out.
        The LCS--we tried to cut that, and I think we cut it by a
    significant amount. The Navy did. But it was not without risk.
        Senator Sessions. It was almost 17 years because when I was
    on the Senate Armed Services Committee Seapower Subcommittee
    when I came here 17 years ago, Admiral Vernon Clark was
    proposing the LCS, and it is just now becoming to be produced.
    It is a fabulous ship and has great potential, as you indicated
    earlier, to take on board all kinds of technological equipment
    that could be valuable in the future. You want to continue to
    see them developed at the speed they are.
        I will submit some written questions perhaps about my
    concern about our allies in the Pacific, the growing strength
    of the Chinese nuclear capability, and how that is impacting
    our friends and allies who depend on us for a nuclear umbrella.
    I believe, as we discussed, colleagues, with any kind of
    nuclear treaty, we cannot just consider Russia. We will also
    have to consider the rising nuclear capability of China.
        Thank you very much.
        Chairman Levin. Thank you, Senator Sessions.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        Welcome to both of you. Thank you for being here and for
    your service to this country.
        Admiral Locklear, I know that this has come up before, but
    in your written testimony, you highlight China's significant
    advances in submarine technology and its continued production
    of ballistic missile submarines which will give China its first
    credible sea-based nuclear deterrent probably by the end of
    2014, as you say. Obviously, this statement is very concerning.
    DOD's submarine capabilities are going to be critical, as you
    have discussed, and the continued procurement of two Virginia-
    class submarines each year will be critical to mitigating the
    projected shortfall in submarines included in the Navy's 30-
    year shipbuilding plan.
        Are you confident that the Virginia-class submarine
    procurement plan and the proposed enhancements are what we need
    to meet the demands of our submarine force in this century?
        Admiral Locklear. I am confident.
        Senator Shaheen. Can you elaborate a little bit on that,
    given the challenges we are facing from China?
        Admiral Locklear. Certainly we need to sustain the size of
    our submarine force, and I would be an advocate of growing our
    submarine capability. We still maintain a significant advantage
    in undersea warfare, and we need to continue to maintain that
    significant advantage.
        The same applies to submarines that applies to ships or
    airplanes. Only one submarine can be in one place at one time.
    So we have to size that force based on what the world is
    showing us today and into the future. The world gets a vote on
    how we have to respond, and the submarines figure heavily,
    particularly my AOR, into scenarios from peace all the way to
    contingency.
        As far as the upgrades that we are putting into our
    Virginia-class submarines, I am comfortable that the submarine
    community and the Navy have looked hard at their role and how
    they are going to be in the role of the joint force and that
    they have calculated across a wide range of missions that
    submarines do, whether it is intelligence and reconnaissance or
    whether it is strike capabilities, whether it is special
    operations capabilities, that these have been figured into the
    future design of the Virginia-class submarine.
        Senator Shaheen. Thank you.
        Robert Work testified before this committee last month at
    his confirmation hearing, and one of the things that was a
    concern to me, I think probably to Senators King and Ayotte, at
    a very parochial level is that he talked about the U.S.
    shipbuilding industrial base as being under pressure. As we
    have looked at the projected population of expert shipyard
    employees, those with 30 or more years of experience, it is
    expected to decline by roughly 40 percent by 2018.
        So I wonder if you could talk about how concerned you are
    about this, Admiral Locklear? What steps are being put in place
    to address attracting a new workforce to replace the folks who
    will be retiring, and especially given the challenges of budget
    cuts and uncertainty, how you expect we will address this
    coming challenge?
        Admiral Locklear. When I was a young officer on board one
    of my first ships, I was an engineering officer, and I happened
    to be in a U.S. shipyard at that time, having a ship worked on.
    We opened up the main engines of the ship, and the guy that was
    sitting next to me was a shipyard worker probably about my age,
    and he was showing me the inside of this engine. He said,
    ``come down here. I want to show you something.'' Inside that
    engine, he had welded his name when he was a young apprentice
    in that shipyard. The ship was about 25- to 30-years old at
    that time. So I had a good visibility of the credibility of
    that a continuity of these people that really understand the
    skill and craft of making very sophisticated ships, warships,
    and submarines.
        I believe our industrial base is under pressure,
    particularly as our shipbuilding industry shrinks and we do not
    do a lot of commercial shipbuilding in this country. So we have
    really a national treasure, national asset that has to be
    looked at from that perspective. To expect that they compete
    out there in the open market globally, and particularly when we
    are, by law, required to build our ships in our own country,
    which is the right thing--so we have to continually update that
    workforce. We have to contract it and then retain it.
        So I know particularly the Navy, as Mr. Work talked about,
    has looked hard at this, but it has to be figured in the
    calculation of our national security strategy for the long run.
        Senator Shaheen. Obviously, we are very proud, those of us
    who represent the Portsmouth Naval Shipyard. I am sure it is
    true of others who represent the other shipyards in this
    country--are very proud of the good work of the folks who have
    been there for many years and are very concerned about our
    actions here to make sure that we continue to support the level
    of activity that allows this country to maintain its security.
    As we look at the future and the potential cuts from
    sequestration kicking back in in 2015, it is certainly
    something that I hope all of us will work very carefully with
    you and the leadership of our military to address because if we
    allow those cuts to come back in, it is going to have clear
    implications for our future.
        Thank you very much.
        Chairman Levin. Thank you very much, Senator Shaheen.
        Senator Wicker.
        Senator Wicker. Thank you, Mr. Chairman.
        Admiral Locklear, I am deeply concerned about the
    administration's budget request that it may not provide the
    full range of equipment and ready forces necessary to our
    national security strategy in the Asia-Pacific region.
    Deterrence is intrinsically linked to readiness. To provide
    deterrence, our military's capability must be tangible and
    demonstrable.
        So tell us, first of all, in a general sense, what do you
    see as the U.S. security priorities in the Asia-Pacific region
    and what is your assessment of the risk to your ability to
    execute our objectives in the Asia-Pacific region if we do not
    provide you with ready and capable forces?
        Admiral Locklear. I think our first priority is to support
    General Scaparrotti to ensure that peace and stability are
    maintained on the Korean peninsula and that the Kim Jong-un
    regime is properly contained.
        The second priority, I think, is to ensure that our
    alliances, our historic alliances--we only have seven treaties
    as a nation, and five of those are in my AOR--are maintained
    and that they are upgraded for the 21st century and that they
    have the right military equipment to support those alliances.
        Then I would say the next is our growing list of partners
    and how we partner with them that are below the ally level but
    certainly are no less important to us as far as how we maintain
    peace and security.
        Then finally, we have enjoyed stability in this region
    generally for the last number of decades. The U.S. military
    presence has underwritten that stability, and I believe it
    remains a priority. I believe this is what the rebalance was
    about, and is recognition that we have to get back at it in the
    Asia-Pacific region by necessity, not by desire but by
    necessity.
        Senator Wicker. Sir, who are our growing list of partners?
    Would you outline those?
        Admiral Locklear. We have a strategic partnership in
    Singapore. We have a growing relationship with Malaysia and the
    Philippines. The Philippines is an ally, but Malaysia,
    Indonesia, Brunei, all these countries that are predominantly
    in Southeast Asia and South Asia that are important to the
    future security environment.
        Senator Wicker. We have obligations to five countries under
    treaties, and then we have that growing list of partners.
        Help us with the people that might be listening, the
    American on the street, the guy at work, the soccer mom taking
    care of the family. How does stability affect us in our daily
    lives? Stability in your AOR.
        Admiral Locklear. My AOR is 50 percent of the world. Of
    that 50 percent, 17 percent of it is land and 83 percent is
    water. Of that 17 percent of the land, 6 out of every 10 people
    alive live on that 17 percent. Most of the global economy is
    generated from there. Most of the type of two-way trade that
    our country does is in this region is generated there. Most of
    the energy supplies that really influence the global economy
    flow through this region every day.
        We are a Pacific nation. Our economy is Pacific-centric,
    and it is important to all of us for the security of our
    children and our grandchildren to ensure that a peaceful and
    stable Asia in the Asia-Pacific is maintained.
        Senator Wicker. I think you are right, Admiral.
        It just concerns me a bit, as I look at what is going on
    now with some of our European allies, countries that have
    relied, to their detriment, on promises that we have made about
    the integrity of their territory. It just seems to me that any
    signal we send that we do not really take seriously our treaty
    obligations is a worrisome notion for people who might rely on
    us in the future. So I just wonder aloud to the members of this
    committee and the people within the sound of my voice what
    signals we are sending when we do not come down very hard on
    violations of the territory of some of our treaty partners.
        Let me shift, though, in the time I have. I am glad to know
    that Senator Reed, who is a distinguished leader on this
    committee, has asked you about our amphibious capability. I
    believe you said that you had asked for additional ships for
    your AOR. Is that correct, Admiral?
        Admiral Locklear. That is correct. It is part of the
    ongoing dialogue about the rebalance and the priorities of how
    you accomplish that rebalance. Part of that discussion was
    about amphibious shipping.
        Senator Wicker. I think you probably have some people on
    this committee and in Congress who would like to help you on
    this.
        Why do you need more amphibious capability? Would you
    elaborate on the role of our marines, the expeditionary
    marines, in your AOR? Would the effectiveness of the marines be
    diminished if there were insufficient amphibious ships, or I
    guess if we do not correct the insufficient number of ships and
    how would this affect your abilities as the combatant
    commander?
        Admiral Locklear. Certainly I am not the only combatant
    commander that desires amphibious shipping or the marines that
    are on them. So there is a global competition among us as the
    world situation moves around and we need different types of
    forces. Generally, the capabilities that the Marine Corps bring
    with amphibious readiness groups is applicable to almost every
    scenario from humanitarian assistance, disaster relief, all the
    way to high-end contingencies. But the global demand signal
    today is greater than what we can resource.
        Of course, we have to make tradeoffs. We only have so much
    money. We only have so much that could be dedicated. I think
    the Navy and the Marine Corps have teamed together to take a
    look at that.
        In my particular AOR, not only do I have forces that are
    out and about in the western Pacific predominantly, but I also
    have amphibious forces that I train and maintain and then I
    send them to other combatant commands. I send them to U.S.
    Central Command and to U.S. European Command.
        In the Pacific, though, it is my view that as the marines
    come back, that we should optimize the capability of the
    marines particularly in the area west of the dateline, and to
    do that, we have to have adequate amphibious lift to do that.
        Senator Wicker. Let me just leave you with this request.
    Tell us what you need and why you need it and what we will not
    be able to do if you get less than that. I would hope that
    members of this committee would do what we could to make sure
    that we are ready for contingencies in your area.
        Thank you very much. Thank you to both of you, actually.
        Chairman Levin. Thank you, Senator Wicker.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        Admiral, I would like to begin with a compliment. I was
    fortunate enough to spend the past weekend on the USS New
    Mexico, a Virginia-class submarine, doing exercises under the
    polar icecap. The machine, the device, the ship was
    extraordinary, but the overwhelming impression I had was of the
    quality of the sailors on that ship. From the commander to the
    mess folks, they were dedicated, patriotic, and passionate
    about what they were doing. You have an extraordinary
    organization. I think sometimes we talk about it in a general
    sense. But to see these young people and their level of
    knowledge--I was particularly impressed by enlisted people who
    had come up through the ranks to have real responsibility on
    that ship. It is an indication of the quality of the military
    that we have. I sometimes feel that we do not adequately
    acknowledge and reward those people for the extraordinary and
    uncomfortable, by definition on a submarine, work that they do.
    It was a riveting experience in terms of the admiration for
    those young people. So the organization is to be complimented.
        Second, I want to associate myself with the comments of
    Senator Sessions. I worry that we are whistling past the
    graveyard in terms of the debt service requirement that is
    looming as interest rates inevitably rise. Interest rates are
    now running at about 2 percent, which is the world record of
    low. If it goes to 4.5 percent, then interest charges--just
    interest charges--will exceed the current defense budget. That
    is dead money. It does not buy any ships, personnel, park
    rangers, Pell Grants, or anything else. I think it is something
    that we really need to pay some attention to while we are in
    this interest lull because when they go up, it is going to be
    too late.
        Third, in terms of a comment, General, you mentioned that
    we have an asymmetric cyber advantage, but it occurs to me that
    for the same reason we have an asymmetric cyber vulnerability
    because of the advanced nature of our society and the extent to
    which we depend upon the Internet and interrelationships for
    everything from the electrical grid to natural gas to financial
    services--so I believe we do have, and I have observed that we
    do have, an advantage because of our advanced state. But
    several of my folks have pointed out to me that it also can be
    a significant disadvantage.
        Admiral, turning to your responsibilities, what do we need
    to bolster the security capabilities of our allies and partners
    in the region, assuming we cannot carry the whole burden,
    especially where we do not have a permanent military presence?
    Is there more we should be doing in the area of foreign
    military sales (FMS), foreign military financing, training, and
    those kinds of things in the Pacific region?
        Admiral Locklear. In general, I would say that FMS are an
    exceptional tool to be able to do a couple things. First, is to
    bolster the capacity and capability of our partners and our
    allies so that they can be more supportive in the security
    environment, and we are certainly doing that with our key
    allies.
        Second, what it also does is that when you have FMS, it
    puts you together with a relationship for sometimes 20 or 30
    years, depending on the life of the system that you have. So
    you share training. You share schools. You share common
    experiences. You share parts supply, all those types of things.
    So I believe that FMS is a very valuable tool for being able to
    help us shape the security environment, particularly in my AOR.
        Senator King. Senator Kaine and I were recently in the
    Middle East and observed the value of the training component
    where military officers from other countries come here for
    training. Clearly it is a training value, but it is also an
    America 101 process. Is that an aspect that takes place also in
    the Pacific theater?
        Admiral Locklear. It is. Of course, we rely heavily on
    International Military Education Training (IMET) funding to be
    able to do that, and I think we could use more IMET. You
    accurately stated it. It is not just our partners and allies
    coming this direction, it is also our officers and enlisted
    going in their direction. Anytime you build trust and
    understanding, that lasts for years, and it builds an inherent
    ability in the security environment. When you have senior
    officers at my level in different countries that have known
    each other for 20 to 30 years, went to school with each other,
    it makes a difference when you have to deal with a crisis.
        Senator King. A question for both of you gentlemen. The
    President's 2015 budget requests to retire the U-2 manned
    aircraft in favor of the unmanned Global Hawk for high altitude
    reconnaissance. Where would Global Hawk be able to provide the
    capabilities you need  or  will  gaps  be  created  by  the
    retirement  of  the  U-2? Do you gentlemen feel that the Air
    Force request is appropriate, given your needs and the needs in
    your region?
        General Scaparrotti. Senator, first of all, given the
    budget constraints, I understand the Services' and the Air
    Force's need to reduce platforms, also aging platforms. But in
    my particular case as the operational commander in Korea, the
    U-2 provides a unique capability that at least presently the
    Global Hawk will not provide. It will be a loss in intelligence
    that is very important to our indicators and warnings. So as we
    look at this, as they look at the retirement of the U-2, we
    have to look at the capabilities of the Global Hawk and perhaps
    build in those capabilities so that I do not have that
    intelligence loss.
        Senator King. Is it the case that you are dealing with a
    potential adversary that is so unpredictable and can act so
    rapidly that intelligence is of utmost importance?
        General Scaparrotti. It is. I have looked for persistence
    because of the indicator and warning that I need in a short
    timeline.
        Senator King. A follow-up question, very briefly. The Air
    Force is also requesting a reduction in Predator and Reaper
    combat air patrols from 65 to 55. Is that a problem? Admiral,
    why don't you tackle that?
        Admiral Locklear. In our AOR--and I think General
    Scaparrotti will have his own perspective on it--the type of
    capabilities that the Reaper brings are--we live in a contested
    environment. You cannot equate the success you have had with
    those platforms in areas of the world where you have air
    supremacy or air superiority. What we have to have is
    survivable platforms, survivable capabilities. The reduction in
    those platforms, I think, is less important to us in the Asia-
    Pacific region than it may be in other parts of the world.
        Senator King. General, any thoughts on that question?
        General Scaparrotti. No. I agree with Admiral Locklear,
    that given the conditions that we have in Korea and high-
    intensity potential crisis, we would have to gain air dominance
    before we employed those.
        Senator King. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator King.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to thank both of you for your service and your
    leadership and particularly also your families for the
    sacrifices you have made. We appreciate it.
        Admiral Locklear, I wanted to follow up on the question
    that my colleague, Senator Shaheen, asked you with regard to
    the submarine capabilities of our country. I believe you said
    that you are an advocate for greater capabilities for our
    attack submarine fleet, if that is right.
        Admiral Locklear. That is correct.
        Senator Ayotte. Certainly, you talked about the importance
    of the Virginia-class submarine, particularly with our
    capability in the Asia-Pacific region.
        One question I wanted to ask you is what percentage of your
    combatant commander requirements for attack submarines are
    being met?
        Admiral Locklear. They are not all being met.
        Senator Ayotte. They are not all being met. In fact, last
    year I think it was about 50 percent in terms of the combatant
    commander requirement requests for attack submarine. I would
    appreciate an update on that. My sense is, it is probably not
    much better or may not even be any better. It may be lower. I
    look forward to those numbers. So we are not meeting all our
    combatant commander requests for attack submarines.
        As we look forward to the Los Angeles-class submarines
    retiring in the coming years, we are replacing them with
    Virginia-class submarines. As I look at the numbers, our attack
    submarines will decline from 55 attack submarines in fiscal
    year 2013, if we go forward, to a low of actually 42 in 2029.
    We are seeing a diminishing trajectory despite the fact--I am
    very glad that there was obviously an inclusion of two
    Virginia-class submarine productions over the Future Years
    Defense Program. I am seeing a disconnect in terms of our needs
    not only in the Asia-Pacific region, but this is where I think
    we see it very much and the declining capacity we will have
    under the current predictions for attack submarines.
        If we are rebalancing to the Asia-Pacific region--and
    really, as we have heard today, it is an environment dominated
    by maritime presence. How can we justify a 24 percent decrease
    in the size of our attack submarine fleet? Does this not
    suggest that we are not adequately resourcing this rebalancing
    as we look at a time, as you said in your testimony, that, in
    fact, China has increasing capability with regard to their
    submarine fleet and has continued to invest in their submarine
    fleet? Could you help me with that?
        Admiral Locklear. I think you accurately represented what
    the future will be based on based on even building two a year.
        Senator Ayotte. Right.
        Admiral Locklear. Of course, when the Chief of Naval
    Operations (CNO)--I will not speak for him, but he is the guy
    who has to manage putting all the requirements into a fixed top
    line. It comes down to managing risk and finding where we can
    absorb risk inside the budgets that we are given.
    Unfortunately, I think that the best that they have been able
    to do, even at two a year, is what you just outlined.
        Senator Ayotte. Thank you, Admiral. I just think that
    people need to understand that this is going to be a
    significant decrease if we stay where we are with regard to how
    we are resourcing the overall defense budget but also, in
    particular, our submarine fleet when there are going to be
    greater needs where countries like China are making greater
    investment and where the value of our attack submarine fleet is
    paramount in terms of defense of the Nation and also our
    presence in the Asia-Pacific region. I think this is an issue
    we have to pay careful attention to, and it is one that we need
    to focus on.
        I also fully agree with my colleague about the value of our
    workforce that maintains those submarine fleets but also the
    workforce that has the technical expertise and background. I am
    very proud of the workers at the Portsmouth Naval Shipyard, but
    this is something that, as you described, is a treasure that we
    need to continue to invest in if we are going to have that
    capacity going forward.
        General Scaparrotti, I wanted to ask you about something in
    your testimony. You talked about missile defense shortfalls in
    terms of your responsibilities. What is it that are our missile
    defense shortfalls and what are your concerns there?
        General Scaparrotti. Senator, first of all, we have a
    challenging environment in terms of North Korea's development
    of ballistic missiles, and they continue apace at that. It is
    both a U.S. and a ROK concern that I have in terms of the
    alliance, and it is developing, along with the ROK, a layered
    interoperable missile defense system that has the right
    components and also has the sufficient munitions. I have made
    the specific requirements known.
        Senator Ayotte. It seems to me with the often erratic
    behavior of the new leader in North Korea, that this is an
    important investment for us if we have needs in missile
    defense, in particular, for protecting South Korea and our
    troops that are there. I look forward to working with you on
    this issue because I think this is critical with the threats we
    face in the region and also I think with what we have seen, as
    you say in your testimony, troubling actions by North Korea in
    terms of proliferation of weapons as well. I think this is
    another issue that we need to watch and is of deep concern to
    us and our allies.
        Admiral Locklear, I wanted to ask you about a particular
    system and its value to PACOM, and that is the Joint Land
    Attack Cruise Missile Defense Elevated Netted Sensor (JLENS),
    which is designed to detect, track, and defeat airborne threats
    including cruise missiles, manned, and unmanned aircraft. Of
    course, you have already testified about some of that activity
    already in the Asia-Pacific region and surface-moving targets,
    as well as swarming boats. In fact, Secretary Hagel has said
    that four combatant commands, including your command, have
    expressed an interest in the capability provided by JLENS.
        Would deployment of JLENS in the Pacific theater help PACOM
    provide surveillance and the fire control required to better
    provide missile defense and force protection to forward-
    deployed troops? First, I wanted to get your thoughts on this
    system.
        Second, are you aware that there actually is a second JLENS
    that stands in reserve right now? Not to put it in more
    civilian terms, but it is in the closet right now in Utah and
    not being deployed. Can you help me understand why that is?
        Admiral Locklear. First of all, you accurately portrayed
    it. I sent a letter to Secretary Panetta at that time asking
    for the capabilities that a JLENS-like system would provide in
    relation to the sophisticated integrated air missile defense
    scenarios that we face in the Asia-Pacific. It would be
    important. It is important.
        It is important, I think, since it is a relatively new
    technology, to get it out, to test it. You cannot just bring
    these things in overnight and expect them to be properly
    integrated. We have to work our way through that.
        I was aware that there is another system. I think that the
    decision was made by the joint force, because of the
    capabilities of the system and the uncertainties of other
    regions of the world, to keep one in reserve just in case we
    need it. I do not fault their decision. I think that given the
    fact that we only have two of the systems and the fact that the
    world is pretty dynamic, keeping one in reserve may be the best
    solution for now.
        Senator Ayotte. Thank you very much, both of you. We
    appreciate it.
        Chairman Levin. Thank you very much, Senator Ayotte.
        Senator Hirono.
        Senator Hirono. Thank you, Mr. Chairman.
        I would like to first associate myself with the comments of
    Senators King and Ayotte in recognizing the competence and the
    dedication of the men and women who serve.
        Admiral Locklear, it is always good to see you once again.
    I also want to commend you on releasing PACOM's energy security
    strategy. It is a concise, clear-eyed assessment of the
    challenges and opportunities the United States faces with
    regard to energy matters in this region, and clearly access to
    affordable, sustainable energy sources is a key part of
    security and stability in the region.
        To my question, Admiral, you mentioned the value of
    multilateral engagements within the region. Specifically, you
    were talking about this with regard to Senator Wicker's
    comments. At Secretary Hagel's invitation, the ASEAN defense
    ministers meeting will be held in Hawaii next month. What are
    your thoughts about the significance of this meeting, and do
    you have plans or are there plans for other meetings of this
    sort with countries or our partners who are below the alliance
    level, as you noted?
        Admiral Locklear. One of my objectives as PACOM Commander
    is to be as supportive as possible of the ASEAN nations, the
    ASEAN organization. Beyond Secretary Hagel's hosting the
    beginning of April in Hawaii, which I will assist him in
    hosting them--and we will talk about many aspects of
    multilateral cooperation--I also make it a point every time I
    go to Jakarta to stop in and see the permanent representatives
    of ASEAN, to see the Secretary-General or his Deputy while I am
    there, and to show generally U.S. support for growing
    multilateral organizations such as ASEAN. There is a growing
    place, I think, particularly in Southeast Asia for these
    multilateral organizations that when they come together, they
    are a consensus organization. We have to set our expectations
    at a certain level, but certainly they should have a voice and
    they should have a voice together.
        Senator Hirono. As you noted, the kind of relationships
    that we build in these areas and with these countries would be
    very beneficial to our national security interests also.
        With the rebalance to the Asia-Pacific theater, I am having
    a bit of trouble understanding a new Air Force plan which would
    move four Air Force KC-135 tankers from Joint Base Pearl
    Harbor-Hickam to the Mainland. Given the space and time needs,
    it seems to me that keeping the tankers forward-deployed in
    Hawaii would make the most sense. Would you like to share your
    perspective on this proposal?
        Admiral Locklear. I have not yet seen the formal proposal
    by the Air Force, but that proposal would have to come through
    me for my comment. The decision to move any forces that are
    combatant commands to PACOM or under my command would have to
    be authorized by Secretary Hagel. There will be a dialogue
    about this. I think there will be a lot of perspectives as we
    look at it.
        I believe those four airplanes were a result of a base
    realignment and closure initiative a number of years back. What
    I understand is that there are some maintenance efficiencies
    that we are being driven to because of the fiscal realities we
    are in, that this is probably the reason that the Air Force is
    pursuing the consolidation of these assets. But we have not
    made a decision yet.
        Senator Hirono. I would have an expectation that the
    National Guard, Air Force, and you would be very much engaged.
    Of course, I want to be in touch also.
        DOD has proposed a 36 percent reduction in military
    construction (MILCON) funds for fiscal year 2015, and it is my
    understanding that these cuts were made to help operations and
    readiness accounts because of the impact of sequester. How will
    these budget changes affect your ability to carry out your
    missions in PACOM both from the MILCON and operations and
    readiness standpoints?
        Admiral Locklear. In general, slowing of MILCON that we had
    anticipated in our program to this degree, 36 percent will
    impact the Services' ability throughout the world, but in
    particular in my AOR to be able to move forward with some of
    their initiatives. For instance, in Hawaii, I think there has
    been a MILCON reduction at Kaneohe. We are moving to move V-22s
    there, new Cobras, new Huey helicopters. It will slow the pace
    at which we are able to integrate these forces into the AOR.
        Senator Hirono. My hope is also that the deferred MILCON
    items will be restored as we go along and as we assess the
    needs that you have in this area.
        You mentioned the cyber threat that impacts the PACOM AOR,
    and with the ever-increasing number of cyber attacks
    everywhere, frankly, would you support a strong cyber team that
    is made up of Active, Guard, and Reserve personnel in your AOR?
        Admiral Locklear. Generally speaking, the more cyber
    experts we have, the better. But I would recommend that we
    refer that over to Cyber Command to take a look at how those
    forces would be integrated in the overall cyber plan because,
    as we have seen in the last number of years, the Guard in times
    of crises goes forward in many cases, and we would have to
    understand how they would be manned and trained and maintained
    to be relevant when they showed up with the Active Forces in a
    contingency.
        Senator Hirono. It is clear that we all ought to be working
    in parallel, of course, all of us should be working together.
    That is really where I am going. I certainly am not advocating
    that everybody does their own thing in this area because it is
    really complicated, I realize.
        Thank you very much, Mr. Chairman.
        Chairman Levin. Thank you, Senator Hirono.
        Senator Graham?
        Senator Graham. Thank you, Mr. Chairman.
        I thank both of you for your service.
        General, is it a fair statement that North Korea is one of
    the most unstable nation states in the world today?
        General Scaparrotti. Yes, sir, I would agree.
        Senator Graham. In the top two or three?
        General Scaparrotti. Yes, sir.
        Senator Graham. In terms of their missile program, by 2024,
    do you expect that they will have ballistic missile capability
    that could effectively reach our Homeland?
        General Scaparrotti. Yes, sir, on the pace they are on.
    Yes, sir.
        Senator Graham. Do you expect by 2024 that they will have
    plutonium weapons, not just uranium-based nuclear bombs?
        General Scaparrotti. Yes, sir.
        Senator Graham. Admiral, by 2024 if China continues on
    their present pace of building up their military, what will the
    balance of power be between China and the United States in your
    command?
        Admiral Locklear. I think in the region, the balance of
    power will continue to shift in the direction of the Chinese
    depending on how much more investments they make and depending
    on what our forces look like forward. So it will continue to
    shift.
        Senator Graham. We are uncertain as to what China will do,
    but it seems like they are intent on building up the military.
    Is that a fair statement?
        Admiral Locklear. At 12.2 percent, that is a fair
    statement.
        Senator Graham. Let us look at the pace they are on and
    what will happen to us by 2024. If sequestration is fully
    implemented--how much longer realistically do you have in this
    command? A couple of years? What is the normal tour?
        Admiral Locklear. It is about 3 years. I am in my last
    year.
        Senator Graham. As we look forward, we will probably have
    two or three commanders by 2024 at least.
        Looking down the road, if sequestration is fully
    implemented, what will that mean in terms of the ability to
    defend this region and to have a deterrent presence? Is
    sequestration a mild, medium, or severe effect on future
    commanders to be able to represent our interests in your area?
        Admiral Locklear. I think assuming that the world, other
    than the Asia-Pacific region, will not be peaceful in 2024,
    sequestration will have a severe effect on our abilities.
        Senator Graham. Now, General, the transition of leadership
    in North Korea--is it stabilizing or is it still volatile? Do
    we know who is in charge of the country?
        General Scaparrotti. Senator, we do know who is in charge.
    It is Kim Jong-un. I think recently he has stabilized somewhat.
    He is displaying a normal routine at this point, purposely so,
    I think, for his regime. But we do not know yet the stability
    within his close regime. A significant change in the leadership
    recently there.
        Senator Graham. Do we have any real leverage to stop their
    nuclear program from developing at the pace they would desire?
        General Scaparrotti. I think the sanctions that we have
    used to this point have not had the impact in that regard.
        Senator Graham. South Korea. Are they seeking to enrich
    uranium?
        General Scaparrotti. There are discussions with civil
    nuclear capability.
        Senator Graham. Is it our position to oppose enrichment by
    the South Koreans for civilian purposes, or do you know?
        General Scaparrotti. Senator, I do not know.
        Senator Graham. Admiral, you have a lot of the world to be
    responsible for. Our military budgets will be at 2.3 percent of
    GDP. Do you know the last time America spent 2.3 percent of GDP
    on defense in the modern era?
        Admiral Locklear. I could not accurately say.
        Senator Graham. Is this not dangerous, what we are doing?
        Admiral Locklear. The real question, as we talked about
    here today, is how do you weigh what appears to be the looming
    threat to the U.S. economy.
        Senator Graham. Let us say if you eliminated DOD in
    perpetuity, would it remotely move us toward balancing the
    budget?
        Admiral Locklear. From what I can see, it would not.
        Senator Graham. So if we assume that is fairly accurate,
    the path we have taken as a Nation in terms of our defense
    capabilities--would you say it is alarming?
        Admiral Locklear. I would say that it bears serious
    watching.
        Senator Graham. What would you say, General?
        General Scaparrotti. Sir, I would say that I am very
    concerned about it.
        Senator Graham. From our enemies' point of view, do you see
    it likely that China will have a confrontation with Japan over
    the islands that are in question, Admiral?
        Admiral Locklear. I think the potential for miscalculation,
    if they do not manage it between themselves properly, could be
    high and it could be very dangerous. That said, I do not see in
    the near term that they are heading in the direction of
    confrontation.
        Senator Graham. When you talk to our allies, do they seem
    concerned about the direction we are heading as a Nation, the
    United States, in terms of our defense capability? Have some of
    the things that have happened in the Mideast--has that affected
    at all the view of American reliability in your area of
    operation?
        Admiral Locklear. I think the whole world watches what we
    do militarily, and for a long time, we have been the single
    guarantor of security around the world.
        Senator Graham. But they need to hedge their bets?
        Admiral Locklear. They are starting to. I think they are
    starting to look at it and they are asking the question of our
    staying power globally, not just in my region.
        Senator Graham. Thank you both.
        Chairman Levin. Thank you, Senator Graham.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman, and to our
    witnesses, thank you for your service and your testimony this
    morning.
        I do not think anyone has mentioned yet, but we should
    applaud the work of the 7th Fleet in assisting in trying to
    find the Air Malaysia flight, just an example of the kind of
    thing the military does every day to advance humanitarian and
    other causes, and that work is important work.
        I think many of the questions and comments today have
    really circled back to budgetary reality. Certainly Senator
    Graham's did. We have two budgetary choices posed for this
    committee by the President's budget submission. Do we accept
    the President's budget or some version of it, which I call the
    ``half-sequester budget?'' The President's proposal would
    actually absorb half the sequester cuts over the entire range
    of the sequester, but try to find a replacement for the other
    half and there is a suggested replacement from 2016 and out. Or
    do we just accept the full sequester?
        There is no way we can do what we want if we accept the
    full sequester. Period, full stop. We cannot do it. If we are
    concerned, we have a way to solve it, but the way we have to
    solve it is do what we did in the 2014 to 2015 budget and do
    sequester relief.
        So it is my hope that we will work in 2016 and out just
    like we did in the 2014 to 2015 budget to do it. That is
    ultimately the significant way to answer some of the concerns
    that you are each laying on the table, in my view.
        Admiral Locklear, I want to ask you a question about one
    aspect of the full sequester or half-sequester budget, and it
    deals with carriers because that is one of the items that is
    most obviously different between the President's submitted
    budget and the full sequester version. That is scaling back
    from an 11-carrier Navy to a 10-carrier Navy. The 11-carrier
    Navy is a statutory requirement. I believe you testified
    recently before the House Armed Services Committee where you
    said 11 carriers continues to be a pretty important component
    to America's maritime dominance. I would like it if you would
    describe that, please.
        Admiral Locklear. We debated a long time what the utility
    of the carrier would be in the 21st century, and we continue to
    see it as, I would say, in the forefront of military
    instruments that leadership have been able to use to be able to
    maintain the peace, to maintain stability, and in crisis, to be
    able to respond quickly.
        The benefit of our carrier force today is that it is
    unequaled in the world. It is nuclear. It is sustainable at sea
    for just about as long as you can think about it. It carries a
    very credible capability to maintain peace and to be able to
    prevail in crisis.
        The down side to the nuclear carrier force or the
    opportunity costs, maybe not the down side, is that they are
    nuclear and they have to be maintained in a safe manner which,
    if you take a look at the history of Navy nuclear power, you
    have to give these young men and women who do this a lot of
    credit. You have young 19- and 20-year-old people running these
    nuclear reactors, and they have been largely without any
    incident for the history of the program. But to do that, you
    have to bring them back through maintenance. They have to come
    back to our shipyards. They have to be in nuclear shipyards to
    have that done.
        In the day-to-day operations globally to be able to
    maintain the requirements that I have and the other combatant
    commanders have, based on the world as it is, about 11 aircraft
    carriers is just barely making it today.
        Senator Kaine. What would it mean in PACOM if we dropped
    back from 11 to 10, changed the statutory requirement, did not
    refuel the George Washington, and dropped back from 11 to 10?
    What would it mean in PACOM?
        Admiral Locklear. I am confident we would still maintain a
    nuclear carrier forward in the Japanese alliance. We have
    announced recently that Ronald Reagan would be that
    replacement. So we are moving in that direction.
        The implication would be that there would be greater
    periods of time not only in my AOR but other AORs where a
    combatant commander would say a carrier is needed in this
    crisis or needed in this scenario and there would not be one
    available.
        Senator Kaine. If I could continue, Admiral, with you, I
    want to talk a little bit about China. I think, as I was
    hearing your testimony, you were indicating that China is
    pretty rapidly chewing away any dominance that we might have in
    the region, but I think you indicated that even at a 12 percent
    growth in defense expenditures, it would be many decades before
    they could reduce our dominance globally. Did I understand the
    gist of your testimony correctly?
        Admiral Locklear. That is correct.
        Senator Kaine. Does China have military bases outside of
    China?
        Admiral Locklear. Not that I am aware of today.
        Senator Kaine. Does China have significant military
    presence today in the Americas?
        Admiral Locklear. Military presence, no.
        Senator Kaine. Africa?
        Admiral Locklear. Military presence, no.
        Senator Kaine. Europe?
        Admiral Locklear. No.
        Senator Kaine. Middle East?
        Admiral Locklear. Just in the Gulf of Aden, where they have
    done counter-piracy operations.
        Senator Kaine. So based on that, is it your understanding
    that China is basically trying to significantly grow the
    projection of military presence in their region but is not, at
    least to this point, significantly growing military presence
    elsewhere?
        Admiral Locklear. The predominance of their efforts are in
    the region.
        Senator Kaine. So that explains the testimony you gave
    earlier. They are chewing away our dominance in their region,
    but it would take a long time for them, even at significant
    growth, to chew away our dominance elsewhere.
        Admiral Locklear. That is correct. When you combine the
    U.S. global security capability with that of our allies, with
    that of our significant allies in all parts of the world, they
    would have a difficult time of it globally.
        Senator Kaine. Mr. Chairman, I just ask these questions to
    suggest, I think, most would say China is our ``principal
    competitor'' in the next century. They have a fundamentally
    different business model than we do. Our business model is a
    global projection of presence both physical with fixed assets,
    bases, and flexible assets like carriers. At least to now, they
    are pursuing a very different business model. Military bases.
    That is not what we are focused on. Other regions. That is not
    what we are focused on. It is as if we pulled all our resources
    into the Americas, we would be a major force in one part of the
    world. That is not what we are doing. So our principal
    competitor has a different business model than we do.
        One last question, if I could, on the Senkaku Islands. I
    think this is a confusing one for us because these are
    uninhabited islands. Is the debate, the controversy, the
    skirmish potentially between China and Japan over those
    islands--it is not about the islands as an economic source
    unless there are natural resources there. Is it more about
    national pride or dominating sea lanes or just for China
    creating a buffer in that region they care about? How would you
    describe it?
        Admiral Locklear. I would describe it as primarily a
    sovereignty issue, less economic, and it is not something new.
    This issue has been around for a long time. Of course, as a
    Government, we do not take sides on territorial disputes, but
    Japan is our ally and we made it pretty clear how we would
    support our ally in the case of this particular scenario.
        Senator Kaine. Thank you, Mr. Chairman.
        Thank you to the witnesses.
        Chairman Levin. Thank you very much, Senator Kaine.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        I want to begin by pursuing the line of questioning that
    Senator Kaine began and his very pertinent observation that
    China's strategic model is focused on its part of the world.
    Yet, you make the point, I think, very tellingly in your
    testimony, Admiral, that China will soon have its first
    credible sea-based nuclear deterrent probably before the end of
    this year. Now, that ability to project nuclear power beyond
    its area, if it is further grown and expanded, would somewhat
    contradict the reasoning that Senator Kaine has just advanced
    or the model that he has just outlined, would it not? In other
    words, it projects a nuclear deterrent that potentially could
    be aimed at this country protecting interests beyond just its
    immediate area.
        Admiral Locklear. I think they have had a nuclear deterrent
    that could be aimed at this country. So putting in a sea-based
    for them, I think, just as it does for us or for the Indians
    who are pursuing the same thing, it adds another layer of
    confidence that their strategic nuclear deterrent will not be
    compromised.
        So what it does for me, a PACOM Commander, is that in the
    event you should ever have crisis, I do not think a conflict or
    a crisis with China is inevitable. I do not think it is.
    Certainly it would not be in the best interest of peace and
    security in the world for that to happen. So we have to walk
    ourselves back from that dialogue, I think.
        In general, I think what they are doing would just add more
    complexity to how we would ever enter a contingency, but we
    should not talk ourselves into one either.
        Senator Blumenthal. On our strategic lay-down in the
    Pacific, I noted that the notional 2020 strategic lay-down
    seems to contemplate a 22 percent ship increase based in that
    part of the world. Is that correct?
        Admiral Locklear. I think that when you define my AOR and
    where the ships and the submarines and airplanes are, it
    extends basically from California to the intersection of India
    and Pakistan. They will be somewhere in that large area, not
    necessarily west of the dateline.
        Senator Blumenthal. But is that 22 percent increase not
    based outside of the United States, in other words, non-U.S.
    bases?
        Admiral Locklear. Not all of it, no.
        Senator Blumenthal. What percentage of it?
        Admiral Locklear. I will have to get you the exact
    percentage that will be outside of U.S. bases. I cannot give it
    to you off the top of my head.
        [The information referred to follows:]

        The potential for U.S. domestic job creation and economic activity
    resulting from the basing of forward deployed Pacific forces to Hawaii
    or California in the U.S. Pacific Command area of responsibility has
    not been assessed. If Congress requires such data, a request to the
    Department of the Navy is recommended. Force lay-down decisions are
    based on operational and strategic considerations in an effort to
    deliver required capability in the most cost-effective way.

        Senator Blumenthal. Is there a way that more of those ships
    can be based in the United States rather than based abroad? I
    know I am putting it in somewhat simplistic terms, but I think
    the reason for my questioning is basing more of these ships in
    the United States means more jobs in the United States and
    potentially greater levels of scrutiny and oversight about
    contracting.
        Admiral Locklear. To some degree we are an island nation,
    when you take a look at us globally where we are located. As an
    island nation that is predominantly a maritime nation, the
    value of maritime forces forward is why you have a Navy.
    Otherwise, if you just want to bring them all home--because of
    the vast distances we have to travel, to continually rotate
    them from home, first of all, is very expensive. For instance,
    for every one ship that I have deployed forward somewhere, it
    takes about four ships back in the continental United States to
    be able to support that rotation. So it is a cost-effective
    solution to be forward particularly where you have an ally or a
    host nation that is willing to help support you. I am always
    reticent to say let us just bring everything back to the
    Homeland. It sounds good but it is not operationally a good
    thing to do.
        Senator Blumenthal. I am not suggesting and I am not in any
    way arguing with you, so to speak. What I am suggesting is an
    analysis that assesses the potential for creating jobs, for
    sustaining economic activity at those bases, whether it is
    Hawaii or California, rather than abroad. I recognize that it
    may be more cost-effective looking at it solely in terms of the
    dollars and cents in your budget, but I am thinking about
    employment and economic activity.
        If you would get back to me with those numbers, I would
    very much appreciate it.
        General, I noticed that yesterday there was an announcement
    that the ROK has officially selected the F-35, the conventional
    takeoff and landing design, and announced purchase of 40 of
    them. I am wondering if you could tell us how that helps you in
    terms of both a common platform with our ally and also the
    qualitative military advantage of the F-35.
        General Scaparrotti. Senator, first of all, the
    announcement yesterday was one of those that included the
    Global Hawk, I believe, as well. Those are commitments that as
    an alliance the ROK has made as a part of the commitments of
    Strategic Alliance 2015. The first part is that they have
    invested in the qualities and the capabilities that they bring
    to this alliance. Both those platforms--in particular, the F-35
    provides the state-of-the-art capability, compatible with us
    and interoperability, and particularly having the same systems
    gives us a great deal more agility.
        Finally, their air force is building. It is getting
    stronger all the time and that helps us a great deal.
        In the plans that we have there, both in armistice and if
    we were to go to crisis, the air force and the establishment of
    air dominance is critical.
        Senator Blumenthal. I understand that there are eight other
    international partners. I do not know whether any of those are
    in the area under your command. Do you know what the state of
    purchases by those other eight international partners are at
    this point?
        General Scaparrotti. No, Senator, not specifically.
        Senator Blumenthal. Thank you. Thank you, Mr. Chairman.
    Again, thank you both for your extraordinarily distinguished
    service to our country, and thank you to all the men and women
    under your command. Thank you.
        Chairman Levin. Thank you, Senator Blumenthal.
        I just have one additional question. Others, obviously if
    they have questions, we will have them addressed as well.
        In your prepared remarks, Admiral, you said that it would
    enhance our security cooperation effectiveness with key allies
    and partners if we had an authority to have $30 million in a
    security cooperation authority managed by the Joint Staff under
    the MILCON appropriation. I am wondering whether that request
    was made of the administration when they put together their
    budget and whether or not there is something like that in the
    budget request. We are trying to find out if there is any
    reference to that.
        Admiral Locklear. DOD is aware of my desire to do that. I
    cannot tell you if it is actually in a line somewhere. I will
    have to look myself and see if it is in there.
        The purpose of it is it would give us enhanced flexibility
    to be able to do some of the things that statute-wise we are
    prevented from doing today from small dollars to big impact.
        Chairman Levin. All right. If you can give us that for the
    record, we would appreciate it.
        [The information referred to follows:]

        [Deleted.]

        Chairman Levin. I have a number of other questions for both
    of you for the record. Other colleagues may as well.
        Are there any additional questions? Senator Kaine?
        Senator Kaine. Did our intelligence provide us any advance
    warning that China was going to impose the ADIZ in November
    2013?
        Admiral Locklear. We had been observing the dialogue, the
    potential for that for some time. As far as the exact date, and
    maybe a day or 2 warning, we did not receive indications of
    that. So it was a surprise to the region of when they actually
    announced it. But we knew for some time that there was a
    contemplation of that.
        Senator Kaine. So the surprise was the timing rather than
    that they actually took this step.
        Admiral Locklear. Right. We came out pretty firm about how
    we felt about it afterwards, but in reality every country
    should have the ability to look at their own defenses and to
    put these types of things in place. We have more ADIZs than any
    other country in the world, but it is the method and the extra
    caveats that were put on it that made it unacceptable. Instead
    of being just, well, let us have a dialogue with our neighbors
    and talk about how we are going to defend our territorial air
    space, it was laid on as a direct issue with Japan and the
    Senkakus. There was not any dialogue among the region or among
    the neighbors. There was not any dialogue with the United
    States about it. So in the end, it did not sit well with the
    region in general.
        Senator Kaine. Thank you.
        Senator Blumenthal. Mr. Chairman, one last quick question.
    Thank you.
        Admiral, thank you for being so forthcoming on the bases
    abroad.
        One of the reasons for my questions is not only the jobs
    and economic activity but also some of the reports of
    corruption or waste in contracting and so forth. I wonder
    whether there have been changes in the systems providing for
    greater oversight and scrutiny, whether the systems of
    contracting and procurement have been changed at all with
    respect to those bases abroad.
        Admiral Locklear. I would have to dig into the specifics of
    your question, Senator. I am not sure I know contracting
    irregularities that we are talking about.
        I know we have, including General Scaparrotti here, very
    credible leadership in these alliances and the bases and the
    dialogue that goes on about how we share costs, how we share
    responsibilities. We just finished negotiating the mutual
    agreement between us and the South Koreans, which we hope that
    they ratify as soon as their congress comes back into session.
    We have a very deliberate dialogue with our allies in Japan
    about how the money is spent. So I think we are doing due
    diligence.
        Senator Blumenthal. Let me be more specific then just to
    give you a little bit more--Glenn Defense Marine Asia. I am
    sure that name is familiar to you. It is a Singapore-based firm
    that has serviced Navy vessels throughout Asia, in fact,
    continued to do so until its chief executive was recently
    arrested. I wonder if you could provide us with the records of
    contracts that the Navy signed since 2009 and also--I am not
    going to prolong this hearing, but perhaps in a written
    response--an account of what is being done to prevent
    occurrences of that kind of issue in the future.
        Admiral Locklear. I will, Senator. I will have to get with
    the Navy, with the CNO. It is his primary oversight of those
    contracts, even in my AOR, as the Army has primary oversight of
    the contracts in Korea. So we will try to consolidate an answer
    for you with the Navy.
        [The information referred to follows:]

        Oversight for our contracting is critical to ensure we have the
    proper support to execute our mission. Secretary Mabus has spoken to
    the Chief of Naval Operations, the fleet commanders, component
    commanders, and three- and four-star admirals stationed around the
    world on the importance and diligence to prevent, identify, and stop
    improper behavior. The alleged behavior by government employees is not
    acceptable in the Navy or anywhere in the U.S. Government. With respect
    to husbanding in particular, the Assistant Secretary of the Navy for
    Research, Development, and Acquisition, Sean Stackley, has engaged to
    review acquisition strategies for husbanding and similar contracts
    worldwide. A team of experts met and implemented changes in the
    acquisition process, tightening up procedures to provide the maximum
    effective oversight. This includes further standardizing of fleet
    requirements, removing pay functions from ships, and better guidance to
    ship commanding officers.
        As combatant commander, I utilize my engagement team continually to
    address both U.S. forces and foreign countries on proper engagement,
    strong ethics, and oversight of contracts and our own personnel. I make
    it a point to address and stress integrity and our duty to prevent,
    detect, and properly adjudicate failures with our foreign partners
    during my meetings, our exercises, and mutual engagements.

        Senator Blumenthal. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you.
        Any other questions? [No response.]
        If not, we thank you both for your service and for your
    testimony. Again, please pass along our thanks to the men and
    women with whom you serve.
        We will stand adjourned.
        [Whereupon, at 11:44 a.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Carl Levin
                 north korean regime priorities and deterrence
        1. Senator Levin. Admiral Locklear and General Scaparrotti, for
    many years our senior intelligence and military leaders have told us
    their assessment that the highest priority for the North Korean
    leadership is regime survival. Do you believe that regime survival is
    also the highest priority for the current leader of North Korea, Kim
    Jong-Un?
        Admiral Locklear. [Deleted.]
        General Scaparrotti. [Deleted.]

        2. Senator Levin. Admiral Locklear and General Scaparrotti, if
    North Korea's leadership most values regime survival, do you believe
    that we will be able to continue to deter North Korea from taking
    actions that would result in the destruction of their regime, such as
    attacking South Korea or the United States?
        Admiral Locklear. [Deleted.]
        General Scaparrotti. [Deleted.]

                        missile defense and north korea
        3. Senator Levin. Admiral Locklear and General Scaparrotti, last
    year, in response to North Korea's provocative behavior, including
    threats to use missiles against the United States, Secretary Hagel
    announced plans to deploy 14 additional Ground-Based Interceptors (GBI)
    in Alaska and an additional radar in Japan. Do you agree that we need
    to continue to improve our Homeland missile defense capabilities
    relative to North Korea, especially our sensor and discrimination
    capabilities like the long-range discriminating radar that Congress
    mandated in last year's defense authorization bill, which is funded in
    the budget request?
        Admiral Locklear. [Deleted.]
        General Scaparrotti. [Deleted.]

    intelligence, surveillance, and reconnaissance challenges against north
                                     korea
        4. Senator Levin. Admiral Locklear and General Scaparrotti, North
    Korea is a tightly controlled and closed country, which makes it
    particularly hard to know much about what their government is planning
    or doing. Can you describe the challenges you face in obtaining
    reliable information about North Korea's military capabilities and
    intentions, especially the challenges related to our intelligence,
    reconnaissance, and surveillance (ISR) requirements?
        Admiral Locklear. [Deleted.]
        General Scaparrotti. [Deleted.]

                china's declared air defense identification zone
        5. Senator Levin. Admiral Locklear, during your testimony you
    stated that China's declaration of the Air Defense Identification Zone
    (ADIZ) has not changed Japan's operations in the area of the Senkaku
    Islands. Has it, however, been used by China as justification for
    greater People's Liberation Army (PLA) Navy or Air Force activity in
    the area of the Senkaku Islands?
        Admiral Locklear. [Deleted.]

                   china's military growth and modernization
        6. Senator Levin. Admiral Locklear, it was recently announced that
    China is increasing its defense budget for fiscal year 2014 by 12
    percent. Due to the lack of transparency with regard to the Chinese
    military budget, it is unclear how the budget increase will be spent.
    Much of the interest in China's continued rise as a global power is
    focused on how its rise will challenge regional security and stability.
    In your assessment, where is China focusing the bulk of its military
    spending increase?
        Admiral Locklear. [Deleted.]

               south china sea and the law of the sea convention
        7. Senator Levin. Admiral Locklear, the need to maintain the free,
    unimpeded flow of international trade and commerce throughout the Asia-
    Pacific region is one of the reasons the administration seeks to
    rebalance toward the Asia-Pacific region. One maritime area of
    particular importance in the western Pacific is the South China Sea,
    through which trillions of dollars of global commerce, including about
    $1 trillion of U.S. commerce, passes each year. However, stability in
    the South China Sea is complicated by the various conflicting claims to
    land features and water space by bordering countries and the meaningful
    resolution of those claims has been elusive. You have previously stated
    your support for the United States becoming a party of the U.N.
    Convention on the Law of the Sea (UNCLOS). How would joining this
    treaty benefit the U.S. military operations in the Asia-Pacific region
    and how does not being a party disadvantage the United States?
        Admiral Locklear. U.S. accession would increase our credibility and
    influence in defending the Convention's existing norms that enable the
    access, mobility, and sustainment of our fleet. Our non-party status
    detracts from our ability to lead developments in the maritime domain
    and enables emerging powers to advance their contrary interpretations
    of the UNCLOS.
        Not being a party to the UNCLOS is used against the United States
    when we challenge--diplomatically or operationally--excessive maritime
    claims of nations in the Asia-Pacific region. Most States in the area
    are Parties to the Convention and cite to its language as legal
    authority for their claims. Some of those countries state the U.S.
    invocation of the UNCLOS language as disingenuous as a non-Party since
    the U.S.'s legal foundation is based in customary international law as
    opposed to the Treaty. The U.S. asserts the Convention embodies
    customary international law, which binds all nations regardless of
    their status with respect to the Convention. However, customary
    international law is created by state practice over time. States'
    claims and actions create and alter customary international law; it is
    not necessarily static. However, the Convention binds the Parties to
    the language of the Convention and that language only changes through a
    formal amendment process. The current language in the Convention is
    favorable to the United States. By acceding to the Convention, the
    United States will be in a better position to interpret and control
    that language.

        8. Senator Levin. Admiral Locklear, in view of the various
    territorial and maritime disputes in the South China Sea and the East
    China Sea, how would joining the UNCLOS support U.S. interests in these
    critical maritime areas?
        Admiral Locklear. The rules of the Convention that guarantee the
    freedom of navigation are favorable to our interests. Being a party to
    the Convention would enhance the credibility of our operational
    assertions and diplomatic challenges against excessive maritime claims
    throughout the world. Being a Party to the Convention would demonstrate
    U.S. commitment to the rules-based international order and strengthen
    the foundation for partnerships with countries that share our national
    interest in preserving the navigational rights that are codified in the
    Convention. Our status as a non-party hampers our ability to push back
    against spurious claims. Joining the Convention would allow us to bring
    the full force of our influence as the world's foremost maritime power
    to bear against countries with excessive maritime claims.

                     tension between south korea and japan
        9. Senator Levin. Admiral Locklear, since Prime Minister Abe's
    visit to the Yasukuni Shrine at the end of last year, already-strained
    relations between South Korea and Japan have worsened. How have the
    tensions between these two allies affected the strategic and military
    relationship between the two countries and your ability to conduct in
    trilateral security engagements?
        Admiral Locklear. The Japan-South Korea relationship is strained;
    however, we are cautiously optimistic that Japan and South Korea will
    improve their relations this year. The trilateral meeting of President
    Obama, President Park, and Prime Minister Abe during the Nuclear
    Security Summit at The Hague this March was an encouraging first step
    towards trilateral cooperation. They discussed regional security and
    the nuclear threat from North Korea. As a result of that meeting, South
    Korea and Japan agreed to hold director general-level talks on the
    historical issues of contention. Both sides shared the opinion that
    these issues should be settled speedily in order to remove obstacles in
    South Korea-Japan relations.
        Last month we successfully participated in the Office of the
    Secretary of Defense (OSD)-led Defense Trilateral Talks between the
    United States, South Korea, and Japan, which are held at the Deputy
    Defense Minister level. Japan and South Korea work well together in
    trilateral military cooperation with the United States; however,
    bilateral security cooperation between Japan and South Korea remains
    elusive. We continually encourage regular trilateral exercise
    engagement with both Japan and the Republic of Korea. We look forward
    to both countries participating in the multilateral Exercise Rim of the
    Pacific (RIMPAC) and a pre-RIMPAC trilateral ballistic missile tracking
    exercise this summer. Our goal is to encourage Japan and the Republic
    of Korea at the highest level to manage their relations through a dual
    approach, separating sensitive historical and territorial issues from
    security cooperation.

        10. Senator Levin. Admiral Locklear, do you see the possibility of
    a breakthrough in the troubled relations between Japan and South Korea
    in the next year?
        Admiral Locklear. The Japan-South Korea relationship is strained;
    however, we are cautiously optimistic that Japan and South Korea will
    improve their relations this year. The trilateral meeting of President
    Obama, President Park, and Prime Minister Abe during the Nuclear
    Security Summit at The Hague this March was an encouraging first step
    towards trilateral cooperation. They discussed regional security and
    the nuclear threat from North Korea. As a result of that meeting, South
    Korea and Japan agreed to hold director general-level talks on the
    historical issues of contention. Both sides shared the opinion that
    these issues should be settled speedily in order to remove obstacles in
    South Korea-Japan relations.
        Last month we successfully participated in the OSD-led Defense
    Trilateral Talks between the United States, South Korea, and Japan,
    which are held at the Deputy Defense Minister level. Japan and South
    Korea work well together in trilateral military cooperation with the
    United States; however, bilateral security cooperation between Japan
    and South Korea remains elusive.

                               facility hardening
        11. Senator Levin. Admiral Locklear, for the last 3 years, the
    committee has expressed concern about the affordability of hardening of
    facilities on Guam and elsewhere in U.S. Pacific Command (PACOM),
    believing that such a large investment is not an efficient use of
    taxpayers' dollars and would be of limited utility in the event of an
    attack. Partially as a result of these concerns, PACOM significantly
    scaled back its plans for facility hardening. Can you assure me that
    PACOM does not anticipate any requirements for hardening of large
    facilities, including hangars, beyond those that have already been
    authorized by Congress or identified for funding in fiscal year 2015
    and fiscal year 2016?
        Admiral Locklear. [Deleted.]

                       u.s. military relations with india
        12. Senator Levin. Admiral Locklear, India remains an important
    partner in the region and our countries share mutual interests such as
    combating violent extremism, protecting vital sea lanes of
    communication, and gaining a better understanding of the ever-growing
    military capabilities in China. However, it seems that establishing a
    military-to-military relationship with India has been difficult. While
    you mention that India has been purchasing C-17s, C-130Js, and P-8s
    from the United States, the country is also increasingly looking to
    make its own defense hardware. Can you provide an update on the current
    status of defense cooperation with India?
        Admiral Locklear. [Deleted.]

        13. Senator Levin. Admiral Locklear, do you believe there is room
    for future cooperation on the defense side with India and what might
    the United States do to improve our military-to-military relationship?
        Admiral Locklear. [Deleted.]

                             engagement with china
        14. Senator Levin. Admiral Locklear, you have been a proponent of
    increased engagement with China's military, at a time when we have
    concerns about China's behavior and claims in Asian waters. What do you
    believe is the benefit to U.S. security that we could achieve by such
    increased engagement with China's military?
        Admiral Locklear. The U.S. military must engage with the People's
    Republic of China (PRC) military to build trust and channels of
    effective communication. Through these means, the United States and
    China can improve our understanding of how our respective governments
    use the military as an instrument of national power. There are many
    opportunities for cooperation in fields of mutual interest such as
    humanitarian assistance/disaster relief, counter-piracy, non-
    proliferation, counter-terrorism, noncombatant evacuation operations,
    and the safety of sailors and airmen in the maritime environment.

        15. Senator Levin. Admiral Locklear, have we seen tangible
    improvements in China's responsibility to our request for information
    and engagement on difficult issues as a result of our increased
    military-to-military engagement with China, and can you briefly
    describe these improvements?
        Admiral Locklear. Yes, we have seen improvements in coordination
    and communication as a result of military-to-military engagement with
    China. These engagements help reinforce the architecture of bilateral
    and multilateral agreements that set international norms. A specific
    example of where China's adherence to bilateral security mechanisms
    ultimately proved helpful in difficult circumstances was the December
    2013 encounter between the USS Cowpens and a Chinese naval vessel. In
    this particular case, communication channels established in the
    Military Maritime Consultative Agreement (MMCA) were key to avoiding a
    collision at sea.
        Similar efforts to expand coordination and communication with China
    are showing hopeful signs. For example, the United States, China, and
    18 other nations recently agreed to a region-wide Code for Unplanned
    Encounters at Sea (CUES) that will help set norms and reduce risks of
    accidents. Bearing in mind U.S. policy and section 1201a of the
    National Defense Authorization Act for Fiscal Year 2000 limiting
    certain categories of military-to-military contacts, the United States
    is also increasing the number of bilateral venues for military-to-
    military engagement, to include additional working groups associated
    with the annual Security and Economic Dialogue and a new dialogue
    between U.S. Assistant Secretaries of Defense and their Chinese
    counterparts.
        U.S. efforts to help expand China's participation in bilateral and
    multilateral security venues and military-to-military engagement will
    continue to aim to support regional stability through increased
    adherence to international norms and standards of conduct.

               effect of the rebalance on science and technology
        16. Senator Levin. Admiral Locklear, as a result of the Department
    of Defense's (DOD) increased strategic focus on the Asia-Pacific
    region, there has been discussion of increased emphasis on using
    science and technology (S&T) programs to improve military capabilities
    in areas of high interest for PACOM, such as electronic warfare, space
    systems, cybersecurity, and undersea warfare. From your perspective,
    what gaps in current warfighting capabilities concern you and what are
    your recommendations for what capabilities and technologies should the
    DOD S&T community develop?
        Admiral Locklear. [Deleted.]

        17. Senator Levin. Admiral Locklear, what are some examples of
    capabilities that have been delivered to your command that have
    improved your command's effectiveness or reduced operational costs?
        Admiral Locklear. [Deleted.]

                         cooperative security locations
        18. Senator Levin. Admiral Locklear, your prepared remarks refer to
    a request for a new authority that would allow the geographic combatant
    commanders to spend up to $30 million per year to make low-cost
    modifications to cooperative security locations used by U.S. forces on
    a periodic basis. Please describe the requirement for such an authority
    and why current authorities, including unspecified minor military
    construction, do not adequately meet your requirement.
        Admiral Locklear. Combatant commanders lack the authority to
    rapidly fund low-cost repairs and improvements during Phase 0
    operations at Cooperative Security Locations (CSL). Existing Security
    Cooperation authorities, including Exercise Related Construction (ERC),
    Combatant Commander's Initiative Fund (CCIF), Overseas Humanitarian,
    Disaster, and Civic Aid (OHDACA), section 1206, Minor Military
    Construction (MMC), and military construction (MILCON) do not
    adequately address the unique challenges of quickly funding low-cost
    repairs or improvements to non-U.S.-owned/limited presence facilities.
    The new authority seeks to maximize investments to existing facilities
    and infrastructure by host nations, joint, interagency,
    intergovernmental. and multinational entities to enhance the deployment
    and mobility of U.S. forces and supplies in support of Theater Campaign
    Plan (TCP) objectives.
        CSLs are enduring Global Defense Posture locations characterized by
    the periodic presence of U.S. Forces with little to no permanent U.S.
    military presence or real property interest at host nation facilities.
    CSLs play a vital access role in PACOM's ability to respond agilely
    throughout the theater and respond to the full range of military
    operations. Many CSLs provide critical strategic access and support
    multiple Services, missions, and purposes. No specific authority exists
    to rapidly fund low-cost repairs/improvements to CSLs or other defense-
    related infrastructure, including host nation-owned ports, airfields,
    roads, bridges or C2 facilities--facilities and infrastructure PACOM
    must use when responding to the full range of military operations
    outside the United States.
        Existing Title 10/22 Security Cooperation authorities (e.g., ERC,
    CCIF, OHDACA, 1206, MILCON/MMC, and others), are limited in scope and
    not specifically designed to support repairs or improve non-U.S.-owned/
    limited presence facilities and infrastructure. The primary shortfalls
    for the existing authorities are listed below.

             ERC: Limited to Joint Staff approved exercises only;
            limited annual funding of just $9 million.
             CCIF: Construction not authorized; limited to
            ``emergent'' issues.
             OHDACA: Limited to humanitarian projects--no dual
            civilian-military use.
             Title 10, section 1206: Limited to military-to-
            military programs/stability operations and counter terrorism
            urgent and emergent requirements; funding limited to $750,000
            per project; infrastructure projects not authorized.
             Title 10, section 2805, MMC: Although limited Service
            operation and maintenance (O&M) funds are available to conduct
            minor repairs and improvements at CSLs, a lack of lead Service
            designation at many CSLs, downward budget pressure, and a
            $750,000 per project limit combine to effectively remove MMC
            from use.
             MILCON: Requires a U.S. real property interest (lease
            or purchase).

        To address this gap, PACOM is requesting a new ``Security
    Cooperation Construction Authority,'' similar to ERC and part of the
    MILCON appropriation managed by the Joint Staff through the Global
    Posture process (GPIT/GPEC). The new authority will provide greater
    flexibility to rapidly fund CSL development and make defense-related
    infrastructure improvements in support of the TCP. The proposal
    requests an ERC-like construction capability at dual-use (Civ/Mil)
    locations, to ensure partner/ally infrastructure is able to support
    U.S. operations. The new authority can be included in the MILCON
    appropriation managed by the Joint Staff with a single-line
    appropriation of $30 million.

        19. Senator Levin. Admiral Locklear, is there a line item in the
    budget for the low cost modifications to cooperative security
    locations?
        Admiral Locklear. No. The fiscal year 2015 President's budget does
    not have a line item specifically funding low-cost modifications to
    cooperative security locations. PACOM will formally submit this request
    in response to the upcoming call for legislative proposals for fiscal
    year 2016 implementation. PACOM will recommend amending title 10,
    section 166a (CCIF) or title 10, section 2805 (a)(2) (MMC), to provide
    specific authorities for improving CSLs and defense-related
    infrastructure.

                   military-to-military engagement with burma
        20. Senator Levin. Admiral Locklear, as you noted in your written
    opening statement, ``Burma continues to undergo its dramatic democratic
    and economic transition, including the release of over 1,000 political
    prisoners and the possibility of a national ceasefire agreement.'' The
    military plays a critical role in the transition since it controls 25
    percent of the Parliament and still plays a significant role in a
    number of government ministries. There have been small steps forward to
    engaging the Burmese military, but these have been limited to a few
    small workshops. DOD has expressed an interest in a more robust
    engagement focusing on human rights training, English-language
    training, military medicine training, and humanitarian response and
    disaster relief training. What are the benefits to engaging with the
    Burmese military and how will these engagements help to shape the
    future of the Burmese military?
        Admiral Locklear. In view of recent political reforms, we believe
    that Burma requires a new approach that focuses on building trust and
    relationships in helping to shape what Aung Sun Sui Kyi has envisioned
    as a ``professional military for the people of Burma.'' Recognizing
    current restrictions on military-military interaction, our challenge is
    to develop a limited engagement strategy that will advance the reform
    process and stay in step with our human rights agenda.

        21. Senator Levin. Admiral Locklear, do you foresee difficulties in
    providing human rights, humanitarian assistance, and disaster relief
    training to the Burmese military because of vetting requirements?
        Admiral Locklear. Yes. Burma remains a restricted country, and all
    forms of military engagement require a rigorous vetting process
    involving the National Security Council, OSD, the Department of State,
    and Embassy Rangoon.

                  special measures agreement with south korea
        22. Senator Levin. General Scaparrotti, the United States and South
    Korea recently concluded negotiations for the Special Measures
    Agreement (SMA) that will govern host nation support until 2018. As you
    are aware, our committee concluded a report on overseas basing a few
    years ago that found that South Korean SMA contributions had not kept
    pace with growth in U.S. costs. Given the current fiscal climate, there
    is a growing concern that our allies and partners are not carrying a
    sufficient part of the financial burden for security in the region. Do
    you think the recent SMA agreement reflects a fair division of the
    financial burden between the South Koreans and the United States for
    security on the Korean peninsula?
        General Scaparrotti. Given the current fiscal climate, I think the
    recent SMA agreement reflects a fair division of the financial burden
    between the Republic of Korea and the United States for security on the
    Korean peninsula.
        A new 5-year (2014 to 2018) SMA was signed on February 2, 2014.
    This agreement specifies contributions the Republic of Korea (ROK) will
    make towards offsetting the cost of stationing U.S. forces in Korea.
    Under the new SMA, the ROK will provide $866 million cost-sharing
    support in 2014; these funds will be used to offset costs of employing
    local national workers, procuring supplies and services, and executing
    MILCON projects. The annual ROK SMA cost sharing contribution will be
    increased by the local inflation rate--as measured by the ROK consumer
    price index--not to exceed 4 percent in a given year during the 2015 to
    2018 time period.
        The ROK SMA contribution of $866 million in 2014 marks a 5.8
    percent increase from the 2013 ROK SMA contribution. This is the
    largest annual increase since 2005. ROK cost sharing support received
    over the next 5 years under the new SMA will play a key role in
    maintaining and enhancing force readiness by providing local national
    workers to support the force, making available valuable supplies and
    services, and building and modernizing needed facilities. It also helps
    position the U.S.-ROK alliance as a linchpin for regional peace and
    stability.

               u.s.-south korea combined counter-provocation plan
        23. Senator Levin. General Scaparrotti, while a wide-scale attack
    by North Korea, whether conventional or otherwise, seems highly
    unlikely, there is a prospect for a limited military action, and such
    an event would likely draw a military response from South Korea. The
    United States and South Korea have finalized a ``combined counter-
    provocation plan'' in effort to formalize the terms of any such
    response. Can you describe the general terms of that agreement and if
    you are satisfied that the plan strikes the right balance between
    enabling South Korea to respond and defend itself while also ensuring
    that the United States is involved in any decisions that might
    implicate the involvement of U.S. forces?
        General Scaparrotti. [Deleted.]

             transfer of wartime operational control to south korea
        24. Senator Levin. General Scaparrotti, as it stands now, during a
    time of war on the Korean Peninsula, the United States would be in
    operational control of the combined U.S. and South Korean forces. That
    arrangement was put in place 60 years ago. Today, South Korea is a
    prosperous nation with a very capable military and should be
    responsible for its own national defense. The plan to transfer wartime
    operational control from the United States to South Korea has been
    delayed until 2015, and there are a number of conditions and milestones
    that must be met before the transfer can occur. Are the United States
    and South Korea on track to fulfill all the conditions necessary so
    that the transfer is not delayed again?
        General Scaparrotti. [Deleted.]

        25. Senator Levin. General Scaparrotti, what obstacles, if any, do
    you see to completing the transfer of wartime operational control no
    later than 2015?
        General Scaparrotti. [Deleted.]

                              littoral combat ship
        26. Senator Levin. Admiral Locklear, during the hearing, you said:
    ``I think that if you talk about a Navy that is the size of 320 or 325
    ships, which is what I would say would be an assessment some have made
    is necessary for the global environment you are in, having 50 or 55
    Littoral Combat Ships (LCS) makes a lot of sense because there are a
    lot of places in the world where you can use them. But if you are
    talking about a budget that can only support a Navy much smaller than
    that, then having that heavy of a reliance on LCS does not make that
    much sense. So I can understand why the reduction was made, but I am
    still a supporter of the LCS and what it can do.'' Our understanding is
    that the Navy has not reduced the requirement for small surface
    combatants, which still is set at 52 ships. What DOD is investigating
    is whether, after acquiring 32 ships of the current LCS designs, it
    will build more of the current designs, build some variant of the
    current designs, or build an entirely new design to fill out the
    requirement for 52 ships. Is that correct?
        Admiral Locklear. DOD remains committed to supporting the current
    LCS program of record. The requirement for LCS still exists, although
    the Secretary of Defense has expressed concerns about emerging threats
    and the need for greater power projection. In view of these concerns,
    he has ordered that no new contract negotiations beyond 32 ships go
    forward. The Navy has been directed to provide the Secretary of Defense
    a list of alternative proposals for the President's 2016 budget
    deliberations which may include a new ship design, existing ships
    (including LCS), and a modified LCS. A Small Surface Combatant Task
    Force has been chartered with researching potential solutions and will
    provide their findings to the Secretary by July 31, 2014. Criteria for
    their recommendations will include: target cost, mission requirements,
    sensors and weapon requirements, and required delivery dates.
                                     ______

               Questions Submitted by Senator Richard Blumenthal
                             host nation oversight
        27. Senator Blumenthal. Admiral Locklear, as mentioned in the
    hearing, I am concerned about the oversight provided to contracting
    support required by ships and other U.S. military assets stationed
    overseas in the PACOM area of responsibility (AOR). With the proposed
    repositioning of 7 more ships to PACOM--increasing the total number to
    39 ships--I want to be assured that appropriate mechanisms are in place
    to prevent any illegalities or improprieties so far removed from CONUS.
    The recent Glenn Defense Marine Asia case exemplifies my concerns. As
    combatant commander, what discussions have you had with host nations
    and countries that receive port visits as to the standards the United
    States abides by with regards to contract for logistics, ship repair,
    and other support services?
        Admiral Locklear. Oversight for our contracting is critical to
    ensure we have the proper support to execute our mission. Secretary
    Mabus has spoken to the Chief of Naval Operations, the fleet
    commanders, component commanders, and three- and four-star admirals
    stationed around the world on the importance and diligence to prevent,
    identify, and stop improper behavior. The alleged behavior by
    government employees is not acceptable in the Navy or anywhere in the
    U.S. Government. With respect to husbanding in particular, the
    Assistant Secretary of the Navy for Research, Development, and
    Acquisition Sean Stackley has engaged to review acquisition strategies
    for husbanding and similar contracts worldwide. A team of experts met
    and implemented changes in the acquisition process, tightening up
    procedures to provide the maximum effective oversight. This includes
    further standardizing of fleet requirements, removing pay functions
    from ships, and better guidance to ship commanding officers.
        As combatant commander, I utilize my engagement team continually to
    address both U.S. forces and foreign countries on proper engagement,
    strong ethics, and oversight of contracts and our own personnel. I make
    it a point to address and stress integrity and our duty to prevent,
    detect, and properly adjudicate failures with our foreign partners
    during my meetings, our exercises, and mutual engagements.

        28. Senator Blumenthal. Admiral Locklear, what impact, if any, have
    the reports of improper influence determining naval port calls had on
    our military-to-military relations with other countries in the Pacific
    region?
        Admiral Locklear. Military-to-military relations with Pacific
    region countries were minimally impacted. Some port visits were
    deferred or locations changed immediately following the incident, but
    no exercises or significant engagements were cancelled.

        29. Senator Blumenthal. Admiral Locklear, what are your
    recommendations to prevent such abuses in the future as there is going
    to be a sizeable increase in forward deployed naval assets?
        Admiral Locklear. First, emphasizing ethics in all aspects of our
    operations is an absolute must. Second, we must be proactive, not
    reactive, in promoting process changes for 7th Fleet husbanding
    services. I am confident our Navy team can continue to implement
    stricter cost controls necessary to prevent any and all gross
    improprieties by our contractors and government employees in the
    future.
        To this effect, the Pacific Fleet has taken the lead in driving
    weekly port visit line-item cost reviews and cultivating improved
    business practices to prevent future abuses in the husbanding service
    provider (HSP) business. The implementation of standardized logistics
    requisitions by ship class, supply officer checklists for quality
    assurance, installation of flow meters on ships to measure volume-based
    services, increased education on contracts and husbanding services at
    the Navy Supply Corps School, and a new multiple HSP award approach for
    future 7th Fleet husbanding contracts are steps now in effect.
    Additionally, the Pacific Fleet has received funding for an overall
    Port Visit Program Manager for policy guidance and two Contracting
    Officer Representatives (COR), whose sole purpose will be contract
    performance oversight.
                                     ______

                 Questions Submitted by Senator Mazie K. Hirono
            u.s. military relocation plans in the republic of korea
        30. Senator Hirono. General Scaparrotti, the U.S. Government has
    plans to relocate U.S. Military Forces from Seoul and other bases to
    Camp Humphreys. While significant portions of the relocation costs are
    being paid by the ROK, the Army is responsible for ensuring that
    adequate housing meeting applicable U.S. standards is available, both
    on-post and off-post, for military personnel, DOD civilians, and their
    families stationed at Camp Humphreys. I understand that the project has
    encountered some challenges. I am also concerned that if a solution is
    not identified and implemented relatively quickly, the Army could be
    forced to settle for off-post housing that are not safe for our
    families, or will require families to have to pay huge amounts out of
    pocket to find an adequate house, and/or will require families to find
    housing located too far off-base to meet operational readiness needs of
    the U.S. Forces Korea (USFK). What is the current status of the
    relocation?
        General Scaparrotti. The Yongsan Relocation Plan and Land
    Partnership Plan relocation to U.S. Army Garrison Humphreys largely
    remains on schedule to meet USFK objectives. However, I am very
    concerned about the Army's ability to determine a solution that meets
    our on-post housing requirements at Camp Humphreys, particularly given
    the majority of the moves will occur in 2016. I am also committed to
    ensuring off-post housing meets quality of life, safety, and
    operational requirements.

        31. Senator Hirono. General Scaparrotti, what are your plans for
    family housing and when do you need to have family housing available
    for the relocation to stay on schedule?
        General Scaparrotti. Housing is a USFK top relocation priority.
    USFK requires on-installation family housing by mid-2016 for 40 percent
    of the command-sponsored families throughout Korea to maintain
    operational readiness. To achieve operational readiness, USFK has
    conducted extensive assessment and planning on housing with DOD and the
    Department of the Army. Currently, there is not a full programmatic
    solution to our housing requirements. The Army has the responsibility
    to develop family housing solutions to meet the USFK requirement on
    Army installations. As such, USFK requested an Army-proposed solution
    no later than July 2014 to stay on the relocation timeline.

                          operational control question
        32. Senator Hirono. General Scaparrotti, in 2010, the United States
    and South Korea agreed to postpone the transfer of wartime operational
    control. U.S. officials noted that doing so would send an important
    message about the U.S. presence in the region. Given that North Korea
    is as significant a threat today as it was in 2010, would you support
    an additional postponement of operational control transfer beyond 2015?
        General Scaparrotti. [Deleted.]

        33. Senator Hirono. General Scaparrotti, what would be your most
    important considerations in making a recommendation on this issue?
        General Scaparrotti. [Deleted.]

                 korea-japan military-to-military interactions
        34. Senator Hirono. Admiral Locklear and General Scaparrotti, Japan
    and Korea are strong allies of the United States. I understand that
    Japan and South Korea were planning to meet in a trilateral summit at
    The Hague. In your opinion, how well are our allies Japan and Korea
    working together in the military arena?
        Admiral Locklear. South Korean military leaders meet often with
    Japan Self Defense Force leaders at various PACOM and OSD-led forums
    such as our Chiefs of Defense Conference, Strategy Talks, and the OSD-
    led Defense Trilateral Talks. Japan and South Korea work well together
    in trilateral military cooperation with the United States; however,
    bilateral security cooperation between Japan and South Korea remains
    elusive. In terms of trilateral exercises, we've seen several important
    recent achievements, such as training in advanced air combat skills
    during Exercise Red Flag Alaska in 2012 and 2013; several iterations of
    at-sea training in the Yellow Sea by our maritime forces since 2012;
    and the first-ever trilateral counter-piracy exercise held last year in
    the U.S. Central Command AOR. Japanese and Korean forces also work very
    well together as leaders in multilateral security cooperation events,
    such as Exercise RIMPAC and the regular series of Proliferation
    Security Initiative (PSI) exercises.
        Our goal is to encourage Japan and the Republic of Korea at the
    highest level to manage their relations through a dual approach,
    separating sensitive, historical, and territorial issues from security
    cooperation.
        General Scaparrotti. Because of different historical
    interpretations of the events of the 20th century, and their
    territorial dispute over the Liancourt Rocks (a.k.a. Dokdo and
    Takeshima), our Korean and Japanese allies are politically at odds.
    Their continued disagreements make collaboration on shared national
    interests difficult, and they rarely cooperate bilaterally in the
    military arena. They do, however, join U.S. forces in trilateral
    discussions and exercises, and we are using this as a way to achieve
    incremental improvements in regional defense cooperation.
        The Korea-Japan bilateral military relationship is hampered by
    limitations on the sharing of defense and security information. The
    United States has information-sharing agreements with both of our
    allies, but Korea and Japan still do not agree to share information
    directly between themselves. This has generally constrained their
    collaboration to humanitarian assistance, disaster relief, and search
    and rescue operations. Within these areas, bilateral cooperation
    between them, including trilateral activities with us, has been slowly
    but steadily increasing, building capacity within the North-East Asia
    region and worldwide.
        In recent years, despite the political friction, we have been able
    to advance beyond the naval search and rescue operations our countries
    have focused on in the past. In 2013, our air forces participated
    together in the Red Flag-Alaska exercise, which was the first time
    Korea and Japan trained in close coordination on air operations. Also,
    last year, for the first time, units from our three navies trained
    together in the East Sea, while all three also participated in counter-
    piracy operations together in the Gulf of Aden.
        We consistently encourage dialogue and security collaboration among
    our three countries. We hope today's minimal but increasing level of
    military cooperation will grow to include multi-Service exercises, but
    that will depend largely on having some formal agreement on sharing
    military information. Such an agreement will pave the way toward more
    comprehensive collaboration improving security and stability throughout
    the region.

                                  philippines
        35. Senator Hirono. Admiral Locklear, we are now working closer
    with the Philippines. How will an access agreement with the Philippines
    assist our operations in the Pacific theater?
        Admiral Locklear. [Deleted.]

        36. Senator Hirono. Admiral Locklear, in addition to the
    Philippines, what other countries is the United States exploring
    options for additional basing or access arrangements in the Asia-
    Pacific region?
        Admiral Locklear. During President Obama's visit to Australia in
    November 2011, he and Prime Minister Gillard announced two force
    posture initiatives that would significantly enhance defense
    cooperation between the United States and Australia: (1) the rotational
    deployment of U.S. marines to Darwin, culminating in the rotation of a
    full Marine Air Ground Task Force through the Northern Territory; and
    (2) increased rotations of U.S. aircraft through northern Australia.
    The announcement was seen as the first tangible manifestation of the
    U.S. rebalance to the Asia-Pacific region. The United States is
    currently in negotiations with the Government of Australia to establish
    a binding access agreement that will codify these arrangements. PACOM
    is also exploring options for an airborne tanker divert and dispersal
    location on Saipan, Commonwealth of the Northern Marianas Islands
    (CNMI) and joint military training ranges on Tinian, CNMI.

                   asia-pacific center for strategic studies
        37. Senator Hirono. Admiral Locklear, I have found that the Asia-
    Pacific Center for Strategic Studies (APCSS) is an outstanding
    institution bringing together a diverse group of outstanding faculty
    and students to discuss, debate, and learn from each other. As we
    rebalance to the Pacific and expand our relationships across the
    region, I'd expect that the APCSS would play a significant role. Please
    share your thoughts on the APCSS and its importance to our rebalance
    strategy and expanding and strengthening our relationships in the
    region.
        Admiral Locklear. The APCSS provides critical support to the PACOM
    mission. Its course offerings, workshops, and numerous special events
    play an important role in promoting understanding of U.S. policy and
    objectives. The Center's programs contribute significantly to building
    U.S. and partner capacity, problem-solving, and the development of
    enduring relationships. By providing access to senior security
    practitioners from around the region, APCSS improves multi-national
    security cooperation, and helps build individual and institutional
    capability. These efforts are key to PACOM's contribution to U.S.
    strategy in the region, including the Asia-Pacific rebalance.
                                     ______

               Questions Submitted by Senator Angus S. King, Jr.
                         north korea collapse scenario
        38. Senator King. General Scaparrotti, how confident are you in the
    ability of South Korea, the United States, China, and other regional
    powers to deal with a state collapse scenario in North Korea?
        General Scaparrotti. [Deleted.]

        39. Senator King. General Scaparrotti, what are the opportunities
    and risks associated with this scenario and how do you assess the
    likelihood that this is how the North Korean regime will eventually
    end?
        General Scaparrotti. [Deleted.]
                                     ______

                 Questions Submitted by Senator James M. Inhofe
                        east china sea peace initiative
        40. Senator Inhofe. Admiral Locklear, tension has increased as a
    result of disputes over the waters of the South China Sea as well as
    the East China Sea in recent years. Ensuring the right of free passage
    and stability in these waters is critical to the security and economic
    interests of the United States, as well as our regional allies. In
    August 2012, Taiwan President Ma Ying-Jeou proposed an East China Sea
    Peace Initiative to address the ongoing dispute over the Senkaku/
    Diaoyutai Islands, the sovereignty of which is claimed by the PRC,
    Japan, and Taiwan. The initiative calls upon all parties concerned to
    resolve disputes through peaceful means, and seek cooperation on
    explorations and developing resources in the East China Sea. Do you
    think this particular initiative could contribute to resolving the
    dispute in a peaceful and comprehensive manner?
        Admiral Locklear. Key elements of President Ma's East China Sea
    Peace Initiative deserve praise. The principles of resolving disputes
    peacefully, shelving controversies, and cooperating on resource
    exploration and development helped Taiwan finalize a fisheries
    agreement with Japan in spring 2013 and, in the South China Sea, enter
    into fisheries negotiations with the Philippines in summer 2013. We
    encourage all claimants to define their claims clearly in ways that are
    consistent with international law and to resolve their disputes
    peacefully.

        41. Senator Inhofe. Admiral Locklear, what is the administration's
    view of this initiative, and is this something the administration can
    support?
        Admiral Locklear. We encourage all claimants to define their claims
    clearly in ways that are consistent with international law and to
    resolve their disputes peacefully. We applaud Taiwan's recent progress
    in working with its neighbors, most notably Japan and the Philippines,
    to address competing maritime claims, and in advancing its economic and
    commercial cooperation with its neighbors.

                              taiwan relations act
        42. Senator Inhofe. Admiral Locklear, this year marks the 35th
    anniversary of the Taiwan Relations Act (TRA). The TRA, along with the
    Six Assurances of 1982, form the basis of U.S. policy towards Taiwan
    and affirm the U.S. commitment to Taiwan's self-defense capability.
    This has successfully ensured peace in the Taiwan Strait and
    contributed to the stability and prosperity in the Asia-Pacific region.
    With the PRC's arms buildup and naval modernization shifting the cross
    strait military balance in its favor, and the U.S. Air Force planning
    to defund the Combat Avionics Programmed Extension Suite (CAPES)
    program--which serves to upgrade Taiwan's F-16 fleet with advanced
    avionics--how do you and the administration plan to continue to
    implement the security commitment the United States has to Taiwan under
    this framework?
        Admiral Locklear. We remain committed to assisting Taiwan to
    maintain sufficient self-defense capabilities consistent with our
    obligations under the TRA. We encourage Taiwan to continually evaluate
    many aspects of their defense approaches and to seek innovative and
    asymmetric methods and strategies that are commensurate with its
    capacities, as well as with the current strategic landscape in the
    Asia-Pacific region. With respect to the F-16 retrofit program, U.S.
    Air Force funding for the  CAPES  program  will  continue  through
    fiscal  year  2014.  The  U.S.  Air  Force  F-16 program office has
    determined that the lack of U.S. Air Force participation beyond fiscal
    year 2014 will not have a significant impact on the Taiwan program, and
    that all funding can be covered in Taiwan's current Letter of Offer and
    Acceptance. As a result, potential cuts in U.S. Air Force funding for
    the CAPES program will not negatively impact the Taiwan F-16 retrofit
    program.

                      rebalance to the asia-pacific region
        43. Senator Inhofe. Admiral Locklear, from your time in the region,
    you can most effectively evaluate the rebalance to the Asia-Pacific
    region called for in the Defense Strategic Guidance (DSG). A rebalance
    toward the Asia-Pacific region would seem to signal an increase in
    presence and resources. From your interactions with your counterparts
    and defense leaders in the Pacific, what is their perception of the
    rebalance?
        Admiral Locklear. While the Asia-Pacific region is a complex
    region, with vibrant civil discourse and diverse points of view, the
    rebalance has generally been welcomed by Asia-Pacific region defense
    leaders. The enhanced regional focus and increased U.S. engagement is
    welcome in both bilateral and with multilateral organizations (e.g.
    with the Association of Southeast Asian Nations-centered
    organizations).
        Regional leaders continue to seek further understanding and updates
    regarding the execution of the rebalance. A common view is that the
    rebalance may not be sustainable; therefore, regional leaders are
    watching the U.S. budget process closely. Nations are weighing their
    relationships carefully in light of China's ascendance and questions
    regarding U.S. commitment. Our allies and partners desire reassurance
    via our actions that the rebalance is sustainable. China, while
    skeptical of our intentions, also questions the strategy's
    sustainability and may take advantage of any sign that the U.S.
    commitment to the region is decreasing.

        44. Senator Inhofe. Admiral Locklear, how does China perceive our
    announced rebalance?
        Admiral Locklear. China regards the rebalance as an attempt at
    ``containment'' and often overemphasizes its military aspects.

        45. Senator Inhofe. Admiral Locklear, what does China stand to gain
    if we fall short of following through on the rebalance?
        Admiral Locklear. I don't believe China would gain if the rebalance
    is unsuccessful. In fact, China would likely see an increasingly
    destabilized region if the United States does not successfully
    implement the security aspect of the rebalance. Changes in the region's
    political dynamics, driven heavily by a major increase in Chinese
    national power, is encouraging countries to accelerate military
    preparations and intensify competition over various security disputes.
    The U.S. rebalance encourages the regional restraint and stability that
    China requires to achieve domestic development goals.

                           defense strategic guidance
        46. Senator Inhofe. Admiral Locklear, the January 2012 DSG says
    ``the growth of China's military power must be accompanied by greater
    clarity of its strategic intentions . . . '' Do you think that China's
    unilateral declaration of an ADIZ covering the airspace of Japan, South
    Korea, and Taiwan has given us greater clarity on China's strategic
    intentions?
        Admiral Locklear. [Deleted.]

        47. Senator Inhofe. Admiral Locklear, what strategy do you suggest
    to counter those aggressive intentions?
        Admiral Locklear. PACOM will continue to monitor PRC force
    development and strategy in order to act in concert with partners and
    allies adapting military forces, posture, and operational concepts to
    maintain regional stability. The complexity of the regional and global
    security environment, as well as the advances in China's military
    capabilities and expanding military operations and missions, call for a
    continuous dialogue between our militaries to expand practical
    cooperation and candidly discuss areas of disagreement. Military-to-
    military engagement with the PRC provides an opportunity to build
    trust, enhance transparency, and reduce the risk of misperception and
    miscalculations.

                                force structure
        48. Senator Inhofe. General Scaparrotti, operational demands
    continue to place a heavy load on scarce, highly valuable systems and
    units. Assets such as ISR aircrafts, battle management airplanes,
    combat search and rescue teams, stealth aircraft, and combat control
    teams play vital roles in our planned and contingency operations.
    Aircrafts such as the E-3 Airborne Warning Control System (AWACS), E-8
    Joint Surveillance and Target Attack Radar Systems (JSTARS), U-2s, EC-
    130s, and RC-135s are examples of low-density, high-demand. However,
    the Air Force is proposing to cut seven AWACS, six JSTARS, seven EC-
    130s, and the entire fleet of U-2s. As the commander of USFK were you
    consulted on the retirement of these assets?
        General Scaparrotti. Yes, I was consulted, and I am closely
    monitoring the Air Force proposals to cut or replace our aging
    aircraft. We remain concerned about these cuts, and while the Air Force
    is working on their replacements, we request the uninterrupted
    continuation of our ISR and command and control missions. I have
    discussed these issues with our Services and DOD leaders, and
    understand the difficult choices they face. I remain hopeful the Air
    Force will rapidly field equally capable replacement aircraft to
    continue the important roles they fill in our theater.

        49. Senator Inhofe. General Scaparrotti, how would you assess the
    risk of not having enough of these assets in a North Korea aggression
    scenario?
        General Scaparrotti. [Deleted.]

        50. Senator Inhofe. General Scaparrotti, the U.S. Air Force
    reversed its decision from last year regarding the U-2 and Global Hawk,
    proposing to retire the U-2 in fiscal year 2016, not the Global Hawk
    Block 30, as proposed in prior years. Did you articulate a position on
    the retirement of the U-2? If so, what was your position?
        General Scaparrotti. The position I continue to articulate is that
    I am concerned about the loss of the significant capability of the U-2.
    I rely on this asset heavily in my theater. While I understand DOD has
    to make tough choices with respect to our future budget, I require
    capabilities that can match the U-2--in both imagery and signals
    intelligence capabilities. We will incur a significant amount of risk
    in this theater if we have a less-capable platform available to us
    during a North Korean provocation or attack.

        51. Senator Inhofe. General Scaparrotti, how will this decision
    impact your ability to address critical intelligence shortfalls?
        General Scaparrotti. No other ISR asset currently has the
    capabilities as that of the U-2. Unless the Air Force is able to
    provide similar sensor capability on another platform such as the
    Global Hawk, the Combined Forces Command will suffer a loss of vital
    intelligence. As they look at the retirement of the U-2, we'll continue
    to advocate for the Air Force to improve the capabilities of the Global
    Hawk so that USFK receives a consistent level of performance from its
    ISR platforms to address our critical indications and warning mission.

                       weapons and ammunition shortfalls
        52. Senator Inhofe. General Scaparrotti, are you experiencing any
    shortfalls in weapons or ammunition for training and operational
    requirements?
        General Scaparrotti. [Deleted.]
                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                 joint surveillance target attack radar system
        53. Senator Chambliss. Admiral Locklear, the JSTARS platform
    provides vital surveillance in the form of Ground Moving Target
    Indication (GMTI) to support targeting and attack operations. The
    President's budget proposal calls for a 40 percent reduction in our
    JSTARS fleet, presumably to fund the acquisition of a replacement
    platform. Is the Air Force currently meeting your battle management,
    command, and control requirements?
        Admiral Locklear. [Deleted.]

        54. Senator Chambliss. Admiral Locklear, how will this proposed
    reduction in aircrafts impact your mission?
        Admiral Locklear. [Deleted.]

        55. Senator Chambliss. Admiral Locklear, can you speak to the
    importance of having the GMTI capability available in your AOR?
        Admiral Locklear. [Deleted.]
                                     ______

                 Questions Submitted by Senator Roger F. Wicker
                              u-2 and global hawk
        56. Senator Wicker. General Scaparrotti, in your testimony, you
    referenced the capabilities provided by the U-2 that is lacking in the
    Global Hawk. I would like for you to provide me with the details of
    those capabilities. In your response on differences in capabilities
    between the U-2 and the Global Hawk, please include a classified annex.
        General Scaparrotti. [Deleted.]

        57. Senator Wicker. General Scaparrotti, given the decision of DOD
    to retire the U-2 and continue operating the Global Hawk as the high
    altitude ISR system for the U.S. Air Force, would it be important to
    you that the Global Hawk is able to carry the same sensors as the U-2?
        General Scaparrotti. [Deleted.]

        58. Senator Wicker. General Scaparrotti, if the Global Hawk carries
    the U-2 multi-spectral imagery and broad area mapping sensors, and
    carries them farther and longer, wouldn't this afford the additional
    capability and capacity to meet your ISR peacetime and wartime
    requirements, as well as other obligations?
        General Scaparrotti. [Deleted.]
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                             south korea's concerns
        59. Senator Ayotte. General Scaparrotti, in your prepared
    statement, you say that, ``South Korea is concerned about adjustments
    in U.S. security strategy, particularly about reduction of U.S.
    commitment and resources.'' South Korea is an important ally in Asia.
    We have major strategic interests there, not the least of which is the
    fact that more than 110,000 Americans reside there. Can you explain in
    more specific detail what South Korea's concerns are?
        General Scaparrotti. As is the case with our Nation, South Korea is
    adapting its national security strategy to a rapidly evolving strategic
    environment, including an increasing North Korean asymmetric threat.
    There are concerns in South Korea that American political and economic
    challenges will lead to a reduction of U.S. commitment or the resources
    available to fulfill its responsibilities under the Mutual Defense
    Treaty. South Korea is concerned that North Korea's increasing
    asymmetric capabilities could erode the U.S. commitment to extended
    deterrence.
        South Korea is also paying close attention to a rising China. Like
    many of the nations in the region, South Korea finds itself in a
    situation of complex interdependence. It relies on the United States as
    its preferred security partner, but depends on China for continued
    economic growth and prosperity. Consequently, South Korea is striving
    to ensure that its security decisions do not detrimentally impact its
    economic opportunities.
        U.S. budget reductions have prompted South Korean concerns over
    whether the United States will have ready forces available in the
    quantity called for by our operational plans. Our ally closely watches
    U.S. force posture, training, and acquisitions, examining their impact
    on U.S. commitments. Though we have seen few direct impacts to our
    forces in Korea, other forces that would come to Korea in time of
    crisis face increasing readiness challenges and our ally knows this.
        In raising these concerns, the ROK is inviting the United States to
    engage in a dialogue to ensure our interests and efforts are aligned.
    My command works in concert with the U.S. Embassy in Seoul, PACOM, and
    the U.S. interagency to address concerns, and to deepen the quality of
    our alliance to surmount concerns and challenges to achieve our mutual
    interests and objectives.

        60. Senator Ayotte. General Scaparrotti, in your prepared
    statement, you state that you are ``concerned about shortfalls in
    critical areas including command, control, communications, computers,
    intelligence, surveillance, reconnaissance, missile defense, critical
    munitions, and the readiness of follow-on forces.'' What are your
    missile defense shortfalls?
        General Scaparrotti. The current ballistic missile defense
    architecture in the Korean theater of operations lacks an organic upper
    tier ballistic missile defense capability, such as Terminal High
    Altitude Area Defense (THAAD) or theater ballistic missile capable
    AEGIS ships to fully address the North Korean missile threat.
        While the decision to place a THAAD system in Korea is not
    finalized, adding this capability would provide a layered ballistic
    missile defense posture for the Korean peninsula against an asymmetric
    no-warning attack. We are working closely with PACOM and the Services
    to address this challenge.
        Stationing the THAAD system in Guam enhances ballistic missile
    defenses of the overall PACOM AOR, but it does not specifically address
    the ballistic missile defense shortfalls and challenges in the Korean
    theater of operations.

        61. Senator Ayotte. General Scaparrotti, what are your concerns
    about the readiness of follow-on forces?
        General Scaparrotti. [Deleted.]

                              radar in japan tpy-2
        62. Senator Ayotte. Admiral Locklear, in your prepared statement,
    you state that, ``it became apparent to both PACOM and Japan that we
    need an additional TPY-2 radar in Japan.'' Why do you believe we need
    an additional TPY-2 radar in Japan?
        Admiral Locklear. [Deleted.]

                        air defense identification zone
        63. Senator Ayotte. Admiral Locklear, in November of last year,
    China declared an ADIZ in the East China Sea encompassing the Senkaku
    Islands. What is your assessment of this move by China?
        Admiral Locklear. [Deleted.]

        64. Senator Ayotte. Admiral Locklear, is the U.S. military abiding
    by the demands of this ADIZ?
        Admiral Locklear. [Deleted.]

        65. Senator Ayotte. Admiral Locklear, are you concerned that China
    may move to impose an ADIZ over the South China Sea?
        Admiral Locklear. We have no indications that the PRC is planning
    to implement an ADIZ in the South China Sea in the near-term, but they
    remain open to future ADIZ announcements.

                         china's military modernization
        66. Senator Ayotte. Admiral Locklear, in his March 5, 2014,
    prepared statement, Secretary Hagel said, ``With the proliferation of
    more advanced military technologies and other nations pursuing
    comprehensive military modernization, we are entering an era where
    American dominance on the seas, in the skies, and in space--not to
    mention cyber--can no longer be taken for granted.'' Do you agree with
    the Secretary of Defense that we are entering an era where American
    dominance on the seas and in the skies can no longer be taken for
    granted?
        Admiral Locklear. Yes, I agree with the Secretary's comment.

        67. Senator Ayotte. Admiral Locklear, why is this happening?
        Admiral Locklear. While budget uncertainty has hampered our
    readiness and complicated our ability to execute long-term plans, the
    Chinese military has continued to pursue a long-term, comprehensive
    military modernization program. Last year, China continued large-scale
    investment in advanced short- and medium-range conventional ballistic
    missiles, land-attack and anti-ship cruise missiles, counter-space
    weapons, military cyberspace capabilities, improved capabilities in
    nuclear deterrence and long range conventional strike, advanced fighter
    aircraft, integrated air defenses, undersea warfare, and command and
    control. Meanwhile, over the past year, the U.S. military has been
    forced to prioritize current readiness at the expense of follow-on
    force readiness and critical investment needed for these forces to
    outpace emerging threats.
                                     ______

                    Questions Submitted by Senator Roy Blunt
                           cyber red team capability
        68. Senator Blunt. Admiral Locklear, what is the current PACOM
    demand for cyber capabilities and/or entities that are focused on cyber
    security, information operations, and cyber intelligence? Please
    describe new initiatives or authorities, and the capabilities provided
    therein, that will assist in the cyber integration of PACOM activities.
        Admiral Locklear. [Deleted.]

        69. Senator Blunt. Admiral Locklear, given the increasingly active
    cyber warfare environment, have you expressed a desire for cyber
    capabilities to be integrated into PACOM planning, training, and
    exercises?
        Admiral Locklear. [Deleted.]

        70. Senator Blunt. Admiral Locklear, is there a desire for cyber
    capabilities to be provided by NSA-certified cyber Red Teams? Please
    explain how cyber Red Team capabilities may be integrated into PACOM
    planning, training, and daily activities.
        Admiral Locklear. [Deleted.]

        71. Senator Blunt. Admiral Locklear, in addition, how will PACOM
    simulate cyber threats posed by cyber Red Teams and who will carry out
    the cyber Red Team activities?
        Admiral Locklear. [Deleted.]

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            THURSDAY, MARCH 27, 2014

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

                     POSTURE OF THE DEPARTMENT OF THE NAVY

        The committee met, pursuant to notice, at 9:36 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, Nelson,
    McCaskill, Hagan, Manchin, Gillibrand, Blumenthal, Donnelly,
    Hirono, Kaine, King, Inhofe, McCain, Sessions, Chambliss,
    Wicker, Ayotte, Blunt, and Cruz.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody.
        I want to welcome Secretary of the Navy Raymond E. Mabus,
    Jr., Chief of Naval Operations Admiral Jonathan W. Greenert,
    USN, and Commandant of the Marine Corps General James F. Amos,
    USMC, to the committee this morning to testify on the plans and
    the programs of the Department of the Navy as part of our
    review of the fiscal year 2015 annual budget request. We're
    grateful to each of you for your service to our Nation and for
    the truly professional service of the men and women with whom
    you work. We want to pay tribute to their families, because of
    the vital role that families play in the success of the men and
    women of our Armed Forces.
        Our witnesses this morning face huge challenges as they
    strive to balance the need to support ongoing operations and
    sustain readiness with the need to modernize and keep the
    technological edge that's so critical to military success.
    These challenges have been made particularly difficult by the
    spending caps imposed in the Budget Control Act (BCA), caps
    that were modestly relieved for fiscal year 2015 in the
    Bipartisan Budget Act (BBA) that we enacted earlier this year.
    However, these caps are scheduled to resume full blast in
    fiscal year 2016 and beyond. These caps already seriously
    challenge our ability to meet our national security needs, have
    already forced all of the military departments to make painful
    trade-offs. Unless modified for years after fiscal year 2015,
    they will threaten our long-term national security interests.
        Last year, the Department of the Navy was facing serious
    readiness problems, caused by deferred maintenance, reduced
    steaming and flying hours, and canceled training and
    deployments. The increased emphasis on readiness in this year's
    budget will address some of the Navy's most serious readiness
    problems, but results in a serious shortfall in modernization
    funds to meet future threats.
        The Navy budget says it continues to support a fleet of 11
    aircraft carriers. However, the budget and Future Years Defense
    Program (FYDP) include a plan to retire, rather than refuel,
    the USS George Washington (CVN-73). To follow through on the
    11-carrier fleet, the administration would have to add almost
    $4 billion to the FYDP to refuel and retain the George
    Washington.
        The Navy budget would continue the planned buy of 29 MH-60R
    helicopters in fiscal year 2015, but would cancel the planned
    buy of 29 aircraft in fiscal year 2016. The Navy says this is
    because of the planned retirement of the George Washington.
    However, the air wing that supports the George Washington would
    be retired if the carrier is retired, as it only contains at
    most five MH-60 aircraft.
        Moreover, the Navy's failure to execute the planned
    purchase of 29 aircraft in fiscal year 2016 would break the
    multiyear procurement contract for H-60 helicopters that are
    managed by the Army. This action would result in the government
    having to pay termination charges of at least $250 million, but
    get nothing in return. This action would result in increased
    costs to the Army, as well.
        For Marine Corps modernization, we have yet another in a
    series of changes in plans that started with the cancellation
    of the Expeditionary Fighting Vehicle (EFV) several years ago.
    After the Marine Corps said it could not afford the EFV, we
    spent many months trying to see whether we could achieve high-
    speed capability more cheaply or whether marines in combat
    units could do their jobs without the high speed. Now, the
    Marine Corps has deferred all armored amphibious assault
    vehicle (AAV) work as being unaffordable, regardless of speed
    capability. In place of that, the Marine Corps is now
    evaluating plans for a simpler, more affordable armored
    personnel carrier that can operate in shallow water. That may
    be the right solution, but it is vital that we promptly find a
    solution and stick to it.
        The Department of Defense (DOD) most recent Defense
    Strategic Guidance (DSG) issued in January 2012, refocuses the
    U.S. military on the Asia-Pacific region. Consistent with that
    strategy, DOD has been working to realign U.S. military forces
    in South Korea and Okinawa, and plans to position Navy and
    Marine Corps forces in Australia, Singapore, and possibly
    elsewhere in the region. DOD has also begun implementing a plan
    to deploy forward more ships as shown by the Navy's first
    rotational deployment of a Littoral Combat Ship (LCS), the USS
    Freedom, to Singapore last year. We look forward to hearing
    more about the results of that deployment.
        Finally, I want to commend you, Secretary Mabus, for your
    efforts to lead in the areas of energy efficiency and energy
    self-reliance. You have wisely placed a strong emphasis on an
    area where, as strong as our military forces may be, we remain
    subject to the tyranny of energy supplies. I want to thank you
    for your commitment to a more sustainable, stronger Navy.
        Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        We'd all agree that our security is being challenged in
    ways that we haven't seen in many years, and maybe ever. Events
    across the Middle East, Africa, and most recently, Ukraine,
    have brought into sharp focus the reality the President seems
    unwilling to accept, that the tide of war is not receding, in
    spite of statements he has made.
        Continuing down a path to slash $1 trillion from our
    national security budget will leave us with a Navy unable to
    meet its mission, overtaxing our sailors and marines, and
    prematurely retiring ships and aircraft. A shrinking Navy
    directly impacts our economic and security interests around the
    world. The global economic system is dependent upon open sea
    lanes, as 90 percent of the global trade is by sea. A strong
    and well-resourced U.S. Navy is vital to protecting our access
    and freedom of maneuvering.
        The Navy projects that the fleet would remain below its
    306-ship goal during most of the period. The Navy needs to buy
    10 ships per year to sustain a 300-ship fleet. Last year's
    budget bought eight and this year's budget will buy only seven.
        Admiral Greenert has stated that the Navy would need a 450-
    ship fleet in order to meet the needs of combatant commanders.
    A small fleet will lead to longer deployments--that's something
    we will be talking about, a very serious problem--and more
    strain on our personnel and their families. Just this week,
    Admiral Samuel J. Locklear III, USN, the Commander of U.S.
    Pacific Command (PACOM), testified that submarine requirements
    in his area of responsibility (AOR) are not being met. While
    the United States is shrinking our submarine force, the Chinese
    are growing theirs, as well as developing new ballistic
    missiles that will provide them with credible second strike.
    It's reminiscent of the 1990s, I would suggest. How can our
    allies and our adversaries take the pivot into Asia seriously
    when we aren't even adequately resourcing the requirements of
    our combatant commanders?
        Further complicating our ability to meet our combatant
    commanders' and the ship force-level requirements, is the
    future acquisition of the Ohio-class ballistic-missile
    submarine, the centerpiece of our nuclear triad. The new Ohio
    will require annual spending of well over $5 billion a year.
    Without additional Navy procurement funding, the Ohio
    replacement will crowd out other ships as well as other Navy
    and Marine Corps investments and our readiness needs. This
    greatly increases the prospect of a hollow Navy force at the
    same time our industrial base is struggling to sustain both
    itself and a much smaller fleet.
        Under the fiscal year 2015 budget, readiness will also
    deteriorate further as the Navy is short about $5 to $6 billion
    in its base budget. The Navy is still very dependent upon
    Overseas Contingency Operations (OCO) funding to meet readiness
    needs. The Commandant has consistently told us that the Marine
    Corps requires 2 to 3 years of OCO funding for reset after all
    forces return from Afghanistan. That bill is $1.3 billion. We
    face the prospect of a future Navy unable to meet the global
    presence mission, looking more and more likely to succumb to
    the same fate as the befallen British fleet, no longer to be a
    global force. The Nation needs to reset its fiscal priorities
    and embark on a second Reagan-like buildup of our Nation's
    defenses, particularly our Navy.
        Before closing, I would like to say that, General Amos,
    this likely will be your last appearance before this committee.
    Maybe you're happy about that, but we're not. It's been great
    to have you, and you're one of our heroes. Your service has
    just been exemplary. Thank you for your service.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        If, indeed, this turns out to be your last hearing, General
    Amos, I would totally concur with what Senator Inhofe said. You
    are a true hero, for everybody who knows you and everybody
    who's under your command and with whom you work.
        Secretary Amos--I mean, Secretary Mabus. I don't know if
    that was a promotion or a demotion. [Laughter.]
        Secretary Mabus.

     STATEMENT OF HON. RAYMOND E. MABUS, JR., SECRETARY OF THE NAVY

        Mr. Mabus. I'll answer to almost anything, Mr. Chairman.
    [Laughter.]
        Before I begin my opening statement, I would like to say
    that the thoughts and prayers of our entire Navy family are
    with the families, the shipmates, and the friends of our sailor
    that we lost in the shooting in Norfolk on Tuesday, the
    midshipman who died this week, and also the sailors and family
    members who are missing in the Washington mudslides.
        Chairman Levin, Ranking Member Inhofe, members of this
    committee, first I want to express my deep thanks to the
    committee on behalf of the Department of the Navy, our sailors,
    our marines, our civilian employees, and their families for all
    your help and all your support.
        General Amos, the Commandant of the Marine Corps, and
    Admiral Greenert, the Chief of Naval Operations (CNO), and I
    could not be more proud to represent these courageous and
    faithful sailors, marines, and civilians. These men and women
    serve their Nation around the world with skill and dedication,
    no matter what hardships they face, no matter how far away from
    home they are, and from their families.
        As both of you have noted, this will certainly be
    Commandant Amos's last posture hearing before this committee. I
    just want to say what a true privilege it has been for me to
    serve with Jim Amos as the Commandant of the Marine Corps.
        The architects of our Constitution recognized the inherent
    value of the U.S. Navy and Marine Corps. Article I, Section 8,
    gave Congress the responsibility ``to provide and maintain a
    Navy'' because our Founding Fathers knew that the Nation needed
    a naval force to operate continuously in war and in peace.
        Over 2 centuries ago, the United States had a crucial role
    in the world. Today, that role is exponentially greater.
    Whether facing high-end combat or asymmetrical threats or
    humanitarian needs, America's maritime Forces are ready and
    present on day 1 of any crisis for any eventuality. In today's
    dynamic security environment, naval assets are more critical
    than ever. In military terms, they provide presence, presence
    worldwide, they reassure our partners that we are there, and
    remind potential adversaries that we're never far away. This
    presence provides immediate and capable options for the
    Commander in Chief when a crisis develops anywhere in the
    world. In the past year, our naval forces have operated
    globally from across the Pacific to continuing combat in
    Afghanistan, from the Gulf of Guinea to the Arctic Circle.
        The 2012 DSG and the newly released Quadrennial Defense
    Review (QDR) are both maritime in focus and require a presence
    of naval forces around the world. Four key factors make that
    global presence and global action possible. These four
    factors--people, platforms, power, and partnerships--have been
    my priorities during my tenure as Secretary, and they have to
    continue to receive our focus looking ahead.
        In these fiscally constrained times, we have used these
    priorities to help balance between the readiness of the force,
    our capabilities, and our capacity. Our people are our biggest
    advantage, and we have to make sure that they continue to get
    the tools they need to do their jobs. In compensation, we've
    increased sea pay to make sure those sailors and marines
    deployed aboard ships are appropriately recognized. However,
    this budget also seeks to control the growth in compensation
    and benefits which threatens to impact all the other parts of
    our budget. If this is not addressed, as the CNO so forcefully
    puts it, the quality of work for our sailors and marines will
    almost certainly decline.
        Shipbuilding and our platforms remain key elements of our
    maritime power and have been a focus of this committee. The
    number of ships, submarines, and aircraft in our fleet is what
    gives us the capacity to provide that global presence. While we
    have the most advanced platforms in the world, quantity has a
    quality all its own.
        I think it's important to understand how we got to our
    current fleet size. On September 11, 2001, our fleet stood at
    316 ships; but by 2008, after one of the great military
    buildups of all times, that number had dropped to 278 ships. In
    the 4 years before I took office, the Secretary of the Navy put
    19 ships under contract. Since I took office in May 2009, we
    have put 60 ships under contract; and, by the end of this
    decade, our plan will return the fleet to 300 ships. We're
    continuing our initiatives to spend smarter and more
    efficiently, and we're driving down costs through things like
    competition, multiyear buys, and just driving harder bargains
    for taxpayers' money.
        Power, or energy, is a national security issue and central
    to our naval forces and our ability to provide the presence
    needed. Dramatic price increases for fuel threaten to degrade
    our operations and training, and could impact how many
    platforms we can acquire. Having more varied, stably priced,
    American-produced sources of energy make us better warfighters.
    From sail, to coal, to oil, to nuclear, and now to alternative
    fuels, the Navy has led in energy innovation.
        Since the end of World War II, U.S. Naval Forces have
    protected the global commons to maintain the foundation of the
    world's economy. In today's complex environments, partnerships
    with other nations, evidenced by interoperability, by
    exercises, and by operations, continue to increase in
    importance. The Navy and Marine Corps, by nature of their
    forward presence, are naturally suited to develop these
    relationships, particularly in the innovative, small-footprint
    ways that are required.
        With the fiscal year 2015 budget submission we are seeking,
    within the fiscal constraints imposed, we will provide our Navy
    and Marine Corps with the equipment, training, and tools needed
    to carry out the mission the Nation needs and expects from
    them. There are never any permanent homecomings for sailors or
    marines. In peacetime, in wartime, and all the time, they
    remain forward-deployed, providing presence, and providing
    whatever is needed by our country. This has been true for 238
    years, and it is our task to make sure it remains true now and
    in the future.
        Thank you.
        [The prepared statement of Mr. Mabus follows:]
                Prepared Statement by Hon. Raymond E. Mabus, Jr.
        Chairman Levin, Ranking Senator Inhofe, and members of the
    committee, today I have the privilege of appearing to discuss posture
    and readiness for the fifth time on behalf of the men and women of the
    Department of the Navy. It is an honor to represent the sailors and
    marines across the globe, as the Marine Hymn says, ``in every clime and
    place;'' the civilians who support them at home and around the world;
    and to report on the readiness, posture, progress, and budgetary
    requests of the Department. Along with Commandant of the Marine Corps,
    General James Amos, and Chief of Naval Operations (CNO), Admiral
    Jonathan Greenert, I take great pride in the opportunity to both lead
    and serve the dedicated men and women of our Department. This
    statement, together with the posture statements provided by CNO
    Greenert and Commandant Amos, are designed to present an overview of
    the state of the Department of the Navy for your consideration as we
    move forward with the fiscal year 2015 budget process.
        The architects of our Constitution recognized the inherent value of
    the U.S. Navy and Marine Corps. Article 1, Section 8, gave Congress the
    responsibility to ``provide and maintain a Navy,'' because our Founding
    Fathers knew that the Nation needed a naval force to operate
    continuously in war and peace. Over two centuries ago they recognized
    that having a Navy and Marine Corps to sail the world's oceans in
    defense of our national interests and our commerce sent a powerful
    signal to our allies and our potential adversaries. Even then, the
    United States had a crucial role in the world. Today that role is
    exponentially greater.
        This year we celebrate the Bicentennial of Thomas Macdonough's
    ``signal victory'' on Lake Champlain during the War of 1812. From that
    early triumph in the defense of our Republic to the heroic fights in
    places like Mobile Bay and Manila; to the Chosin Reservoir and the
    quarantine during the Cuban Missile Crisis and the coastal and riverine
    patrols of Vietnam; to the mountains of Afghanistan and the littorals
    of the Pacific presently; our Navy and Marine Corps have been there
    when the Nation called. We have given our Commanders in Chief the
    options needed.
        These options are far greater than just waging war, although the
    Navy and Marine Corps are ready, when necessary, to fight and win our
    Nation's wars. In today's complex world, with a dynamic security
    environment, naval assets are more critical than ever. This year our
    ground forces are returning home from the battlefields of Afghanistan,
    just as they have from Iraq. Yet our sailors and marines know that they
    will continue to forward deploy as the Guardians of our safety and
    security. In peace, as in war, we will deploy, day after day, year
    after year. For 7 decades our global presence and maritime strength
    have ensured the freedom of the seas and the security of peaceful free
    trade around the world. This has resulted in unprecedented growth in
    the world's economy, which has benefitted all. It also ensures
    America's interests are respected and our people remain secure.
        The Navy and Marine Corps respond whenever the Nation calls.
    Whether facing high-end combat, asymmetrical threats or humanitarian
    needs, America's maritime forces are ready and present on day one of
    any crisis, for any eventuality.
                           strategic context in 2013
        Throughout the past year, the Navy and Marine Corps repeatedly
    demonstrated the critical role they play in ensuring global stability.
    In military terms, they provide worldwide presence. Naval forces
    operated across the Pacific, and in the continuing combat mission in
    Afghanistan, from the Gulf of Guinea to the Arctic Circle. As President
    Theodore Roosevelt said, ``A good Navy is not a provocation to war. It
    is the surest guarantee of peace.'' We don't have to surge units from
    home. Our ships don't take up an inch of anyone else's soil. We
    reassure our partners that we are there, and remind those who may wish
    our country and allies harm that we're never far away. We protect the
    global commons and ensure the freedom of navigation which has
    underwritten the growth of the world's economy for decades.
        In recent years we have had a range of examples which illustrate
    what our Navy and Marine Corps mean for our Nation. Every time North
    Korea conducts missile tests or threatens their neighbors, our
    Ballistic Missile Defense ships are already there, already on patrol.
    There's no overt escalation, because we are already present. When
    special operations units conduct operations all over the globe, from
    capturing known terrorists in Libya to raids in Somalia, they rely on
    Navy ships and Marine Corps units as critical enablers. We support
    friends and allies with humanitarian assistance missions like Pacific
    Partnership and in exercises that help build our ability to operate
    together like our Cooperation Afloat Readiness and Training (CARAT)
    exercises with numerous partners. Around the world the credible combat
    power of the U.S. Navy and Marine Corps opens the door for diplomacy
    and helps our leaders address emerging threats.
        A few months ago when Typhoon Haiyan moved toward our allies in the
    Philippines, our naval forces in the region tracked its progress. U.S.
    marines were on the ground within hours after the storm. Our C-130s and
    MV-22 Ospreys brought in early aid and began to survey and assess the
    damage. Within days we had a dozen ships, including the George
    Washington Strike Group, in the waters around the Philippines along
    with over a hundred aircraft, providing lifesaving aid and supplies to
    devastated communities.
        Humanitarian assistance and disaster relief missions are an
    important contribution our Navy and Marine Corps make to our Nation's
    diplomacy because our presence allows us to respond quickly and
    effectively. These operations build our partnerships and they encourage
    stability and security by helping those in need get back on their feet.
    However, it should not be lost on anyone that we are talking about
    warships, warplanes and warfighters. We amassed a dozen combat ready
    warships and massive amounts of air support, rapidly, to respond to a
    crisis. We were able to do so because of the inherent flexibility of
    our people and our platforms.
        These examples demonstrate that for the Navy and Marine Corps
    global presence is our purpose. We are there to deal with the
    unexpected. We are the Nation's hedge against new crises and new
    conflicts. The Navy and Marine Corps are our Nation's Away Team, ready
    for whatever comes over the horizon.
                               today's priorities
        Four key factors make our global presence and global action
    possible. These four factors--people, platforms, power and
    partnerships--have been my priorities during my tenure as Secretary and
    they must continue to receive our focus looking ahead.
        Each of these four priorities contributes directly to the
    Department of the Navy's ability to provide the presence and options
    which the Commander in Chief and the American people have come to
    expect. They are what makes our Navy and Marine Corps the most
    immediate and capable option when a crisis develops anywhere in the
    world. Our people, platforms, power, and partnerships guide our
    approach to the fiscal year 2015 budget process.
                       people--supporting our vital asset
        In 1915, my predecessor, Josephus Daniels testified before Congress
    that ``a Navy, no matter how powerful, unless it is well manned by an
    adequate number of well-equipped and well-trained sailors, would have
    very little value.'' That statement is even more true today. Our Total
    Force of Active Duty and Reserve military, and civilians are what make
    the Navy and Marine Corps the best in the world.
        Our equipment--the ships, submarines, aircraft, vehicles, weapons
    and cyber systems; everything that our sailors and marines operate--are
    technological marvels and the most advanced in the world. But they only
    exist thanks to those who design, build and procure them. They would be
    useless without those who sail and fly and operate them. The people are
    the real marvel. They are what gives the United States the edge and
    what sets us apart from the world. That is why our people have been and
    must continue to be our highest priority. However, the last few years
    have seen increasing challenges to our people, uniform and civilian.
        Those in uniform have seen ever lengthening deployments. The
    average number of days that ships are underway or deployed increased 15
    percent since 2001. In 2013 the USS Dwight D. Eisenhower Strike Group
    returned from back-to-back deployments, totaling 12 months, with only a
    2-month break in between. USS Nimitz, which returned home just before
    Christmas, was extended twice because of the crisis in Syria and was
    deployed for 10 months. Instead of 6 month deployments, which had been
    standard for decades, 8 months at sea is the new normal and 10 months
    is becoming more common. These extended deployments, which immediately
    follow an intense training cycle requiring recurring operations at sea,
    stress our sailors and marines and their families. This will continue
    because the requirement for naval presence will not diminish.
        Our civilian personnel have been tested as well. We literally could
    not put our fleet to sea without these committed and courageous
    individuals. The horrific attack at the Washington Navy Yard in
    September cost the lives of 12 devoted public servants left 2
    physically injured and intangible scars across our workforce. Just days
    later, as soon as they were permitted, most of their colleagues on the
    Navy Yard returned to work, committed to their mission despite 3 years
    in which they received no pay raises and were subject to furloughs. Two
    weeks after the shooting our Navy and Marine Corps civilians, including
    many who worked at the Navy Yard but were not part of Naval Sea Systems
    Command or Naval Facilities Engineering Command, were forced off the
    job again by the government shutdown.
        A concrete demonstration of our support for our sailors, marines,
    and civilians are their pay and benefits. Military pay and benefits
    continue at a competitive level, and in some skill areas are better
    than those found in the private sector. The promise of a military
    retirement is a key element of the covenant we have with the men and
    women who serve our country for an entire career. We must safeguard
    that promise for today's sailors and marines. However, we also have to
    realize that the growth rate in military compensation must be
    controlled. Our sailors and marines chose to serve their country out of
    duty and patriotism, not just for the money. We must ensure that we
    support our Active-Duty personnel by giving them the resources and
    tools they need to do their jobs, as well as their well-earned
    compensation.
        We support the sensible and fair reforms to compensation and
    benefits introduced in the President's budget. We look forward to
    considering the complete review being conducted by the Military
    Compensation and Retirement Modernization Commission. We must have a
    holistic approach which ensures that any changes are reasonable,
    effective, and fair in sustaining the All-Volunteer Force.
        Today's demanding environment will require the most resilient force
    that our Navy and Marine Corps has ever fielded. Because of that we
    continue to develop the 21st Century Sailor and Marine Initiative as an
    overarching method of supporting our people, to eliminate stovepipes
    and ensure a comprehensive approach. The goal is to help our sailors
    and marines maximize their personal and professional readiness, and to
    assist them and their families with the mental, physical and emotional
    challenges of military service.
        The initiative is influencing sailors and marines around the world.
    In particular, we are working to counter the challenges of suicide,
    sexual assault and alcohol-related incidents. These tragic occurrences
    not only impact the resilience of our sailors and marines, they also
    directly impact the discipline of the force and degrade combat
    effectiveness.
        We remain resolute in our efforts to minimize suicides and we are
    striving to understand the root causes and contributing factors that
    lead to suicide and suicide-related behavior. We want an environment in
    which sailors and marines are comfortable coming forward when they feel
    they may harm themselves, or when they know of a shipmate contemplating
    harm. Over the past few years we have introduced a number of
    initiatives including the Navy Operational Stress Control (OSC) Program
    to help build personal resilience, promote peer-to-peer support,
    enhance family support, and enable intervention up and down the chain
    of command. We have also added additional mobile training teams who
    travel to units around the world to teach these skills and foster a
    sense of community. Our suicide prevention teams examine each incident
    for insights and data to inform our programs and we apply those lessons
    to help improve our training and policy.
        Sexual assault continues to be an ``insider threat'' with serious
    impacts on the Navy and Marine Corps. Because of the seriousness of
    this issue, soon after taking office I established the first and only
    Sexual Assault Prevention and Response Office reporting directly to me
    as Secretary. We have implemented numerous programs to strengthen our
    approach, including consistent leadership, new training methods, and
    victim-centered support efforts. Reporting of sexual assaults increased
    in fiscal year 2013, which we believe reflects a positive aspect of our
    efforts. It indicates that our sailors and marines believe that their
    reports will be taken seriously and that perpetrators will be held
    accountable.
        Another key element is our effort to strengthen the expertise and
    increase the resources of the Naval Criminal Investigative Service and
    our judge advocates to investigate and prosecute sexual criminals. We
    have also focused some of their training on advocating for victims. We
    continue to conduct regular voluntary anonymous surveys in order to
    learn as much as possible about perceptions and the factors influencing
    decisions to report or not report sexual assaults
        We continue to work to curb alcohol abuse and reduce the number of
    alcohol-related incidents which can end lives and careers. There has
    been a downward trend in alcohol related incidents which continued in
    2013 as we saw yet another reduction in cases of driving under
    influence (DUI) and alcohol related behavior. We attribute this in part
    to dynamic media and education campaigns and directed-actions for
    irresponsible use of alcohol. We have also instituted limits to the
    shelf space available for the sale of alcohol at Navy and Marine Corps
    exchanges. Implementation of the alcohol detection device program is
    still relatively new but fleet feedback suggests these devices, paired
    with an effective command prevention program which includes things like
    curfews and base patrols, provide an effective deterrent to alcohol
    abuse.
        Another positive development in 2013 was the significant strides
    the Navy made toward our goal of complete equality of opportunity for
    women in every officer designator and enlisted rating. Female officers
    and enlisted currently serve on virtually every class of surface ship
    and in every type of aviation squadron. Female officers now serve as
    well in our submarine force and the Task Force on Enlisted Women in
    Submarines continues to develop details for full submarine force
    integration. The Navy is opening 252 enlisted and 15 officer billets to
    women in the coastal riverine force. The sole remaining area in the
    Navy not yet open to women is Navy Special Warfare. However, once
    assessments are complete and Congress has been notified, assigning
    women in that area will be in accordance with the U.S. Special
    Operations Command implementation plan.
        The Marine Corps continues to implement its plan to open closed
    positions to women. All positions currently closed will either be
    opened to women or an exception to policy requested from the Secretary
    of Defense by January 2016. Since the 2011 NDAA the Marine Corps has
    opened 463 positions in 22 units in the ground combat element to female
    officers and staff non-commissioned officers with open occupational
    specialties. Female officers and female enlisted marines have been
    given the opportunity to volunteer for the training in Infantry Officer
    School or the Infantry Training Battalion as part of the research
    effort to inform decisions to open currently closed positions to women.
                      platforms--building the future fleet
        The marines, sailors, and civilians are the heart of our force, but
    what enables them to do their job are the ships, submarines, and
    aircraft in our fleet. As I noted earlier, we have the most advanced
    platforms in the world and we must constantly work to maintain that
    technological advantage. However, at a certain point quantity has a
    quality all its own.
        The very nature of the Navy and Marine Corps mission, maintaining a
    global presence and positioning forces to respond immediately to
    emergent threats from man or nature, means that there is not much
    difference in our operations in times of war or peace. The updated
    Defense Strategic Guidance and Quadrennial Defense Review clearly rely
    even more on maritime assets in our national security strategy.
        It is important to understand how we got to our current fleet size.
    On September 11, the fleet stood at 316 ships. By 2008, after one of
    the largest military buildups in American history, that number had
    dropped to 278 ships. In the 4 years before I took office as Secretary,
    the Navy put 19 ships under contract. Since I took office in May 2009,
    we have put 60 ships under contract and by 2019 our current plan will
    enable us to return the fleet to 300 ships.
        Some of the Navy's decline in the number of ships may be attributed
    to our understandable focus on ground forces involved in two major wars
    for more than a decade. But when I took office, I found it necessary to
    significantly revamp our basic management and oversight practices as
    well.
        When I took office, many of the Navy's shipbuilding programs were
    seriously troubled, with costs spiraling out of control and schedules
    slipping. There were some fundamental flaws in the acquisition process
    we were using. Ships were still being designed while under
    construction, immature technology was added before being proven, and
    requirements grew without restraint or realistic price forecasts. One
    of the central problems the Navy faced was a lack of competition in the
    system. With a smaller number of shipbuilders, Navy contracts had begun
    to be treated like allocations, rather than competitions to earn our
    business.
        In the past 5 years, we have turned shipbuilding around by
    promoting acquisition excellence and integrity as well as aggressive
    oversight. We have been rebuilding the Department's core of acquisition
    professionals. Our focus is on everything from requirements, to design,
    to construction efficiency, to projected total life cycle costs. We
    emphasized firm, fixed-price contracts over the cost-plus contracts
    that can inflate costs. We introduced initiatives to spend smarter and
    more efficiently through competition, multi-year buys, and driving
    harder bargains for taxpayer dollars. I have made it clear to industry
    that Navy expects three things. A learning curve should be evident so
    each ship of the same type, whose design had not dramatically changed,
    would take fewer man-hours to build and should cost less than previous
    ships. Second, costs have to be scrubbed relentlessly with total
    visibility for Navy in estimates and bids. Third, appropriate
    investments in both infrastructure and workforce training must be made
    and are a shipbuilder's responsibility.
        But along with those harder bargains and expectations I made a
    commitment to our industry partners that the Department will do three
    things to keep up our end of the relationship. First, we must build
    stable designs without major changes during construction. Second, if a
    new advanced technology comes along after construction has started; it
    must wait until the next block of ships. Finally, we will offer a
    realistic shipbuilding plan so that the number, type, and timing of
    building would be transparent and offer some stability to the industry.
        In today's fiscal environment maintaining and increasing the fleet
    size will require sound management, innovative solutions, and
    continuing to seek out efficiency in our acquisition system. Navy
    shipbuilding is a unique public-private partnership; a key economic
    engine touching all but one of the 50 States that provides over 100,000
    high-skilled, high-paying jobs and the basis for the global prosperity
    and security that naval presence has assured since World War II.
        The fiscal year 2015 Shipbuilding Plan projects that we will reach
    300 ships by the end of the decade. This plan maintains a force that is
    balanced and flexible and focuses on critical technologies. It is
    designed to be able to prevail in 21st century combat situations,
    including anti-access, area-denial environments, and to be
    operationally effective and resilient against cyber attacks. In 2013 we
    awarded two Arleigh Burke-class destroyers (DDG) and contracted for
    seven more, which will be built over the next several years through a
    multi-year procurement contract. In total in 2013 we delivered seven
    new vessels to the fleet. We deeply appreciate the support of this
    committee and will work with you in order to build and maintain the
    fleet needed to address our global requirements and responsibilities.
        2013 saw a number of significant milestones for our new platforms
    and our research and development programs. Our interim Afloat Forward
    Staging Base (AFSB) USS Ponce continued to develop operating concepts
    for future AFSBs and Mobile Landing Platforms (MLP). The next
    generation destroyer USS Zumwalt (DDG-1000) and the MLP USNS Montford
    Point were launched. The first P-8 Poseidon maritime patrol aircraft
    deployed to the Pacific and the Navy and Marine Corps established their
    first F-35 Lightning II squadrons. The Air and Missile Defense Radar
    (AMDR) began development. The Standard Missile 6 (SM-6) was introduced
    to the fleet. None of these programs would be possible without your
    continued support.
        The deployment of Littoral Combat Ship (LCS) USS Freedom to the
    Pacific is an important milestone in the LCS Program. The deployment
    tested the ship and its key operating concepts, overcame first-in-class
    challenges, and provided the Navy with lessons learned and ways to
    improve the program. The rotational forward deployment of the ship with
    our friends in Singapore was an unqualified success. In addition to
    contributing to relief efforts for Typhoon Haiyan, the ship also
    conducted a very successful crew-swap, teaching us a great deal about
    the LCS's new and innovative manning and deployment concepts.
        Our aviation and weapons programs are just as important to our
    ability to project power and provide presence as our shipbuilding. In
    May Admiral Greenert and I stood on the deck of USS George H.W. Bush
    and watched the landing of the X-47B unmanned carrier demonstrator. It
    was an historic moment in naval aviation, and a critical step forward
    in the development of our naval unmanned systems. We are pushing ahead
    with the Unmanned Carrier Launched Airborne Surveillance and Strike
    system (UCLASS) to develop an aircraft capable of multiple missions and
    functions, including precision strike in a contested environment.
    Support for this aircraft is vital for shaping the carrier air-wing for
    the challenges of the 21st century. To enhance our combat effectiveness
    and efficiency, these unmanned systems need to be integrated into
    everything we do across the full range of military operations.
        The at-sea testing of a directed energy weapon system was also an
    important development. These new systems can give the Navy an
    affordable, multi-mission weapon with a deep magazine and unmatched
    precision. Their modular nature will allow them to be installed on
    numerous different classes of ships in the future. We intend to deploy
    the system on the USS Ponce to continue testing and inform follow on
    Navy and DOD research into developing and integrating affordable
    directed energy weapons into the Joint Force.
        During difficult fiscal times it may be tempting to target research
    and development programs for savings. However, that kind of thinking is
    short sighted. These programs, and our entire research and development
    establishment from the Office of Naval Research to Navy labs to our
    industry partners, are vital to our future.
                        power--a national security issue
        Power and energy are central to our naval forces and our ability to
    be in the right place, around the world. It is what we need to get them
    there and keep them there. The Navy has a long, proud history of energy
    innovation. From sail to coal to oil to nuclear, and now to alternative
    fuels, the Navy has led the way.
        Energy is a national security issue and can be, and is, used as a
    geostrategic weapon. Even with domestic oil production up, imports
    declining, and new oil and gas Reserves being discovered, energy is
    still a security concern and military vulnerability. One reason for
    this is that oil is the ultimate global commodity, often traded on
    speculation and rumor. In the aftermath of the chemical weapons attack
    in Syria, oil prices surged to over $107 per barrel and remained there
    for weeks, in what oil traders call a ``security premium.'' This same
    scenario plays out, such as during the crises in Egypt and Libya, and
    every time instability arises. Each $1 increase in the price of a
    barrel of oil results in a $30 million bill for the Navy and Marine
    Corps. This has huge implications across the Department of Defense and
    for our security. DOD is the largest single institutional consumer of
    fossil fuels on earth and budgets about $15 billion each year on fuel.
    But in fiscal years 2011 and 2012 price spikes added another $3 billion
    to the DOD fuel bill. The potential bills from that ``security
    premium'' can mean that we will have fewer resources for maintenance
    and training. But more importantly, the cost of meeting our high fuel
    demand can also be measured in the lives of marines killed or wounded
    guarding fuel convoys. During the height of operations in Afghanistan,
    we were losing one Marine, killed or wounded, for every 50 convoys
    transporting fuel into theater. That is far too high a price to pay.
        In 2009, I announced five energy goals for the Department of the
    Navy in order to improve our energy security, increase our strategic
    independence, and improve our warfighting capabilities. The topline
    goal commits the Department of the Navy to generate one-half of its
    energy needs from non-fossil fueled sources by 2020. We are making real
    progress toward that goal through greater energy efficiency and
    alternative fuel initiatives. Burning cleaner fuel, or burning less
    fuel, is better for the environment but that is not our primary
    incentive. We're pursuing these alternatives because they can make us
    better warfighters.
        Under a Presidential directive, the Department of the Navy is
    working with the Departments of Energy and Agriculture to help promote
    a national biofuel industry. This past year, under the authority in
    Title III of the Defense Production Act (DPA), we took an important
    step forward, with a DOD DPA award to four companies which committed to
    produce 160 million gallons of drop-in, military-compatible biofuels
    each year at an average price of well below $4.00 per gallon, a price
    that is competitive with what we are paying today for conventional
    fuels. DOD policy and my prior commitment has been that we will only
    buy operational quantities of biofuels when they are cost competitive.
    This initiative moves us far down that road. At full production,
    biofuels combined with conventional fuel at a 50/50 blend hold the
    promise of being able to cost-effectively provide our fleet with much
    of its annual fuel demand, providing real competition in the liquid
    fuels market.
        We also continue to develop our energy efficiency through research
    and development of more efficient propulsion systems, shore-based power
    management and smart-grid technology, and conservation measures. For
    example, in the past year the Naval Facilities Engineering Command's
    Engineering and Expeditionary Warfare Center provided technology
    demonstrators at Camp Lemonnier, Djibouti which reduced fuel
    consumption 9 percent base wide, even with a 3 percent increase in
    energy demand because of an increased population. At Joint Base Pearl
    Harbor Hickam a $2.2 million contract for the Daylight Project was
    awarded, which will use sunlight to light warehouse spaces and utilize
    photo sensors to automatically turn off lights when daylight levels are
    sufficient. In aggregate, fiscal year 2013 energy programs in Hawaii
    are projected to save the government $4.7 million a year. The Marine
    Corps' development of expeditionary power solutions, through the
    experimental forward operating bases or ExFOB, has made them better
    warriors who are lighter and more agile in the face of today's global
    threats.
        The Navy has a long and successful history of partnering with
    industry to promote business sectors and products important to our
    Nation's military and economic security. From the development of the
    American steel industry to nuclear power, the Navy has helped the
    country develop economically while helping sailors benefit from the
    cutting edge of technology to defend our Nation. These programs are
    about diversifying fuel supplies, stabilizing fuel costs and reducing
    overall energy needs. In achieving these energy goals, we will maximize
    our reach and maintain our global presence and make our Navy and Marine
    Corps more combat capable.
                    partnerships--the global maritime world
        For the last 7 decades, American naval forces have deployed around
    the world to be, as President Obama said this past year, the anchor of
    global security. We operate and exercise alongside our friends and
    partners around the world, to maintain the stability of the global
    maritime commons. We work to uphold the key principles of free trade in
    free markets based on freedom of navigation, which underwrites the
    unprecedented growth of the global economy.
        In times of economic uncertainty it is more critical than ever to
    protect the stability of the global system. As 90 percent of worldwide
    trade moves at sea, this system, and the sophisticated set of
    international rules and treaties on which it is based, has become
    central to our global marketplace. However the efficiency and intricate
    interdependencies of a ``just in time'' economy place the system at
    risk from the destabilizing influences of rogue nations, non-state
    actors, and regional conflicts.
        The Navy and Marine Corps, by nature of their forward presence and
    the boundless quality of the world's oceans, are naturally suited to
    develop relationships, particularly in the innovative, small footprint
    ways the updated Defense Strategic Guidance and QDR require. Helping
    international partners increase their abilities and become more
    interoperable with us helps us all. Allies and partners around the
    world recognize that our combined naval forces offer a unique and
    critical capability. As an Asian ambassador to the United States
    recently remarked to me, the competing claims in the Pacific today have
    reminded some of our friends of the vital role U.S. naval forces play
    in global stability.
        Providing security for free trade and freedom of navigation across
    the maritime domain requires more capacity than any single nation can
    muster. The U.S. Navy plays a principal role in maintaining the freedom
    of the seas, but it cannot play an exclusive role. Partnerships between
    like-minded nations, collaborating to ensure security and safety at
    sea, distribute the burden based on alliances, shared values and mutual
    trust.
        A recent Naval History and Heritage Command study titled ``You
    Cannot Surge Trust'' has reinforced the fact that partnership and trust
    do not appear overnight. Naval operations, in peace and war, are
    fundamentally human endeavors. Operational success is based as much, or
    more, on professional norms, personal relationships and human decision
    making as on technology or hardware. Partnerships are a critical naval
    endeavor.
        In the past year, we continued to develop the strength of our
    partnerships across the globe. Engagement between the leaders of the
    world's naval forces is a critical component of building those human
    connections. Because of this, our senior uniformed leaders and I have
    traveled extensively to meet and consult with our peers.
        Many nations have a longstanding territorial view inward, which
    caused them to focus overwhelmingly on land forces in the past. But in
    today's globalized world they recognize that they now have to face
    outward. They are looking to the U.S. Navy and Marine Corps for advice
    and assistance as they make that shift. Other nations are already
    maritime focused, and look to develop the ability to train, exercise,
    and operate together effectively to forward our shared goals. Through
    our meetings between senior leaders and exercises with our allies,
    partners, and friends we are building the international relationships,
    trust, and inter-operability which are vital to protecting our common
    interests in a globalized world.
        In 2013, we conducted the largest exercise of the year in the
    Arabian Gulf, the International Mine Countermeasures Exercise. With
    representatives from 41 countries, including 6,600 sailors on 35 ships,
    the world's navies cooperated to help promote regional stability and
    address the global challenge of mine warfare. Also this past year,
    Expeditionary Strike Group 3 and the 1st Marine Expeditionary Brigade
    conducted the multilateral amphibious exercise Dawn Blitz. Alongside
    amphibious units from Canada, New Zealand, and Japan, and observers
    from Australia, Chile, Colombia, Israel, Mexico, Peru and Singapore,
    the exercise helped increase our core amphibious capabilities, while
    also strengthening our partnership and interoperability. As I mentioned
    earlier our partners in Singapore hosted the first forward stationing
    of the Littoral Combat Ship USS Freedom. The ship conducted numerous
    exercises with our friends in Southeast Asia, expanding the number of
    ports we can visit and work from in the littorals.
        Some of our exercises are smaller and more focused, like Obangame
    Express 2013 which occurred this past spring in the Gulf of Guinea. It
    concentrated on developing the maritime security and patrol
    capabilities of local forces in West and Central Africa that have seen
    increasing armed robbery at sea, piracy, smuggling and other maritime
    crimes. In part of this exercise a team of U.S. sailors who specialize
    in maritime security missions worked on board the Belgian Naval Ship
    Godetia with our European allies, to train African sailors in the
    tactics for boarding and inspecting ships.
        These are just a few examples of literally hundreds of operations,
    engagements, and exercises that the Navy and Marine Corps participated
    in during the past year. However, we also had a challenge in 2013 when
    it came to funding our operational, partnership and theater security
    cooperation missions. The Navy was forced to cancel or defer ship
    deployments supporting counter-narcotics missions in the Southern
    Command area of operations. Some exercises, including some in support
    of the Southern Partnership Station in Central and South America, had
    to be scaled back significantly because the sequester level funds did
    not provide us with the operating budget we needed to complete the
    missions. Future funding at sequester levels is likely to force us to
    continue to limit and prioritize our critical partnership building
    operations.
        But our partnerships mean a great deal more than our alliances and
    friendships around the world. The Navy and Marine Corps also have
    critical relationships with industry and with the American people. Our
    nation's defense industrial workers are skilled, experienced, and
    innovative and can't be easily replaced. We must provide stability and
    predictability to the industrial base to maintain our ability to build
    the future fleet and keep our technological advantage. One of the
    strengths of our system is the teamwork of our uniformed warfighters,
    our Navy and Marine Corps civilians, the leadership team in Washington,
    and our industry partners.
        Recently, the Chief of a Navy in the Asia-Pacific region reminded
    me of a fundamental difference between land forces and naval forces.
    Land forces, he said, look down at a map. They look at borders and
    lines and limitations. Naval forces look out toward the vast horizon
    and they look to the future. Sailors and marines are a unique breed.
    When they join the sea services they accept the challenge of the
    unknown with an adventurous spirit and an open mind. That is part of
    why the Navy and Marine Corps are naturally inclined toward
    partnership, and have been throughout our history, from operating with
    the Royal Navy to fight the slave trade in the 19th century to modern
    coalition operations in the Pacific and the Arabian Gulf. That same
    spirit which causes us to look for what comes next also causes us to
    look for new and innovative solutions, and new friends to help us
    across the globe.
                       fiscal year 2015 budget submission
        The Department of the Navy's fiscal year 2015 budget request is
    designed to meet the updated Defense Strategic Guidance, and is
    informed by the 2014 Quadrennial Defense Review. It meets the
    objectives the strategy laid out, but our fiscal limits force us to
    accept a certain amount of risk in some mission areas. The Navy and
    Marine Corps continue to focus on planning for the 21st century
    including preparing for the anti-access, area-denial challenge,
    sustaining our global capability by increasing forward stationing and
    implementing new deployment models, and sustaining the All-Volunteer
    Force. Based on our strategic outlook we have had to make tough
    choices, and look to fund the most critical afloat and ashore readiness
    requirements, continue to provide sovereign sea-based options for the
    Commander in Chief, and to sustain our vital industrial base.
        The President's budget for fiscal year 2015 continues to build the
    fleet of more than 300 ships we will have by the end of this decade.
    This fleet will include established and proven platforms which we are
    currently deploying, next generation platforms, and new advanced
    weapons, sensors, and payloads. Guided by operational concepts like air
    sea battle, the experiences of more than 10 years of war, and the
    lessons from our wargaming and studies, the Navy and Marine Corps of
    2020 will be able to continue to project power and to maintain
    stability in the global commons.
        Supporting our sailors and marines is a vital part of our budget
    request. We have increased spending on high priority Quality of Service
    programs, including increased career sea pay to help incentivize sea
    duty. We have also modestly increased spending on quality of life
    programs including on-base housing. But these initiatives must be
    balanced to ensure our sailors and marines have the resources and
    equipment they need to complete the mission. Across the Future Years
    Defense Program (FYDP) we will add funds to improve quality of work
    issues like training support and improving the availability of spare
    parts so our sailors and marines remain the most knowledgeable in the
    world and have the tools they need to do their jobs. We protect
    programs that support our sailors or marines when they need help. This
    includes sexual assault incident response and training, suicide
    prevention, and family support programs. We remain committed to our
    military-to-civilian transition assistance and work to ensure that our
    veteran employment programs offer the best opportunities to capitalized
    on the knowledge and skills of transitioning sailors and marines.
        Maintaining undersea dominance is vital to the U.S. Navy. The
    development of the Virginia Payload Module (VPM) will be critical when
    our guided missile submarines (SSGNs) begin to retire in 2026. We must
    develop the VPM by funding R&D through fiscal year 2018, so that we can
    introduce the modules into the very successful Virginia-class
    submarines, thus assuring that we will not lose capability as the SSGNs
    retire. This budget also funds the development of improved sonar
    processors, improved sonobuoys, and improved torpedoes to help ensure
    that we maintain our core undersea advantage.
        Continued production of proven platforms for the fleet is a key
    element in this budget and across the FYDP. We will continue to build
    two Virginia-class submarines and two Arleigh Burke-class destroyers
    per year in order to help increase the size of the fleet and replace
    older ships as they retire. In fiscal year 2015 we will purchase 29 MH-
    60R and 8 MH-60S helicopters, completing the upgrade of our tactical
    helicopter force which has been underway for the past decade. We will
    also continue the procurement of the next generation E-2D airborne
    early warning aircraft and of the MV-22B for the Marine Corps. These
    established and world leading platforms provide the foundation of the
    future fleet.
        This budget also procures new and advanced platforms that will take
    our fleet into the future. We will build LCSs and AFSB, and continue to
    introduce Joint High Speed Vessels (JHSV) and MLPs to the fleet. This
    will provide modular and mission focused capabilities around the world,
    while helping to meet the presence requirements of the fleet. In
    aviation we will continue production of the new P-8 Poseidon maritime
    patrol aircraft across the FYDP, deploying new squadrons, as well as
    the F-35 Lightning II for both the Navy and Marine Corps. We will
    continue the introduction of the next generation SM-6 Standard Missile
    to our Aegis capable ships, and fund the R&D for the Long-Range Anti-
    Ship Missile which is vital for our future surface combatants. However,
    it is important to point out that given the reality of the $38 billion
    reduction from the President's budget for fiscal year 2014 to the
    President's budget for fiscal year 2015, many of these purchases will
    be made at reduced rates. PB15 buys 111 fewer aircraft and over 5,000
    fewer weapons across the FYDP than the President's budget for fiscal
    year 2014 program. This is part of the increased risk that we have had
    to accept.
        Unmanned platforms and systems will be an important part of the
    future Navy and Marine Corps and our budget carries on with R&D and
    production of these critical platforms. The MQ-4 Triton will complete
    its testing phase during this budget, and we will begin production for
    the fleet across the rest of the FYDP. The R&D for UCLASS also
    continues in fiscal year 2015, and throughout the FYDP. Developing
    these aircraft is vital to the future of the carrier air-wing. Unmanned
    undersea vehicles (UUVs) will be central to our mine-warfare
    capabilities and maintaining undersea dominance. This budget includes
    R&D for multiple systems, as well as deployment of the Mk 18 Kingfisher
    UUV for counter-mine missions. Across the entire spectrum of military
    operations, an integrated force of manned and unmanned platforms is the
    future.
        We will continue to fund our energy programs with this budget by
    moving forward with the biofuels program under the DPA, as well as
    continuing our sea and shore based efficiency programs. This budget
    includes $776 million in tactical and ashore energy programs in fiscal
    year 2015, and $3.8 billion across the FYDP. Our ashore initiatives,
    including appropriated funds and third party investments, of $570
    million in fiscal year 2015 are projected to generate annual savings of
    over $100 million, starting in fiscal year 2017, due to efficiencies.
    Investments in tactical programs help increase our on station time for
    ships, reduce need for resupply, and increase the amount of time our
    Marine Corps units can stay in the field, making us more capable
    militarily. Continuing to work toward the Department's energy goals
    will allow us to lessen the impact of price volatility in the energy
    market and make us better warfighters.
        This budget includes funds to maintain our presence in the Middle
    East, and advance our capabilities there. Funding for the continued
    deployment of the interim-AFSB USS Ponce, improved manning for our
    mine-countermeasures ships, and the introduction of new capabilities,
    are important parts of this effort. The new weapons and systems, like
    the Laser Weapon System (LaWS) aboard Ponce, the Advanced Precision
    Kill Weapon System (APKWS) guided rockets for our MH-60 helicopters,
    and the Sea Fox UUV mine neutralization system, will help our sailors
    and marines maintain their edge in the Arabian Gulf and beyond. We are
    also funding the forward stationing of 10 Coastal Patrol ships (PCs) to
    Bahrain which will increase their availability to the combatant
    commander and increased presence in the shallow waters of the region.
        The President's budget for fiscal year 2015 also represents the
    platforms and payloads necessary for increasing operations in the Asia-
    Pacific region as we continue to support the rebalance toward Asia.
    This budget sustains the operations of our LCSs in Singapore, which
    includes early investment for the rotational deployment of up to four
    LCSs by 2017. Exercises in the Pacific, like our CARAT and Pacific
    Partnership missions, will be funded to ensure that we maintain our
    partnerships in the region. We also continue to support the growth in
    the number of marines who are rotating through Darwin, Australia. This
    year we are expanding from a company-sized unit to a battalion, and in
    the coming years we will continue to expand to a Marine air ground task
    force (MAGTF).
        In our fiscal year 2015 budget we include funding to support the
    movement of more of our ships and units forward as the most effective
    and cost-efficient means of maintaining our global presence. Forward
    based, stationed, or operating ships all provide presence at a
    significantly lower cost since one ship that operates continuously
    overseas provides the same presence as about four ships deploying
    rotationally from homeports in the United States. Besides the PCs to
    Bahrain and the LCSs to Singapore, we continue to fund the forward
    basing of four BMD capable DDG's to Rota, Spain. As the DDGs from Rota
    patrol European and African waters, we free other ships to deploy
    elsewhere. This year we will also begin moving JHSVs forward and
    prepare for the fleet introduction of the MLPs and AFSBs. We will
    continue the operations of, and expand the size of, the Marine Corps'
    new Special Purpose MAGTF-Crisis Response operating out of Moron,
    Spain.
        It is our duty to spend the taxpayers' dollars wisely, and it is a
    duty that we take very seriously in the Department of the Navy. We
    continue to look at contractual services spending for efficiencies,
    with conscious decisions made to challenge requirements through
    mechanisms such as ``contract courts,'' requiring annual justification
    of contracts. We are willing to accept higher levels of risk in some
    areas of services spending before sacrifices are made in force
    structure, modernization, or readiness. I have also ordered the Deputy
    Under Secretary of the Navy/Deputy Chief Management Officer to begin a
    comprehensive assessment of the business challenges facing the Navy and
    Marine Corps.
        The fiscal year 2015 budget request for the Navy and Marine Corps
    gives us what we need to accomplish the missions assigned in the new
    Quadrennial Defense Review and updated Defense Strategic Guidance.
    However, the funding levels allowed under the Bipartisan Budget Act
    mean that we have to accept higher levels of risk for some of those
    missions. If the Nation is confronted with a technologically advanced
    challenger, or more than one major contingency operation at a time,
    those risks would increase further. We face readiness challenges that
    are a result of sequester induced shortfalls, continuing fiscal
    constraints, and the high demand for naval forces globally.
                                   conclusion
        This year we commemorate the 150th anniversary of the Battle of
    Mobile Bay. A century and a half ago our Nation was engulfed in the
    Civil War. A Task Force under the command of Admiral David Farragut,
    one of our Navy's greatest heroes, attacked the ships and forts that
    defended the port at Mobile, AL. Facing down confederate ironclads and
    a treacherous minefield in the shallow, enclosed waters, he issued his
    famous order, ``Damn the torpedoes, full speed ahead.'' Lashed high in
    the rigging of his flagship he led the attack from the front of the
    formation to capture the last major Confederate port on the Gulf Coast.
        From the halls of Montezuma to Point Luck and the waters around
    Midway, our sailors and marines have demonstrate that kind of
    dedication and daring time and again. They, and our Navy and Marine
    Corps civilians, continue in that spirit today whether facing combat in
    Afghanistan, dangerous operations at sea, or the challenges created by
    the past year of budget instability. The budget request that we are
    making for fiscal year 2015, the specific details of which are included
    in the President's fiscal year 2015 budget submission, will provide
    them with the equipment, training, and resources they need to continue
    their efforts in support of our Nation's security. As our founding
    fathers outlined over two centuries ago, it is our responsibility to
    ensure that we maintain our Navy and Marine Corps.
        Today we face a dangerous and challenging world. Rising powers and
    maritime territorial conflicts threaten freedom of navigation and the
    free trade of today's global economic system. Terrorist organizations
    continue to proliferate around the world. Political instability
    threatens to break into violence in numerous regions. The Navy and
    Marine Corps are our Nation's insurance policy. Our people, platforms,
    power, and partnerships must be efficiently developed and appropriately
    funded to ensure our ability to provide the President with the options
    required and the American people with the security they deserve.
        For 238 years, our sailors and marines have been there when the
    Nation called and we must endeavor to ensure that we are there for the
    future. Difficult times pose difficult questions, and the Commandant,
    CNO and I look forward to answering yours. The continued support of
    this committee is essential in ensuring the Navy and Marine Corps team
    has the resources it needs to defend our Nation now and in the future.
    As President Woodrow Wilson once said, ``A powerful Navy, we have
    always regarded as our proper and natural means of defense.''

        Chairman Levin. Thank you, Secretary Mabus.
        Admiral Greenert.

      STATEMENT OF ADM JONATHAN W. GREENERT, USN, CHIEF OF NAVAL
                               OPERATIONS

        Admiral Greenert. Thank you, Mr. Chairman.
        Chairman Levin, Senator Inhofe, and distinguished members
    of the committee, I'm proud to represent 633,000 sailors, Navy
    civilians, and their families, especially approximately 50,000
    sailors deployed and operating forward around the globe today.
    The dedication and resilience of our people continue to amaze
    me, Mr. Chairman, and the citizens of this Nation can take
    great pride in the daily contributions of their sons and
    daughters in places that count.
        Mr. Chairman, since I've been appearing before this
    committee, about 2\1/2\ years, you have always thanked us for
    our service. This being the last Navy posture hearing under
    your leadership, I'd like to take the opportunity to thank you
    for your service to the Nation over the past 36 years, and for
    all that you've done in support of the Navy, our sailors, and
    their families. We wish you and Barbara the best as you
    complete your distinguished service.
        I, too, like Secretary Mabus just passed earlier, would
    like to offer my condolences to the family, friends, and
    shipmates of the sailor who was killed Monday, in Monday
    night's shooting. The sailors, particularly those of the USS
    Mahan, are in our thoughts and prayers, as well as the entire
    Norfolk Naval Station family.
        I am pleased to appear this morning beside Secretary Mabus
    and General Amos. Your Navy/Marine Corps team is united in
    fulfilling our longstanding mandate to be where it matters,
    when it matters, and to be ready to respond to crises to ensure
    the stability that underpins the global economy is in place.
        General Amos has been a great shipmate. Our Services'
    synergy of effort has never been better, and I am committed to
    continuing that momentum.
        Secretary Mabus has provided us the vision, the guidance,
    and the judiciousness to build the finest Navy and Marine Corps
    that the Nation is willing to afford.
        Forward presence is our mandate. We operate forward to give
    the President options to deal promptly with contingencies. As
    we conclude over a decade of wars and bring our ground forces
    home from extended stability operations, your naval forces will
    remain on watch.
        The charts that I provided in front of you show today's
    global distribution of deployed ships, as well as our bases and
    our places that support them. Our efforts are focused in the
    Asia-Pacific region and the Arabian Gulf, but we provide
    presence and respond as needed in other theaters, as well.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Admiral Greenert. Now, with this forward presence, over the
    last year we were able to influence and shape the decisions of
    leaders in the Arabian Gulf, Northeast Asia, and the Levant. We
    have patrolled off the shores of Libya, Egypt, and the Sudan to
    protect American interests and to induce regional leaders to
    make the right choices. We relieved suffering and provided
    assistance and recovery in the Philippines in the wake of a
    devastating typhoon. Our presence dissuades aggression and
    coercion against our allies and friends in the East China Sea
    and the South China Sea. We kept piracy at bay in the Horn of
    Africa. We continue to support operations in Afghanistan while
    taking the fight to insurgents, terrorists, and their
    supporting networks across the Middle East and Africa with our
    expeditionary forces supporting our Special Operations Forces.
        The fiscal year 2014 budget will enable an acceptable
    forward presence. Through the remainder of the fiscal year, we
    will be able to restore fleet training, maintenance,
    operations, and recover a substantial part of our 2013 backlog.
        The President's 2015 budget submission enables us to
    continue to execute our missions, but we will face high risk in
    specific missions that are articulated in the DSG. I laid this
    out in more detail in my written statement.
        Our President's 2015 budget fiscal guidance through that
    FYDP is about halfway between the BCA gaps and our President's
    budget for fiscal year 2014 plan, still a net decrease of $31
    billion, when compared to the President's budget for fiscal
    year 2014.
        To prepare our program within these constraints, I set the
    following six priorities. Number one is the sea-based strategic
    deterrence. Number two, forward presence. Number three, the
    capability and the capacity to win decisively. Number four, the
    readiness to do that. Number five, to sustain our asymmetric
    capabilities and our technological edge. Number six, to sustain
    a relevant industrial base.
        Using these priorities, we built a balanced portfolio of
    capabilities within the fiscal guidance provided. We continue
    to maximize our presence in the Asia-Pacific region and the
    Middle East using innovative combinations of rotational
    forward-basing and forward-stationing forces. We still face
    shortfalls in support ashore and a backlog in facilities
    maintenance that erode the ability of our bases to support the
    fleet. We have slowed modernization in areas that are central
    to remain ahead of, or keep pace with, technologically-advanced
    adversaries. Consequently, we face higher risk, if confronted
    with a high-tech adversary or if we attempt to conduct more
    than one multi-phased major contingency simultaneously.
        As I testified before you in November, I am troubled by the
    prospects of reverting to the BCA revised caps in 2016. That
    would lead to a Navy that is too small and lacking the advanced
    capabilities needed to execute the missions that the Nation
    expects of its Navy. We would be unable to execute at least 4
    of the 10 primary missions that are articulated in the DSG and
    in the QDR.
        On the back of the chart that I provided you, our ability
    to respond to contingencies would be dramatically reduced, and
    I'm showing that. It limits our options and decision-space, and
    we would be compelled to inactivate an aircraft carrier in the
    air wing. Further, our modernization and recapitalization would
    be dramatically reduced, threatening readiness in our
    industrial base. Reverting to BCA caps year-by-year will leave
    our country less prepared to deal with crises, our allies trust
    will wane, and our enemies will be less inclined to be
    dissuaded or to be deterred.
        Mr. Chairman, I remain on board with the efforts to get our
    fiscal house in order. I look forward to working with the
    committee to find solutions that enable us to sustain readiness
    while building an affordable but relevant future force. The
    force has to be able to address a range of threats,
    contingencies, and high-consequence events that could impact
    our core interests.
        I appreciate the opportunity to testify. Thank you for your
    continued support for your Navy and the families. I look
    forward to your questions.
        [The prepared statement of Admiral Greenert follows:]
              Prepared Statement by ADM Jonathan W. Greenert, USN
        Chairman Levin, Senator Inhofe, and distinguished members of the
    committee, I am honored to represent more than 600,000 Active and
    Reserve sailors, Navy civilians, and their families, especially the
    48,000 sailors who are underway on ships and submarines and deployed in
    expeditionary roles, around the globe today.
        As the chart below shows, 104 ships (36 percent of the Navy) are
    deployed around the globe protecting the Nation's interests. This is
    our mandate: to be where it matters, when it matters.

        I would like to begin this statement by describing for you the
    guidance that shaped our decisions within the President's budget for
    fiscal year 2015 (PB-15) submission. I will address the Navy's
    situation following the budget uncertainty in fiscal year 2013, the
    Bipartisan Budget Act of 2013 (BBA), and the National Defense
    Authorization Act (NDAA) for Fiscal Year 2014. Then, I will provide
    details of our PB-15 submission.
                               strategic guidance
        The governing document for PB-15 is the 2014 Quadrennial Defense
    Review (QDR). The QDR uses the 2012 Defense Strategic Guidance (DSG) as
    a foundation and builds on it to describe the Department of Defense's
    role in protecting and advancing U.S. interests and sustaining American
    leadership. The DSG and its 10 Primary Missions of the U.S. Armed
    Forces have guided Navy's planning for the past 2 years. Validated by
    the QDR, those missions remain the baseline against which I measure our
    posture in various fiscal scenarios. Also, 2020 is the benchmark year
    identified by the DSG, and that remains the timeframe on which my
    assessments are focused.
        The QDR's updated strategy is built on three pillars: protect the
    Homeland, build security globally, and project power and win
    decisively. In support of these, it requires the Navy to ``continue to
    build a future fleet that is able to deliver the required presence and
    capabilities and address the most important warfighting scenarios.''
        In order to improve its ability to meet the Nation's security needs
    in a time of increased fiscal constraint, the QDR also calls for the
    Joint Force to ``rebalance'' in four key areas; (1) rebalancing for a
    broad spectrum of conflict; (2) rebalancing and sustaining our presence
    and posture abroad; (3) rebalancing capability, capacity, and readiness
    within the Joint Force; and (4) rebalancing tooth and tail. To satisfy
    these mandates of the QDR strategy, the Navy has been compelled to make
    tough choices between capability and capacity, cost and risk, and to do
    so across a wide range of competing priorities. Our fundamental
    approach to these choices has not changed since I assumed this
    position. We continue to view each decision through the lens of the
    tenets I established when I took office: Warfighting First, Operate
    Forward, Be Ready.
                                    overview
        When I appeared before you in November 2013, I testified that
    adherence to the Budget Control Act of 2011 (BCA) revised discretionary
    caps, over the long term, would result in a smaller and less capable
    Navy. That Navy would leave us with insufficient capability and
    capacity to execute at least 4 of the 10 primary missions required by
    the DSG.
        Passage of the BBA and the topline it sets for fiscal year 2015,
    together with the fiscal guidance provided for this submission provide
    a level of funding for the Navy that is $36 billion above the estimated
    BCA revised discretionary caps across the fiscal year 2015 to fiscal
    year 2019 Future Years Defense Program (FYDP). That funding level is
    still $31 billion below the level planned for in our PB-14 submission.
    Accordingly, the Navy PB-15 program reduces risk in most DSG primary
    missions when compared to a BCA cap scenario, but we still face higher
    risk in at least two primary missions compared to PB-14. This high risk
    is most likely to manifest if we are faced with a technologically
    advanced adversary, or if we attempt to conduct more than one multi-
    phased major contingency simultaneously.
        In the PB-15 submission, we assess that the Navy of 2020 will:

             Include 308 ships in the battle force,\1\ of which
            about 123 will be deployed. This global deployed presence will
            include more than two carrier strike groups (CSG) and two
            amphibious ready groups (ARG) deployed, on average. It is
            similar to the presence provided by PB-14.
    ---------------------------------------------------------------------------
        \1\ It should be noted that the Department of the Navy revised
    guidelines for accounting for the size of the Navy's battle force.
    Therefore, numbers in this statement are not directly comparable to
    those used in prior testimony. Changes to guidelines include clarifying
    the accounting for smaller, forward deployed ships (e.g. patrol
    coastal, mine countermeasures ships, high speed transports) and ships
    routinely requested by combatant commanders (e.g, hospital ships).
        The table illustrates the differences between new and old battle
    force accounting guidelines:

          PB-15: New Guidelines; Today - 290; Fiscal Year 2015 - 284;
    Fiscal Year 2020 - 308
          PB-15: Old Guidelines; Today - 284; Fiscal Year 2015 - 274;
    Fiscal Year 2020 - 302
    ---------------------------------------------------------------------------
             Provide ``surge'' capacity of about three CSG and
            three ARG, not deployed, but ready to respond to a contingency.
             Deliver ready forces to conduct the DSG primary
            mission Deter and Defeat Aggression, but with less margin for
            error or ability to respond to unforeseen or emergent
            circumstances, compared to PB-14.
             Conduct, but with greater risk, the DSG primary
            mission Project Power Despite anti-access/area denial (A2/AD)
            Challenges against a technologically advanced adversary
            compared to PB-14. This is principally due to slower delivery
            of new critical capabilities, particularly in air and missile
            defense, and overall ordnance capacity.
             Provide increased ship presence in the Asia-Pacific
            region of about 67 ships, up from about 50 on average today;
            presence in the Middle East will likewise increase from about
            30 ships on average today to about 41 in 2020. These are both
            similar to the levels provided by PB-14.

        In order to ensure the Navy remains a balanced and ready force
    while complying with the reduction in funding below our PB-14 plan, we
    were compelled to make difficult choices in PB-15, including slowing
    cost growth in compensation and benefits, maintaining the option to
    refuel or inactivate 1 nuclear aircraft carrier (CVN) and a carrier air
    wing (CVW), inducting 11 guided missile cruisers (CG) and 3 dock
    landing ships (LSD) into a phased modernization period, canceling
    procurement of 79 aircraft, canceling 3,500 planned weapons
    procurements, and reducing funding for base facilities sustainment,
    restoration, and modernization.
        Additional challenges are on the horizon. In the long term beyond
    2019 (the end of the PB-15 FYDP), I am increasingly concerned about our
    ability to fund the Ohio Replacement ballistic missile submarine (SSBN)
    program--our highest priority program--within our current and projected
    resources. The Navy cannot procure the Ohio Replacement in the 2020s
    within historical shipbuilding funding levels without severely
    impacting other Navy programs.
                               where we are today
        Before describing our fiscal year 2015 submission in detail, I will
    discuss the Navy's current posture, which established the baseline for
    our PB-15 submission.
        The impact of the continuing resolution and sequestration
    reductions in fiscal year 2013 compelled us to reduce afloat and shore
    operations, which created an afloat and shore maintenance and training
    backlog. We were able to mitigate some of the effects of this backlog
    through reprogramming funds in fiscal year 2013 and congressional
    action in fiscal year 2014 to restore some funding. Impact to Navy
    programs, caused by the combination of sequestration and a continuing
    resolution in fiscal year 2013 included:

             Cancellation of five ship deployments and delay of a
            carrier strike group (CSG) deployment.
             Inactivation, instead of repair, of USS Miami
            beginning in September 2013.
             Reduction of facilities sustainment by about 30
            percent (to about 57 percent of the requirement).
             Reduction of base operations, including port and
            airfield operations, by about 8 percent (to about 90 percent of
            the requirement).
             Furlough of civilian employees for 6 days.

        Shortfalls caused by fiscal year 2013 sequestration still remain in
    a number of areas. Shipbuilding programs experienced $1 billion in
    shortfalls in fiscal year 2013, which were partially mitigated with
    support from Congress to reprogram funds and by fiscal year 2014
    appropriations. PB-15 requests funding to remedy the remaining $515
    million in shipbuilding shortfalls. Funding to mitigate (but not enough
    to completely reconcile) other carryover shortfalls that remain in
    areas such as facilities maintenance, fleet spares, aviation depots,
    and weapons maintenance is requested in the Opportunity, Growth and
    Security (OGS) Initiative submitted to Congress with PB-15.
        In fiscal year 2014, Congress' passage of the BBA and subsequent
    appropriations averted about $9 billion of the estimated $14 billion
    reduction we would have faced under sequestration. As a result:

             We are able to fully fund our fiscal year 2014
            shipbuilding plan of eight ships.
             We are able to protect research, development, testing,
            and evaluation (RDT&E) funding to keep the Ohio Replacement
            Program--our top priority program--on track.
             We are able to fund all Navy aircraft planned for
            procurement in fiscal year 2014.

        In our readiness programs, $39 billion of the $40 billion
    requirement was funded, enabling us to:

             Fund all ship maintenance.
             Fund all required aviation depot maintenance.
             Fully fund ship and aircraft operations.

        The remaining $5 billion shortfall below our PB-14 request includes
    about $1 billion in operations and maintenance accounts and about $4
    billion in investment accounts. To deal with this shortfall, in the
    area of operations and maintenance we are aggressively pursuing
    contracting efficiencies in: facilities sustainment projects, aviation
    logistics, and ship maintenance. To address the remaining investment
    shortages, we are compelled to reduce procurement of weapons and spare
    parts, to extend timelines for research and development projects, and
    to defer procurement of support equipment for the fleet.
                         our strategic approach: pb-15
        In developing our PB-15 submission, we evaluated the warfighting
    requirements to execute the primary missions of the DSG. These were
    informed by current and projected threats, global presence requirements
    defined by the Global Force Management Allocation Plan (GFMAP), and
    warfighting scenarios described in the combatant commanders'
    operational plans and Secretary of Defense-approved Defense Planning
    Scenarios (DPS). To arrive at a balanced program within fiscal
    guidance, we focused first on building appropriate capability, then
    delivering it at a capacity we could afford. Six programmatic
    priorities guided us:
        First, maintain a credible, modern, and survivable sea-based
    strategic deterrent. Under the New START treaty, the Navy SSBN force
    will carry about 70 percent of the U.S. accountable deployed strategic
    nuclear warheads by 2020. Our PB-15 request sustains today's 14-ship
    SSBN force, the Trident D5 ballistic missile and support systems, and
    the nuclear command, control, and communications (NC3) system. The
    Ohio-class SSBN will retire, one per year, beginning in 2027. To
    continue to meet U.S. Strategic Command presence and surge
    requirements, PB-15 starts construction of the first Ohio Replacement
    SSBN in 2021 for delivery in 2028 and first deterrent patrol in 2031.
        Second, sustain forward presence of ready forces distributed
    globally to be where it matters, when it matters. We will utilize cost-
    effective approaches such as forward basing, forward operating, and
    forward stationing ships in the Asia-Pacific, Europe, and the Middle
    East. Rotational deployments will be stabilized and more predictable
    through implementation of an improved deployment framework we call the
    Optimized Fleet Response Plan (O-FRP). We will distribute our ships to
    align mission and capabilities to global region, ensuring high-end
    combatants are allocated where their unique capabilities are needed
    most. We will meet the adjudicated fiscal year 2015 Global Force
    Management Allocation Plan (GFMAP); however, this represents only 44
    percent of the global Geographic Combatant Commander (GCC) requests.
    Sourcing all GCC requests would require about 450 combatant ships with
    requisite supporting structure and readiness.
        Third, preserve the means (capability and capacity) to both win
    decisively in one multi-phase contingency operation and deny the
    objectives of.or impose unacceptable costs on.another aggressor in
    another region. In the context of relevant warfighting scenarios, we
    assessed our ability to provide more than 50 end-to-end capabilities,
    also known as ``kill chains'' or ``effects chains.'' Each chain
    identifies all elements needed to provide a whole capability, including
    sensors, communications and networks, operators, platforms, and
    weapons. PB-15 prioritizes investments to close gaps in critical kill
    chains, and accepts risk in capacity or in the rate at which some
    capabilities are integrated into the Fleet.
        Fourth, focus on critical afloat and ashore readiness to ensure
    ``the force'' is adequately funded and ready. PB-15 (compared to a BCA
    revised caps level) improves our ability to respond to contingencies
    (``surge'' capacity) by increasing the readiness of non-deployed
    forces. However, it increases risk to ashore readiness in fiscal year
    2015, compared to PB-14, by reducing facilities sustainment,
    restoration, and modernization (FSRM) and military construction
    (MILCON) investments. This reduction adds to backlogs created by the
    deferrals in fiscal year 2013 and fiscal year 2014, exacerbating an
    existing readiness problem.
        Fifth, sustain or enhance the Navy's asymmetric capabilities in the
    physical domains as well in cyberspace and the electromagnetic
    spectrum. Our fiscal year 2015 program prioritizes capabilities to
    remain ahead of or keep pace with adversary threats, including
    electromagnetic spectrum and cyber capabilities and those capabilities
    that provide joint assured access developed in concert with other
    Services under air-sea battle. Our program terminates certain
    capability programs that do not provide high-leverage advantage, and
    slows funding for those that assume too much technical risk or could be
    developed and ``put on the shelf'' until needed in the future.
        Sixth, sustain a relevant industrial base, particularly in
    shipbuilding. We will continue to evaluate the impact of our investment
    plans on our industrial base, including ship and aircraft builders,
    depot maintenance facilities, equipment and weapons manufacturers, and
    science and technology researchers. The government is the only customer
    for some of our suppliers, especially in specialized areas such as
    nuclear power. PB-15 addresses the health of the industrial base
    sustaining adequate capacity, including competition, where needed and
    viable. We will work closely with our industry partners to manage the
    risk of any further budget reductions.
        Stewardship Initiatives. Another important element of our approach
    in PB-15 included business transformation initiatives and headquarters
    reductions to comply with Secretary of Defense direction. In order to
    maximize warfighting capability and capacity, the Department of the
    Navy achieved approximately $20 billion in savings across the PB-15
    FYDP through a collection of business transformation initiatives. These
    can be grouped into four major categories: (1) more effective use of
    operating resources (about $2.5 billion over the FYDP); (2) contractual
    services reductions (about $14.8 billion FYDP); (3) Better Buying Power
    (BBP) in procurement (about $2.7 billion FYDP); and (4) more efficient
    research and development (about $200 million FYDP). These initiatives
    build on Navy and Department of Defense (DOD) initiatives that date
    back to 2009 and represent our continuing commitment to be good
    stewards of taxpayer dollars.
        Our PB-15 request also achieves savings through significant
    headquarters reductions, placing us on track to meet the 20 percent
    reduction by fiscal year 2019 required by Secretary of Defense fiscal
    guidance. We applied reductions to a broader definition of headquarters
    than directed, achieving a savings of $33 million in fiscal year 2015
    and $873 million over the FYDP from reductions in military, civilian,
    and contractor personnel. In making these reductions, we protected
    fleet operational warfighting headquarters and took larger reductions
    in other staffs.
                                 what we can do
        As described earlier, PB-15 represents some improvement over a
    program at the BCA revised caps, but in PB-15 we will still face high
    risk in executing at least 2 of the 10 primary missions of the DSG in
    2020. The 2012 Force Structure Assessment \2\ (FSA) and other Navy
    analysis describe the baseline of ships needed to support meeting each
    of the 10 missions required by the DSG. Against that baseline and our
    ``kill chain'' analysis described earlier, we assess that under PB-15
    the Navy of 2020 supports each of the 10 DSG missions as follows:
    ---------------------------------------------------------------------------
        \2\ Consistent with other ``ship counts'' in this statement, the
    regional presence numbers described in this section are not directly
    comparable to those used in previous years due to the Battle Force
    counting guidelines revision.
    ---------------------------------------------------------------------------
        1. Provide a stabilizing presence. Our PB-15 submission will meet
    the adjudicated presence requirements of the DSG. By increasing the
    number of ships forward stationed and forward based, PB-15 in some
    regions improves global presence as compared to our PB-14 submission.
    The Navy of 2020:

             Provides global presence of about 123 ships, similar
            to the aggregate number planned under PB-14.
             Increases presence in the Asia-Pacific from about 50
            ships today on average to about 67 in 2020 on average, a
            greater increase than planned under PB-14.
             ``Places a premium on U.S. military presence in--and
            in support of--partner nations'' in the Middle East, by
            increasing presence from about 30 ships \3\ today on average to
            about 41 on average in 2020.
    ---------------------------------------------------------------------------
        \3\ Under revised Battle Force accounting guidelines, the Middle
    East presence today now includes eight patrol coastal (PC) ships
    forward based in Bahrain; the number will increase to 10 in fiscal year
    2014. PC were not counted previously before the revision.
    ---------------------------------------------------------------------------
             Continues to ``evolve our posture'' in Europe by
            meeting ballistic missile defense (BMD) European Phased
            Adaptive Approach (EPAA) requirements with four BMD-capable
            guided missile destroyers (DDG) in Rota, Spain and two land-
            based sites in Poland and Romania. The first of these DDG, USS
            Donald Cook, arrived in February 2014 and all four will be in
            place by the end of fiscal year 2015. Additional presence in
            Europe will be provided by forward operating joint high speed
            vessels (JHSV) and some rotationally deployed ships.
             Will provide ``innovative, low-cost, and small-
            footprint approaches'' to security in Africa and South America
            by deploying one JHSV, on average, to each region.
             Beginning in fiscal year 2015, we will deploy one hospital
            ship (T-AH), on average, and, beginning in fiscal year 2016,
            add one patrol coastal (PC) ship, on average, to South America.
            Afloat forward staging bases (AFSB) forward operating in the
            Middle East will also provide additional presence in Africa as
            required.

        2. Counter terrorism and irregular warfare (CT/IW). We will have
    the capacity to conduct widely distributed CT/IW missions. This mission
    requires Special Operations Forces, expeditionary capabilities such as
    intelligence exploitation teams (IET), and specialized platforms such
    as two AFSB and four littoral combat ships (LCS) with embarked MH-60
    Seahawk helicopters and MQ-8 Fire Scout unmanned air vehicles. PB-15
    adds capacity for this mission by procuring a third mobile landing
    platform (MLP) AFSB variant in fiscal year 2017 for delivery in fiscal
    year 2020.
        3. Deter and defeat aggression. FSA analysis described the ship
    force structure required to meet this mission's requirement: to be able
    to conduct one large-scale operation and ``simultaneously be capable of
    denying the objectives of.or imposing unacceptable costs on.an
    opportunistic aggressor in a second region.'' According to the FSA, the
    Navy has a requirement for a force of 11 CVN, 88 large surface
    combatants (DDG and CG), 48 attack submarines (SSN), 11 large
    amphibious assault ships (LHA/D), 11 amphibious transport docks (LPD),
    11 LSD, 52 small surface combatants (collectively: LCS, frigates, mine
    countermeasure ships) and 29 combat logistics force (CLF) ships. This
    globally distributed force will yield a steady state deployed presence
    of more than two CSG and two amphibious ready groups (ARG), with three
    CSG and three ARG ready to deploy in response to a contingency
    (``surge''). The Navy of 2020 delivered by PB-15, however, will be
    smaller than the calculated requirement in terms of large surface
    combatants, LHA/D, and small surface combatants. This force structure
    capacity provides less margin for error and reduced options in certain
    scenarios and increases risk in this primary mission. If we return to a
    BCA revised caps funding level in fiscal year 2016, the situation would
    be even worse. We would be compelled to inactivate a CVN and CVW and to
    reduce readiness and other force structure to ensure we maintain a
    balanced, ready force under the reduced fiscal topline. As in the BCA
    revised caps scenario I described previously, these reductions would
    leave us with a Navy that is capable of one multi-phase contingency.
    Under these circumstances, we would not meet this key DSG mission.
        4. Conduct stability and counterinsurgency operations. The Navy of
    2020 will be able to meet the requirements of this DSG mission.
        5. Project power despite anti-access/area-denial (A2/AD)
    challenges. Compared to PB-14, our overall power projection capability
    development would slow, reducing options and increasing our risk in
    assuring access. The reduced procurement of weapons and slowing of air
    and missile defense capabilities, coupled with joint force deficiencies
    in wartime information transport and airborne intelligence,
    surveillance, and reconnaissance (ISR), will cause us to assume high
    risk in conducting this DSG mission if we are facing a technologically
    advanced adversary. PB-15 makes results in the following changes to air
    and missile defense capabilities (versus PB-14):

             The Navy Integrated Fire Control-Counter Air (NIFC-CA)
            Increment I capability will still field (with the E-2D Advanced
            Hawkeye aircraft) in 2015, but only four air wings (versus six
            in PB-14) will have transitioned to the E-2D by 2020. Fewer air
            wings with E-2D translates to less assured joint access. NIFC-
            CA Increment I integrates aircraft sensor and ship weapon
            capabilities, improving lethality against advanced air and
            missile threats.
             The F-35C Lightning II, the carrier-based variant of
            the Joint Strike Fighter, is scheduled to achieve Initial
            Operational Capability (IOC) between August 2018 and February
            2019. However, our F-35C procurement will be reduced by 33
            airframes in the PB-15 FYDP when compared to PB-14. The F-35C,
            with its advanced sensors, data sharing capability, and ability
            to operate closer to threats, is designed to enhance the CVW's
            ability to find targets and coordinate attacks. The impact of
            this reduced capacity would manifest itself particularly
            outside the FYDP, and after F-35C IOC.
             All components of an improved air-to-air kill chain
            that employs infrared (IR) sensors to circumvent adversary
            radar jamming will be delayed 1 year. The Infrared Search and
            Track (IRST) Block I sensor system will field in 2017 (versus
            2016) and the improved longer-range IRST Block II will not
            deliver until 2019 (versus 2018).
             Improvements to the air-to-air radio frequency (RF)
            kill chain that defeats enemy jamming and operates at longer
            ranges will be slowed, and jamming protection upgrades to the
            F/A-18E/F Super Hornet will be delayed to 2019 (versus 2018).

        However, PB-15 sustains our advantage in the undersea domain by
    delivering the following capabilities:

             PB-15 procures 56 P-8A Poseidon maritime patrol
            aircraft over the FYDP, replacing the legacy P-3C Orion's
            capability.
             Continues to procure two Virginia-class SSN per year
            through the FYDP, resulting in an inventory of 21 Virginia-
            class (of 48 total SSN) by 2020.
             Continues installation of anti-submarine warfare (ASW)
            combat system upgrades for DDG and improved multi-function
            towed arrays (MFTA) for DDG and CG. Both installations will be
            complete on all DDG forward based in the Western Pacific by
            2018.
             All of our P-8A and ASW helicopters in the Western
            Pacific will still be equipped with upgraded sonobuoys and
            advanced torpedoes by 2018.
             The LCS mine countermeasures (MCM) mission package,
            which employs unmanned vehicles and offboard sensors to
            localize and neutralize mines, will complete testing of its
            first increment in 2015 and deploy to the Arabian Gulf with
            full operational capability by 2019.
             The LCS ASW mission package, which improves surface
            ASW capability by employing a MFTA in concert with a variable
            depth sonar (VDS), will still field in 2016.
             Additional Mk 48 Advanced Capability (ADCAP)
            heavyweight torpedoes, restarting the production line and
            procuring 105 Mod 7 torpedoes across the FYDP. The restart will
            also provide a basis for future capability upgrades.

        6. Counter weapons of mass destruction. This mission has two parts:
    (1) interdicting weapons of mass destruction as they proliferate from
    suppliers, and (2) defeating the means of delivery during an attack.
    PB-15 will meet requirements for this mission by providing sufficient
    deployed CSG, ARG, and surface combatants, as well as SEAL and EOD
    platoons, to address the first part. For the second part, BMD-capable
    DDG exist in sufficient numbers to meet adjudicated GCC presence
    requirements under the GFMAP, and can be postured to counter weapons
    delivered by ballistic missiles in regions where threats are more
    likely to emanate. That said, missile defense capacity in some
    scenarios remains a challenge and any reduction in the number of BMD-
    capable DDG raises risk in this area.
        7. Operate effectively in space and cyberspace. Our PB-15
    submission continues to place priority on cyber defense and efforts to
    build the Navy's portion of the Department of Defense's cyber mission
    forces. Continuing PB-14 initiatives, PB-15 will recruit, hire, and
    train 976 additional cyber operators and form 40 cyber mission teams by
    2016. Additionally, we will align Navy networks with a more defensible
    DOD Joint Information Environment (JIE) through the implementation of
    the Next Generation Enterprise Network (NGEN) ashore and Consolidated
    Afloat Networks and Enterprise Services (CANES) at sea.
        8. Maintain a safe, secure, and effective nuclear deterrent. This
    mission is the Navy's top priority in any fiscal scenario, and our PB-
    15 submission will meet its requirements. It satisfies STRATCOM demand
    for SSBN availability through the end of the current Ohio class'
    service life. Additionally, our PB-15 submission funds Nuclear Command,
    Control, and Communications (NC3) modernization and the Trident D5
    ballistic missile Life Extension Program (LEP) while sustaining the
    fleet of E-6B Mercury Take Charge and Move Out (TACAMO) aircraft.
        9. Defend the Homeland and provide support to civil authorities.
    PB-15 will maintain an appropriate capacity of aircraft carriers,
    surface combatants, amphibious ships, and aircraft that are not
    deployed and are ready for all homeland defense missions.
        10. Conduct humanitarian, disaster relief, and other operations.
    Our analysis determined that a global presence of two ARG and nine JHSV
    is sufficient to conduct these operations. Our PB-15 submission will
    support this level of presence.
         manpower, modernization, warfighting capability, and readiness
        The following paragraphs describe more specific PB-15 programs
    actions that result from our strategic approach and influence our
    ability to conduct the missions required by the DSG:
    End Strength
        PB-15 supports a fiscal year 2015 Navy Active end strength of
    323,600, and Reserve end strength of 57,300. It appropriately balances
    risk, preserves capabilities to meet current Navy and Joint
    requirements, fosters growth in required mission areas, and provides
    support to sailors, Navy civilians, and families. We adjusted both
    Active and Reserve end strength to balance available resources
    utilizing a Total Force approach. PB-15 end strength remains fairly
    stable across the FYDP, reaching approximately 323,200 Active and
    58,800 Reserve in fiscal year 2019.
    Shipbuilding
        Our PB-15 shipbuilding plan combines the production of proven
    platforms with the introduction of innovative and cost-effective
    platforms in order to preserve capacity while enhancing capability.
    Simultaneously, we will sustain efforts to develop new payloads that
    will further enhance the lethality and effectiveness of existing
    platforms and continue mid-life modernizations and upgrades to ensure
    their continued relevance. We will continue to field flexible,
    affordable platforms like AFSB and auxiliary ships that operate forward
    with a mix of rotational civilian and military crews and provide
    additional presence capacity for certain missions requiring
    flexibility, volume, and persistence. PB-15 proposes:

             Funding for 14 LCS across the FYDP (3 per year in
            fiscal years 2015-2018 and 2 in fiscal year 2019). However, in
            accordance with Secretary of Defense direction, we will cease
            contract negotiations after we reach a total of 32 ships (12
            procured in the PB-15 FYDP). Per direction, we will assess LCS'
            characteristics such as lethality and survivability, and we are
            studying options for a follow-on small surface combatant, and
            follow on flight of LCS.
             Two Virginia-class SSN per year, maintaining the
            planned 10-ship Block IV multi-year procurement (fiscal year
            2014-fiscal year 2018).
             Two Arleigh Burke-class DDG per year, maintaining the
            10-ship multi-year procurement (fiscal year 2013-2017). PB-15
            procures 10 DDG (3 Flight IIA and 7 Flight III) in the FYDP.
            The first Flight III DDG, which will incorporate the advanced
            Air and Missile Defense Radar (AMDR), will be procured in
            fiscal year 2016 and delivered in fiscal year 2021.
             An additional AFSB variant of the Montford Point-class
            MLP in fiscal year 2017. This AFSB will deliver in fiscal year
            2020 and will forward operate in the Asia-Pacific region.
             Three T-AO(X) fleet oilers (in fiscal year 2016, 2018,
            and 2019, respectively).
             Advanced procurement requested in fiscal year 2019 to
            procure one LX(R) amphibious ship replacement in fiscal year
            2020.

        Additionally, to comply with fiscal constraints, our PB-15
    submission delays delivery of the second Ford-class CVN, USS John F.
    Kennedy (CVN-79) from fiscal year 2022 to fiscal year 2023.
    Aviation
        PB-15 continues our transition to the future carrier air wing,
    which will employ manned and unmanned systems to achieve air, sea, and
    undersea superiority across capability ``kill chains.'' We will also
    continue to field more advanced land-based maritime patrol aircraft
    (manned and unmanned) to evolve and expand our ISR, ASW, and sea
    control capabilities and capacity. To further these objectives while
    complying with fiscal constraints, PB-15:

             Continues plans to transition the F/A-18E/F Super
            Hornet fleet from production to sustainment with the final 37
            aircraft procured in fiscal year 2013 and scheduled for
            delivery in fiscal year 2015. Likewise, the final EA-18G
            Growler electronic warfare aircraft will be procured in fiscal
            year 2014 and delivered in fiscal year 2016. We are forced to
            assume the risk of moving to a single strike fighter prime
            contractor due to fiscal constraints.
             Maintains IOC of the F-35C Lightning II between August
            2018 and February 2019. However, due to fiscal constraints, we
            were compelled to reduce F-35C procurement by 33 airframes
            across the FYDP.
             Maintains initial fielding of the E-2D Advanced
            Hawkeye and its NIFC-CA capability in fiscal year 2015. Due to
            fiscal constraints, we were compelled to reduce procurement by
            10 airframes over the FYDP with 4 CVW completing transition to
            the E-2D by 2020, versus the preferred 6 in PB-14.
             Continues development of the Unmanned Carrier Launch
            Surveillance and Strike System (UCLASS), a major step forward
            in achieving integration of manned and unmanned systems within
            the CVW. UCLASS remains on a path to achieve early operational
            capability (EOC) within 4 to 5 years of contract award, which
            is projected for fiscal year 2015.
             Continues to transition to the P-8A Poseidon maritime
            patrol aircraft from the legacy P-3C Orion. However, we were
            compelled by fiscal constraints to lower the final P-8A
            inventory objective from 117 to 109 aircraft. The warfighting
            requirement remains 117, but we can only afford 109.
             Continues development of the MQ-4C Triton land-based
            unmanned ISR aircraft. However, technical issues delayed the
            low-rate initial production decision from fiscal year 2015 to
            fiscal year 2016. Together with fiscal constraints, this
            reduces procurement of MQ-4C air vehicles in the FYDP from 23
            to 16. Triton will make its first deployment to the Pacific in
            fiscal year 2017. The multi-INT version will start fielding in
            2020.
             Aligns the MQ-8 Fire Scout ship-based unmanned
            helicopter program to LCS deliveries. Fiscal constraints and
            global force management (GFM) demands on our surface combatants
            compelled us to remove options to conduct dedicated ISR support
            to Special Operations Forces from DDG and JHSV, but Fire Scout-
            equipped LCS can be allocated to combatant commanders by the
            GFM process to support this mission. This decision reduces
            procurement of MQ-8 air vehicles across the FYDP by 19.
             Continues our maritime intelligence, surveillance,
            reconnaissance, and targeting (ISR&T) transition plan to
            deliver increased ISR persistence by the end of fiscal year
            2018 and exceed the aggregate capability and capacity of our
            legacy platforms by the end of fiscal year 2020. However, as we
            transition from legacy platforms like the EP-3E Aries II,
            fiscal constraints will compel us to take moderate risk in some
            collection capabilities over the next few years.
    Modernization
        In parallel with recapitalization, PB-15 continues modernization of
    in-service platforms. Flight I and II of the Arleigh Burke-class DDG
    began mid-life modernization in fiscal year 2010, and will continue at
    the rate of two hulls per year (on average) through fiscal year 2016.
    In fiscal year 2017, we will begin to modernize Flight IIA DDG in
    parallel with Flight I and II in order to do so closer to the midpoint
    in the Flight IIA's service lives and increase return on investment.
    This will also increase operational availability and BMD capacity
    sooner than a serial, ``oldest-first'' plan. Nine of 12 Whidbey Island-
    class LSD have undergone a mid-life update and preservation program,
    and 7 Wasp-class large deck amphibious assault ships (LHD) will
    complete mid-life modernization by fiscal year 2022. Modernization of
    the 8th LHD, USS Makin Island will be addressed in subsequent budget
    submissions.
        The Navy's budget must also include sufficient readiness,
    capability, and manpower to complement the force structure capacity of
    ships and aircraft. This balance must be maintained to ensure each unit
    will be effective, no matter what the overall size and capacity of the
    Fleet. To preserve this balance and modernize cruisers while avoiding a
    permanent loss of force structure and requisite ``ship years,'' PB-15
    proposes to induct 11 Ticonderoga-class CG into a phased modernization
    period starting in fiscal year 2015. Only fiscal constraints compel us
    to take this course of action; CG global presence is an enduring need.
    The ships will be inducted into phased modernization and timed to align
    with the retirements of CG such that the modernized ships will replace
    one-for-one, when they finish modernization. This innovative plan
    permits us to reapply the CG manpower to other manning shortfalls while
    simultaneously avoiding the operating costs for these ships while they
    undergo maintenance and modernization. The plan to modernize and retain
    the CG adds 137 operational ``ship years'' to the battle force and it
    extends the presence of the Ticonderoga class in the battle force to 58
    years. It avoids approximately $2.2 billion in operating and
    maintenance costs across the FYDP for 11 CG. In addition, it precludes
    Navy having to increase our overall end strength by about 3,400 people
    (approximately $1.6 billion over the FYDP), which would otherwise be
    required to fill critical shortfalls in our training pipelines and
    fleet manning.
        PB-15 also proposes to induct three Whidbey Island-class LSD into
    phased modernization availabilities on a ``rolling basis'' beginning in
    fiscal year 2016, with two of the three always remaining in service.
    Similar to the CG plan, the LSD plan avoids approximately $128 million
    across the FYDP in operating and maintenance and an end strength
    increase of approximately 300 people (approximately $110 million over
    the FYDP) for the 1 LSD that will be in this category during the PB-15
    FYDP. This plan adds 35 operational ``ship years'' and sustains the
    presence of the Whidbey Island-class in the battle force through 2038.
        We appreciate the additional funding and expanded timeframe given
    by Congress for modernizing and operating the LSD and CG proposed for
    permanent inactivation in PB-13. Consistent with the spirit of
    congressional action, we are committed to a phased modernization of
    these nine ships, plus an additional four CG and one LSD. However,
    funding constraints still make us unable to keep all of these ships
    operational in every year, in the near term. While we would prefer to
    retain all LSD and CG deployable through the FYDP, a balanced portfolio
    under current fiscal constraints precludes this.
        To mitigate a projected future shortfall in our strike fighter
    inventory while integrating the F-35C, PB-15 continues the service life
    extension program (SLEP) for the legacy F/A-18A-D Hornet. With SLEP
    modifications, some of these aircraft will achieve as much as 10,000
    lifetime flight hours, or 4,000 hours and 16 years beyond their
    originally-designed life.
    Electromagnetic Maneuver Warfare
        In addition to the actions described earlier in the statement to
    improve air and missile defense and sustain our advantage in the
    undersea and information domains, our program enhances our ability to
    maneuver freely in the electromagnetic spectrum, while denying
    adversaries' ability to do the same. It maintains our investment in the
    Ships' Signals Exploitation Equipment (SSEE) Increment F, which equips
    ships with a robust capability to interdict the communications and
    targeting elements of adversary kill chains by 2020. It delivers
    upgraded electromagnetic sensing capabilities for surface ships via the
    Surface Electronic Warfare Improvement Program (SEWIP) Block 2 that
    will deliver in 2016. PB-15 then begins low rate initial production
    (LRIP) of SEWIP Block 3 in 2017 to add jamming and deception
    capabilities to counter advanced anti-ship cruise missiles. To enhance
    CVW capabilities to jam enemy radars and conduct other forms of
    electromagnetic spectrum maneuver warfare, PB-15 maintains our
    investments in the Next Generation Jammer (NGJ). NGJ will provide the
    EA-18G Growler with enhanced airborne electronic attack (AEA)
    capabilities for conventional and irregular warfare. The current ALQ-99
    jammer, which has been the workhorse of the fleet for more than 40
    years, will not be able to meet all requirements in challenging future
    environments.
    Mine Warfare
        Mines are a low-cost, asymmetric weapon that can be effective in
    denying U.S. forces access to contested areas. To enhance our ability
    to counter mines in the Middle East and other theaters, our PB-15
    program sustains investments in the LCS mine countermeasures (MCM)
    mission package, completing initial testing of its first increment in
    2015 and achieving full operational capability in 2019. With these
    packages installed, LCS will locate mines at twice the rate our
    existing MCM ships can achieve, while keeping the LCS and its crew
    outside the mine danger area. LCS also has significantly greater on-
    station endurance and self-defense capability than existing MCM. PB-15
    sustains our interim AFSB, USS Ponce, in service until fiscal year
    2016. USS Ponce provides forward logistics support and command and
    control to MCM ships and helicopters, allowing them to remain on
    station longer and sustain a more rapid mine clearance rate. In the
    near-term, PB-15 continues funding for Mk 18 Kingfish unmanned
    underwater vehicles (UUV) and Sea Fox mine neutralization systems
    deployed to the Arabian Gulf today, as well as increased maintenance
    and manning for Avenger-class MCM ships forward based in Bahrain.
    Precision Strike
        Our precision strike capabilities and capacity will be critical to
    success in any foreseeable future conflict. Accordingly, PB-15 funds
    research and development for the Virginia Payload Module (VPM) through
    fiscal year 2018 to increase Virginia-class SSN Tomahawk missile
    capacity from 12 to 40 missiles, mitigating the loss of capacity as
    Ohio-class guided missile submarines (SSGN) begin to retire in 2026.
    These efforts will support the option to procure the VPM with Block V
    of the Virginia class, as early as fiscal year 2019, in a future
    budget. Also in support of strike capacity, PB-15 sustains the existing
    Tactical Tomahawk cruise missile inventory by extending service life
    through investments in critical capability enhancements and vital parts
    to achieve maximum longevity. To develop a follow-on weapon to replace
    Tactical Tomahawk when it leaves service, PB-15 commences an analysis
    of alternatives (AoA) in fiscal year 2015 for planned introduction in
    the 2024-2028 timeframe. Also, our program enhances CVW precision
    strike capabilities by integrating the Small Diameter Bomb II (SDB II)
    on the F/A-18 by 2019.
    Anti-Surface Warfare
        To pace improvements in adversaries' long-range anti-ship cruise
    missiles and maritime air defenses, PB-15 implements a plan to deliver
    next-generation anti-surface warfare (ASuW) capability. The program
    maintains current ASuW capability inherent in the Harpoon missile,
    Joint Standoff Weapon (JSOW) C-1, and Mk 48 ADCAP torpedoes. In the
    near term, we are pursuing options to develop an improved, longer-range
    ASuW capability by leveraging existing weapons to minimize technical
    risk, costs, and development time. Additionally, PB-15 funds enhanced
    ASuW lethality for LCS by introducing a surface-to-surface missile
    module (SSMM) in fiscal year 2017. PB-15 accelerates acquisition of the
    next-generation Long Range Anti-Ship Missile (LRASM), fielding an early
    air-launched capability on the Air Force B-1B Lancer bomber in fiscal
    year 2018 and integration with the F/A-18E/F in fiscal year 2019.
    Additionally, PB-15's restart of Mk 48 ADCAP production and acquisition
    of 105 Mod 7 torpedoes over the FYDP enhances submarine ASuW capacity
    and provides a basis for future capability upgrades.

    Forward Presence
        PB-15 continues our DSG-directed rebalance to the Asia-Pacific both
    in terms of force structure and in other important ways. It increases
    our presence in the region from about 50 ships today on average to
    about 67 by 2020. In doing so, we continue to leverage our own
    ``bases'' in the region, such as Guam and Hawaii, as well as ``places''
    where our allies and partners allow us to use their facilities to rest,
    resupply, and refuel. PB-15 continues to preferentially field advanced
    payloads and platforms with power projection capabilities, such as the
    F-35C Lightning II, the Zumwalt-class DDG, the AIM-120D Advanced Medium
    Range Air-to-Air Missile, and the P-8A Poseidon to the Asia-Pacific
    first in response to the rapidly increasing A2/AD capabilities of
    potential adversaries in the region.
        In our PB-15 submission, we seek to maximize our presence in the
    Asia-Pacific and other regions using both rotational and non-rotational
    forces. Rotational forces deploy to overseas theaters from homeports in
    the United States for finite periods, while non-rotational forces are
    sustained in theater continuously. Nonrotational forces can be forward
    based, as in Spain and Japan, where ships are permanently based
    overseas and their crews and their families reside in the host country.
    Forward stationed ships operate continuously from overseas ports but
    are manned by crews that deploy rotationally from the United States, as
    is the case with the LCS deployed to Singapore, with four ships in
    place by 2017. Forward operating ships, by contrast, operate
    continuously in forward theaters from multiple ports and are manned by
    civilian mariners and small detachments of military personnel who
    rotate on and off the ships. Examples of forward operating ships
    include MLP, JHSV, AFSB, and the oilers and combat support ships of the
    combat logistics force (CLF). Forward based, stationed, or operating
    ships all provide presence at a significantly lower cost since one ship
    that operates continuously overseas provides the same presence as about
    four ships deploying rotationally from homeports in the United States.
        To capitalize on this advantage, our PB-15 program continues the
    move of four BMD-capable destroyers to Rota, Spain. The first of these,
    USS Donald Cook, is already in place, and three ships will join her by
    the end of fiscal year 2015. We will likewise forward base an
    additional (fourth) SSN in Guam in fiscal year 2015. PB-15 sustains our
    forward based MCM and PC in Bahrain, and forward stationed LCS will
    begin to assume their missions at the end of the decade. As JHSV are
    delivered and enter service, they will begin forward operating in
    multiple regions, including the Middle East in fiscal year 2014, the
    Asia-Pacific in fiscal year 2015, Africa in fiscal year 2016, and
    Europe in fiscal year 2017. USNS Montford Point, the first MLP, will
    deploy and begin forward operating from Diego Garcia in fiscal year
    2015. USNS Lewis B. Puller, the first AFSB variant of the Montford
    Point-class, will relieve our interim AFSB, USS Ponce, and begin
    forward operating in the Middle East in fiscal year 2016.
    The Optimized Fleet Response Plan (O-FRP)
        In addition to maximizing forward presence by basing ships
    overseas, our PB-15 submission also takes action to maximize the
    operational availability and presence delivered by units that deploy
    rotationally from the United States. In fiscal year 2015 we will begin
    implementation of the O-FRP, a comprehensive update to our existing
    Fleet Response Plan, the operational framework under which we have
    trained, maintained, and deployed our forces since 2003.
        The legacy FRP employed units on repeating cycles about 30 months
    in length that were divided into four phases: maintenance, basic
    training, integrated (advanced) training, and sustainment. Scheduled
    deployments of notionally 6 to 7 months were intended to take place in
    the sustainment phase, and the units' combat readiness was maintained
    for the remainder of the sustainment phase to provide ``surge''
    capacity for contingency response.
        Over the past few years, continuing global demand for naval forces
    coupled with reduced resources has strained the force. Continued demand
    in the Asia-Pacific, combined with increased commitments in the Persian
    Gulf, as well as responses to crisis events in Syria and Libya, coupled
    with an emerging global afloat BMD mission, have driven recent
    deployment lengths for certain units (CSG, ARG, and BMD-capable DDG in
    particular) as high as 8 to 9 months. Sequestration and a continuing
    resolution in fiscal year 2013 added to these pressures by hampering
    maintenance and training, which slowed preparation of ships and delayed
    deployments. In many instances, we have been compelled to shorten
    training and maintenance or to deploy units twice in the same
    sustainment cycle. While the FRP provides flexibility and delivers
    additional forces where required for crisis response, the increased
    operational tempo for our forces in recent years is not sustainable in
    the long term without a revision of the FRP. Reductions in training and
    maintenance reduce the combat capability and readiness of our forces
    and the ability of our ships and aircraft to fulfill their expected
    service lives. These effects combine with unpredictable schedules to
    impact our sailors' ``quality of service,'' making it more difficult to
    recruit and retain the best personnel in the long-term.
        The O-FRP responds to these schedule pressures and simultaneously
    makes several other process and alignment improvements to more
    effectively and efficiently prepare and deploy forces. Our analysis
    concluded that a 36-month deployment cycle (versus about 30 months)
    with scheduled deployments of up to 8 months (versus 6 to 7 months) is
    the optimal solution to maximize operational availability while
    maintaining stability and predictability for maintenance and training.
    Beyond scheduling, the O-FRP increases cohesiveness and stability in
    the composition of the teams we prepare for deployment by keeping the
    same group of ships and aircraft squadrons together in a CSG through
    successive cycles of training and deployment. The O-FRP also takes
    actions to make maintenance planning more predictable and maintenance
    execution more timely and cost-effective. It takes parallel steps in
    training by closely aligning the many inspections and exercises that
    units must complete in a predictable, rationalized sequence.
        Our PB-15 submission implements the O-FRP beginning in fiscal year
    2015 with the Harry S. Truman CSG, and will implement it in all other
    CSG and surface combatants as they prepare for and execute their next
    deployments. The O-FRP will subsequently be expanded to amphibious
    ships (ARG) and we are studying the desirability of expanding it to
    submarines and other unit types in the future.
    Fleet Readiness
        A central challenge in delivering the best Navy possible for the
    funds appropriated is properly balancing the cost of procuring force
    structure and capability with the cost of maintaining them at an
    appropriate level of readiness. When faced with a future of declining
    budgets, if we are returned to BCA revised caps funding levels in
    fiscal year 2016 and beyond, we are forced to make difficult decisions.
    Unstable budget levels (due to continuing resolutions and
    sequestration) force reductions in maintenance and training. Over time,
    this begins to take an untenable toll on our enduring ability to deploy
    forces that are sufficiently ready to complete their missions with
    acceptable risk and the ability of our ships and aircraft to reach
    their expected service lives. We are mandated to fund readiness. In a
    declining budget, we must look at reducing recapitalization and
    modernization. This can also have the consequences, of falling behind
    competitors in terms of capability and relevance, or we risk having too
    few ships and aircraft to execute certain missions in the future. As a
    result, we balance force structure capacity and capability with
    readiness in any financial situation.
        Despite the reduction in funding below levels planned in PB-14, PB-
    15 strikes this balance and the result is a program that delivers
    sufficient readiness to meet our GFMAP presence commitments and provide
    sufficient ``surge'' capacity for contingency response.
        As part of our efforts to sustain fleet readiness, Navy continues
    to improve its maintenance practices for surface ships by increasing
    governance, transparency, and accountability. Over the last several
    years, these practices have enabled us to decrease the amount of
    backlogged ship maintenance caused by high operational tempo.
        Going forward, PB-15 funds Navy's fiscal year 2015 afloat readiness
    to the DOD guidelines and goals. As in previous years, a supplemental
    funding request will be submitted to address some deployed ship
    operations, flying, and maintenance requirements.
    Readiness and Investment Ashore
        To comply with fiscal constraints, we are compelled to continue
    accepting risk in shore infrastructure investment and operations. PB-15
    prioritizes nuclear weapons support, base security, child development
    programs, and air and port operations. PB-15 funds facilities'
    sustainment to 70 percent of the DOD Facilities Sustainment Model, and
    prioritizes repair of critical operational facilities like piers and
    runways, renovation of inadequate barracks, and improving the energy
    efficiency of facilities. Less critical repairs to non-operational
    facilities will be deferred; however, this risk will compound over
    years and must eventually be addressed.
    Depot Maintenance Infrastructure
        Due to fiscal constraints, the Department of the Navy will not meet
    the mandated capital investment of 6 percent across all shipyards and
    depots described in 10 U.S.C. 2476 in fiscal year 2015. The Navy
    projects an investment of 3.5 percent in fiscal year 2015. PB-15 does,
    however, fund the most critical deficiencies related to productivity
    and safety at our naval shipyards. We will continue to aggressively
    pursue opportunities such as reprogramming or realignment of funds to
    find the appropriate funds to address this important requirement and
    mandate.
    Base Realignment and Closure
        PB-15 continues to fund environmental restoration, caretaking, and
    property disposal at Base Realignment and Closure (BRAC) 2005 and
    prior-round BRAC installations. We meet the legal mandates at all
    levels from previous BRAC rounds.
                              health of the force
    Compensation Reform and Quality of Service
        PB-15 addresses readiness by applying an important concept: quality
    of service. Quality of service has two components: (1) quality of work;
    and (2) quality of life. Both are intrinsically tied to readiness. At
    work, the Navy is committed to providing our sailors a challenging,
    rewarding professional experience, underpinned by the tools and
    resources to do their jobs right. Our obligations don't stop at the
    bottom of the brow. We support our Navy Families with the proper
    quality of life in terms of compensation, professional and personal
    development, and stability (i.e., deployment predictability). Our
    sailors are our most important asset and we must invest appropriately
    to keep a high caliber All-Volunteer Force.
        Over the last several years, Congress has been generous in
    increasing our benefits and compensation by approving pay raises,
    expanding tax-free housing, increasing health care benefits for
    retirees, and enhancing the GI Bill. This level of compensation and
    benefits, while appropriate, is costly and will exceed what we can
    afford.
        Personnel costs for military and civilian personnel make up about
    half of DOD's base budget.a share that continues to grow and force
    tradeoffs with other priorities. It is a strategic imperative to rein
    in this cost growth; therefore, we propose to slow rates of military
    pay raises, temporarily slow basic allowance for housing growth, and
    reduce indirect subsidies provided to commissaries. Coupled with
    reductions in travel expenses, these reforms will generate $123 million
    in Navy savings in fiscal year 2015 and $3.1 billion across the FYDP.
    None of these measures will reduce our sailors' pay.
        When my Senior Enlisted Advisor (the Master Chief Petty Officer of
    the Navy) and I visit Navy commands around the world, the message I get
    from our sailors is that they want to serve in a force that is properly
    manned and one that provides them with the tools, training, and
    deployment predictability they need to do their jobs. Sailors tell us
    that these factors are as important as compensation and benefits. Any
    Navy savings from compensation reform, therefore, will be re-invested
    to quality of service enhancements that include:

             Increases in travel funding for training.
             Expansion of the Navy e-Learning online training
            system
             Improvement in training range and simulation
            capabilities, simulated small arms training, and other shore-
            based simulators and trainers for surface ship and submarine
            personnel.
             Additional aviation spare parts.
             Enhancements to aviation logistics and maintenance.
             Enhancements to surface ship depot maintenance.
             Increasing financial incentives for sailors serving in
            operational capacities at sea.
             Increasing retention bonuses.
             Enhancing base operating support (BOS) funding to
            improve base services for sailors and their families.
             Restoring of $70 million per year of funding for
            renovation of single sailors' barracks that we were previously
            compelled to reduce due to fiscal constraints.
             Military construction projects for five barracks and a
            Reserve Navy Operational Support Center (NOSC).
             Improving berthing barges in Yokosuka, Japan that
            house sailors while forward based ships undergo depot
            maintenance.
             Increasing support to active commands by Selected
            Reserve (SELRES) personnel, thereby reducing workloads on
            active duty personnel.
             Implementing an information technology (IT) solution
            that enables Reserve personnel to remotely access Navy IT
            resources in support of mission objectives.
             Increasing funding for recapitalization projects at
            our flagship educational institutions.

        For the same reasons we support reform of pay and other benefits,
    the Navy also supports DOD-wide proposals in PB-15 to reduce military
    health care costs by modernizing insurance options for dependents and
    retirees, and through modest fee and co-pay increases that encourage
    use of the most affordable means of care.
    Enduring Programs
        Along with the plans and programs described above, I remain focused
    on enduring challenges that relate to the safety, health, and well-
    being of our people. In June 2013, we established the Navy 21st Century
    Sailor Office (OPNAV N17), led by a flag officer, to integrate and
    synchronize our efforts to improve the readiness and resilience of
    sailors and their families. The most pressing and challenging problem
    that we are tackling in this area is sexual assault.
    Sexual Assault
        The Navy continues to pursue a deliberate strategy in combatting
    sexual assault. We continue to focus on preventing sexual assaults,
    supporting and advocating for victims, improving investigation programs
    and processes, and ensuring appropriate accountability. To assess
    effectiveness and better target our efforts, Navy's Sexual Assault
    Prevention and Response (SAPR) program is driven by a metrics-based
    strategic plan that focuses on care and support to victims, as well as
    individual, command and institutional efforts to prevent this
    destructive crime. We receive feedback directly from our sailors
    through surveys, polls, and Fleet engagements, which steers our program
    and efforts. In fiscal year 2013, more sailors than ever came forward
    to report incidents, many of which occurred months or even years prior.
        Sustaining a world-class response and victim advocacy system
    remains a top priority; preventing sexual assaults from occurring is an
    imperative. Our strategy focuses on creating a climate where behaviors
    and actions that may lead to sexual assault, as well as sexual assault
    itself, are not tolerated, condoned or ignored. This multi-faceted
    approach focuses on command climate; deterrence; and bystander
    intervention. To prevent more severe crimes in the continuum of harm,
    we are concentrating our leadership efforts on ending the sexist and
    destructive behaviors that lead up to them. Our metrics indicate that
    sailors are reporting unacceptable behavior and that commands are
    taking it seriously.
        We will continue to measure, through surveys and reports,
    prevalence data, command climate and perceptions of leadership support,
    investigation length, and victim experience with our response and
    investigative system. We also measure key statistics about the
    investigative and adjudication process itself, such as length of time
    from report to outcome, as we continue to ensure a balanced military
    justice system for all involved. These metrics will be utilized to
    further improve and refine our prevention strategy, as well as inform a
    DOD-wide report to the President due in December 2014.
        Every sailor and Navy civilian deserves to work in an environment
    of dignity, respect, and trust. We hold our leaders accountable for
    creating a command climate that promotes these basic principles and
    thereby reduces the likelihood of an environment where sexual
    harassment might occur. We are strengthening our sexual harassment
    prevention policy by separating it from Equal Opportunity and aligning
    it with previous SAPR policy amendments, which have resulted in
    increased trust in our system to report incidents.
        When sexual assaults do occur, we ensure the victims' rights and
    preferences are respected throughout the investigative and disposition
    processes. In October 2013, we established the Victims' Legal Counsel
    (VLC) Program. The program is currently staffed by 25 Navy judge
    advocates acting as VLC, providing legal advice and representation to
    victims. The program will eventually expand to 29 VLC located on 23
    different installations, and VLC services are already available to all
    eligible victims worldwide. Our VLC work to protect and preserve the
    rights and interests of sexual assault victims, and in the case of
    investigation and prosecution, to ensure victims understand the
    process, can exercise their rights, and are able to have a voice in the
    process.
        However, work remains to be done. Despite 80 percent of sailors
    reporting confidence in the Navy's response system to sexual assault
    and 86 percent agreeing that the Navy and their individual commands are
    taking actions to prevent sexual assault, nearly 50 percent cite ``fear
    of public exposure'' or ``shame'' as barriers to reporting. We continue
    to seek ways to overcome these perceived barriers.
        We greatly appreciate Congress' interest and support in our efforts
    to combat sexual assault, particularly the measures contained in the
    NDAA for Fiscal Year 2014. We are fully engaged in implementing the new
    requirements and we believe that given time to measure progress
    following full implementation, we will be able to better assess whether
    any additional legislative or policy measures are required. We remain
    committed to eradicating sexual assault within our ranks and ensuring
    that sexual assault cases are processed through a fair, effective, and
    efficient military justice system. We must ensure that all changes to
    the system do not adversely impact the interests of justice, the rights
    of crime victims, or the due process rights of the accused.
    Suicide
        Another critical problem we are focused on is suicides. Suicides in
    the Navy declined last year by 28 percent, from 65 in 2012 to 47 in
    2013. This is cautiously optimistic, but one suicide is still one too
    many. Preventing suicide is a command-led effort that leverages a
    comprehensive array of outreach and education. We cannot tell precisely
    what combination of factors compel an individual to contemplate
    suicide, so we address it by elevating our awareness and responsiveness
    to individuals we believe may in trouble. For example, all sailors
    learn about bystander intervention tool known as ``A.C.T.'' (ask-care-
    treat) to identify and encourage at-risk shipmates to seek support. We
    also know that investing in the resilience of our people helps them
    deal with any challenge they may face.
    Resilience
        Our research shows that a sailor's ability to steadily build
    resilience is a key factor in navigating stressful situations.
    Education and prevention initiatives train sailors to recognize
    operational stress early and to use tools to manage and reduce its
    effects. Our Operational Stress Control (OSC) program is the foundation
    of our efforts to teach sailors to recognize stressors in their lives
    and mitigate them before they become crises. In the past year, we
    expanded our training capacity by 50 percent and increased OSC mobile
    training teams (MTT) from four to six. These MTT visit each command
    within 6 months of deployment and teach sailors resiliency practices to
    better manage stress and avoid paths that lead to destructive
    behaviors.
        In addition, we are strengthening support to sailors who are
    deployed in unfamiliar surroundings. We have started a program to
    assign trained and certified professionals as deployed resiliency
    counselors (DRC) to our largest ships, the CVN and LHA/D. DRC are
    credentialed clinical counselors that can assist or provide support to
    sailors who are coping with or suffering from common life events,
    common life stressors, and discrete traumatic events that may include
    sexual assault. This initiative extends the reach of Navy's resiliency
    programs to deployed commands and allows a ``warm hand-off'' to shore
    services when the sailor returns to homeport.
    Character Development
        At all levels in the Navy, leadership, character, and integrity
    form the foundation of who we are and what we do. These bedrock
    principles are supported by our culture of accountability, command
    authority, and personal responsibility. Leadership failures and
    integrity shortfalls undermine our organization and erode public trust.
    We will continue to reinforce standards and hold those who violate the
    rules appropriately accountable.
        One avenue by which we instill character and ethics in our leaders
    is by teaching ethics education and character development in the
    College of Operational and Strategic Leadership at the Naval War
    College. Building on this effort and other guidance to the force, in
    January 2013, I approved the Navy Leader Development Strategy to
    promote leader character development, emphasize ethics, and reinforce
    Navy core values. This strategy provides a common framework to develop
    Navy leaders at every stage of a sailor's career. We are implementing
    an integrated framework through a career-long continuum that develops
    our leaders with the same attentiveness with which we develop our
    weapons systems. The focus on character development in our professional
    training continuum has increased, and we employ techniques such as
    ``360 degree'' assessments and peer mentoring to help young officers
    better prepare to be commanding officers. The Navy Leader Development
    Strategy reemphasizes and enhances the leadership, ethics, and
    professional qualities we desire in our force.
    Family Readiness Programs
        Family readiness is fully integrated into our Navy's call to be
    ready. The critical programs which support our families are also
    overseen by the policy and resourcing lens of our 21st Century Sailor
    Office. These programs and services assist sailors and their families
    with adapting to and coping with the challenges of balancing military
    commitment with family life. Fleet and family support programs deliver
    services in four key areas: deployment readiness, crisis response,
    career support and retention, and sexual assault prevention and
    response.
        This past year, our Family Advocacy program (FAP) has implemented
    the DOD Incident Determination Committee (IDC) and Clinical Case Staff
    Meeting (CCSM) model Navy-wide. This model ensures standardization and
    consistency in child abuse and domestic abuse decisionmaking. It also
    guarantees that only those with clinical expertise in child abuse and
    domestic abuse are involved in determining treatment plans.
        Other career and retention support services include the family
    employment readiness program, personal financial management, and the
    legislatively-mandated transition goals, plan, success program to
    assist separating sailors. Increased stress and longer family
    separations have amplified program demand and underlined the importance
    of these support programs and services to ensure the psychological,
    emotional and financial well-being of returning warriors and their
    families. Financial issues are still the number one cause of security
    clearance revocation and our financial counselors have noted an
    increase in the number of sailors entering the Service with debt,
    including student loan debt. We continually monitor the environment for
    predatory lending practices targeting servicemembers and families.
        Auditability. To be good stewards of the funding appropriated by
    Congress, effective internal controls over our business operations and
    auditability of our outlays is essential. It remains our goal to
    achieve full financial auditability by the end of fiscal year 2017. Our
    near-term objective is to achieve audit readiness on the Department of
    the Navy's schedule of business activity (SBA) in fiscal year 2014, and
    thus far, 8 of the 10 components of Navy's SBA have been asserted as
    audit ready. In the area of property management, the Department has
    asserted audit readiness for 7 of 13 property subclasses, and 4 of
    those have been validated as audit ready. Continuing resolutions and
    sequestration in fiscal year 2013 and fiscal year 2014 have had no
    measurable impact on our ability to meet the fiscal year 2014 SBA
    auditability mandate, but they have increased risk to our ability to
    meet the fiscal year 2017 full financial auditability requirement.
                                   conclusion
        We believe it is vital to have a predictable and stable budget to
    develop and execute an achievable program to conduct the 10 primary
    missions outlined in the DSG, and support the pillars and ``rebalance''
    called for in the QDR.
        PB-15 proposes the best balance of Navy capabilities for the
    authorized amount of funding. It sustains sufficient afloat readiness
    in today's Navy but accepts more risk while building a future fleet
    that is able to conduct full-spectrum operations. I remain deeply
    concerned that returning to BCA revised caps spending levels in fiscal
    year 2016 will lead to a Navy that would be too small and lacking in
    the advanced and asymmetric capabilities needed to conduct the primary
    missions required by our current guidance: the DSG and the QDR.

        Chairman Levin. Thank you so much, Admiral Greenert, for
    that very pointed testimony.
        General Amos.

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

        General Amos. Chairman Levin, Ranking Member Inhofe,
    members of the committee, I'm pleased to appear before you
    today to tell you about your U.S. Marine Corps.
        Before I get into my prepared text, Mr. Chairman, I, too,
    want to thank you for your faithful service. We have a great
    word that, while it's not unique to the Marine Corps, we
    certainly claim it as such, and that's the word, ``fidelity,''
    and that means ``faithful.'' You've been that for decades and
    decades, and you certainly have to the naval forces as well as
    my fellow colleagues in the other Services. Sir, thank you for
    your sacrifice, you and your wife. This Nation will sorely miss
    you next year when you're not serving the committee.
        Chairman Levin. Thank you so much, General Amos and Admiral
    Greenert. Thank you for those very personal remarks. I will
    pass them along to Barbara.
        General Amos. Please do, sir.
        Since our founding in 1775, marines have answered the
    Nation's call, faithfully protecting the American people and
    maintaining a world-class standard of military excellence.
    Nothing has changed, and nothing will change in the future.
    Yet, we find ourselves at a strategic inflection point. After
    12 years of war, we are drawing our forces down in Afghanistan,
    resetting our institution, and resetting and reawakening the
    soul of the U.S. Marine Corps.
        Today, we are challenged by fiscal uncertainty that
    threatens both our capacity and capabilities, forcing us to
    sacrifice our long-term health for near-term readiness. As I
    have testified before many times, despite these challenges, I
    remain committed to fielding the most capable and ready Marine
    Corps that the Nation is willing to afford.
        Our greatest asset is our individual marine, the young man
    or woman who wears my cloth. Our unique role as America's
    signature crisis response force is grounded in the legendary
    character and warfighting ethos of our people. As we reset and
    prepare for future battles, all marines are rededicating
    themselves to those attributes that carried marines across the
    wheat fields and into the German machine guns at Belleau Wood,
    France, in March 1918; those same attributes that enabled raw,
    combat-inexperienced, young marines to succeed against a
    determined enemy at America's first offensive operation in the
    Pacific on August 7, 1942, as the first marine division landed
    at Guadalcanal; and, lastly, those timeless strengths of
    character and gut courage that enabled marines to carry the day
    in an Iraqi town named Fallujah and against a determined enemy
    in the Taliban strongholds of Marjah and Sangin. Your Marine
    Corps is rededicating itself to those simple, four timeless
    attributes: persistent discipline; faithful obedience to orders
    and instructions; concerned and engaged leadership 24-hours-a-
    day, 7-days-a-week; and strict adherence to standards. These
    ironclad imperatives have defined our Marine Corps for 238
    years, and they will serve us well in the decades to come.
        As we gather here today, some 30,000 marines are forward-
    deployed around the world, promoting peace, protecting our
    Nation's interests, and securing our defense. But, we do not do
    this alone. Our partnership is with the U.S. Navy, and that
    partnership provides an unmatched naval expeditionary
    capability. Our relationship with the Navy is a symbiotic one.
    My relationship with Admiral Jon Greenert is unprecedented.
    This is why I share the CNO's concerns about the impacts
    associated with the marked paucity of building ship funds.
    America's engagement throughout the future security environment
    of the next 2 decades will be naval in character, make no
    mistake about that.
        To be forward-engaged and to be present when it matters
    most, we need capital ships, and those ships need to be loaded
    with its U.S. Marine Corps. Expeditionary naval forces are our
    Nation's insurance policy. We are a hedge against uncertainty
    in an unpredictable world. The Navy/Marine Corps team provides
    power projection from the sea, responding immediately to crises
    when success is measured in hours, not in days. From the super
    typhoon that tragically struck the Philippines late last year,
    to the rescue of American citizens in South Sudan over the
    Christmas holidays, your forward-deployed naval forces were
    there. We carried the day for America.
        As the Joint Force draws down and we conclude combat
    operations in Afghanistan, some argue, quite frankly, that we
    are done with conflict. My view is completely different. As
    evidenced in the recent events currently unfolding in Central
    Europe, the world will remain a dangerous and unpredictable
    place. There will be no peace dividend for America, nor will
    there be a shortage of work for its U.S. Marine Corps. Ladies
    and gentlemen, we will not do less with less. We will do the
    same with less.
        In closing, you have my promise that we will only ask for
    what we need, we will continue to prioritize and make the hard
    decisions before coming before this committee and Congress.
        Once again, I thank the committee for your continued
    support. I'm prepared to answer your questions.
        [The prepared statement of General Amos follows:]
               Prepared Statement by General James F. Amos, USMC
                       i. america's crisis response force
        The U.S. Marine Corps is the Nation's crisis response force. Since
    our founding in 1775, marines have answered the Nation's call,
    faithfully protecting the American people and maintaining a world-class
    standard of military excellence. Today we are at a strategic inflection
    point. Fiscal uncertainty has threatened both our capacity and
    capabilities, forcing us to sacrifice our long-term health for near-
    term readiness. Despite these fiscal challenges, we remain committed to
    fielding the most ready Marine Corps the Nation can afford. Around the
    globe marines stand ready to engage America's adversaries or respond to
    any emerging crisis. Thanks to the support of Congress, the American
    people will always be able to count on the Marine Corps to fight and
    win our Nation's battles.
        America is a maritime nation: its security, resilience, and
    economic prosperity are fundamentally linked to the world's oceans. Our
    naval forces serve to deter and defeat adversaries, strengthen
    alliances, deny enemies sanctuary, and project global influence. The
    amphibious and expeditionary components of our naval force allow us to
    operate with assurance in the world's littoral areas. The Marine Corps
    and the Navy are prepared to arrive swiftly from the sea and project
    influence and power when needed. Operating from the sea, we impose
    significantly less political burden on our partners and allies, while
    providing options to our Nation's leaders. We remain committed to the
    mission of assuring access for our Nation's forces and its partners.
        Forward deployed naval forces enable our Nation to rapidly respond
    to crises throughout the world. The ability to engage with partnered
    nations, through highly trained and self-sustaining forces, maximizes
    America's effectiveness as a military power. For approximately 8
    percent of the Department of Defense's (DOD) budget, the Marine Corps
    provides an affordable insurance policy for the American people and a
    highly efficient and effective hedge against global and regional
    tensions that cause instability. We provide our Nation's leaders with
    time and decision space by responding to today's crisis, with today's
    forces . . . TODAY.
    Naval Character
        We share a rich heritage and maintain a strong partnership with the
    U.S. Navy. Together we provide a fundamental pillar of our Nation's
    power and security--the ability to operate freely across the seas.
    Security is the foundation of our Nation's ability to maintain access
    to foreign markets and grow our economy through trade around the world.
    The Navy-Marine Corps relationship has never been better; we will
    continue to advance our shared vision as our Nation transitions from
    protracted wars ashore and returns its focus to the maritime domain.
        Throughout more than a decade of sustained operations ashore in
    Iraq, Afghanistan, and elsewhere, we continued to deploy thousands of
    marines aboard amphibious warships around the globe. The Navy and
    Marine Corps remains postured to provide persistent presence and
    engagement, maintaining a constant watch for conflict and regional
    unrest. Well-trained Marine units embarked aboard U.S. Navy warships
    increase the Nation's ability to deter and defend against emerging
    threats. Our adaptability and flexibility provide unmatched
    capabilities to combatant commanders.
    Unique Roles and Missions
        The Marine Corps provides unique, sea-based capabilities to the
    joint force. Our forward deployed amphibious based marines have long
    played a critical role across the full range of military operations. We
    assure littoral access and enable the introduction of capabilities
    provided by other Military Services, government agencies,
    nongovernmental organizations, allies, and international partners. The
    stability and vitality of the global economic system is dependent on
    this capability, especially where our Nation's vital interests are
    challenged.
        The Marine Corps provides operating forces that are a balanced air-
    ground-logistics team. They are responsive, scalable and self-
    sustaining. As our Nation's middle-weight force, we must maintain a
    high state of readiness, able to respond wherever and whenever the
    Nation requires. Crisis response requires the ability to expand the
    expeditionary force after its introduction in theater. The Marine Air-
    Ground Task Force (MAGTF) modular structure lends itself to rapidly
    right sizing the force as the situation demands, to include a joint or
    combined force.
                   ii. our commitment to the nation's defense
    Global Crisis Response
        At our core, the Marine Corps is the Nation's crisis response force
    and fulfilling this role is our top priority. We have earned a
    reputation as the Nation's most forward deployed, ready, and flexible
    force. Our performance over the past decade underscores the fact that
    responsiveness and versatility are always in demand. Marines formed the
    leading edge of the U.S. humanitarian response to earthquakes in
    Pakistan and Haiti, and disasters in the Philippines and Japan, all
    while fully committed to combat operations in Iraq or Afghanistan.
        During 2013, four Marine Expeditionary Units (MEUs) and their
    partnered Amphibious Ready Groups (ARGs) participated in overseas
    operations and exercises. These forward deployed amphibious forces--
    normally built around a 3-ship amphibious squadron with 2,200 embarked
    marines--provided a uniquely trained and integrated task force,
    postured to immediately respond to emerging crises. The Marine Corps
    has placed increased emphasis over the past several years partnering
    with coalition nations. Through security cooperation activities we
    advance mutual strategic goals by building capacity, deterring threats,
    and enhancing our crisis response capabilities. Throughout the year,
    ARG-MEUs strengthened our relationships through major exercises and
    operations with partnered nations which include Saudi Arabia, Kuwait,
    United Arab Emirates, Jordan, Egypt, Qatar, Oman, India, Thailand,
    Australia, Japan, and the Philippines.
        Super Typhoon Haiyan
        Typhoon Haiyan struck the Philippines on November 7, 2013 with
    winds gusting up to 195 mph, the fourth highest ever recorded. Even
    before the storm reached landfall, marines and sailors forward-based in
    Okinawa were preparing to respond. After returning to home port,
    elements of the 31st MEU embarked aboard USS Germantown and USS Ashland
    to support Typhoon Haiyan humanitarian assistance/disaster relief
    operations in the Philippines. Within 8 hours, Marine Forces forward
    based in the Pacific Theater provided the initial humanitarian
    response. This effort was followed by a Marine Corps led Joint Task
    Force, to include Marine MV-22 and KC-130J aircraft that flew 1,205
    sorties (totaling more than 2,500 flight hours), delivered more than
    2,005 tons of relief supplies and evacuated 18,767 Philippinos, 540
    American citizens and 301 third country nationals. These efforts were
    closely coordinated on scene with the U.S. Agency for International
    Development's Office of Foreign Disaster Assistance. With the
    longstanding partnership and trust built between our two nations,
    marines were able to rapidly respond with critically needed
    capabilities and supplies in times of crisis. This operation
    underscores the point, that trust is established and nurtured through
    forward presence . . . trust cannot be surged.
        Special Purpose Marine Air-Ground Task Force-Crisis Response (SP-
            MAGTF CR)
        Forward positioned in Spain, SP-MAGTF-CR marines are trained and
    equipped to support a wide range of operations. This unit is unique
    amongst other crisis response forces because it possesses an organic
    aviation capability that allows for SP-MAGTF CR to self-deploy. This
    force is primarily designed to support U.S. and partner security
    interests throughout the U.S. Central Command (CENTCOM) and U.S. Africa
    Command (AFRICOM) theaters of operation, to include embassy
    reinforcement, non-combatant evacuation operations, and tactical
    recovery of aircraft and personnel. The MV-22's unprecedented agility
    and operational reach enable the SP-MAGTF-CR to influence these
    theaters of operation in a matter of hours. In 2013, SP-MAGTF-CR
    collaborated with local authorities to establish a presence that could
    rapidly respond to the full spectrum of contingencies within AFRICOM's
    AOR. SP-MAGTF-CR is also involved in bilateral and multilateral
    training exercises with regional partners in Europe and Africa.
        Late last year, we witnessed the security situation deteriorate
    within South Sudan. Weeks of internal violence threatened to erupt into
    a civil war as populations were being driven from their homes. On short
    notice, 150 marines from the SP-MAGTF-CR flew aboard MV-22 Ospreys over
    3,400 miles non-stop to stage for future operations at Camp Lemonier,
    Djibouti on the Horn of Africa. The next day, marines flew to Uganda to
    prepare for a potential non-combatant evacuation operation and to
    bolster our East Africa Response Force. In January, marines aboard two
    KC-130J Hercules aircraft evacuated U.S. embassy personnel from harm's
    way.
    Afghanistan
        Marines have been continuously at war in Afghanistan since 2001. In
    the past year, we have transitioned from counter-insurgency operations
    to training, advising, and assisting the Afghan National Security
    Forces (ANSF). With expanding capabilities and increased confidence,
    the ANSF is firmly in the lead for security in support of the
    Government of the Islamic Republic of Afghanistan throughout all of
    Helmand and Nimroz Provinces.
        Today, more than 4,000 Active and Reserve marines are forward
    deployed in Regional Command South West (RC (SW)) and in full support
    of the Afghan National Police, and Afghan National Army. In 2013, we
    reduced our coalition force advisory teams from 43 to 15, and we
    shifted our emphasis from tactical operations to Brigade-level
    planning, supply chain management, infrastructure management, and
    healthcare development. In January 2013, there were over 60 ISAF
    (principally United States, United Kingdom, and Georgian) bases in RC
    (SW). Today only seven remain. In addition, we removed permanent
    coalition presence in 7 of 12 districts with Marine forces located only
    in one remaining district center.
        Afghan district community councils currently operate in seven
    Helmand districts which represent 80 percent of the population. As a
    result, health and education services have markedly improved. With the
    presidential election approaching in April 2014, we are expecting a
    higher turnout than the previous presidential elections due to the
    population's increased understanding of the electoral process.
    Currently, there are 214 planned polling stations in Helmand Province.
    The upcoming election will be conducted with limited International
    Security Assistance Force (ISAF) military assistance.
    Asia-Pacific Rebalance
        As our Nation continues to shift its strategic focus to the Asia-
    Pacific, it is important to note that that the Marine Corps--
    specifically, III Marine Expeditionary Force (III MEF)--has been
    forward based there since the 1940s. Marines have a long history in the
    Pacific, replete with many hard-won victories. We are ideally suited to
    operate within this maritime region and we are adjusting our force lay-
    down to support the President's Strategic Guidance for the Department
    of Defense issued in January 2012. We remain on course to have 22,500
    marines west of the International Date Line--forward based and
    operating within the Asia-Pacific theater.
        We have the experience, capabilities, and most importantly, the
    strategic relationships already in place within the region to
    facilitate the national security strategy. Marines forward deployed and
    based in the Asia-Pacific Theater conduct more than 70 exercises a
    year, all designed to increase interoperability with our regional
    partners, build theater security cooperation, and enhance prosperity
    and stability in this region. By strategically locating our forces
    across the region, we enable more active participation in cooperative
    security and prosperity. No forces are more suited to the Pacific than
    naval amphibious forces. We envision an Asia-Pacific region where our
    marines' presence will continue to build upon the excellent cooperation
    with our regional partners and allies to advance our common interests
    and common values.
    Security Cooperation
        The Marine Corps supports all six geographic combatant commands
    (GCC) with task-organized forces of marines who conduct hundreds of
    Theater Security Cooperation (TSC) activities with the armed forces of
    more than 50 partner nations each year. Per the Defense Strategic
    Guidance, our forward-engaged marines conducted TSC with a focus on
    building partner capacity, amphibious capability, interoperability for
    coalition operations, and assured access for U.S. forces. Overall, the
    Marine Corps participated in over 200 security cooperation engagements
    in 2013, including TSC exercises, bilateral exercises, and military-to-
    military engagements.
        In September 2013, the Commandant of the Marine Corps, Chief of
    Naval Operations, and Commandant of the Coast Guard signed the Maritime
    Security Cooperation Policy. This tri-service policy prescribes a
    planning framework for Marine Corps, Navy, and Coast Guard
    headquarters, regional components, and force providers with the goal of
    achieving an integrated maritime approach to security cooperation in
    support of national security objectives.
        Black Sea Rotational Force (BSRF)
        Forward postured in Romania, the BSRF engages partner nations and
    operates in multiple countries throughout the Black Sea-Eurasia region.
    Engagements included peacekeeping operations training events, technical
    skills familiarization events, and various professional symposia
    throughout the Caucasus region.
        SP-MAGTF-Africa 13 (SP-MAGTF-AF)
        As a sub-component of SP-MAGTF-CR, SP-MAGTF-Africa 13 is forward
    based in Italy, consisting of a company-sized Marine element that
    engages with partnered countries in Africa. SP-MAGTF-AF 13 focused on
    training African troops primarily in Burundi and Uganda, bolstered
    militaries attempting to counter groups affiliated with al-Qaeda
    operating across the Maghreb region, and provided security force
    assistance in support of directed Africa Union Mission in Somalia
    (AMISOM).
        Marine Rotational Force-Darwin (MRF-D)
        In 2013, a company sized element of MRF-D marines deployed to
    support U.S. Pacific Command (PACOM) requirements and emphasize the
    U.S. commitment to the Asia-Pacific region. During their stay in
    Darwin, marines conducted bilateral training with the Australian
    Defense Forces. In conjunction with the 31st MEU--from August through
    September 2013--MRF-D supported the bilateral Exercise Koolendong at
    the Bradshaw Field Training Area in Australia to serve as a proof of
    concept in preparation for the expected arrival of 1,150 marines in
    2014. This next deployment--the first step of Phase II, expands the
    rotational force from company to battalion sized rotational units. The
    intent in the coming years is to establish a rotational presence of a
    MAGTF of up to 2,500 marines. The presence of marines in Australia
    reflects the enduring alliance and common security interests in the
    region and improves interoperability between the United States and
    Australia
                    iii. fiscal year 2015 budget priorities
        For fiscal year 2015, the President's budget provides $22.8 billion
    in our baseline budget, down from our fiscal year 2014 budget of $24.2
    billion. This budget has been prioritized to support a highly ready and
    capable Marine Corps focused on crisis response. The capabilities we
    prioritized in this year's budget submission protect near-term
    readiness while addressing some shortfalls in facility sustainment,
    military construction, equipment recapitalization and modernization.
    The Marine Corps budget priorities for 2015 include:
        Amphibious Combat Vehicle
        The development and procurement of the Amphibious Combat Vehicle
    (ACV) is my top acquisition priority. The modern battlefield requires
    both highly mobile and armor-protected infantry forces. The ACV will be
    designed to provide the capabilities required to meet current and
    future amphibious operations. This program is critical to our ability
    to conduct surface littoral maneuver and project Marine units from sea
    to land in any environment; permissive, uncertain, or hostile. The
    Marine Corps requires a modern, self-deployable, survivable, and
    affordable amphibious vehicle as a once-in-a-generation replacement for
    the existing Amphibious Assault Vehicles, which have been in service
    for more than 40 years.
        Marine Aviation
        The Marine Corps continues to progress towards a successful
    transition from 13 types of aircraft to six. This transformation of our
    aviation combat element will provide the Marine Corps and the future
    naval force with highly advanced fixed-wing, tilt-rotor, and rotary-
    wing platforms capable of operating across the full spectrum of combat
    operations. As the Marine Corps moves towards a future battlefield that
    is digitally advanced and connected, the F-35B/C Joint Strike Fighter's
    (JSF) fifth-generation capabilities will enable the collection, fusion,
    and dissemination of information to all elements of the MAGTF.
    Additionally, MV-22 Osprey vertical flight capabilities coupled with
    the speed, range, and endurance of fixed-wing transports, are enabling
    effective execution of current missions that were previously
    unachievable on legacy platforms.
        Modernization and sustainment initiatives are required to enhance
    the capabilities of Marine Aviation's legacy platforms to maintain
    warfighting relevance. Specifically, modernization and relevancy of F/
    A-18A-D Hornet and AV-8B Harrier aircraft are vital as the Marine Corps
    completes the transition to the F-35B short take-off and vertical
    landing JSF in 2030. The F-35B is critical to our ability to conduct
    future combined arms operations in expeditionary environments.
        Resetting our Ground Equipment
        We have made significant strides in resetting our equipment after
    12 years of wartime wear and tear. We are executing a reset strategy
    that emphasizes both our commitment to the American taxpayer and the
    critical linkage of balancing reset and readiness levels. Over 75
    percent of the Marine Corps equipment and supplies in RC (SW) have been
    retrograded. The Marine Corps requires continued funding to complete
    the reset of equipment still being utilized overseas, to reconstitute
    home station equipment, and to modernize the force.
        The current rate of equipment returning from theater will allow the
    Corps to reset our ground equipment by 2017, but this will require the
    continued availability of Overseas Contingency Operations funding for
    fiscal year 2015 through fiscal year 2017 to support our planned
    schedule of depot level maintenance. We are not asking for everything
    we want; only what we need. We have consciously chosen to delay
    elements of modernization to preserve current readiness. These short
    term solutions cannot be sustained indefinitely without cost to our
    future capabilities.
        Joint Light Tactical Vehicle
        We remain firmly partnered with the U.S. Army in fielding a Joint
    Light Tactical Vehicle (JLTV) that lives up to its name, while also
    being affordable. The JLTV is needed to provide the Marine Corps with
    modern, expeditionary, light-combat and tactical mobility while
    increasing the protection of our light vehicle fleet. By replacing only
    a portion of our High Mobility Multipurpose-Wheeled Vehicle (HMMWV)
    fleet, the JLTV will help to preserve our expeditionary capability with
    a modern level of protected mobility.
        Military Construction
        For fiscal year 2015, the Marine Corps is requesting $331 million
    for Military Construction programs to support warfighting and critical
    infrastructure improvements. This fiscal year 2015 budget represents a
    61 percent funding level decrease from our fiscal year 2014 request of
    $842 million and a significant decrease from the Marine Corps' previous
    6 year average. Our primary focus is toward the construction of Joint
    Strike Fighter (F-35B) and Osprey (MV-22) facilities that support unit
    relocations to Hawaii and Japan. We have prioritized environmental and
    safety corrections such as water plant improvements and emergency
    communication capabilities. Funding is also included for the continued
    consolidation of the Marine Corps Security Force Regiment and its fleet
    antiterrorism security teams from the Norfolk area to Yorktown, VA.
    Finally, we are providing funding to continue the renovation, repairs
    and modernization of junior enlisted family housing units located in
    Iwakuni, Japan.
    Readiness and Risk in the Fiscal Year 2015 Budget
        The Marine Corps remains committed to building the most ready force
    our Nation can afford, but this comes at a risk. As our Nation
    continues to face fiscal uncertainty, the Marine Corps is responsibly
    building a relevant and lean force for the 21st century. The emerging
    security threats to our Nation demand that America has a globally
    responsive, truly expeditionary, consistently ready, maritime crisis
    response force.
        While today's fiscal constraints may make us a leaner force, we are
    committed to maintaining our readiness--the real measure of our ability
    to meet unforeseen threats. Our innovative spirit, strong leadership,
    and enduring stewardship of the Nation's resources will guide our
    modernization efforts. We will invest in our marines as they are the
    foundation of the Marine Corps. We will continue to reset our
    warfighting equipment and reconstitute our force after more than a
    decade of combat operations. We will maintain our investments in the
    research and development of new equipment and technologies that ensure
    our Nation's crisis response force remains relevant and ready well into
    the 21st century.
        In a fiscally constrained environment, it is critical that we
    maximize every taxpayer dollar entrusted to the Marine Corps. Our
    ability to efficiently manage our budget is directly related to our
    ability to properly account for every dollar. To that end, for the
    first time, the Marine Corps achieved an ``unqualified'' audit opinion
    from the DOD Inspector General. We became the first military service to
    receive a clean audit, which provides us with the ability to have a
    repeatable and defendable process to track, evaluate and certify each
    dollar we receive. We are particularly pleased that this audit will
    give the American people confidence in how the Marine Corps spends
    taxpayer money.
        As fiscal realities shrink the Department of Defense's budget, the
    Marine Corps has forgone some important investments to maintain near-
    term readiness. To protect near-term readiness, we are taking risks in
    our infrastructure sustainment and reducing our modernization efforts.
    These trades cannot be sustained long term and portend future increased
    costs. As America's crisis response force, however, your Corps does not
    have a choice. We are required to maintain a posture that facilitates
    our ability to deploy today. As we continue to face the possibility of
    further budget reductions under sequestration, we will be forced into
    adopting some variation of a less ready, tiered status, within the next
    few years.
        As we enter into fiscal year 2015 and beyond, we are making
    necessary trade-offs to protect near-term readiness, but this comes at
    a risk. Today, more than 60 percent of our non-deployed units are
    experiencing degraded readiness in their ability to execute core
    missions. Approximately 65 percent of non-deployed units have equipment
    shortfalls and 35 percent are experiencing personnel shortfalls
    necessitated by the effort to ensure that forward deployed units are
    100 percent manned and equipped. The primary concern with out-of-
    balance readiness of our non-deployed operating forces is an increased
    risk in the timely response to unexpected crises or large-scale
    contingencies. The small size of the Marine Corps dictates that even
    non-deployed units must remain ready to respond at all times as they
    are often the Nation's go-to forces when unforeseen crises occur.
        The risk to the Nation is too great to allow the readiness of the
    Marine Corps to be degraded. Through congressional support we will
    continue to monitor our five pillars of readiness: high quality people,
    unit readiness, capability and capacity to Meet the Combatant Command
    Requirements, Infrastructure Sustainment, and equipment modernization.
    Our current funding levels protect current readiness; however, it does
    so at the expense of the infrastructure sustainment and equipment
    modernization efforts, which are keys to protecting future readiness.
    This is a rational choice given the current fiscal situation, but it is
    not sustainable over time. Ignoring any of these areas for long periods
    will hollow the force and create unacceptable risk for our national
    defense.
                          iv. shared naval investments
        Naval forces control the seas and use that control to project power
    ashore. The fiscal and security challenges we face demand a seamless
    and fully integrated Navy-Marine Corps team. Achieving our shared
    vision of the future naval force requires strong cooperation. Now more
    than ever, the Navy-Marine team must integrate our capabilities to
    effectively protect our Nation's interests.
        Amphibious Warships
        The force structure to support the deployment and employment of 2
    Marine Expeditionary Brigades (MEB) simultaneously is 38 amphibious
    warfare ships. However, considering fiscal constraints, the Navy and
    Marine Corps have agreed to sustain a minimum of 33 amphibious warfare
    ships. The 33-ship force accepts risk in the arrival of combat support
    and combat service support elements of a MEB, as well as meeting the
    needs of the naval force within today's fiscal limitations.
        The LX(R) program is the next major amphibious ship investment
    necessary to replace our aging fleet of LSDs. As we move forward with
    this program we should take advantage of the knowledge developed in
    building the LPD-17 class of ship. It is imperative that this is a
    warship capable of delivering marines to an objective in a non-
    permissive environment. Replacing the LSD with a more capable platform
    with increased capacity for command and control, aviation operations
    and maintenance, vehicle storage, and potential for independent
    operations gives the geographic combatant commander a powerful and
    versatile tool, and permit independent steaming operations.
        Maritime Prepositioning Force
        The second method of deployment for the MEB is the Maritime
    Prepositioning Force, which combines the speed of strategic airlift
    with the high embarkation capacity of strategic sealift. The two
    remaining Maritime Prepositioning Ship Squadrons (MPSRON), each
    designed to facilitate the deployment of one MEB, carry essential
    combat equipment and supplies to initiate and sustain MEB operations
    for up to 30 days. With the introduction of the seabasing enabling
    module, which includes large medium speed roll-on/roll-off (LMSR)
    vessels, dry cargo and ammunition ships and mobile landing platforms,
    MPSRON-supported forces will have enhanced capability to operate from a
    seabase.
        Ship-to-Shore Connectors
        Ship-to-shore connectors move personnel, equipment and supplies,
    maneuvering from a seabase to the shoreline. These are critical
    enablers for any seabased force. Modern aerial connectors, such as the
    MV-22 Osprey extend the operational reach of the seabased force and
    have revolutionized our ability to operate from the sea. The Navy is in
    the process of modernizing the surface connector fleet by replacing the
    aging Landing Craft Air Cushion and the 50-year-old fleet of Landing
    Craft Utility. Continued funding of the maintenance and extended
    service life programs of our existing fleet of connectors as well as
    investment in recapitalization of the surface connector capability
    through procurement of the Ship-to-Shore Connector and Surface
    Connector will be critical for future security environments. We need to
    continue to push science and technology envelopes to develop the next
    generation of connectors.
                  v. our vision: redesigning the marine corps
        As we drawdown the Marine Corps' Active component end strength from
    war time levels of 202,000 marines, we have taken deliberate steps to
    construct a force that we can afford to operate and sustain in the
    emerging fiscal environment. Over the past 3 years, we have undertaken
    a series of steps to build our current force plan. In 2010, our Force
    Structure Review Group utilized the Defense Strategic Guidance and
    operational plans to determine that the optimum size of the Active
    component Marine Corps should be a force of 186,800. Under the
    constraints of the 2011 Budget Control Act and the 2012 Defense
    Strategic Guidance, we estimated that a force of 182,100 active
    component marines could still be afforded with reduced modernization
    and infrastructure support. More recently, as we entered into the
    Quadrennial Defense Review, we came to the difficult conclusion that,
    under the threat of continued sequestration or some variant, an Active-
    Duty Force of 175,000 marines is what our Nation can afford, along with
    very steep cuts to Marine Corps modernization accounts and
    infrastructure. This significantly reduced force is a ``redesigned''
    Marine Corps capable of meeting steady state requirements. We will
    still be able to deter or defeat aggression in one region, however with
    significant strain on the force and increased risk to mission
    accomplishment.
        The redesigned force is built to operate using the familiar MAGTF-
    construct, but it places greater emphasis on the `middleweight' Marine
    Expeditionary Brigades by establishing standing MEB Headquarters. These
    MEB Headquarters will be prepared to serve as a ready crisis response
    general officer-level command element for the joint force. The
    redesigned force will deploy Special Purpose Marine Air Ground Task
    Forces and MEUs to provide combatant commanders ready forces for a
    broad range of missions from forward presence to crisis response.
        Maintaining a high state of readiness within the current and near-
    term fiscal climate will be challenging for marines and their
    equipment. For example, the desired 186.8K force supported a 1:3
    deployment-to-dwell ratio to meet emerging steady state demands. A
    redesigned force of 175,000 reduces that to a 1:2 dwell ratio for our
    operational units during a peacetime environment. This 1:2 ratio is the
    same operational tempo we have operated with during much of the past
    decade while engaged in combat and stability operations in Iraq and
    Afghanistan.
        The redesigned force size implements the Strategic Choices
    Management Review (SCMR) directed 20 percent headquarters reduction,
    and it includes the elimination of one three-star Marine Expeditionary
    Force Headquarters. Our ground forces will be reduced by 1 regimental
    headquarters and 8 battalions (6 infantry, 2 artillery), as well as a
    reduction of an additional 27 companies or batteries. Our aviation
    forces will be reduced by 3 group headquarters and 13 squadrons. Our
    logistics forces will be reduced by 3,294 marines (14 percent) and 1
    battalion while conducting an extensive reorganization to gain
    efficiencies from reduced combat service support resources. In ground
    force terms, our aggregate cuts across the force comprise a reduction
    in nearly a Marine Division's worth of combat power.
        The redesigned force will retain the ability to generate seven
    rotational MEUs, with the capacity to deploy one from the east coast,
    one from the west coast, and one from Okinawa every 6 months. New
    Special Purpose MAGTF (SP-MAGTF) force structure responds to greater
    demand for multi-role crisis response forces in several geographic
    combatant commands under the so-called ``New Normal'' security
    environment.
        In support of the rebalance to the Pacific, we prioritized our
    Pacific theater forces and activities in the new force structure.
    Despite end strength reductions, III Marine Expeditionary Force--our
    primary force in the Pacific--remains virtually untouched. We also
    restored Pacific efforts that were gapped during Operation Enduring
    Freedom, including multiple exercises and large parts of the Unit
    Deployment Program. A rotational presence in Darwin, Australia also
    expands engagement opportunities and deterrence effects.
        In support of U.S. Cyber Command and in recognition of the
    importance of cyberspace as a warfighting domain, we are growing our
    cyberspace operations forces organized into a total of 13 teams by the
    end of 2016. The teams will provide capabilities to help defend the
    Nation from cyber-attack, provide support to combatant commanders, and
    will bolster the defenses of DOD information networks and the Marine
    Corps Enterprise network.
        Lastly, the Marine Corps remains fully committed to improving
    embassy security by adding approximately 1,000 Marine Corps embassy
    security guards (MCESG) as requested by Congress. The redesigned force
    structure consists of the marines necessary to maintain our steady-
    state deployments and crisis-response capabilities in the operating
    forces as well as the additional marines for MCESG. We have absorbed
    new mission requirements while reducing our overall force size.
    Expeditionary Force 21
        Expeditionary Force 21 is the Marine Corps' capstone concept that
    establishes our vision and goals for the next 10 years and provides a
    plan for guiding the design and development of the future force. One
    third of the Marine Corps operating forces will be forward postured.
    These forces will be task-organized into a greater variety of
    formations, capable of operating from a more diverse array of ships
    dispersed over wider areas, in order to meet the combatant commanders'
    security cooperation and partner engagement requirements. In the event
    of crises, we will be able to composite these distributed formations
    into larger, cohesive naval formations.
        Expeditionary Force 21 will inform future decisions regarding how
    we will adjust our organizational structure to exploit the value of
    regionally focused forces. A fixed geographic orientation will
    facilitate Marine commanders and their staffs with more frequent
    interactions with theater- and component-level organizations,
    establishing professional bonds and a shared sense of the area's
    challenges and opportunities.
        Expeditionary Force 21 provides the basis for future Navy and
    Marine Corps capability development to meet the challenges of the 21st
    century. The vision for Expeditionary Force 21 is to provide guidance
    for how the Marine Corps will be postured, organized, trained, and
    equipped to fulfill the responsibilities and missions required around
    the world. Through Expeditionary Force 21 we intend to operate from the
    sea and provide the right-sized force in the right place, at the right
    time.
                              vi. the reawakening
        As we drawdown our force and focus the Marine Corps toward the
    future, we see an opportunity to re-set our warfighting institution and
    foster a Reawakening within our Corps. For the past 12 years of war,
    marines have performed heroically on the battlefield. In Iraq and
    Afghanistan, marines have carried on the Corps' legacy of warfighting
    prowess, and every marine should be proud of that accomplishment. But
    as the preponderance of our Marine forces return from Afghanistan and
    we are focusing our efforts on the foundations of discipline,
    faithfulness, self-excellence and concerned leadership that have made
    us our Nation's premier, professional fighting force. This is the time
    to reset and prepare for future battles.
    Focus on Values
        There is no higher honor, nor more sacred responsibility, than
    becoming a U.S. marine. Our record of accomplishment over a decade of
    conflict will be in vain if we do not adhere to our core values. Our
    time honored tradition and culture bears witness to the legions of
    marines who have gone before and who have kept our honor clean. Marine
    Corps leadership has long recognized that when resetting the force
    following sustained combat, marines must embrace change. We are mindful
    of the many challenges that lie ahead; there is much work left to be
    done.
        Our purposeful and broad-range efforts to reset the Corps have to
    be successful. We must retain our focused observance to the basic
    principles and values of our Corps. We refer to them as the soul of our
    Corps. As such, all marines are rededicating themselves to persistent
    discipline; faithful obedience to orders and instructions; concerned
    and engaged leadership; and strict adherence to standards. These iron-
    clad imperatives have defined our Corps for 238 years. As we reset and
    Reawaken the Corps, our focus on the individual soul of the Corps is
    crucial.
        The Marine Corps is fully committed to improve diversity and
    opportunity for the men and women who wear our uniform and we are
    actively seeking innovative solutions to improve our Corps. Over the
    last year, I have personally sought out successful women leaders in the
    corporate sector to help us better understand how they are achieving
    success in the areas of diversity, inclusion and integration of women
    in the workplace. This has paid immeasurable dividends, as we have
    gained a better appreciation for the dynamics on how to address and
    positively affect culture change within our ranks.
    Marine Corps Force Integration
        The Marine Corps continues its deliberate, measured, and
    responsible approach to researching, setting conditions, and
    integrating female marines in ground combat arms military occupational
    specialties (MOS) and units. We welcome the chance to broaden career
    opportunities for all marines that the Secretary of Defense's
    overturning of the direct ground combat assignment rule offers us.
    Beginning in 2012, we assigned qualified female Marine officers and
    staff noncommissioned officers to 21 previously closed combat arms
    battalions in the assault amphibian, tank, artillery, low-altitude air
    defense and combat engineer fields. Since the elimination of the
    assignment policy restriction last year, we began conducting infantry-
    specific research by providing an opportunity for female officer
    volunteers to attend the Infantry Officer Course following completion
    of initial officer training at the Basic School.
        In 2013, we continued this infantry-specific research by providing
    an opportunity for enlisted female Marine volunteers to attend the
    Infantry Training Battalion (ITB) following graduation from recruit
    training. As a result of these assignment and early training
    assessments, the Marine Corps currently offers opportunities to female
    marines in 39 of 42 occupational fields representing over 90 percent of
    our primary individual MOSs and in more than 141,000 positions
    worldwide. Know that your Marine Corps will continue to maintain high
    levels of combat readiness, while integrating female marines into
    previously closed occupational fields and units to the maximum extent
    possible. We will continue to conduct the research and assessment of
    these integration efforts to ensure all marines are provided an
    equitable opportunity for success in their chosen career path.
    Sexual Assault Prevention and Response
        Sexual assault is criminal behavior that has no place in our Corps;
    we are aggressively taking steps to eradicate it. Over the past 2
    years, we have tackled the sexual assault problem head on and have seen
    measurable improvements in three specific areas--prevention, reporting,
    and offender accountability.
        The Marine Corps continues to implement its Sexual Assault
    Prevention and Response Campaign Plan. Launched in June 2012, the SAPR
    Campaign Plan called for large-scale institutional reforms, to include
    the implementation of SAPR training programs on an unprecedented scale
    and frequency. This includes the continued refinement of prevention
    training Corps-wide, while strengthening capabilities for victim care,
    offender accountability, and program assessment. Our reforms have
    yielded many positive results that affect marines on an individual
    level, while steadily transforming the Corps into a leading institution
    in both preventing and responding to this crime. The most promising
    result of the campaign plan thus far has been the continued rise in
    reporting.
        In fiscal year 2013, reports of sexual assault in the Marine Corps
    increased by 86 percent continuing a trend started in fiscal year 2012,
    which saw a 31 percent reporting increase. In addition, 20 percent of
    all fiscal year 2013 reports were made for incidents that occurred
    prior to the victim joining the Corps; 17 percent were made for
    incidents that took place over 1 year ago. With sexual assault being a
    historically under-reported crime, we believe that these trends speak
    directly to the trust and confidence that marines have in their
    immediate commanders and the overall Marine Corps' program. These
    encouraging developments suggest that our efforts are working to
    increase awareness of SAPR resources and to establish a healthy
    environment of respect and dignity where victims feel confident in
    coming forward.
        With this increased sexual assault reporting, I anticipated an
    increased demand within the military justice system. Consistent with
    this prediction, between fiscal year 2012 and fiscal year 2013, the
    number of child and adult sex offense prosecutions increased from 59 to
    119. The number of those cases that were contested increased by over
    160 percent. These numbers reinforce the need to continue building and
    manning a first-rate legal practice in the Marine Corps, comprised of
    quality judge advocates and legal service specialists, that anticipates
    and adapts to evolving legal challenges.
        In 2012, I restructured the model for the delivery of legal
    services in the Marine Corps in order to elevate the practice of law
    and better handle complex cases, such as sexual assaults. This new
    model does two key things: (1) it centralizes supervision of the
    military law practice; and (2) it puts more competent and experienced
    attorneys in charge of the military justice system. Without question,
    the restructuring of our legal community dramatically improved our
    performance in prosecuting, defending, and judging sexual assault and
    other complex trials. I am committed to reinforcing the success gained
    by this reorganization.
        We are continuing to evaluate and assess the new demands placed on
    our military justice system and our legal community. These include the
    creation and expansion of the Victims' Legal Counsel Organization and
    the extension of the requirement to provide military justice experts to
    the Office of Military Commissions. To meet these increasing demands
    and new legislative initiatives affecting our justice system, I have
    directed an internal review of our retention and assignment policies to
    ensure we can continue to operate a first class military justice
    system. This review will have two goals. In the short term, we must
    ensure we have a sufficient number of qualified judge advocates to
    confront the immediate requirements. In the long term, we must ensure
    that judge advocates serve in assignments that will maximize their
    military justice expertise, while maintaining their credibility and
    skills as unrestricted Marine officers, to include operational law and
    traditional Marine Corps leadership assignments.
    Recruiting and Retaining High Quality People
        We make marines, win battles, and return quality citizens back to
    their homes across America, citizens who, once transformed, will be
    marines for life. Your Corps must be comprised of the best and
    brightest of America's youth. To operate and succeed in volatile and
    complex environments, marines must be physically fit, morally strong,
    and possess the intelligence required to make good decisions and
    operate advanced weapon systems. It is a complex and ever-evolving
    profession.
        The Marine Corps utilizes a variety of officer and enlisted
    recruiting processes that stress high mental, moral, and physical
    standards. Additionally, all processes are continuously evaluated and
    improved to ensure that recruits meet or exceed the highest standards
    possible. Retaining the best and most qualified marines is accomplished
    through a competitive career designation process for officers, and a
    thorough evaluation process for enlisted marines, both of which are
    designed to measure, analyze, and compare our marines' performance,
    leadership and accomplishments.
    Civilian Marines
        Our civilian marines serve alongside our marines all around the
    world. Our civilian marine workforce remains the leanest of all
    Services with a ratio of 1 civilian to every 10 Active Duty marines
    (1:10). Additionally, our civilian labor represents less than 5 percent
    of the Marine Corps' total operations and maintenance budget. More than
    95 percent of our civilians are located outside the Pentagon at our
    bases, stations, depots and installations. Civilian marines provide
    stability in our training and programs when our marines rotate between
    units, demonstrating that our ``best value'' for the defense dollar
    applies to the total force.
        The Marine Corps supports measures that enhance consistency,
    efficiency and cost effectiveness of our workforce. Since 2009, we have
    restrained growth by prioritizing civilian workforce requirements.
    Additionally, we have realigned resources to retain an affordable and
    efficient workforce. In reaction to Defense Departmental reductions, we
    stood up an Executive Steering Group to determine how to minimize
    stress to our workforce. As we move forward we will continue to keep
    faith with our all-volunteer force of Federal civilians.
                                  vii. summary
        Marines are key components to the range of military missions our
    national security demands. We are proud of our reputation for frugality
    and remain one of the best values for the defense dollar. In these
    times of budget austerity, the Nation continues to hold high
    expectations of its Marine Corps, and our stewardship of taxpayer
    dollars. The Marine Corps will continue to meet the needs of the
    combatant commanders as a strategically mobile force optimized for
    forward-presence, and crisis response.
        As we continue to work with Congress, the Department of the Navy,
    and the Department of Defense, your Marine Corps remains focused on
    today's fight and the marines in harm's way. The U.S. Marine Corps will
    remain the Nation's premier crisis response force. We will remain most
    ready, when the Nation is least ready . . . always faithful to our
    marines, sailors, and families.

        Chairman Levin. Thank you very much, General Amos.
        Let's try 7-minutes on our first round.
        Let me ask both of you, Admiral and General, about the
    budget request, which includes a number of personnel-related
    proposals which would slow the growth of personnel costs.
    Included in that is a 1 percent pay raise for most military
    personnel, which is lower than the currently projected 1.8
    percent that would take effect under current law. It includes a
    1-year pay freeze for general and flag officers and a slight
    reduction in the growth of the housing allowance. Over time, it
    has a phased reduction by about $1 billion of the annual direct
    subsidy provided to military commissaries, which is down from
    the current annual subsidy of about $1.4 billion, and some
    changes in the TRICARE program.
        DOD has testified that the savings that are achieved by
    these proposals, which are estimated by DOD to be a little over
    $2 billion in fiscal year 2015--those savings would be used to
    invest in modernization and readiness. Admiral and General, let
    me ask you, do you agree with these proposals?
        Admiral Greenert. Mr. Chairman, I agree with those
    proposals.
        Chairman Levin. Okay.
        General?
        General Amos. Mr. Chairman, I do. I completely do.
        Chairman Levin. Can you tell us why?
        Admiral Greenert. Mr. Chairman, for me, I think it's about
    balance. I ask our folks--we spent a lot of time talking to our
    folks--``How is your compensation?'' They say, ``My
    compensation is good, but you can't just pay me and keep
    running me into the ground.'' Operations tempo (OPTEMPO) is
    high, and when I put the discussion together, their quality of
    work is out of balance with their quality of life and
    compensation. What we need to do in the Navy is, we need to
    improve the amount of spare parts they have: the gaps at sea,
    the training, personal and unit. We need to do more for their
    training courses.
        For me, Mr. Chairman, it's about balancing the compensation
    they have with the environment that they work in. All the money
    that we would garner--$123 million projected from this--would
    go into exactly that, to improve their quality of work, where
    they work, day in and day out, and train and become better
    sailors.
        Chairman Levin. Thank you.
        General Amos?
        General Amos. Mr. Chairman, today, the latest figure is 63
    cents of every $1 that Congress gives the U.S. Marine Corps
    goes to pay some form of compensation. That leaves me a small
    amount to modernize the Marine Corps, to pay for training, to
    educate my marines, pay for fuel, ammunition, and all that.
    That projected cost will only increase over the FYDP. If
    sequestration stays in effect, it will continue to increase as
    it edges up.
        For me, as I travel around the Marine Corps, the marines
    are not complaining about their pay. I make no apology for the
    fact that they've been well-compensated for and well-paid for,
    for the last 12 years, because quite frankly they've shouldered
    a pretty heavy burden for America and they deserve to be paid
    for accordingly. But, right now we are doing well, sir. If we
    don't arrest the increase in cost, in things like TRICARE and
    things like pay raises and basic allowance for housing, none of
    these are we trying to take money away from marines. What we're
    trying to do is just lower the slope of growth so that we can
    get this under control. Like Admiral Greenert stated, sir, it's
    my intention to take that money and plow that back into the
    U.S. Marine Corps for things like quality of life.
        Chairman Levin. Okay, thank you.
        Secretary, the President's budget, relative to the question
    of the George Washington, says that it continues to support a
    Navy fleet which includes 11 aircraft carriers, but the budget
    and the FYDP include a plan to retire, rather than to refuel,
    the George Washington. To follow through on the 11-carrier
    fleet, the administration would have to add almost $4 billion
    to the budget and the FYDP to refuel and to retain the George
    Washington. Now, if we were to try to restore the refueling
    plan envisioned last year, that would require adding about $770
    million in fiscal year 2015, alone.
        Secretary Hagel testified before the committee earlier this
    month that the administration would modify the FYDP for years
    2016 through 2019 to restore funding for the refueling in order
    to maintain the 11 aircraft carriers in the Navy's fleet if--
    capital ``IF''--they were to receive a clear signal that
    Congress would support DOD's FYDP for those years that include
    $115 billion more than the BCA caps for national defense.
        My first question for you, Mr. Secretary, what signal would
    be sufficient for the administration to restore funding for
    CVN-73, the George Washington refueling overhaul?
        Mr. Mabus. Mr. Chairman, I want to add my thanks, before I
    answer your question, to you and to give you a Bravo Zulu, well
    done, for your years of service and to the sponsor of the USS
    Detroit (LCS-7), Barbara Levin.
        Chairman Levin. Thank you.
        Mr. Mabus. As you pointed out, what we have done in the
    fiscal year 2015 budget is move the decision about the George
    Washington for 1 year. We can move it for a year without
    impacting the schedule, without impacting the cost, and without
    impacting the next carrier that comes along to be refueled. We
    need 11 aircraft carriers, and we are very cognizant of that
    fact. As Admiral Locklear testified about the need for further
    carriers, we need those 11 carriers for the OPTEMPO and for the
    stress that is put on the other carriers, should we lose one.
        What you pointed out was very accurate, in terms of
    restoring the costs. We will submit a budget for fiscal year
    2016 that, according to the initial guidance that we have
    received, will have money for the carrier. It will be dependent
    on Congress, whether or not the funding gets restored in 2016
    and throughout the FYDP, because it is a fairly large bill for
    us to bear, and it probably cannot be done if sequestration
    kicks back in fiscal year 2016.
        Chairman Levin. Just to conclude that then, you need the
    signal during the fiscal year 2016 budget consideration rather
    than during consideration of the fiscal year 2015 budget. Is
    that what I understand you to say?
        Mr. Mabus. We need the decision in 2016.
        Chairman Levin. You need a signal in 2015?
        Mr. Mabus. I think the signal could come either in fiscal
    year 2015 or fiscal year 2016, but a decision will have to be
    made in fiscal year 2016.
        Chairman Levin. Thank you.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Secretary Mabus and Admiral Greenert, the Navy's long-range
    30-year ship acquisition plan calls for a 306-ship Navy. How
    many do we have right now?
        Mr. Mabus. We have 290.
        Senator Inhofe. Okay. If sequestration continues in full
    into 2023, what size of fleet would we see at that time?
        Admiral Greenert. I'd have to get you the 2004 numbers.
        Senator Inhofe. Okay, fine.
        Admiral Greenert. On the back, it's 304 ships.
        Senator Inhofe. For the record, you can go ahead and do
    that.
        [The information referred to follows:]

        Senator Inhofe. Admiral Greenert, with a smaller fleet,
    we're going to see longer deployments, right?
        Admiral Greenert. Yes, sir, we will.
        Senator Inhofe. We've gone through this before,
    historically. In the 1970s we went through this, and to a
    lesser degree, in the 1990s. Is that correct?
        Admiral Greenert. That's correct, sir.
        Senator Inhofe. It's my experience, in going around and
    talking to the kids that are out there, that the deployments
    are just killing the families. It's a real hardship. Do you
    agree with that?
        Admiral Greenert. That's a strong term, but it's definitely
    cost dissatisfiers around, and you're right, there.
        Senator Inhofe. Maybe I'm getting a different reading than
    some of the uniforms might get, but I think it is something
    that's really serious.
        It seems to me that if you're building the Ford-class
    aircraft carrier every 5 years, it would only support a 10-
    aircraft carrier deployable force. I think that's right. Do you
    think that's right?
        Admiral Greenert. No, sir. If we keep the CVN-73, we'll
    build to 11 aircraft carriers.
        Senator Inhofe. When?
        Admiral Greenert. When the Ford's delivered, that would get
    us to 11.
        Senator Inhofe. About when?
        Admiral Greenert. Oh, I'm sorry. March 2016.
        Senator Inhofe. Okay. Actually, the dispensation from the
    law that requires 11 is good until 2015, so you're satisfied
    that that's going to happen?
        Admiral Greenert. I'm satisfied that in March 2016, we'll
    have delivery of the Ford, yes, sir.
        Senator Inhofe. Okay.
        Secretary Mabus, in light of the civilian personnel hiring
    freezes and furloughs for fiscal year 2014--now, I know
    something about this because while we don't have any--our depot
    is an Air Logistics Center (ALC) at Tinker--we had 15,000 that
    were affected by that. I know what the furloughs do. Are the
    impacts similar on the shipyards and aviation depots as they
    were in my State of Oklahoma?
        Mr. Mabus. We were able to exempt most of the shipyard
    workers from the furloughs, and some of the aviation depot
    workers, but certainly not all of them. There was an impact.
    There was an impact across the entire civilian workforce, to
    include the people that design our ships.
        Senator Inhofe. Now, how many of those actually had to take
    furloughs, of the numbers that you have?
        Mr. Mabus. We were able to exempt about 20 percent of our
    civilians.
        Senator Inhofe. You were able to shorten some of those
    furloughs also, as we were.
        Mr. Mabus. Yes.
        Senator Inhofe. Yes, okay.
        Yesterday at a hearing--I was not there, but I looked at
    this chart from the hearing. It shows the problem that we're
    having right now is in the older and more experienced people.
    This chart shows that it's skyrocketing, the number of
    workforce with experience from 0 to 9 years, and then it's
    dropping precipitously in 30 years and over. Are you familiar
    with that chart? Were you in the hearing of the Subcommittee on
    Readiness and Management Support yesterday?
        Mr. Mabus. No, sir, I was not.
        Senator Inhofe. Oh, okay. But have you seen this chart?
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Mabus. I'm aware of the trend.
        Senator Inhofe. You're aware of the problems.
        What kind of a problem is this? Because you're losing your
    experienced personnel. We went through this back in the 1990s
    when we went from 8 shipyards with 70,000 personnel down to 4
    shipyards with 20,000 personnel at the same time you're losing
    your most experienced personnel. That's happening today, isn't
    it?
        Mr. Mabus. It is happening today and I think it's the thing
    you pointed out about the 1990s. That's why we're losing so
    many people today. They're reaching retirement age now.
        Senator Inhofe. Yes, I understand that.
        General Amos, regardless of what happens with
    sequestration, the Marine Corps is going to be required to
    reduce its end strength from 182,000 to 175,000. In terms of
    battalions, that means you're dropping from 21 to 20. Is that
    correct?
        General Amos. No, sir, that's not exactly correct.
        Senator Inhofe. From 21 from 28.
        General Amos. No, sir. We started at 202,000, we're at
    194,000, about 193,000 today. We're on our way to 175,000. At
    2002, we had 27 infantry battalions. When we go to full
    sequestration, at 175,000, we'll have 21 infantry battalions.
        Senator Inhofe. Okay. Now, the statement you made a minute
    ago--and it's typical of a marine's statement, and I agree with
    it, and I'm very proud of you--you say we won't do less with
    less, we will continue to do it. I know you will. But you will
    also be assuming more risk. Isn't that correct?
        General Amos. Senator, that's absolutely correct.
        Senator Inhofe. Yes. Risk equals lives, doesn't it?
        General Amos. Risk equals a whole bunch of things, unit
    readiness, but at the end of the day, it could result in
    increased casualties.
        Senator Inhofe. Okay.
        General Amos, you may have to answer this for the record,
    because I should know this, and I don't. I'm familiar with what
    we went through with the non-line-of-sight (NLOS) cannon and
    that capability in the Army; the Crusader program that was
    canceled during the Bush administration; and the Future Combat
    System (FCS) program that was canceled 5 years ago in this
    administration.
        As you've gone through this thing--and it seems to me it's
    in all of the Services--we get our expectations up, we start
    working on a program, and then it's canceled, and we already
    have an investment in that program. We went through, in the
    Marine Corps, the AAV, then we went through the EFV, then the
    amphibious combat vehicle (ACV), and now, I understand that the
    Marine Corps personnel carrier is going to be taking over in
    some form. I'm not sure what that form is. We don't have time
    to elaborate on that, but can you explain to me what the
    problem is when we have to go through all these programs? That
    isn't your fault, that's a policy that you were handed. Is that
    a problem, when you go through these various developments of
    equipment?
        General Amos. Senator, I am mindful of the time and I'll be
    happy to give you the complete detailed brief for the record.
        I regret that this has been the history of this vehicle. If
    you remember, I appeared before this committee 3 years ago
    along with Secretary Gates, and he said that we had canceled
    that. He canceled it because of cost, he canceled it because of
    reliability. Then what we discovered after that as we really
    got into it, was quite frankly, the EFV ashore, where it was
    going to live most of its life carrying the marines, was
    marginalized with regards to maneuverability and protection.
    This is all the things that we have put in the alchemy as we
    have looked forward over the last 3 years to try to figure out
    what's the best way ahead.
        We can build a high water speed vehicle today but the
    tradeoffs in survivability protection, in maneuverability
    ashore, where it's going to live most of its life, and
    maintainability, are more than I'm willing to pay. What we've
    done is we've changed the paradigm. We've said, ``Okay, the
    requirement for the vehicle to go high water speed from a sea
    base considerably off the shore is we can solve that with a
    connector.'' We're looking inside, organically, to the
    connectors that we currently own, connectors that we're buying
    right now like the joint high speed vessel (JHSV), which will
    go 30, 40, 50 knots in the right sea state, and we can now, buy
    a vehicle that is basically one-third the cost that is easily
    much more maneuverable and safe ashore. That's the direction
    we're going. It's a better cost.
        Senator Inhofe. That I do appreciate. For the record, if
    you could elaborate on that, starting through the various
    entities that we've talked about, that would be very helpful
    for us to understand that.
        General Amos. Senator, I'll be happy to.
        [The information referred to follows:]

        The complete detailed brief was submitted to Senator Inhofe on
    March 28, 2014, by the Marine Corps.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Inhofe. Thank you.
        General Amos. Thank you.
        Chairman Levin. Thank you, Senator Inhofe.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        Mr. Secretary, Admiral Greenert, General Amos, thank you
    for your service.
        General Amos, if this is your last appearance, thank you
    for your extraordinary service to the Marine Corps and to the
    Nation, and for your great counsel and advice.
        General Amos. Thank you.
        Senator Reed. Thank you, sir.
        Admiral Greenert, you've said that the number one priority
    of the Navy is to fund the Ohio replacement submarine. Admiral
    John M. Richardson, USN, Director of the Naval Nuclear
    Propulsion Program indicated that there's a delay of at least 6
    months in the reactor core manufacturing because of
    insufficient funding which could throw the whole program into
    disarray. In fact, in your statement you allude to the
    possibility that this will slip. This is not simply a Navy
    issue, because this is the central part of our nuclear triad.
    Could you comment on the status of this program and what we
    have to do to keep it on track?
        Admiral Greenert. We have two departments. We have DOD and
    the Department of Energy (DOE) here that help serve us. DOE is
    the core development, and they need high computing capability
    to do that. We're putting a new-type core in the Ohio so you
    don't have to refuel it. Anyway, we need to reconcile this.
    It's about $150 million, if I'm not mistaken, and the National
    Nuclear Security Administration (NNSA) and DOD have been
    talking about it.
        Senator, in the end, I have to get with Admiral Richardson
    and we have to reconcile this. We will, and we'll come to the
    committee if we need help. The program has to stay on track. We
    have no slack in this program.
        Senator Reed. You can probably make this argument for every
    platform in the military, but this is an issue of our nuclear
    deterrence which is a national security concern that transcends
    the Navy. Since that is the case, is there a possibility that
    resources from DOD could be committed to help you keep this
    program on track? I'll also ask Secretary Mabus to comment.
        Admiral Greenert. Up to a point. But you'll get into a
    situation where the charter, if you will, the mission of DOD,
    you start going outside that and then we would need a nonsecure
    internet protocol router network (NIPRNet) or something, where
    you can cross departments. But we're doing all we can within
    DOD to reprogram from other resources within Admiral
    Richardson's programs. We'll eventually reach a wall, though,
    and we'll have to go to DOE.
        Senator Reed. Mr. Secretary, any comments?
        Mr. Mabus. Senator, to your point, I think it's important
    that we have this conversation, this debate, about how we fund
    the Ohio-class replacement and the strategic deterrent. These
    platforms will be at sea into the 2080s. We're driving the cost
    down, but they're expensive platforms. If it's all paid for out
    of Navy shipbuilding, it will have a very serious and very
    negative effect on the rest of the fleet to include the rest of
    our submarine force, our attack submarines. We have to start
    building the first one in 2021; and sometime between now and
    then I think there needs to be a very serious look at how we
    pay for this.
        Senator Reed. Thank you, Mr. Secretary.
        General Amos, you and your marines are conducting joint
    operations with South Koreans for the first time in a couple of
    years. It raises a question I also raised with Admiral Locklear
    this week, which is the ability to conduct amphibious
    operations in PACOM, specifically.
        Can you give us an update on the capabilities? Admiral
    Locklear indicated to us that he needs more amphibious
    capabilities to carry out his missions in the Pacific.
        General Amos. Senator, the Asia-Pacific area is 62 percent
    of the world's surface area. It's huge. The water, it's a
    maritime theater. For us, the amphibious ships, those three
    types--the large deck, the landing platform dock and the
    landing ship dock--are the Swiss Army knives of the naval force
    for American diplomacy there. That's what marines live on. We
    have one marine amphibious ready group (ARG) forward deployed
    in the Pacific right now, and it's based out of Sasebo, Japan.
    That one has four ships. We use that all of the time. Those are
    the very ships that are being used in part of this operation.
    Every now and then, an ARG/Marine Expeditionary Unit (MEU) will
    come through on its way to the Persian Gulf and swing through
    and participate in the exercises.
        But, quite frankly, in an area that big--and that's part of
    the reason why the Secretary of the Navy and the CNO have
    committed in a couple of years to put another ARG/MEU down in
    the southern part of the Asia-Pacific area so we can move those
    marines around Australia and out of Guam and use it down there.
    Quite frankly, we don't have enough. We know that, sir. We're
    just trying to figure out how we can cut Solomon's baby here
    with the budget. We need more ships out there.
        Senator Reed. A followup question, General, about the
    interconnector--because that was a term that's been used a few
    times. Is that the high-speed platform to deliver from over the
    horizon combat vehicles to the beach? I know the marine AAVs
    that were proposed before were designed to be the high-speed
    approach to the beach and then the tactical on-the-ground
    equipment that you could drive forward. Now you're just looking
    at a platform to get land vehicles to the beach and then
    beyond?
        General Amos. Essentially, that's true, sir. Connectors is
    just a general term we're using for everything for vehicles we
    currently own, like the air-cushioned vehicles (ACU) we have
    right now, the landing craft utility (LCU) that we have in
    service right now. We have JHSVs, as you're aware of. We've
    already commissioned two of them. They're out at sea right now.
    There's another eight being built. Those will go fast, they
    will haul a lot of marines and vehicles. That gives us the
    ability to be able to maneuver from a sea base that could be
    pushed as far out as perhaps 100 miles because of the enemy
    threat.
        Senator Reed. Right.
        General Amos. What we've done is, we've changed the
    paradigm and the way we've thought, in that we have to swim all
    that way in our ACV. It's impractical now. Can we get it on a
    connector, and can the connector take us in? The answer is yes.
        Senator Reed. Okay.
        Just a final point, because my time is expiring. We talked
    about the Ohio-class, and I think all of this--not only our
    attack submarine fleet but the ballistic missile fleet--has to
    be considered in the context of very sophisticated Russian
    submarines that are coming into the Service, and increasingly
    sophisticated and increasingly numerical Chinese submarines. We
    still have a distinct advantage underwater, but that advantage
    is not as great as it was previously. Admiral, do you concur?
        Admiral Greenert. We own the undersea domain, Senator, but
    we have to maintain it. I'm very comfortable, and I have pretty
    good empirical data, and we can give you a briefing, if you'd
    like.
        Senator Reed. Yes, I would like to receive a briefing on
    it, thank you.
        [The information referred to follows:]

        Senator Reed received a classified briefing on May 6, 2014.

        Chairman Levin. Thank you very much, Senator Reed.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        I thank the witnesses.
        General Amos, thank you for your outstanding service over
    many years. You join other great leaders who preceded you as
    the Commandant, and it is noteworthy that you served as the
    first marine aviator to be Commandant of the Marine Corps. I
    thank you for your outstanding service.
        You made two comments in your opening remarks that struck
    me. One was the 62 cents out of every $1 now spent on the
    Marine Corps is devoted to personnel and entitlement benefits.
    It reminds me of the words of Secretary Gates, who said these
    costs are ``eating us alive.'' I'd be interested in what you
    think we ought to do in that area, given the benefit of your
    experience.
        The other comment, you mentioned the brave sacrifice of
    marines at the battle of Fallujah. Second battle of Fallujah,
    96 marines and soldiers died, 600 injured. Today, the black
    flags of al Qaeda fly over the city of Fallujah. It's rather
    difficult to explain to those family members exactly what
    happened since they made that sacrifice. I believe it was a
    failure of American policy towards Iraq. But, whatever caused
    it, it's really tragic.
        As you answer the question about the personnel costs, I
    can't let this opportunity go by without asking you about the
    F-35 and how you gauge its progress and how it's doing.
        General?
        General Amos. Senator, first of all, on the 60-plus cents
    of compensation for our manpower, I want to go on record as
    saying that's not a function of marines costing more per
    person. I can prove this--we actually cost less. It's just a
    function of our proportion of the budget. That's why our costs
    are up there. That's the first point.
        The second point is, I think there's a balance as we look
    forward. There's a commission that's looking at retirement, and
    we're drawing a force down, and we're rebalancing, and we're
    under sequestration--so there's pressure to cut services, and
    these types of things across the Corps. I think there's a
    balance when we start looking at compensation with regards to
    how much the market will bear.
        The proposal by the Joint Chiefs, really over the last 2
    years, we think it's modest, we think it's balanced, we think
    it's reasonable. That's shallowing the pay raise down to 1
    percent, no pay raise for general officers and flag officers.
    We've tried to come up with a simplified TRICARE program that
    becomes affordable, that hasn't had a pay increase since 1996.
    That's the only healthcare company in America, I think, that
    can boast that.
        Bachelor allowance for housing: can we lower the ramp of
    that? It typically goes up somewhere between 2 to 3 percent a
    year. So do rents. Can we lower that? There's simply things
    like the commissary. The last thing I want to see is the
    commissaries going away from our marines. That's a huge
    satisfier or dissatisfier. Can we get it so it doesn't have to
    be subsidized like the exchanges have? You remember from the
    days when they were subsidized. I think that's reasonable.
        It's a reasonable approach, trying to lower our costs, our
    compensation costs, in addition to those things. I paid $152
    million in unemployment last year. I have all these things.
    We're just trying to get it under control, a right balance.
        Regarding the F-35, sir, I'll tell you we have 17 airplanes
    at Yuma out in our 1st fleet squadron. They're flying well,
    they're doing well. We have another 14 at our training squadron
    at Eglin Air Force Base. We have 55 airplanes under contract,
    not delivered, but under contract. The airplane for us is
    progressing well. We still are working towards a July/August
    2015 initial operation capability (IOC). Mindful of the
    Government Accountability Office report that came out on March
    24, we work closely with the Joint Program Office, the program
    officer, program manager. We have a reasonably okay level of
    optimism that the software for our version will make the 2015
    IOC. We have bulkhead problems that we've discovered. Probably
    in the next 60 days they'll have the fixes for those things and
    we'll figure out what we're going to do.
        Sir, I'm optimistic about it, but I'm mindful of it. I'm
    paying very close attention to it.
        Senator McCain. Thank you for your stewardship of the
    program. I must say, it's come a long way.
        Secretary Mabus, it's not often that I am surprised, but I
    must say that I was taken aback when I heard that the Tomahawk
    missile program--now you're planning to cut it so that the
    number would drop to 196 last year, 100 in 2015, and 0 in 2016,
    to be replaced by a ``next-generation land attack weapon''
    whatever that means.
        Mr. Secretary, I would remind you, in the Libya exercise we
    expended 220 Tomahawks. As far as I know, we've never been
    briefed on any follow-on weapon that would replace the
    Tomahawk. People like Seth Cropsey and others at the Hudson
    Institute say it doesn't make sense, it really moves the United
    States away from a position of influence in military dominance.
    Cropsey went on to say they couldn't find a better way than
    depriving the U.S. fleet of Tomahawks. It's breathtaking.
        I think we have ample testimony that it takes years to
    develop a new weapon. Senator Inhofe talked about all the
    programs that have been canceled. Now we're going to have zero
    Tomahawks in 2016 and begin on a follow-up weapon? I'd be very
    interested in the rationale for this decision.
        Mr. Mabus. Senator, the supply of Tomahawks which we have
    today--and you're absolutely correct about the numbers that we
    used in Libya--that have been manufactured are sufficient to
    carry us----
        Senator McCain. Which is how many?
        Mr. Mabus. Which is about 4,000 Tomahawks in the arsenal
    today, which will carry us--when you add the Tomahawks that we
    plan to buy in 2015--through any eventuality that we could
    foresee. The follow-on weapon, we are in the analysis of
    alternatives, and we believe that we can get that follow-on
    weapon introduced into the fleet expeditiously, and so we
    certainly, absolutely don't need a gap between the Tomahawk and
    the next weapon.
        I'll be happy to get you a complete briefing on exactly
    where we are on that second weapon.
        Senator McCain. I would like to receive a briefing on it,
    thank you.
        [The information referred to follows:]

        Senator McCain received a classified briefing on May 15, 2014.

        Senator McCain. I've overused my time but this is really
    rolling the dice, in my view, when we haven't even begun the
    assessment of what that new weapon would look like. I don't
    think there's any doubt about the absolute criticality of a
    weapon like the Tomahawk, without even moving forward, most of
    these weapon systems take as much as a decade to fully develop
    and move into the fleet. I really am surprised, and obviously
    we will have the subject of further hearings, I would think,
    Mr. Chairman, on this particular issue.
        I thank you.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        Admiral Greenert, Secretary Mabus, thank you.
        General Amos, thank you very much for all of your service
    to our country. We're extraordinarily appreciative.
        I want to thank all the soldiers, sailors, airmen, and
    marines around the world for everything they have done.
        Senator Ayotte and I just got back from Afghanistan. This
    past Saturday, we were with General Joseph F. Dunford, Jr.,
    USMC, Commander of the International Security Assistance Force
    and U.S. Forces-Afghanistan. Secretary Mabus, I know you know
    this already--Admiral, General--but your sailors and marines
    are doing extraordinary, just extraordinary work over there.
    From everyone at [Naval Surface Warfare Center] Crane, [Perry,
    IN] they wanted me to let you know how appreciative they are
    for the opportunity to continue to protect our Nation.
        Admiral, when we look at what just happened, the Russians
    just took 51 ships from Ukraine. Russia's navy, in effect, went
    from 280 to 331 ships. I was wondering the coordination that is
    going on now between yourself and the Estonia navy, Latvia
    navy, Lithuania navy, our NATO partners, and our European
    partners. Are their navies chipping in? Has there been an
    increased look at what is going on in that region?
        Admiral Greenert. This much I can tell you, Senator. I've
    communicated with my colleagues--Romania, Bulgaria, Poland, the
    NATO nations--to reassure them, ``Hey, we're all in this
    together, okay?'' That is number one.
        Number two is that our exercise program remains on track,
    that we have with them staff talks. It's such that we're
    reassuring our allies, Senator. Let me be clear with that.
        Senator Donnelly. When you look at the Russian navy,
    they're looking at bases in Cuba, Venezuela, Nicaragua. They've
    visited South and Central America. Iran has sent a naval ship
    into the Atlantic. How are we responding to these encroachments
    into our hemisphere?
        Admiral Greenert. If you look at the chart there today, the
    places that they have chosen are not places where you can
    repair ships. You can't do much, really. Many of them are not
    deep water. The kinds of negotiations that they're doing, maybe
    you pull in and you get some fuel, which everywhere you see a
    square on that chart, we can repair, refuel, refresh. I keep my
    eye on it. They are in this hemisphere. But it is not unusual
    to be able to go in, anybody that wants to do business. They'll
    sell you fuel, and they'll let you buy some food and some minor
    things. But, can you do any reasonably relevant repair to
    weapon systems in that? That's what we've really have to keep
    our eye on. I don't see that yet, other than Cuba, of course.
        Senator Donnelly. After what has happened in Crimea, the
    things you've looked at there, the other challenges that we
    have, have those things made it more difficult to rebalance to
    the Pacific? We know you're stretched. Is there a point where
    the rubberband snaps, in effect?
        Admiral Greenert. There's a point to where the rubberband
    snaps. If we go to BCA caps and we continue on that track, then
    I think the rubberband's pretty darn close to snapping, if you
    will.
        But today, you see in that chart, we have 21 ships in the
    U.S. European Command (EUCOM). I'm reasonably comfortable
    there. In fact, we're building there. We sent the USS Donald
    Cook (DDG-78), the Aegis destroyer--she's now based in Rota,
    Spain--and we'll send the USS Ross (DDG-71), another one this
    summer, two more next year. We'll have four DDGs right there,
    in addition to the little squares there. Those are places where
    our ships operate out of, and we're moving other ships forward
    as part of our strategy, including EUCOM.
        We need to keep our eye on it and have the right ships at
    the right place.
        Senator Donnelly. As you look at the rebalance to the
    Pacific, in regards to the Chinese--looking at last year, this
    year, and next year--are we in the same or better position this
    year, as opposed to the Chinese? As we look ahead over the next
    couple of years, how would you characterize that balance
    between the two of us?
        Admiral Greenert. When I appeared before you with
    President's budget for fiscal year 2014, and we talked about
    the DSG, one of the things I laid out was to assure joint
    assured access. Some call it anti-access/area denial or also
    called A2/AD. I would tell you, yes, I feel very comfortable we
    can keep pace and stay ahead where we're needed to. We're
    slipping, even with President's budget for fiscal year 2015. We
    go to BCA gaps, we fall behind, and I'm very concerned at our
    ability to project power in an area against an advanced
    adversary with those, if you will, advanced capabilities. We're
    slipping behind them, and now we need to prioritize. But I
    worry about that, Senator.
        Senator Donnelly. General Amos, you have served us in
    extraordinary ways, this country. As you look at the Marine
    Corps and looking forward, and the challenges we've had in
    Afghanistan, which you have met so well, the challenges we've
    had in Iraq, same thing--when you look at the things that
    concern you the greatest for the future of the Marine Corps,
    for the future of the success of our Armed Forces, what would
    they be?
        General Amos. Senator, we spent a lot of time with my staff
    working on that, because it covers everything from sexual
    assault, to abuse, to hazing, to this kind of bad behavior.
    When you try to look at all that, how do we take some shameful
    behavior that has perhaps embarrassed the Marine Corps, how do
    we correct that in light of 12 years singularly focused on
    combat?
        In my opening comment, I talked about reawakening the soul
    of the Marine Corps. I'm not trying to be corny here, but as we
    go back in history, what was it that caused the marines to do
    so well when they crossed the border in March 2003? I remind
    all the young marines, there were 70,000 marines there, and
    there were probably less than 500 of that 70,000 that had ever
    been in combat before. When we crossed the beach on August 7,
    1942, in Guadalcanal, with the exception of just a few leaders,
    almost everybody was green. Same thing in the wheat fields of
    Belleau Wood, France, when the 5th and 6th Marines charged the
    machinegun nest and turned the tide of World War I.
        It's discipline. It's adherence to standards. It's engaged
    leadership, leadership where marines, when we come home, the
    staff noncommissioned officers and the officers actually care
    about what that young lance corporal is thinking, what he's
    going to do on the weekend. It will affect all our behavior.
    Everything from sexual assaults to alcohol abuse to suicides.
    We have to go back to the basic fundamentals that have kept our
    Marine Corps what it is for 238\1/2\ years.
        I know that may sound corny, but it really is the truth.
    The marines get it, they understand it. That's where we are.
    I'm not concerned about, ``Will we be courageous in the future?
    Will we work through the budgets and the programmatics?'' We
    will. We'll figure it out, and we'll continue to do the
    Nation's bidding.
        But, we don't want to lose the soul of us, the character of
    us. We haven't lost it, but if we can just reaffirm it, then a
    lot of these really important things that go on in the life of
    a marine, that, quite frankly, bring discredit to us, I think
    we can help ourselves with this.
        I don't know whether that satisfies your question or not.
        Senator Donnelly. It's very eloquent and very on target.
        Thank you so much, to all of you, for your service.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator Sessions.
        Senator Sessions. Thank you to all of you for your
    leadership and service to the country.
        Secretary Mabus, I think you're doing an excellent job in a
    very difficult time.
        Admiral Greenert, thank you for your service.
        General Amos, thank you for your long career. I was in
    Fallujah not long after that great battle. I talked to the
    marine leaders. It was fabulously courageous service, door-to-
    door, that they fought, and it is a battle that will rank high
    in the history of the Marine Corps. Thank you for your long
    service.
        Secretary Mabus, and all of us, I think it's like as they
    say, ships in the night, when we're talking about budget and
    numbers. All of us need to begin to get our heads together on
    the challenge we face. I am worried about it. I'm worried about
    where we are. I intend to continue to dig into this and get a
    better handle on where we are.
        The projections and suggestions that we're going to have
    big cuts as a result of the sequester is not exactly correct.
    Secretary of Defense Chuck Hagel said that DOD's budget cut was
    $37 billion last year because of sequestration, and, unless
    Congress changes the law, sequestration will cut another $50
    billion, starting--each year--in fiscal year 2016. That's not
    exactly right, colleagues. It's not right. It's from the
    President's budget, what he proposed. They're asking for $115
    billion above the BCA spending levels over the next 4 years,
    which is complicated by the fact that the Democratic leadership
    has made absolutely clear, not one dime more will go to the
    defense budget that's not matched by an equal expenditure for
    non-defense discretionary spending. You're talking about $230
    billion more, over the next 4 years, above the BCA that the
    President signed and we agreed to above the BBA that helped. We
    have a problem with our numbers. Fundamentally, based on what
    we spent, we'll have 2 years more of flat budgets with an
    increase of about 2.5 percent, or $13 billion a year through
    2021.
        Whether you can get by on that, I don't know. But we can't
    expect big increases in the current climate, in my opinion.
        Second, colleagues, I worry that we are sending a message
    that we're not going to be an effective fighting force in the
    future because of the reduction in spending and flat spending.
    I think we are going to have a difficult challenge, but we
    don't need to over-tell the world that we are on some sort of
    major retreat from our responsibilities. Hopefully, that won't
    happen.
        I just wanted to share that perspective. We're all going to
    have to wrestle with this. I don't think we're going to see
    another $115 billion over the next 4 years for DOD.
        Secretary Mabus, maybe you'd like to comment on that.
        Mr. Mabus. We share the concern, Senator, and we appreciate
    what Congress has done in 2014 and 2015. It's given us some
    stability. It's given us some certainty. It's given us an
    ability to plan. But, even that was significantly below the
    President's budget for fiscal year 2014 budget request for 2014
    and 2015. Our concern is, if it goes back to the sequester
    levels in 2016 and beyond, both the CNO and the Commandant of
    the Marine Corps have spelled out some of the impacts that will
    have on readiness, platforms, training, steaming, flying, and
    on doing what you said, which is being the only global Navy and
    Marine Corps in the world, and meeting our obligations to this
    country and to the world under the DSG and also under the QDR.
        Those are serious concerns. Those are concerns that are
    right upon us, because 2016 is only a little more than a year
    away.
        Senator Sessions. We'll talk about all that some more. I
    just wanted to share with you that the expectation that we're
    going to demand that we have to have dollar-for-dollar
    increases in non-defense as to defense, is not justifiable.
    We're not going to be able to do that, number one. I'm not sure
    how much more we can go back and bust the budget. The
    President's budget that he submitted to us, that you talk about
    blithely here, is in direct violation of the BBA he signed just
    a few weeks ago, and Congress voted to help the military. We're
    forced to double that for non-defense. I just would tell you,
    that's a problem. It's not going to be easy for us to solve,
    and we all have a responsibility to do the right thing.
        Admiral Greenert, you talked about the Navy's requirement.
    I just want to briefly ask you about the LCS. The Navy has that
    as a requirement, does it not? That's a formal process. They
    have 52 of those ships, and you established 52 as the Navy's
    requirement for that ship?
        Admiral Greenert. Yes, sir. It fulfills the requirement we
    refer to as the small surface combatant. I need 52 ships.
    Today, I have 26 ships.
        Senator Sessions. We have that ship moving forward now.
    Secretary Mabus, I know you're alert and watch this project.
    But, isn't it correct that the ship is under the cost cap that
    Congress has set and that it seems to be moving forward, let us
    say, at cruising speed now?
        Mr. Mabus. It's moving forward at its high cruising speed,
    Senator. Yes, it's under the congressional cost cap. One of the
    things that industry and Congress and the American people ought
    to be very proud of is the fact that the cost has been driven
    down on this ship from over $750 million for the first ones to
    about $350 million for the ones today.
        Senator Sessions. Briefly, Congress asked the Navy to look
    for a faster ship, a more flexible ship, a ship that uses a
    substantially smaller crew as this one does, a fuel-efficient
    ship, one that can be utilized for a variety of activities at a
    reasonably lower cost. Secretary Mabus, do you believe this
    ship is meeting those demands of Congress?
        Mr. Mabus. Senator, the ships that we have had delivered in
    the first deployment of LCS-1 are meeting those requirements.
        Senator Sessions. Thank you.
        Chairman Levin. Thank you very much, Senator Sessions.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman.
        Thank you, to all of our witnesses today. I want to echo
    the comments, especially, General Amos, to you. Congratulations
    on your wonderful service. It's been a treat to work together
    with you.
        Just picking up on Senator Sessions, I don't view the
    President's budget submission to be contrary to the BBA, which
    I worked on and supported. The submission for 2015 is in accord
    with what we did in 2015. We were able to provide 2 years, 2014
    and 2015, partial sequester relief. But, I view it as, we've
    reserved for another day the discussion about sequester relief
    in the out-years. I have been impressed that the President's
    budget submission does not say ``fiscal year 2016 and forward,
    eliminate the sequester.'' What the President's budget
    submission says is, ``years 2016 and forward, eliminate half
    the sequester.''
        DOD, under the President's budget submission, will absorb
    50 percent of the sequester cuts over the length of the
    sequester. But, you've asked for relief from the other 50
    percent. None of us took oaths of office to the sequester; we
    took oaths of office to try to do the best thing for the
    country. I think many of us are going to reserve our right to
    try to battle for additional sequester relief in 2016 and
    forward. That's really what's before us.
        Secretary Mabus, I want to talk about this issue that the
    Chairman began with you on the signal to send. Because this is
    somewhat about timing--your timing in DOD and doing budgets,
    and our timing in Congress. We've done a 2-year budget now for
    the first time. It's generally a good thing. But here's the
    challenge. By statute, we won't have to have a budget done
    until April 2015. That budget will be a top-line budget; it
    won't even be a line-item budget. We'll do a National Defense
    Authorization Act (NDAA) in May or June 2015. There will be an
    appropriations bill sometime after that.
        You have to give a budget to the President and work with
    the President on a fiscal year 2016 budget submission that he's
    required by law to deliver to Congress in February 2016.
        I gather you need some kind of a signal, about what fiscal
    year 2016 will look like from this committee in order to
    present your budget to the President so that the President can
    give us a budget in February. But we don't do a budget until
    April.
        On this question of, ``When do you need a signal if you're
    to do things like the statutory requirement of the 11-carrier
    Navy?''--my sense is, you need a signal as you're presenting
    the President material about the fiscal year 2016 budget
    submission, at least a signal of some kind. Am I reading that
    wrong?
        Mr. Mabus. Senator, you're reading that correctly. The
    earlier the signal could come, obviously the better for us.
    We're already working on the 2016 budget.
        Senator Kaine. If we give you no signal, and then we get
    into April 2015 and start talking about what we're going to do
    in fiscal year 2016, I don't know how you could present a
    budget to the President, and have the President present one to
    us that assumes a 2016 budget that would support 11 carriers,
    that would support the end strength that you foresee for the
    Marine Corps, for the Army, for the National Guard. We really
    need to give you a signal sooner than next calendar year, don't
    we?
        Mr. Mabus. It would be difficult the later that signal
    comes. The earlier, as I said, the better, and the easier it is
    to do the budget workup.
        As I told Chairman Levin, the only thing we've done on the
    carrier is to give that extra year for such a decision and such
    a signal or a notion of where we're going to be in 2016 and in
    the rest of the 2016 FYDP.
        Senator Kaine. But, separate from budgets, strategically, I
    gather there is no dispute within the DOD, the Navy family, the
    White House, in terms of the 11-carrier strategy, which is
    statutory but also a strategy that is desired and preferred, in
    terms of America's maritime defense posture, correct?
        Mr. Mabus. It is a strategy that is very desired and very
    preferred.
        Senator Kaine. General Amos, quickly, your discussion with
    Senator Donnelly, I thought, was an interesting one, because
    I've really grappled too, with this issue of--what is the
    stress on the force, the Marine Corps or any force, from 12
    years of war? We had a 7-year war, the Revolutionary War; we
    had a war of 5 to 10 years in Vietnam; but, from late 2001
    until now into 2014, we've not had a 13-year period where we've
    been waging two wars simultaneously.
        There's a lot of deferred maintenance. I look at it as
    deferred maintenance issues, the kind you talk about. There are
    the character issues, the ``returning to roots issues.'' It's
    hard to repair your roof in the middle of the rainstorm.
    Nobody's up on the roof trying to patch it when it's pouring--
    you wait until the rain stops. Then you go up and try to patch
    your roof. The whole series of issues that you mentioned, very
    important ones--military sexual assault, suicide, other kinds
    of behaviors that may be treated in a cavalier fashion that
    shouldn't be the pace of an OPTEMPO for 13 or 14 years. It
    breeds conditions where that's more likely, and we're moving
    into a phase now where we have to get into those deferred
    maintenance projects. Is that how you see the task before our
    organization right now?
        General Amos. Senator, two aspects of that.
        Number one is the readiness that you talk about. We have
    taken money, we've made purposeful decisions to take money out
    of home-station readiness--training ranges, building some
    facilities, and those types of things, programs--and moved it
    to unit readiness. Readiness of our units that are deployed,
    readiness of our units that are fixing to deploy, is at the
    highest state. The readiness of those home-station units that
    are back there, that are a long ways away from deploying, are
    beginning to erode. My Assistant Commandant testified to that
    yesterday at this full committee's Subcommittee on Readiness
    and Management Support hearing. That is a concern of mine, and
    that's mostly parts, and artisans to be able to fix things, the
    people that will maintain it. But those are things that are
    eroding--the things at home station, with regards to facilities
    and maintenance. I've been given $6 billion, over the last
    probably 6 or 7 years, to upgrade barracks. We built well over
    100 new barracks in the Marine Corps quality of life, and those
    are better than they've ever been since I've been a marine.
    But, they'll begin to erode. Our training ranges will begin to
    erode.
        I am concerned about that. I have a near-term requirement
    for the Nation, and that is to be America's crisis response
    force. We are meeting that. I want to be clear that we will
    continue to meet that. We're eating the seed corn back here.
        With regards to the marines themselves, 52 percent of
    193,000-plus marines that are on Active Duty today, are on
    their first enlistment, which means the bulk of the Corps are
    somewhere between 18 and probably 22-23 years old. They joined
    the Marine Corps to deploy. They joined the Marine Corps to go
    from one thing, reset, wash their clothes, repack their gear,
    and then go again. When I traveled around in Afghanistan--there
    is a classic case--it could be 110 degrees in Afghanistan, and
    you're talking to marines that haven't had a bath in a month;
    they're just eating tray rations or T-rats, if they're lucky.
    You say, ``Okay, devil dogs, what have you got?'' They'll go,
    ``Sir, when am I going to get to deploy again?''
        The morale of the marines, themselves, are high. We don't
    look at the stress of the multiple deployments and go, ``Oh,
    God, this is terrible.'' We're not doing that. Marines don't do
    that. They actually want to deploy.
        This budget, this 175,000 Marine Corps that we are building
    will be on a 1:2 dwell, which is what we've been on now for
    about the last 5 to 6 years. The young marines like that,
    because they want to go to Western Pacific (WESTPAC),
    Australia, Africa, or Europe. It's a little bit harder on what
    we call the career force, the majors and the gunnery sergeants.
    There is going to be stress there, sir, but the marines are a
    happy lot right now.
        The equipment piece, the sustainment back for those that
    are not to deploy, that worries me. That's what concerns me
    probably the most.
        Senator Kaine. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Kaine.
        Senator Wicker.
        Senator Wicker. Thank you, Mr. Chairman.
        To all of our witnesses, thank you for your service, and
    thank you for your testimony.
        I have a letter here that my colleagues and I received from
    a group of 20 retired Marine Corps generals, including former
    Commandant of the Marine Corps, General James T. Conway, and
    former U.S. Central Command (CENTCOM) Commander, General James
    N. Mattis. The letter from this distinguished group highlights
    concerns about our current 30-year shipbuilding plan. We've
    talked about that earlier today in the testimony.
        I look forward to receiving your plan next month. Not
    having a stable and predictable shipbuilding plan creates a
    ripple effect that extends beyond the demise of our defense
    industrial bases.
        Mr. Chairman, I ask that this letter be entered into the
    record at this point.
        Chairman Levin. It will be.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Wicker. Let me quote from it. ``Experience over the
    past decade demonstrates that the demand for amphibious
    warships will not decrease. These ``Swiss Army Knives'' of the
    sea have proven to be much more than just troop transports.
    Their versatility and interoperability with our Allies have
    repeatedly caused them to serve as the cornerstone of America's
    visible forward presence, projecting metered power and response
    to crises ranging from noncombatant evacuations and
    humanitarian assistance to direct military intervention.''
        Our PACOM commander, Admiral Samuel J. Locklear III,
    testified before our full committee on Tuesday. He stated that
    we have insufficient amphibious ships to meet the current
    global demand.
        This is a concern to me and other members of the committee.
    Here's my question to you three gentlemen, and we'll start with
    General Amos and go down the table. In this fiscal austere
    environment, if sequestration-level cuts to defense spending
    persist beyond 2016, what sort of gap will these cuts create
    between America's Asia rebalance strategy and maintaining a
    presence in Europe? What gaps are we seeing today regarding the
    right number and type of ships required?
        General Amos?
        General Amos. Senator, thank you. We have a gap right now
    in the Mediterranean. In the late 1990s and early part of
    2000s, we had ARG/MEUs, marine ARGs, in the Mediterranean all
    the time. Quite frankly, we don't have them. We don't have them
    available right now, because they're spending their time in the
    CENTCOM area of operations, of necessity.
        There's no question that we would like to have more
    amphibious ships. I've made the statement publicly a couple of
    times, I'd like to have 50-plus amphibious ships. The demand
    for steady-state operations all around the world would indicate
    that that's probably somewhere around the right number: 50-
    plus. But, we simply can't afford it, because it's capital
    ships, and they cost a lot of money. That's the reality that
    Admiral Greenert, the Secretary, and I deal with, a $14
    billion-a-year shipbuilding account, trying to figure out how
    you cut that and parse that out.
        Senator Wicker. Is 50 ships going to be your requirement?
        General Amos. The requirement is 38 for forcible entry,
    Senator, but the steady-state requirement for day-to-day
    operations around the world is something well above that. It's
    in the 50s. But, it's impractical, and we're not going to be
    able to afford that. Can we get more, and should we get more
    than what we have? The answer is yes. It's a function of where
    we're going to get the money.
        Senator Wicker. Mr. Secretary?
        Mr. Mabus. To pick up on what General Amos was saying for
    forcible entry, the requirement--and that's to do the war
    plans--is 38 ships. But, the Marine Corps and the Navy have
    agreed that, because of budget constraints, it can be done with
    33 ships, as long as you have 30 ships of those available at
    any given time.
        But, as General Amos said and as the CNO will reiterate,
    the steady-state requirement, the things that the letter
    mentioned, things like humanitarian assistance, disaster
    relief, engagements with our allies and with nations around the
    world, that number is certainly greater than 38 ships. It
    ranges from a low of probably 45 ships that the CNO has talked
    about, to above 50 ships that General Amos just mentioned.
        One of the things we're doing to try to mitigate that is
    using other types of ships to do certain missions that
    amphibious ships have done in the past--JHSVs to move marines
    and equipment rapidly across wide areas, afloat forward staging
    bases (AFSB), and mobile landing platforms to be the sea base
    with the AFSBs; and our budget has an additional one of those
    in 2017 to have different ways to move marines, to get marines
    to where they need to be, to do the engagement, to do the
    humanitarian assistance, to do the disaster relief that
    amphibious ships do so well. But, because as the General said,
    they are such capital-intensive ships, we're looking for a
    smaller-footprint, more-affordable ways to do this. To meet
    steady-state requirements, we would need a good many more of
    all types of ships.
        Admiral Greenert. Senator, I think you have one of these
    chartlets in front of you. On the back, in the lower right-hand
    corner, I summarize: This is what's going to happen to your
    shipbuilding plan at the BCA level. We'll probably have to
    cancel three destroyers, a submarine, the carrier we talked
    about, and, as the Secretary mentioned, a ship called an AFSB
    currently built on the west coast. These things can be built in
    other shipyards too.
        I agree that there's request, require, and reality. The
    request out there for ships to do, I'll call it, expeditionary
    things--because if we try to do it all with amphibious ships,
    we'll do one of two: we won't get it done or we'll wear them
    out. That's what we're doing today. We are wearing out our
    amphibious ships. That letter that you mentioned probably
    addresses that pretty well.
        I agree, the requirement is 38 ships, with an affordable 33
    ships, but our reality is, we're at 29 ships, and it will be
    difficult to hold that. But, amphibious shipbuilding is a
    requirement of mine. I'm very concerned about it, and it has a
    high priority. My partner, down to my left, and I will work on
    that.
        We will continue the rebalance to the Asia-Pacific region.
    The way to do that is to move ships forward, JHSVs like the
    Secretary mentioned, mobile landing platforms--there's a
    picture of that in front of you--and to do the things with
    these ships that you might normally do with an amphibious ship.
    They don't do joint forcible entry, they do lower-end kinds of
    things.
        We have quite a conundrum. It will hurt the shipbuilding
    plan. We have to be judicious and innovative. But, it still
    won't meet all the requirements in the future.
        Senator Wicker. I thank all three of you for your answers.
    My time is gone. But, Admiral, if we look at the difference
    between requirement and reality, and we stick with what you
    view now as reality, you say that we're wearing these ships
    out. Are there any other consequences that this committee needs
    to know about?
        Admiral Greenert. You'll wear the people out. I worry about
    that more than I do the ships. You can build ships in less than
    a decade, probably, with money if you have the industrial base.
    That's a problem. But, it'll take you more than a generation if
    you wear this force out. We've seen this before, and we lived
    it twice--after Vietnam and in the 1990s.
        Senator Wicker. Thank you, and thank you all.
        Chairman Levin. Thank you, Senator Wicker.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        I thank each of you for your extraordinary service. Thank
    you for being here today, and very helpful testimony.
        Let me ask, if I may, Secretary Mabus and Admiral Greenert,
    as the requirement for the Ohio-class replacement draws closer,
    what can we do in Congress to make sure that we accomplish this
    mission? I know you're going to say money. But, in what form,
    over what period of time, and what amounts do you think are
    necessary to guarantee that we do the Ohio-class?
        Mr. Mabus. Senator, I'll take a very quick crack at it and
    then turn it over to my submariner CNO, here.
        We are exactly on track now, in terms of the early
    engineering, the research and development (R&D) that need to
    happen for the Ohio-class replacement to come online in 2029,
    when the first ship will need to go on patrol. The big
    milestones that are coming, we have to start buying advanced
    procurement in 2019, we have to start construction on the first
    one of these in 2021. The amounts of money will go up pretty
    dramatically in that timeframe.
        The common missile compartment that we are developing now
    with the British has to be ready earlier, because the British
    submarines will put to sea before ours, their replacement for
    their strategic deterrent. We have to have that capability
    ready so that they can do the early testing on that.
        In answer to an earlier question from Senator Reed, when
    those additional amounts of money, very substantial additional
    amounts of money, become necessary in the early 2020s, if all
    of that comes out of a steady dollar-number Navy shipbuilding
    account, we will keep the Ohio-class replacement on track. What
    we will do is, we will devastate the rest of the shipbuilding--
    attack submarines, our surface force. I don't think that is an
    event that anyone wants to see happen.
        I think that there has to be a serious discussion about how
    we pay for this once-in-a-generation replacement of a strategic
    deterrence. Because some of these Ohio-class replacements are
    scheduled to be at sea until the 2080s, in order to keep from
    just taking our fleet down to where we cannot operate and do
    the missions that our country requires us to do.
        Senator Blumenthal. Thank you.
        Admiral?
        Admiral Greenert. Secretary Mabus did a pretty good
    description there. We need a predictable budget, and on time.
    When we have a Continuing Resolution, we can't do what's called
    ``new starts.'' Things you want to start during that fiscal
    year, you can't. We are building up engineers, we're doing the
    computations now on the designs so that when we reach 2021, we
    have all the detailed design and we can start building.
    Because, remember, we slipped it 2 years. We said, ``Well, if
    we're going to do that, when you start building it, you'd
    better have all the detailed design done, because 2031 on
    patrol is just not waverable, sir.'' Predictable and on-time
    budgets.
        There are two elements undergoing this design phase. First
    is the Navy part, the DOD part, but then second there's the
    NNSA, the DOE part, to help us with the reactor, the uranium,
    and all that, to make it a life-of-the-ship core. I'm concerned
    about that, and those need to come together working with the
    United Kingdom, as the Secretary said.
        Thank you, sir.
        Senator Blumenthal. Predictable and on time, which is what
    the submarine building program has been, very proudly, for
    Connecticut, where we make them, I thank you for those answers.
        Let me ask you, Mr. Secretary. I know that you're
    considering some initiatives in terms of reducing tobacco sales
    at exchanges. I think those kinds of changes in tobacco
    consumption, or the incentive surrounding them, could be very
    important for the health of the men and women under your
    command. Could you describe a little bit, specifically, what
    you're planning to do?
        Mr. Mabus. Senator, we're looking at several things to do.
    We have the fittest force ever. We know that tobacco hurts that
    fitness. We know that we spend far more money in healthcare
    than the exchanges make in profit from tobacco sales. We're
    looking at a range of options that, hopefully, we will be able
    to come forward with fairly soon.
        We want to build on what has been done in the submarine
    force. Smoking was banned on submarines on January 1, 2011. We
    have a fitter submarine force because of that. We know the
    dangers of tobacco. We know what it does to the fitness of our
    force. We're looking at a good number of initiatives.
        Senator Blumenthal. You already have a cessation program. I
    think it's called You Quit, or something like that, which I
    think is also commendable.
        Mr. Mabus. We have a pretty aggressive cessation program,
    and we will continue to make that available to our sailors and
    our marines, to help them quit this addiction.
        Senator Blumenthal. Let me ask, finally, about the tuition
    assistance program. I'm somewhat disappointed to see--if I'm
    correct in my reading of the budget--that both the Navy and the
    Marine Corps are reducing available funds. The Navy cuts are
    about $25 million, and the Marine Corps has proposed cuts of
    tuition assistance over 67 percent, from $45 million in fiscal
    year 2014, to only about $15 million. I don't need to tell any
    of the leaders at the table today how important this program
    is. I wonder whether there is something we can do about it.
        General Amos. Senator, the numbers are a little bit
    misleading. We have $15 million in the fiscal year 2015 budget
    for tuition assistance, and what we've done now is, we're
    trying to figure out how we did in 2014. We had the $44 million
    in there. As I recall, we didn't use it all. There was a usage
    issue. We're trying to capture as much money as we can, so we
    don't waste it. We put $15 million as a placeholder in 2015,
    and we've agreed that, internally, with my budget head, we will
    then feed that account with quarterly offsets as we adjudicate
    our budget as it goes through the year.
        The Marine Corps will not fall short on tuition assistance
    for the remainder of this year. We're going to pay 100 percent
    of it. What we have done though is that we've said that for the
    first 2 years of a marine's life, you're not eligible for
    tuition assistance. You should be worrying about your military
    occupational specialty (MOS) credibility, learning to be a
    marine, and learning about your unit. Then from the third year
    on, they're eligible for tuition assistance at 100 percent
    reimbursement.
        Admiral Greenert. Senator, that one got by me. My
    intention, in talking to my Chief of Naval Personnel, is to
    fund at 100 percent. We'll work that out in the budget
    execution.
        I want to look closely and make sure our sailors and
    marines are informed. We have a process to sit down and put
    together a good plan with them so they know what they're
    taking, why it is, what it is going to do for them, and make
    sure what they're signing up for are credentialed, respected
    universities, colleges, and trade schools that get them
    something relevant when they complete their service.
        Senator Blumenthal. Your responses are very reassuring and
    welcome. If there is anything that we can do to make possible
    full funding, I hope you'll let us know.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Blumenthal.
        Senator Blunt.
        Senator Blunt. Thank you, Chairman.
        Thank you all for being here today.
        General Amos, thanks, particularly, for your great service.
    We may not see you again in this particular setting, but I know
    we'll continue to rely on your advice and your judgment on
    these issues as long as you're willing to give it. I appreciate
    your service.
        I'm sorry I missed the defense appropriations hearing
    yesterday. I had another appropriations hearing going on at
    exactly the same time. But I did look at what some of the
    comments were made there about aviation, which is what I think
    I want to talk about in my 6\1/2\ minutes that are left.
        In terms of the electronic attack analysis, Admiral
    Greenert, where are we in a study that will provide what we
    think we need to know about what combination of aircraft works
    best together and what's the best way to approach that package
    of aircraft?
        Admiral Greenert. We've done a Navy study. Our Naval Air
    Systems Command did a study, and what we looked at was, what's
    a good knee in the curve, if you will? Where do you get the
    most for the number of aircraft? We're talking about platforms,
    and we're talking about the Growler. Right now, we have five
    Growlers in a squadron. We looked and said, ``For the kinds of
    packages we would have in the future to get joint assured entry
    against the kind of defenses that we would be up against in the
    future, you need closer to six, seven, eight.'' Eight is
    premier. Something close to that.
        Now what we want to do is look joint-wide. That's good for
    us, but we are the joint provider for all electronic attack.
    We'll do that this summer, look joint-wide.
        Senator Blunt. Will we have the Navy analysis that you
    talked about, will that be available to us before the markup
    that this committee would have?
        What would that time be, Mr. Chairman? End of May?
        Chairman Levin. We have a scheduled markup right before the
    Memorial Day recess.
        Senator Blunt. Is the Navy analysis, not the systemwide
    analysis, available now or will it be by sometime in May?
        Admiral Greenert. Oh, it's available now. I'll take that as
    a followup for you, Senator.
        [The information referred to follows:]

        The Navy electronic attack analysis will be provided directly to
    you and your staff via secret protocols.

        Senator Blunt. Alright. In terms of the Growlers that you
    brought up, when flying the Growlers together with other
    aircraft, you have a lot more electronic attack capacity. That
    would include the F-35, when that becomes part of the system.
        Admiral Greenert. Yes, sir. Make no mistake, the F-35 has a
    good electronic attack. However, that's just one of its
    attributes. We'll need Super Hornets in that package for some
    time, well into the next decade. Somebody has to do the
    suppression. The beauty of the Growler is, it has not only the
    anti-radiation missiles--it can protect itself and the units--
    it has extraordinary capability. It isn't linear. When you add
    another Growler, it's more exponential, what you get for that
    package.
        Senator Blunt. Thank you.
        Secretary Mabus, on the F-35, the F-35B or the F-35C, when
    does the Navy expect that to be operationally ready for combat?
    I'm not asking IOC. I'm asking when you would expect that to be
    operationally ready for combat.
        Mr. Mabus. Senator, the B, for the marines, the short take-
    off and vertical landing (STOVL) version, is the first out of
    the pack. General Amos has followed that very closely. We've
    stood up our first squadron in Yuma, and IOC would be next
    year, in 2015. Ready for combat, the threshold would be about 6
    months later than for the Marine Corps.
        Senator Blunt. What about for the Navy?
        Mr. Mabus. For the Navy, the C version, the carrier
    version, is the last of the three versions to come online. We
    are looking at about a 2019 IOC, and the threshold for combat
    operations, again, about 6 months after IOC.
        Senator Blunt. Sometime in 2019 or 2020?
        Mr. Mabus. 2019 or 2020.
        Senator Blunt. Depending on when you get that to start
    with?
        Mr. Mabus. That's correct.
        Senator Blunt. General Amos, I know you're a former pilot,
    an F-18 pilot. Any comments on either of these questions would
    be appreciated.
        General Amos. Sir, I hope I'm not a former pilot.
    [Laughter.]
        Senator Blunt. Exactly. [Laughter.]
        General Amos. But, I do, the Secretary is absolutely
    correct. Although it sounds squishy, that IOC is 10 pilots, 10
    crews, complete maintenance, airplanes all set up, completely
    combat-ready. If something should happen and our Nation should
    need to deploy fifth-generation capability, by the end of next
    year we'll have those capabilities to be able to do that. But,
    that squadron is scheduled to deploy to the Western Pacific in
    2017. That'll be the first debut of a fifth-generation airplane
    for the United States of America around the world.
        Senator Blunt. Do you want to give me your sense of the
    diversity of aircraft that's necessary to perform the mission
    in the best possible way?
        General Amos. Senator, I think the way we're headed right
    now, the Department of the Navy, is a great blend. We talked a
    little bit earlier, we're going to have fifth-generation
    airplanes which are highly stealthy. We have capabilities for
    information-sharing in electronic warfare, in and of their own
    class, that will be what I would consider--I don't want to say
    ``strike aircraft,'' but first aircraft in a contested arena,
    followed up by the rest of the force, which doesn't have to be
    fifth-generation. I think we have the right blend and the right
    balance.
        Senator Blunt. Admiral Greenert, on your unfunded
    priorities, back to your earlier comments, the unfunded
    priority for the Growler was 22. Could you tell us why you need
    those 22?
        Admiral Greenert. Senator, in a previous discussion, we
    looked at the study which we could provide to you.
        [The information referred to follows:]

        [Deleted.]

        Admiral Greenert. The electromagnetic spectrum is a huge
    issue for us. Electronic warfare will be bigger and bigger. The
    capabilities are going to expand, they're not going to be less.
    What we have today in the budget, as I looked at it, is
    acceptable. It is the minimum. That would be five Growlers per
    squadron. But, when I look in the future and I think of the
    study coming up, studies never say, ``Hey, guess what? You have
    too much.'' All vectors pointed to needing more. The question
    posed to me was, ``What do you need to reduce programmatic and
    operational risk?'' To me, Growlers were clearly one of those.
        Senator Blunt. I would think also, just as my comment, when
    we add the new plane, that's a very expensive plane. Whatever
    you can do to protect that package, to use it in the most
    effective way, would be a good thing for us to be sure we're
    thinking about. I think the initial cost per copy of those
    planes, if I divide correctly, is about $400 million a copy.
    Whatever package you have there should be the best possible
    package, not of the Growlers, but of the new plane.
        Admiral Greenert. Yes, sir. As General Amos said, and I
    agree with him, that's an extraordinary plane. It's fifth-
    generation. We have to have it. It can go in by itself. It
    networks, it has payload range, and all of that. But, we have a
    whole air wing that has to come together, from the Hawkeye
    through the Growler to the strike fighters. You're right, the
    Growlers will just enhance. The synergy will be expanded.
    Again, it's exponential when you add additional Growlers.
        Senator Blunt. Thank you.
        Chairman Levin. Thank you, Senator Blunt.
        Senator Hagan.
        Senator Hagan. Thank you, Mr. Chairman.
        To all three of you, I just want to say thank you so much
    for your service, the incredible job you're doing on behalf of
    our country.
        General Amos, I know we have a lot of bases in North
    Carolina, Camp Lejeune, in particular. I appreciate all of our
    marines and what they do in North Carolina.
        General Amos, I know Senator Blumenthal was asking a
    question on tuition assistance. I wanted to follow-up on that,
    the tuition assistance benefit. Because this is something that,
    across the Services, is a benefit that's a great recruitment
    benefit, retention benefit, and the outcome that it does for so
    many of our military men and women, to help them get that
    college education by taking that one college class a semester
    on their own time is a real benefit.
        I guess my concern is the 65 percent cut that's being
    proposed of almost $30 million, including the cost-share
    arrangement, places a 25 percent burden on the marine. I wanted
    to say, why such a huge cut? Also, why put that burden on the
    marine?
        I also understand that you're looking at changing the
    measures so that the marines would have to be on duty for 2
    years after they enter the Service to see how they're adapting
    to the military and how they're comfortable with their duties.
    But, shouldn't we wait to see the effectiveness of these new
    measures before we cut this benefit?
        General Amos. Senator, we went from $44 million in fiscal
    year 2014's budget to fiscal year 2015's budget, budgeting $15
    million. We're going to fill the rest of that in throughout the
    year. It's a commitment. If a marine signs up for a course, and
    it costs X amount of money, we're going to pay 100 percent of
    that. It's true. We'll add money into that pot through the
    annual execution of our budget. Please understand that that
    will be fully funded at 100 percent.
        It is true that we've set some criteria. We've set the
    criteria of 2 years. You have to have been a marine on Active
    Duty for 2 years. That's predominantly so that that young
    marine is spending his or her time focusing on their MOSs,
    their growing maturity, their understanding, their unit.
    They've probably deployed at least once, maybe even getting
    close to twice. They're tightly focused on being a marine.
        Once they get just past the end of their 25th month, then
    they're eligible for this. Once you get to the 36th month, then
    you're eligible for the GI Bill.
        Senator, I think we have the right balance here.
        Senator Hagan. You're saying you're not making the cut down
    to 75 percent?
        General Amos. We are not making the cut to 75 percent.
        Senator Hagan. Okay. Great.
        Admiral Greenert, in the Navy it looks like you've decided
    not to cut too, that you're going to do 100 percent, but
    reported that you might eventually ask the sailors to put some
    skin in the game. The way I understand it, the average sailor
    using the tuition assistance benefit is an E-5 with 8 years of
    service, 66 percent of them are married, with children, and
    they earn $33,000 in base pay. Do they need to put more skin in
    the game, when we're talking about a recruitment-and-retention
    benefit like the tuition assistance?
        Admiral Greenert. Senator, I don't know. I have to look at
    this closely, but I'm not ready to put skin in the game, as
    they say, through 2015. That's where I am. I like the program.
    I'm more focused on making sure what they take is of value to
    them, because to me, this is not a lot of money. In fact, this
    is a good return on investment that we'll get, but more
    importantly, society will get. Sooner or later, we're all going
    to go out and do something else. I want our kids to go out
    there feeling confident that what they did here in the Navy
    accelerated their life and made them a better person.
        Senator Hagan. I thank you for that.
        General Amos, I wanted to ask you a question about the
    Marine security guards (MSG). With the rise of the instability
    in countries like South Sudan, Mali, and then, obviously,
    Ukraine, the demands and the need for MSGs in support of our
    diplomatic missions is obviously apparent. The Marine Corps'
    Embassy Security Group has, as I understand it, 1,300 marines
    stationed throughout the world at detachments, regional
    headquarters in over 135 countries, supporting the Department
    of State (DOS). The MSG program is growing. How do you describe
    the relationship between the Marine Corps and the DOS?
        General Amos. Senator, I think it's legendary. Every time I
    go--which is not often, but several times throughout the year--
    I go to the DOS for different functions and different meetings.
    Now, as I travel around and visit marines at embassies, and I
    talk to the Ambassadors, the Chargees, and the rest of the
    embassy personnel, I think it's legendary. I think we train
    them that way. They're inoculated down in Quantico, VA, when
    they go to school that way, in very rigorous training. It's a
    highly successful program.
        We have 163 diplomatic posts today, because some countries
    will have more--they'll have a consul, and then they'll have an
    embassy. So, 163 posts. We're going to grow another 35 as a
    result of the NDAA, when we received the other 1,000 marines.
        Probably one of the fallouts of the 1,000 marines that
    Congress gave us this last year is we've developed a Marine
    Security Augmentation Group, which is a squad of marines. We
    have a bunch of them. We blow that balloon up, or shrink it,
    and we send it to an embassy when an embassy is beginning to
    sense high threat. When the President of the United States is
    going to go into a country, or the Vice President is going to
    travel, we'll send this augmentation unit. They're MSG, they're
    trained in diplomatic skills, they have all the weapons skills,
    and they fall in on the marines that are there. Then, either
    once the crisis goes away or the threat goes, or, in some
    cases, the very important persons leave, we pull them out. We
    deployed that now 17 times in the last year since Congress gave
    us those 1,000 marines. It's a huge success story.
        Senator Hagan. Then I also wanted to follow-up on one of
    Senator McCain's questions, General Amos. That is, will the F-
    35B still achieve the IOC by July 2015? What's being done to
    ensure that the program stays on track?
        General Amos. Senator, the last part of your question is
    being managed not only at my desk, but at the program office
    desk at my head of Marine Corps Aviation. To include Admiral
    Greenert and General Welsh, there is an awful lot of oversight
    on this thing, a lot of people paying very close attention.
        Paying more attention, I don't know that that's possible.
    We have a great program manager right now, Lieutenant General
    Christopher C. Bogdan, USAF, Program Executive Officer of the
    F-35 Lightning II Joint Program Office. He's working through
    the nuances of this, trying to bring this new program in which
    is very challenging.
        We are still on track at this time for a July IOC of next
    year for us. But that's predicated on the software delivery,
    Block 2B, for us. The program manager is moderately okay,
    thinking that he'll make it. If, for some reason, things don't
    fall in place, then I'm not going to declare IOC in July 2015.
    This is event-driven.
        Senator Hagan. Right.
        General Amos. We're keeping the oversight and the pressure
    on the program, and I'm hoping, I'm anticipating, a July IOC of
    next year.
        Senator Hagan. I appreciate that, thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Hagan.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to thank all of you here for your leadership and for
    your service.
        I very much want to commend and thank General Amos for your
    distinguished service to our country and all that you have done
    for us to keep us safe. Please pass our gratitude on to your
    family, as well, for their sacrifices.
        First of all, I wanted to commend you, Admiral Greenert. As
    I understand, I received a report from the Military Times that
    you were in Mayport last week or recently, apparently, and you
    were asked a question about our naval bases worldwide, and in
    particular, another base realignment and closure (BRAC) round.
    As I understand it, you're quoted as saying, ``People ask me
    about BRAC, do you have the need?'' You said, ``Do you see a
    need for BRAC? I say no, I don't.'' I want to commend you for
    that, because as I look at our needs for our Navy right now,
    particularly the work being done at our shipyards, including
    the Portsmouth Naval Shipyard, they're booked out in terms of
    their work. I'm not sure if we were to go down a BRAC round we
    could do what we need to do in terms of not only adding to the
    fleet but also maintaining the fleet in the way that we would
    need to.
        The issue that I'm very concerned about as we look at the
    overall posture of our attack submarine fleet, as I understand
    it, even without going down the sequestration road, we're in a
    position that the number of attack submarine fleets actually
    decline from 54 currently to, as we go to 2029, 42. Obviously,
    sequestration is, I imagine, even worse. I would like to hear
    what you would say about the size of the fleet then. But in
    addition to that, just even looking at where we are, I'm
    concerned that with the two replacements of Virginia-class
    submarines, we aren't going to be able to meet all our needs in
    the Asia-Pacific region and other areas around the world.
        Can you comment on that?
        Admiral Greenert. Yes, sure, Senator. I was under the ice
    last weekend with Senator King on a Virginia-class submarine,
    the USS New Mexico. It reminded me that we do own the undersea
    domain. We can go anywhere in the world with these things.
        Senator Ayotte. Right.
        Admiral Greenert. They're absolutely valuable.
        But, to your point, the Asia-Pacific region will remain our
    priority. I would say, other regions of the world may have to
    take a backseat to that. But that still won't fulfill Admiral
    Locklear's requirement. He needs, I think it's 10-ish, or
    whatever. We get about 70 percent of what he can do. If we are
    under the BCA caps, and we are sequestered, as the back of this
    little chartlet shows you, I don't see how we can sustain two
    Virginia-class a year. That's tough. It breaks my heart to lose
    the USS Miami. I thank you for doing all that you could to help
    us maintain that. But these eaches really hurt.
        Senator Ayotte. Yes, that broke our hearts too, and we were
    hoping to, obviously, put the investment back into the Miami. I
    think that, as we go forward, that this is an issue, I know,
    that Senator King is concerned about as well. But the fact is
    that the Chinese are investing more in their submarine fleet.
    Do you think we can take for granted our supremacy underneath
    the seas that's so important to the protection of our country,
    but also of our allies?
        Admiral Greenert. No, ma'am, we can't do that. We have it
    today, and that's what's so critical. It would be a shame to
    lose it. I have to do everything I can to maintain that.
        Under BCA caps, that's going to be very difficult. It's
    more than submarines. It's a network under there.
        Senator Ayotte. Of course it is.
        Admiral Greenert. It involves the P-8A, and it involves
    unmanned underwater vehicles and fixed systems. We have to do
    the R&D to do that, to stay ahead. We are slipping, and we will
    slip further. I'm very concerned, if we go to BCA caps.
        Senator Ayotte. Right. Thank you, Admiral.
        I also wanted to ask you, Admiral Greenert and Secretary
    Mabus, as Senator Donnelly mentioned, we were in Afghanistan,
    but then we were also in Ukraine on Sunday. One of the issues
    that was brought to our attention was the exercises by the USS
    Truxtun in the Black Sea. What I was hoping to really make the
    point to both of you is that I believe the presence there,
    whether it's the USS Truxtun or another of our naval assets, is
    very important right now, in terms of the signal it sends, not
    only in terms of our support for the sovereignty of Ukraine,
    but as well as our signal to the Russians.
        Admiral Greenert. Yes, Senator. We intend to remain on
    track for the exercise plan that we have. We have an exercise,
    usually, with Ukraine, called, I think, Operation Sea Breeze,
    if I'm not mistaken. We intend to keep that on track until
    further notice.
        Senator Ayotte. I would say I'm glad we're keeping it on
    track. We might want to consider increasing our exercises in
    that region, as well. I hope that's something that both of you
    will consider, in light of what we see with regard to Russian
    aggression against the territorial integrity of Ukraine right
    now. Our presence, I think, very much matters.
        General Amos, yesterday, I think as you testified, we had
    General Paxton before the Readiness and Management Support
    Subcommittee. We were talking about the size of our Marine
    Corps. One of the things that struck me that I wanted to ask
    you about today is, if we go down to 175,000, General Paxton
    described yesterday that if we have to fight a conflict, as I
    understand it, that brings us down a 1:2 dwell, even if we're
    not involved in a conflict. Isn't that right? Let's say we have
    to go fight a conflict, which none of us wants to do, but we
    always need to be prepared for. Can you describe for us what
    that means? Because I think that people need to understand, as
    I understand it, when we're all in, what that means.
        General Amos. Senator, that's exactly what it means. It
    means we empty the bench of the Active-Duty Forces. We'll have
    folks back at home station that'll be keeping the fires going,
    but the combat forces of the Marine Corps are all in for a
    major theater war, and will come home when the war is over.
        Now, in the context of what else could be done around the
    world, we'd activate our 39,600 Reserves, and they'd come on.
    They're very experienced now. They're an integral part. They
    would perform some of the shock absorber. They would become
    part of our combat replacements. But as far as other things
    going on around the world, we're not the only Service, the
    Joint Force would then have to address that. But for a major
    theater war, for 175,000 marines, we're all in, Senator.
        Senator Ayotte. I have supreme confidence in the capability
    of our Marine Corps, but that's a tough OPTEMPO for the Marine
    Corps, is it not, when we're all in like that?
        General Amos. Senator, the 1:2 for the steady-state is not
    optimum. All of us have been trying to get back to a 1:3, so
    you're gone 6 months and you're home 18 months. It gives you
    time to reset, go to school, move new leadership in, train----
        Senator Ayotte. See your family, we hope.
        General Amos. Yes, thank you.
        Senator Ayotte. Exactly.
        General Amos. Families actually get to see their spouse,
    daddies, and mommies. 1:3 is the ideal thing. It just is the
    right amount of tension and the right amount of, I guess,
    relaxation. 1:2, we've been at now for at least 5 to 6 years.
    The young kids in the Marine Corps, our youngsters, they're
    okay with that. That's why they joined. It's the career force
    that the 1:2 dwell begins to put pressure on. Those are the
    marines that have been on Active Duty for 13 to 14 years, they
    have a family, they're trying to get kids in school, and think
    about high schools and stuff. It becomes hard for them,
    Senator.
        Senator Ayotte. Thank you, General.
        I want to thank all of you.
        I just think it's an important consideration for us,
    because we're talking about the career force, we're talking
    about the leadership within the Marine Corps and those that are
    providing the mentorship and the standards for our newer and
    younger members of the Marine Corps. I'm very concerned that if
    we continue at that tempo, we're really jeopardizing our most
    precious asset, which is our men and women in uniform in our
    Marine Corps. We're very proud of them. I think this is an
    important consideration as we look at the impact of sequester
    and, even without sequester, there are serious issues here.
        I want to thank all of you.
        Chairman Levin. Thank you, Senator Ayotte.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        We all talk about sequester. I think we have to step back a
    moment and remind ourselves that the sequester was designed to
    be stupid. It was designed to never take effect. It was
    designed as an incentive to Congress and the President to
    figure out how to deal with the necessity of getting our
    budgets under control. I call it the ``Wile E. Coyote theory of
    budgeting,'' where we throw an anvil off the cliff, run down to
    the bottom, and then act surprised when it hits us on the head.
    That's exactly the situation we're in now.
        I just think we have to step back and say, ``Wait a minute.
    This isn't the way it was supposed to be.'' Senator Kaine said,
    ``We didn't take an oath to the sequester.'' Our obligation is
    to figure out how to replace the sequester. I think that's
    something that we all need to set ourselves as a goal over the
    next year. We have the BCA in place now, we have a little bit
    of breathing room. But instead of relaxing and saying, ``Oh,
    we're going to have to deal with the sequester in 2016,'' we
    ought to figure out, how do we replace it? The BCA contemplated
    that, it instructed that, and we haven't been able to do it.
        Now, one follow-on question. How could you live under the
    BCA caps without the sequester? Secretary Mabus, how does that
    world look? If you take away the sequester, there's still those
    caps that were imposed in 2011. Is that an adequate level of
    funding to meet the requirements and the needs of the U.S. Navy
    over the next 8 years?
        Mr. Mabus. Senator, it's far preferable to the sequester. I
    think that the thing that Senator Kaine talked about is, the
    President's budget, going forward is about half of the
    sequester, which is about what BCA caps would be.
        We would have some risk, but we would be able to perform
    the missions that the country has given us, both from the Navy
    and the Marine Corps. The Marine Corps, under that scenario,
    would stay at 182,100, almost certainly. The Navy and our
    shipbuilding plan would stay on track to get to the fleet size
    that we need with the right mix of ships.
        The President's budget that was submitted for 2015 and then
    on out for the out-years, I haven't seen exactly the lines as
    they go along, but is about where those caps would be.
        Senator King. I think we should take our obligation to meet
    the caps but to deal with the sequester, as the BCA
    contemplated in August 2011.
        Let me move on for a minute. I just want to thank Secretary
    Mabus and Admiral Greenert for your work to move forward with
    the fifth destroyer, which is going to be built up in Maine at
    Bath Iron Works. It'll probably be the cheapest ship in the
    whole series, and it's important to us, it's important to the
    people of Maine. We're very proud of that shipyard and proud of
    the work that they are doing.
        Mr. Chairman, on April 12, we're commissioning the USS
    Zumwalt, which I've seen under construction now, and it's one
    of the most amazing ships, I think, in the world. I would
    certainly invite members of this committee and anyone else to
    join us in Maine at Bath on April 12. That's going to be an
    extraordinary day. I talked to somebody the other day who
    crossed the bridge at Bath and looked back and said, ``What is
    that ship that they're building out there?'' It is an amazing
    piece of military equipment. Of course, my hope is, the Navy's
    going to like it so much, they're going to want half a dozen
    more. But that's a discussion for another day.
        Tradeoff between personnel costs and readiness. We had a
    hearing yesterday on the Subcommittee on Personnel of this
    committee, and I think we need to remind ourselves that, within
    the budget constraints we're talking about, this is a zero-sum
    game. If you don't make the personnel reductions that you're
    talking about, that's $2 billion a year that has to come out of
    readiness. General Amos, is that the way you see it?
        General Amos. It is, Senator. There's a difference between
    reducing the personnel costs and reducing personnel. When I
    reduce personnel, I go to 175,000. There'll be less overall
    cost in my budget for people but my proportional part of the
    budget for people will also go down. But it's the compensation
    piece inside of each one of those young marines that I need to
    get adjusted downward.
        Senator King. Right. What I asked at the Subcommittee on
    Personnel hearing was to get a figure from DOD on the growth of
    personnel cost, per capita, as opposed to overall. Which says,
    yes, it's only 50 percent; but if you're down 100,000 or
    150,000, then that masks the increase of cost per person. I'm
    searching for that data.
        But the other piece is, as you said earlier, if we don't
    make savings like this, then it has to come out of your
    readiness budget.
        General Amos. Senator, maybe I can state it just a little
    bit differently. What worries me is that, if we don't get this
    under control, then over time, we will become an entitlements-
    based Marine Corps instead of a warfighting-based Marine Corps.
        We exist for only one reason, to fight our Nation's
    battles. We have to rebalance this. We can do it. We can do it
    within reason. We can do it with keeping faith with our own
    marines and our sailors. But it has to be rebalanced, because
    we exist to do the Nation's bidding, not to become an
    entitlements-based Marine Corps.
        Senator King. I think it's important that in the figures
    that we were given, it's $2.1 billion in this budget year, the
    savings from these personnel changes, but something like $30
    billion over the next 5 years. This is a significant number.
    Now, of course, there is a commission on compensation. The
    inclination is to wait until that happens. But if we do, that
    makes it a year later that we make changes that are necessary
    to provide more funds for our troops' readiness.
        Secretary Mabus and Admiral Greenert, the Navy recently
    released the Arctic Roadmap. As the Admiral mentioned, he and I
    were on the USS New Mexico this past weekend, 400 feet under
    the Arctic ice, which was an extraordinary experience.
        I have to say, Admiral, that my wife asked, ``What was your
    major impression of the trip?'' She expected me to say the
    cold, the ice, the ship, or the nuclear power plant. But it was
    the people on that ship. Those young men on that ship were
    amazing. I was particularly impressed by the enlisted people
    that had worked their way up through the ranks. They felt it
    was their machine, and they were so proud, patriotic, and
    idealistic. That was a tremendous experience, and that was my
    overall impression.
        However, the Arctic is opening up. It's essentially a new
    ocean. Admiral Greenert, what does that mean for us, in terms
    of naval assets? Because you have the chart here, and there's
    nothing up here. What do we have to be thinking about, in terms
    of naval assets? I know it isn't within your bailiwick, but we
    only have one icebreaker in the whole shooting match of the
    U.S. Government, and that's a 40-year-old Coast Guard
    icebreaker that's powerful enough to go up there. What do we
    need to be thinking about as the Arctic Ocean opens up?
        Admiral Greenert. Senator, working with my oceanographer,
    with the Coast Guard, and my staff, here's the way we're
    approaching this. Number one, just when is it ice-free and
    where is it ice-free? We need to figure that out. We went to
    2025; a good bit of the icecap that we now know will be ice-
    free. What does ``ice-free'' mean? That you can take a
    commercial ship that doesn't have to be ice-hardened, and you
    could go through some of the sea lines of communication, if you
    will.
        Where are those? Number two. Where are these sea lines of
    communication? You have the Northwest Passage, not really
    highly traveled, sort of shallow. Then you have the northern
    route. That goes up near Russia, fairly deep. How often is it
    open during these summer months? Then you have a polar track.
    How deep is the water? Because draft, for the big ships that
    would make it commercially viable, is important. We're
    analyzing that, talking to industry, Maersk and others that do
    that. That's number two.
        Number three, is there a threat such that we need to be up
    there or is this no different from, say, the south Atlantic or
    somewhere where you just travel? You say, okay, just travel. We
    need to figure that out. My people are analyzing that.
        Then, number four, what kind of agreements do we need to
    make, if there is an issue? Are there sovereignty claims that
    we need to settle down with and talk about? We were in staff
    talks with the Russians, and we want to continue that, when
    we're ready to do that. The Chinese have joined a group.
    They're interested. We want to talk with what I'll call the
    community of nations, which is interested in using the Arctic.
    Obviously Canada, obviously all the Scandinavian countries, and
    Norway. Those are all in progress. From that will become a
    global force management demand signal, if you will, as to what
    we need up there. Today, we average one submarine, oddly
    enough, in that upper Arctic region.
        Chairman Levin. Thank you.
        Senator King. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator King.
        Senator Cruz.
        Senator Cruz. Thank you, Mr. Chairman.
        Admiral, General, Mr. Secretary, thank you for being here.
    Thank you for your service to our Nation.
        Secretary Mabus, I'd like to talk some about the proposed
    reductions to our military in the context of alternative
    avenues for cost savings. The Army, right now, is planning on
    reducing its size by six brigade combat teams by 2019,
    according to this year's budget request. Those proposed cuts
    concern me greatly.
        DOD continues to spend billions of dollars on alternative
    energy research in programs at DOD that I think are far less
    essential than maintaining our readiness and ability to defend
    our national security interest. For example, the Navy spent
    $170 million on algae fuel, which costs four times as much as
    regular fuel, which means, potentially, $120 million was spent
    unnecessarily. Even in these tight budgetary times, the Navy
    budget now contains nearly $70 million, in this year's budget,
    for a request for the Navy Energy Program, which funds R&D
    activities such as the Algae Fuel Research Program.
        The first question I wanted to ask is, instead of buying
    algae fuel, which even the National Research Council says is
    currently not sustainable, DOD could instead field nearly a
    battalion's worth of Active Duty soldiers or even more National
    Guard troops. Secretary Mabus, I would welcome your views, in
    light of the threats we face, whether you would support more
    Army infantry troops instead of money spent on algae fuel.
        Mr. Mabus. Senator, now is exactly the time that we have to
    diversify our energy sources. We're facing, in fiscal year 2011
    and fiscal year 2012, an unbudgeted $1 billion increase in fuel
    cost for each year--$2 billion that we had not budgeted for,
    because of the spikes in the price of oil. If we don't get an
    American-made, more stably-based source of fuel, if we don't
    get some competition into the fuel, we're looking at fewer
    soldiers, fewer sailors, fewer platforms. That's exactly why
    we're doing this.
        The $170 million you mentioned is not for algae fuel, it is
    for alternative fuels. You'll be happy to know that we now are
    working with four companies that are obligated to provide us
    with 163 million gallons of biofuel by 2016 at less than $3.50
    a gallon. We're not going to buy any alternative fuels that
    aren't absolutely price competitive. Because oil is a global
    commodity, oil is traded globally, and every time there's
    something happening in the world, every time you have somebody
    threatening to close a strait, or just instability, oil traders
    add a security premium. Every time the price of oil goes up a
    dollar a barrel, it costs our Navy and Marine Corps $30 million
    additionally in fuel. Now is exactly the time that we have to
    do it or we will face more cuts just like the type you were
    talking about.
        Senator Cruz. Now, your comment was that we needed an
    American-produced energy source that was stable and reliable.
    As I'm sure you're aware, we're in the midst of an energy
    renaissance right now, where the United States is on track, in
    the next few years, to become the world's top producer of
    natural gas, and a few years later, the world's top producer of
    oil. Is it your view that DOD is going to somehow revolutionize
    the study of algae or alternative energy? Is that really the
    core function of the Navy, and at a time when the Navy is
    proposing, for example, cutting 5,000 marines and eliminating 2
    marine infantry battalions?
        Now, obviously, your job is to prioritize. My question is,
    which is a higher priority, preserving those two marine
    infantry battalions or continuing to research algae fuel, in
    the hopes that somehow the world energy market can be
    transformed by the Navy's research?
        Mr. Mabus. To start with, I'm very glad that America is
    increasing its production of oil and natural gas. But, oil is a
    globally traded commodity, and even if we produce as much as we
    could need--and the military's going to go to the head of the
    line, in terms of fossil fuels or any other kind of fuels--we
    are dependent on the world price. That's what has just been
    skyrocketing our fuel costs. That's what I talked about. A more
    stably-priced, American-produced version.
        We are not researching algae, Senator. The research has
    been done. The production is there. We are moving toward
    changing the way we use fuel. We're doing energy efficiency as
    well. If we don't do these things, the cuts that you talked
    about--and you're absolutely right, I have to set priorities--
    this is a priority that will save ships, this is a priority
    that will save marines, and this is a priority that will save
    marine lives.
        Senator Cruz. At a price----
        Chairman Levin. Senator Cruz, if I could interrupt, because
    there's votes now, Senator McCaskill will follow you, and then
    she's going to have to vote; and Senator Hirono is here as
    well. If there's no one here when they're done, we will recess
    for 10 minutes, because I will be coming back. When you're
    done, Senator Cruz--you have about another half minute or so--
    it will then go to Senator McCaskill.
        Senator Cruz. Very good. Thank you, Mr. Chairman.
        My final question is this. In a hearing before this
    committee, Secretary Hagel responded to this same line of
    questioning, and he characterized the algae fuel program, and
    also programs such as a wind farm in Alaska that was built
    where there's no wind, as, quote, ``luxuries.'' Now, from your
    testimony today, it sounds like you don't agree with Secretary
    Hagel's characterization. I would welcome your views on whether
    you think he's right or wrong that these programs are
    ``luxuries,'' and whether the priority--in my view, the
    priority, the number-one priority, should be maintaining
    readiness in the capacity to defend our national security,
    which means the soldiers, sailors, airmen, and marines
    necessary to protect our interests. That should be prioritized
    above luxuries. Do you agree with that or not?
        Mr. Mabus. I absolutely agree that the number-one priority
    ought to be readiness, and that's why we're doing the
    alternative fuels.
        Senator Cruz. Do you agree with Secretary Hagel's
    characterization?
        Mr. Mabus. Senator, I didn't hear Secretary Hagel's
    characterization, but I'm confident that, in these energy
    terms, that he did not state that they were luxuries.
        Senator Cruz. Thank you.
        Senator McCaskill [presiding]. Thank you.
        Thank you all for being here today.
        I know you have received plaudits today, General Amos,
    which you deserve, for a career that should make every American
    proud of you and those marines you love so much. If anybody
    doesn't know that General Amos loves the marines, talk to me.
    He loves the marines.
        I wanted to give a shout-out to Bonnie. I think that one of
    the things that happens, so many of you come in front of this
    committee that have had incredibly long service and have done
    all kinds of sacrifices. I'd like to have a hearing someday and
    just have everybody's spouses up here. Frankly, we could learn
    a lot about the good, the bad, and the ugly of our military. I
    would love the opportunity to have them sitting there, to thank
    all of them. Please give my best to Bonnie and thank her for
    the important role she's played in helping you lead the Marine
    Corps.
        General Amos. Thank you, Senator. I'll be happy to tell
    Lynn, Mrs. Greenert, and Bonnie that you'd like to hold a
    hearing for them.
        Senator McCaskill. I don't know. They probably wouldn't
    think that was a love note. [Laughter.]
        I don't know that that's a good idea.
        Let me talk first about the Growler, Admiral. I know that
    Senator Blunt covered it with you, about the Growler
    capability. I notice that it was put in the unfunded
    priorities. I'm curious as to what was the analysis that went
    into a request for these additional Growlers, in terms of
    airborne electronic attack issues.
        Admiral Greenert. The analysis was, looking toward the
    future air wing, the laydown of the aircraft that we intended
    to have--really, capability, starting from the Hawkeye, which
    is the manager--that's the radar plane--and then what we would
    have for electronic attack in our joint and strike fighters.
    Today, what do our potential adversaries have out there, and
    whether they're proliferating--it's not just one; these systems
    are proliferating--and what are they made up of? What kind of
    threats would we have in the future for what I call joint
    assured entry? When doing that, we realized we're at bare
    minimum right now. Yes, we are at requirement, but if this is
    going to grow, and this line is shutting down, and this
    capability is not available, and we are the entire DOD's
    source, I felt the opportunity existed to reduce risk
    operationally and reduce risk programmatically. It's time to
    act.
        Senator McCaskill. I appreciate that, and I think this is
    one of those moments, you have these moments, because all of us
    are, frankly, sometimes appropriately accused of parochial
    concerns. This is a time that I almost wish that I wasn't from
    St. Louis, because I'm afraid that my advocating for this very
    important aircraft could be seen as parochial. In reality,
    Admiral, what I'm asking you, in fact, should be a national
    priority, not a parochial priority.
        Admiral Greenert. It is certainly a DOD priority, because
    we provide all airborne electronic attack. Again, there's
    another study coming, so I couldn't use that for analysis, but
    we looked at the last, and you've seen many of these. They
    don't get smaller.
        Senator McCaskill. Right.
        Admiral Greenert. The future in the electromagnetic
    spectrum is expanding dramatically.
        Senator McCaskill. It's going to explode. I just can't
    imagine that this isn't going to be one of our highest
    priorities, in terms of our readiness and capability for
    decades to come, because of the potential that's there.
        I also wanted to talk to you--it made my heart beat a
    little faster, Secretary Mabus, when I read your opening
    statement before the hearing today, and I saw you talking about
    your estimated savings on contractual services, alone, of more
    than $2.5 billion. You're playing my song. I have worked very
    hard on the contracting piece, and seeing that you're going to
    have $15 billion of savings over 5 years, in terms of
    contractual services, is most of that attributable to cutting
    programs, or is most of that attributable to more aggressive
    contracting practices and getting a better bang for our buck?
        Mr. Mabus. Door number two. Senator, you and I are both
    former State auditors. My father was probably the cheapest
    human that God ever saw fit to put on this Earth, and I am his
    son.
        We spend $40 billion a year on service contracts, more than
    we do on acquisition. So we decided to take a close look at it.
    We've set up things like contract courts to have every
    contracting officer every year bring in their contracts and
    justify them. We have very senior oversight now of all contract
    activities. Some of these contracts just go on and on and get
    renewed whether they're needed or not. We are absolutely
    confident that we can save the $2.5 billion a year, and we're
    hopeful that we can do better than that.
        It's hard, it's not just as obvious as cutting a program.
    It's where very large amounts of savings can be had. What we
    are getting to is the ability to track a dollar from the time
    it is appropriated by Congress all the way through the process
    to what do you get in that contract at the end for that dollar?
    It hasn't been an easy process. But we're a long way down the
    road and we're absolutely confident of the savings.
        Senator McCaskill. These are the kinds of savings that is
    just money in the bank for all the needs we have. I hope their
    experiences in doing this and how you've done it will be taken
    to Secretary Hagel so that we can have some joint activity
    around the processes you're using and what you've learned in
    the process. Because I know that while I join with, I think,
    every member of this committee with grave concerns over the
    notion that we would get back into a sequestered environment
    and what it would mean to our military, at the same time I know
    there's still some squeezing we can do, especially in that
    contract arena.
        Secretary Amos, I have to go vote, but I don't want to
    leave without recognizing the survey that was taken in the
    Marine Corps that has not gotten very much attention. In 2011
    you conducted, in the Marine Corps, a survey on unwanted sexual
    contact and then you did another one last year, that the
    Department of the Navy did, that measured the prevalence of
    unwanted sexual contact. We found that it went down between
    2011 and 2013. It decreased for both men and women from 2011
    and 2013. Now I know that's because of a lot of factors, and
    part of it is that we are all working harder at it. I think the
    work that this committee has done has made a difference in
    terms of the environment in raising this problem to the very
    top of everyone's list. I also know we've had an increase in
    reporting.
        That's the goal: decrease in incidence, increase in
    reporting. It looks like, for at least this year, we're on that
    track for your Service. I want to make sure that I recognize
    that I know you're working at it very hard and I just wanted to
    point out that we do have both of those things going on right
    now, an increase in reporting and a decrease of incidence. I
    think that's very important.
        General Amos. Senator, thank you. As you say, there's an
    enormous amount of work and attention being paid from the very
    senior level to include this committee and our President. My
    Service Secretary is absolutely committed to this thing, as are
    the CNO and myself. We have a lot going on. I guess you could
    probably say there's a lot of job-ones. But, this is one of
    those job-ones that is really important. We're just about 2
    years into a campaign plan we launched in July 2012. The
    vectors are encouraging. Nobody's dancing in the end zone in my
    Service right now. We have a lot of work to do so we're going
    to stay at it, Senator. You have my word on that.
        Senator McCaskill. I know you will. Just as I think
    everyone in leadership of the military knows that I'm not going
    anywhere, and this is going to be something that I will
    continue. I've joked with some people. I was accused of
    coddling the command during this debate, and I said, ``I think
    people have not been coming to the Armed Services hearings,''
    because I don't think that would be the way they would
    characterize, typically, the aggressive questioning that
    sometimes I engage in, in order to make a point and hopefully
    make positive change for the military that we all care about so
    deeply, and more importantly, for the men and women who serve
    nobly and courageously.
        I thank all of you for being here.
        I know that members are coming back to ask questions. If I
    don't go now I'm going to miss this vote, so I'm going to
    recess the hearing briefly, and then I'm sure the chairman will
    be back momentarily to continue the hearing.
        Thank you. [Recess.]
        Chairman Levin [presiding]. The committee will come back to
    order.
        I don't know if any colleagues are going to be coming back,
    but if their staff is here, let them know that I only have a
    few questions and then we will adjourn unless I have notice
    that a colleague is coming back.
        Admiral Greenert, first, you made reference to an unfunded
    priority list. When will that list be coming in?
        Admiral Greenert. Mr. Chairman, it's due by April 18. I
    would like to have it within 2 weeks.
        Chairman Levin. Alright. Now, we also get, I think, an
    unfunded list from the Marine Corps. Is that correct? General,
    there's an unfunded priority list which will be forthcoming
    from the Marine Corps as well?
        General Amos. Yes, sir, it'll all come in here shortly.
        Chairman Levin. At the same time? Will they come the same
    time, generally?
        General Amos. Yes, sir.
        Chairman Levin. Okay. We will also expect the list from the
    other Services, as the practice is.
        Admiral, I wonder if you could tell us about the efforts
    that we're making relative to Malaysia Flight 370 if you're
    free to tell us that. Can you tell us what ships are steaming
    in that direction, what area they're going to, or what their
    mission will be? I guess we'll start with that if you have that
    information.
        Admiral Greenert. When the plane went down, we steamed a
    destroyer, the USS Pinckney, that happened to be in the area.
    That's the goodness of being where it matters, when it matters.
    Then we had another ship, just a few days later, the USS Kidd.
    Both of those ships steamed in the area until released. They
    were released within about 5 to 6 days because it was
    determined--when there became uncertainty as to the location,
    they said, ``Look, we need to do an aerial search so we can do
    this.'' Although we had aircraft there at the same time, and a
    more, I'd say, organized, or say, more organized laydown, we
    had a P-8, which is our maritime patrol, our new one, and a P-
    3, searching in a northern and a southern region. When the area
    shifted now to just a southern region, we are now working with
    the Australians and we fly one of our maritime patrol aircraft
    daily.
        Chairman Levin. Are our ships going to go to the area where
    that debris field has been identified? Or are we going to just
    rely on our planes, in terms of our contribution?
        Admiral Greenert. Our contribution, when tasked, we will go
    to the debris field. I'm not familiar right now with which
    ship. We've agreed to provide a sensor--it's a pinger sensor,
    effectively, using remote and we'll deploy that from a ship.
    There'll be, as a minimum, an auxiliary ship of some sort that
    will go down there. I'll take that for the record and get you a
    synopsis of that.
        [The information referred to follows:]

        The following ships were in support of Malaysia Flight 370 search:
    USS Kidd (7 days underway), USS Pickney (6 days underway), USNS
    Ericsson (5 days underway), USNS Charles Drew (1 day underway), and
    USNS Tippecanoe (1 day underway), supported in the search for MH-370.
    All ships were released upon establishment of the Northern/Southern
    Corridors west of Australia.
        There were no surface vessels utilized in the search for MH-370 in
    the search areas west of Australia. Two P-8 aircraft were used in the
    search, flying a total of 404.5 flight hours. One surface vessel, the
    USNS Cesar Chavez (20 days underway), was used for logistical support
    only.

        Chairman Levin. Alright. But, as of right now, there's been
    no specific area where we have assigned our ships to go, as of
    right this moment?
        Admiral Greenert. Other than the one that would tow this
    search for the pinger, no, sir. Not at this time, that I'm
    aware of.
        Chairman Levin. Okay. Alright, thanks.
        Just a couple of questions. Let's see, I guess, Admiral,
    this might go to you as well. Let me start first with Secretary
    Mabus. The Navy is going to be conducting a review of the LCS
    program to assess options for future purchases, beyond the 32
    ships currently approved. Is that correct?
        Mr. Mabus. That's correct, Senator.
        Chairman Levin. Will the Navy's review include the current
    designs derivatives of the current LCS designs and a new ship
    design?
        Mr. Mabus. Senator, the review that was ordered by the
    Secretary of Defense--and I think it's very important as you
    pointed out to go exactly with what the Secretary has ordered--
    is that we do a review of the ship, as we do of almost every
    Navy type of ship, that there are three options coming out of
    this review. One, is to continue to build the LCS, as is; two,
    is to build a modified version of the LCS; and three, is to
    build a completely new ship. But the instruction also continues
    that we are to take cost and delivery time to the fleet into
    account. The only thing that has been paused now is that we are
    not to enter into contract negotiations past 32 ships. But that
    32 ships will take us to 2019.
        Chairman Levin. You're not to enter contract negotiations
    beyond that until this review is completed. Is that correct?
        Mr. Mabus. That's correct. This review will be completed
    this year.
        Chairman Levin. Alright.
        Admiral, let me ask you about the survivability
    requirements for the LCS program. Are those requirements
    different than the survivability requirements for cruisers and
    destroyers?
        Admiral Greenert. Yes, sir, they are. There are levels of
    survivability, as we call them. Survivability three, that's a
    cruiser, destroyer, and carrier, and that means you take a
    missile hit, guns hit, mine, and maybe torpedo, and you
    continue to fight on. The militarization, if you will, the
    building standards, are different.
        Level two, amphibious ships and some submarines. In that
    one, you are able to continue fighting on in some circumstances
    very late out.
        Then, there's level one, and level one is where we have
    frigates and the LCS.
        If I may, sir, the ``survivability'' is a broader term than
    we're giving it credit for. There are three elements to
    survivability. The susceptibility to get a hit--in other words,
    your ability to defend yourself; then there's the
    vulnerability--and that would be taking the shock, the effect
    of the hit itself, the compartmentalization; and then, lastly
    is the recovery, the damage control--firefighting, automatic
    firefighting, automatic dewatering, and all that. All of those
    go together.
        We've looked at LCS and compared it with our frigate, which
    folks have been happy with, and it meets or exceeds the same
    standards of those elements of survivability and recoverability
    that I just laid out to you.
        I will tell you, we can do a little bit more in
    susceptibility, but LCS does meet the standards in the design
    that we laid forward and everybody, if you will, signed up to.
    Sometimes the question is, ``I want better survivability.''
    That's fine. We can work on the susceptibility, and we do have
    a plan in place.
        Chairman Levin. Now, are the requirements for LCS ships, in
    terms of survivability and the other elements mentioned,
    approved by the Joint Requirements Oversight Council?
        Admiral Greenert. Yes, sir, they were.
        Chairman Levin. Okay. Are you a supporter of this ship?
        Admiral Greenert. I am, yes, sir.
        Chairman Levin. Can you tell us why?
        Admiral Greenert. First of all, we need small surface
    combatants. I have 26. We need 52.
        Number two, I look at the potential of this ship. All the
    discussions that we just had on survivability notwithstanding,
    we can get there in that regard, but this ship has the ability
    to grow. It has speed, it has volume, and it has capacity. We
    can put payloads in there, as we've proven and as we have in
    the program of record. We talk about it as only a counter-
    surface anti-submarine, if you will, and my warfare ship, but I
    think there's more because of the ability to grow, as we have
    just talked about with Secretary Mabus. We'll go to another
    flight, and that ship could look quite different although
    they're the same hull. If you look at our strike fighter, the
    Hornet, if you look at our destroyers, we're coming up on our
    fourth flight, and the very satisfying Arleigh Burke-class
    destroyers.
        Chairman Levin. Thank you.
        Senator Hirono?
        Senator, would you, when you're done, if there's no one
    else here, would you then adjourn? If there is someone else
    here, would you then call upon them? Because I'm going to have
    to leave.
        Senator Hirono. Certainly.
        Chairman Levin. Thank you.
        Senator Hirono. Thank you, Mr. Chairman.
        Chairman Levin. Thank you all very much for your testimony
    today.
        Senator Hirono [presiding]. I want to start by, of course,
    thanking you for your service, and all of the men and women
    that you lead and their commitment.
        Secretary Mabus, as I was reading your testimony and you
    noted that there are four key factors that make our global
    presence and action possible, and one of these factors is the
    people. Your testimony went into some detail about your
    initiatives in regard to meeting the challenges of suicide,
    sexual assault, and alcohol-related incidents. I want to
    commend you for these initiatives, because this committee spent
    considerable time on the issue of sexual assault. I will have a
    continuing interest in the outcomes of your initiatives in this
    area.
        Turning to my questions. You responded to a number of
    questions regarding your efforts to become more energy self-
    sufficient and to decrease our reliance on very expensive oil
    to fuel our efforts. I agree with you that over the long-term,
    that we do need to move toward energy self-sufficiency because
    that does enable us to pay for the soldiers, sailors, and the
    platforms that we're all talking about. I commend you for your
    forward thinking in this area. I wanted to ask you, what is the
    importance of R&D in helping the Navy meet the energy security
    goals that you've outlined and that you've set?
        Mr. Mabus. R&D in this area, as in all areas, is one of the
    edges that we have. As I've said in an answer to a previous
    question, in terms of much of this alternative energy, we're
    there, in terms of production, in terms of what we can do now.
    There are still many areas that we need to research, that we
    need to look into because of potential for growth, potential
    for savings, potential to make us better warfighters. That's
    one of the reasons that we have fought so hard in this budget
    submission to protect R&D funding all across the Navy, because
    our people are our first edge; our technology and our R&D is
    the other edge that we bring in the world.
        Senator Hirono. Of course, I am very aware that there are
    efforts underway in Hawaii that are actually already saving
    money in this area.
        Admiral Greenert, you mentioned that, due to fiscal
    constraints, the Department of the Navy will not meet the
    mandated capital investment of 6 percent across all shipyards
    and depots described in fiscal year 2015. The Navy projects an
    investment of 3.5 percent in fiscal year 2015, and the budget
    proposal does fund the most critical deficiencies related to
    productivity and safety at our naval shipyards. Of course, we
    have a very large naval shipyard in Hawaii, as well as in other
    States.
        Can you comment to the importance of the sustainment,
    restoration, and modernization funding for the shipyards, and
    what the impact of this reduced level of capital investment
    will be?
        Admiral Greenert. Yes, Senator. It's more than just
    maintaining, if you will, buildings, utilities, and all that.
    It will increase the efficiency of the shipyard as well. We've
    seen payback in that.
        I regret that we didn't meet that. I will tell you that I'm
    committed in the execution of this budget as we look for
    opportunities to reprogram money. It is my intention to do as
    much as feasible to do that. We'll look for other programs that
    aren't obligating right. This will be a priority of mine in a
    reprogramming request.
        Senator Hirono. I'm glad to hear that because I have
    certainly seen firsthand how, for example, modernizing of a
    shipyard really enables for better efficiency, not to mention
    the impact on the morale of the men and women who work in our
    shipyards. So thank you for your efforts.
        General Amos, as the rotational movements in Hawaii
    continue for the marines around the Pacific and we in Hawaii
    are going to see an eventual movement of more troops,
    additional marines to our State from Okinawa, mainly, can you
    talk to the importance of the availability of training ranges
    for our marines as they rotate to Hawaii, for example?
        General Amos. Senator, I'd be happy to. We're joined at the
    hip with the Army National Guard and the Guard folks there in
    Hawaii right now, and the U.S. Army, with regards to the
    Pohakuloa Training Area (PTA) on the Big Island. There's a lot
    more that we can do there. There's discussion underway right
    now about building a runway, where we could land C-17s down
    there in the PTA area itself, making some building areas down
    there, temporary building areas, that both the Army and the
    Marine Corps could use, and the Guard when we deploy down
    there. We use our ground forces in Hawaii, that's really their
    sole ground training area. You can fire artillery, you can fire
    mortars, we can do air-to-ground there. It's significant for
    us, so it's very important for the forces that are there.
        We're going to bring in another 900 marines over the next
    couple of years that will fall in on Kaneohe, on the facilities
    there. But even beyond that, the other 2,700 marines that we'll
    bring into the Hawaii area at the end of the Pacific
    realignment for us--it's one of the last things that happens,
    but it's 2,700 marines coming to Hawaii--and those are marines
    that will need training ranges and facilities. So this is very
    important.
        Senator Hirono. Thank you. I'll certainly do my part to
    make sure that the people of Hawaii understand the importance
    of the training facilities, because those kinds of issues can
    become very controversial in the community, with regard to
    Pohakuloa, Makua, and other areas.
        I see my time is up and I don't see anyone else here.
        I thank you, once again, for being here and for your
    testimony.
        This committee is adjourned.
        [Whereupon, at 12:42 p.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Bill Nelson
                         east coast strategic dispersal
        1. Senator Nelson. Secretary Mabus, the Future Years Defense
    Program (FYDP) accompanying this year's budget request did not include
    construction at Naval Station Mayport necessary for accomplishing
    strategic dispersal of the carrier fleet on the east coast. This
    indicates there will be no progress towards achieving strategic
    dispersal through at least 2019. When do you anticipate the Navy will
    request to restart the initiative?
        Mr. Mabus. The Navy remains committed to strategic dispersal of
    east coast carriers and intends to homeport a CVN in Mayport in the
    future. The current budgetary uncertainty prevents us from identifying
    a specific timeline. The decision has been made to defer the investment
    required to homeport a CVN in Mayport at this time due to fiscal
    constraints.

        2. Senator Nelson. Secretary Mabus, do you anticipate having to
    reanalyze cost projections for the required military construction
    (MILCON)?
        Mr. Mabus. Once the MILCON projects required to support homeporting
    a CVN at Mayport are programmed in a future year, the cost estimates
    will be refined to reflect current economic conditions and lessons
    learned from completed projects.

        3. Senator Nelson. Secretary Mabus, one of the facilities which
    Mayport requires to be constructed to support a nuclear powered
    aircraft carrier is a nuclear controlled industrial facility (CIF). The
    Navy's estimate for building a CIF at Mayport was $150 million, while
    the Government Accountability Office (GAO) estimates the building
    should cost $35 to $95 million. After those estimates were produced, a
    CIF was completed in Portsmouth, VA, for $33 million. Why does the Navy
    estimate a facility at Mayport Naval Air Station would cost almost five
    times as much as the facility built in Virginia?
        Mr. Mabus. Several factors contribute to the disparity in cost
    between the Norfolk Naval Shipyard (NNSY) CIF and Mayport: project
    scope, timing, and location. First, a direct one-for-one comparison of
    the NNSY CIF to Mayport cannot be made as several structures critical
    to operating a CIF already exist in Norfolk, but not in Mayport.
    Mayport cost estimates include construction costs for similar
    facilities.
        Second, the Mayport CIF design is more robust to accommodate the
    increased potential for higher storm surges due to its location
    adjacent to the coast of Florida.
        Third, the downturn in the economy after 2008 has led to a more
    favorable bidding climate nationwide. The award amount of $26.3 million
    for the NNSY CIF in 2012 reflects a winning bid in the current economic
    climate. In contrast, cost estimates for Mayport were prepared early in
    2008 to inform the selection of a Preferred Alternative from among many
    different ship homeporting options as part of the 2008 Environmental
    Impact Statement. Estimates for all the Mayport options were very
    conservative, as they were based on preliminary data and took into
    consideration the post-Katrina cost escalations prevalent in Florida
    and the other Gulf Coast States at the time. Should the CIF be
    programmed in a future year, the estimate would be refined to reflect
    current economic conditions and lessons learned from constructing the
    CIF in Norfolk.

        4. Senator Nelson. Secretary Mabus, are there lessons learned in
    the construction of the Virginia CIF that could be applied to Mayport?
        Mr. Mabus. As with any MILCON project, there were lessons learned
    during the planning, design, and construction process for the CIF at
    NNSY. Should the Mayport CIF be programmed in the future, the estimate
    would be refined to reflect current economic conditions and lessons
    learned from completed projects.

                   aerial surveillance, command, and control
        5. Senator Nelson. Admiral Greenert, this year's fiscal year 2015
    procurement plan requests four E-2D aircraft in the base budget, with
    an additional aircraft purchased with the Opportunity, Growth, and
    Security Initiative (OGSI) funds. Can you please describe the
    difference in your ability to conduct aerial surveillance and command
    and control if the Navy is not allowed to procure all five E-2Ds?
        Admiral Greenert. The fifth E-2D currently in the President's
    budget request for fiscal year 2015 OGSI and on the Navy Unfunded
    Priority List (UPL) would provide additional flexibility to the Navy's
    Master Aviation Plan, mitigating the risk of potential delays to E-2C
    to E-2D transitions, and subsequent operational deployments. The Navy
    will transition all 10 of its carrier air wings from E-2C to E-2D and
    can only convert a particular squadron when 5 E-2Ds are built and
    delivered. Due to training and logistic constraints, operating with
    mixed E-2 squadrons of Cs and Ds is not effective or efficient. The
    multiyear procurement and future production plans average five aircraft
    per year, but fiscal year 2015 funding fell short resulting in only
    four E-2Ds.
        The heart of the E-2D is the new mechanically-rotated,
    electronically-scanned radar, APY-9, and the 18-channel antenna, ADS-
    18. Combined with powerful new software and advanced computing power,
    the E-2D delivers anti-ship cruise missile defense against low
    observable targets over land and in denied access environments.
    Integrated with the other elements of Naval Integrated Fire Control-
    Counter Air (NIFC-CA), E-2D provides the carrier battle group with the
    highest level of survivability in the anti-access/area-denial (A2/AD)
    environment, thus increasing its lethality over the legacy E-2C.

                             p-8 radar performance
        6. Senator Nelson. Admiral Greenert, I'm pleased to see the Navy's
    P-8 Maritime Reconnaissance plane being put to use in the Pacific. Can
    you please discuss how the Navy is addressing concerns about the P-8's
    radar performance, sensor integration, and data transfer capabilities
    that were raised in the Department of Defense's (DOD) December 2013
    Director, Operational Test and Evaluation (DOT&E) report?
        Admiral Greenert. Initial operational test and evaluation (IOT&E)
    completed in March 2013 and evaluated the P-8A version 10 software.
    This evaluation was the basis for the DOT&E report. IOT&E identified
    four major operational test deficiencies tied to the intelligence
    collection mission area, all of which had been previously documented
    during Developmental Test (DT). The four deficiencies were: (1)
    incorrect radar SAR map elevation data; (2) smeared SAR imagery; (3)
    inability to connect to some SIPRNET web sites; and (4) inoperative
    specific emitter identification system.
        P-8A version 20 software, released in June 2013, corrected the
    first three of these deficiencies. These corrections then were
    evaluated during DT in August 2013 and again during a follow-on test
    and evaluation (FOT&E) period which completed in March 2014. DT
    concluded that the version 20 software fixed or significantly reduced
    the severity of the first three deficiencies. Formal FOT&E results will
    be reported in the coming months. Additionally, version 20 software has
    been in use by the Fleet since the beginning of the first operational
    deployment in December 2013. To date, the Fleet has reported no
    problems with any of these first three deficiencies, confirming the
    success of the correction effort. A correction for the fourth and final
    deficiency (specific emitter identification system) is included in the
    P-8A version 40 software scheduled for release in July 2015.
                                     ______

                 Questions Submitted by Senator Jeanne Shaheen
     base closure and realignment commission and portsmouth naval shipyard
        7. Senator Shaheen. Admiral Greenert, as you are aware, DOD has
    recently announced that it intends to request another Base Realignment
    and Closure (BRAC) round from Congress. As chairman of the Readiness
    and Management Support Subcommittee, I fully appreciate DOD's fiscal
    challenges, particularly our critical readiness shortfalls. However, I
    strongly disagree that another BRAC round is needed at this time, and I
    will not support one in the upcoming National Defense Authorization Act
    (NDAA). I was heartened by your statement in Florida last week that you
    ``did not see a need for BRAC'' within the Navy. Could you please speak
    to the importance of supporting our shipyards and maintenance
    facilities so that we continue to maintain this critical capability?
        Admiral Greenert. Navy shipyards and maintenance facilities are
    vital to Fleet readiness. Naval shipyards provide organic capability to
    perform depot/intermediate-level maintenance, modernization, emergency
    repair work on nuclear-powered aircraft carriers/submarines, and
    complement the private sector's capability for conventional surface
    ship maintenance. It is critical that Navy maintains this capability to
    meet current operational requirements and achieve the expected platform
    service life of surface ships, aircraft carriers, and submarines.

                            defense industrial base
        8. Senator Shaheen. Admiral Greenert, when Mr. Work testified
    before this committee last month, he described the U.S. shipbuilding
    industrial base as ``under pressure.'' Last year, the Navy projected
    the population of expert and highly experienced shipyard employees to
    decline by over 40 percent. Are you concerned about the health of the
    defense industrial base with regards to shipbuilding generally and
    submarines in particular?
        Admiral Greenert. The shipbuilding industrial base necessary to
    build and maintain platforms for defense relies on a complex, heavy
    industry where ships are procured at very low annual production rates
    that require significant capital investment and infrastructure, coupled
    with a wide range of technical capabilities designed for operations at
    sea, undersea, and air, often requiring unique design and engineering
    skills. Accordingly, lead ship design contracts and modifications to
    existing ships are the primary means for maintaining shipbuilding
    design engineering skills in the United States. A stable industrial
    base is required to ensure minimum sustainable work force employment
    levels and retention of critical skills to meet both design and
    construction requirements.
        Today, we do have some sectors of the shipbuilding industrial base
    that are healthier than others. However, there are not enough ships
    being built to sustain all sectors of the industrial base at an optimal
    level. Together with Congress, the Navy has worked hard to provide
    stability, via multi-year and block-buy contracts, to a number of our
    shipbuilding programs, which has had a positive effect on those
    shipbuilders and vendors. While our auxiliary shipbuilding sector has
    been bolstered by recent commercial new construction orders, these
    orders provide only near-term workload, and future commercial orders
    are viewed as less probable. Combined with a reduced backlog and
    projected Navy orders of only one amphibious ship and eight auxiliary
    ships within the FYDP, this means that the amphibious and auxiliary
    shipbuilding sector is most at risk.
        Our submarine industrial base is at its most robust and healthy
    level in over 15 years due to the two per year Virginia-class multi-
    year procurement. However, the Navy has not designed a new ballistic
    missile submarine since the 1970s or built one since the last Ohio-
    class delivered in 1997. We are taking the necessary steps to restart a
    dormant missile tube and launch tube industrial base.

        9. Senator Shaheen. Admiral Greenert, I was pleased to see that the
    Navy is continuing with its plans to procure 21 new Virginia-class
    submarines by 2020. Do you feel confident that the Navy's submarine
    procurement plan is adequate, particularly given that the overall
    number of submarines is set to decline and China is expanding its own
    capabilities in this area?
        Admiral Greenert. The 2012 Force Structure Assessment (FSA)
    determined that 48 attack submarines is the minimum required for the
    Navy to meet all mission areas outlined in the Defense Strategic
    Guidance (DSG).
        According to our President's budget for fiscal year 2015 30-year
    ship building plan, submarine force structure slowly declines below the
    48 SSN minimum requirement from 2025-2034, with a low of 41 from 2028-
    2030. Navy is mitigating this shortfall through three parallel efforts:
    continuing procurement of two Virginia-class submarines per year,
    reducing the construction span of Virginia-class submarines, and
    extending the service lives of selected attack submarines. Continued
    procurement of two Virginia-class SSNs per year mitigates the severity
    of the SSN shortfall while maintaining a balanced portfolio throughout
    the other Navy ship building programs within the fiscal guidance
    provided.
        If we return to the Budget Control Act of 2011 (BCA) revised
    discretionary caps in fiscal year 2016, we will be compelled to reduce
    force structure to ensure we maintain a balanced, ready force under the
    reduced fiscal topline. Under BCA level funding, the Navy will not be
    able to sustain two Virginia-class procurements a year resulting in an
    even lower number of attack submarines.

                               sea-floor scarring
        10. Senator Shaheen. Admiral Greenert, submarines and other ocean
    vessels produce wakes that can alter water column stresses. In littoral
    zones containing moveable sediment, these wakes have the potential to
    leave a vessel-specific signature in bottom roughness patterns. The
    bottom roughness signature is characterized by the ripple wavelength,
    height, and orientation. A modification of this roughness due to local
    modification of the water column and bottom stresses can result in
    temporary sea-floor scarring. Harnessing this technology could yield
    significant benefits for the Navy. Can you describe to what extent the
    Navy has evaluated, or is currently studying, the potential of sea
    scarring and its ability to aid undersea operations?
        Admiral Greenert. The Navy currently has no program of record to
    evaluate or study the potential of sea scarring and its ability to aid
    in undersea operations.

                            special operations craft
        11. Senator Shaheen. Admiral Greenert, one of the persistent
    challenges for Special Operations Craft is balancing high-speed, open
    ocean capability with substantial shock and vibration experienced by
    operators under those conditions. Repeated exposure can lead to
    discomfort, injury, and performance degradation. Can you describe the
    U.S. Special Operations Command's (SOCOM) efforts to develop or support
    commercially available platforms that could address this issue?
        Admiral Greenert. I appreciate your concerns about our special
    operators, but I defer to Admiral McRaven to provide the answer to your
    question on SOCOM's small craft acquisition efforts.

        12. Senator Shaheen. Admiral Greenert, is SOCOM working with the
    Office of Naval Research or other DOD RDT&E programs on a solution to
    this challenge?
        Admiral Greenert. I know that NAVSEA Naval Surface Warfare Center
    (NSWC) Panama City and NSWC Carderock Division, Norfolk Detachment are
    working with SOCOM, however I defer to Admiral McRaven to provide more
    specifics on Special Operations craft-related research and development
    (R&D) efforts.
                                     ______

                 Questions Submitted by Senator James M. Inhofe
            meeting and sustaining the fleet size goal of 300 ships
        13. Senator Inhofe. Secretary Mabus and Admiral Greenert, the
    Navy's long-range 30-year ship acquisition plan calls for a 306-ship
    fleet. The Navy's plan calls for building a new Ford-class aircraft
    carrier only every 5 years. How do you reconcile this budget and the
    FYDP with achieving and sustaining that 306-ship goal, in both the
    near-term and over the next 30 years?
        Mr. Mabus and Admiral Greenert. The fiscal year 2015 President's
    budget fully funds the construction of naval vessels in the fiscal
    years 2015 to 2019 FYDP. This budget also builds and maintains a battle
    force inventory of near or above 300 ships, and ultimately achieves the
    2012 FSA objective of 306 battle force ships.
        Within the long-range 30-year shipbuilding plan, both in the FYDP
    and across the 30-year period, CVN procurement remains on 5-year
    centers, meeting the requirement of 11 carriers, as validated by the
    2012 FSA, in fiscal year 2016 with the delivery of the Gerald R. Ford
    (CVN-78) through fiscal year 2039. The use of incremental funding
    mitigates funding spikes in the Shipbuilding and Conversion, Navy
    appropriation, and allows the Navy to procure these large capital ships
    and apply funding to other shipbuilding programs concurrently. This is
    a more practical and effective procurement strategy that enables the
    Navy to reach its force structure goals.
        Building CVNs on 5-year centers is more fiscally sustainable, but
    will ultimately arrive at a CVN force of 10 carriers, as shown in the
    30-year shipbuilding plan beginning in fiscal year 2040 based on an
    expected service life of 50 years. With the current CVN force at 10
    ships until CVN-78 delivers in fiscal year 2016, the department has
    looked at the risk to operational plans and presence requirements.
    Changes in maintenance and operation strategies such as implementing
    the Optimized Fleet Response Plan will mitigate the risks associated
    with having a 10-carrier force.
        In addition, over the next 25 years, several factors could
    influence the force structure requirement necessary in fiscal year
    2040, such as changes to the presence requirement, our ability to
    fulfill requirements based on the capabilities of new and modernized
    payloads and platforms, the global environment, and the defense
    strategy. Technology could also advance over the next 25 years to
    enable us to extend the service life of the Ford-class aircraft
    carriers. The department supports the current acquisition plan to meet
    today's defense strategy, and continues to review the force structure
    requirement and long-range shipbuilding plan every year.

        14. Senator Inhofe. Secretary Mabus, if sequestration continues in
    full until 2023, what size fleet are we likely to see and how would
    that alter the Navy's presence mission? At a certain point doesn't
    quantity have a quality all its own?
        Mr. Mabus. If sequestration continues in fiscal year 2016 and
    beyond, one potential scenario could result in a fleet size of 304
    ships. However, sustaining forward presence would continue to be a high
    priority for the Navy. One of the key areas of the Quadrennial Defense
    Review's updated strategy is ``rebalancing and sustaining our presence
    and posture abroad'' and it requires the Navy to ``continue to build a
    future fleet that is able to deliver the required presence and
    capabilities and address the most important warfighting scenarios.''
    Even under sequestration, Navy would continue to utilize cost-effective
    approaches to sustaining forward presence, such as forward basing,
    forward operating, and forward stationing ships.
        Capacity does impact the Navy's ability to fulfill the defense
    missions, primarily in our ability to surge forces and deploy within 30
    days. If sequestration continues, we would have a reduced surge
    capacity and reduced ability to conduct more than one multi-phased
    major contingency simultaneously.

        15. Senator Inhofe. Secretary Mabus, with a smaller fleet we will
    see longer deployments, and as our experience from the 1970s shows,
    won't that lead to personnel retention and loss of critical experienced
    personnel?
        Mr. Mabus. I disagree with the opening premise of the question; we
    will not have a smaller fleet. There were 316 ships in the fleet on
    September 11, 2001, and 278 ships in 2008. We are growing the fleet to
    over 300 ships before the end of the decade, assuming we can avoid
    returning to sequestration.
        That said, longer deployments can present retention challenges,
    which Navy is addressing through the Optimized Fleet Response Plan
    (OFRP) and special and incentive pays. OFRP will result in more
    predictable deployment schedules, improved quality of work, enhanced
    quality of life and an acceptable personnel tempo. In recognition of
    longer deployments and the arduous nature of sea duty, Navy is
    increasing career sea pay and career sea pay premium rates, and is
    pursuing authority from the Office of the Secretary of Defense (OSD) to
    pay sailors for extended deployments. Funding for these special and
    incentive pays is included in the President's budget.

        16. Senator Inhofe. Secretary Mabus, if the long-range plan is to
    only build a Ford-class aircraft carrier every 5 years, and assuming a
    service life for the carriers of 50 years, then is that not effectively
    going to only a 10-aircraft carrier-deployable force instead of the 11
    required by law?
        Mr. Mabus. Based on the current schedule, the aircraft carrier
    force structure will be restored to 11 CVNs with the projected delivery
    of CVN-78 in 2016. The current construction schedule for Ford-class
    carriers, as depicted in the Navy's 30-year shipbuilding plan,
    maintains a force structure of at least 11 carriers until 2039, after
    which the fleet is currently projected to be reduced to 10 CVNs without
    any major changes in the interim 24 years.

                           ship counting rules change
        17. Senator Inhofe. Secretary Mabus and Admiral Greenert, the
    Navy's budget reflects a revision to its ship counting rules. Please
    explain why the Navy has made this change?
        Mr. Mabus and Admiral Greenert. Our decision to change the ship
    counting procedures was not without careful thought and planning to
    ensure that we are accurately representing the Fleet and how we are
    delivering the capability needed to conduct the missions outlined in
    the DSG. The new counting methodology provides flexibility to the
    combatant commanders to assess the near-term environment and changing
    situations faced in meeting the demands of the DSG. This will include
    Forward Deployed Naval Forces (FDNF), whether self-deployable or non-
    self-deployable, being added to the battle force count dependent on the
    mission, location, and required capabilities.
        The new counting methodology allows ship types routinely requested
    by the combatant commanders and allocated through the Global Force
    Management Allocation Plan (GFMAP) to be counted on a case-by-case
    basis with the recommendation of the Chief of Naval Operations and
    approved by the Secretary of the Navy. This will be a temporary
    authorization to include these ships in the ship count and will remain
    in effect until the ships are no longer requested in the GFMAP or are
    retired (whichever occurs first).

        18. Senator Inhofe. Secretary Mabus, how are the new ship counting
    rules more flexible in response to GFMAP and combat command demand
    signals?
        Mr. Mabus. Our decision to change the ship counting procedures was
    not without careful thought and planning to ensure that we are
    accurately representing the Fleet and how we are delivering the
    capability needed to conduct the missions outlined in the DSG. The new
    counting methodology provides flexibility to the combatant commanderss
    to assess the near-term environment and changing situations faced in
    meeting the demands of the DSG. This will include FDNFs, whether self-
    deployable or non-self-deployable, being added to the battle force
    count dependent on the mission, location, and required capabilities.
        The new counting methodology allows ship types routinely requested
    by the combatant commanders and allocated through the GFMAP to be
    counted on a case-by-case basis with the recommendation of the Chief of
    Naval Operations and approved by the Secretary of the Navy. This will
    be a temporary authorization to include these ships in the ship count
    and will remain in effect until the ships are no longer requested in
    the GFMAP or are retired (whichever occurs first).

        19. Senator Inhofe. Secretary Mabus and Admiral Greenert, the
    Navy's budget reflects a revision to its ship counting rules. What
    would have been the number of ships before this change was made?
        Mr. Mabus and Admiral Greenert. Under the new counting methodology,
    the battle force will be 284 ships at the end of fiscal year 2015 and
    309 ships at the end of fiscal year 2019. Under the previous counting
    rules the overall battle force inventory would have been 274 ships at
    the end of fiscal year 2015 and 301 ships at the end of fiscal year
    2019.

        20. Senator Inhofe. Secretary Mabus and Admiral Greenert, the
    Navy's budget reflects a revision to its ship counting rules. Should we
    also be counting those ships in an extended 3- to 4-year overhaul as a
    combat readily deployable ship?
        Mr. Mabus and Admiral Greenert. Yes, the Department of the Navy
    believes that we should continue to include ships in extended overhaul
    as part of the battle force inventory because they are still ``combat
    capable ships that contribute to warfighting missions, specific combat
    support missions, or service support missions,'' as described in
    Secretary of the Navy Instruction 5030.8B. These ships could still be
    returned to service should the security environment demand additional
    ships. At any given point in time and on a continuing basis, all battle
    force ships enter some type of maintenance or modernization
    availability lasting from several weeks, to several months and even
    several years. Not being ``combat readily deployable'' does not change
    the ship's status as an inventory asset to the Navy.

                                    biofuels
        21. Senator Inhofe. Secretary Mabus, you note in your testimony
    that, ``we now are working with four companies that will--that are
    obligated to provide us with 163 million gallons of biofuel at 2016 at
    less than $3.50 a gallon.'' Are these amounts actually assumed in your
    budget submission estimates? Please clarify any differences.
        Mr. Mabus. If all four Defense Production Act (DPA) companies are
    selected for Phase II funding awards, those companies have committed to
    provide the domestic fuels market with more than 160 million gallons of
    advanced drop-in, military compatible biofuels. The weighted average
    price of this fuel will be less than $3.50 with production beginning in
    2016.
        The funding for nearly all operational, conventional and
    alternative, fuel purchases comes from the Defense Working Capital Fund
    (DWCF) and will continue to do so for the foreseeable future. The DWCF
    is a revolving fund of operations and maintenance (O&M) dollars. Each
    year the Navy submits the total number of gallons of fuel it will need
    to conduct its mission. The price Navy will pay for fuel is set by the
    Comptroller in OSD. As a matter of policy, DOD will only purchase bulk
    quantities of alternative fuels that are cost-competitive with
    conventional fuels. Therefore, there are no additional budget estimates
    submitted to account for operational purchases of alternative fuels.
    The fuel being produced by the DPA companies is ``drop-in'' meaning it
    will be mixed into the general fuel pool and indistinguishable from
    conventional products.

                  opportunity, growth, and security initiative
        22. Senator Inhofe. Secretary Mabus, the administration has
    proposed the OGSI as a means to provide additional funding above the
    BCA caps as a part of this budget: the administration's initiative
    would provide for $56 billion in total of which $28 billion would go to
    DOD. In addition, the DOD budget request includes amounts roughly about
    $29 billion per-year between fiscal year 2016 and fiscal year 2019,
    totaling $115 billion. What is the Navy's share of the administration's
    OGSI for the fiscal year 2015 requested amount of $28 billion?
        Mr. Mabus. The Department of the Navy's share of the $28 billion
    requested for DOD is $9 billion. Of the $9 billion, $7.6 billion was
    for Navy and $1.4 billion was for Marine Corps.

        23. Senator Inhofe. Secretary Mabus, what is the Navy's share of
    the $115 billion included in the DOD budget request in the out-years by
    fiscal year, fiscal years 2016-2019?
        Mr. Mabus. The OGSI is a 1-year request in fiscal year 2015 to
    accelerate readiness improvements that are proposed more gradually in
    the fiscal year 2015 President's budget submission. Currently, there is
    no OGSI request for fiscal years 2016-2019.
        The DOD's fiscal year 2015 President's budget submission includes
    $115 billion in funding above the revised discretionary caps of the BCA
    of 2011 for fiscal years 2015-2019. The Navy's share for fiscal years
    2016-2019 by fiscal year is estimated as follows:

             Fiscal Year 2016: $11 billion
             Fiscal Year 2017: $9 billion
             Fiscal Year 2018: $8 billion
             Fiscal Year 2019: $6 billion
             Total Fiscal Years 2016-2019: $34 billion

        24. Senator Inhofe. Secretary Mabus, can you provide the specific
    line item (amount and effort) details of the OGSI request?
        Mr. Mabus. Yes, the line item detail, including funding, is
    provided in the DOD report attached. The report is organized by
    Appropriation type (e.g., O&M, procurement, et cetera) and with each
    appropriation is line item detail.

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               civilian personnel
        25. Senator Inhofe. Secretary Mabus, in light of the civilian
    personnel hiring freezes and furloughs that occurred in fiscal year
    2014, what impacts were there on the shipyards and aviation depots? How
    were they mitigated or what risk was assumed?
        Mr. Mabus. The fiscal year 2013 hiring freeze and overtime funding
    restrictions created a capacity shortfall for naval shipyards resulting
    in deferral of approximately 75,000 man-days of planned work from
    fiscal year 2013 to fiscal year 2014. Navy mitigated the impact by
    lifting the hiring freeze in June 2013, commencing aggressive
    recruitment efforts, and exempting shipyards from civilian furloughs.
    Even with those efforts, the number of personnel at the end of fiscal
    year 2013 was about 200 below the budgeted end strength.
        Commander, Fleet Readiness Center (COMFRC) lost 12 working days on
    all production lines across the fleet readiness centers. This issue was
    exacerbated by the fiscal year 2013 hiring freeze and resulted in
    COMFRC understaffing its fiscal year 2014 requirement by just under 600
    full-time equivalent (FTE) personnel. Additionally, the furlough
    resulted in 43 aircraft and 289 engine repair delays and caused a net
    operating loss of approximately $8 million to this working capital
    funded organization.

        26. Senator Inhofe. Secretary Mabus, what is the civilian personnel
    hiring plan for the shipyards in fiscal year 2015?
        Mr. Mabus. The following table provides information on the staffing
    requirements for fiscal year 2015 for the four Naval Shipyards
    (Portsmouth Naval Shipyard, NNSY, Puget Sound Naval Shipyard (PSNS) and
    Intermediate Maintenance Facility (IMF), and Pearl Harbor Naval
    Shipyard and IMF.

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        27. Senator Inhofe. Secretary Mabus, Avondale Shipyard in Louisiana
    is scheduled to close in a few years with no remaining work. What other
    new construction shipyards face a similar problem during the FYDP time
    horizon?
        Mr. Mabus. While no other new construction shipyards are currently
    scheduled to close during the FYDP time horizon, any reductions in
    planned ship procurements resulting from sequestration in fiscal years
    2016 to 2019 will further exacerbate shipbuilding industrial base
    issues and could result in significant lay-offs and/or closures in
    those areas most affected.

                            ohio replacement program
        28. Senator Inhofe. Secretary Mabus, 2 years ago due to fiscal
    challenges the Navy was forced to delay the procurement start of the
    Ohio replacement program (ORP). Planned procurement now will not begin
    until fiscal year 2021. The ships will begin to deliver about 7 years
    later just in time to replace the aging Ohio-class Ballistic Missile
    Submarine (SSBN), assuming there are no construction delays. This new
    submarine is anticipated to cost more than $6 billion per ship in then-
    year dollars and there is concern that cost will crowd out other
    important shipbuilding program needs, like attack submarines and
    surface combatants. Admiral John M. Richardson, Director of Naval
    Reactors, has testified that funding shortfalls made impossible the
    purchase of vital capital equipment and postponed infrastructure
    improvements, most notably defunding high performance computing
    capacity that is needed to deliver the ORP reactor design on time and
    to support the existing fleet. Cancelling this computer purchase in
    fiscal year 2014 has resulted in at least a 6-month delay to reactor
    core manufacturing, impacting the ORP lead-ship construction schedule.
    Is the ORP still on schedule, and is the program fully funded in the
    current fiscal year 2015 DOD budget, including the out-years?
        Mr. Mabus. Naval Reactor's Department of Energy (DOE) funding was
    reduced by $151 million in fiscal year 2014. As a result of that
    funding shortfall, there was insufficient funding to support a planned
    procurement ($11 million) for high performance computers (HPC) that are
    necessary to complete the reactor design for the ORP as well as support
    fleet operations. As a result, the ORP reactor core design is expected
    to be delayed by 6 months. Naval Reactors is working with DOE on a path
    forward that will provide resources to procure the computers this year.
    If that proves unsuccessful, Naval Reactors will reprioritize fiscal
    year 2015 resources, at the detriment of other requirements, to procure
    HPCs, dependent upon their fiscal year 2015 appropriation level. If the
    HPC procurement can take place by the beginning of fiscal year 2015,
    the impact to ORP can be minimized.
        The DOE shortfall is the only issue delaying the program at this
    time. The program is fully funded in the fiscal year 2015 President's
    budget request for the FYDP.

        29. Senator Inhofe. Secretary Mabus, are there shortfalls in the
    related DOE budget request that will impact planned ship construction?
    How will they be addressed?
        Mr. Mabus. Naval Reactor's DOE funding in fiscal year 2014 is $151
    million below the requested level. Nearly $100 million of this
    reduction was directed against the Naval Reactors' Operations and
    Infrastructure funding line, which among other activities, funds two
    Naval Reactor laboratories, two prototype reactor plants, and the spent
    fuel processing facility--all of which support the current and future
    nuclear fleet. One impact of this shortfall was insufficient funding to
    support a planned capital equipment procurement ($11 million) for HPCs
    that are necessary to complete the reactor core design for the ORP. As
    a result, the reactor core design would have been delayed by 6 months.
    Additionally, this funding shortfall, if not resolved, would have
    resulted in shutdown of one training reactor in New York, reducing
    nuclear operator training pipeline capacity. The resultant 450 operator
    per year shortfall would have impacted all nuclear powered ships,
    including those under construction with Navy crews on-board. The delay
    to spent fuel handling infrastructure will impact nuclear powered
    submarine and aircraft carrier refueling/defuelings, but not ships in
    new construction.
        Naval Reactors working with the DOE identified funding to enable
    fiscal year 2014 procurement of the required HPC capability, thus
    keeping ORP on schedule. The Navy has provided fiscal year 2014 funding
    relief for training reactor maintenance, ensuring the training pipeline
    capacity remains consistent.

                           marine corps end strength
        30. Senator Inhofe. General Amos, I understand regardless of what
    happens with sequestration, the Marine Corps is required to reduce end
    strength to 175,000 Active Duty down from 182,700. In terms of
    battalions, this translates to 21 battalions down from 28 battalions.
    Could you articulate the risk and the readiness implications of drawing
    down the Marine Corps to these levels?
        General Amos. The current budget supports the 175,000 force at
    moderate risk. At this force level, 20 of our 21 battalions will be
    required for a major war. Those battalions would be adequately trained
    and ready, but the Marine Corps will be all in until the war is over.
    We will have very little left for crises that could occur in other
    parts of the world.
        A return to sequestration in fiscal year 2016 with a 175,000 force
    would equate to high risk. At this lowered resource level, our units
    that deploy to combat would not be as well trained, and would be slower
    arriving. This means that it will take longer to achieve our
    objectives, and the human cost would likely be higher.

        31. Senator Inhofe. General Amos, what were the trade-offs that the
    Marine Corps made to sustain this level of end strength?
        General Amos. In order to prioritize emerging demands in a fiscally
    constrained environment, we accepted risk in major combat operations
    (MCO) and stability operations. Thus, the redesigned Marine Corps made
    tradeoffs in some high end capabilities, like armor and artillery, in
    order to concentrate on our role as America's premier crisis response
    force.
        In the short term, our focus on readiness ensures that our 21
    battalions will be trained and ready for a major war. However, should
    major war occur, we will be all in until the war is over. We will have
    very little left for crises that could occur in other parts of the
    world. To meet forward presence demands, our force will maintain a high
    operational tempo at 1:2 deployment to dwell ratio which increases risk
    by stressing training requirements and straining our career force.
        The long-term impacts depend in large part on resourcing levels. A
    return to sequestration in fiscal year 2016 with a 175,000 force would
    equate to high risk. At this lowered resource level, our units that
    deploy to combat would not be as well trained, and would be slower
    arriving. This means that it will take longer to achieve our
    objectives, and the human cost would likely be higher.

                           amphibious combat vehicle
        32. Senator Inhofe. General Amos, I understand the Amphibious
    Combat Vehicle (ACV) program has been restructured due to technology
    maturity and affordability. Now, the Marine Corps plans to use Marine
    Personnel Carrier (MPC) program requirements to define the first
    increment of the ACV program. How realistic is it to expect MPC to be
    the first increment of ACV?
        General Amos. The MPC, which we refer to as ACV increment 1.1, is a
    realistic, practical, and highly effective means of addressing our
    infantry mobility requirements. ACV 1.1 is intended to be the
    acquisition of a non-developmental, medium wheeled, armored personnel
    carrier. This type of combat vehicle is ubiquitous throughout the
    international defense industry and is used by militaries around the
    world. We have worked with industry for many years to encourage the
    development of increased protection, lethality, and mobility
    capabilities. In 2013, we completed government swim and protection
    testing of several candidate vendors' vehicles. The results were
    impressive and we believe that this approach will provide a vehicle
    that is superior in many aspects to our current Amphibious Assault
    Vehicle (AAV) and will deliver the capability much faster than a new
    design. We will upgrade and sustain enough AAVs to ensure that we
    maintain an amphibious capability until the new vehicle is fully
    incorporated as a modern component of the Nation's power projection
    capabilities.

        33. Senator Inhofe. General Amos, I understand the ACV program has
    been restructured due to technology maturity and affordability. Now,
    the Marine Corps plans to use MPC program requirements to define the
    first increment of the ACV program. What is the impact of changing the
    ACV strategy on the current AAV platform?
        General Amos. By pursuing a non-developmental acquisition of a
    wheeled-armored personnel carrier, we will reduce the time it takes for
    us to field a vehicle, and reduce the burden of our current AAVs. We
    will have a parallel survivability upgrade program in place to improve
    protection and performance of a portion of the AAV fleet so that it
    will continue to serve as the primary amphibious mobility platform
    until the fleet is replaced entirely by a modern capability.

        34. Senator Inhofe. General Amos, what is the operational impact to
    the Marine Corps if this program is deferred for several years?
        General Amos. The AAV's current performance capabilities,
    especially in the areas of protection, mobility, and lethality, are
    woefully short of required operational capabilities. We did not use the
    vehicles in the latter stages of Operation Iraqi Freedom and not at all
    in Operation Enduring Freedom (OEF) for those reasons. We continue to
    deploy them with our Marine Expeditionary Units (MEU), and if called
    upon, to conduct major combat operations from the sea or inland. It is
    likely the AAV will be the maneuver platform used by our infantry
    forces because that is what we have. However, we should no longer defer
    the AAV's replacement.
        There is no looming readiness or combat capability that will
    suddenly impact the Marine Corps; however, the current AAV fleet is
    facing several obsolescence and declining parts supply issues. These
    factors decrease the readiness of our primary infantry mobility
    platform. We will be able to address some of the issues through an
    aggressive survivability and sustainment upgrade program, but without
    replacement the already 40-year-old vehicle will continue to age and
    decline in readiness.

                            ohio replacement program
        35. Senator Inhofe. Secretary Mabus and Admiral Greenert, the Navy
    has been advocating for the establishment of a new separate national
    defense account to fund the future procurement of the new ORP, instead
    of funding the ship in the Shipbuilding and Conversion, Navy
    shipbuilding account. This new account would be similar to the National
    Defense Sealift Fund (NDSF) account used to fund sealift. However, the
    Navy's budget proposes to cancel the NDSF account because the account
    has not executed funding as it was intended to. Given the Navy's
    proposal to terminate the NDSF account, why would it make sense to fund
    the new Ohio in a separate account? Why not simply fund the new Ohio in
    the same manner the earlier Trident submarine was funded which was in
    the Shipbuilding and Conversion, Navy account?
        Mr. Mabus and Admiral Greenert. The construction of the ORP SSBN
    will require significant increases in Navy's top-line for the
    Shipbuilding and Conversion, Navy appropriation.
        If Navy shoulders the entire burden of the Ohio Replacement SSBN
    out of the Shipbuilding and Conversion, Navy appropriation as it is
    currently estimated each fiscal year, it will significantly reduce
    other shipbuilding programs once Ohio Replacement SSBN construction
    begins in fiscal year 2021. This will result in substantial gaps in
    fleet ship requirements in the late 2020s and 2030s.
        The Navy has historically been able to resource approximately $13
    billion in annual new-ship procurement funding. In addition to the
    challenge of funding the Ohio Replacement SSBN, during several years in
    the early 2020s Navy will also require approximately $2 billion in
    additional ship construction funding to recapitalize the large number
    of ships decommissioning in those years to attempt to reach the FSA
    required battle force size and shape.

    status of the uss george washington (cvn-73) aircraft carrier refueling
                                    overhaul
        36. Senator Inhofe. Secretary Mabus, there has been considerable
    confusion over what exactly the Navy's budget supports for the USS
    George Washington CVN-73 aircraft carrier. It is unclear if the ship
    will be decommissioned only half way through its 50-year service life,
    or if it will receive an overhaul designed to support another 25 years
    of service. Secretary Hagel indicated that DOD is looking for an
    indication from Congress that the fiscal year 2016 and later
    sequestration caps would be modified to accommodate the extra $115
    billion the administration has included in the out-years of the fiscal
    year 2015 FYDP. Please explain what exactly is in the Navy's budget for
    this ship in fiscal year 2015?
        Mr. Mabus. The President's budget for fiscal year 2015 requests $46
    million operation and maintenance, Navy (OMN) in fiscal year 2015 to
    continue planning requirements to defuel CVN-73 , which will be
    required whether the ship is inactivated in fiscal year 2016 under a
    sequestration level budget or proceeds to refueling and complex
    overhaul (RCOH) under a higher level budget. The President's budget for
    fiscal year 2015 also includes Military Personnel, Navy (MPN) and OMN
    funding for ship O&M required to sustain CVN-73 as the Navy's forward-
    deployed aircraft carrier.

        37. Senator Inhofe. Secretary Mabus, what specifically is included
    in this budget in fiscal year 2016, and the later years of the FYDP?
        Mr. Mabus. Program Objective Memorandum (POM) 16 is still under
    development and preliminary at this time; however, the fiscal year 2015
    President's budget and associated FYDP inactivates CVN-73 and a carrier
    air wing (CVW) under the following funding:

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                            Fiscal Year                Future Years
                                                             ----------------------------------------     Defense
                                                               2015    2016    2017    2018    2019       Program
    ----------------------------------------------------------------------------------------------------------------
    MPN.....................................................   323.7   198.5   165.5    90.7    33.0           811.4
    DHAN....................................................    14.8     9.5     6.3     2.7     0.7            34.0
    APN - Termination Fees for MH-60Rs......................       -   250.0       -       -       -           250.0
    OMNR/RPN - Fleet Logistics..............................    11.8       -       -       -       -            11.8
    OMN - Air Operations....................................   109.2       -       -       -       -           109.2
    OMN - 1B1B (Ship Ops)...................................    30.6    11.2       -       -       -            41.8
    OMN - 1B4B (Ship Maintenance)...........................    97.0       -       -       -       -            97.0
    OMN - 2B2G (Inactivation)...............................    46.0   211.0   719.0    50.0    35.0         1,061.0
                                                             -------------------------------------------------------
      Current Funding for GW in President budget 2015.......   633.1   680.2   890.8   143.4    68.7         2,416.1
    ----------------------------------------------------------------------------------------------------------------

        The military personnel funding profile supports full manning of
    CVN-73 and the associated CVW in fiscal year 2015, with declining
    manning across the FYDP representing the profile necessary to man CVN-
    73 during inactivation and reduce the Navy inventory by one CVW
    beginning in fiscal year 2016. The Defense Health Accrual account is a
    non-appropriated transfer fund that is the Department's contribution to
    the Medicare-Eligible Retire Health Care Fund for the future Medicare-
    eligible health care costs of current servicemembers. The cost is based
    on the average personnel strength and actuarial rate estimates.
        The reduction of one CVW eliminates the need for 16 MH-60Rs in
    fiscal year 2016, resulting in termination fees for cancellation of the
    multi-year procurement. This action is reversible and will be a POM 16
    decision.
        Fleet logistics funding represents a reduced reserve aviation
    posture associated with a smaller carrier fleet. Air operations and
    ship operations represent the full cost of operating CVN-73 until
    arrival in Norfolk in December 2015. Ship maintenance funding
    represents a minimal maintenance event sufficient to operate safely on
    the return to Norfolk.
        The total budget profile for inactivating CVN-73 is $1,124 million
    ($1,061 million in the President's budget for fiscal year 2015 FYDP) as
    detailed below:

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                        Fiscal Year                    Future Years
                   CVN-73 Inactivation               ------------------------------------------------     Defense
                                                       2014    2015    2016    2017    2018    2019       Program
    ----------------------------------------------------------------------------------------------------------------
    Advance Planning (AP)...........................      63      46     144                                     253
    GFE and Prime Contractor Support................                      11       7       7       7              32
    Ship's Terminal Offload Program.................                      55                                      55
    Inactivation....................................                             710      28                     738
    Tow.............................................                                      10      23              33
    PSNS & IMF (AP Disp & Recycle)..................                       1       2       5       5              13
                                                     ---------------------------------------------------------------
      CVN-73 Inactivation...........................      63      46     211     719      50      35           1,124
    ----------------------------------------------------------------------------------------------------------------

        The assumptions for this estimate are that:

             There is $63 million of fiscal year 2014 Shipbuilding
            and Conversion, Navy defueling preps that is for work common to
            either path: inactivation or overhaul.
             The $46 million of fiscal year 2015 OMN defueling prep
            is also common to either path.
             The inactivation commences in October 2016.

        The above inactivation funding profile in the outyears is partially
    modeled on CVN-65, and will likely change as cost estimates are
    refined.

        38. Senator Inhofe. Secretary Mabus, when would be the latest date
    a decision would have to made by DOD in time to support the overhaul in
    the fiscal year 2016 budget?
        Mr. Mabus. A decision not later than December 2014 supports
    incorporation of the RCOH in the fiscal year 2016 budget with a start
    date delayed to fiscal year 2017.

        39. Senator Inhofe. Secretary Mabus, will this action serve to
    break the joint Army-Navy H-60 helicopter multi-year procurement
    contract? What has the Navy budgeted for that multi-year procurement
    cost penalty?
        Mr. Mabus. A final decision on maintaining or terminating the MH-
    60R multi-year procurement contract has been deferred to fiscal year
    2016. Our proposed fiscal year 2015 budget fully funds the multi-year
    procurement in fiscal year 2015 with advance procurement for the 29 MH-
    60R aircraft (and full procurement of 8 MH-60S aircraft). If the Navy
    returns to BCA levels in fiscal year 2016, the subsequent fiscal
    constraints would challenge our ability to procure the 29 aircraft. MH-
    60R procurement would be aligned to force structure reductions. This
    scenario may cause MH-60R multi-year procurement contract termination
    which could cause contract termination costs and reduce rotary wing
    capacity for Navy. We have not determined the exact costs and fees
    associated with a cancellation. Cancellation fees would be calculated
    in accordance with Federal Acquisition Regulations. Any cancellation
    decision and notification would occur after the fiscal year 2016 budget
    is approved by Congress.
        The cost to procure 29 MH-60R aircraft is estimated at $760
    million; the exact amount will be based on the fiscal year 2015
    appropriation. Both multi-year procurement contracts (MH-60R and MH-
    60S) require fiscal year 2015 advance procurement funding in order to
    maintain multi-year aircraft pricing for fiscal year 2015. Navy will
    continue to work with Congress and our industry partners on a
    resolution for the fiscal year 2016 budget submission.

                          cvn-78 ford aircraft carrier
        40. Senator Inhofe. Secretary Mabus, the lead ship of the new class
    of aircraft carriers, the USS Ford CVN-78 is projected to cost almost
    $13 billion for procurement, plus more than $3 billion of R&D funding.
    The procurement funds have been incrementally requested over a 16-year
    span from 2001 to 2016. While Congress did acquiesce to the Navy's
    request to break from the longstanding policy of fully funding ships in
    the year of authorization, back to the Eisenhower 1950s administration,
    and allowed the Navy to split fund this ship over 6 years, no one
    realistically contemplated the procurement funding would span 16 years.
    It is not realistic to expect effective oversight over such a lengthy
    span of time. Nuclear aircraft carriers have always been expensive.
    However, is it not time for reconsidering how to fully fund ships and
    get back to responsible budgeting and more effective program oversight?
        Mr. Mabus. USS Gerald R. Ford (CVN-78) is the lead ship of the
    first new class of aircraft carriers in nearly 40 years. CVN-78 was
    initially financed with Advanced Procurement funding from fiscal years
    2001 to 2007 for long lead time material, advance planning, and advance
    construction. This was followed by 4 years of Full Funding from fiscal
    years 2008 to 2011. The President's budget 2015 reflects Completion of
    prior year shipbuilding programs funding for CVN-78 in fiscal years
    2014 to 2016 to finance cost increases due first of class issues and
    government-furnished equipment cost increases.
        The NDAA for Fiscal Year 2013 (Public Law 112-239) authorized 6
    years of full funding for CVN-78, CVN-79, and CVN-80. The split funding
    authority granted in the NDAA for Fiscal Year 2013 supports an optimal
    build profile that minimizes overall construction cost; provides
    sufficient margin to meet key operation timelines; and meets
    affordability requirements within a fiscally constrained environment.
        Fully funding large capital ships such as aircraft carriers in a
    single year is not the most efficient and effective use of Navy's total
    obligation authority for shipbuilding. Using 6 years of full funding
    avoids funding spikes in the Shipbuilding and Conversion, Navy account
    and allows the Navy to procure large capital ships and fund other
    programs concurrently in order to sustain the Navy's 30-year
    shipbuilding plan. Split funding or incremental funding is a more
    practical and effective procurement strategy to maintain a weapon
    system vital to the Nation's defense.
        Incrementally funding aircraft carriers or any other shipbuilding
    program does not alleviate the Navy's responsibility to Congress and
    the public to provide visibility into program funding and effective
    program oversight. The President's budget 2015 Justification of
    Estimates shows, for both CVN-78 and CVN-79, each fiscal year of
    funding that contributes to the end cost of the ship.

                           biofuels/alternative fuels
        41. Senator Inhofe. Secretary Mabus, the Navy spent $160 million in
    fiscal year 2012 and fiscal year 2013 for an ongoing biofuels
    production project, and is planning for bulk purchases of biofuels in
    fiscal year 2015. The Navy spent over $26/gallon on their last biofuel
    bulk-purchase in 2011. Is it in the Navy's best interest to continue to
    pay for biofuel refineries which it will never own, in order to
    purchase biofuels which have not yet proven cost competitive with
    conventional fuels, given that the defense budget has already been
    decimated by President Obama?
        Mr. Mabus. The U.S. Navy and the Marine Corps have a long history
    and tradition of embracing innovation to gain a strategic and
    competitive edge. The DPA biofuels effort is a perfect example of
    innovation that will expand the liquid fuel supply base, ensure
    competitively priced biofuels to that of petroleum, and make the United
    States and our military less vulnerable to price shocks of a globally
    traded commodity.
        Oil price shocks in fiscal year 2011 and fiscal year 2012 resulted
    in an unfunded bill to DOD, in the year of execution, of $3 billion. In
    fiscal year 2013, oil price shocks and volatility would have resulted
    in an additional $1 billion bill had it not been for a reprogramming.
    This unpredictable global commodity has direct and negative impacts on
    training, readiness, and national security. It is irresponsible and in
    direct conflict to our national security to not pursue alternative
    fuels.
        The 2011 biofuel purchase was not a bulk buy. This purchase was
    used in testing and evaluation to demonstrate the performance and
    feasibility of utilizing alternative fuels in operational conditions.
    The DOD will only purchase bulk quantities of biofuels that are cost
    competitive with conventional fuel.
        Beginning in 2016, the DPA companies will be producing biofuel at
    commercial scale. Based upon their commitments, the DPA companies stand
    to:

             produce more than 100 million gallons per year of
            drop-in, military compatible fuels;
             at a weighted average price of $3.45 per gallon; and
             with at least 50 percent lower lifecycle greenhouse
            gas (GHG) emissions than that of conventional fuel.

        42. Senator Inhofe. Secretary Mabus, what national security
    advantage does the United States gain by spending hundreds of millions
    of the Navy's dollars to produce biofuels within the United States when
    many of our fuel purchases occur outside of the United States?
        Mr. Mabus. Approximately two thirds of the refined fuel purchased
    by the U.S. Navy is bought in domestic markets. Unfortunately, only
    about half of that fuel actually comes from domestic sources since
    roughly half of all oil used to make refined products in the United
    States is imported. This fact only adds to the importance of expanding
    the domestic supply base so that the United States is less dependent on
    unstable foreign oil markets. Expanding the domestic, drop-in biofuels
    market is paramount to national security.
        In fiscal year 2011 and fiscal year 2012, the DOD saw an unfunded
    bill in the year of execution of $3 billion due to sharp price
    movements and volatile markets. In fiscal year 2013, oil price shocks
    and volatility would have resulted in an additional $1 billion bill had
    it not been for a reprogramming. This unpredictable global commodity
    has direct and negative impacts on training, readiness, and national
    security.
        It is irresponsible and in direct conflict to national security to
    not pursue alternative fuels. As major consumers of liquid fuel, the
    United States as a whole and the DOD in particular would greatly
    benefit from a competitive, domestic renewable fuels industry capable
    of broadening the commodity supply base and ultimately helping to ease
    the impacts of unstable oil markets.
        Beginning in 2016, the DPA companies will be producing biofuel at
    commercial scale. Based upon their commitments, the DPA companies stand
    to:

             produce more than 100 million gallons per year of
            drop-in, military compatible fuels;
             at a weighted average price of $3.45 per gallon; and
             with at least 50 percent lower lifecycle GHG emissions
            than that of conventional fuel.

        Finally, while more than the majority of U.S. Navy fuel is
    purchased in domestic markets, there is still the need for an
    international biofuel effort. That is why Statements of Cooperation
    (SOC) for the research and use of alternative fuels have been signed
    with the Royal Australian and Italian navies. Additional SOC are being
    sought with numerous other countries. The U.S. Navy is a globally
    deployed force and it is in our best interest to ensure our allies are
    also working to expand the fuel supply base and move away from unstable
    oil markets.

        43. Senator Inhofe. Secretary Mabus, how much funding by fiscal
    year has been committed out of both the Navy and OSD budget for the
    President's initiative involving DOD, DOE, and the Department of
    Agriculture to promote a national biofuel industry?
        Mr. Mabus. DOD requested the amounts shown below in support of the
    Advanced Drop-in Biofuels Production effort. No additional funds are
    programmed for this project.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                           President's
                Fiscal Year                  Request          Appropriated
    ------------------------------------------------------------------------
    2012..............................               $100               $100
    2013..............................                 70                 60
    ------------------------------------------------------------------------

        Beginning in 2016, the DPA companies will be producing biofuel at
    commercial scale. Based upon their commitments, the DPA companies stand
    to:

             produce more than 100 million gallons per year of
            drop-in, military compatible fuels;
             at a weighted average price of $3.45 per gallon; and
             with at least 50 percent lower lifecycle GHG emissions
            than that of conventional fuel.

                               compensation issue
        44. Senator Inhofe. Admiral Greenert, in your written hearing
    statement, you discuss how important it is to control personnel cost
    growth by slowing military pay raises; slowing basic allowance for
    housing growth; and reducing commissary subsidies. You go on to say
    that ``none of these measures will reduce our sailors' pay.'' But, it
    seems to me that these measures taken together will greatly diminish a
    sailor's purchasing power and our young enlisted families will suffer
    the most. How will DOD's proposed pay and benefit changes impact a
    sailor's stay-or-leave decision about continued military service?
        Admiral Greenert. When my Senior Enlisted Advisor (the Master Chief
    Petty Officer of the Navy) and I visit Navy commands around the world,
    the message I get from our sailors is that they want to serve in a
    force that is properly manned and one that provides them with the
    tools, training, and deployment predictability they need to do their
    jobs. Sailors tell us that these factors are as important as
    compensation and benefits. Navy is committed to providing our sailors
    with a challenging, rewarding professional experience, underpinned by
    the tools and resources to do their jobs right. Our sailors are our
    most important asset and we must invest appropriately to keep a high
    caliber All-Volunteer Force. Therefore, any Navy savings from
    compensation reform will be reinvested to quality of service
    enhancements that I feel will encourage sailors to continue their Navy
    service.

        45. Senator Inhofe. Admiral Greenert, how will future officer and
    enlisted recruits perceive changes in pay and benefits as they weigh
    their decisions for future military service?
        Admiral Greenert. The military compensation package offered to
    future officer and enlisted recruits will remain competitive. Future
    officers and enlisted will continue to receive regular military
    compensation (i.e. basic pay, food and housing allowances, and tax
    advantage) that will very likely exceed earnings of civilians with
    similar education and work experience. Additionally, the Navy will
    continue to offer other benefits that exceed what is available to most
    new hires in the civilian sector including free healthcare for the
    member, very low cost sharing for family members, 30 days paid leave
    per year, and the GI Bill.

                      cut in flight 3 configuration change
        46. Senator Inhofe. Secretary Mabus, you have previously testified
    that we must build stable designs without major changes during
    construction. If a new advanced technology comes along after
    construction has started, it must wait until the next block of ships.
    The fiscal year 2016 ships are part of a 5-year (fiscal years 2012 to
    2016) multi-year procurement buy which is predicated on a stable
    configuration. In light of that statement, why does the budget include
    $134 million for design to support the introduction of the Flight 3
    configuration change for the DDG-51 program starting with the
    procurement of fiscal year 2016 ships?
        Mr. Mabus. You are correct that I said we should build ships
    without major changes, and I truly believe that statement. However, in
    this fiscal environment the proposed plan gives the Navy the ability to
    bring the Air Missile Defense Radar (AMDR) and its critical protection
    to our sailors and our fleet in a known and tested design with minimum
    configuration changes. The $134 million DDG-51 advanced procurement
    Shipbuilding and Conversion, Navy requested in the President's fiscal
    year 2015 budget will be used to mitigate risk by completing detail
    design ahead of fabrication for the Flight III configuration. This
    proposed strategy also provides the flexibility to continue to procure
    Flight IIA DDGs, if necessary.

        47. Senator Inhofe. Secretary Mabus, consistent with your
    statement, should the start of procurement for Flight 3 be deferred
    until the multi-year procurement buy is completed?
        Mr. Mabus. No. The plan for introducing the DDG-51 Flight III
    capability in fiscal year 2016 adequately balances both technical and
    production risk in order to upgrade critical warfighting capability in
    the most cost effective manner. The Navy has already awarded the DDG-51
    fiscal years 2013 to 2017 multi-year procurement contracts for 10 DDG-
    51 Flight IIA ships as described in the Under Secretary of Defense for
    Acquisition, Technology, and Logistics (USD(AT&L)) approved Acquisition
    Strategy dated June 2012 and authorized by Congress in the NDAA for
    Fiscal Year 2013, section 123.
        Procurement of the DDG-51 Flight IIA ships using multi-year
    procurement contracts resulted in significant savings. The multi-year
    procurement savings will not be affected by the introduction of the
    Flight III capability. The DDG-51 Flight III capability consists of a
    Flight IIA ship which changes the SPY-1D(V) radar to the AMDR along
    with the associated changes to power and cooling. These changes will be
    implemented using one or more engineering change proposals (ECP).
        While the introduction of any new technology involves some risk, no
    contractual commitment in advance of appropriations (the definition of
    a multi-year procurement) will be used to execute these ECPs. The ECPs
    will be annually funded. The additional technical risk of incorporating
    the new radar capability is warranted because the ships will deliver a
    significant increase in integrated air and missile defense (IAMD)
    capability. The proposed strategy to use ECPs to incorporate the AMDR
    into the DDG-51 Flight IIA also provides the flexibility to continue to
    procure Flight IIA DDGs if the technology critical to Flight III (i.e.
    AMDR) does not mature on schedule. The use of one or more ECPs is the
    most efficient method to introduce this capability while minimizing
    both risk and potential cost growth.

                              littoral combat ship
        48. Senator Inhofe. Secretary Mabus, given the Navy only budgeted
    for three Littoral Combat Ships (LCS) in fiscal year 2015, when will
    the Navy have a revised acquisition strategy for the program?
        Mr. Mabus. The deferral of one block buy ship from fiscal year 2015
    to fiscal year 2016 was a direct result of funding impacts associated
    with the Bipartisan Budget Act (BBA). The acquisition strategy to
    procure three ships in fiscal year 2015 instead of four ships is
    currently in draft and expected to be approved in late fiscal year
    2014.
        Navy plans to procure the single LCS shifted to fiscal year 2016
    under the current block buy contract(s) by making an adjustment to the
    terms of the block buy contracts. The adjustment to the procurement
    profile will be made in consultation with industry, with consideration
    of cost, production schedule performance, shipyard resource loading,
    and vendor base considerations. Final determination will be made
    subject to bilateral negotiations with a focus on minimizing impact to
    cost by leveraging the affordability initiatives brought to the program
    by the block buy contracts (stable requirements, stable design, stable
    production schedule, skilled workforce, facility investments, long-term
    vendor agreements, fixed price contracts). Minimal to no schedule
    impact is expected.

        49. Senator Inhofe. Secretary Mabus, what action will the Navy take
    to avoid breaking their 20-ship block buy construction contract?
        Mr. Mabus. See answer to question 48.

        50. Senator Inhofe. Secretary Mabus, Assistant Secretary Stackley
    has testified that, ``the reduction from four to three LCS in fiscal
    year 2015 will require the Navy to extend the pricing for one block buy
    ship.'' What exactly does that statement mean?
        Mr. Mabus. See answer to question 48.

        51. Senator Inhofe. Secretary Mabus, what would be the cost penalty
    the Navy would incur if the contract is broken because four ships are
    not procured in fiscal year 2015? What is the cost of a fourth ship in
    fiscal year 2015?
        Mr. Mabus. The deferral of one block buy ship from fiscal year 2015
    to fiscal year 2016 was a direct result of funding impacts associated
    with the BBA. However, Navy plans to procure the single LCS shifted to
    fiscal year 2016 under the current block buy contract(s) by making an
    adjustment to the terms of the block buy contracts. It is expected that
    this slight adjustment to the procurement profile can be accomplished
    with minimal cost and schedule impact on the fiscal year 2016 ship. Per
    the block buy contract terms, the target prices of the prior year ships
    in the block buy will not be impacted.
        $397 million would be required to restore procurement of the fourth
    LCS in fiscal year 2015.

        52. Senator Inhofe. Secretary Mabus, how does the experience of the
    LCS compare with that of the USS Oliver Hazard Perry (FFG-7) program
    built during the 1970s and 1980s?
        Mr. Mabus. The ``First-of-Class'' issues experienced on LCS-1 and
    LCS-2 are not unusual for lead ships. For every new ship class, a
    highly tailored new construction production line must be established,
    as well as some production processes unique to that class.
        Oliver Hazard Perry (FFG-7) was introduced into the fleet in 1977
    and was a lengthy line production program with many ships in parallel
    construction in several yards, similar to the LCS program. The FFG-7
    class had many ``First-of-Class'' issues including the high failure
    rate for ship service diesel generators (SSDG), unreliable operation of
    the new MK-92 fire control system with new radar, as well as
    survivability concerns resultant of the top line weight, manning, and
    cost constraints.\1\ For economic reasons and to avoid disruption of
    line production, the Navy developed many fixes for early problems and
    installed them as modification packages after ship delivery.
    ---------------------------------------------------------------------------
        \1\ GAO testimony 108301, 1979: According to a 1975 Navy assessment
    of the ship's survivability protection, the ship and other U.S. ships
    are quite vulnerable to low level enemy threats. Survivability
    improvements for the FFG-7 class are being evaluated, and corrective
    actions are planned. However, opportunities for improvement are limited
    because the ship is small, there are cost and weight constraints as
    well as state of-the-art limitations, and the payoff of all possible
    changes may not be commensurate with the costs.
    ---------------------------------------------------------------------------
        Cost growth attributable to ``First-of-Class'' issues is difficult
    to quantify given the varying complexity of ship designs and
    construction processes and long and varying construction timelines.
    This level of complexity can result in unintended or corollary changes
    in which one change to resolve a particular ``First-of-Class'' issue
    may then cause additional issues or prompt additional changes in the
    rest of a ship space or deck or throughout the entire ship. In some
    cases, change may be driven by a budget decision made years after the
    start of construction, which later impacts a major piece of government
    furnished equipment, leading to a necessary redesign of the ship's
    topside (e.g., FFG-7 stern redesign to enable the ship to accommodate
    the LAMPS-MK III helicopter, its hauldown system, and the towed sonar
    system). In other cases, change may be driven by a government re-
    prioritization of the defense priorities and allocation system ratings,
    which affects what materials are available for use by the shipbuilders
    (e.g., LCS was affected by the re-prioritization of HSLA-80 steel to
    the production of Mine-Resistant Ambush Protected (MRAP) vehicles in
    response to the war on terrorism, as well as consolidation of U.S.
    steel producers in this area). FFG-7 was designed with little
    modernization growth margin to take on additional capabilities whereas
    LCS requirements drove tradeoffs in support of modularity to perform
    portions of mine countermeasure and patrol craft missions. Therefore,
    it is difficult to identify a credible or common frame of reference by
    which ``First-of-Class'' issues and cost growth can be fairly
    characterized or meaningfully compared across ship classes,
    particularly given the significant warfare mission requirement
    differences from class to class.
        For example, in May 2004 the Navy made the decision not to invest
    in prototyping for the LCS, and to instead proceed directly from the
    just-completed preliminary design phase to final system design and to
    construction of LCS-1 in December 2004, followed by construction of
    LCS-2 in October 2005. Based on this acquisition strategy, the Navy
    requested, and Congress appropriated, funding of construction of the
    first two LCS lead ships with Research, Development, Test and
    Evaluation (RDT&E) appropriations with later ships to be funded in
    Shipbuilding and Conversion, Navy. In contrast, FFG-7 program spent
    significant RDT&E funds over many years of development, including
    building a completely fitted out Combat Information Center where
    testing and coordination of the sophisticated electronics
    communications equipment and sensors could be done prior to launching
    of the lead FFG. LCS, however, went directly to the two industry teams
    to complete the design and construction. As with all shipbuilding
    programs, the LCS Shipbuilding and Conversion, Navy budget includes a
    change order budget for all follow ships of the class of approximately
    5 percent of basic construction cost that is intended, in part, to
    cover forward-fit changes that address lead ship issues on the follow
    ships in the class.
        Across all ship classes, experience shows that it is rare that all
    design issues will be discovered and resolved before a lead ship is
    placed in service. Discovery of ``First-of-Class'' issues largely
    depends upon sufficient underway operations by the crew(s) in a
    realistic environment, such that early failures or non-obvious design
    defects are revealed. As these issues are discovered, they are factored
    into work packages during a post shakedown availability (PSA) or other
    post-delivery availabilities. The Navy actively works to discover these
    ``First-of-Class'' issues as early as possible so that they can be
    dealt with effectively within the appropriation life of Shipbuilding
    and Conversion, Navy funding. Most ``First-of-Class'' issues do not
    recur on follow ships, due in part to the increase in shipyard
    expertise and quality in combination with correction of design issues.

                        cruiser reduced operating status
        53. Senator Inhofe. Secretary Mabus, please describe your plan to
    lay up the 11 Ticonderoga-class (CG-47) cruisers?
        Mr. Mabus. There is no plan to lay up any ships. Our fiscal year
    2015 President's budget submission proposes to induct 11 Ticonderoga-
    class CG into a phased modernization period starting in fiscal year
    2015. This plan helps us to balance sufficient readiness, capability,
    and manpower to complement the force structure capacity of ships and
    aircraft. This balance must be maintained to ensure each unit will be
    effective, no matter what the overall size and capacity of the fleet.
    Phased modernization allows us to preserve this balance and modernize
    cruisers while avoiding a permanent loss of force structure and
    requisite ``ship years.''
        Only fiscal constraints compel us to take this course of action; CG
    global presence is an enduring need. The ships will be inducted into
    phased modernization and timed to align with the retirements of CGs
    such that the modernized ships will replace one-for-one the retiring
    ships when they finish modernization. This innovative plan permits us
    to reapply the CG manpower to other manning shortfalls while
    simultaneously avoiding the operating costs for these ships while they
    undergo maintenance and modernization.
        The plan to modernize and retain the CGs adds 137 operational
    ``ship years'' to the battle force and it extends the presence of the
    Ticonderoga-class in the battle force to 58 years. It avoids
    approximately $2.2 billion in O&M costs across the FYDP for 11 CGs. In
    addition, it precludes Navy having to increase our overall end strength
    by about 3,400 people (approximately $1.6 billion over the FYDP), which
    would otherwise be required to fill critical shortfalls in our training
    pipelines and fleet manning.

        54. Senator Inhofe. Secretary Mabus, how long will these cruisers
    be laid up?
        Mr. Mabus. There is no plan to lay up any ships. What our fiscal
    year 2015 President's budget submission proposes to do is induct 11
    Ticonderoga-class CG into a phased modernization period starting in
    fiscal year 2015. This plan helps us to balance sufficient readiness,
    capability, and manpower to complement the force structure capacity of
    ships and aircraft. The ships undergoing phased modernization will
    replace, on a hull-for-hull basis, the retiring ships (CG-52 to -62) as
    those ships reach the end of their service lives in the 2020s. In
    general terms, this will mean that phased maintenance periods will vary
    between 4 and 11 years.

        55. Senator Inhofe. Secretary Mabus, what is the projected cost?
        Mr. Mabus. The cost per ship will vary based on individual hull
    material, condition of the ship, and previously completed
    modernization. The range is approximately $350 to $600 million per ship
    which includes induction, sustainment, modernization, and maintenance
    costs. Initially, Navy will leverage the Ship's Modernization,
    Operations and Sustainment Fund (SMOSF) for those ships specifically
    named in the NDAA for Fiscal Year 2014 (CGs-63 to -66, -68 to -69, -
    73). The plan to modernize and retain 11 CGs adds 137 operational
    ``ship years'' to the battle force and it extends the presence of the
    Ticonderoga-class in the battle force to 58 years.

        56. Senator Inhofe. Secretary Mabus, what is actually budgeted by
    fiscal year by program?
        Mr. Mabus. In the fiscal year 2015 President's budget, CG-63, -64,
    -65, -66, -68, -69, and -73 are supported by SMOSF funding and have
    zero funding budgeted through the fiscal year 2015 President's budget
    FYDP. Below is a table summarizing what is budgeted for the other four
    cruisers proposed for phased modernization (CG-67, -70, -71, and -72).
    The table is in then-year millions of dollars.

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        57. Senator Inhofe. Secretary Mabus, how can you ensure they will
    be returned to active service in future years in light of the
    persisting budget fiscal challenges?
        Mr. Mabus. Navy has an enduring requirement for 11 cruisers to
    fulfill the Air Defense Commander role. There is no replacement
    cruiser, thus Navy will have to return these ships to active service.
    In order to provide additional assurance that the CGs will return to
    active service in future years in light of the persisting budget fiscal
    challenges, the Navy has built a transparent plan which includes direct
    congressional monitoring of funding and work accomplishment.

        58. Senator Inhofe. Secretary Mabus, what is the alternative if
    Congress does not approve the layup plan?
        Mr. Mabus. There is no plan to lay up any ships. If Congress does
    not approve the phased modernization plan or provide the funding to
    retain the force structure, the Navy's only remaining alternative would
    be to pursue decommissioning the ships. This will result in a permanent
    loss of force structure.

        59. Senator Inhofe. Secretary Mabus, if the cruisers are laid up,
    how will the Navy meet the combatant command force presence
    requirements, and what risk does the Navy assume in doing so?
        Mr. Mabus. There is no plan to lay up any ships. Our fiscal year
    2015 President's budget submission proposes to induct 11 Ticonderoga-
    class CG into a phased modernization period starting in fiscal year
    2015. The Navy will maintain 11 of its most capable air defense
    commander CGs and increasing number of DDGs to meet adjudicated
    combatant commanders' requirements. Under the Optimized Fleet Response
    Plan, surface combatant deployment lengths will increase to 8 months,
    providing increased presence to mitigate the effects of CG
    modernization.
        The fiscal year 2015 President's budget supports meeting the
    President's strategic guidance. Eleven cruisers is the minimum number
    of purpose-built air defense commander platforms necessary to support
    the 10 deploying carrier strike groups. A reduction from 22 to 11 adds
    acceptable risk to the Navy's multi-mission air warfare capacity,
    strike flexibility, and redundancy.
        To date, the Navy has modernized CGs 52 to 58 with the Advanced
    Capability Build (ACB) 08 combat system as well as substantial hull,
    mechanical, and electrical upgrades, and has nearly completed
    modernization on CGs 59 to 62 with the improved ACB 12. These
    investments have allowed the first 11 ships of the Ticonderoga-class to
    remain the world's premier air defense commander platform, fully
    capable of integrating into the carrier strike group construct or
    operating independently in support of combatant commanders demands.

                          dod headquarters reductions
        60. Senator Inhofe. Admiral Greenert and General Amos, how will
    each of your Services achieve the headquarters reductions ordered by
    Secretary Hagel and at the same time ensure critical functional
    capabilities are not lost?
        Admiral Greenert. Our fiscal year 2015 President's budget request
    achieves savings through significant headquarters reductions, placing
    us on track to meet the 20 percent reduction by fiscal year 2019
    required by Secretary of Defense fiscal guidance. To protect the Navy's
    ability to rebalance to the Pacific and continue to execute ongoing
    overseas contingency operations, less pressure is applied to fleet
    operational headquarters staffs and more on other staffs. Specifically,
    Fleet Forces Command, the U.S. Pacific Fleet, and Navy component
    command headquarters were allocated a 5 percent reduction. This
    decision required additional pressure to be placed on other staffs in
    the Navy to compensate for the protection of the fleets.
        The headquarters reductions are designed to streamline management
    through efficiencies and elimination of lower-priority activities,
    protecting critical functional capabilities. The reductions will be
    based on projected mission requirements and are consistent with
    legislative requirements including 10 U.S.C. 2463.
        General Amos. The Marine Corps is phasing the mandatory
    headquarters reduction at approximately 4 percent per year beginning in
    fiscal year 2015. In addition, since 2009, the Marine Corps has
    restrained growth by prioritizing civilian workforce requirements and
    realigned resources to retain an affordable and efficient workforce.
    Similarly, the Marine Corps has identified Active Duty military billets
    within headquarters organizations that will be eliminated to achieve
    the 20 percent reduction in management headquarters by 2019.

                    ship construction quality control issues
        61. Senator Inhofe. Secretary Mabus, what actions has the Navy
    taken to deal with and mitigate the ship construction quality control
    issues that were prevalent the last few years?
        Mr. Mabus. The U.S. Navy requires the best warships in the world.
    Building these ships is a complicated endeavor that, on occasion,
    results in technical issues. To address those issues, the Naval Sea
    Systems Command (NAVSEA) instituted a ``Back to Basics'' initiative in
    2010 at the four Supervisors of Shipbuilding (SUPSHIP) designed to
    improve oversight and results of ship construction quality and contract
    administration. As part of this initiative, NAVSEA increased the number
    of waterfront quality assurance (QA) personnel, as well as financial
    and contract administration specialists, in order to better oversee and
    enforce the terms of shipbuilding contracts. The emphasis of the ``Back
    to Basics'' was to establish effective quality surveillance plans, to
    ensure SUPSHIP personnel were properly trained, to develop standards
    for oversight of shipbuilding contracts, and to partner with
    shipbuilder production teams to ensure consistency during ship
    construction. NAVSEA established an audit program to ensure SUPSHIP QA
    departments meet the standards for QA oversight.
        As a result, we have increased shipbuilder surveillance inspections
    and metrics-based assessments of the core shipbuilding process by the
    SUPSHIP. This includes joint collaboration with the shipbuilders on
    ensuring compliance with critical construction processes and ship
    specifications while identifying negative trends and implementing
    corrective actions early in the construction cycle.
        The results to date have been positive across the platforms. After
    implementation of ``Back to Basics'' and several NAVSEA led audits of
    shipbuilder compliance to critical shipbuilding processes, i.e.
    welding, coatings, electrical, new construction Navy ships have seen a
    significant decrease in quality deficiencies at delivery. On the LPD-17
    class, the level of completeness and quality continues to improve with
    each ship delivery; and the build plans for follow-on ships are
    becoming more stable. Each ship has received fewer Board of Inspection
    and Survey (INSURV) trial cards than its predecessor indicating lessons
    learned are being incorporated. In addition, LPD-22, -23, -24, and -25
    were delivered with zero ``starred'' cards. This was also true of the
    last two T-AKE ships and most recently LHA-6. LCS-4 delivered with a 75
    percent reduction in starred cards. The high level of quality at which
    Joint High Speed Vehicle and MLP class ships are being delivered can be
    attributed to the increased collaboration between the Navy and the
    shipbuilder to develop a more mature ship design before the start of
    construction. Improvements have also been realized with the Virginia-
    class submarine program. The average INSURV scores for significant
    material deficiencies and equipment operational capability have been
    improving over each of the last eight Virginia-class submarine
    deliveries.
        The Navy will continue to improve its shipbuilding oversight so
    each ship is constructed at the highest possible quality with the
    fewest possible deficiencies at delivery.

                    virginia-class submarine payload module
        62. Senator Inhofe. Secretary Mabus, I am concerned with increasing
    the Virginia-class submarine size by a third to accommodate a 93.7 foot
    module in the submarine's center. How well-defined are the Virginia
    Payload Module's (VPM) requirements?
        Mr. Mabus. The VPM requirements are now specifically laid out in
    the Capability Development Document (CDD) for Virginia (SSN-774) class
    submarine strike capability change. The Joint Requirements Oversight
    Council (JROC) validated this CDD on December 17, 2013. Although, the
    overall dimensions of the VPM are not firmly set, additional design
    decisions have decreased the size of the VPM insert to approximately 70
    feet. A key element of the VPM design criteria is to ensure Virginia-
    class submarines with VPM will be able to fully execute existing
    missions in addition to the missions enabled by adding additional
    payload capacity while staying within cost and schedule requirements
    listed in the CDD.

        63. Senator Inhofe. Secretary Mabus, how much of an impact will the
    VPM change have on the cost of the Virginia-class ships?
        Mr. Mabus. The Navy will have the option to incorporate the VPM
    into the Block V construction contract as early as fiscal year 2019.
    VPM would more than triple the Virginia-class strike missile capacity
    from 12 to 40 at less than a 15 percent cost increase. The approved VPM
    CDD outlines threshold and objective key performance parameters (KPP)
    for non-recurring engineering (NRE), lead ship, and follow on ships
    costs. The Navy's current cost estimate is less than the cost
    objectives set forth in the CDD.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                                    Current
                                           Threshold   Objective   Estimate
    ------------------------------------------------------------------------
    Non-Recurring Engineering...........         800         750         744
    Lead Ship...........................         475         425         423
    Follow-on Ships.....................         350         325         318
    ------------------------------------------------------------------------

        The Navy is currently reviewing various design concepts and is
    committed to reducing VPM unit costs by selecting a final design
    concept that is cost-effective. Modifying the proven successful design
    and construction of Virginia submarines provides the most cost
    effective means to mitigate the loss of undersea strike capacity
    created by the retirement of the SSGNs in 2026 to 2028.

        64. Senator Inhofe. Secretary Mabus, will this change result in
    instability to a proven submarine design, disrupt a stable production
    line, and add significant cost risk which is not affordable in these
    difficult fiscal times?
        Mr. Mabus. Inserting the VPM into Block V Virginia-class submarines
    will not result in design instability, disrupt the production line, or
    add cost risk. While providing a significant increase in strike
    capacity, VPM is itself a low technical risk design change, integrating
    existing or scaled-up components. The Virginia-class' modular design
    has been evolving to meet the Nation's changing needs, and the
    production line has proven adaptable. Block III design changes are
    similar in magnitude to those planned as part of VPM. All Block III
    submarines are on track to continue Virginia-class' established record
    of early deliveries, including the first Block III submarine, PCU North
    Dakota (SSN-784). The design and certification work being done on the
    Block III submarines' Virginia payload tubes, which will be similar to
    the tubes used for VPM, will further de-risk the VPM design by ensuring
    that mature, operational systems are utilized throughout the module. It
    is important to note that the design and certification work on the lead
    Block III ship, North Dakota, is not in the critical path for delivery
    and the ship will still deliver prior to its contractual delivery date.
    A similar, but smaller, investment was made in Block IV to reduce total
    ownership costs.
        The VPM in Block V is the next evolution of this established and
    proven design process. The Navy has extensive experience with
    lengthening existing submarine designs, most recently with the in-
    production addition of the multi-mission module to USS Jimmy Carter
    (SSN-23). The Block V design labor estimates are consistent with the
    Jimmy Carter's redesign, and only 12 percent of the original Virginia-
    class design for over three times the strike capacity.
        The Navy has already completed advanced modeling to assess the
    impact of the VPM on Virginia-class submarine performance
    characteristics and has determined that this modification will not
    prevent the ship from meeting any of its current assigned KPPs. The
    JROC has validated the requirement modification to the Virginia-class
    submarine by approving the strike capability change CDD in December
    2013.
        The validated CDD contained KPPs for cost and schedule as well as
    system performance. The Department has been finding ways to reduce
    costs since the project's inception. The current concept has been
    reduced in length by over 20 feet. This design will prove less costly
    to both design and build, ensuring the ability to meet the cost
    constraints in the CDD.

                                  fighter gap
        65. Senator Inhofe. Secretary Mabus, does the Navy still have a
    fighter gap?
        Mr. Mabus. The Navy does not currently have a strike fighter gap,
    but projects a strike fighter shortfall of 35 aircraft in 2023. This
    fighter gap is deemed manageable given the Navy's current inventory and
    programmed procurement.

        66. Senator Inhofe. Secretary Mabus, in light of the shift to the
    Asian-Pacific theater and a greater need for electronic warfare
    capability, has the Navy acted too quickly in ending its procurement of
    Growler (EA-18G) aircraft?
        Mr. Mabus. In 2012, the JROC validated a requirement for additional
    EA-18Gs which were included in the fiscal year 2014 President's budget.
    Since the start of the EA-18G program, the Navy has continually
    assessed warfighting requirements much of which drove the Navy to
    increase its 2003 EA-18G inventory objective to today's 135 aircraft.
    The process of assessing warfighting needs continues today; however,
    the Navy must balance and prioritize its requirements within its fiscal
    constraints. Our fiscal year 2015 President's budget submission
    represents that balance and priority.
        The UPL included 22 EA-18G aircraft. Should funding beyond that
    requested in fiscal year 2015 President's budget become available,
    additional investment in airborne electronic attack capability would
    help to counter an increasing threat capability and support future
    airborne electronic attack requirements for the joint force.

          contractor support reductions/acquisition reform initiatives
        67. Senator Inhofe. Secretary Mabus, can you explain the
    methodology the Navy used to reduce its use of contractor support for
    programs?
        Mr. Mabus. The Department of the Navy continues taking a hard look
    at contractual services while considering higher but balanced risk in
    some areas of services spending in order to avoid sacrifices in
    important investments in force structure, modernization, or readiness.
    The initiatives undertaken by the Navy to reduce the number of services
    contractors include:

             Implementing a robust and comprehensive requirements
            review process. The Navy Services Requirements Review Boards
            (SRRB) are being implemented across the Navy to establish a
            uniform process to identify, validate, assess, plan and monitor
            services' acquisitions. The process provides focus on
            optimizing and validating current and future service
            acquisition requirements and on management of contracted
            services in the constrained fiscal environment. SRRBs have
            yielded favorable results with respect to program offices
            developing service requirements which satisfy mission needs
            while optimizing cost efficiencies by analyzing trade-offs and
            substantiating those needs. Results of SRRBs vary across the
            department, and heads of contracting activities (HCA) are
            individually responsible for addressing their findings. For
            example, as a result of SRRBs, one HCA reported that it
            cancelled 36 contracts and reduced the scope of 53 others;
            contractor labor was reduced by 65 FTEs across the enterprise
            and 32 contracts were identified as candidates for in-sourcing
            at a potential $7 million savings. Another HCA reported a
            savings of $20 million from 17 service requirement disapprovals
            out of a total spend of $3 billion.
             Implementing the Navy contractor manpower reporting
            application (CMRA), and the submission and review of the Navy
            Inventory of Contracts for Services (ICS) report to Congress.
            The Navy CMRA and ICS provide requirements owners, human
            resources, budget submitting, and program offices an
            opportunity for greater visibility into services contracting
            spending by thorough review and analysis of the number of
            contractors under all contracts. The Navy acquisition and
            budget submitting offices have the ability to verify that
            contracted services are validated against mission requirements
            that justify expenditures during reviews, and that corrective
            action is taken when inherently governmental performance or
            unauthorized personal services are identified.
             Navy implementation of section 808. Section 808 limits
            the amount of money the Navy can obligate for service contracts
            during fiscal year 2012 and fiscal year 2013 to amounts
            requested for service contracts in the fiscal year 2010 budget.
            The Navy section 808 implementation has led to program offices
            closely scrutinizing contractor labor cost support and
            thoroughly examining their services contracts portfolio.
             Implementing targeted reductions in services spending.
            In response to current budgetary and program pressures,
            reductions in contracted services spending have been directed
            across the budget submitting offices to drive efficiencies.
            Those reductions generally focus on a specific spend
            categories, i.e. management support services, headquarters
            staff, and designated services portfolio groups, such as
            knowledge-based, equipment related, and electronic and
            communication services.

        The effect of the above initiatives combined has led to
    improvements regarding requirements development, requirements
    substantiation, and reduction of services contracting costs. In the
    future, the Navy plans to use a six-step contract services spending
    process to implement further reductions in contractor support: (1)
    ``finding'' the sources of services spending; (2) ``fixing'' the
    responsibility for services resource decision-making; (3) ``tracking''
    how services funding flows in execution; (4) ``engaging'' with resource
    decision-makers to determine where the Department can reduce demand for
    services; (5) ``targeting'' services funding for reduction; and (6)
    ``assessing'' changes in business behavior and reviewing execution of
    services spending. This methodology is expected to yield a more
    proactive approach to managing services spending, a more granular
    understanding of the services we are acquiring, and a more deliberate
    planning and budgeting process with leadership involvement.

        68. Senator Inhofe. Secretary Mabus, a review of the budget
    indicates the Navy may have been the most aggressive amongst the three
    Services in making contractor support reductions. What lessons from the
    Navy experience would be applicable for the Army and the Air Force?
        Mr. Mabus. The fundamental lesson from the Navy experience is the
    need for establishment of a consistent oversight/governance process and
    execution process (i.e. SRRBs) to ensure proper planning and
    administration of contracted support services with associated
    indicators of risk. Through the initial implementation of the SRRB
    process, the Department of the Navy has identified the following major
    findings/recommendations:

             Increase visibility into direct cite actions.
             Increase emphasis on contracting officer's
            representative (COR) responsibilities and expand COR training.
             Improve the effective use of the Contractor
            Performance Assessment Review System.
             Increase competition and small business opportunities.
             Develop standard labor categories for comparative
            purposes.
             Improve the independent government cost estimate
            process for services.
             Investigate potential savings/efficiencies by
            strategically sourcing common services and strengthen usage of
            existing vehicles.

        DOD has recognized the value of the structured SRRB process and has
    directed expanded use across DOD through a Better Buying Power
    initiative that is managed and tracked by the Business Senior
    Integration Group, chaired by the USD(AT&L). In that regard, the Navy
    experience will be translated into a flexible and standardized review
    process that can be tailored to the needs of a given organization.
        Of note, the Services have established a quarterly, joint forum to
    allow for additional sharing of ideas, issues, opportunities, and
    solutions. This spirit of collaboration will ensure that lessons from
    each Service are shared and leveraged, as appropriate.

                         ground program industrial base
        69. Senator Inhofe. General Amos, the Marine Corps has spent
    several years and billions of dollars to develop a high-water speed
    amphibious vehicle. The Marine Corps recently completed a year-long
    study to assess the technical feasibility and affordability of bringing
    that capability to the force. Now I understand you have restructured or
    refined the ACV strategy. What concerns do you have regarding the
    ground vehicle industrial base and its ability to meet the Marine Corps
    ACV requirements?
        General Amos. Given our continued engagement with industry we feel
    confident that the ground vehicle industrial base will be able to
    deliver the ACV 1.1 capability. Our engagement with industry to develop
    a large market research base assisted the refinement and finalization
    of requirements that will be achievable with our current industrial
    capacity.

        70. Senator Inhofe. General Amos, do you have any concerns that the
    industrial base will be there for the Marine Corps when it's time to
    produce a vehicle?
        General Amos. Given our continued engagement with industry we feel
    confident that the ground vehicle industrial base will be able to
    deliver the ACV 1.1 capability. Our engagement with industry to develop
    a large market research base assisted the refinement and finalization
    of requirements that will be achievable with our current industrial
    capacity.

                          joint light tactical vehicle
        71. Senator Inhofe. General Amos, I noted that the Marine Corps
    procurement accounts were reduced 28 percent relative to fiscal year
    2014 enacted levels ($1.4 billion fiscal year 2014; $983 million
    requested). I understand this is where the Marine Corps took risk to
    prioritize readiness. Given the stress on the Marine Corps budget, does
    the Marine Corps still support the Joint Light Tactical Vehicle (JLTV)
    program?
        General Amos. Yes. The JLTV is needed to provide the Marine Corps
    with a modern expeditionary light combat and tactical mobility
    capability while increasing the force protection and survivability of
    that class of vehicles. Working closely with the U.S. Army, the Marine
    Corps is an equal partner in developing this key tactical wheeled
    vehicle. The Marine Corps plans to procure 5,500 JLTVs to meet our most
    critical need within light combat missions.

                  high mobility multi-purpose wheeled vehicle
        72. Senator Inhofe. General Amos, I understand the Marine Corps is
    undertaking a High Mobility Multi-purpose Wheeled Vehicle (HMMWV)
    sustainment modification initiative to modify existing armored HMMWVs
    in order to achieve pre-armoring safety and performance. How would you
    prioritize this program against reset?
        General Amos. The HMMWV Sustainment Modification Initiative (HSMI)
    is an additive and distinctly different effort that compliments reset
    activities. HSMI and reset are paired together with the overarching
    objectives which include: addressing immediate repair requirements to
    achieve near-term mission capability; returning long-term operational
    relevance of our HMMWV fleet; reducing O&M costs; extending useful
    service life; and providing a bridge as the JLTV is transitioned and
    fielded to the operating forces. Specifically, the HMSI targets the
    restoration of HMMWV off-road mobility, reliability, and return of
    payload capacity, while maintaining worldwide transportability to
    support expeditionary operations in austere environments.
        While selected quantities of armored and non-armored vehicles in
    the HMMWV fleet are identified as candidates, initially only one third
    of the fleet (6,851 armored vehicles) has been targeted to potentially
    receive HSMI (based on specific variant and operational force demand).
    These are the vehicles that will not be replaced during initial JLTV
    introduction and have the most demanding mission profiles.
        As reset continues, future wartime equipment requirements are
    constantly reviewed and refined based on drawdown projections and our
    Ground Combat Tactical Vehicle Strategy. HSMI is being undertaken in a
    manner that compliments, but does not replicate or negate, needed reset
    activities and will be accomplished as a concurrent action where
    practical. In concert with fiscal year 2016 POM analysis and planning,
    the prioritization the Marine Corps places on investment in future
    platforms is being thoroughly examined as we seek to gain the correct
    balance that realizes the greatest result in the current constrained
    fiscal environment.

                                   readiness
        73. Senator Inhofe. General Amos, Marine Corps O&M appropriation
    increased almost $600 million compared to fiscal year 2014 enacted
    levels. What level of unit readiness does the President's budget
    request assume?
        General Amos. The fiscal year 2015 budget preserves near-term
    readiness to support an increased forward presence in the Pacific, and
    crisis response capabilities, such as those demonstrated in the
    Philippines for humanitarian assistance and disaster response and later
    with the evacuation of American citizens from South Sudan.
    Additionally, this budget resources the land-based Special Purpose
    Marine Air-Ground Task Force-Crisis Response (SPMAGTF-CR), currently
    located in Spain and Italy. Special Purpose Marine Air-Ground Task
    Force (SPMAGTF) is not intended to replace, but rather compliment, the
    Amphibious Ready Groups (ARG) and MEUs that are forward deployed. The
    Navy-Marine Corps team is committed to forming capabilities that would
    provide other crisis response capabilities to U.S. Central Command
    (CENTCOM) and U.S. Southern Command (SOUTHCOM).

        74. Senator Inhofe. General Amos, if funded at the budget request
    level extending into the FYDP, how long until it takes the Marine Corps
    to regain sufficient full spectrum readiness?
        General Amos. Full spectrum readiness depends on a budget that
    balances current unit readiness and long-term investments. As a result
    of reduced budgets, we are currently unbalanced, as resources that
    would have otherwise been applied to non-deployed units and investments
    accounts are re-prioritized to deployed and next-to-deploy units to
    safeguard near-term operational unit level readiness. Tough choices
    have been made in these fiscally challenging times to protect this
    near-term readiness. Whereas the President's budget protects near-term
    readiness, fully reconstituting the Marine Corps after more than a
    decade of war is at risk if funding is not available for equipment
    modernization and infrastructure. In this current fiscally challenging
    time, necessary force level draw down savings are not expected to be
    realized until 2019 at which time the Marine Corps would be on a path
    to balanced institutional readiness.

        75. Senator Inhofe. General Amos, overall Marine Corps O&M accounts
    are up $531.2 million over fiscal year 2014 enacted, however, depot
    maintenance is only funded at 83 percent of the requirement and reset
    requirements have not been addressed in the Overseas Contingency
    Operations (OCO). What is the impact on readiness if these requirements
    are not met in OCO?
        General Amos. After more than a decade of sustained combat
    operations, we have undertaken aggressive depot maintenance reset
    strategy to prioritize the repair and redeployment of ground combat
    equipment to the operating forces as quickly as possible. As a result,
    approximately 78 percent of the Marine Corps' total OEF reset
    requirement has retrograded from theater; however, only approximately
    40 percent has been reset.
        Last year, our reset liability was estimated at less than $3.2
    billion. Annually, we review and refine our life-cycle sustainment
    strategies and depot maintenance requirements for our ground equipment
    through a deliberate requirements determination process. Through this,
    we estimate our remaining reset liability for fiscal year 2015 and
    beyond to be approximately $1.3 billion, which cannot be absorbed
    within our baseline funding levels. As such, the Marine Corps will
    continue to require OCO for the next several years to complete our
    reset requirements.

                                women in service
        76. Senator Inhofe. General Amos, during the last 2 years, what has
    been the total cost to DOD to conduct the reviews required to determine
    whether additional military occupational specialties (MOS) or units
    should be opened to allow women the opportunity to serve in these
    areas?
        General Amos. Since April 2012, we have spent approximately $1.13
    million on three research studies and on a Marine Corps wide planning
    effort. Going forward, Marine Corps Force Integration Plan execution
    will include a series of expanded studies. Further, we will be required
    to modify some of our Ground Combat Element facilities throughout the
    Marine Corps to accommodate female marines and sailors. Presently, we
    estimate that all of our research efforts--including our Expanded
    Entry-Level Training Research Studies and the Ground Combat Element
    Integrated Task Force--will cost approximately $27 million. The total
    facilities costs are $12 million. Given how important it is to get
    integration right, maintain our high standards, and maintain the
    highest level of combat readiness, we see these totals as prudent
    investments in the future of our Marine Corps.

        77. Senator Inhofe. General Amos, the Army's survey of women
    currently serving, and a similar study by the Marine Corps both suggest
    that while service women generally support a policy of opening MOS and
    units to women, that the propensity of women to voluntarily serve in
    combat is very low. If positions in combat arms are opened to women,
    and if there are not enough volunteers, will DOD involuntarily assign
    women to those units?
        General Amos. Since the inception of the All-Volunteer Force, the
    Marine Corps has invested significant resources in our recruiting
    efforts. These investments have been particularly successful in
    ensuring that we have sufficient combat arms marines. In fact, since
    the early 1980s, Marine Corps Recruiting Command closes out the combat
    mission specialties (to include infantry) usually mid-way through the
    recruiting year. Enlistment is a voluntary contract between the Marine
    Corps and a recruit. The vast majority of these contracts include an
    agreement to assign the recruit to a specific occupational field. While
    some recruits do sign open contracts (i.e. ones in which they could be
    assigned any MOS), the Marine Corps, as a business practice, does not
    assign recruits combat arms MOS, unless they desire one. These same
    contractual and business practices would apply once combat arms MOS are
    open to female marines. No one has been forced into a combat arms
    specialty against his or her will since the mid-1980s.
        Combat arms units contain a large number of positions that require
    non-combat arms specialties. These include administrators, intelligence
    specialists, logisticians, maintainers, and vehicle operators to name a
    few. If a combat arms unit were to open, those positions would be open
    for assignment to any marine--male or female--who held the required
    MOS. Such assignments would be made through our normal assignments
    process. A qualified marine's desires would be considered, however, the
    primary driver would be the needs of the Marine Corps.
        Non-combat arms marines in combat arms units are frequently
    required to act as provisional infantry. To ensure that these marines--
    male and female--have the ability to meet the physical demands of this
    task, we are conducting a research study that includes non-combat arms
    marines performing as provisional infantry. This study will produce
    physical, physiological, and performance requirements that non-combat
    arms marines will have to meet in order to be assigned to combat arms
    units. By holding non-combat arms marines to these standards, we will
    ensure that female and male marines assigned to combat arms units are
    fully capable of meeting mission requirements.

        78. Senator Inhofe. General Amos, prior to the service initiatives
    to evaluate expanding MOS and units for women, there were no defined
    performance standards for soldiers and marines to serve in combat arms
    positions. The Services are in the process of developing those
    standards now. Do you agree with me that when our Nation sends our sons
    and daughters into combat that our forces must have overwhelming
    advantage over our adversaries?
        General Amos. There were, in fact, defined performance standards
    for a marine to serve in the ground combat arms prior to the Secretary
    of Defense directive rescinding the Direct Ground Combat Definition and
    Assignment Rule (DGCAR). These performance standards were, are, and
    will remain gender-neutral. Further, these standards were reviewed as
    part of our Systems Approach to Training (SAT) every 3 years during
    peacetime and every 2 years during wartime. There were, unfortunately,
    some gaps in quantifying the physical performance requirements to
    execute some of our collective tasks. Further, our prerequisites and
    screening requirements for assignment to the combat arms clearly
    required greater rigor. I agree that marines fighting our Nation's
    battles should go to war confident that they can defeat the enemy
    anywhere, anytime. To that end, a key element of our research evaluates
    the performance of gender-integrated units against a series of
    collective, realistic, combat arms tasks. The hypothesis of this study
    is that gender-integrated units will perform as well as our all-male
    units have heretofore. We are confident that our research will give us
    the necessary information to ensure that, as we continue to broaden
    opportunities for female marines, we will not lower our standards and
    we will not sacrifice the high combat readiness that America demands of
    her marines.

        79. Senator Inhofe. General Amos, do you agree that the need for
    overwhelming superiority cannot be completely met with technology?
        General Amos. I agree completely. History tells us that the
    ultimate arbiter in combat is the human will. Will, however, is not
    enough. Victory in battle demands that we educate our marines in the
    art of war and train them in the most realistic, physically demanding,
    and mentally challenging manner possible. The fact the Marine Corps
    focuses most on tough training and on those intangible combat
    multipliers--esprit, the warrior ethos, courage, and honor--is what
    attracts so many young Americans to our colors.
        I think that it is important to note that our female marines have
    repeatedly demonstrated that they measure up to their brothers in terms
    of willpower, intelligence, courage, and character. The heroic
    performance of so many of our female marines during the past 12 years
    of war proves this to be true. All that requires further study is the
    ability of female marines to meet the individual and collective
    physical requirements to perform the mission in ground combat arms
    units. This is why our research is so focused on the physical
    requirement of combat arms MOS.

        80. Senator Inhofe. General Amos, do you agree that the need for
    overwhelming superiority means it is not acceptable to rely on minimum
    standards for either men or women?
        General Amos. The Marine Corps will always maintain our high
    mental, moral, and physical standards as we have done for the past 238
    years. Retaining the best and most qualified marines is accomplished
    through a competitive career designation process for officers and a
    thorough evaluation process for enlisted marines, both of which are
    designed to measure, analyze, and compare our marines' performance,
    leadership, and accomplishments. Our emphasis on high standards will
    not change as we continue with our integration efforts.

        81. Senator Inhofe. General Amos, how will DOD ensure that the
    Services do not ``settle'' for soldiers and marines who only meet
    minimal standards?
        General Amos. The Marine Corps, principally, makes marines, wins
    battles, and returns quality citizens back to American society,
    citizens who will be marines for life. Your Marine Corps must be
    comprised of the best and brightest of America's youth. To operate and
    succeed in volatile and complex environments, marines must be
    physically fit, morally strong, and possess the intelligence required
    to make good decisions and operate advanced weapon systems.
        The Marine Corps will continue to attract high caliber men and
    women who do not settle for minimum standards. Institutionally, we are
    focusing our efforts on the foundations of discipline, adherence to
    standards, and concerned leadership that have made us our Nation's
    premier, professional fighting force.
        These iron-clad imperatives have defined our Corps for 238 years.
    They will continue to serve us well in the decades to come.

        82. Senator Inhofe. General Amos, it is my understanding that the
    Services' testing, while seemingly objective and scientific, do not
    replicate actual combat environments. Do you agree that it is
    unacceptable to make decisions on this critical national issue if data
    is only collected in controlled conditions?
        General Amos. Our research and assessment approach has been
    informed by over 12 years of combat experience, which is a key element
    in the design of our approach to understanding all aspects of
    integrating female marines into ground combat arms positions and
    enhancing our overall combat effectiveness.
        In February 2014, I authorized the formation of a Ground Combat
    Element Integrated Task Force to evaluate the physical performance of
    individual marine volunteers in the execution of individual and
    collective tasks in an operational environment. I believe that this
    assessment will provide us the data that will inform our way ahead as
    we broaden opportunities for all marines.
        Know that your Marine Corps will continue to maintain high levels
    of combat readiness, while integrating female marines into previously
    closed occupational fields and units to the maximum extent possible. We
    will continue to conduct the research and assessment of these
    integration efforts to ensure all marines are provided an equitable
    opportunity for success in their chosen career path.

        83. Senator Inhofe. General Amos, can you promise the American
    people that the studies being used will guarantee that the combat
    effectiveness of critical combat arms units, that must close with and
    kill the enemy at close quarters, will not be degraded in any way if
    these units are opened to allow women to volunteer for these jobs?
        General Amos. Marines have fought in large wars and small, smoothly
    adapting to the Nation's needs and demands since 1775. The adaptability
    of marines to challenges in every clime and place is a hallmark of our
    Marine Corps. The challenges of future operating environments demand
    diversity in our force. Diversity enhances access, challenges group
    think, and makes us a more relevant expeditionary force around the
    globe.
        The very core of our research is aimed at ensuring that every
    marine is prepared to fight and win against an unpredictable enemy. Our
    research will evaluate the performance of gender-integrated units
    against a series of collective, realistic, ground combat arms tasks. We
    are confident that our research will give us the necessary information
    to ensure that, as we continue to broaden opportunities for female
    marines, we will maintain our standards and the high combat readiness
    that America demands of her marines.

        84. Senator Inhofe. General Amos, in your opinion, is our Nation
    ready to ask women to close with and kill an enemy with their hands, if
    necessary?
        General Amos. In over 12 years of combat operations in Iraq and
    Afghanistan, female marines have served capably from the march up to
    Baghdad to the austere fields of Helmand Province. They have acquitted
    themselves with the honor, courage, and commitment expected of all
    marines, regardless of gender. Female marines have earned 477 combat
    action ribbons since the start of the global war on terror for
    rendering satisfactory performance under enemy fire while actively
    participating in a ground or surface engagement. These marines have
    demonstrated time and time again their ability to respond with courage
    and bravery in the face of the enemy.
        The Marine Corps continues to implement the Secretary of Defense's
    policy to fully integrate women into previously restricted occupational
    fields. We are doing so in a manner that is deliberate, measured, and
    responsible. For our infantry occupational field, whose mission is to
    close with and destroy the enemy under fire and maneuver, we will
    continue to enable marines to excel in the violent and unforgiving
    arena of human combat by maintaining our standards. Technological
    developments have certainly led to new tactics on today's battlefield,
    but the fundamental nature of warfare has not changed since antiquity.
    Each marine on the battlefield--now and in the future--must be trained
    to standards that will allow them to thrive in the chaos of combat
    regardless of the technology and equipment they have at their disposal.
    The Marine Corps is fully committed to removing unnecessary gender-
    based barriers; we will do so while maintaining the highest levels of
    readiness commensurate with our role as the Nation's crisis response
    force.

        85. Senator Inhofe. General Amos, American women serving in our
    military have already given their lives for our country. In your
    opinion, if a future enemy targets American service women for brutal,
    inhumane treatment, would this have a negative effect on the will of
    the American people to support our Nation's participation in an
    international conflict?
        General Amos. In the last 12 years of sustained combat in Iraq and
    Afghanistan, we have faced a tough and determined enemy who pays little
    heed to the precepts of international law governing the conduct of
    armed conflict, such as the Geneva Conventions. Insurgents in Iraq and
    Afghanistan have carried out unspeakable atrocities against men, women,
    and children to advance their misguided agenda. Marines who have
    deployed to those places face this reality and perform masterfully,
    while still ``keeping our honor clean.''
        There is no doubt those who seek to do our Nation harm may resort
    to similar cowardly tactics in the future, and we will continue to
    train for these threats in kind. I am responsible for guaranteeing the
    highest state of combat readiness of this force, and I take personal
    responsibility for safeguarding the health and welfare of those in my
    charge. All marines, regardless of gender, are well-prepared for the
    uncertainty of war and trained to maintain a tempo that outpaces the
    enemy. When faced with any threat, we remember the fundamental charge
    entrusted to us by the American people--to fight and win our Nation's
    battles.

        86. Senator Inhofe. General Amos, can you tell the American public
    that if combat arms positions are opened to women that in a future
    conflict they will not involuntarily be assigned to these units?
        General Amos. If, after our extensive research, it is clear that
    integrated units perform the same or better than previously non-
    integrated units, we will assign the best-qualified marines to those
    units. Our research is designed to develop and validate those most
    physically demanding individual and collective standards in order to
    ensure that we maintain our high standards and enhance our combat
    readiness for any future conflict.

        87. Senator Inhofe. General Amos, have you evaluated the impact on
    the propensity of women to serve if women cannot be guaranteed that
    they will not be involuntarily assigned to a combat arms unit during
    their career?
        General Amos. A quick look analysis reported by the Center for
    Naval Analyses in September 2012 indicated that 23 percent of our
    female marines may not have joined the service if they were to be
    involuntarily assigned to a combat arms unit. Marine Corps Recruiting
    Command assesses voluntary assignments to ground combat MOS to have a
    negligible impact on overall accessions regardless of gender, pending
    the results of our current research efforts.
        There is currently no formal data collected that confirms the
    impact of involuntary assignment of females to ground combat arms, as
    it does not occur within male recruiting. Involuntary assignment is
    generally seen as having a significant adverse impact. The recent Joint
    Advertising Market Research and Studies New Recruit Survey from fall
    2013 data indicates only 6 percent of female applicants have an
    interest in ground combat arms MOS. It should also be noted that the
    youth market does not readily distinguish between serving in open MOS
    and serving in a closed combat arms units.

                  special purpose marine air-ground task force
        88. Senator Inhofe. General Amos, the SPMAGTF construct responds to
    greater demand for multi-role crisis response forces in several
    combatant commands under the current security environment. I understand
    you have stood up one unit in Spain. Could you please provide an update
    on that unit and your plan for future units?
        General Amos. The SPMAGTF-CR gives U.S. Africa Command (AFRICOM)
    and U.S. European Command (EUCOM), a broad range of military
    capabilities to respond to crises in their areas of responsibility
    (AOR) to include conducting non-combatant evacuation, humanitarian
    assistance, disaster relief, and support to U.S. embassies and other
    operations, missions, and activities as directed by national and
    command leadership. Additionally, SPMAGTF-CR conducts theater security
    cooperation events and exercises with allies in Eurasia and Africa.
    SPMAGTF-CR's new mission now encompasses missions previously assigned
    to the Black Sea Rotational Force and Special Purpose Marine Air Ground
    Task Force-Africa. The Marine Corps positioned the new expeditionary
    unit forward to respond to limited crisis within the EUCOM and AFRICOM
    AORs.
        SPMAGTF-CR is commanded by a Marine Corps colonel and supported by
    a regiment headquarters, and consists of an infantry battalion, (12)
    MV-22s, (3) KC-130Js, and enablers, comprised of approximately 1,200
    marines and sailors. The marines and sailors are based out of Moron Air
    Base, Spain; Sigonella Naval Air Station, Italy; and Mihail
    Kogalniceanu Air Base, Romania. Future SPMAGTFs are expected to be
    stationed in locations able to provide similar support to SOUTHCOM and
    CENTCOM. The Marine Corps expects SPMAGTF-CR to be an enduring
    requirement. As such, military planners are working toward providing
    SPMAGTF-CR a capability afloat off the shore of Western Africa.

        89. Senator Inhofe. General Amos, does your budget request match
    address current and future SPMAGTF requirements?
        General Amos. The fiscal year 2015 budget supports current and
    future SPMAGTF requirements. However, shore-based SPMAGTFs are
    inherently less flexible than MEUs aboard ARGs, due to partner nation
    basing caveats and other limitations placed on aviation operations that
    are integral for rapid movement through the combatant commanders' AORs.
    The ARG/MEU team remains the Nation's preeminent crisis response force
    providing deterrence and decision space for the Nation. However,
    amphibious warship inventory and operational tempo constrain the number
    of ARGs available to support combatant commanders. The SPMAGTF fills a
    crisis response gap when ARG/MEUs are not available.

                                    finance
        90. Senator Inhofe. Secretary Mabus, what has the Navy budgeted for
    cyber by fiscal year and program line item?
        Mr. Mabus. The overall Department of Navy cyber budget for fiscal
    years 2013, 2014, and 2015 are $718.4 million, $817.7 million, and
    $981.1 million, respectively. These funding totals include all
    appropriations (O&M, procurement, R&D, and manpower) for identified
    national security systems. Funding does not include the Marine Corps.

        91. Senator Inhofe. Secretary Mabus, define sufficient cash as
    opposed to 7 to 10 days of cash for the Working Capital Fund?
        Mr. Mabus. Although the Navy's goal is to maintain a cash balance
    in the 7- to 10-day range, the Navy's fiscal year 2015 President's
    budget projects the fiscal year 2015 ending cash balance will be $679.3
    million or 5.7 days of cash. The Navy projects a positive cash balance
    throughout the entire fiscal year.

        92. Senator Inhofe. Secretary Mabus, what is the impact on depots
    and shipyards from this change from sufficient cash as opposed to 7 to
    10 days of cash for the Working Capital Fund?
        Mr. Mabus. The shipyards are no longer funded with the Navy Working
    Capital Fund (NWCF) and are therefore not impacted by the Navy's cash
    position. The cash balance is anticipated to be below the 7-day level
    at the end of fiscal year 2015, however, the Navy projects a positive
    cash balance throughout the entire fiscal year. Therefore, at this time
    we do not project an impact to the operations of the NWCF depots.

        93. Senator Inhofe. Secretary Mabus, what is the status of the VXX
    Presidential helicopter replacement program?
        Mr. Mabus. The VXX program has completed a Milestone B review, and
    has awarded a contract to Sikorsky Aircraft Corporation for the
    engineering and manufacturing development phase. The contract will
    involve integration of mature mission systems into an existing in-
    production aircraft. The Navy's acquisition strategy is focused on
    affordability and long-term sustainability. The Navy has fully funded
    the program and initial fielding is planned for late 2020.

        94. Senator Inhofe. Secretary Mabus, what is budgeted by fiscal
    year by line item for Marine Corps embassy support?
        Mr. Mabus. The chart below lists the budget estimates for the
    Marine Corps Embassy Security Group (MCESG) for fiscal years 2013 to
    2015, which includes the congressional plus-up in fiscal year 2014 for
    the directed expansion of the MCESG:

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                       Fiscal Year
                                            --------------------------------
                                                2013       2014       2015
    ------------------------------------------------------------------------
    Military Personnel, Marine Corps -          $  6.1     $  5.5     $  5.6
     Officers (BA 1).......................
    Military Personnel, Marine Corps -            89.1      110.3      135.0
     Enlisted (BA 2).......................
    Operation & Maintenance, Marine Corps         60.1       61.1       74.4
     (4A4G)................................
    Procurement, Marine Corps (523000).....        0.4        1.4        1.4
    Procurement of Ammunition, Navy &              3.9        7.7        8.0
     Marine Corps (166000).................
                                            --------------------------------
      Total................................     $159.6     $185.7     $224.4
    ------------------------------------------------------------------------

                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                            ohio replacement program
        95. Senator Chambliss. Secretary Mabus, the Ohio-class submarine is
    a vital part of the nuclear triad in projecting combat power,
    especially in the form of nuclear deterrence. We provide a nuclear
    umbrella to our allies to counter nuclear proliferation throughout
    several regions. Admiral Richardson, the Deputy Administrator of the
    Office of Naval Reactors with the National Nuclear Security
    Administration, stated in his written testimony presented to the
    Subcommittee on Strategic Forces of the Senate Armed Services
    Committee, that funding shortages have made impossible the purchase of
    ``HPC capacity that is needed to deliver the ORP reactor design on time
    and to support the existing fleet. Cancelling this computer purchase in
    fiscal year 2014 has resulted in at least a 6-month delay to reactor
    core manufacturing, impacting the ORP lead-ship construction
    schedule.'' The ORP was already delayed 2 years and now with this 6-
    month delay to the lead-ship construction schedule, I see the potential
    for an unacceptably wider gap in coverage with regards to that nuclear
    umbrella. What impact would such a gap have in the capability of the
    United States responding to a nuclear threat or with the proliferation
    of nuclear weapons by other countries?
        Mr. Mabus. Maintaining a credible, modern, and survivable sea-based
    strategic deterrent is the Navy's top priority. The Ohio-class SSBN
    will retire, one per year, beginning in 2027. Construction of the first
    ORP must begin in 2021 for delivery in 2028 and first deterrent patrol
    in 2031. A 6-month delay will add significant risk in meeting U.S.
    Strategic Command (STRATCOM) presence and surge requirements. There is
    no slack in the program.
        Naval Reactors is working with DOE on a path forward that will
    provide resources to procure the computers this year. If that proves
    unsuccessful, Naval Reactors will reprioritize fiscal year 2015
    resources, at the detriment of other requirements, to procure HPCs,
    dependent upon their fiscal year 2015 appropriation level. If the HPC
    procurement can take place by the beginning of fiscal year 2015, the
    impact to ORP can be minimized.

        96. Senator Chambliss. Secretary Mabus, how will the Navy overcome
    these development issues in its quest to seeing the ORP through?
        Mr. Mabus. Naval Reactors is working with DOE on a path forward
    that will provide resources to procure the computers this year. If that
    proves unsuccessful, Naval Reactors will reprioritize fiscal year 2015
    resources at the decrement of other requirements to procure HPCs. If
    the HPC procurement can take place by the beginning of fiscal year
    2015, the impact to ORP can be minimized.

        97. Senator Chambliss. Secretary Mabus, is fiscal year 2021 still a
    realistic target for construction of the first ORP to begin?
        Mr. Mabus. Yes. Fiscal year 2021 is a realistic target. Naval
    Reactors is working with DOE on a path forward that will provide
    resources to procure the HPC this year. If that proves unsuccessful,
    Naval Reactors will reprioritize fiscal year 2015 resources at the
    decrement of other requirements to procure the computers. If the HPC
    procurement can take place by the beginning of fiscal year 2015, the
    impact to ORP can be minimized. Additionally, since there is little
    room for margin in the ORP production schedule, it's imperative that
    future funding needs are met in order to support the schedules and
    requirements for design, construction, and certification for the lead
    ship to commence its first strategic deterrence patrol in fiscal year
    2031.

        98. Senator Chambliss. Secretary Mabus, there has been renewed
    debate on using supplemental funding streams for the ORP. I find the
    arguments for it flawed in some respects. First, the claim that nuclear
    ballistic missile submarines are a national mission as opposed to a
    traditional Navy mission would likely come as news to most Americans.
    They might rightly ask, ``Isn't the Navy a national program?'' Second,
    setting up barriers between programs inhibits choosing priorities,
    which is particularly important in a time of budget austerity. Third,
    the Navy's inability to control the cost growth of other major programs
    such as its new class of carriers has contributed to the Service's
    current budget problems. But giving the Navy a free pass by moving the
    ORP ballistic missile submarine (SSBN(X)) off its budget won't
    encourage it to spend its dollars more wisely. What is the Navy's
    current position on paying the balance of the ORP outside of the Navy's
    budget using separate national defense funds?
        Mr. Mabus. If Navy absorbs the entire burden of the ORP SSBN out of
    the Shipbuilding and Conversion, Navy appropriation as it is currently
    estimated each fiscal year, it will significantly reduce other
    shipbuilding programs once ORP SSBN construction begins in fiscal year
    2021. This will result in substantial gaps in fleet ship requirements
    in the late 2020s and 2030s. The Department of the Navy can only afford
    the SSBN procurement costs with significant increases in Navy's top-
    line and Shipbuilding and Conversion, Navy appropriation.
        The cost of the ORP SSBN is significant relative to the resources
    available to the Department of the Navy in any given year. At the same
    time, the Department of the Navy will have to address the block
    retirement of ships procured in large numbers during the 1980s which
    are reaching the end of their service lives. The confluence of these
    events prevents Navy from being able to shift resources within the
    Shipbuilding and Conversion, Navy appropriation to accommodate the cost
    of the ORP SSBN.
        If the Navy funds the ORP SSBN from the Shipbuilding and
    Conversion, Navy appropriation as it is currently estimated each fiscal
    year, ORP SSBN construction will divert funding from construction of
    other ships in the battle force such as attack submarines, destroyers,
    aircraft carriers, and amphibious warfare ships. The resulting battle
    force will not meet the objectives of the 2012 FSA. In addition, there
    will be significant impact to the shipbuilding industrial base.

        99. Senator Chambliss. Secretary Mabus, under current conditions,
    will the Shipbuilding and Conversion, Navy accounts be able to support
    the ORP and other equally important programs into the 2020s to 2030s?
        Mr. Mabus. No, the Navy cannot procure the ORP in the 2020s within
    historical shipbuilding funding levels without severely impacting other
    Navy programs. The Navy can only afford the ORP procurement costs with
    significant increases in Navy's top-line and Shipbuilding and
    Conversion, Navy account.

                                     f-18g
        100. Senator Chambliss. Admiral Greenert, I understand that in
    response to a letter from the chairman of the House Armed Services
    Committee asking you to provide a list of requirements that were
    unfunded but for which there is a validated requirement, the Navy has
    listed, among other things, 22 F-18G Growlers at a cost of over $2
    billion. Has this requirement for additional Growlers above the current
    program of record (135 aircraft) been validated through the Joint
    Capabilities Integration and Development System process and approved by
    the JROC, and if so, who is leading this study or studies?
        Admiral Greenert. The JROC has validated the Navy's Airborne
    Electronic Attack (AEA) current force structure. The current inventory
    objective meets today's minimum requirement. The addition of 22 EA-18Gs
    would enhance Navy's ability to support the joint tactical AEA
    capability. Ongoing analysis by DOD and the Navy indicate a larger
    squadron size is needed to maximize the AEA capabilities and reduce
    risk in a joint major contingency operation. The additional 22 aircraft
    would allow the carrier squadrons to deploy with 7 aircraft vice their
    current complement of 5 aircraft per squadron, reducing the warfighting
    risk in the joint forces ability to operate in future complex
    electromagnetic A2/AD environments.

        101. Senator Chambliss. Admiral Greenert, what is the timeline for
    the completion of this study?
        Admiral Greenert. The Navy's Assessment Division is conducting a
    study that will identify the required number of EA-18Gs per carrier air
    wing (CVW) based upon the requirements to conduct CVW mission sets and
    the unique capabilities of the EA-18G during major contingency
    operations. Results are expected to be available in June 2014.

        102. Senator Chambliss. Admiral Greenert, will you provide the
    results of this study to the congressional defense committees?
        Admiral Greenert. Yes, the results of this study, which are
    expected to be available in June 2014, will be provided to the
    congressional defense committees.

        103. Senator Chambliss. Admiral Greenert, why should Congress add
    any money for a requirement before the studies are complete and the
    JROC has approved a new requirement?
        Admiral Greenert. The JROC has validated the Navy's current AEA
    force structure. The addition of 22 EA-18Gs will be used to augment
    existing Navy squadrons in the execution of the joint AEA missions
    allowing carrier squadrons to deploy with 7 aircraft vice their current
    complement of 5 aircraft per squadron. The additional aircraft will
    support AEA capability in a carrier air wing and reduce risk in a Joint
    major contingency operation environment, including future complex
    electromagnetic A2/AD environments.

        104. Senator Chambliss. Admiral Greenert, if the committee were to
    contemplate adding Growlers to fulfill a requirement which has not yet
    been validated, which Navy modernization account would you recommend
    taking the money from . . . .other aircraft programs? . . .
    shipbuilding? . . . submarines?
        Admiral Greenert. I included 22 additional Growlers on the Navy's
    fiscal year 2015 UPL to support AEA capability in a carrier air wing
    and reduce risk in a Joint major contingency operation environment,
    including future complex electromagnetic A2/AD environments. However,
    the UPL is not of higher priority than the items in our fiscal year
    2015 President's budget submission. I would not recommend taking money
    from any of our fiscal year 2015 President's budget programs in order
    to fund the additional Growlers.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
           nuclear deterrent ohio-class submarine replacement program
        105. Senator Ayotte. Admiral Greenert, in your prepared remarks,
    you state that, ``under the New Strategic Arms Reduction Treaty, the
    Navy SSBN force will carry about 70 percent of the U.S. accountable,
    deployed strategic nuclear warheads by 2020.'' Yet, in your written
    testimony, you say that you are ``increasingly concerned about our
    ability to fund the Ohio Replacement ballistic missile submarine
    program--our highest priority program--within our current and projected
    resources.'' You go on to say, ``the Navy cannot procure the Ohio
    Replacement in the 2020s within historical shipbuilding funding levels
    without severely impacting other Navy programs.'' Can you elaborate on
    the concerns you have with this program?
        Admiral Greenert. Beyond the FYDP, the need to recapitalize our
    fleet ballistic missile submarine force will cause significant and
    noteworthy risks to the Navy's overall shipbuilding plan. If Navy
    absorbs the entire burden of the Ohio Replacement SSBN out of the
    Shipbuilding and Conversion, Navy appropriation as it is currently
    estimated each fiscal year, it will significantly reduce other
    shipbuilding programs once Ohio Replacement SSBN construction begins in
    fiscal year 2021. This will result in substantial gaps in fleet ship
    requirements in the late 2020s and 2030s. The Department of the Navy
    can only afford the SSBN procurement costs with significant increases
    in Navy's top-line and Shipbuilding and Conversion, Navy appropriation.
        Simply stated, the Navy can make $13 billion to $14 billion
    available annually for shipbuilding in a balanced budget that
    adequately funds manpower, operations, training, sustainment, and
    aircraft/weapons recapitalization. With an estimated cost of about $6
    billion/SSBN(X), and an imperative to build at least one CVN every 5
    years, these two programs will consume $8 billion new start
    construction funds each year. This leaves $5 to $6 billion for the
    remainder of our shipbuilding program. With attack submarines running
    about $2 billion each, DDGs and LPDs costing about $1.7 billion each,
    and LHAs coming in at $4 billion/ship, this $5 billion to $6 billion
    shipbuilding fund will only procure about three other ships in a given
    year. Sustaining rates for SSNs are 1.5/year and DDGs are 2.5/year--
    those two classes alone require us to build four ships/year just to
    sustain their inventories, clearly, there are insufficient funds to
    support doing this while we build the SSBN(X)--if Navy has to absorb
    the costs.

        106. Senator Ayotte. Admiral Greenert, why do you believe the Navy
    needs to build the next generation ballistic missile submarine?
        Admiral Greenert. The Navy's top priority is to maintain a
    credible, modern, and survivable sea-based strategic deterrent. Under
    the New START treaty, the Navy SSBN force will carry about 70 percent
    of the United States accountable deployed strategic nuclear warheads by
    2020. The current Ohio-class SSBN will retire, one per year, beginning
    in 2027. To continue to meet STRATCOM presence and surge requirements,
    construction of the first Ohio Replacement SSBN must begin in 2021 for
    delivery in 2028 and first deterrent patrol in 2031. Additionally,
    construction of the Ohio Replacement aligns with our ally, the United
    Kingdom, in building of the common missile compartment to support their
    Successor-class SSBN program.

        107. Senator Ayotte. Admiral Greenert, what advantages does the
    sea-leg of our nuclear triad provide?
        Admiral Greenert. A credible, modern, and survivable sea-based
    strategic deterrent is the centerpiece of our nuclear triad. The SSBN's
    inherent stealth, when joined with the capabilities of the Trident II
    D5 strategic weapons system, provides the most survivable leg of the
    nuclear triad and contributes deterrence through an assured second
    strike capability that is reliable and credible.

                  amphibious combat vehicle propulsion system
        108. Senator Ayotte. General Amos, for future Marine Corps
    amphibious combat vehicles, would you agree that speed is a vital
    factor--in terms of minimizing the ship-to-shore time?
        General Amos. Yes. Speed is an essential element of maneuver
    warfare as it enhances lethality, increases protection, and facilitates
    surprise. Minimizing closure times from ship to inland objectives is
    important and is facilitated by the aviation element of our Marine Air
    Ground Task Forces (MAGTF), and the flexibility, speed, and range of
    the ships, crafts, and connectors of the amphibious task force. We have
    long desired high water speed capability in our armored personnel
    carriers and have pursued development of that capability for more than
    4 decades without result. We have proven that there is no longer a
    technological barrier to achieving the capability, but the limitations
    imposed on such a vehicle's design compromise its landward
    capabilities, which is the domain in which it will operate for the vast
    majority of its operational life. We are better served by using and
    improving Navy capabilities and other MAGTF assets to enhance the speed
    of amphibious operations in order to rapidly place effectively equipped
    marines on the objective.

        109. Senator Ayotte. General Amos, what is the Marine Corps doing
    to increase amphibious combat vehicle speeds?
        General Amos. In the near-term, we have committed RDT&E funding to
    develop several technical enhancements that, if applied to an
    amphibious combat vehicle, could facilitate improved hydrodynamic
    performance and increase speed. We are also working with the Navy to
    address some improvements to current sea connectors that could
    facilitate faster closure times and more efficient deployment of
    marines from the sea base. We will also be pursuing a more long-term
    science and technology effort through the Office of Naval Research to
    study and develop technologies that will facilitate an increased speed
    and agility of amphibious forces.

                  rules changes to assessing naval fleet size
        110. Senator Ayotte. Secretary Mabus, I note that the Navy has
    revised its guidelines for accounting for the size of the Navy's battle
    force--or fleet size. For example, under the old counting rules, we
    have 284 ships and submarines today, but under the new counting rules,
    we have 290. Similarly, in fiscal year 2015, under the old counting
    rules, we will have 274 ships and submarines and under the new counting
    rules, we will have 284--a difference of 10. What was the reason for
    this change?
        Mr. Mabus. The new counting methodology provides flexibility to the
    combatant commanders to assess the near-term environment and changing
    situations faced in meeting the demands of the DSG. This will include
    FDNFs, whether self-deployable or non-self-deployable, being added to
    the battle force count dependent on the mission, location, and required
    capabilities.
        The new counting methodology allows ship types routinely requested
    by the combatant commanders and allocated through the GFMAP to be
    counted on a case-by-case basis with the recommendation of the Chief of
    Naval Operations and approved by the Secretary of the Navy. This will
    be a temporary authorization to include these ships in the ship count
    and will remain in effect until the ships are no longer requested in
    the GFMAP or are retired (whichever occurs first).
        For example, in fiscal year 2015, the specific impact of the new
    counting methodology resulted in adding 10 Patrol Craft FDNFs currently
    operating in the 5th Fleet, reducing the mine counter measure ship
    count from 11 ships to the 8 ships FDNF in 5th and 7th Fleet, adding 1
    High Speed Transport assigned to U.S. Pacific Command (PACOM) to
    replace the currently leased WestPac Express, and adding the 2 Hospital
    Ships (T-AH).
        As of May 9, 2014, the Navy's battle force consists of 289 ships.

        111. Senator Ayotte. Secretary Mabus, what vessels are you now
    counting that you weren't previously?
        Mr. Mabus. The specific impact of the new counting methodology will
    result in adding 10 Patrol Craft FDNFs currently operating in the 5th
    Fleet, reducing the mine counter measure ship count from 11 ships to
    the 8 ships FDNF in 5th and 7th Fleet, adding 1 HIgh Speed Transport
    assigned to PACOM to replace the currently leased WestPac Express and
    adding the 2 hospital ships (T-AH) in fiscal year 2015.

                           navy yard--insider threats
        112. Senator Ayotte. Secretary Mabus and Admiral Greenert, the
    tragedy last September at the Washington Naval Yard showed us the
    dangers insider threats can pose. Further, the intelligence leaks
    committed by Edward Snowden demonstrate that insiders pose threats, and
    when they are able to carry out their acts can cause incredible
    damage--to our dedicated workforce and our national security. How are
    you working to confront potential insider threats?
        Mr. Mabus and Admiral Greenert. I issued an Insider Threat Program
    policy in August 2013 which is aligned with the President's Executive
    Order and the minimum standards identified by the National Insider
    Threat Task Force. I designated the Deputy Under Secretary of the Navy
    for Policy as the Navy Insider Threat Senior Agency Official. The
    policy provides direction to key staff functions and the Service Chiefs
    to implement an integrated insider threat program to deter, detect, and
    mitigate insider threats before damage is done to national security,
    personnel, resources, and/or capabilities.
        The Department is also working with the Under Secretary of Defense
    for Intelligence's Continuous Evaluation Concept Demonstration. This
    demonstration will use existing DOD, other Federal agencies, and
    commercial data sources and run the information against a set of
    business rules that are aligned with the Federal Investigative
    Standards and the Federal Adjudicative Guidelines. As designed, the
    system is supposed to identify information which presents a security
    concern. Once the concern is verified, it will be forwarded to the
    appropriate responsible official of the Department to resolve. The Army
    demonstrated this capability with positive results. The DOD
    demonstration will prove the ability to expand the effort to cover the
    entire DOD cleared population. We are committed to this effort and see
    great promise in it to thwart future insider threats.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            THURSDAY, APRIL 3, 2014

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

                     POSTURE OF THE DEPARTMENT OF THE ARMY

        The committee met, pursuant to notice, at 9:34 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, McCaskill,
    Udall, Hagan, Manchin, Shaheen, Gillibrand, Blumenthal,
    Donnelly, Kaine, King, Inhofe, McCain, Sessions, Chambliss,
    Wicker, Ayotte, Graham, Vitter, and Blunt.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody. The committee
    meets today to hear testimony from the Secretary of the Army,
    the Honorable John M. McHugh, and the Chief of Staff of the
    Army, General Raymond T. Odierno, USA. Our hearing is on the
    Army's fiscal year 2015 budget request and current posture.
        We meet with heavy hearts. Once again, our Army must
    recover from an act of unspeakable violence here at home. Much
    remains unknown about the shooting incident yesterday at Fort
    Hood, including the question of what prompted this horrible
    attack. All that is certain is that lives have been lost and
    that families are grieving, and we all share in their grief.
        Secretary McHugh, General Odierno, please convey this
    committee's condolences to the men and women of Fort Hood and
    the Army, and please be assured that this committee will fully
    support your efforts to care for those who are affected.
        For more than a decade, the men and women of the Army had
    the burden of the wars in Iraq and Afghanistan. They have done
    all that we have asked and more to succeed, and remain
    resilient through repeated combat deployments.
        Last year, the sequestration required by the Budget Control
    Act (BCA), along with a higher than expected operating tempo in
    Afghanistan, led to a $12 billion shortfall in Army operation
    and maintenance accounts, resulting in the cancellation of
    major training exercises and the deferral of required equipment
    maintenance and repairs.
        Last year's Bipartisan Budget Act (BBA) has begun to
    relieve these readiness problems by providing added funding to
    reduce somewhat the impact of sequestration in fiscal years
    2014 and 2015. But the budget caps and sequestration will apply
    again with full force in 2016 and beyond.
        The administration has proposed we increase revenues so
    that we can raise the defense budget caps by $26 billion in
    fiscal year 2015, the budget before us. Whether by additional
    revenues or by other means, raising the budget caps to reduce
    their impact is essential and is contingent on bipartisan
    congressional agreement. I believe we must pursue just that
    continuously and with determination in the months ahead.
        Under existing strategic guidance, the Active Army will cut
    its end strength by approximately 82,000 soldiers to the
    planned force of 450,000 by the end of fiscal year 2017. If the
    budget caps remain unchanged, however, the Army would shrink to
    an end strength of 420,000--a force size which General Odierno
    has publicly said is inadequate to support our national defense
    strategy. End strength and force structure reductions of this
    magnitude must be managed carefully to avoid the risk that the
    Army could become a hollow force--a force with inadequate
    training levels and insufficient equipment to accomplish its
    missions.
        I look forward to the testimony of our witnesses on how the
    Army will reorganize to make the reductions required by the
    budget caps now in law; how the Army would spend additional
    money if Congress were to raise the caps, as proposed by the
    administration; how it will decide which installations will
    lose combat brigades; whether additional reductions can be
    borne by units based overseas; and what the impact of
    reductions required by the statutory budget caps is likely to
    be on military and civilian personnel, families, readiness,
    modernization, and our defense posture around the world.
        In developing a plan to address the statutory budget caps,
    the Army has also had to make difficult decisions about
    distribution of proposed cuts between the Active Force and the
    Reserve Force. The Department of the Army's planned end
    strength reductions would, at the end of fiscal year 2017,
    provide an Active Army of 450,000, or 20 percent less from its
    wartime high of 569,000; an Army National Guard of 335,000, or
    6 percent less than its wartime high of 354,000; and a U.S.
    Army Reserve at 180,000, or 10 percent less than its high of
    205,000. The Army's decisions on the allocation of aviation
    assets between Active and Reserve units have been particularly
    controversial, and we'll hold a hearing next Tuesday, April 8,
    focusing on the Army's plans for change in Active and Reserve
    component force mix due to the end strength reductions over the
    next several years.
        The Army has repeatedly cancelled equipment modernization
    programs due to problems with cost, performance, or with
    budget. This year's budget request proposes to cancel the
    Army's Ground Combat Vehicle (GCV). The Army has three
    remaining new-vehicle programs: the Joint Light Tactical
    Vehicle (JLTV), the Paladin Integrated Management (PIM) Self-
    Propelled Howitzer, and the Armored Multipurpose Vehicle
    (AMPV). Upgrades for the M1 tank and M2 Bradley are scheduled,
    but remain a year or 2 down the road. The cancellation of the
    GCV, the gap in the Abrams and Bradley programs, and the
    slowing of other vehicle programs combined to raise serious
    questions about risks to the Army's ground vehicle industrial
    base. I look forward to hearing from our witnesses how they
    plan to manage these risks.
        Finally, the Army has been devoted to addressing the
    physical and emotional toll that 12 years of war have taken on
    our soldiers and their families. While there are numerous
    programs now and significant resources dedicated to support our
    soldiers and their families before, during, and after their
    deployment and service, we know there is more to do. We remain
    concerned with the incidents of suicides and sexual assaults,
    and the continuing problems faced by many of our soldiers as
    they return from deployments to war zones, leave the military,
    seek new jobs, and transition to civilian life. The committee
    is interested to hear updates from Secretary McHugh and General
    Odierno on their assessment of the steps that have already been
    taken to address these problems, and the steps that remain to
    be taken.
        I invite them and I invite you both to begin your testimony
    by updating us on yesterday's events at Fort Hood.
        Again, the committee is grateful for your great
    contributions to our Nation.
        I call on Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman. Let me just
    identify with your deep-felt remarks about what happened
    yesterday. It happened that coincidentally I was with Secretary
    McHugh when the news came and we both got it at the same time
    of the tragedy at Fort Hood.
        I can pretty much identify with the rest of your remarks,
    too. Given the deterioration of military readiness and
    capabilities over the last 5 years and the significant end
    strength cuts planned for the Army, we're all concerned that we
    can't meet the missions outlined in the Defense Strategic
    Guidance (DSG) without unacceptable risk to the force and our
    country. We have to remind ourselves and others that when risk
    goes up you're talking about lives.
        We've been wrong before in the past when it comes to
    assumptions regarding the size of our ground forces. In fact,
    Secretary McHugh, you and I sat next to each other back in 1993
    on the House Armed Services Committee when we heard testimony
    by some expert that in 10 years we would no longer need ground
    forces. So we've been wrong before on where we are.
        Today, the greatest risk our military faces is becoming a
    hollow force, and we'll have some questions concerning that.
    General Dempsey said the risk we face today is we have a
    significant near-term readiness risk that has been accruing.
    We're digging ourselves a readiness hole out of which it will
    take several years to climb.
        Not only does the budget underfund current readiness, it
    mortgages future readiness. The Bipartisan Budget Agreement
    (BBA) gave a minor budgetary relief. Chairman Levin has already
    covered the effects that would have in 2014, 2015, and, of
    course, the devastating effects I'm sure that, General, you're
    going to want to talk about should things happen this way and
    continue to 2017.
        Yesterday--I don't see Senator Ayotte here now, but it was
    prophetic because--and I used this this morning on a show--
    Senator Ayotte asked the question--I'm going to go ahead and
    repeat what she asked yesterday at the hearing--``What steps
    are you taking to prepare for, prevent, and respond to threats
    to personnel and facilities in light of the 2009 Fort Hood
    shooting?'' That was just yesterday morning before the
    Readiness and Management Support Subcommittee of the Senate
    Armed Services Committee, and then, of course, the disaster
    happened shortly after that. So we'll have some questions
    concerning that and where we go from here, what the future's
    going to look like, and the security that we are going to have
    to offer.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Secretary McHugh.

        STATEMENT OF HON. JOHN M. McHUGH, SECRETARY OF THE ARMY

        Mr. McHugh. Thank you. Mr. Chairman, let me express my
    appreciation to you, the ranking member, and in individual
    discussions before the hearing, too, the other members of the
    committee, for their heartfelt expressions of sorrow and
    support. It's deeply appreciated.
        Obviously, as you noted, Mr. Chairman, this longstanding
    posture hearing is being held now under a shadow of the tragic
    events that happened just yesterday afternoon at Fort Hood. As
    I know you all understand, any time the Army loses a soldier,
    we all mourn. When that loss comes at the hands of another
    soldier, and indeed when that event occurs at the very place
    that suffered so much pain, so much anguish, just 4\1/2\ years
    ago, it only adds to the sorrow and the all-consuming sense of
    loss the Army is feeling this day.
        Our first responsibility, as I know you share, is to the
    families of the fallen; also to those, of course, who have been
    wounded and those close to them, their family, their loved
    ones, as they make their way hopefully on a road to full
    recovery. Our thoughts and prayers, but most importantly our
    actions and our every effort, will be with those families, will
    be with those survivors, whatever the struggle. We have ordered
    all possible means of medical and investigatory support, as
    well as added behavioral health counselors.
        I want to give a tip of the hat to Department of Veterans
    Affairs (VA) Secretary Rick Shinseki, who immediately reached
    out and offered any support from the VA in respect to needed
    personnel. In speaking, as both the Chief and I did, late last
    evening to Lieutenant General Mark Milley, for the moment the
    immediate need seemed to be met, but we're going to monitor
    that very carefully.
        As I know all of you recognize, this is an ongoing
    investigation and one that occurred just 15 or so hours ago.
    Even at this point, the circumstances remain very fluid, but we
    recognize we owe this committee particularly, but also this
    Congress, the facts, what we know, and when we know it. I want
    to promise all of the members here this morning that we will
    work with you as we go forward together so that you can
    effectively discharge your oversight responsibilities.
        If I may, Mr. Chairman, I'd also like to take a brief
    opportunity to say to the Fort Hood community and to the Army
    family worldwide: This is a time once again to come together,
    to stand as one, as they have so many times before, drawing
    strength from each other.
        As this committee knows so well, the past 13 years have
    been fraught with much loss, with much pain, much suffering.
    But through it all, the men and women of the U.S. Army, their
    families, the civilians who support them, have come through the
    storm together. I know as we have in the past, we'll come out
    the other side of this tempest, poorer for the losses, but
    stronger through our resolve.
        Mr. Chairman, I can take a moment now to give you the
    updates that you've requested and then defer to the Chief for
    the purpose of the posture statement if you'd like.
        Chairman Levin. That would be fine, thank you.
        Mr. McHugh. Based on our discussions last evening with
    Lieutenant General Mark Milley and a subsequent conversation I
    had about 10:45 p.m. with the Secretary of Defense, these are
    the facts as we understand them. But again, things are changing
    even at this moment.
        The specialist, the alleged shooter involved, joined the
    U.S. Army in June 2008. When he first enlisted in the Army, he
    was an 11-Bravo. That's an infantry soldier, as most of you
    know. He later, upon re-upping, transferred his Military
    Occupational Specialty (MOS) to an 88-Mike, truck driver. We
    are tracking at the moment that he did have two deployments,
    including one 4-month, approximately 4-month deployment to Iraq
    as a truck driver.
        His records show no wounds, no involvement, direct
    involvement in combat, as General Milley said, no record of
    Purple Heart or any injury that might lead us to further
    investigate a battle-related traumatic brain injury or such. He
    was undergoing a variety of treatment and diagnoses for mental
    health conditions ranging from depression to anxiety to some
    sleep disturbance. He was prescribed a number of drugs to
    address those, including Ambien.
        He was seen just last month by a psychiatrist. He was fully
    examined, and as of this morning we had no indication on the
    record of that examination that there was any sign of likely
    violence either to himself or to others, no suicidal ideation.
    So the plan forward was to just continue to monitor and to
    treat him as deemed appropriate.
        The alleged weapon was a .45 caliber that the soldier had
    recently purchased. He lived off post. We try to do everything
    we can to encourage soldiers to register their personal weapons
    even when they live off post. We are not legally able to compel
    them to register weapons when they reside off post, but the
    minute that soldier brought that weapon onto the post it was
    not registered and it was under our rules and regulations being
    utilized, obviously, illegally and with not proper clearance or
    foreknowledge by the command.
        He is married. His wife was being questioned the last I was
    informed last evening. They are natives to Puerto Rico. Again,
    the background checks we've done thus far show no involvement
    with extremist organizations of any kind, but, as General
    Milley said to me last evening, and I know the Chief and I
    fully support, we're not making any assumptions by that. We're
    going to keep an open mind and an open investigation and we
    will go where the facts lead us, and possible extremist
    involvement is still being looked at very carefully.
        He had a clean record in terms of his behavioral record--no
    outstanding bad marks for any kinds of major misbehaviors that
    we're yet aware of.
        So you know the conditions of those who were involved in
    the incident. There were three victims who have, tragically,
    lost their lives. The other killed in action in that moment was
    the shooter, who took his own life when confronted by a
    military police officer, a female. 16 others wounded, 3 that
    were considered critical, the others of varying severity but
    considered by and large, stable. But we obviously are going to
    continue to make sure they get the best of care, because we
    want to ensure absolutely that no bad thing comes out of this
    more than already has.
        So that is pretty much what we know at this moment, Mr.
    Chairman.
        Chairman Levin. Thank you very much, Mr. Secretary.
        Mr. McHugh. If it's appropriate, I'll yield to the Chief
    for the posture comments.
        Chairman Levin. General Odierno.

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

        General Odierno. Mr. Chairman, if I could just add a few
    comments. First, once again, we talk a lot in the Army that we
    have an Army family, and we've lost young people who are part
    of our Army family and we take that incredibly serious. For me,
    this hits close to home. I've spent a lot of time at Fort Hood
    personally. I was a brigade commander, a division commander,
    and a corps commander at Fort Hood. I understand the resilience
    of that community, the resilience of the people there, how
    proud the soldiers are of what they do, and we will do
    everything we can to ensure they continue to move forward.
        I would just say that I believe that some of the procedures
    that have been put in place following the incident 4\1/2\ years
    ago did help us yesterday. The alert procedures that were in
    place, the response, the training that has gone into the
    response forces that responded, I think contributed to making
    this something that could have been much worse.
        So we will continue to monitor the force of the Army and
    the resources of the Army will be behind Fort Hood. We are very
    confident in the leadership of General Mark Milley, who has, I
    think as many of you know, just returned from Afghanistan as
    the commander of a corps over there and is a very experienced
    commander, and we will continue to support them.
        The only thing I would add to the facts that the Secretary
    provided, that this was an experienced soldier. He spent
    actually 9 years in the Puerto Rico National Guard before
    coming on Active Duty. So he was a very experienced soldier,
    had a 1-year deployment to the Sinai with the National Guard
    and then had a 4-month deployment in Iraq. It was the last 4
    months at the end of 2011, from August to December 2011.
        We will continue to work through this issue, and continue
    to investigate, and as we do that we will provide information
    to all.
        The only other thing I'd say, is great interagency
    cooperation. The Federal Bureau of Investigation has provided
    significant assistance, as well as the State of Texas, as well
    as the VA, as the Secretary pointed out. So we will continue to
    work this. We have an incredibly talented, resilient Army.
    We'll continue to be incredibly resilient and move forward. But
    we will also reach out to our family, the victims and the
    families of our victims of this tragic incident.
        That's all I have. If you want me to continue, I will
    continue with my statement.
        Chairman Levin. Thank you. I think that would be
    appropriate, to give us now your posture statement.
        General Odierno. Chairman Levin, Ranking Member Inhofe,
    other members: Thank you so much for allowing me to speak with
    you this morning. I first want to thank you, Mr. Chairman, for
    your 36 years of service and all you have done for us as the
    chairman of this committee, your leadership, your bipartisan
    leadership, in always supporting our soldiers and families, and
    also holding us accountable for doing what's right for our
    soldiers and for our national security. I want to thank you,
    sir, for that.
        Chairman Levin. I very much appreciate that. Thank you.
        General Odierno. Despite declining resources, the demand
    for Army Forces actually continues to increase. More than
    70,000 soldiers are deployed today on contingency operations
    and about 85,000 soldiers are forward stationed in nearly 150
    countries, including nearly 20,000 on the Korean Peninsula. Our
    soldiers, civilians, and family members continue to serve with
    the competence, commitment, and character that our great Nation
    deserves.
        A typical day for our soldiers includes patrolling
    alongside our Afghan National Army partners, standing watch on
    the Demilitarized Zone in Korea, providing security for an
    embassy in South Sudan, manning missile batteries in Turkey and
    Guam, and assisting recovery efforts from the devastating
    mudslide in the State of Washington.
        As we consider the future roles and missions of our Army,
    it's imperative we consider the world as it exists, not as one
    we wish it to be. The recent headlines on Russia's annexation
    of Crimea, the intractable Syrian civil war, artillery
    exchanges between North Korea and South Korea, just to name a
    few, remind us of the complexity and uncertainty inherent in
    the international security environment.
        It demands that we make prudent decisions about the future
    capability and capacity that we need within our Army.
    Therefore, we must ensure our Army has the ability to rapidly
    respond to conduct the entire range of military operations,
    from humanitarian assistance and stability operations to
    general war.
        We certainly appreciate the short-term predictability in
    fiscal year 2014 and fiscal year 2015 afforded by budget levels
    in the BBA. The BBA supports a fiscal year 2015 Army funding
    level of $120.5 billion, but in reality it is still $12.7
    billion short of our request. The budget agreement will allow
    us to begin to buy back some short-term readiness by funding
    additional combat maneuver rotations, thereby increasing the
    amount of forces trained and ready for decisive combat
    operations.
        However, we still are required to make tough choices and
    had to reduce our modernization efforts by ending four
    programs, restructuring 30, and delaying 50 programs. We
    continue to take significant risk in our facilities,
    sustainment, and home station training.
        The 2014 Quadrennial Defense Review builds on the defense
    priorities outlined in the 2012 DSG. Last year, I testified
    that we can implement the defense guidance at moderate risk
    with an end strength of 490,000 in the Active Army, 350,000 in
    the National Guard, and 202,000 in the U.S. Army Reserve, and I
    stand by that assessment. However, sequestration is the law of
    the land and it will return in fiscal year 2016 without
    immediate congressional action. The readiness gains achieved in
    fiscal year 2015 will quickly atrophy as we are forced to
    reduce future planned rotations and other planned training
    activities in order to fund immediate operational requirements.
        Sustained readiness requires sustained training dollars and
    investment. Our modernization accounts will receive a 25
    percent reduction, with no program unaffected. Major weapons
    programs will be delayed, severely impacting the industrial
    base both in the near- and long-term.
        Under sequestration, for the next 3 or 4 years we will
    continue to reduce end strength as quickly as possible while
    still meeting operational commitments. As we continue to draw
    down and restructure into a smaller force, the Army will
    continue to have significantly degraded readiness and extensive
    modernization shortfalls. At the end of fiscal year 2019, we
    will begin to establish the appropriate balance between end
    strength, readiness, and modernization, but for an Army that is
    much smaller. From fiscal years 2020 to 2023, we begin to
    achieve our readiness goals and reinvest in our modernization
    programs.
        We will have no choice but to slash end strength levels if
    sequestration continues in order to attain that proper balance.
    As I said earlier, we'll be required to further reduce the
    Active Army to 420,000, the National Guard to 315,000, the U.S.
    Army Reserve to 185,000. At these end strength funding levels,
    we will not be able to execute the defense strategy.
        In my opinion, this will call into question our ability to
    execute even one prolonged multi-phase major contingency
    operation. I also have deep concerns that our Army at these end
    strength levels will not have sufficient capacity to meet
    ongoing operational commitments and simultaneously train to
    sustain appropriate readiness levels.
        The President's budget submission supports end strength
    levels at 440,000 to 450,000 in the Active Army, 335,000 in the
    Army National Guard, and 195,000 in the U.S. Army Reserve. I
    believe this should be the absolute floor for end strength
    reductions. To execute the defense strategy it's important to
    note that as we continue to lose end strength, our flexibility
    deteriorates, as does our ability to react to strategic
    surprise. My experience tells me that our assumptions about the
    duration and size of future conflicts, allied contributions,
    and the need to conduct post-conflict stability operations are
    optimistic. If these assumptions are proven wrong, our risk
    will grow significantly. Under the President's budget we will
    achieve a balance between end strength, readiness, and
    modernization 3 to 5 years earlier than under sequestration,
    and that would occur around fiscal year 2018 and at greater
    total force levels.
        In order to meet ongoing and future budget reductions, we
    have developed a total force policy in close collaboration
    within the Army and the Department of Defense (DOD). The
    Secretary of Defense directed that the Army not retain
    structure at the expense of readiness. Additionally, the
    Secretary of the Army and I directed that cuts should come
    disproportionately from the Active Force before reducing the
    National Guard and U.S. Army Reserve.
        Our total force policy was informed by the lessons learned
    during the last 13 years of war. We considered operational
    commitments, readiness levels, future requirements, as well as
    costs. The result is a plan that recognizes the unique
    attributes, responsibilities, and complementary nature of each
    component, while ensuring our Guard and Reserves are maintained
    as an operational and not a strategic reserve.
        Ongoing reductions, coupled with sequestration level cuts
    over the next 7 years, will result in a total reduction of
    150,000 soldiers, 687 aircraft, and up to 46 percent of our
    Brigade Combat Teams (BCT) from the Active Army. The National
    Guard will be reduced by 43,000 soldiers, 111 aircraft, and up
    to 22 percent of the BCTs it currently has. The U.S. Army
    Reserve will be reduced by 20,000 soldiers.
        The end strength cuts to the Active Army will represent 70
    percent of the total end strength reductions, compared with 20
    percent from the National Guard and 10 percent from the U.S.
    Army Reserve. This will result in the Guard and Reserves
    comprising 54 percent of the total Army end strength, while the
    Active component will comprise 46 percent. The Army will be the
    only Service in which the Reserve outnumbers the Active
    component.
        Under sequestration we cannot afford to maintain our
    current aviation structure and still sustain modernization
    while providing trained and ready aviation units across all
    three components. Therefore, we've developed an innovative
    concept to restructure our aviation fleet to address these
    issues. Overall we believe this plan will generate a total
    savings of $12.7 billion over the Program Objective Memorandum
    (POM).
        Of the 798 total aircraft reduced under this plan, 687, or
    86 percent, will come out of the Active component and 11
    aircraft, or 14 percent, from the National Guard. We will also
    transfer about 100 UH-60s to the National Guard.
        As with end strength, we are disproportionally taking cuts
    from the Active component aviation, and, in fact, we will
    eliminate three full combat aviation brigades out of the Active
    component, while the National Guard sustains all of its brigade
    structure.
        This plan allows the Army to eliminate the obsolete
    airframes, modernize the fleet, and sustain pilot proficiency
    across the total force. The result is an Active and Reserve
    aviation force mix with more capable and prepared formations
    that are able to respond to contingencies at home and abroad.
        Let me be very clear. These are not cuts we want to take,
    but we must take, based on sequestration. I believe our
    recommendation delivers the best total Army for the budget we
    have been allocated.
        The Secretary and I also understand that the American
    people hold us to a higher standard of character and behavior.
    Combatting sexual assault and harassment remains our top
    priority. Over the past year the Army has established more
    stringent screening criteria and background checks for those
    serving in positions of trust. Army commanders continue to
    prosecute the most serious sexual assault offenses at a rate
    more than double that of civilian jurisdictions, including many
    cases that civilian authorities refuse to pursue.
        We appreciate the continued focus of Congress as we
    implement legislative reforms to enhance the rights of
    survivors and improve our military justice system. We continue
    to take this issue very seriously. I also know how much work
    remains to be done in this area.
        We are also aggressively and comprehensively attacking the
    issue of ethical leadership individually, organizationally, and
    through systematic reviews. We've initiated 360-degree
    assessments on all officers and especially commanders. We've
    implemented a new officer evaluation report to strengthen
    accountability. For our general officers, we conduct peer
    surveys and develop specific ethics focus as part of our senior
    leader education program. We have also implemented 360-degree
    assessments for our general officers.
        We also appreciate help with two issues impacting our
    ability to maintain the right balance for our Army. First, is
    the Base Realignment and Closure (BRAC) process, which is a
    proven, fair, cost-effective means to address excess
    installation capacity. With the reduction of over 200,000
    soldiers from our Army and lower budgets, we need a BRAC to
    reduce unsustainable infrastructure.
        Second, we are extremely grateful for the high-quality care
    and compensation provided to our soldiers. We have endorsed
    proposals that recognize their incredible service while
    allowing us to better balance future investments in readiness,
    modernization, and compensation.
        We must keep in mind that it is not a matter of if, but
    when, we will deploy our Army to defend this great Nation. We
    have done it in every decade since World War II. It is
    incumbent on all of us to ensure our soldiers are highly
    trained, equipped, and organized. If we do not, they will bear
    the heavy burden of our miscalculations.
        I'm incredibly proud to wear this uniform and represent the
    soldiers of the Active Army, the Army National Guard, and the
    U.S. Army Reserve. Their sacrifices have been unprecedented
    over the last 13 years. We must provide them with the necessary
    resources for success in the future.
        Thank you, Mr. Chairman, thank you to the entire committee,
    for allowing me to testify here today. I look forward to your
    questions.
        [The joint prepared statement of Mr. McHugh and General
    Odierno follows:]
              Joint Prepared Statement by Hon. John M. McHugh and
                          GEN Raymond T. Odierno, USA
                                  introduction
        America's Army remains heavily committed in operations overseas as
    well as at home in support of our combatant commanders. More than
    66,000 U.S. Army soldiers are deployed to contingency operations, with
    nearly 32,000 soldiers supporting operations in Afghanistan. In
    addition, there are approximately 85,000 soldiers forward stationed
    across the globe in nearly 150 countries worldwide. Every day, the
    soldiers and civilians of the Active Army, Army National Guard and Army
    Reserve inspire us with their competence, character and commitment to
    serving our Nation. A typical day for our soldiers may include
    patrolling alongside our Afghan National Army partners, standing watch
    on the demilitarized zone in Korea, manning missile batteries in Turkey
    and Guam, delivering humanitarian relief to the Philippines, conducting
    logistics training in Sierra Leone, securing facilities in South Sudan,
    and responding to floods, wildfires, and tornados across the United
    States.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Throughout our Nation's history, the United States has drawn down
    military forces at the close of every war. Today, however, we are in
    the process of rapidly drawing down Army forces before the war is over.
    At the same time, we continue to face an uncertain, complicated and
    rapidly changing international security environment, as stated in the
    2014 Quadrennial Defense Review. In light of domestic fiscal
    challenges, the Army is committed to doing its part to restore fiscal
    discipline and contribute to our Nation's economic strength. In a time
    of budget stringency, the Army's greatest challenge is providing
    steadfast support to worldwide operational commitments to include
    Afghanistan while simultaneously drawing down, reorganizing and
    preparing the force for a wider array of security missions and threats
    in the future. We are committed to ensure the U.S. Army remains the
    most highly trained and professional land force in the world.
        Together, we must ensure our Army is trained and ready to prevent
    conflict, shape and set theaters for our geographic Combatant
    Commanders, deter aggression, and if necessary, win decisively in a
    sustained major combat operation. However, over the last 2 years, the
    impact of the Budget Control Act (BCA) of 2011 has resulted in
    declining readiness throughout the Total Army (Active Army, Army
    National Guard, and Army Reserve).
                   budgetary reductions and strategic choices
        Over the past 4 years, the Army has absorbed several budget
    reductions in the midst of conducting operations overseas and
    rebalancing the force to the wider array of missions required by 2012
    Defense Strategic Guidance. To comply with the funding caps specified
    in the BCA, the fiscal year 2013 budget proposed $487 billion in
    Department of Defense (DOD) funding reductions over 10 years, of which
    the Army's share was an estimated $170 billion. In addition,
    sequestration was triggered in 2013, forcing an additional $37 billion
    reduction in fiscal year 2013 and threatening a further total reduction
    in DOD funding of approximately $375 billion through fiscal year 2021,
    with the Army's portion estimated at $95 billion. In fiscal year 2013,
    a combination of sequestration and Overseas Contingency Operations
    funding shortfalls degraded Army readiness levels. It caused the Army
    to carry over a readiness shortfall of $3.2 billion to fiscal year
    2014.
        The Army continues to face an uncertain fiscal environment in the
    years ahead. The Bipartisan Budget Act (BBA) of 2013 provides the Army
    modest, temporary relief from BCA defense spending caps in 2014. The
    predictability afforded by known budget levels is appreciated, and the
    BBA supports a fiscal year 2015 Army funding level of $120.5 billion.
    However, the Army still faces budget cuts of $7.7 billion in fiscal
    year 2014, and an additional $12.7 billion in fiscal year 2015, when
    compared to the President's fiscal year 2014 budget request. While we
    welcome the relief and predictability that the BBA provides, the Army
    will be forced to cut $20.4 billion in planned funding, an abrupt
    reduction over a short 2-year period of time. Beyond fiscal year 2015,
    fiscal uncertainty remains, including the potential resumption of the
    sequestration-level spending caps in fiscal year 2016.
        During this period of uncertainty in the fiscal and strategic
    environment, our goal has been to maintain the proper balance between
    end strength, readiness and modernization across the Total Army. We are
    reducing end strength as rapidly as possible, while still meeting our
    operational commitments, in order to concentrate remaining funds on
    rebuilding readiness. However, to do this we must accept greater risk
    in our modernization programs. To rebuild and sustain a force capable
    of conducting the full range of operations on land, to include prompt
    and sustained land combat, it is essential that we take steps to
    prevent hollowness within the force. Therefore, consistent with the
    2012 Defense Strategic Guidance, we are in the process of drawing down
    Active Army end strength from a wartime high of 570,000 to 490,000--a
    14 percent cut--by the end of fiscal year 2015. The Army National Guard
    will reduce from 358,200 to 350,200 and the Army Reserve will remain
    relatively constant, decreasing from 205,000 to 202,000 soldiers. In
    conjunction with these end strength reductions, the Army decided to
    reorganize the current operational force of Active Army Infantry,
    Armored and Stryker Brigade Combat Teams (BCTs) from 38 to 32. This
    force structure reorganization will allow us to eliminate excess
    headquarters infrastructure while sustaining as much combat capability
    as possible.
        The fiscal year 2015 budget request provides a balanced and
    responsible way forward in the midst of ongoing fiscal uncertainty. It
    allows the Army to reduce and reorganize force structure, but incurs
    some risk to equipment modernization programs and readiness. Under the
    fiscal year 2015 budget request, the Army will decrease end strength
    through fiscal year 2017 to a Total Army of 980,000 soldiers--450,000
    in the Active Army, 335,000 in the Army National Guard and 195,000 in
    the Army Reserve. This reduction will also adjust the force mix ratio
    between the Active and Reserve components. We will reverse the force
    mix ratio, going from a 51 percent Active component and 49 percent
    Reserve component mix in fiscal year 2012 to a 54 percent Reserve
    component and 46 percent Active component mix in fiscal year 2017. The
    Army will be able to execute the 2012 Defense Strategic Guidance at
    this size and component mix, but it will be at significant risk.
        But with sequestration-level caps in fiscal year 2016 and beyond
    the Army will be required to further reduce Total Army end strength to
    420,000 in the Active Army, 315,000 in the Army National Guard and
    185,000 in the Army Reserve by the end of fiscal year 2019. This would
    end up being a total reduction of 213,000 soldiers with 150,000 coming
    from the Active Army, 43,000 coming from the Army National Guard and
    20,000 from the Army Reserve. This includes a 46 percent reduction in
    Active Army BCTs and a 21 percent reduction in Army National Guard
    BCTs. Sequestration-level spending caps would also require a 25 percent
    reduction to Army modernization accounts, with no program unaffected.
    Major weapon programs will be delayed, severely impacting the
    industrial base both in the near and long term. Most significantly,
    these projected end strength levels would not enable the Army to
    execute the 2012 Defense Strategic Guidance.
        For the next 3 years, as we continue to draw down and restructure
    into a smaller force, the Army will continue to have degraded readiness
    and extensive modernization program reductions. Under the President's
    budget, we will begin to regain balance between end strength,
    modernization and readiness beyond fiscal year 2017. Our goal would be
    to achieve balance by the end of fiscal year 2019 with 450,000 soldiers
    in the Active Army, 335,000 in the Army National Guard, and 195,000 in
    the Army Reserve.
        Under sequestration-level spending caps, from fiscal year 2019 to
    fiscal year 2023 the Army will begin to establish the appropriate
    balance between readiness, modernization and end strength, albeit for a
    much smaller Army at 420,000 soldiers in the Active Army, 315,000 in
    the Army National Guard and 185,000 in the Army Reserve. We will
    stabilize our end strength and force structure. From fiscal year 2020
    to fiscal year 2023 we would begin achieving our readiness goals and
    reinvesting in modernization programs to upgrade our aging fleets. Our
    goal is to achieve balance by fiscal year 2023. The reduction in our
    institutional base will make reversibility significantly more
    difficult. Finally, the size of our Army at this level of funding will
    not allow us to execute the Defense Strategic Guidance and will put in
    doubt our ability to execute even one prolonged, multi-phased major
    contingency operation.
                               leader development
        Developing adaptive Army leaders who possess the individual
    toughness, battlefield skill and fighting spirit that typify the
    American soldier is one of our highest priorities. The unpredictable
    nature of human conflict requires leaders to not only lead in close
    combat but understand the operational and strategic environment, to
    include its socio-economic, cultural and religious underpinnings. Our
    leaders must demonstrate the competence, proficiency and professional
    values necessary to achieve operational and strategic mission success.
    We must continue to educate and develop soldiers and civilians to grow
    the intellectual capacity to understand the complex contemporary
    security environment to better lead Army, Joint, Interagency and
    Multinational task forces and teams. Therefore, we will reinvest and
    transform our institutional educational programs for officers and
    noncommissioned officers in order to prepare for the complex future
    security environment.
        We will continue to build leaders who exhibit the character,
    competence and commitment that are hallmarks of the Army Profession. We
    are aggressively and comprehensively reinforcing our core values and
    ethical leadership throughout all unit and institutional training,
    leader development programs and professional military education. We
    will also transition to a new officer evaluation system that
    strengthens accountability and emphasizes the evaluation of character
    attributes and competencies. We have completed a 360-degree assessment
    pilot for all battalion and brigade commanders, which will be fully
    institutionalized across the force in 2014. We will continue peer
    assessments for all general officers and will institute 360-degree
    assessments for all general officers upon promotion to each general
    officer rank.
        Today, our leaders are the most competent and operationally
    experienced since World War II. We must build on this incredible
    experience to develop leaders who can operate in an ever-changing,
    complex strategic environment, understanding the implications of
    critical thinking, rapid communications and cyber warfare as it relates
    to combined arms maneuver, irregular warfare and counterinsurgency
    operations.
    the army: globally responsive, regionally engaged strategic land forces
        There is no more unambiguous display of American resolve than the
    deployment of the American soldier. As part of the Joint Force, the
    Army deters potential adversaries by presenting a credible element of
    national power: landpower that is decisively expeditionary and
    strategically adaptive. The Army possesses a lethal combination of
    capability and agility that strengthens U.S. diplomacy and represents
    one of America's most credible deterrents against hostility. If
    necessary, a ready Army can defeat or destroy enemy forces, control
    land areas, protect critical assets and populations and prevent the
    enemy from gaining a position of operational or strategic advantage.
    Ultimately, potential adversaries must clearly perceive Army forces as
    being capable of appropriate and rapid response anywhere in the world
    and across the entire range of military operations, from stability
    operations to general war.
        A ready and capable Total Army provides Joint and Combined forces
    with expeditionary and enduring landpower for the full range of
    military operations. Regionally aligned Army forces provide direct
    support to geographic and functional combatant commands. Army forces
    are tailorable and scalable, prepared to respond rapidly to any global
    contingency mission. The Army maintains a responsive force posture
    through an effective mix of Total Army capabilities and network of
    installations at home and abroad, to include Army prepositioned stocks.
    The Army National Guard and Army Reserve provide predictable, recurring
    and sustainable capabilities and strategic depth. Rapidly deployable
    Army forces, to include airborne forces, are able to respond to
    contingencies and conduct forcible entry operations anywhere in the
    world on short notice. Army prepositioned equipment across the globe
    also enables the rapid air deployment of Army combat and support
    forces.
    Missions as a Member of the Joint Force
        As an interoperable member of the Joint Force, the Army sets the
    theater for combatant commanders by providing unique capabilities en
    route to, and operating within, austere environments to support all
    plans and contingencies. These capabilities include special operations
    and ground forces, operational leadership and mobility, and critical
    enablers such as aviation, missile defense, intelligence, engineers,
    logistics, inland ground transportation infrastructure, medical and
    signal/communications.
        The Army provides the Joint Force versatility across the full range
    of military operations, underpinning operational and strategic reach
    through the full length of a campaign, often in contested environments.
    Effective joint operations require Army ground combat forces and Army
    critical enablers. A significant portion of the Army's force structure
    is devoted to enabling the Joint Force as well as our Multinational and
    Interagency partners.
        We provide a variety of Joint Task Force headquarters certified and
    trained to lead Joint Forces, plan operations and exercise mission
    command of units across the full range of military operations. We
    provide strategic, operational and tactical logistics, worldwide
    engineering support and intelligence capabilities, as well as space-
    based and terrestrial command and control networks that connect our own
    units, the Joint community, and Interagency and Multinational partners.
    The Army is also investing in emerging and evolving missions such as
    operations in cyberspace and countering weapons of mass destruction.
    For example, we continue to develop and field cyber mission forces that
    enable the success of our national mission force, combatant commands,
    and Army land forces.
    Regionally Aligned Forces
        The Army is regionally aligning forces in support of the geographic
    and functional combatant commands. These forces provide deployable and
    scalable regionally-focused Army forces task organized for direct
    support of geographic and functional combatant commands and Joint
    requirements. Forward stationed Army forces in the Republic of Korea,
    Japan, and Europe, along with Army units based in the United States are
    aligned with combatant commands. These forces shape and set theaters
    for regional commanders employing unique Total Army characteristics and
    capabilities to influence the security environment, build trust,
    develop relationships and gain access through rotational forces,
    multilateral exercises, military-to-military engagements, coalition
    training, and other opportunities.
        Army forces strengthen alliances and ensure collective capability
    while building capacity and serving common interests. In many regions
    of the world, Army military-to-military relationships have enabled the
    United States to remain a trusted and welcome partner over the years.
    The Army's Special Forces Groups provide extraordinary regional
    expertise and unique capabilities, as well as years of experience, to
    the combatant commands. The Army National Guard, through the State
    Partnership Program, maintains long-term partnerships worldwide.

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        We are expanding regional alignment of the Total Army as the
    drawdown in Afghanistan continues and additional formations become
    available. The Army's first regionally aligned BCT--the 2nd Brigade,
    1st Infantry Division stationed at Fort Riley, Kansas--began actively
    supporting U.S. Africa Command in March 2013 and has conducted over 70
    missions, from crisis response to security cooperation, in more than 30
    countries. 1st Infantry Division headquarters, building upon the
    initial success of its 2nd Brigade and aligned with U.S. Africa
    Command, is planning a Libyan General Purpose Force training mission.
    The 48th Infantry BCT, Georgia Army National Guard, is aligned with
    U.S. Southern Command and has deployed teams to several Central and
    South American countries. The Fort Hood-based 1st BCT, 1st Cavalry
    Division, aligned with U.S. European Command, participated in
    multilateral exercises and training as the primary U.S. land force
    contribution to the NATO Response Force.
        About 80,000 Active and Reserve component soldiers are postured to
    support operations and engagements in the Asia-Pacific region. I Corps,
    stationed at Joint Base Lewis-McChord, WA, and assigned to U.S. Pacific
    Command, provides deployable mission command capability for
    contingencies and enhances an already strong Army presence in the Asia-
    Pacific region. The Army maintains a Terminal High Altitude Area
    Defense battery deployed to Guam, defending our allies and supporting
    the Pacific theater's ballistic missile defense posture. During fiscal
    year 2013, U.S. Army Pacific conducted 28 large-scale exercises with 13
    countries. Soldiers also conducted security cooperation engagements
    with 34 countries in the Asia-Pacific region.
        During fiscal year 2013, a total of more than 109,000 soldiers
    deployed in support of operations in Afghanistan. More than 4,300
    soldiers supported Operation Spartan Shield, our ongoing effort to
    maintain stability in the region and reassure our allies and partners
    in U.S. Central Command's area of responsibility. In addition, during
    fiscal year 2013 more than 2,200 soldiers participated in 7 exercises
    in the region. III Corps, stationed at Fort Hood, TX, and 1st Armored
    Division headquarters, stationed at Fort Bliss, TX, are both aligned
    with U.S. Central Command. In June 2013 the 1st Armored Division
    headquarters deployed to Jordan, providing mission command for several
    regional exercises and conducting training with allied and partner
    forces.
    Missions at Home and Support of Civil Authorities
        The Total Army defends the Homeland and supports civil authorities
    for a variety of complex missions. Soldiers from the Active and Reserve
    components are engaged in the Homeland on a daily basis, in capacities
    ranging from personnel serving as defense coordinating officers in
    support of the Federal Emergency Management Agency to U.S. Army North
    leading and coordinating Army missions in support of civil authorities.
    The Army stands ready to conduct a no-notice response in support of
    civil authorities, particularly for a complex catastrophe that may
    require the employment of a significant Army force. The Total Army also
    provides the preponderance of forces for the DOD's Chemical,
    Biological, Radiological and Nuclear Response Enterprise. Army National
    Guard air and missile defense units protect our Nation's Capital and
    provide manning for Ground-based Midcourse Defense systems deployed in
    Alaska and Colorado that will deter and defeat missile attacks on our
    Nation. Soldiers support Federal drug enforcement efforts along our
    Nation's southern border every day.
        Over the past year, the Army responded to natural disasters in the
    United States with sustained, life-saving support. The Army National
    Guard conducted firefighting operations in several Western States. In
    September 2013, Active and Reserve component soldiers provided rapid
    assistance when severe storms caused devastating floods and landslides
    in northern Colorado. A team of about 700 soldiers from the Colorado
    and Wyoming Army National Guard, as well as the Active Army's 4th
    Infantry Division stationed at Fort Carson, CO, evacuated more than
    3,000 displaced residents. Soldiers and civilians from the U.S. Army
    Corps of Engineers also supported operations in Colorado, and continue
    to support ongoing national efforts to restore critical infrastructure
    following Hurricane Sandy.
                             ensuring a ready army
        A trained and ready Army must be able to rapidly deploy, fight,
    sustain itself and win against complex state and non-state threats in
    austere environments and rugged terrain. Readiness is measured at both
    the service and unit levels. Service readiness incorporates
    installations and the critical ability of the Army to provide the
    required capacities (units) with the requisite capabilities (readiness)
    to execute the roles and missions required by combatant commands. Unit
    readiness is the combination of personnel, materiel and supplies,
    equipment and training that, when properly balanced, enables immediate
    and effective application of military power.
    Training
        Training across the Total Army serves two main purposes: preparing
    units to support combatant commands worldwide and developing leaders
    who can adapt to the complex security environment. To meet demands
    across the full range of military operations, the Army will shift the
    focus of training on rebuilding warfighting core competencies. We are
    reinvigorating our Combat Training Centers (CTC), to challenge and
    certify Army formations in a comprehensive and realistic decisive
    action training environment that features regular, irregular and
    insurgent enemy forces. Tough, realistic multi-echelon home station
    training using a mix of live, virtual and constructive methods
    efficiently and effectively builds soldier, leader and unit competency
    over time.
        From 2004 to 2011, all CTC rotations were focused on building
    readiness for assigned missions in a counterinsurgency environment.
    This shift impacted 5,500 company commanders, 2,700 field grade
    officers, and 1,000 battalion commanders. Recognizing this atrophy in
    readiness for the full range of military operations, the Army returned
    to conducting decisive action CTC rotations in 2011, with a plan to
    cycle nearly all Active Army BCTs by the end of fiscal year 2015 along
    with the requisite amount of available Army National Guard BCTs.
    However, due to sequestration, the Army canceled seven CTC rotations in
    2013 and significantly reduced home station training, negatively
    impacting the training, readiness and leader development of more than
    two divisions' worth of soldiers. Those lost opportunities only added
    to the gap created from 2004 to 2011, creating a backlog of
    professional development and experience.
        The BBA allows us to remedy only a fraction of that lost
    capability. Even with increased funding, in fiscal year 2014 the Army
    will not be able to train a sufficient number of BCTs to meet our
    strategic requirements. Seventeen BCTs were originally scheduled to
    conduct a CTC rotation during fiscal year 2014. BBA-level funding
    enables the addition of another 2 BCT rotations, for a total of 19 for
    the fiscal year. However, due to the timing of the additional funding,
    some BCTs were still unable to conduct a full training progression
    before executing a CTC rotation. Without the benefit of sufficient home
    station training, BCTs begin the CTC rotation at a lower level of
    proficiency. As a result, the CTC rotation does not produce the maximum
    BCT capability, in terms of unit readiness. For BCTs that do not
    conduct a CTC rotation, we are using available resources to potentially
    train these formations up to only battalion-level proficiency.
        The Army can currently provide only a limited number of available
    and ready BCTs trained for decisive action proficiency, which will
    steadily increase through fiscal year 2014 and the beginning of fiscal
    year 2015. But with potential sequestration in fiscal year 2016,
    readiness will quickly erode across the force. We must have
    predictable, long-term, sustained funding to ensure the necessary
    readiness to execute our operational requirements and the Defense
    Strategic Guidance.
        Fiscal shortfalls have caused the Army to implement tiered
    readiness as a bridging strategy until more resources become available.
    Under this strategy, only 20 percent of operational forces will conduct
    collective training to a level required to meet our strategic
    requirements, with 80 percent of the force remaining at a lower
    readiness level. Forward stationed forces in the Republic of Korea will
    remain ready, as will those dedicated as part of the Global Response
    Force. Forces deployed to Afghanistan are fully trained for their
    security assistance mission but not for other contingencies. The Army
    is also concentrating resources on a contingency force of select
    Infantry, Armored and Stryker BCTs, an aviation task force and required
    enabling forces to meet potential unforeseen small scale operational
    requirements. Unless Army National Guard and Army Reserve units are
    preparing for deployment, the Army will only fund these formations to
    achieve readiness at the squad, team and crew level.
    Force Structure
        We have undertaken a comprehensive reorganization of Army units to
    better align force structure with limited resources and increase unit
    capability. Unit reorganizations are necessary to begin balancing force
    structure, readiness and modernization. However, when combined with
    reduced funding and operational demand, the pace of force structure
    changes will reduce our ability to build readiness across the force
    during fiscal year 2014 and fiscal year 2015.
        Reorganization of the current operational force of Active Army
    Infantry, Armored and Stryker BCTs from 38 to 32 reduces tooth-to-tail
    ratio and increases the operational capability of the remaining BCTs.
    All Active Army and Army National Guard BCTs will gain additional
    engineer and fires capability, capitalizing on the inherent strength in
    combined arms formations. Initially, 47 BCTs (29 Active Army and 18
    Army National Guard) will be organized with a third maneuver battalion.
    The remaining 13 BCTs (3 Active Army and 10 Army National Guard) will
    be reevaluated for possible resourcing of a third maneuver battalion in
    the future.
        Following a comprehensive review of our aviation strategy, the Army
    has determined that it must restructure aviation formations to achieve
    a leaner, more efficient and capable force that balances operational
    capability and flexibility across the Total Army. We will eliminate
    older, less capable aircraft, such as the OH-58 A/C Kiowa, the OH-58D
    Kiowa Warrior and the entire fleet of TH-67 JetRangers, the current
    trainer. The Army National Guard will transfer low-density, high-demand
    AH-64 Apache helicopters to the Active Army, where they will be teamed
    with unmanned systems for the armed reconnaissance role as well as
    their traditional attack role. The Active Army in turn will transfer
    over 100 UH-60 Blackhawk helicopters to the Army National Guard. These
    aircraft will significantly improve capabilities to support combat
    missions and increase support to civil authorities, such as disaster
    response, while sustaining security and support capabilities to civil
    authorities in the States and territories.
        The Army will also transfer nearly all Active Army LUH-72 Lakota
    helicopters to the United States Army Aviation Center of Excellence at
    Fort Rucker, AL, and procure an additional 100 LUH-72 Lakotas to round
    out the training fleet. These airframes will replace the TH-67
    JetRanger helicopter fleet as the next generation glass cockpit, dual
    engine training helicopter. At current funding levels, this approach
    will enable the Army National Guard to retain all of its LUH-72
    aircraft for general support requirements as well as ongoing border
    security operations. The Aviation Restructure Initiative allows us to
    sustain a modernized fleet across all components and reduces
    sustainment costs. Eighty-six percent of the total reduction of
    aircraft (687 of 798) will come out of the Active component. The Active
    Army's overall helicopter fleet will decline by about 23 percent, and
    the Army National Guard's fleet of helicopters will decline by
    approximately 8 percent, or just over 100 airframes. The resulting
    Active and Reserve component aviation force mix will result in better
    and more capable formations which are able to respond to contingencies
    at home and abroad.
     soldiers, civilians, and our families: the premier all-volunteer army
        Trust is the foundation of military service. An individual's choice
    to serve, whether enlisting or reenlisting, depends on a strong bond of
    trust between the volunteer, the Army and the Nation. Soldiers need to
    know that the Nation values their service and will provide them with
    the training, equipment and leadership necessary to accomplish their
    mission. They also want to know that their families will enjoy a
    quality of life that is commensurate with their service and sacrifice.
    For that reason, one of our top priorities as we make the transition
    from war and drawdown the Army--regardless of fiscal challenges--must
    be the welfare, training, and material resources we put toward
    maintaining the trust of our soldiers, civilians, and their families.
    Ready and Resilient Campaign
        Perhaps nothing exemplifies the idea of trust more than President
    Abraham Lincoln's second inaugural address when he called upon the
    Nation to care for those who have borne the burdens of battle and their
    families. The effects of deploying are sometimes severe and lifelong.
    As a result, the continued care and treatment of soldiers and their
    families is a lasting priority. Yet even as we work to recover and
    rehabilitate those most severely affected by two wars, we know that an
    ever increasing portion of our Army has not faced warfare.
    Understandably, they have new and different challenges. In both cases,
    Army readiness is directly linked to the ability of our force to deal
    with personal, professional and unforeseen health concerns, such as
    mental and physical challenges. We must also begin to view health as
    more than simply health care, and transition the Army to an entire
    system for health that emphasizes the performance triad--sleep,
    activity, and nutrition--as the foundation of a ready and resilient
    force.
        The Ready and Resilient Campaign, launched in March 2013, serves as
    the focal point for all soldier, civilian, and family programs and
    promotes an enduring, holistic and healthy approach to improving
    readiness and resilience in units and individuals. The campaign seeks
    to influence a cultural change in the Army by directly linking personal
    resilience to readiness and emphasizing the personal and collective
    responsibility to build and maintain resilience at all levels. The
    campaign leverages and expands existing programs, synchronizing efforts
    to eliminate or reduce harmful and unhealthy behaviors such as suicide,
    sexual harassment and assault, bullying and hazing, substance abuse and
    domestic violence. Perhaps most importantly, the campaign promotes
    positive, healthy behaviors while working to eliminate the stigma
    associated with asking for help.
    Sexual Harassment/Assault Response and Prevention Program
        The Army is an organization built on and bound by values. Sexual
    harassment and assault in all its forms is abhorrent to every one of
    those values. Simply put, sexual assault is a crime that will not be
    tolerated. The overwhelming majority of soldiers and civilians serve
    honorably and capably, but we must recognize that the ill-disciplined
    few jeopardize the safety of all our people as well as the trust and
    confidence the American people have in their Army.
        Army actions to combat sexual assault and harassment are driven by
    five imperatives. First, we must prevent offenders from committing
    crimes, provide compassionate care for victims and protect the rights
    and privacy of survivors. Second, we must ensure that every allegation
    is reported, it is thoroughly and professionally investigated, and we
    must take appropriate action based on the investigation. Third, we
    shall create a positive climate and an environment of trust and respect
    in which every person can thrive and achieve their full potential, and
    continually assess the command climate. Fourth, we will hold every
    individual, every unit and organization and every commander
    appropriately accountable for their behavior, actions and inactions.
    Finally, the chain of command must remain fully engaged--they are
    centrally responsible and accountable for solving the problems of
    sexual assault and sexual harassment within our ranks and for restoring
    the trust of our soldiers, civilians, and families.
        Our goal is to reduce and ultimately eliminate this crime from our
    ranks. To underscore the importance of the chain of command's role in
    preventing sexual assault, the Army now includes command climate and
    Sexual Harassment/Assault Response and Prevention (SHARP) goals and
    objectives in all officer and noncommissioned officer evaluations and
    unit command climate surveys. Accountability is reinforced by training
    and education on the appropriate behaviors, actions and reporting
    methods. The Army has integrated SHARP training into every professional
    development school, making sure it is tailored to roles and
    responsibilities appropriate to each course's population.
        We are making progress, particularly on reporting and investigating
    these incidents. Over the past year the Army expanded the Special
    Victim Capability Program to include 23 special victim prosecutors, 22
    sexual assault investigators, and 28 special victim paralegals at 19
    installations worldwide. These professionals are trained in the unique
    aspects of investigating and prosecuting sexual assault cases. We have
    also trained 81 Active and 24 Reserve component judge advocates through
    our Special Victim Counsel Program, which was established in September
    2013. As of December 2013, 241 victims had received over 1,443 hours of
    legal services from these specially-trained counsel, including
    appearances at Article 32 hearings and courts-martial.
        Army commanders, advised by judge advocates, continue to take the
    most challenging cases to trial, including cases that civilian
    authorities have declined to prosecute. For cases in which the Army had
    jurisdiction over the offender and a final disposition was made,
    commanders prosecuted rape and sexual assault at a rate more than
    double the estimated average prosecution rates in civilian
    jurisdictions. The Army also provides sexual assault patients with
    expert, emergency treatment for their immediate and long-term needs.
    Regardless of evidence of physical injury, all patients presenting to
    an Army medical treatment facility with an allegation of sexual assault
    receive comprehensive and compassionate medical and behavioral health
    care.
        Sexual assault is antithetical to competent command, and it is
    important that commanders retain their authority over the disposition
    of sexual assault cases. Removal of that authority would make it harder
    to respond to the needs of soldiers within the command, especially the
    victims. Many of the Army's most difficult problems--such as
    integration--were solved by making commanders more accountable, not
    less. Therefore the Army opposes legislative efforts to remove
    commanders from the disposition process.
    Suicide Prevention
        The Army Suicide Prevention Program, part of the Ready and
    Resilient Campaign, has significantly enhanced our understanding of one
    of our greatest challenges: the loss of soldiers to suicide. The Army
    has expanded and increased access to behavioral health services and
    programs that develop positive life-coping skills. A comprehensive
    education and training program is helping soldiers, civilians, and
    family members improve their ability to cope with stress,
    relationships, separations, deployments, financial pressures and work-
    related issues. The goal is to increase resiliency and, just as
    important, access to support. Our Suicide Reduction Working Group
    provides a forum for stakeholders to collaborate on initiatives that
    mitigate high-risk behaviors. The Army continues to revise and create
    policy to promote and increase awareness of prevention and intervention
    skills, services and resources. We have seen an aggregate drop in
    suicides, and while not a declaration of success, it is a leading
    indicator that our resiliency efforts are starting to take hold across
    the force.
    Role of Women in the Army
        Women continue to play an important role in making our Army the
    best in the world. We are validating occupational standards for
    integrating women into all career fields. By reinforcing universal
    standards for each soldier--regardless of gender--in a deliberate,
    measured and responsible manner we increase unit readiness, cohesion
    and morale while allowing for qualification based on performance, not
    gender, across our profession.
        Army Training and Doctrine Command is leading our effort with the
    Soldier 2020 initiative, which seeks to ensure we select the best
    soldiers for each military occupational specialty, regardless of
    gender. It is a standards-based, holistic and deliberate approach that
    uses scientific research to clearly define physical accessions
    standards based on mission requirements for each Army occupation.
    Simultaneously, we are conducting an extensive study to identify the
    institutional and cultural factors affecting gender integration, to
    develop strategies for the assimilation of women into previously
    restricted units. An important part of that process will be to ensure
    we have a qualified cadre of female leaders, both officers and
    noncommissioned officers, in place prior to the introduction of junior
    female soldiers to serve as role models and provide mentorship during
    this transition.
        During the last year, the Army opened approximately 6,000 positions
    in 26 BCTs, select aviation specialties in special operations aviation
    and approximately 3,600 field artillery officer positions. The Army
    anticipates opening an additional 33,000 previously closed positions
    during fiscal year 2014.
    Recruitment and Retention
        The Army is defined by the quality of the soldiers it recruits and
    retains. We are only as good as our people, and recruiting standards
    and reenlistment thresholds remain high. During fiscal year 2013, 98
    percent of the Army's recruits were high school graduates, exceeding
    our goal of 90 percent. We are also on track to achieve retention rates
    consistent with the past 3 years. The need to recruit and retain high-
    quality soldiers will only grow in importance as we continue to draw
    down our forces.
        Unfortunately, natural attrition alone will not achieve the Army's
    reduced end strength requirements. Inevitably, the Army will not be
    able to retain good soldiers on active duty who have served their
    Nation honorably. The Army must responsibly balance force shaping
    across accessions, retention, and promotions, as well as voluntary and
    involuntary separations. During fiscal year 2013, the Army reduced
    accessions to the minimum level needed to sustain our force structure,
    achieve end strength reductions and reestablish highly competitive but
    predictable promotion opportunity rates. The Army also conducted
    Selective Early Retirement Boards for lieutenant colonels and colonels
    and, likewise, a Qualitative Service Program for staff sergeants
    through command sergeants major, all aimed at achieving 490,000 Active
    Army end strength by the end of fiscal year 2015. During fiscal year
    2014 the Army will conduct Officer Separation Boards and Enhanced
    Selective Early Retirement Boards for qualified majors and captains. We
    remain committed to assisting soldiers and their families as they
    depart Active Army formations and transition to civilian life, and we
    encourage continued service in the Army National Guard or Army Reserve.
    Role of the Army Civilian
        As the Army evolves so too must its civilian workforce, which will
    also draw down concurrent with reductions to military end strength.
    Army civilians will reduce from a wartime high of 285,000 to 263,000 by
    the end of fiscal year 2015. As the civilian workforce is downsized, we
    will do it smartly, focusing on preserving the most important
    capabilities. This requires a broader strategy that links functions,
    funding and manpower to produce the desired civilian workforce of the
    future--one that fully supports the generation of trained and ready
    combat units. The Army will manage the civilian workforce based on
    workload and funding available. We will use all available workforce
    shaping tools such as Voluntary Early Retirement Authority and
    Voluntary Separation Incentive Pay to reduce turbulence in our civilian
    workforce. We will target the skills we need to retain, and voluntarily
    separate those with skills no longer needed. If we cannot achieve our
    Army civilian reduction goals by voluntary means, we will use reduction
    in force as a last resort.
        The possibility of future reductions only adds to the burdens we've
    placed on Army civilians in recent years. Last year, the Army
    furloughed more than 204,000 civilian employees, forcing them to take a
    20 percent reduction in pay for 6 weeks during the fourth quarter of
    fiscal year 2013. Furloughs came on the heels of 3 years of frozen pay
    and performance-based bonuses. The tremendous impact on the morale of
    our civilian workforce cannot be understated, and some of our highest
    quality civilian personnel have sought employment in the private
    sector.
        We rely heavily on our Army civilians, and they have remained
    dedicated and patient during the last few years of uncertainty and
    hardship. Like their uniformed counterparts, Army civilians are
    required to demonstrate competence, technical proficiency and
    professional values to achieve mission and individual success. Over the
    past 3 years the Army has implemented a number of changes to improve
    training, educational and experiential opportunities for the civilian
    workforce. Focused leader development, improvements to the Civilian
    Education System and continued maturity of the Senior Enterprise Talent
    Management Program are all designed to build a more professional and
    competency-based civilian workforce.
        The Army is also streamlining its contractor workforce by reducing
    contract spending at least to the same degree as, if not more than,
    reductions to the civilian workforce; contractor reductions are
    approximately $1.5 billion in fiscal year 2015. The use of contracted
    services will continue to be reviewed to ensure the most appropriate,
    cost effective and efficient support is aligned to the mission. As the
    Army continues its workforce shaping efforts, contracted manpower will
    be appropriately managed based on functional priorities and available
    funding to ensure compliance with law.
    Compensation Reform
        We are extremely grateful for the high quality care and
    compensation our Nation has provided to our soldiers over the last
    decade. Military manpower costs remain at historic highs. We must
    develop adjustments to military compensation packages that reduce
    future costs, recognize and reward our soldiers and their families for
    their commitment and sacrifice, while ensuring our ability to recruit
    and retain a high quality All-Volunteer Army. While we recognize the
    growing costs of manpower, we must also approach reform from the
    perspective that compensation is a significant factor in maintaining
    the quality of the All-Volunteer Army, and always has been.
        After 13 years of war, the manner in which we treat our soldiers
    and families will set the conditions for our ability to recruit in the
    future. That said, if we do not slow the rate of growth of soldier
    compensation, it will consume a higher, disproportionate percentage of
    the Army's budget and without compensation reform we will be forced to
    reduce investments in readiness and modernization. The Army supports a
    holistic and comprehensive approach that reforms military compensation
    in a fair, responsible and sustainable way. Changes to military
    compensation included in the fiscal year 2015 budget request--which
    include slowing the growth of housing allowances, reducing the annual
    direct subsidy provided to military commissaries and simplifying and
    modernizing our TRICARE health insurance program--are important first
    steps that generate savings while retaining competitive benefits. These
    savings will be invested in readiness and modernization.
     equipment modernization, business process improvement, and sustainment
        The Army makes prudent choices to provide the best possible force
    for the Nation with the resources available, prioritizing soldier-
    centered modernization and procurement of proven and select emerging
    technologies. The institutional Army manages programs that sustain and
    modernize Army equipment, enabling the operational Army to provide
    responsive and ready land forces. We will continue to improve the
    efficiency and effectiveness of our business processes to provide
    readiness at best value.
    Focus Area Review
        Army senior leaders conducted reviews to consolidate and reorganize
    organizations, programs and functions across several focus areas--
    readiness, institutional and operational headquarters reductions,
    operational force structure, installations services and investments,
    the acquisition workforce and Army cyber and command, control,
    communications and intelligence. As a result of this effort, the Army
    will achieve greater efficiency across our core institutional
    processes, consolidate functions within the acquisition workforce and
    reduce headquarters overhead by up to 25 percent.
    Equipment Modernization
        Modernization enables the Army to meet requirements with a smaller,
    fully capable and versatile force that is equipped to defeat any enemy
    and maintain dominance on land. BCA-driven budget reductions have
    placed Army equipment modernization at risk through program
    terminations, procurement delays and program restructures. Research,
    development, and acquisition funding has declined 39 percent since the
    fiscal year 2012 budget planning cycle and the long-term effect will be
    additional stress on current vehicle fleets, reduced replacement of
    war-worn equipment, increased challenges sustaining the industrial base
    and limited investment in the modernization of only the most critical
    capabilities.

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        The Army's equipment modernization strategy focuses on effectively
    using constrained resources for near-term requirements and tailoring
    our long-term investments to provide the right capabilities for
    soldiers in the future. This approach calls for carefully planned
    investment strategies across all Army equipment portfolios, which will
    involve a mix of limiting the development of new capabilities,
    incrementally upgrading existing platforms and investing in key
    technologies to support future modernization efforts. The strategy
    captures the Army's key operational priorities: enhancing the soldier
    for broad joint mission support by empowering and enabling squads with
    improved lethality, protection and situational awareness; enabling
    mission command by facilitating command and control, and
    decisionmaking, with networked real-time data and connectivity with the
    Joint Force; and remaining prepared for decisive action by increasing
    lethality and mobility, while optimizing the survivability of our
    vehicle fleets.
        In the short-term, the Army remains focused on several efforts. We
    are reducing procurement to match force structure reductions. We will
    continue to apply business efficiencies such as multiyear contracts,
    planning for should-cost and implementation of Better Buying Power, to
    facilitate smarter investing. We will tailor capabilities in
    development to meet requirements under affordability constraints. We
    will not transition four programs to the acquisition phase, to include
    the Ground Combat Vehicle and the Armed Aerial Scout. Additionally, we
    will end 4 programs, restructure 30 programs, and delay 50 programs.
    Lastly, the divestiture of materiel and equipment, where appropriate,
    will reduce maintenance and sustainment costs and support the
    maximization of resources. Over the long-term, investing in the right
    science and technology and applying affordable upgrades to existing
    systems will allow us to keep pace with technological change and
    improve capabilities.
        Ground Vehicles
        A new Infantry Fighting Vehicle (IFV) remains a key requirement for
    the Army. However, due to significant fiscal constraints, the Army has
    determined that the Ground Combat Vehicle program will conclude upon
    completion of the Technology Development phase, expected in June 2014,
    and will not continue further development. In the near-term, the Army
    will focus on refining concepts, requirements and key technologies in
    support of a future IFV modernization program. This will include
    investment in vehicle components, subsystem prototypes and technology
    demonstrators to inform IFV requirements and future strategies for
    developing a Bradley Infantry Fighting Vehicle replacement. Over the
    long-term, the Army anticipates initiating a new IFV modernization
    program informed by these efforts as resources become available.
        The Army is also committed to developing and fielding the Armored
    Multi-Purpose Vehicle to replace our obsolete M113 family of vehicles
    and augmenting our wheeled vehicle fleet with the Joint Light Tactical
    family of vehicles. In addition, the Army will continue to fund a third
    brigade's set of Double V-Hull (DVH) Stryker vehicles, while supporting
    an incremental upgrade to DVH Strykers for power and mobility
    improvements.
        Army Aviation
        The Army will divest legacy systems and fund the modernization and
    sustainment of our most capable and survivable combat-proven aircraft:
    the AH-64 Apache, UH-60 Blackhawk and CH-47 Chinook helicopters. We
    will divest almost 900 legacy helicopters including the entire single
    engine OH-58D Kiowa Warrior and TH-67 helicopter training fleets. The
    Army will also modernize our training fleet with LUH-72 Lakota
    helicopters.
        The Network
        The equipment modernization strategy seeks to provide the soldier
    and squad with the best weapons, equipment, sustainment and protection
    with the support of the network. LandWarNet is the Army's globally
    interconnected network that is ``always on and always available,'' even
    in the most remote areas of the globe. LandWarNet enables mission
    command by carrying the data, voice and video every soldier and leader
    needs to act decisively and effectively. It supports all Army
    operations, from administrative activities in garrison to operations
    conducted by our forward stationed and deployed soldiers. Additionally,
    it forms the basis of our live, virtual and constructive training.
    Equipment Reset and Retrograde
        Retrograde is the return of equipment to facilities for reset and
    to support future force structure and operations. By December 2014, the
    Army plans to retrograde approximately $10.2 billion of the $15.5
    billion worth of Army equipment currently in Afghanistan. The balance
    of the equipment will be used by our forces, transferred to the Afghans
    or to another troop contributing nation, or disposed of properly in
    theater, which will provide a cost avoidance of more than $844 million
    in transportation, storage and security costs. The total cost of moving
    the equipment out of Afghanistan is estimated at roughly $1-3 billion.
    The cost range is due to the unpredictable nature of our ground routes
    through Pakistan and other Central Asian countries that may require a
    shift to more expensive multimodal or direct air cargo movement.
        Once the equipment returns to the United States, our reset program
    restores it to a desired level of combat capability commensurate with a
    unit's future mission. A fully funded Army reset program is critical to
    ensuring that equipment worn and damaged by prolonged conflict in harsh
    environments is recovered and restored for future Army requirements.
    During fiscal year 2013, the Army reset approximately 87,000 pieces of
    equipment at the depot level and about 300,000 pieces of equipment,
    such as small arms; night vision devices; and nuclear, biological and
    chemical equipment, at the unit level. As a result of sequestration, we
    deferred approximately $729 million of equipment reset during fiscal
    year 2013, postponing the repair of nearly 700 vehicles, 28 aircraft,
    2,000 weapons and Army prepositioned stocks. The projected cost of the
    reset program is $9.6 billion (not including transportation costs),
    which extends for 3 years after the last piece of equipment has
    returned. Resources available under planned spending caps are not
    sufficient to fully reset returning equipment from Afghanistan in a
    timely and efficient manner.
    Organic and Commercial Industrial Base

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        The Army's industrial base consists of commercial and Government-
    owned organic industrial capability and capacity that must be readily
    available to manufacture and repair items during both peacetime and
    national emergencies. The Army must maintain the critical maintenance
    and manufacturing capacities needed to meet future war-time surge
    requirements, as well as industrial skills that ensure ready, effective
    and timely materiel repair. We are sizing the organic industrial
    workforce to meet and sustain core depot maintenance requirements and
    critical arsenal manufacturing competencies. We will also continue to
    work with our industrial partners to address energy, water and resource
    vulnerabilities within our supply chain.
        Both the commercial and organic elements of the industrial base are
    essential to the efficient development, deployment and sustainment of
    Army equipment. Over the past decade, the Army relied on market forces
    to create, shape and sustain the manufacturing and technological
    capabilities of the commercial industrial base. However, reduced
    funding levels due to sequestration accelerated the transition from
    wartime production levels to those needed to support peacetime
    operations and training. During fiscal year 2013, the Army lost more
    than 4,000 employees from the organic industrial base and will continue
    to lose highly skilled depot and arsenal workers to other industries
    due to fiscal uncertainty. Hiring and overtime restrictions, in
    addition to furloughs, affected productivity and increased depot
    carryover, not to mention the detrimental effect on worker morale.
    Installations
        In fiscal year 2013, the Army deferred critical upkeep on thousands
    of buildings across Army installations due to a reduction of $909
    million in sustainment, restoration and maintenance funding. End
    strength reductions have reduced some associated sustainment costs, but
    key facility shortfalls remain that will continue to impact Army
    readiness. Increased funding in fiscal year 2014 enables investment in
    facility readiness for critical infrastructure repair as well as high
    priority restoration and modernization projects. The fiscal year 2015
    budget reflects our measured facility investment strategy that focuses
    on restoration, modernization and limited new construction.
        The capacity of our installations must also match the Army's
    decreasing force structure. At an Active Army end strength of 490,000
    soldiers, which we will reach by the end of fiscal year 2015, we
    estimate that the Army will have about 18 percent excess capacity. We
    need the right tools to reduce excess installations capacity, or
    millions of dollars will be wasted maintaining underutilized buildings
    and infrastructure. Failure to reduce excess capacity is tantamount to
    an ``empty space tax'' diverting hundreds of millions of dollars per
    year away from critical training and readiness requirements. Trying to
    spread a smaller budget over the same number of installations and
    facilities will inevitably result in rapid decline in the condition of
    Army facilities.
        The Base Realignment and Closure (BRAC) process is a proven, fair
    and cost-effective means to address excess capacity in the United
    States. BRAC has produced net savings in every prior round. On a net
    $13 billion investment, the 2005 BRAC round is producing a net stream
    of savings of $1 billion a year. We look forward to working with
    Congress to determine the criteria for a BRAC 2017 round.
    Energy and Sustainability
        We are establishing an energy informed culture as a key component
    of Army readiness. Through a synchronized campaign of performance
    initiatives, business process changes and education and training
    opportunities, the Army seeks to achieve a lasting capability to use
    energy to the greatest benefit. The campaign includes efforts focused
    on both the energy required for military operations (operational
    energy) and the energy required by our power-projection installations
    around the world.
        In a tighter budget environment, the Army must manage its
    installations in a sustainable and cost-effective manner, preserving
    resources for the operational Army to maintain readiness and capability
    across the range of military operations. We will leverage institutional
    energy savings to generate more resources that we can use to train,
    move and sustain operational forces and enhance Army mobility and
    freedom of action. To take advantage of private sector efficiencies,
    Army installations are privatizing utilities and entering into public-
    private energy-saving performance contracts. By partnering with
    experienced local providers, the Army has privatized 144 utilities
    systems, avoiding about $2 billion in future utility upgrade costs
    while saving approximately 6.6 trillion British thermal units a year.
    The Army is also exploring opportunities to expand public-public
    partnerships.
        Operational energy improvements to contingency bases, surface and
    air platforms and soldier systems will increase overall combat
    effectiveness. Improved efficiencies in energy, water and waste at
    contingency bases reduce the challenges, risks and costs associated
    with the sustainment of dispersed bases. Next generation vehicle
    propulsion, power generation and energy storage systems can increase
    the performance and capability of surface and air platforms and help
    the Army achieve its energy and mobility goals. Advances in lightweight
    flexible solar panels and rechargeable batteries enhance combat
    capabilities, lighten the soldier's load and yield substantial cost
    benefits over time. Emergent operational energy capabilities will
    enable Army forces to meet future requirements and garner efficiencies
    in a fiscally constrained environment.
    Business Transformation
        The Army continues to transform its business operations to be
    smarter, faster and cheaper. We are working to reduce business
    portfolio costs by almost 10 percent annually as we capitalize on the
    progress made with our Enterprise Resource Planning systems. Our
    business process reengineering and continuous process improvement
    efforts continue to confer significant financial and operational
    benefits. Through our focus area review we will reduce headquarters
    overhead, consolidate and streamline contracting operations and improve
    space allocation on Army installations. We are reengineering core
    processes in acquisition, logistics, human resources, financial
    management, training and installations to improve effectiveness and
    reduce costs. Over the long-term, the Army will improve its strategic
    planning, performance assessment, and financial auditability so that
    commanders can make better-informed decisions on the utilization of
    resources to improve readiness.
                                    closing
        Throughout our history, we have drawn down our Armed Forces at the
    close of every war. However, we are currently reducing Army end
    strength from our wartime high before the longest war in our Nation's
    history has ended, and in an uncertain international security
    environment. Our challenge is to reshape into a smaller, yet capable,
    force in the midst of sustained operational demand for Army forces and
    reduced budgets. The resulting decline in readiness has placed at risk
    our ability to fully meet combatant commander requirements. Our ability
    to provide trained and ready Army forces will improve as we begin to
    balance readiness, end strength and modernization. However, if
    sequestration-level spending caps resume in fiscal year 2016, we will
    be forced to reduce end strength to levels that will not enable the
    Army to meet our Nation's strategic requirements.
        We have learned from previous drawdowns that the cost of an
    unprepared force will always fall on the shoulders of those who are
    asked to deploy and respond to the next crisis. The Nation faces
    uncertainty and, in the face of such uncertainty, needs a strong Army
    that is trained, equipped, and ready. No one can predict where the next
    contingency will arise that calls for the use of Army forces. Despite
    our best efforts, there remains a high likelihood that the United
    States will once again find itself at war sometime during the next 2
    decades. It is our job to be prepared for it.

        Chairman Levin. Thank you both.
        Secretary McHugh, do you have anything to add on the
    posture statement at this time?
        Mr. McHugh. Mr. Chairman, I want to be respectful of the
    committee's time. I obviously have a statement, but by and
    large it tracks what the Chief said. I fully endorse all the
    comments he made, and if it suits the committee and you, sir, I
    think I'll just--if you'd like, I could enter that into the
    record.
        Chairman Levin. That would be fine. We will enter it into
    the record.
        Let's start with a 7-minute first round.
        Mr. Secretary, first of all, let me thank you both for
    those very heartfelt comments about the events at Fort Hood.
    The Army stands as one and I hope that everyone in that family
    knows that Congress stands with them as one. As I mentioned, if
    there's anything that we can do to be helpful in the aftermath
    of this, to help the grieving families and the installations,
    please just call on us. We will all be there for you and for
    them.
        On the question of sequestration, this is one of the issues
    which I believe we have to hit head-on. It's going to affect
    not just this year, and it already has, despite a BBA which has
    reduced somewhat the impact of sequestration. It's going to
    have dramatic impacts, as you have just described, General, in
    2016.
        In the fiscal year 2015 budget, however, the administration
    has requested--not requested so much as it has opened up the
    possibility, I guess, and I guess ``requested'' is accurate, an
    additional $26 billion, raising the caps by that much for
    fiscal year 2015. It has indicated it is going to recommend
    additional revenues to pay for that additional $26 billion in
    spending above the BCA caps.
        I believe that the Army's share of that $26 billion would
    be--and correct me if I'm wrong on this--$4.1 billion for
    readiness and $3.4 billion for the investment accounts. Does
    that sound about right?
        Mr. McHugh. That sounds correct, Senator.
        Chairman Levin. All right. Can you indicate what priorities
    you would spend that share of those funds if, in fact, we
    authorized and appropriated that additional funding?
        Mr. McHugh. Senator, briefly, and then the Chief has
    submitted an unfunded requirements list that embodies the $7.5
    billion and I'd let him detail that. But as you noted, it's
    basically 60-40, with 60 percent going to try to accelerate our
    readiness recapture and also to some efforts with respect to
    sustainment, restoration, and modernization and other
    modernization programs that we view as vital.
        Chairman Levin. Could you submit the highlights in your
    judgment for the record.
        [The information referred to follows:]

        The fiscal year 2015 President's budget includes additional
    discretionary investment that can foster economic progress, promote
    opportunity, and strengthen national security. The Department of
    Defense (DOD) Opportunity, Growth, and Security Initiative (OGSI)
    funding focuses on adding resources in three key areas: (1) restoring
    readiness; (2) accelerating modernization of key weapons systems; and
    (3) improving DOD facilities across the country.
        The current level of fiscal year 2015 funding will allow the Army
    to sustain the readiness levels achieved in fiscal year 2014, but will
    only generate the minimum readiness required to meet the defense
    strategy. In order to build decisive action capabilities in fiscal year
    2015, the Army has prioritized funds to properly train forces in the
    Army Contingency Force and, due to top line funding decreases, has
    accepted risk to the readiness of multifunctional and theater support
    brigades as well as in progressive home station training, facilities,
    equipment sustainment, and modernization. OGSI provides the necessary
    infusion to accelerate the restoral of readiness and modernization
    programs.
        The Army share of the $26.4 billion OGSI is $7.5 billion, which has
    been aligned within areas of our base budget submission to accelerate
    training readiness, improve installation readiness, and modernization.
    Training Readiness ($2.0 billion):
        Funding OGSI would provide training opportunities at all
    operational levels, including multifunctional and theater support
    brigades to meet combatant commander demands. Additional funds for
    training would also improve the Army National Guard and U.S. Army
    Reserve readiness to the level of Platoon(+) proficiency above the
    Individual, Crew, and Squad proficiency funded in the fiscal year 2015
    President's budget request.
    Installation Readiness ($2.4 billion):
        To address risk in our installation infrastructure, OGSI improves
    installation readiness that has been degraded under the cumulative
    impacts of uncertain and reduced funding. Sustainment and base
    operation support levels would increase to 90 percent of requirements
    across the Total Army, providing much needed stability to support base
    services and infrastructure.
    Modernization ($3.1 billion):
        The OGSI provides the resources needed to accelerate modernization
    by developing and buying new or upgraded systems in order to ensure
    that the United States maintains technological superiority over any
    potential adversity as we continue to draw down and restructure.

        Chairman Levin. There is a request that we have already, I
    think, received now, is that correct?
        Mr. McHugh. Correct.
        Chairman Levin. Then within that, are there highlights that
    you might want to mention?
        General Odierno. Yes, Mr. Chairman. First, again about $1.8
    billion of that will be directly related to operational tempo,
    which is the training and readiness dollars, which will be
    invested in all of the components to immediately increase their
    readiness. We have taken a lot of risk in base operations
    support and about $1.5 billion would be invested. What does
    that mean? That's our training facilities. That is our training
    ranges, which we've had to reduce the maintenance of and
    sustainment of and the building of, which impacts our overall
    training.
        We also have not been able to keep up with our
    installations support structure. We've taken risks there. We're
    only funding that at 50 percent. So we put about almost $1
    billion back into that to help us sustaining the facilities
    that are necessary for our soldiers.
        We're also investing about $200 million in institutional
    training to continue to ensure that we improve and sustain our
    ability to train our noncommissioned officers (NCO), officers,
    and new soldiers at the rates we think are appropriate, to
    include initial aviation training and other things.
        Then finally, it would go to high-priority modernization
    programs, such as the AH-64, the UH-60, the Gray Eagle
    intelligence platforms that we have that are key for the
    future, as well as engineer capability that we have not been
    able to upgrade and update that we know is essential based on
    our experiences over the last 13 years.
        In addition to that, I have submitted and it will come
    forward, an initial $3.1 billion in unfinanced requirements
    that are not included in that number, and most of that is a
    carryover from the shortfall that we had over the last couple
    years, which goes again at more readiness.
        Chairman Levin. Thank you.
        The budget request includes numerous personnel-related
    proposals intended to slow the growth of personnel costs. Among
    these are a pay raise below the rate of inflation, a 1-year pay
    freeze for general and flag officers, reduction in the growth
    of the housing allowance over time, a phased reduction in the
    subsidy for military commissaries, a series of changes to the
    TRICARE program.
        There's further reductions, as you've indicated, in the end
    strength of the Army and the Marine Corps. General, first of
    all, let me ask you, do you personally support these proposals?
        General Odierno. I do, Senator.
        Chairman Levin. Were the senior enlisted advisers consulted
    during this process?
        General Odierno. We had several meetings that included the
    senior enlisted advisers.
        Chairman Levin. Do they agree with these proposals?
        General Odierno. They do, sir.
        Chairman Levin. Army aviation, there's restructuring which
    has been proposed. I think you highlighted it in your written
    statement and I think you may have made reference to it in your
    oral testimony, including the fact that the Army National Guard
    would transfer low density, high demand AH-64 Apache
    helicopters to the Active Army and the Active Army would
    transfer over 100 Black Hawk helicopters to the Army National
    Guard.
        My question is, do all the Service Chiefs approve of that
    recommendation? I'm asking you now as a member of the Joint
    Chiefs of Staff. Did all the Service Chiefs approve that?
        General Odierno. In the meetings that we've had, several
    meetings within DOD, and we've all agreed to the budget
    allocation and how we would conduct the budget, to include the
    Aviation Restructure Initiative, Mr. Chairman.
        Chairman Levin. Is that included in this?
        General Odierno. Yes, sir.
        Chairman Levin. Did the Secretary of Defense approve? I'm
    talking about that specific proposal, because that's going to
    be one of the issues which is going to be very closely debated
    here and very closely analyzed here. So I want to know if
    everybody approved that. Did the Secretary of Defense approve
    that?
        General Odierno. Yes, Mr. Chairman.
        Chairman Levin. How about the Chief of the National Guard
    Bureau? Did he approve it? Did he at least have an
    opportunity----
        General Odierno. He was in every meeting that we conducted
    when we had discussions both internal and external to the Army
    within DOD.
        Chairman Levin. One quick last question. I have about 6
    seconds left. I believe it would be helpful if the President
    would announce a specific troop level number for the U.S.
    military presence in Afghanistan after 2014 as quickly as
    possible, and not wait for a Bilateral Security Agreement (BSA)
    to be signed by the next president. It obviously is not going
    to be signed by this President of Afghanistan. I think it would
    be helpful in terms of steadiness, stability, certainty, and
    confidence about an ongoing presence in Afghanistan if our
    President would announce a specific troop level for that
    presence after 2014.
        My question I guess would be of you again, General: In your
    view, would that be helpful for Afghanistan's security through
    the rest of this year?
        General Odierno. Senator, I believe that the sooner we can
    come and provide them information that relays our commitment to
    them, I think it helps us as we move forward in Afghanistan.
        Chairman Levin. Thank you very much.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Secretary McHugh, last night we were together at an event
    where we had a lot of people from Fort Sill in Oklahoma when
    you got the phone call of the tragedy that took place. I know
    there was buzzing around the room, even though it happened
    twice at Fort Hood, it could just as well have happened at Fort
    Sill and other places; is that right, from what we know now?
        Mr. McHugh. From what we know now, we're viewing this as a
    threat across the entire Army.
        Senator Inhofe. Yes. I think it was prophetic yesterday
    during that hearing--I think I mentioned this in my opening
    statement--that Senator Ayotte was challenging that we haven't
    really done enough and expressed a concern, and just
    coincidentally hours after that is when this took place. I know
    that that meant a lot to all of us.
        Since this happened just last night, do you have any
    immediate thoughts about this that you'd like to share with us?
        Mr. McHugh. I think Senator Ayotte is posing a statement
    that we question ourselves about every day, and certainly
    particularly this day. While I would suggest we have done a
    great deal since the tragedies at Fort Hood in 2009, both
    across-installation type measures to what we're doing to try to
    track insider threats and what we're trying to do to make sure
    we can identify those soldiers who may have the kind of
    behavioral health challenges that could lend them to violence,
    we're doing things a lot differently and, as the Chief has
    mentioned, as we watched some of the events unfold yesterday,
    we saw some of the benefits and gains made out of that first
    Fort Hood experience.
        But something happened. Something went wrong, and we didn't
    know what that was, and if we failed in some way against our
    current policies, we need to be honest with ourselves and with
    you and hold ourselves accountable. But if we identify new
    challenges, new threats we hadn't recognized before, we have to
    put into place programs to respond to that.
        Senator Inhofe. I appreciate that.
        General Odierno, I wrote down one of the quotes that you
    made in your opening statement, that we could ``barely sustain
    one long-term contingency operation.'' Did I write that down
    correctly? Were you talking about with a force of 450,000?
        General Odierno. That was with a force of 420,000.
        Senator Inhofe. Okay.
        General Odierno. I said it would be very--in my opinion, it
    is doubtful that we'd be able to conduct one prolonged,
    sustained, multiphase campaign.
        Senator Inhofe. That's a strong statement. This is the time
    for strong statements. People have to understand the situation
    that we're in.
        Now, with that you're probably assuming that would be with
    a trained and ready force; is that correct?
        General Odierno. That's correct, sir.
        Senator Inhofe. That would be moderate to high risk? Or
    what risk level?
        General Odierno. It would be high risk, sir.
        Senator Inhofe. Already high risk, even with a ready and
    trained force?
        General Odierno. It has to do with the size. It's about the
    size, which is--you've reduced your Active component, you've
    reduced your National Guard, you've reduced your Reserve. It
    has to do with assumptions. If it goes past 1 year, it will be
    very difficult for us to sustain that in the long-term based on
    the capability and capacity that we have.
        Senator Inhofe. General, we never talk about this, but
    there are a lot of people out there that don't like us. We have
    a lot of countries that have great capability relative to ours
    now. This is something we haven't really had to live with
    before, and I know that they're aware--it's not just us in this
    room that are aware of that statement, that we could just do
    one.
        If we're in the middle of one long-term contingency
    operation, what do you think's going through their minds,
    potential adversaries out there?
        General Odierno. The thing we talk about all the time is
    one of the things--the reason we have an Army, an Armed Forces,
    is to prevent conflict, deterrence. Deterrence is a combination
    of capacity and confidence. It's important for us that we have
    the capacity and confidence that is interpreted by others that
    compels them not to miscalculate. What I worry about is
    miscalculations that could occur.
        Senator Inhofe. The whole thing back during the Reagan
    administration was the deterrent that is offered by our
    strength, our force. I think we all agree with it.
        I did some checking just this morning. We've gotten back as
    far as the beginning of World War II. You talked about the fact
    that we would, if we're having to go on down to, with
    sequestration--of course, the big problem's going to be the
    year 2016--you'd be talking about 420,000 Active, 315,000 Army
    Guard, and 185,000 Army Reserves. So the Reserve component when
    you add those together is 500,000.
        Are we overlooking something? Because we went back as far
    as World War II and we've never had the Reserve component
    larger than the Active component. Do you think that's accurate?
        General Odierno. I'd have to go back and look. What I would
    tell you is over the last 10 years or so that has been the
    case, where the Reserve component is bigger--I mean, the Active
    component is bigger.
        Senator Inhofe. Do you have any thoughts or comments about
    that?
        General Odierno. I think it's a tricky combination. What I
    would say is it is--as I say all the time, we are very
    complementary. We need all three of the components. They're
    very important to our strategy. However, they bring different
    attributes. The attributes that the Active component brings is
    a higher level of readiness and responsiveness. As we reduce
    the size of the Active component, the responsiveness and the
    ability to do this is significantly degraded, and that's the
    cause for concern.
        We still need the Guard and Reserve at levels because they
    provide us the depth and capability in order to execute longer
    term strategies. They also provide us some very unique
    capabilities that we don't have in the Active component.
        Senator Inhofe. Let me compliment you. You have been
    outspoken. You've actually said things that sometimes others
    don't. One of your quotes was: ``If we do not have a
    legislative solution that provides our leaders with the time
    and the flexibility to shape our force for the future, we will
    create a hollow force, we will very quickly go to extremely low
    levels of reduction in the next 6 months.''
        Then you had made a statement before the House Armed
    Services Committee that if sequestration were allowed to occur,
    the Army would begin to grow hollow within months.
        Are we hollow now?
        General Odierno. We are in some ways, because we cannot
    sustain the level of readiness that we think is appropriate. We
    are rebuilding it this year because of the BBA. So we'll make
    some progress in 2014 and 2015. But in 2016, as sequestration
    comes back in line, readiness will immediately dip again. So
    for a 3- to 4-year period until we can get our forces aligned,
    we will not be trained and modernized the way we would like to
    be, which begins to create a level of hollowness.
        Senator Inhofe. My time has expired, but for the record if
    you would, I'd like to have you respond to the relative degree
    of a hollow force that we had in the 1970s and that we were
    close to in the 1990s. Where are we compared with that
    situation back then? You remember that very well.
        Thank you, Mr. Chairman.
        [The information referred to follows:]

        The term hollow force describes an Army in which there is prolonged
    and disproportionate investment across manpower, operations and
    maintenance, modernization, and procurement without corresponding
    adjustments to strategy. This means that hollowness can exist under
    different circumstances and as a result of different factors.
        The Army has been considered hollow only in the mid-1970s to early
    1980s. Although the Army was at risk of becoming hollow in the 1990s,
    this outcome was generally avoided. In the 1970s and early 1980s, the
    Army was not manned, trained, or equipped to execute its mission. This
    resulted in a classic example of a hollow Army. In the 1990s, a dearth
    of investment in modernization and acquisition, combined with a heavy
    operational tempo, placed the Army at serious risk of becoming hollow.
        Rebuilding the Army after the 1970s required tremendous resources
    and nearly 10 years of effort. The Army that emerged from this
    rebuilding process ultimately ensured a stable end to the Cold War and
    earned an overwhelming victory in the Gulf War. In part because of the
    tremendous efforts to rebuild the force in the 1980s, the Army was
    better able to evade hollowness throughout the 1990s by diverting
    resources from acquisitions and modernization to training, leader
    development, operations and maintenance. As a result, in the aftermath
    of September 11, the Army was sufficiently capable to immediately
    respond, however it was not fully capable of conducting large, long-
    term, sustained operations without significant investment in structure
    and acquisitions. This outcome was tenable because we had sufficient
    force structure and readiness to meet requirements while we
    strengthened the Army to sustain those requirements.
        In the years since September 11, the Army has been largely
    modernized and organized to meet the requirements laid out in the
    Defense Strategic Planning Guidance. The resources devoted to the Army
    have left us with one of the most well-trained and equipped forces in
    the history of our Army. However, the combined impacts of the Budget
    Control Act, planned budget cuts, and the future loss of Overseas
    Contingency Operations funding have placed this force at risk. With the
    pending end strength reductions, the Army will soon have more
    requirements than our force structure can sustain yet still not have
    the resources to train what remains. This can create an Army that will
    look more like the one of the 1970s than that of the 1990s. This is an
    important distinction, because although the Army of the 1990s was at
    risk of hollowness, it had an able officer and noncommissioned officer
    corps and was able to adequately meet its requirements until sufficient
    capacity could be built for sustained operations. The Army of the 1970s
    could not have done so.
        With prompt action we can avoid a return to the 1970s and early
    1980s. Not only will a hollow Army be unable to implement the Defense
    Strategic Guidance, but continued budget shortfalls places the Army at
    risk of having to deploy unready, ill-equipped forces to a major
    contingency. History has demonstrated that doing this not only places
    victory at risk, but drastically increases the costs of conflict in
    terms of lives, money, and time. It is imperative that we act to
    prevent this outcome.

        Senator Levin. Thank you very much, Senator Inhofe.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        Mr. Secretary and Chief, thank you, too. This is a tragic
    situation at Fort Hood, and I'll comment. While I have no
    insight on this particular situation, one of the things that
    strikes me is that this individual had, like so many others in
    the Service, deployment. In fact, his deployment wasn't as
    extensive and as multiple as many people who are serving. He
    had already been identified as having mental health problems
    and was being treated. The Army was doing its best for one of
    its own, and yet we still have these tragic consequences.
        But I think one of the great leadership dilemmas you're
    both going to face over the next years is that there are other
    young men and women who have these issues, who may even be
    treated, some may not even be identified, and we have to,
    obviously, get to the bottom of this and learn from it. But
    this is a consequence of 10 years of uninterrupted warfare for
    the Army, and many things you have to do and think about are
    going to have to be in the context of how do we deal with
    soldiers that have these issues, some obvious and some not so
    obvious. It's a huge responsibility.
        I know you understand this, but I think that should be
    explicit at this moment.
        General Odierno, one of the principles of a reduced force
    is that it is more readily deployed, faster, quicker, with more
    lethality, better training, and better--I hate to use the word
    ``productivity,'' but a much more efficient force. One of the
    points you just made, and I think it bears reiteration, is that
    because of many factors the Active Force can be faster out the
    door and better prepared as units because of simple things like
    constant access to ranges, constant unit training.
        Can you elaborate on that?
        General Odierno. Senator, it has to do with complexity, and
    as complexity grows it requires more of what you just
    discussed. So for example, there are some things that aren't as
    complex. So let me give you an example. A port-opening team,
    that's not complex training, so we can train that and that can
    be done. But as you get to complex operations, such as BCTs and
    what we might ask them to do, the amount of training is
    significant in order to build the collective capability that is
    necessary, the integration of company, platoons, integration of
    air and ground, the integration of intelligence, the
    integration of fires. All of that takes a significant amount of
    training, because that integration is very difficult and
    complex and it requires our leaders to do much training.
        That's why we need certain capability in the Active
    component, because they need to be ready. So if we need to
    deploy them, they have already gone through that training and
    they are prepared to do that. We send them and they can
    immediately begin to do that. That's why it's so necessary to
    have that capability ready and prepared to go in the Active
    component.
        As you get smaller, it becomes even more important because
    you don't have the depth that we once had. So that even becomes
    more important.
        Senator Reed. Is there a metric for this, in the sense that
    every unit that's notified for deployment has to do
    predeployment training? My sense--and again it's a sense; let
    me get your reaction--is that for an Active Force who's been
    continually engaged in all these complex operations you've
    talked about day-in and day-out, that predeployment training is
    a certain number of days or weeks, but for units, while they
    might have individual members with more expertise, in terms of
    the unit deployment it's a longer period of time.
        Do you have those metrics?
        General Odierno. We do. I can lay this out for you in
    detail. But what I would tell you is for Active component
    units, in reality they need to be prepared to immediately go
    out the door. It has to do with personnel readiness as well as
    unit collective training readiness. That takes a lot of effort
    to even sustain the right level of medical, dental, other
    readiness that is required for them to deploy.
        Senator Reed. The recollection is that in a unit that is
    required to deploy--a company within hours, a battalion within
    a day or less, and then the brigade within that same sort of
    hourly notion--it was a lot different than other units, even
    Active units. So that's something I think that has to be
    appreciated.
        The other issue here, too, is with respect to size. Are
    there technologies that you need to compensate for the
    decreased size? Put another way, the soldier of 2014 has a lot
    more firepower, effectiveness, than the soldier of 1974, I can
    assure you of that. So are there things that you need? Are
    there things that help put in context this number, not just
    simply saying, back in 1976 we had 1 million soldiers under
    arms, now we only have 500,000?
        General Odierno. I am very aware of that. I don't like
    doing those comparisons because the capabilities that we have
    in our Army today are much greater than they have ever been.
    Our individual soldier, the capability he has, the way he's
    equipped with the sights, weapons systems, information
    technology that we've given him, makes him incredibly more
    capable. The systems that we have that are integrated, whether
    it be a heavy, light, or medium capability, are much better
    than they've been in the past.
        So our investments have paid dividends and our units are
    more capable than they were before, which allows us to get
    smaller. Again, there comes a point where you get too small and
    it's just a matter of numbers, and that's what I'm worried
    about.
        Senator Reed. I have a few seconds remaining, so I have
    more of a comment than a question. Looking at ourselves is
    interesting, but we have to look at the adversaries also.
    They're getting more sophisticated, particularly potential, and
    we have to take every range of potential engagement. Some of
    them are getting very sophisticated in terms of their air
    power. For the past 50 years, the Army has fought with total
    air superiority, and we have to begin to think about the fact
    that maybe it won't be total.
        I hope that informs some of the issues in terms of the
    structural changes you're making, because at times when you
    could rely on other platforms for close air support (CAS) you
    might have to bring your own. Is that in your thoughts?
        General Odierno. If I could just make a couple comments,
    and I appreciate that.
        Senator Reed. Yes, sir.
        General Odierno. One, is that we have really changed how we
    use our attack helicopters, and we use it much more in close
    support, direct support to our ground forces in a variety of
    different scenarios. We're also now going to have to use it as
    a reconnaissance-surveillance platform, which is critical to
    any success. That's becoming more critical, how you fight for
    intelligence and how you understand and develop the situation.
        The only last comment I'd make on modernization, the one
    thing that we have to do that we have not done yet, it is this
    combination of mobility, survivability, and lethality. Over the
    last 8 years, we have focused on survivability, so we've lost
    mobility and we have not increased our lethality. So as we go
    to the future it is incumbent on us that as we invest in our
    science and technology (S&T), we have to invest in better
    mobility, combined with better survivability, with increased
    lethality. That's where we need to focus our modernization
    programs, and have that connected to our reconnaissance and
    surveillance capabilities. That's what's going to provide us
    with the advantage with a smaller force.
        Senator Reed. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Reed.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        I'd like to add my voice along with all of us with an
    expression of condolences to the families of the tragedy that
    has taken place.
        First of all, General, I'd like to associate my remarks
    with what Senator Reed just stated. We always talk about how
    more capable we are. We are facing a much more capable
    adversary as well. I think that it's interesting to note the
    efficiency of the recent Russian movement into Crimea. Even
    though it was unopposed, it was a pretty impressive operation,
    wouldn't you say?
        General Odierno. It was.
        Senator McCain. They showed some capabilities and
    coordination of forces that maybe we hadn't quite expected.
        General Odierno. Whenever I look at another force, the one
    thing you look at is not only its technical capability, but its
    ability to coordinate, synchronize, organize. What we have seen
    is some very sophisticated synchronization, organization,
    integration.
        Senator McCain. Including the fact that we did not
    intercept any communications amongst those various branches in
    the execution of this operation.
        When did you first start serving in the U.S. Army, General?
        General Odierno. I first entered West Point in 1972 and
    started serving in 1976, sir.
        Senator McCain. So you've had a chance to observe a lot of
    things happen in the world and a lot of engagements and a lot
    of activities the United States has been involved in. Would you
    say that in your judgment, the world is more dangerous now in
    many respects since the end of the Cold War, or the same, or
    less so?
        General Odierno. Senator, the comment I've made repeatedly,
    it is the most uncertain that I have seen it, which in itself
    makes it somewhat dangerous because of the uncertainty that
    we're seeing around the world and the unpredictability that
    we're seeing around the world across many different areas. It's
    not just limited to one place. It's occurring on almost every
    continent.
        Senator McCain. One would argue that it's not prudent to
    continue to reduce our defense capabilities. Wouldn't that make
    sense?
        General Odierno. Again, there is concern because of the
    uncertainty that we see, and that's what concerns me.
        Senator McCain. We hear statements made by unnamed
    administration officials that this is, ``the end of land wars,
    there are no more land wars.'' In your experience and
    background and knowledge, do you think that that's probably a
    good idea, to plan for no more land wars?
        General Odierno. As I said, Senator, in my opening
    statement, every decade since World War II we have had to
    deploy Army forces. We continue to have Army forces deployed
    today. So my opinion is we want to have a balanced joint force,
    which requires also the capability to deploy land forces.
        Senator McCain. You know what I find interesting is that
    when General Meyer came here before Congress and testified that
    we have a hollow Army, it got headlines all over the world.
    Now, basically, what you're saying is that we are headed
    towards a hollow Army.
        The Commander, U.S. Forces Korea, testified here just
    recently that he had enough operational capabilities with the
    forces that are now in Korea, but he does not have the
    sufficient or battle-ready units to reinforce him in case of a
    crisis in Korea. Do you share that view?
        General Odierno. I don't know exactly what he said and what
    the context was. So I feel uncomfortable commenting on that,
    Senator. What I would say is we are working very hard to build
    the readiness that we can do everything we can in our
    commitment to support our allies on the Korean Peninsula.
        Senator McCain. But a lot of those units are not combat
    operationally ready?
        General Odierno. They are not at this time.
        Senator McCain. They are not.
        So now we are presenting you with a 2-year reprieve, and
    then sequestration kicks in again. One, I would be very curious
    how that affects your capability to plan; and two, what will
    the further impact of sequestration be on the U.S. Army, in
    your view?
        General Odierno. One of the things I worry about the most
    is, the reason we've been able to do the things we've been
    asked to do in the past is we had a sustained readiness
    capability. So in other words, we had consistent funding, a
    continuous sustainment of readiness throughout the force. We
    have not been able to do that.
        So, 2014 and 2015 help us. We will rebuild readiness to
    some level. But in 2016 we will lose that readiness again. You
    need consistent readiness funding in order to sustain the level
    of readiness necessary for us to be capable to respond the way
    the American people expect us to, if we're needed.
        Senator McCain. How do you plan?
        General Odierno. What we're doing is I have to prioritize.
    What I have to do is I have to take part of the force and make
    sure they are ready to go, which means there's other parts of
    the force which are getting less.
        Senator McCain. But I guess my question is sequestration,
    no sequestration. You probably have to dual plan.
        General Odierno. Right now I plan for sequestration. That's
    the law of the land, Senator. We try to build scenarios and
    give some recommendations on what funding we might need in
    order to create a readiness level and a size of the Army that
    is acceptable. That goes back to, as we've said, we think the
    force should be about 450,000 in the Active component, and the
    money to sustain that force that would be necessary.
        Senator McCain. I'm hearing, General--and I know you are,
    too, and I'd like to get your comment on the record--I'm
    hearing from a lot of very bright and talented young officers
    in all Services that this kind of lifestyle, where operations
    are cancelled, where deployments, they don't know from one day
    to the next, the degree of readiness and training in
    capabilities that they expect to have are not becoming--are not
    real, and many of them are questioning whether service in the
    military is a lifestyle that they want to pursue.
        Are you hearing those same kinds of rumblings, especially
    amongst the best and the brightest?
        General Odierno. What I would say is, if we continue along
    this path where we go up and down and uncertainty about what
    the size of the Army will be, what the type of readiness will
    be, it will start to impact those who want to stay. So far, it
    has not. We are doing everything we can to sustain the
    experience that we have in the force. But if this continues for
    10 more years, I would be very surprised if it does not begin
    to impact those who want to continue to serve.
        It is not about amount of deployments----
        Senator McCain. How about 2 more years?
        General Odierno. Excuse me?
        Senator McCain. How about 2 more years?
        General Odierno. It's unclear. I don't know. But what I say
    often is I don't know what will be the thing that finally--the
    straw that breaks the camel's back on this. We are working very
    hard to ensure we keep our very best and so far have been able
    to do that. But I don't know how much longer we'll be able to
    do that.
        Senator McCain. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator McCaskill.
        Senator McCaskill. Thank you.
        Secretary McHugh, the Defense Finance and Accounting
    Services (DFAS) was set up by the Secretary of Defense back in
    1991 in an effort to try to better manage the business systems
    at DOD. Since its inception, they have consolidated more than
    300 installation-led offices into 9 sites, reduced the number
    of systems from 330 to 111. Obviously, they work off a working
    capital fund where they charge their customers. There's not a
    direct appropriation.
        I was a little concerned when I saw that you launched an
    Army Financial Management Optimization (AFMO) Task Force
    pursuant to your directive, that would move from the DFAS some
    functions directly in the Army. I worry about that. So what I
    need to ask you is why, because what we're going to do is, if
    everybody does that, we're back to where we began, with a lot
    of duplication, a lot of one branch not knowing what the other
    branch is doing in terms of systems.
        As we are trying to get to an audit, it seems to me that
    decision you've made, at least at the superficial level, looks
    like you're rowing the boat the wrong way.
        Mr. McHugh. Thank you for the question, Senator. I know you
    understand full well the Army does not control DFAS. So there's
    been a number of reports that the Army was going to close DFAS
    centers at Rome, NY, or other places.
        Senator McCaskill. Right.
        Mr. McHugh. I have to tell you that's not true. We don't
    have that power even if we would choose to do so.
        As I know you understand as well, in these enormously
    difficult and challenging times, the Army is looking at
    virtually everything we do to try to see where we can be more
    efficient, more effective, and frankly, save money. Over the
    past several years we have deployed a number of Enterprise
    Resource Planninngs (ERP), including General Fund Enterprise
    Business Systems (GFEBS). Those are systems by which we
    internally within the Army track our bills, pay our bills, et
    cetera. Those have to date been very successful.
        So what I asked our Army folks, financial management folks,
    to do was to set up two hubs to take a look at how we might
    optimize our structure and how we might indeed pursue
    auditability. You're absolutely right, we're under a
    legislative requirement to be fully auditable by 2017. We feel
    we are on track, and part of the pursuit of that auditability
    includes the deployment of these ERPs that enable us to, we
    think, become more efficient.
        But we haven't made any decisions or any choices, and we
    need to find out exactly what these systems look like and if
    there is opportunity to save money. I have had discussions, our
    AFMO folks have had multiple discussions, with the Comptroller
    General of DOD, at the moment Secretary Bob Hale, who does own
    DFAS. He's carefully watching this.
        So we don't have an intent one way or another to take
    business away from DFAS necessarily. But I think it's important
    for all of us to know. DFAS, you correctly noted, Senator, is
    run on a transactional basis. In other words, for every action,
    transaction they complete, they're paid by the Service. As we
    come down in numbers--we're talking anywhere from 420,000 to
    450,000--as the other Services reduce, there's going to be
    fewer transactions. So I don't control DFAS, but I think
    they're going to have to make some management decisions as
    well.
        Senator McCaskill. I don't think there's any question about
    it. I guess my plea to you is I would like to be as engaged in
    this process as much as possible. I know Bob Hale is leaving
    and his replacement will take this over. But I have sat on this
    side of this desk way too many times and found inefficiencies
    in business systems as it relates to the various branches
    working with and sometimes against each other.
        If we're going to go this opposite direction, if we're
    going to bust up DFAS, I think we need to be very thoughtful
    about it and make sure that we're not driving up the cost for
    the remaining branches. If you decide to take some of this
    internally, you're going to drive up costs for the remaining
    branches and we may be robbing Peter to pay Paul. That's why I
    want to stay on top of it and make sure that all of this gets
    thought out across the board.
        Mr. McHugh. Senator, a more than reasonable request, as
    always, and we'll send a team over at your convenience to brief
    you and make every effort to keep you informed.
        Senator McCaskill. Thank you.
        General Odierno, I know that you have stood up the Special
    Victim's Counsel in the Army with great rapidity and I'm very
    proud of that. I know that there are many, hundreds, of victims
    that have gotten their own counsel as a result of you
    prioritizing that, and all of us appreciate it very much.
        I was very concerned about the media coverage around the
    Sinclair case because it was so inaccurate. I want to say very
    clearly for the record what happened in the Sinclair case. What
    happened in the Sinclair case is the prosecutor wanted to drop
    the serious charges. The prosecutor wanted to say: ``I'm
    done.'' The special victim's counsel, a captain, who was
    working with that victim as a result of your standing up the
    unit so quickly, wrote a letter to the command saying: ``This
    case should not be dropped.''
        That special victim's counsel was doing exactly what the
    Senate and the House and the President signed into law,
    advocating for that victim in that environment. Couldn't have
    been more correct in what she did, that victim's counsel.
    Somehow that judge twisted that into undue command influence.
        That's a problem we're going to have to deal with. I wanted
    the record to be very clear. I want to get assurances from you
    that the message will be sent to victims' counsels that that
    victims' counsels did what she should have done, not in any way
    do anything that's inappropriate within the Uniform Code of
    Military Justice.
        I don't know how the judge got to that interpretation. I
    don't know how a command is influenced by a command--by a
    captain who's writing a letter saying this is a serious case
    and it should not be dropped. If it were not for that
    commander, that case would have been over. There never would
    have been a day in court where that general would have had to
    take the stand and admit maltreatment of one of his subordinate
    officers or would he have ever had to even plead to the more
    serious charges that he ended up having to plead to.
        So as much as people were outraged about the sentence, I
    want to make very clear that this was not an example where it
    should be some kind of mark on the side of the ledger that we
    should be doing away with command involvement in cases. Just
    the opposite. I want to make sure that you understood what
    actually happened in that case and that from the very top there
    is not a message that goes out to special victims' counsels
    that they should retreat in their obligations.
        General Odierno. If I could just make one comment, Senator.
    I hold quarterly an advisory council. I bring in victims and
    advocates from around the Army. I just held one last week. The
    one message that was absolutely clear from everyone in that
    meeting was the importance of the special victim advocate and
    the difference that it's making with each and every one of our
    victims and survivors that go through this.
        So we are absolutely dedicated to this, and we believe it's
    showing great benefit for us as we go through the process.
        Senator McCaskill. Thank you very much, General.
        Thank you.
        Chairman Levin. Thank you very much, Senator McCaskill.
        Senator Chambliss, you arrived just in the nick of time to
    ace out Senator Ayotte.
        Senator Ayotte. It's always that way. [Laughter.]
        Senator Chambliss. We're probably both going to ask the
    same question on A-10. [Laughter.]
        Mr. Secretary, General, let me first express my sympathy to
    the Army nation, obviously, for what happened yesterday, and
    just know that you're in our thoughts and prayers.
        Gentlemen, one of the proposals that's in the Secretary's
    budget was the moving of the commissaries towards a more
    businesslike approach, which I agree with. I think that we need
    to operate our exchanges, our commissaries, on a business
    formula. But what we're doing is we're exacting some pain from
    particularly some of your enlisted personnel who depend on the
    commissaries and exchanges probably to a greater degree maybe
    even than the officer corps.
        Rather than exacting that pain right now, Senator Warner
    and I have a stand-alone bill that would delay the
    implementation of the Secretary's budget until the study that
    comes out the end of this year. We're not exactly sure when,
    but it will certainly address the issue of the commissaries.
        I'd just like you, General, to comment on that as to where
    you think we are relative to moving towards a businesslike
    formula with the commissaries. How is this going to impact our
    Active Duty as well as our Army National Guard and Army Reserve
    folks who have access to those facilities?
        General Odierno. First off, as we've taken a hard look at
    this, in general terms as we looked at this, commissaries
    provide about a 30 percent benefit on items that they buy in
    the commissary. With the proposal to run a business that is one
    that runs and pays for itself, that goes down to about a 20
    percent savings. We think the 20 percent savings is still quite
    significant and we believe that that savings legitimizes the
    fact that we should make, as you mentioned, improvements to the
    business processes of the commissary.
        We will still, though, provide additional funds for
    commissaries, for example, that are overseas, that really it's
    almost impossible to run in an efficient way because of the
    movement of goods and things to get people the goods that are
    necessary, and maybe in some remote areas. So it'll be looked
    at on an individual basis. But for the most part, this
    efficiency in my mind is essential, because we have to improve
    these business practices. I think it still provides quite a
    significant benefit for all of our soldiers, sailors, airmen,
    and marines as we go through this process.
        Senator Chambliss. Any comment, Mr. Secretary?
        Mr. McHugh. Yes, Senator. I fully support what the Chief
    said. We looked very carefully at those operations where we had
    a reason to believe all soldiers, enlisted or officers, really
    had no other alternatives other than the commissaries, as the
    Chief said, particularly overseas, but also in our remote
    locations.
        This is something that I know Congress through their
    morale, welfare, and recreation activities, oversight
    activities, going back as far as my time on the Hill, have been
    looking at this, and it's been the long-held belief of many
    that there are significant savings to be made. We think that we
    can do both, certainly in a way that does not unduly impact our
    junior enlisted soldiers.
        I would just note, because of the fiscal challenges we
    face, these kinds of efficiencies, economies, have already been
    budgeted in. So if we have an order to stand down while some
    commission looks at it, we'll certainly respect that directive,
    but we'd have to find the money somewhere else. Generally, for
    all of these kinds of initiatives, we have to go right back to
    the kinds of accounts that we've already hit hard over the last
    2 years. So there would be significant challenges to not going
    forward.
        Senator Chambliss. General Odierno, in defense of standing
    down the entire fleet of A-10 aircraft, the Air Force has
    emphasized that the A-10's sole usefulness is that of being
    CAS, discounting its capabilities in combat search and rescue
    and forward air control roles. While there are without question
    other assets that can perform the CAS mission, none can do so
    with the same maneuverability, loiter time, and targeting
    capability of the A-10.
        Could you give us your thoughts from an Army perspective as
    to whether or not the Air Force's decision to stand down that
    entire A-10 fleet is in the best interests of the national
    security?
        General Odierno. As we talk to our soldiers, they will tell
    you that obviously they support and are getting great support
    from the A-10 aircraft and the Air Force. A lot of it has to do
    with the visual deterrence that it provides, low-flying,
    visible both to us and the enemy itself, and the impacts that
    it has. So the A-10 is a great CAS aircraft, as far as we're
    concerned the best CAS aircraft.
        However, as we've done in Afghanistan, there is a
    significant amount of missions of CAS being flown by other
    platforms, such as the F-15s and the F-16s. The Air Force has
    come to us and told us that they absolutely believe that this
    will be able to meet our needs in CAS. So we are working with
    them in the future to develop those techniques and procedures
    that would be necessary to provide us the proper support of F-
    16s.
        We have had several discussions about this and we are
    supporting their effort. But a lot of it has to do with this
    visual piece, and we have to work with the Air Force on how we
    replace that once the A-10 goes away.
        Senator Chambliss. Was there a recommendation from the Army
    with respect to retirement of A-10s?
        General Odierno. We did not make a recommendation to the
    Air Force to retire them. But they have worked with us to
    ensure us that they will continue to provide us the best CAS.
        Senator Chambliss. My time has run out here. This is not in
    the form of a question, but just to let you know, I do have a
    concern relative to competition or lack thereof on the BAE
    Bradley tracked vehicle, that I know there's some consideration
    being given as to how we approach that weapon system. I may
    submit a question for the record to you on that.
        Thank you.
        Chairman Levin. Thank you, Senator Chambliss.
        Mr. McHugh. Mr. Chairman, may I just say one thing?
        Chairman Levin. Please, Secretary McHugh.
        Mr. McHugh. I hope I get the opportunity to say something a
    little additional about another member who's dear to us. This
    is the last Army posture hearing for Senator Chambliss. I just
    wanted to express our Army and my personal appreciation for all
    that he's done. Saxby and I go back quite a ways. So I'll miss
    seeing him here, but I wish him, and we all wish him, the best
    in the future. Thank you, Senator.
        Senator Chambliss. Thanks very much. It's been a great
    relationship.
        Chairman Levin. Thank you both. I can't say that I'm going
    to miss Saxby Chambliss because I won't be around to miss Saxby
    Chambliss. But if I were around, I would miss Saxby Chambliss,
    put it that way. [Laughter.]
        Senator Udall.
        Senator Udall. Good morning, gentlemen. We all have heavy
    hearts this morning, as has been discussed over and over again.
    In Colorado our thoughts and prayers go out to you, our
    soldiers, and the Army families at Fort Hood. I think we've
    also been in awe of the heroes who responded to the tragic
    events of yesterday.
        The valor of those first responders comes as no surprise to
    many of us. In my home State of Colorado we've just been in awe
    as our soldiers have deployed over and over again to combat in
    Afghanistan. They've trained our allies. They've tracked the
    enemies of humanity during the counter-Lord's Resistance Army
    operations in Africa. They've saved many lives and much of what
    we hold dear in Colorado while battling both wildfires and
    floods over the last year. They've been great neighbors and
    friends to say the least. We're just so lucky to have these
    heroes living amongst us. We're forever grateful for what they
    do day-in and day-out.
        I have great respect for the brave men and women in your
    sister Services and there's no doubting the importance of air
    and sea power. But the simple fact is the missions I've just
    described require soldiers who bring boots-on-the-ground.
    That's why I'm worried about the potential cuts in the Army's
    end strength and the effect that those cuts would have on our
    soldiers, our ability to project power, and our very
    communities.
        I'm also increasingly disturbed by the public conflict
    between the Active component and the National Guard. If there's
    one thing we've learned over the last several years, it's that
    we need a well-trained, well-equipped, multi-component Army.
        We're also facing the potential, as we've been discussing
    here this morning, for significant budget-driven reductions if
    Congress doesn't get its act together and we don't stop
    sequestration from kicking back in next year. In light of that,
    we literally can't afford a delay in the critical decisions
    that are before us while a committee spends months or years
    conducting a study for the sake of a few attack battalions.
        If we freeze force structure changes to the Guard, we will
    still have to absorb cuts through even deeper reductions in end
    strength and iron on the Active side. In my mind that's not a
    responsible compromise. This is a complex and emotionally
    charged issue and we're not going to solve it by going to war
    with ourselves.
        I think of Winston Churchill, if I can paraphrase him. He
    said: ``We're out of money. It's time to start thinking.'' So
    with that in mind, I have some questions.
        Mr. Secretary, let me start with you. I want to thank you
    publicly for agreeing to my request to withdraw the Army's
    request for a land acquisition waiver for the Pinyon Canyon
    Training Area. With the Pinyon Canyon controversy finally put
    to rest, our soldiers will be able to conduct the training they
    so need, while our ranchers can do their vital work without
    fear of losing their land. It's a rare win-win scenario, and I
    was proud and honored to work with you and your team to make it
    a reality. I know the great people at Fort Carson will make
    good use of that training area, and I know they'll continue to
    work to protect the land for themselves and future generations.
        So with all of that in mind, would you describe the types
    of training that our soldiers need to conduct to prepare for
    full-spectrum operations? What are your main concerns about the
    threats facing the current and future force? Then, if I could
    on that note, how does access to quality training areas like
    Pinyon Canyon factor into the Army's assessments of
    installations?
        Mr. McHugh. Thank you, Senator. Let me first of all return
    the compliment. Not just I, but all of us in the Army, greatly
    appreciated the leadership, the courage really, that you
    consistently showed on resolving the Pinyon Canyon issue. I
    totally agree with you, it's win-win, and we can all get back
    to what concerns us most, in our case soldiering and training
    those soldiers, in the case of farmers and ranchers, doing
    God's work out on the land. So thank you for those efforts.
        As you noted, suggested, in recent years our focus on
    training has really been on the counterterrorism initiative.
    That's recently switched to a train-and-assist mission, and
    that, coupled with the fact that we just have had dwindling
    resources, has really caused us to greatly diminish the
    complexity of our training and to by and large not have the
    funds to do decisive action training.
        We are utilizing our return, of course, out of Iraq, but
    also out of Afghanistan, to now return to decisive action
    training, more complex training, the type of mission sets that
    the Chief spoke about earlier. We'll have 19 Combat Training
    Center (CTC) rotations this year; 17 of those will be for
    decisive action training. That is in no small measure thanks to
    the relief that this Congress provided through the BBA for 2014
    and 2015.
        But as the Chief said, if we go back to 2016, those kinds
    of buybacks will be immediately lost and we'll have to do the
    best training we can at a much lower level of proficiency and
    complexity. The Chief went into some detail about how the more
    complex missions require larger troop formation sets, require
    the integration of fires and infantry and your overhead CAS, et
    cetera. In the case of our attack platforms, for example, we
    are integrating unmanned aerial platforms, the Gray Eagle,
    which adds even more complexity.
        So the ability to do that kind of training, you need land,
    you need clear air space. While the major portion of those
    occurs at Fort Polk and out at the CTC in California, obviously
    the training opportunities at Pinyon Canyon have and remain
    vital, and the stability that the recent agreement brings, I
    think, will obviously be a consideration should we get to a
    point where we begin to evaluate bases for possible drawdown.
    It's a very complex system and it's interrelated. But every
    asset that a post, camp, or station can bring to the table is
    something on their side.
        Senator Udall. Again, I think this is a great example of
    everybody sitting down, listening, and working out a way
    forward. So again, I want to thank you.
        General, let me direct a question to you that I think you
    can answer for the record because my time is about to expire. I
    want to return to the National Guard force structure comments I
    made. I know you spoke to this as well. If the Army were
    prevented from making those changes pending the findings of the
    independent commission, what would the ripple effect be? The
    money would have to come from somewhere. So am I right in
    saying that there would be significant effects on the Active
    Army and/or the Army Reserve?
        General Odierno. There would be, up to $12.7 billion over
    the POM, over the entire period.
        Senator Udall. You answered the question. We don't need to
    ask the question for the record. So thank you.
        Thanks again for your service and for being here,
    gentlemen.
        Chairman Levin. Thank you very much, Senator Udall.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        I want to thank both of you for your leadership and
    service. First of all, I share the sentiments of all my
    colleagues in offering my thoughts and prayers to those who
    have been affected by the tragedy at Fort Hood yesterday.
        In the Readiness and Management Support Subcommittee of the
    Senate Armed Service Committee yesterday morning, we actually
    talked about the issue of insider threats. There have been a
    number of reports--I know, Secretary McHugh, that you've been
    working on this along with the other Services. Also, the Senate
    Homeland Security and Governmental Affairs Committee has been
    working on it, which I also happen to serve, along with the
    Secretary of Homeland Security, Jeh Johnson, of the Department
    of Homeland Security (DHS).
        So it is my hope that we will all really get together, the
    work that you're doing, along with what DHS is doing, to review
    not only yesterday's incident, but the most recent incidents,
    to make sure that you have the tools that you need, whether
    it's reviewing security clearances, other issues. So I look
    forward to working with you on that.
        General Odierno, I wanted to follow up on Senator
    Chambliss's discussion on the A-10. I know you're surprised by
    that. [Laughter.]
        About 10 days ago, Senator Donnelly and I were in
    Afghanistan. I was glad to hear you say that you often hear
    feedback from those that serve underneath you in terms of their
    support for the A-10, because I wasn't even raising it with
    people on the ground and they were pulling me aside and saying
    to me: ``The A-10 is very important to us.'' In fact, I had a
    guy pull me aside and tell me a story about how the A-10 had
    helped our Special Forces on the night before on an incident
    that they were dealing with in Afghanistan.
        So I believe that there is a strong feeling on the ground
    toward the CAS mission of the A-10. This was reaffirmed for me
    in Afghanistan. Again, it wasn't an issue I was affirmatively
    raising. Actually, I had people pulling me aside to tell me
    this.
        I appreciate what you said, that the A-10 is the best CAS
    platform that we have. In answer to Senator Chambliss, you said
    that you'd be working with the Air Force to develop the CAS
    tactics, techniques, and procedures (TTP) for other aircraft
    that the Air Force wants to use for this mission, including the
    F-15 and the F-16.
        Here's my concern. My concern is that we already have the
    TTPs for the A-10, don't we? We don't have to develop
    procedures on how to deal with CAS for the A-10?
        General Odierno. Yes.
        Senator Ayotte. So when I hear talk about that it's the
    best CAS platform, we know that their pilots are very focused
    on the CAS mission that they perform, not only in Afghanistan
    but also in Iraq, as you know from your service in Iraq--the
    very fact that we have to develop new TTPs for other aircraft
    to really look at this issue, I worry about this in terms of
    our CAS capability gap, and that we're going to be putting
    ourselves in a risk situation.
        So we already have it in place and we already know it
    works. So it worries me to think we would take this on.
        Do you have a comment on that?
        General Odierno. Senator, I would just say clearly the A-10
    has been supporting ground forces for a very long time and, as
    you've said and I have said, we're incredibly confident in it.
    This is another example, though, of the impact that budget
    reductions are having on our military.
        Senator Ayotte. Right.
        General Odierno. We have to make hard decisions, and
    they're just really tough, difficult decisions. I know General
    Welch will tell you he flew A-10s; he's a big supporter. But we
    have to make difficult decisions. That's why we have to be able
    to figure out how we can best utilize multi-role aircraft.
    That's why we're going to have to work together. They have been
    providing CAS in Afghanistan with those platforms. But there
    are some things we have to adjust, because it is not quite the
    same as the A-10 is with ground forces.
        Senator Ayotte. Right, exactly, because the F-15 and the F-
    16 in terms of survivability, they have to come in much faster.
    One of the benefits, as you've described, is the visual, but
    the ability to go at a slower pace because it's a huge--we
    know, it has much more survivability, just the nature of it.
    It's a beast, in a good way.
        But I worry about this because CAS to me shouldn't be a
    secondary function. It has to be a number one function when we
    think about our men and women on the ground. Would you agree
    with me on that?
        General Odierno. It is critical to us. In fact, the Army
    has made decisions in the past because of our reliance on CAS
    in the kind of systems we develop. So it's critical. We rely on
    it completely.
        Senator Ayotte. Right.
        General Odierno. It's very important to us.
        Senator Ayotte. I thank you.
        I wanted to ask you, General, you spent years serving in
    Iraq. I appreciate your leadership there and everything that
    you did in Iraq. I just wanted to get your thoughts. As we're
    looking at where we stand with regard to post-2014 force
    posture in Afghanistan and our continued involvement in
    Afghanistan, are there any lessons that you see in terms of
    what's happening now in Iraq that we should be mindful of as we
    look at our commitment in Afghanistan?
        General Odierno. I would just say that, as we have
    recommended, the Joint Chiefs have recommended, we believe it's
    vitally important that we have a force that remains in
    Afghanistan. There's nothing that shows commitment like having
    people on the ground there every day. I think that provides
    confidence not only to the military, but confidence to the
    political leaders, that we are going to stand behind them as
    they continue to improve. I think that's important.
        I think not only that, it's important for us to be there in
    order for us to continue to build the institutional capacity
    that's necessary for Afghanistan to sustain stability over the
    long-term.
        Senator Ayotte. We've seen, unfortunately, a resurgence of
    al Qaeda in Iraq. Don't we face a similar risk in Afghanistan
    if we don't have a follow-on commitment there?
        General Odierno. My experience tells me that when they
    sense a level of instability they will do everything they can
    to exploit that instability.
        Senator Ayotte. Thank you, General.
        I want to add my support for the chairman's comments
    earlier. Having just gotten back from Afghanistan, I believe
    it's very important that the President announces what our
    follow-on commitment is going to be in Afghanistan, consistent
    with General Dunford's recommendations. It's important that we
    do so now. Obviously, that commitment would be contingent on
    signing of the BSA, and I believe also more responsibly
    handling the detainee issues there.
        But the commitment now, we need to send that signal to the
    Taliban with the elections coming up this weekend, with the
    fighting season beginning there, that we remain committed to
    ensuring the security of Afghanistan in a way that will not
    allow the resurgence of al Qaeda again, to make sure that our
    country is protected.
        So I really appreciate the chairman's comments on that. I
    would like to support the President in his follow-on
    recommendations. I look forward and I hope that he will make
    that announcement soon.
        Thank you.
        Chairman Levin. Thank you very much, Senator Ayotte.
        Senator Manchin.
        Senator Manchin. Thank you, Mr. Chairman.
        Thank you, Mr. Secretary and General Odierno. Again, my
    deepest sympathy to all of our men and women in uniform and to
    all of you that support the military directly, and to all of us
    from West Virginia and around the country that support you for
    what you do.
        General Odierno, I recognize and appreciate the need to
    modify the structure of the Army to better fit today's
    operational requirements and fiscal constraints. Getting cost
    savings by retiring low-priority weapons systems is a good way
    to do this and I strongly support it. However, I am less clear
    about the value of moving Army National Guard Apaches into the
    Active Duty. Guard Apaches have performed exceptionally well in
    Iraq and Afghanistan. I think that we all identify and
    recognize that.
        Here's where my concerns would come from to try to
    understand. The cost of a Guard Apache battalion is about $32
    million per year. The cost of an Active Duty Apache battalion
    is about $75 million per year--so that we know the cost. We
    don't know exactly what the cost buys us, the difference of $32
    million to $75 million. General, if you could answer that.
        General Odierno. Absolutely. It has to do with the amount
    of training, simple. What we try to do with the National Guard
    is we want to maintain pilot proficiency, which we do very well
    at. But as I had stated earlier, with Apaches it's much more
    than that. It has to do with collective training. It has to do
    with doing reconnaissance, surveillance missions. It has to do
    with combining with unmanned aerial vehicles. It has to do with
    conducting combined arms training at the company-squad,
    company, battalion, and brigade level.
        So the Active component does more days of training in order
    to develop those more complex entities, where the National
    Guard simply doesn't have the time to do that. If we did, it
    would be like an Active component unit.
        The other thing that's happening here, which--excuse me,
    Senator, because I know you probably want to ask another
    question. But remember, we're taking out all of our
    reconnaissance and surveillance aircraft, the OH-58. We're
    taking the Apaches to replace that. So if we don't do that, we
    will not have a reconnaissance and surveillance capability in
    the Active component. Because of the amount of training it
    takes for us to be proficient at that, that's why we'd like to
    put it in the Active component.
        The bottom line is I would certainly love to have a larger
    capacity of Apaches where I could do both, but I can't. I don't
    have the money. So we had to make a difficult recommendation.
        Senator Manchin. I understand. There's a $43 million per
    battalion difference. So when we're looking at it from cost
    effectiveness, I have not heard when I was governor of the
    State of West Virginia and now in my role as a Senator, from
    anybody in the military that the Guard was not able to perform
    whatever mission you asked when they were in the Active
    rotation. So that's a hard one for us.
        General Odierno. See, it's a time issue. There's nothing
    the Guard can do about it, because they do the best they can
    with the time and resources we give them. But this takes much
    more time. So when we use them we have to give them--we give
    them a lot of----
        Senator Manchin. But you're moving Black Hawks over,
    correct?
        General Odierno. Yes. Again, the integration of Apaches and
    the integration it takes to do that is a bit more complex than
    the Black Hawks.
        The other issue is the Black Hawk much better fits their
    Homeland defense and State missions than the Apache, and it'll
    help them to improve that capability.
        Senator Manchin. If there's a possibility I can sit down
    with you or whoever you would put in that position in front, me
    and my staff would be very happy to be able to work with you.
        General Odierno. I'd be happy to, Senator.
        Senator Manchin. If I can--and maybe, Mr. Secretary, this
    might be directed to you. We talk about the tooth-to-the-tail
    ratio, that it's easy to say how many front-line soldiers and
    how many back office guys. I know we've been right now talking
    about the front line. Are we having the same rapid reduced,
    reduction, as far as our back line as we do the front line?
        Mr. McHugh. Proportionately, yes. You have fewer officers,
    so you obviously proportionately have fewer total numbers. But
    we are very carefully and very closely, principally through the
    G-1, General Howard Bromberg, and our Assistant Secretary of
    Army for Personnel, to try to ensure that we're taking down all
    of our ranks in an appropriate way, so that we have the right
    numbers in the right places.
        It becomes very challenging, particularly when the
    President asked us to try to protect a reversal, a surge if you
    will, which requires us to look very hard at some of the NCOs,
    senior NCOs.
        Senator Manchin. If I may, my time is going to elapse.
        Mr. McHugh. Yes, we're doing, I think, what you would want
    us to do.
        Senator Manchin. Okay. The dovetail to that is going to be
    the last time I think you told me one of the major initiatives
    we have is to diminish significantly the number of contractors
    that we employ. I've had a hard time since I've been here
    finding out what that number really is and how much of a
    reduction you have been able to make towards that reduction. Do
    you have any numbers at all?
        Mr. McHugh. You asked me--then I'll defer to General
    Odierno--last year and I believe the year before what was the
    number of contractors in Afghanistan. I can tell you at the end
    of the first quarter, fiscal year 2014, there were
    approximately 78,136 DOD contractors, of which 70,161 were Army
    contractor personnel.
        Senator Manchin. Then how many men and women in uniform did
    we have at the same time?
        Mr. McHugh. At that same time, the Army boots-on-the-ground
    were about 52,000.
        Senator Manchin. So we have more contractors in Afghanistan
    than we do boots-on-the-ground?
        Mr. McHugh. Our fighting force has generally been less than
    the support force behind it.
        Senator Manchin. How many contractors are still in Iraq,
    sir?
        Mr. McHugh. We're not in Iraq.
        Senator Manchin. I know, but I know we have contractors
    there.
        General Odierno. There are contractors--I don't know the
    exact number, but there are contractors there that are
    supporting the equipment that the Iraqi Government is
    purchasing, and that's by Foreign Military Sales contract.
        Senator Manchin. That means we're supporting that from the
    DOD budget?
        General Odierno. No. That is the dollars they pay.
        Senator Manchin. My final one, just for you, is if you
    could provide me a list--and we've talked about this. We want
    to make your job the best we possibly can. But if we have laws,
    redundancies, things that are strapping you and holding you
    back, no different than any of us that are requiring you to buy
    weapons or buy any other type of support from our States that
    you might not want or need, we have to get serious about this.
        We're asking you--and I really appreciate the military,
    DOD, Secretary Hagel, for truly putting a budget forward that
    tried to address what the new modern DOD would look like. Can
    you give me any list of any laws that you would like to see us
    try to help change that would give you the ability to do your
    job in a much more efficient, effective manner?
        Mr. McHugh. In fact, we're working on that right now.
    Congressman Thornberry from the great State of Texas on the
    House Armed Services Committee has asked a very similar
    question. He has expressed an interest in working with us to
    identify legal and internal regulatory burdens we've put on
    ourselves in acquisition and modernization programs, et cetera.
    So I can't speak for Congressman Thornberry, but we'd be
    thrilled if you'd be an active part of that.
        Senator Manchin. Absolutely, very active.
        I'll finish this up with saying that I know it's very
    difficult when we ask the question for you to be able to tell
    us, okay, I don't need this, I don't need this, and I don't
    need this, and it's being produced in this State and this State
    and this State. But there are some of us here that really care
    about that, and if there's something in my State that we're
    supplying that you don't need and you can show you don't need
    it, I'll be the first to say let's not do it. So I would
    appreciate straightforwardness on that, too, sir. Thank you.
        Mr. McHugh. Thank you, Senator.
        Chairman Levin. Senator Manchin, there are three things I'm
    going to make reference to, that you've raised very
    appropriately. This last issue that you raised, we've met with
    Congressman Thornberry as a matter of fact and Congressman
    McKeon. There's a letter that has gone out, signed by Chairman
    McKeon, Congressman Smith, Senator Inhofe, myself, and
    Representative Thornberry, on exactly this subject that you
    have raised.
        The reason that Congressman Thornberry signed it is he's
    the likely successor to Congressman McKeon. So that's a very
    important subject. We will get you a copy of that letter and
    make a copy of that letter to insert it into the record.
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        Senator Manchin. Since I'm not a likely successor of you--
    --
        Chairman Levin. At some point. [Laughter.]
        Senator Manchin. I do understand that. I just appreciate
    the diligence on this, because I think it's important for them
    to do their job.
        Chairman Levin. It's a very important point you've raised.
        Next, another issue which you've raised is on the Apache
    issue and the question of the Black Hawk and Apache and the
    funding that's involved in that. What we'll need for the record
    is the funding issues on that, the impact of that, because,
    Senator Manchin, we've been told that this is part of an
    integrated aviation restructuring package which saves $12
    billion. So we're all going to need to see exactly how that
    works, what those numbers are, how it's integrated, where these
    alleged savings are, because it's a very important issue. We're
    going to be looking at this----
        Senator Manchin. With a cost of $43 million per battalion,
    sir, and basically I've witnessed and seen the performance of
    the Guard, which has been exemplary. But there is much more to
    it that maybe I don't know. We're willing to sit down and work
    through this.
        Chairman Levin. We all ought to get these numbers, because
    that $43 million saving, which I don't doubt at all,
    apparently, according to General Odierno, is because the
    training is a much more shorter period and it needs to be
    expanded when they're Active Duty. But whatever it is, we're
    all going to need that data, and we need it for the record,
    because I think all of us are going to be looking very closely
    at that issue.
        [The information referred to follows:]

        The Aviation Restructuring Initiative (ARI) generates necessary
    savings by divesting three entire fleets of Army aircraft--the OH-58A/C
    Kiowas; the TH-67 training helicopters; and the OH-58D Kiowa Warriors--
    an overall reduction of 798 aircraft. The net effect of the reduction
    is a 23 percent decrease in aircraft in the Active component, with only
    an 8 percent reduction in the Army National Guard (ARNG). Beyond
    procurement and modernization cost savings, the Army will also avoid
    the significant operations and sustainment costs of these aging
    aircraft fleets. If the ARI does not occur, the costs outlined below
    would be unbearable for the Army under the current budget constraints
    and would risk creating a hollow force, with less overall capability
    and less investment in modernization.
        The ARI will avoid approximately $12 billion in one-time costs. The
    Army will avoid paying for the Cockpit and Sensor Upgrade Program
    (CASUP), the Service Life Extension Programs (SLEP) for the OH-58D and
    the TH-67 training helicopter, and a new training helicopter to replace
    the aging TH-67 fleet. The Army programmed $1.457 billion for CASUP
    between fiscal year 2015 and fiscal year 2019. The breakdown of these
    costs is as follows: $245.01 million in fiscal year 2015; $223.12
    million in fiscal year 2016; $257.22 million in fiscal year 2017;
    $308.32 million in fiscal year 2018; and $423.42 million in fiscal year
    2019. The Army estimated spending an additional $1.9 billion for CASUP
    between fiscal year 2020 and fiscal year 2030. CASUP was a stop-gap
    measure to allow the Kiowa Warrior to be more combat effective until a
    long-term solution for performing the armed aerial reconnaissance
    mission could be identified. There are also many other costs that the
    ARI allows the Army to avoid, which would have been programmed for
    outside of the Program Objective Memorandum fiscal year 2015 to fiscal
    year 2020. Estimates show the Army further avoided additional required
    spending of $6.96 billion on the OH-58D SLEP, $191 million on the TH-67
    SLEP/upgrades, and $1.43 billion on a new training aircraft to replace
    the TH-67 in fiscal year 2020 and beyond.
        Regarding the $43 million savings with National Guard Apache
    battalions, that figure, and the data that supports it, is currently
    under review by the Office of the Secretary of Defense. We anticipate
    that information being available in the second quarter of fiscal year
    2015.
        The Army's attack/reconnaissance battalions are considered low
    density and high demand assets that must be fully trained and ready on
    short notice to deploy for worldwide contingencies and crisis response
    in the wake of major reductions to the Total Army end strength and
    force structure. The divestment of OH-58D Kiowa Warriors and the
    elimination of 3 entire Combat Aviation Brigades from the Active
    component will take Army aviation down from 37 to 20 shooting
    battalions. This necessitates transferring all Apache helicopters to
    the Active component in order to meet the demands of our combatant
    commanders. The Army simply does not have the luxury of retaining
    Apache helicopters in the Reserve component as it is considerably more
    expensive to maintain a sufficient, available inventory of Apaches in
    the Reserve component than it is to do so in the Active component.
    Moreover, it is not possible to produce AH-64s at a rate sufficient to
    replace the OH-58, resulting in a multi-year capability gap if the ARI
    does not proceed. Also, the purchase of sufficient AH-64s would cost
    over $4 billion, in addition to greater annual operations cost of more
    than $340 million.
        When considering the most effective use of limited resources,
    National Guard formations should be optimized with dual use equipment
    and formations that are capable of supporting States and Governors as
    well as combatant commanders when mobilized. We must develop
    complimentary and mutually supporting capabilities. The Army supports a
    multi-component solution for operationalizing ARNG Aviation Brigades in
    non-permissive environments. Under the ARI, each ARNG Aviation Brigade
    will have an Active component AH-64 battalion aligned with them for
    training and deployment. These AH-64 battalions will deploy with an
    intermediate maintenance slice to support AH-64 maintenance and
    armament. This model has proven effective in the past, and in fact, we
    have a National Guard Aviation Brigade deployed to Kuwait today with an
    Active Duty attack battalion attached.
        The ARI was necessary due to severe budget restraints. The ARI is
    designed to achieve a leaner, more efficient and capable force that
    balances operational capability and capacity across the Total Army. The
    low-density, high-demand AH-64 Apaches transferring out of the ARNG
    will be repurposed to replace Active component OH-58D Kiowa Warriors
    that are being divested. The transfer will enable the teaming of
    Apaches with unmanned aircraft systems for armed reconnaissance,
    filling a critical capability need for an Armed Aerial Scout created by
    the elimination of the Armed Reconnaissance Helicopter program. In
    addition, consolidation of Apache airframes in the Active component
    will enable the Army to better meet the operational demands of our
    combatant commanders due to the increased operational availability as a
    result of the reduced dwell times required in the Active component. The
    ARNG will receive additional UH-60 Black Hawk helicopters to optimize
    the ability to perform its mission in the Homeland and deploy in
    support of combat operations.
        The ARNG was involved in the development and staffing of the
    aviation restructure plan during the entire process. The ARNG was
    directly involved as early as February 2013 and had planners present
    during the development of specific details of the ARI. It is important
    to note that under the ARI plan, the regular Army, ARNG, and the U.S.
    Army Reserve all retain combat aviation units. The UH-60 Black Hawks
    and the CH-47 Chinooks, which are in all Service components, accounted
    for the majority of hours flown in a combat environment during
    Operation Enduring Freedom and Operation Iraqi Freedom.

        Chairman Levin. Thank you very much, Senator Manchin, for
    raising that issue.
        Senator Vitter.
        Senator Vitter. Thank you, Mr. Chairman.
        Thanks to both of you for your service, and certainly my
    thoughts and prayers and condolences go out to all of the
    victims' families at Fort Hood, as do all of ours.
        General, you have consistently testified that the minimum
    in your opinion to maintain any sort of adequate readiness for
    the Army is a 450,000 Active component, correct?
        General Odierno. That's correct, Senator.
        Senator Vitter. That is still, as I understand it and as
    you have identified, the lowest level in terms of Army
    readiness since 1940; is that correct?
        General Odierno. The lowest number of soldiers. I have not
    said that, but that is, in fact, true.
        Senator Vitter. I believe you have also said that that
    meets our minimum readiness requirements, but with a ``fairly
    high level'' of risk; is that correct?
        General Odierno. That's correct, Senator.
        Senator Vitter. In your Army career, have you ever lived
    through a similarly fairly high level of risk?
        General Odierno. I would say that my assessment is based on
    the uncertainty in the world and the fact that we're not sure
    when we'll be able to respond. I do have some concerns about
    the readiness of our force, especially over the next 3 to 4
    years as we're transitioning in losing end strength, and that
    our readiness is decreasing. So I have some concerns.
        What keeps me up at night is will I have enough soldiers
    properly trained and ready to deploy if they are asked to do
    that?
        Senator Vitter. I'm not trying to push you in any corner.
    I'm just asking, that fairly high level of risk, have you
    experienced that before in your Army career to the same extent?
        General Odierno. No.
        Senator Vitter. Okay. In light of this, General, can you
    speak to the benefit, necessity in my opinion, of maintaining
    our Joint Rotational Training Centers (JRTC) and the benefit
    they provide?
        General Odierno. They are absolutely essential to what we
    are trying to do now as we rebuild our readiness to operate and
    conduct decisive action and do combined arms capability and
    rebuild that in our force. The way we do that is centerpiece
    our CTCs, specifically the National Training Center at Fort
    Irwin and the JRTC at Fort Polk.
        Those are critical to our strategy moving forward and our
    training. We are investing in them. They will be the ones who
    certify and conduct and ensure that our BCTs and enabler
    packages are trained in order for us to be prepared for future
    conflicts. They are critically important to us.
        Senator Vitter. Great. Thank you, General. I assume it's
    fair to say the nature of their training is particularly
    important and well-suited to the types of conflicts we face
    today?
        General Odierno. We have, in fact, developed the scenarios
    there that I believe best represent not only the conflicts of
    today, but the conflicts we will face in the future. It's a
    challenging leader development place where our leaders learn to
    think and adapt to current and future operations that are
    absolutely critical to us as we look forward to our success.
        Senator Vitter. Thanks, General.
        General, we just went through, of course, a programmatic
    environmental analysis and assessment for basically cuts,
    reductions, in the Army. That was very recent. Given that
    deliberative and rigorous process the Army just went through,
    will the Army use the same, fundamentally the same, process,
    the same metrics, the same considerations, in the next round of
    analysis?
        General Odierno. Yes. We did that analysis to get us down
    to 490,000. As we continue to reduce the size of the Army, we
    will do the same analysis. The Secretary and I, although we
    have to have further discussion--I think he probably should
    comment as well--we believe the criteria used were pretty good
    the first time.
        Mr. McHugh. We, in fact, have issued the programmatic
    environmental analysis stage 2 to the bases, and we're
    beginning the process of collecting data. Part of that,
    frankly, is because as we've talked in a number of occasions
    this morning, sequestration remains the law of the land, and if
    we have to go down to the 420,000 that the Active component
    would be directed toward under that, under the BCA, we have to
    know exactly where the structure and force lies so that we can
    make the best decisions we can.
        As the Chief said, the requirements and the determinations,
    the inputs, that we used the first time seemed to work pretty
    well. So we'll remain flexible, but those are pretty much the
    tracks that we remain on.
        Senator Vitter. So again, Mr. Secretary, not to prejudge
    anything, but the basic analysis, the basic metrics, the basic
    tests you used the first time, will continue?
        Mr. McHugh. Basically. But again, you come to different
    conclusions as your numbers change.
        Senator Vitter. Yes, I'm not saying where that leads. I'm
    just saying the basic criteria and metrics should be the same;
    is that fair to say?
        Mr. McHugh. It is fair to say. It's also fair to say that
    at that point, should we make additions or deletions or
    whatever, that obviously would be part of the public record and
    we'd allow people the opportunity to make comment on it.
        Senator Vitter. Okay. Just a last question. The DSG clearly
    states that risk should not be taken in the capability to
    rapidly respond with ready forces, but rather risk should only
    be accepted in the ability to sustain large-scale ground
    operations and the regeneration of forces. General and Mr.
    Secretary, in terms of this fairly high level of risk you admit
    we're accepting at 450,000, is it limited to that ability to
    sustain large-scale ground operations versus to rapidly
    respond?
        General Odierno. I think the risk that we have is not for
    rapid response. The risk over a couple years is readiness,
    because it takes time to catch up as end strength reduces and
    the investment we have in readiness and modernization to catch
    up. Where the risk comes into play again is in the size, and if
    we have to do multiple contingencies, which is what the DSG
    requires, it really has to do with the size plus the readiness.
    We will still have the rapid deployment capability, but our
    ability to do a major contingency and another one clearly is at
    risk based on the size and capability that we have inside the
    Army at a lower level.
        Senator Vitter. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Vitter.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        Mr. Secretary, General, on behalf of everyone in Indiana,
    our sympathies to the entire Army family, to those who were
    injured, and to those who lost their lives. Please know our
    thoughts and prayers are with all of you in the Army family.
        Mr. Secretary, DFAS, the headquarters is in Indiana. I know
    how hard those folks work, the excellence and quality of their
    work, the pride they take in it and in serving their country. I
    would just ask you that you keep us in the loop and keep us
    informed as you move forward in the DFAS process. We would
    appreciate making sure that you keep us in the loop, and I know
    you will do that.
        Mr. McHugh. Absolutely, Senator. As I said to Senator
    McCaskill, that's a very reasonable request. I would just note
    again, it's not our intent to, nor do we control the structure
    and the processes of DFAS. But rather, we're just trying to
    ensure within the Army we're doing what we control as well as
    we can.
        Senator Donnelly. Understood.
        I was with Senator Ayotte when we were in Afghanistan and
    Ukraine recently, and part of the discussion was about the
    equipment that's leaving Afghanistan. While we were in Ukraine,
    the defense minister, prime minister, was talking to us about
    how desperately they need almost everything--communications
    equipment, other equipment. I was just wondering if there has
    been any discussions about whether there's a match-up between
    some of the things that are heading out that we have in excess
    and the needs of friends like Ukraine and other places in
    Eastern Europe.
        General Odierno. Senator, what we do is, we have identified
    excess property, as you very well know. What the process is we
    identify that. That is available for other nations. They have
    to request it and they request it to our government, and then
    we would make decisions and then provide that equipment. So we
    have identified all of that excess equipment. Any country can
    ask for that equipment.
        The issue becomes if they have to fund it themselves or if
    we gift it, but that's a decision that would be made based on
    the request that is presented to us. But we certainly have that
    list of equipment that anyone is welcome to look at and let us
    know. We have not been asked so far to specifically look at
    whether Ukraine could use some of that equipment.
        Senator Donnelly. The reason I mention it is because, in
    effect, they said they've basically been stripped of almost
    everything they had. Their navy was taken from them. So they
    have in their conversations with us, told us how much they
    appreciate the friendship, how much they look forward to
    continuing to work with us, and how much they look at the U.S.
    Army as a model for where they'd like to be at some point in
    the future.
        One of the areas that I have been working on a lot over the
    past few years is the Joint Improvised Explosive Device Defeat
    Organization (JIEDDO), the impact JIEDDO has had trying to
    figure out fertilizer formulas that are non-explosive, trying
    to figure out how we can have our young men and women come home
    without one more Improvised Explosive Device (IED) occurring.
    JIEDDO is going to a smaller footprint. I just wanted to ask
    what your plans are as you look at this, so that we're not in a
    place where we're back to zero in effect and have to start and
    ramp up all over again.
        What are your hopes for JIEDDO and what are the
    continuances that you plan to have with it?
        General Odierno. First, as we went through this process of
    looking at the future JIEDDO, we all agree the Army--I'll speak
    for the Army. The Army specifically agrees that we need JIEDDO
    to sustain itself, because the threat of IEDs is not going
    away. They are becoming more complex, they're becoming more
    sophisticated. We need a process that allows us to constantly
    look at this, so we can develop the TTP, and use the technology
    necessary for us to continue to move forward.
        So, we absolutely agree with that. We also in the Army have
    established the Asymmetric Warfare Group in Training and
    Doctrine Command (TRADOC) that will connect to JIEDDO and help
    us to help them to identify future threats and development
    systems. So for us it's critical for the way ahead.
        We agree that it should remain under DOD. We think that's
    the best place for it because then they can resource it through
    all the different capabilities that the Services have, because
    this is not a single-Service issue. It is a multi-Service
    issue.
        Senator Donnelly. You have as the Army taken such a
    significant lead in this effort to defeat IEDs. I remember some
    years ago when, Mr. McHugh and I were both Congressmen, that I
    had a constituent whose son was over there. He ran his own
    machine shop and he spent a month and a half--basically, he
    told all his customers, I'll get back to you when I can--create
    an extender on a vehicle so it could catch a tripwire, that was
    30 feet, 15 feet, 5 feet in front. He said: ``Look, if I can't
    get somebody else to do this, I want my son to come home
    safe.'' He said: ``I came up with this all on my own at
    night.''
        Those are the kinds of things that JIEDDO has been able to
    help improve on, develop, take 10 degrees further. So we
    certainly don't want to lose the capability that we have there.
        When we look at the mental health screening that's going on
    and the challenges that we face in that area, do you think
    there's a way to try to have more mental health screening tools
    associated with the periodic health assessment that goes on
    every year?
        Mr. McHugh. We're always looking, as I mentioned a number
    of times this morning, for ways in which we can do things
    better. The challenge we face, particularly as we look at what
    occurred just yesterday at Fort Hood, is that we are doing
    everything we can to destigmatize in the soldier's mind the
    reaching out for help before it becomes a larger problem. We've
    really increased our behavioral health encounters within the
    Army by over 900 percent.
        We view that as positive. Folks are reaching out more.
    They're asking for help more voluntarily. But then sometimes
    things happen like what happened yesterday that we fail to
    understand.
        We have for a deploying soldier five discrete behavioral
    health touch points: 180 days prior to deployment, within 90
    days of when they get to theater, 30 days after redeployment,
    90 days after redeployment. Then for every soldier, regardless
    of your deployment status, we do a behavioral health assessment
    each and every year.
        So we're trying to keep as close a watch on our soldiers as
    we can. But clearly we believe there are more things we can do
    to identify problems in the more discrete stages of their
    development, try to get soldiers added help where under our
    current tool kit it may not be so obvious.
        Senator Donnelly. I'll finish with this. On that trip we
    also met with the Israeli Defense Forces. One of their folks in
    this area said what they also try to do is have their platoon
    leaders--they push it down, so that they can help, give them as
    much training as possible, so when they look they can try to
    pick something up, see something that's a little out of normal
    and report it back up. I would hope we would take a look at
    that.
        General Odierno. Absolutely the key. We've now put
    behavioral specialists into brigades. We didn't have that
    before. So we've now done that.
        Here's the biggest problem we have, and really it's a
    dilemma. The problem is sharing information and how you protect
    an individual's rights with sharing information so the
    commanders and the people at the lower level understand that
    maybe there was a previous problem. The Secretary and I are
    really doing the best we can to come up with processes that
    allow us to share information, because in a lot of cases that's
    the problem. We're much better at it, but there are some
    limitations to what we can do and we're trying to do the best
    we can.
        That's one thing I think we should try to work together on,
    is how we can better share information so that the chain of
    command, as you have said, has the ability to really understand
    when soldiers are having problems. To me, that's the thing we
    have to focus on.
        I would just make one other comment--I know we're over time
    and I apologize, Mr. Chairman--is that the other thing is
    behavioral health--we have invested a lot in the Army, but
    there are just some times when they don't want to have it in
    the Army; they want to be off post. We have to look at how we
    provide behavioral health off post and how we're able to do
    that and the funding that allows them to do that properly. It's
    a combination of all of those things, I think, that would
    really help us in this area.
        Senator Donnelly. Thank you both. Again, our sympathies to
    the entire Army family.
        Chairman Levin. Thank you, Senator Donnelly.
        Senator Sessions.
        Senator Sessions. Thank you.
        Thank you all, and our hearts and prayers go out to those
    who suffered loss in the Army family at Fort Hood and the whole
    Army family.
        Mr. Secretary, thank you for your leadership. You've been a
    candid and effective leader, I believe.
        General Odierno, it's a pleasure to have you here again. I
    remember visiting you when you were doing some of the best work
    ever was done in Iraq. It was a very tough time and
    professionals credit you with changing the ground, the actions
    on the ground, in a way that was positive for America. I
    couldn't be more proud of you and your Service.
        I am a supporter of DOD. I believe that it has been
    disproportionately squeezed in our budget process. But I am not
    unaware that Admiral G. Mullen, USN, a former Chairman of the
    Joint Chiefs, told us that the greatest threat to our future is
    the debt. We're told, Secretary McHugh, by the Congressional
    Budget Office (CBO) a few weeks ago that this year we paid $211
    billion in interest on our debt this past year, and it will
    rise to $880 billion 10 years from today.
        That's an annual increase in expenditure of our
    government's discretionary spending by $650 billion. I believe
    we need to maintain a vibrant, effective, mobile, hostile
    military. But all of us, I think, acknowledge do we not, that
    it means tightening belts and seeing how we can do those things
    at lower costs. I know you've been working toward that end and,
    in fact, have made progress.
        But you accept that notion, do you not?
        Mr. McHugh. I don't disagree with a word that then-Chairman
    Mullen said. I think from DOD's perspective we are not just
    willing, we're anxious to do our part. We went through a first
    round of $487 billion worth of cuts, and then came in in a
    second round of some $500 billion worth of cuts.
        The thing that worries us now is not just the size of those
    cuts, which becomes very sizable under the BCA, under
    sequestration, but the rapidity, the rapid nature of the
    implementation of them. So we want to do our part and we think
    we are. But there does come a point beyond which national
    security becomes----
        Senator Sessions. I agree. I don't believe 420,000 is
    sufficient for the Army. But I don't know why we'll have to go
    there. I'm going to have to be shown that, because I'm ranking
    on the Senate Budget Committee and we are wrestling with these
    numbers. You have to know, I know you know, the President will
    not allow any additional money for DOD unless he gets an
    additional equal amount increased to non-defense discretionary.
    This doubles the cost of any relief to the military.
        The Ryan-Murray bill this year did help. I know you agree.
    So what I can't understand is this. You've said and, General
    Odierno, you noted, that in fiscal year 2016 it kicks in again.
    But this is the way I read the funding levels. This year we're
    at $496 billion, is that correct, for DOD? Do you have that
    number?
        Mr. McHugh. I deal in Army numbers.
        Senator Sessions. I'm sure that's true, and another thing,
    we want to be sure the Army is fairly treated as you work
    through this process.
        But my understanding is, the numbers I have, we are
    spending $496 billion for DOD this year. Next year, 2015,
    defense will get $498 billion. The next year, in 2016, it will
    remain flat again basically, but it goes to $499 billion. But
    the next year, 2017, it jumps $13 billion to $512 billion; and
    increases $13 billion each year for the next 5 years. That's
    under the soldier, under the BCA. There are not further cuts.
    Staying flat at a time of low inflation, even low inflation, is
    somewhat squeezing of your budget, I acknowledge.
        But in the years to come, we're showing growth that
    actually exceeds CBO's projection of inflation. Am I wrong
    about that?
        Mr. McHugh. I don't have the DOD figures in front of me.
    But as you know, Senator, the Army has already experienced
    significant cuts. We're coming down from a high of $144 billion
    in our base budget in fiscal year 2010 to $121 billion roughly
    in the fiscal year 2015 BBA. Even at a flat line, our costs
    don't flat-line.
        Senator Sessions. Let me ask you this. How are you
    functioning this year? How many soldiers do we have this year,
    2014?
        General Odierno. As we stand right now, we're about 522,000
    soldiers. We're not functioning, Senator. That's the issue. We
    are not. We are not ready. We are not funding our training. We
    had to cut significant modernization programs. We're not
    functioning.
        Senator Sessions. I understand that. But if you reduce from
    512,000 to 450,000, that would be 60,000 soldiers. If the other
    parts of DOD are tightening their belts, I just have to be
    convinced that we're not able to sustain ourselves at a steady
    growth rate.
        There's a predictability. If the BCA is not changed, there
    is predictability. We are flat for 2 more years and then we
    grow at 2.5 percent a year for 5 years. So you have a certain
    predictability there.
        I don't want to see the Army disproportionately cut. The
    danger to me always was this year, and Ryan-Murray helped,
    because if we hadn't fixed the problem this year we'd have been
    in a real fix. It would have really done it.
        General Odierno, my time is up, but I'll let you explain.
    Isn't it true that the problem you're facing right now is
    you're having to make decisions to reduce costs that really
    won't pay off until the out years, and you have an additional
    burden on you right now to keep this Army under control and in
    a positive way?
        General Odierno. That's correct. We were not able to--
    because of operational commitments and other things we're doing
    now, we can't balance ourselves down the road. That's exactly
    the issue. With sequestration, we really don't come in balance
    until fiscal year 2020.
        Mr. McHugh. If I may, there is also another consideration
    that goes beyond the base budget, Senator. At the height of
    funding, we in the Army received $121 billion in fiscal year
    2007 for wartime operations, Overseas Contingency Operations
    (OCO). Those are coming down dramatically as well. For example,
    in last year's agreed-upon budget there were some $3 billion of
    base operations costs that the Army incurred that this Congress
    allowed us to pay out of OCO. So those are tens of billions of
    dollars that obviously when we come out of Afghanistan, while
    we hope we can receive 3 years for reset purposes, that money
    is gone too.
        Senator Sessions. We were told last year that you were
    having to take base money for OCO. Did that happen? Did you
    actually have to use some of your base money?
        Mr. McHugh. No. In fact, at the end of the day when OCO was
    approved, in fact, Congress allowed us to pay for some of our
    base expenses out of OCO.
        Senator Sessions. Good. I was afraid.
        Mr. McHugh. It's good until the money goes away, and then
    you're stuck with base operation expenses without the funding
    to pay for them.
        Chairman Levin. Thank you, Senator Sessions.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        Thank you both for being here and thank you for your
    service and to your families for theirs in supporting the great
    work that you do. I would like to join many of my colleagues in
    expressing my deepest sympathies and concern for the Fort Hood
    community and most particularly the families of the victims in
    that shooting. Certainly this experience shows that no part of
    our country, no place, is immune from gun violence, and whether
    it is a small school in Sandy Hook, CT, or an urban community
    in New Haven or one of the great military installations in the
    world, Fort Hood, everybody shares in the tragedies that
    needless and senseless gun violence causes in this country
    today.
        This experience, I think, also shows, as a number of my
    colleagues have observed, the importance of mental health care.
    Obviously, in this instance an investigation is ongoing. I'm
    not going to ask you to comment on that investigation or this
    particular individual. But one of the questions that I've been
    asked in these brief hours since this tragedy is whether there
    is sufficient screening--put aside the health care issue, which
    is preeminently important. Is there enough screening of
    individuals to know whether they are dangerous?
        General, I know you've thought a lot about this issue and
    you've commented here. Perhaps you can make some observations
    on it.
        General Odierno. Screening--first off, in fact, in this
    case the individual was screened, was receiving counseling. So
    in a lot of ways the system worked. But obviously it didn't
    work completely, because in the end he made some decisions that
    obviously cost other people their lives.
        The amount of behavioral health and the screening that we
    do and how often we do it has increased significantly over the
    last 5 years, especially with the help of Congress to help us
    in giving us the ability to do that. We have increased by 150
    percent our behavioral health specialists. We have made some
    really good progress here.
        But again, ultimately, as I said earlier, one of the issues
    we run into all the time is the sharing of information, trying
    to protect individuals' rights, but also trying to ensure that
    we are providing them with the help necessary. We also,
    obviously, continue to combat the stigma of coming forward with
    behavioral health issues. Those are the things we have to
    constantly and continually focus on.
        We do quite significant screening today, but it doesn't
    mean it's right and it doesn't mean we can't improve it. We
    have to constantly evaluate this. This is something that we're
    going to have to deal with for a very long period of time, and
    that's the consequence of 13 years of war. We're going to have
    to make sure that we have the systems in place to do this.
    We'll have to do constant evaluations of this.
        Mr. McHugh. May I add, Senator?
        Senator Blumenthal. Please.
        Mr. McHugh. First, I'd like to, if I may--I believe I may
    have misspoke earlier. I said our behavioral health encounters
    in the Army have increased by over 900 percent. I got
    enthusiastic there.
        Senator Blumenthal. I was going to ask you about that
    number.
        Mr. McHugh. It's over 90 percent, still significant, the
    baseline being about 900,000, to almost double that. So we view
    that as a positive thing. As the Chief said, that's in no small
    measure due to the efforts we've made to bring on board
    significant increases in behavioral health specialists, provide
    them at a lower level so people feel more comfortable going
    forward.
        The challenge I think we have, as we discussed earlier, is
    ensuring that we have the best possible tools to identify
    problems after those encounters and those assessments occur. We
    do pre-deployment, just prior to post-deployment, periodic at
    30 days and at 90 days after deployment, behavioral health
    screening face-to-face, to try to make sure we see problems
    that may be emerging. Thereafter, every soldier is screened
    each and every year.
        Clearly, we may have missed something yesterday. We need to
    work very hard to understand what that might have been, and if
    we can learn a lesson and improve the process, that's what we
    want to do.
        Senator Blumenthal. I appreciate the comments that both of
    you have made. I have no question about your determination to
    improve and upgrade this system, which has bedeviled police
    departments and all kinds of other organizations with a
    similar, not the same but a similar, mission that deals with
    firearms and the challenges that you do in even higher impact
    situations. I don't minimize the challenges that you face.
        I would respectfully suggest, since you mentioned earlier
    the call that you received from General Shinseki, that part of
    the strategy has to be to increase the compatibility of
    records-keeping. We have dwelled on this at length. I am sorry
    to once again belabor this point, but the sooner and better we
    can make those records systems completely interoperable and
    make the health care system completely seamless, the better it
    will be. I just want to emphasize that point as strongly as I
    can.
        If I may ask a question, since my time is very limited,
    about the Army Aviation Restructure Initiative. I understand
    from my National Guard units--and this concerns me as head of
    the subcommittee that has jurisdiction--that under the Aviation
    Restructure Initiative, Black Hawk helicopters will be
    transferred from the Active component to the National Guard in
    very substantial numbers. The National Guard has expressed
    concern to me that they will receive older A&L model Black
    Hawks instead of the new M model, which would as a result
    require significant and right now nonexistent financial
    investment to modernize that force.
        Is it true that the Guard will be receiving the A&L model
    aircraft?
        General Odierno. There won't be any As.
        Senator Blumenthal. No As?
        General Odierno. No As. There will be a combination of L&Ms
    that they receive from the Active component.
        Senator Blumenthal. Is there a plan to provide additional,
    even more modern Black Hawks?
        General Odierno. Over time, because they have a higher
    percentage of our UH-60s now, as we continue to modernize the
    fleet they will become more modernized, just like the Active
    component. The Active component has Ls and Ms as well.
        Senator Blumenthal. Right.
        General Odierno. It will be the same level of
    modernization. That's what we like about it, because actually
    it increases our modernization levels over the long run.
        Senator Blumenthal. Thank you.
        I very much appreciate your testimony and thank you again
    for your service.
        Chairman Levin. Thank you very much, Senator Blumenthal.
        During the Wounded Warriors Act, in that Act we had a lot
    of provisions relative to increased interoperability, and you
    raise a very critical question. We're going to ask for the
    record an update on the interoperability of these records,
    because it's critically important. We thought we had really
    taken a major step and maybe we did, hopefully, with the
    Wounded Warriors legislation towards that goal. So we'll ask,
    Mr. Secretary, if you can give us an update on that question
    that Senator Blumenthal raised.
        Senator Blumenthal. Thanks very much.
        Mr. McHugh. For the record?
        Chairman Levin. For the record.
        Mr. McHugh. Yes, we can do that, DOD and VA.
        Chairman Levin. We'll ask both VA and DOD to give us that.
    As a matter of fact, this will be a good test. We'll ask you
    with General Shinseki to give us a joint report.
        Mr. McHugh. Me personally? Not DOD, the Secretary of
    Defense?
        Chairman Levin. I'm talking about the Army, have the Army
    and VA give us a joint report signed by both of you on this
    question. That'll tell us something about interoperability.
        Mr. McHugh. You're the chairman.
        Chairman Levin. I'm sorry. I'm corrected. It should be DOD.
    Can you pass along our request to DOD, or shall we make it
    directly?
        Mr. McHugh. I'd be happy to.
        Chairman Levin. All right. We'll make it directly too, to
    take you off something of a hook on that.
        Senator Blumenthal. If I may just add, Mr. Chairman, with
    very sincere thanks for that suggestion, that it be done within
    the next month. I don't want to put time pressure on you and I
    know I'm a little bit out of line in amending Chairman Levin's
    suggestion.
        Chairman Levin. No, not at all, not at all.
        Mr. McHugh. I can't speak for DOD, but obviously this is
    something they've been working on very diligently. Secretary
    Hagel immediately picked up the challenge from Secretary
    Panetta. So I'm sure they'll do it as quickly as they can.
        Chairman Levin. We will pass that directly to the Secretary
    of Defense and send you a copy so you can follow what we're
    doing.
        Mr. McHugh. Thank you very much, sir.
        Chairman Levin. Thank you very much.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Levin. Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        To both of you and the Army family, I think all of us are
    heartbroken with Fort Hood going through this thing twice. The
    whole Nation is thinking about the Army today and particularly
    those at Fort Hood.
        As we move forward dealing with this problem, General
    Odierno, do you think the 1992 DOD regulation prohibiting
    personal possession of firearms on installations should be
    revisited? What's your view about one way to deal with attacks
    like this is to have installations where people are armed and
    can fight back? What's your view of that?
        General Odierno. I believe that we have our military police
    and others that are armed, and I believe that's appropriate. I
    think that I believe that that allows us the level of
    protection necessary.
        Although we carry arms quite regularly overseas when we're
    deployed and do it on a regular basis, I believe back in the
    United States it's more appropriate that we leave it to that,
    sir.
        Senator Graham. I would just ask you to keep an open mind,
    because in a deployed environment, everyone has a weapon. It's
    a pretty stressful place in Iraq and Afghanistan, and I think
    people have been responsible in the military. I remember my
    last visit to Afghanistan that you could not be served chow
    unless you presented your weapon. I think the reason is you
    want everyone to have their weapon because of the insider
    threat; is that correct?
        General Odierno. That's correct, sir.
        Senator Graham. I think our military at home is very much a
    target of terrorism, but also this seems to be more of an
    individual who had a hard time coping. Major Hasan clearly to
    me was an act of terrorism. I think you can expect more of this
    back here at home.
        I just talked to Attorney General Holder and he said home-
    grown terrorism--and I'm not saying this was; it apparently
    wasn't--is getting to be a bigger threat. We've had several
    soldiers killed, one at a recruiting station--outside, in New
    Jersey.
        I just hope you'd revisit this policy, because I think our
    military members are very responsible with firearms and we need
    to really look at having more capability, not less, to deal
    with insider threats.
        Now, as to the size of the Army, I know we have a $17
    trillion budget deficit. Admiral Mullen said something that got
    a lot of attention: ``The biggest threat to our national
    security is our deficit.'' There's some truth to that, but I'm
    not so much worried about our deficit blowing up the country as
    I am terrorists. I don't think people in South Carolina are as
    safe as they could be, given sequestration.
        You have said very eloquently, General Odierno that, ``I
    began my career in a hollow Army; I do not want to end my
    career in a hollow Army.'' If sequestration is allowed to
    continue beginning in 2016, will we have ended that career in a
    hollow Army?
        General Odierno. From today through 2020 or so, until we
    get rebalanced based on taking the end strength to a level, our
    ability to sustain a level of readiness and modernization, I
    believe, begins to hollow the Army out.
        Senator Graham. So the answer would be, yes. Thank you for
    your honesty. I think every Service Chief has told us that. I
    hope we will act responsibly.
        Now within reason, knowing that money is always an object,
    would you agree that our military is being positioned based on
    budget concerns more than threat concerns, given sequestration?
        General Odierno. It's clear to me we've developed the DSG,
    which was before sequestration. Sequestration does not allow us
    to meet that DSG. We're driving down structure based on budget.
        Senator Graham. Right. The world's just not safer. That's
    not why we're cutting the budget. We just decided for some
    reason to cut the budget in spite of the growing risk.
        Within reason, what would be the appropriate size of the
    Army? If you can't give me an answer today, think about it,
    given all the threats that are reasonable that we're facing,
    and see if we can build a budget to support the Army based on
    the threats to the Nation. Do you have any ballpark figure?
        General Odierno. I do. I'm on record. I'll repeat what I've
    said in the past. I believe in order to meet--I testified last
    year and the year before that in order to, at moderate risk,
    which I think is reasonable, a force of 490,000, 350,000, and
    202,000 in the Reserve component is appropriate for that.
        Senator Graham. Let's say that we wanted to accept some
    risk, but less than moderate. What would you do?
        General Odierno. Then I would say--I believe the floor is
    450,000, 335,000 in the Guard, and----
        Senator Graham. No, I want to go the other way. I want to
    have a budget that gives us minimum risk.
        General Odierno. I see.
        Senator Graham. Call me old-fashioned, but I think that's
    the number one job of the Federal Government.
        General Odierno. I have not thought my way through that.
    But for many years most of us believed that the right size of
    the Army is somewhere around 500,000 to 520,000.
        Senator Graham. That would be the optimum Army given what
    we face as a Nation?
        General Odierno. Right.
        Senator Graham. Could you tell me the difference in terms
    of cost, not today but over time--you don't have to do it
    today--between high risk, moderate risk, and the optimum Army?
        General Odierno. We can lay that out for you.
        [The information referred to follows:]

        We consider 1,084.2 thousand soldiers an ``acceptable risk'' Army.
    This force would be comprised of 520,000 Active component soldiers,
    358,200 Army National Guard soldiers, and 206,000 U.S. Army Reserve
    soldiers. In fiscal year 2015 dollars, the Army would require
    approximately $137 billion per year to maintain this force.
        In terms of a ``moderate risk'' force, we would require 1,045.2K
    soldiers, consisting of 490,000 Active component, 350,200 Army National
    Guard, and 205,000 U.S. Army Reserve. This would cost about $132
    billion per year.
        Finally, a ``significant risk'' Army would consist of 980,000
    soldiers, including 450,000 Active component, 335 Army National Guard,
    and 195 U.S. Army Reserve. The cost to maintain this force would be
    about $125 billion per year.
        The estimates include the following components: manpower costs
    (additional Active component, Army National Guard, and U.S. Army
    Reserve personnel including full-time support personnel for the Reserve
    component); modernization costs (additional procurement only for the
    units' associated equipment such as joint light tactical vehicles,
    radios, and night vision equipment); installation costs (incremental
    base operations services costs for increases in supported populations
    and costs for surges in training activities); sustainment costs
    (incremental cost of depot maintenance for equipment associated with
    the additional structure), and compensation reform (these estimates
    also include significant compensation reforms that, if not enacted,
    would increase the costs by $4 to $5 billion per year).

        Senator Graham. What I want the committee to look at is in
    terms of our budget deficit, how much if we went to the high
    risk, could we remotely balance the budget? I think the amount
    of money involved is going to be within our power to gather if
    we could replace sequestration.
        Now, about the A-10. The A-10 is being retired because you
    have to make hard choices budgetwise, is that correct?
        General Odierno. That's what I believe. That's why I
    believe the Air Force is doing it.
        Senator Graham. The F-35 comes on line, if everything goes
    perfectly, in 2021, I believe; is that correct?
        General Odierno. Around that time.
        Senator Graham. So for $3.5 billion we could keep the A-10
    in the inventory for a few more years and wouldn't have a gap.
    Does that make sense?
        General Odierno. I would just say it would allow us to keep
    the A-10 for that amount of money. That additional money would
    allow the Air Force to make a decision to keep the A-10, but
    that would be, obviously, up to them.
        Senator Graham. Do both of you still believe that military
    commanders should bear the responsibility for dealing with
    sexual harassment problems in the military?
        General Odierno. Absolutely, Senator.
        Mr. McHugh. Absolutely.
        Senator Graham. Mr. Secretary, do you think we're on the
    right track of getting a handle on this problem?
        Mr. McHugh. I think as we look at the kinds of indicators
    that we normally use to track these reports particularly have
    grown significantly. We view that as positive. As an internal
    to that, a good number of those reports are for years where
    something happened before the soldier--usually a female but not
    always--even joined the military. That shows us they have
    increasing confidence.
        We obviously have a long ways to go. None of us are ready
    to declare victory. The Chief and I focus on this every day. We
    had a meeting just last week, a rally in DOD to kick off Sexual
    Awareness Month, the month of April. In everything we do and
    say, including our published priorities, sexual assault and
    harassment is my number one priority. I know that everyone in
    the Army believes that and is working on it.
        Senator Graham. Thank you.
        My time is up, but in 10 seconds, General Odierno, could
    you tell us what happens if we get Afghanistan wrong? If it
    falls apart, what's going to come our way?
        General Odierno. As I said, I mentioned earlier, ungoverned
    territory or instability will allow those to exploit that,
    elements such as al Qaeda and others, which would then allow
    portions of Afghanistan and any other area that's ungoverned
    and not properly secure to threaten the United States. That
    remains a concern.
        Chairman Levin. Thank you. Thank you, Senator Graham.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman, and thanks to the
    witnesses for this important testimony today.
        I'm going to ask a question about the long-term stress on
    the Army of 13 years of war. We see these shooting incidents,
    two at Fort Hood, one at the Navy Yard, one in Virginia
    recently at Naval Station Norfolk. They pose some mental health
    challenges. They pose base security challenges. When we hear
    the testimony about sexual assault in the military, when we
    hear testimony about military suicides--General Amos was here a
    couple of weeks ago talking about instances where marines acted
    in disrespectful manners that he's having to deal with.
        I view all these issues as connected to potentially--
    they're organizational stress issues. We've not had a war
    that's been 13 years of continuous warfare before. Talk to me
    about long-term stress of 13 years of war and the effect that
    you see in the Army and what we need to be doing to deal with
    that, please?
        General Odierno. Thank you, Senator. Obviously, in the Army
    we've had 2.4 million deployments. Some are multiple
    deployments, but 2.4 million soldiers have deployed to Iraq and
    Afghanistan over the last 13 years. 500,000 of those have
    deployed multiple times. What that means is there is stress on
    the force, stress on families. There's stress on individuals.
    It's the first time we've done this with an All-Volunteer Force
    and we have to understand this.
        This is one of the things--so what are we seeing? We're
    seeing increased alcoholism. We're seeing--we had an initial
    increase in divorce rates. That settled down. We're seeing an
    increase in those who have behavioral health issues that we
    have to help them with. That's the cost of this.
        One of the things I don't talk a lot about when we talk
    about risk, though, is as we make it smaller, in the future if
    we have to deploy these forces, it's going to put a significant
    risk on them because of the pure numbers. That's one of my
    worries, and that's one of the risk calculations I make, is
    what's the impact this reduction has on a smaller force and
    what will be the impact on our leaders and our soldiers.
        We don't talk a lot about the impact this has on our
    leaders. Our leaders are the ones who have multiple, multiple
    deployments and have the stress of leading, and they've handled
    it incredibly well. But they also have stress on them as well
    as we move forward. We have to consider all of this in the
    future. We have to have programs in place to deal with it. We
    have to make sure we understand this as we continue to develop
    the Army, and we have to consider that as we adjudicate risk
    for the future force.
        Senator Kaine. In this time of really unprecedented, in the
    sense that we don't have a historical precedent of a 13-year
    war, unprecedented stress, we ought to be doing what we can to
    make it easier. But wouldn't you say sequestration, budget
    uncertainty, that's a pretty significant additional stressor on
    top of a stress that is already an unprecedented one?
        General Odierno. I agree, Senator.
        Senator Kaine. I just have to say, I don't know exactly the
    context under which Admiral Mullen made the statement that our
    debt was our largest national security threat. I just have to
    say I could not disagree more. I've done an awful lot of
    budgets as a mayor and a governor. I understand surpluses, I
    understand deficits, I understand debt, I understand ratios of
    debt to GDP that are acceptable. We're a little on the high
    side by a couple of percentage points. It's completely within
    our control to deal with it.
        The national security challenges we have, they're the
    most--debt that we can control doesn't match up to an Iranian
    nuclear threat. Debt that we can control doesn't match up to a
    North Korean nuclear threat. Debt that we can control doesn't
    match up to the proliferation and mutation of al Qaeda
    affiliates all over the world.
        I think we need to get out of our head that debt is our
    biggest national security challenge and read the newspaper
    every morning.
        It is my hope that working on the budget, working through
    the National Defense Authorization Act, that we'll be able to
    do in fiscal year 2016 and forward what we did in fiscal years
    2014 and 2015. The President's budget only asks for partial
    sequester relief. The request--if we do what has been
    requested, everything that's been requested, we will have
    lifted half of the burden of sequester, actually slightly less
    than half of the burden of soldier, from the military. They
    will have absorbed more than half. I'm not sure I would have
    made such a reasonable request.
        You're trying to meet us halfway. You're asking for us to
    give you half relief, essentially. It's my hope that we'll do
    that in fiscal year 2016 and out.
        One question only, and that is--I've been asking this in
    all the posture hearings--talk to us about 1 year in, the
    integration of women fully into all MOSs, the work that's being
    done in the Army and how you're approaching that, and give us a
    1-year status report? Thank you.
        Mr. McHugh. Thank you, Senator. First of all, to this
    point, it's going very well. The Army has through DOD notified
    Congress of our intent right now to open up some 33,000
    positions across the Army. It really does take a very broad-
    based perspective, broad-based approach to various jobs that
    women are interested in doing.
        Even in our more challenging MOSs, the Sapper course, our
    combat engineers, they're attending the schools. They're doing
    extraordinarily well. In fact, over the last 3 years women have
    graduated at the same rate as men, a pretty remarkable
    statement as to the capabilities of these soldiers, both male
    and female.
        Perhaps most important of all, we're going through a very
    methodical evaluation of our physical standards. People are in
    some quarters suggesting we're doing this to lower standards to
    help women into the ranks. That's simply not true. What we're
    trying to do, and we'd be doing it even if we were an all-male
    military, is trying to match required physical skills with
    those kinds of actions that you're expected to carry out in
    your particular job. We want every soldier to be postured for
    success and to have the physical as well as the mental
    capabilities to do the job that they're assigned to.
        That is a very methodical process, led by our TRADOC. All
    of us would wish it would go further, but to do it right it
    needs to work its way out.
        We have a full report due on this at the end of the year to
    the Secretary of Defense, who will in turn relay that report to
    all of you. But from the Army perspective, including our
    Special Operations Forces units, our 160th Aviation, it's going
    very well.
        Senator Kaine. Great. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Kaine.
        Senator King has graciously yielded to Senator Hagan.
        Senator Hagan. Thank you. Thank you, Chairman Levin and
    Senator King.
        I too want to express my deep concern, my heartfelt prayers
    and condolences, to what's taking place at Fort Hood now, and
    particularly to all the families and all the servicemembers,
    men and women, and families on that base. All of North Carolina
    is wishing those same thoughts and prayers.
        I did want to make one statement on the 440th Airlift Wing.
    I am deeply concerned with an Air Force proposal that would
    remove all of the C-130s stationed at Pope Army Airfield at
    Fort Bragg, which would leave no aircraft at the home of the
    Airborne. The Airborne mission is probably the best example of
    the importance of joint operations and it's critical to ensure
    input from all stakeholders before significant decisions are
    made.
        Secretary McHugh and General Odierno, I want you to know
    that I'm committed to ensuring the readiness of the 82nd
    Airborne, which is the heart of our global response force and
    our Special Operations Forces and our other units at Fort
    Bragg. We can chat about that later.
        My first question I wanted to ask about is maintaining our
    technological superiority. In your written testimony, you
    stated that if sequestration persisted in 2016 and beyond it
    would not be until fiscal year 2020 to fiscal year 2023 that
    the Army would begin reinvesting in the modernization programs
    to upgrade aging fleets.
        I chair the Emerging Threats and Capabilities Subcommittee
    of the Senate Armed Services Committee and to me, that is a
    real concern. Recently, I held a classified briefing with Under
    Secretary of Defense for Acquisition, Technology, and Logistics
    Frank Kendall III on military technology superiority.
        Secretary McHugh and General Odierno, first thanks again
    for your service to our country. Thank you. To the extent that
    you can speak about this in an open session, what risk will the
    Army be assuming if you're forced to really degrade much of
    your modernization programs due to this long-term sequestration
    that we've all been talking about this morning?
        Mr. McHugh. Thank you for reading the submitted document
    and for focusing on a very important passage. This is an area
    that we deeply concern ourselves about. It is one of the
    things, the very hard things, we had to do to ensure as best we
    can that, for the threats that arise today, we're as prepared
    as possible to send soldiers out into harm's way to meet them.
        It is not the kind of cut that we would prefer to take, for
    the simple reason that, as you noted, Senator, the threats and
    the capabilities of our potential adversaries in the future are
    evolving very rapidly as well. Heretofore, very basic terrorist
    organizations are developing key capabilities. One of the great
    advantages that the U.S. Army has enjoyed, particularly over
    the last 13 years, was the best equipment, the most modern
    equipment. That didn't just happen. We just don't go buy it at
    a box store. It has to be developed. Our S&T accounts have been
    severely hit and under sequestration would be a mere percentage
    of what we view as the rational investment level.
        It will have a significant impact on our S&T national base
    that I know you're concerned about, but also clearly on the
    availability of the most modern equipment in that future
    battlefield, not when it arises, but where it arises.
        Senator Hagan. I'm also concerned about the talent that we
    need to have to be sure that we have the top talent. If we put
    this off years down the road, we're going to lose what I think
    would be an institutional capability that's not going to sit
    around and twiddle their thumbs.
        Mr. McHugh. Exactly. We speak a lot about the industrial
    base, as we should, and we talk about highly skilled workers.
    It is absolutely the same kind of challenge in our research and
    development and S&T fields. These are obviously very highly-
    trained, very highly-educated, and in our case, thankfully very
    highly-skilled individuals, that will go find other things to
    do if we are unable to sustain them and give them work they
    find interesting and challenging and work that obviously will
    greatly benefit men and women in uniform.
        Senator Hagan. It really is a problem, because if you wait
    years down the road, the catch-up will be way too long to be
    competitive on the front end.
        Mr. McHugh. You may be too late.
        Senator Hagan. I know that we just had one question on the
    new roles for women in the military. I understand that during
    the last year the Army opened approximately 6,000 positions in
    26 different BCTs, select aviation specialties, and special
    operations aviation, and then approximately 3,600 field
    artillery positions. I also understand the Army anticipates
    opening an additional 33,000 previously closed positions during
    fiscal year 2014.
        Can you expand on that? I know those are huge numbers and
    that's a big transition. Then, with these openings, how many
    combat-related positions are still closed to women, and how is
    the transition going?
        General Odierno. Senator, thank you for the question. We
    are continuing to open up positions. As you just said, on
    January 17 through the Secretary of Defense, we informed
    Congress we opened up 33,000. Those are really occupations
    already open to women, but they are serving at different
    levels. For example, they're now able to serve in infantry
    battalions and armor battalions, and that's where all those
    positions are opening.
        Senator Hagan. Now they're getting credit for that.
        General Odierno. Right, that's right. Yes, exactly.
        So what we're doing now, the next step is we're now looking
    at--we're doing our physical demands study in TRADOC to move
    towards opening all positions to women. There's a couple of
    things we have done. We now have our first female soldiers
    that's completed training on our Multiple Launch Rocket Systems
    and they are now serving as platoon leaders in these jobs.
    That's a new opening.
        We are doing our physical demands study that is looking at
    the rest of our artillery, armor, and infantry positions. That
    will help us as we go forward and report out in the end of 2015
    to opening all of these positions, as we've been requested to
    by the legislation.
        We're also conducting a significant integration study on
    how we would properly integrate them as we move forward. So
    what you'll see in the next year or so are the results starting
    to come out of these studies that we're doing. We just finished
    a fairly comprehensive test out at Fort Stewart in the Third
    Infantry Division, testing infantry skills and other things as
    we develop the standards. We had both women and men conducting
    those experiments.
        I believe we have a comprehensive effort to gather the data
    which will enable us to make the right decisions moving
    forward. We anticipate that we will begin to open up more and
    more positions to women as we move forward.
        Senator Hagan. One question that arises when you're saying
    you're conducting these standards: Are the men already trained
    and the women are not? How are you looking at the actual
    training program?
        General Odierno. Yes. It's a physical demands test, so it
    has nothing to do with training. It has to do with physical
    abilities. In other words, we're not accounting for can you do
    something quicker, faster. It really is about testing your
    physical abilities to do it. So level of capability does not
    play into it.
        Senator Hagan. Thank you, Mr. Chairman. Thank you, Senator
    King.
        Chairman Levin. Thank you, Senator Hagan.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        I'd like to begin by making a modest suggestion. One of the
    advantages of being the last person in the line is that one
    gets to listen to all the other questions and comments. I've
    been coming to these hearings now for a year, almost a year and
    a half, and the word that's been used more often than any other
    single word is ``sequester.''
        It occurred to me as I was listening to the questions on
    both sides of the aisle that are deeply concerned about the
    impact on sequester on the Army and on DOD, perhaps the Armed
    Services Committee could lead a bipartisan project to find a
    solution to our sequester and budget problem. It's a bipartisan
    group, well-respected group, and I think most importantly, we
    have, I think, a more intimate acquaintance with the real
    effects of sequester than perhaps any other committee. We have
    three members of the Senate Budget Committee on this committee.
        I commend to you, Chairman Levin, the idea of convening us
    as a group to talk about the solution to sequester, because one
    of the frustrating things to me is that around here we often
    bemoan problems like sequester, but they don't seem to get
    resolved. We now have a little breathing space because of the
    BBA. But I'm just afraid if we just keep talking about it,
    we're not going to get anything done.
        So, I make that suggestion to you.
        Chairman Levin. I very much welcome that suggestion, as
    somebody who has spent a huge amount of my time recently, the
    last couple of years, struggling with this issue and suggesting
    an alternative which so far has not achieved real mass in terms
    of support because it involves at least in part revenues to
    address the problem. So I'm very sympathetic to what you're
    saying and I will talk to ranking member Senator Inhofe about
    how we might see if there's enough interest on his side.
        I've already talked to one of our colleagues, a Republican
    colleague on his side--I won't identify him because he should
    identify himself--who raised a very similar suggestion just
    this morning to what you have, that we as a committee and we as
    individual Senators are in a position, because we've seen the
    impacts and we see the looming impacts. By the way, we've seen
    the fiscal year 2015 impacts, but also the fiscal year 2016
    impacts, where this sequester comes back in its full bloom, in
    its full lack of glory.
        So we are in a position, as Senator King mentions, that
    perhaps, except for the Senate Budget Committee, no other
    committee, no other single committee, can see, because about
    half of the sequester falls on the military. No other committee
    is in that position. The rest of it, the non-defense
    discretionary, is divided up among the committees.
        So I welcome the suggestion and I will talk to Senator
    Inhofe and see what he thinks, so that we might be able, either
    formally or informally, to get our committee members together
    and start noodling this very important issue.
        Thank you.
        Senator King. Thank you, Mr. Chairman.
        General Odierno, to go from the broadest to one of the more
    narrowest issues, the budget proposes a series of changes
    involving military pay raise, the base allowance, commissary
    subsidies, and TRICARE. The pressure here is going to be to
    wait. There's a commission on compensation that's supposed to
    report about a year from now. I know that everybody's going to
    say let's put off this discussion until that commission
    reports.
        What's the down side of waiting?
        General Odierno. It's our budget figures in fiscal year
    2015 and beyond. Fiscal year 2015 is really, it's the savings
    that we garner from those proposals immediately. It probably
    impacts fiscal year 2015 more, because by the time fiscal year
    2016 and fiscal year 2017 we supposedly would have some output
    from them. So we'd have to figure out how we make up for the
    reductions that we booked based on our recommendations for the
    changes in compensation if we had to wait.
        I don't have the exact number of what it is in fiscal year
    2015. So I'd have to tell you what that specific impact is
    based on the number. I know the number grows as it gets to the
    out years and it becomes more significant.
        Senator King. We had a Personnel Subcommittee of the Senate
    Armed Services Committee hearing and the number that we were
    given was $2.1 billion for year one and almost $30 billion over
    5 years. I think that needs to be borne in mind, that every
    year that we put off those decisions we have to find that money
    somewhere else.
        General Odierno. That's exactly right. The Army's portion
    of that is around 40 percent, because it's based on the number
    of personnel that you have.
        Senator King. General Odierno, by my count you've been a
    part of two previous military drawdowns, first in the 1970s
    following Vietnam and in the 1990s after the Cold War. What
    lessons do you take from those experiences at different phases
    of your career that could be applied to the current
    circumstance?
        General Odierno. In the 1970s I was probably too young to
    understand what was going on and really have a grasp. But what
    I remember from the 1970s, as I talked about, was the
    hollowness of the Army that I came into, the lack of training,
    the lack of resources, the lack of ability for us to properly
    train our units to meet the missions that they had at the time.
    That was very clear to me.
        We saw that change in the 1980s as investment increased
    inside the Army. It made a significant difference on morale. It
    made a significant difference on our abilities and our
    confidence. You could even argue that at some point along the
    way the American people had lost confidence in their military,
    which was rebuilt in the 1980s and 1990s.
        What I learned in the 1990s is we took our personnel out so
    quickly it left significant holes in the force, that took us 10
    to 15 years to recover from in terms of properly allocating and
    properly managing the downsizing. That was forced on it because
    of the amount of people we had to take down.
        But the difference between those years and now was the
    sheer capacity. Back then we had almost a million-man Active
    Army in the 1990s, which was brought down initially to 750,000,
    and then 550,000. What happens is now that we're getting so
    small, each cut is significant, has significantly more impact
    on the ability, because we are really getting small enough now
    where it really means something, where in the past you could
    argue maybe it didn't.
        To me, that's the biggest difference as we look forward to
    this. We have to make sure we're not hollow and we have to make
    sure we maintain the capacity so we have the ability to respond
    and deter.
        Senator King. A couple of brief observations and questions.
    Senator Kaine and I and Senator Levin and I were in the Middle
    East at different times over the last 6 months or so. One of
    the things we noticed was the very high value of our training
    and exchange programs with officers in other countries. I think
    that program, it's a relatively low-cost, high-return,
    because--I don't want to overstate it, but the respect and
    admiration and positive feelings of those officers for the
    United States after they had come here and had training here
    was palpable.
        I think I'd like you to comment on the value you see of
    those programs.
        General Odierno. Two things. One, it goes two ways. First,
    is the value of us sending our officers to foreign countries to
    train and the influence that they have, the influence they have
    as they interact, frankly, it helps them tremendously when they
    get to hear different viewpoints and how people view us. That
    helps us as we look at developing strategies and capabilities
    in the future.
        Second, is when they send them here and what they gain by
    interacting with us on a daily basis. We are expanding that
    program in the Army. We have expanded the number of officers
    that come to our War College. We're expanding the number that
    we are sending to other countries. We've been very cognizant in
    that decision. For me, that's critical for us, especially as we
    operate in this very complex interrelated world that we have
    today.
        Senator King. That's a pretty low-cost program.
        General Odierno. It's very low, it is. You get a lot for
    the money that you spend on it.
        Senator King. Just a final comment, again based on these
    trips and one that I took just a week ago that was on a naval
    vessel. You have amazing people. When I got back from the trip
    with Chairman Levin, my wife asked: ``What was your overall
    impression?'' We were in some pretty interesting areas, lots of
    experiences, lots of inputs. But my overall impression was the
    quality of people we have working for us, particularly the
    young people, who are working under difficult circumstances,
    many of them haven't had raises in a long time. They have to
    deal with the threats of furloughs.
        I had exactly the same experience 2 weeks ago on this naval
    vessel. It was the enlisted men, the chiefs, and the officers,
    of course. But the young people that we have working for us who
    are patriotic and idealistic are fantastic. I often feel that
    we don't pay them as much respect as I think they deserve for
    what they're doing.
        General Odierno. I'll just make one quick comment, Senator.
    That's why I still love to wear this uniform. It's because of
    them and what I see every day and the sacrifices they make and
    how dedicated they are. I try to tell everyone that there are
    times when people are worried about this generation. I'm not
    worried about this generation. We have great young men and
    women out there that dedicate themselves to a lot of different
    things, and that's what inspires me every day to continue to
    serve, sir.
        Senator King. I have to tell you that the experience that
    inspired me was to interview--was going through the process of
    the young people applying for the military academies back in
    Maine and seeing the quality of people that want to serve our
    country. It's reassuring for sure.
        Gentlemen, thank you very much and thank you for your
    service.
        Chairman Levin. Thank you very much, Senator King.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        Secretary McHugh, General Odierno, I know you've had a very
    long morning and so I just have a brief question. But before I
    ask that, I just wanted to express my condolences to both of
    you, to everyone in the Army, over the tragedy at Fort Hood. I
    know that we all share in mourning the victims and offering
    condolences to their families.
        I want to ask both of you about a hearing that I held
    yesterday in the Readiness and Management Support Subcommittee
    of the Senate Armed Services Committee, where Assistant
    Secretary of the Army for Installations, Energy, and
    Environment Ms. Katherine Hammack--we were discussing the whole
    issue of BRAC. She commented--and I'm going to paraphrase, but
    we have the quote if you would like to see it. To paraphrase
    what she said, it's that if the Army, I assume DOD, can't get
    the authorization for BRAC in 2017, that you might go ahead and
    list some bases for closure in your budget request because of
    the concerns about the ability to continue to run those bases
    in the way that they should be run.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Shaheen. While I appreciate the budget constraints
    that DOD has at this time because of sequestration and
    certainly think we should do everything possible to roll back
    those automatic cuts, I found it troubling that the military
    would go forward without working in conjunction with Congress.
    I wonder if you could respond to that?
        Mr. McHugh. Thank you, Senator. I obviously didn't get a
    chance to review personally Secretary Hammack's comments, but
    let me tell you the Army's view. Having gone through three base
    closure rounds as a Member of Congress, I understand how
    difficult they are. I also understand that the way in which we
    need to pursue that and the way in which we realize the most
    savings is working with Congress, particularly through a base
    closure process that is endorsed in law.
        This Congress has provided us certain flexibilities to,
    short of a BRAC, make decisions on excess facility and excess
    structure shedding, and we'll certainly look at the authorities
    that Congress has provided us in law. But in terms of an actual
    base closure round, certainly in my view, my position, that
    will only occur should this Congress give us the authority to
    do that.
        Senator Shaheen. Thank you. I very much appreciate that
    response. I know we're awaiting some information about the
    European infrastructure and what can be done there. I look
    forward to receiving that. But I very much appreciate your
    answer. Thank you.
        Chairman Levin. Thank you very much, Senator Shaheen. Thank
    you for raising that subject. I had not heard of that comment
    until you just reported it.
        I would just tell you, Mr. Secretary, that if our Army or
    any of the other Services propose something in the budget which
    is not compliant with the BRAC process, in other words front-
    running the BRAC process, it will be doubly difficult for the
    military, maybe triply difficult, to get a BRAC process going.
        I supported the last BRAC process, by the way. I know how
    difficult it is to get a BRAC process. But it will set any
    possibility of such a process back many years if there's an
    effort to obviate the law. I think that's basically what you
    just told Senator Shaheen and I very much welcome that
    assurance as well.
        I only have one additional quick question of you, General
    Odierno. You mentioned individual rights a number of times when
    it comes to the mental health counseling question. It's a
    sensitivity which we all would appreciate. But what do you mean
    by that? Is this the inability of a counselor, for instance, to
    talk to a commander about what a mental health counselor had
    heard from a soldier? Or is it something different?
        General Odierno. It's partly that, but it's also, for
    example, if a soldier has mental health counseling at Fort
    Bragg, NC, and he moves to Fort Carson, CO, sometimes we have
    difficulty moving that information with them because of
    patient--Health Insurance Portability and Accountability Act
    (HIPPA), frankly. So that's the concern.
        We are trying to develop systems that enable us to do some
    of that, but it is difficult.
        Chairman Levin. Isn't that a matter of mental health
    records being interoperable? In other words, can't we shift
    mental health like medical records?
        General Odierno. The issue is the medical records would be
    available to the physicians. I'm talking about commander's
    knowledge. So in other words, it's about the company commander
    at Fort Bragg knew this, but the company commander at Fort
    Carson does not know that this soldier had previous problems.
        Mr. McHugh. We had a flavor of that with Major Nidal Hasan,
    in that the receiving commander was not aware of some of the
    disciplinary issues that he had, some of the academic issues
    that he had, that over time added to his challenges.
        Part of the problem is HIPPA and who has access to what
    kind of medical records, behavioral health records. Part of it
    is our own regulatory process, and that it's the age-old
    culture of the military, not just the Army, that you're given a
    new start with every permanent change of station. We've made a
    lot of progress in making the relevant information aware and
    available to receiving commanders, but we still have some
    challenges on what we're allowed to do legally.
        Chairman Levin. All right. Let us know if there's anything
    we should be doing in that area legislatively.
        Apparently, we do not have any additional questions, I
    believe. We thank you very much.
        Mr. McHugh. Senator, could I----
        Chairman Levin. I'm sorry?
        Mr. McHugh. I said my respects to Senator Chambliss. The
    Chief opened with his comments; I want to close. We will miss
    you deeply. I will miss you personally. You have been an
    amazing and inspiring leader. The people of your great State
    have been blessed and we have equally been blessed and the men
    and women of the Army have always appreciated and respected
    your leadership and your contributions. Thank you.
        Chairman Levin. Thank you, Secretary McHugh. Thank you,
    General Odierno. Thank you both for your very personal
    accolades for me. It means a great deal to me to receive them
    from people of your quality and your character and your caliber
    and your leadership. We will treasure those comments from both
    of you.
        I'm sorry. General?
        General Odierno. I just want to clarify something, Senator,
    if I could.
        Chairman Levin. Sure, just as long as it wasn't the
    accolade for me. [Laughter.]
        General Odierno. No, it was not the accolade, no. I double
    that, sir.
        It has to do with, I was asked several questions about risk
    and other things. I want to be very clear, as I was in the
    written statement, that I have defined risk very clearly. At
    450,000, I've defined risk as significant in executing the DSG;
    and at 420,000 I have said we cannot implement the DSG. I want
    to make sure that's on the record because by the questions I
    was asked that might not have been as clear. But I'm not
    backing away from my written statement. I just wanted to
    clarify that for the record.
        Chairman Levin. Thank you so much.
        Now, there's a couple of things we've asked. One is, we'll
    ask the Secretary of Defense and the Veterans Affairs
    Secretary, and that's General Shinseki, about interoperability
    of medical records. Staff, please, if you can try to get a
    joint letter from myself and Senator Inhofe on that, it would
    be appreciated.
        In terms of the restructuring of the Army aviation, you're
    going to get us the budget, the basis of your $12 billion
    Future Years Defense Program savings for that, so we can
    understand it.
        I think with that, we will stand adjourned, with our
    thanks.
        [Whereupon, at 12:45 p.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                    Question Submitted by Senator Carl Levin
                   management of risk in the industrial base
        1. Senator Levin. Secretary McHugh, the Army's ground vehicle
    fleet, including its M1 tanks and its M2 Bradley fighting vehicles,
    need to be upgraded, but these upgrades are not programmed to begin for
    several years. Vehicles returning from operations in Afghanistan are
    worn out and must be repaired, reset, and recapitalized. The Army has
    canceled the Ground Combat Vehicle (GCV) program. Truck production
    programs have been concluded earlier than originally planned, and
    upgrades of the current fleets will not be ready for a few years. This
    leaves only three new vehicle programs: the Joint Light Tactical
    Vehicle (JLTV), the Paladin self-propelled howitzer, and the M113
    armored personnel carrier replacement, called the Armored Multi-Purpose
    Vehicle (AMPV). In light of all these delays, reductions, or
    terminations among the Army's ground vehicle programs, what steps are
    you taking to manage risk and preserve your critical and fragile
    industrial base?
        Mr. McHugh. The Army, via A.T. Kearney, is currently working with
    industry to conduct a comprehensive combat vehicle portfolio industrial
    base study. This report, expected in the near-term, is assessing the
    commercial and organic combat vehicle industrial base and the related
    sustainment of critical skills and suppliers. The study is focused on
    the capacity, capability, and costs for the production and sustainment
    of the portfolio, including Marine Corps GCVs. The Army is also
    conducting a similar study to review the tactical wheeled vehicle
    portfolio. That study is designed to provide data that informs the
    forthcoming Army Tactical Wheeled Vehicle Strategy, scheduled for
    release during the first quarter of fiscal year 2015.
        Aside from this continued monitoring of the industrial base, the
    Army has also taken certain active steps to mitigate impacts. These
    steps include, but are not limited to, mitigation through advocacy for
    Foreign Military Sales (FMS), extended and accelerated production in
    certain programs, and investment in key suppliers on a case-by-case
    basis. In addition, the Army extended the current production for Abrams
    tanks, including securing FMS in support of Saudi Arabia and Egypt.
    These efforts have kept production lines active in the vehicle
    industrial base; the Army submitted a fiscal year 2015 budget request
    to accelerate production of Engineering Change Proposals (ECP),
    allowing the Army to take advantage of incremental upgrades to
    capabilities while supporting the industrial base; to support a small
    number of identified high-risk, critical, and fragile suppliers, the
    Army made targeted investments in support of certain components used in
    Abrams transmissions, Bradley engines, and forward-looking infrared
    systems; and the Army is also evaluating options to utilize a $90
    million fiscal year 2014 congressional add to sustain the industrial
    base.
                                     ______

                    Questions Submitted by Senator Kay Hagan
                             global response force
        2. Senator Hagan. Secretary McHugh and General Odierno, I am
    concerned about the effect that renewed sequestration could have on
    readiness. I was glad to see in your written testimony that units
    dedicated as part of the Global Response Force (GRF) would remain
    ready. The 82nd at Fort Bragg, NC, provides the nucleus of the GRF
    which assures rapid access anywhere on the globe. Could you speak to
    the role and importance that you see for the GRF in the future security
    environment?
        Mr. McHugh and General Odierno. The GRF, which includes units at
    Fort Bragg and others across the United States, will continue to remain
    one of our highest resourcing priorities because it offers our national
    leadership a hedge against an uncertain world environment. The
    importance of the GRF only increases as the Army Active component
    reduces in size because fewer units will be available to respond to
    unforeseen crises, especially if we must revert to sequestration-level
    budgets and re-impose tiered readiness. The GRF is only an initial
    response capability. Any sustained contingency operation will require
    additional, trained, and ready forces to ensure success.

        3. Senator Hagan. Secretary McHugh and General Odierno, in an
    Airborne Joint Forcible Entry Operation, the Army obviously relies upon
    the Air Force to get them to the fight. How important is ``Jointness''
    to this mission?
        Mr. McHugh and General Odierno. The ability to conduct an Airborne
    Joint Forcible Entry Operation is one of the most critical and unique
    capabilities that the Army provides to the Nation. The GRF is a
    national asset, providing our leadership the ability to respond to
    crisis anywhere in the world within 18 hours of notification.
        Airborne operations are inherently joint; the ability to employ our
    Airborne Infantry Brigade Combat Teams (BCT) is entirely dependent on
    the capacity and capability of the Air Force's tactical and strategic
    airlift fleet. Since World War II, the Army-Air Force team has
    conducted airborne operations in Korea, Vietnam, Grenada, Panama,
    Afghanistan, and Iraq. Airborne operations are extremely complex and
    the related skills are highly perishable. Consistent and sufficient
    readiness resources are essential to maintaining this vital capability.

        4. Senator Hagan. Secretary McHugh and General Odierno, what can be
    done to help foster this?
        Mr. McHugh and General Odierno. Airborne operations are extremely
    complex and the related skills are highly perishable. The best way to
    foster jointness in airborne operations is by increasing training
    opportunities, which requires resources. Although airborne operations
    are inherently joint, in most cases the Army must reimburse the Air
    Force for fuel and other costs associated with the use of Air Force
    airlift platforms. However, resources must go well beyond maintaining
    minimum proficiency in airborne operations. The Army-Air Force team
    must train under realistic conditions away from home station. For
    example, Airborne BCTs not dedicated to the GRF mission will be
    regionally aligned.
        If BCA budget caps remain unchanged, the impacts to our training
    resources will substantially degrade our Nation's ability to conduct
    Airborne Joint Forcible Entry Operations and to sustain airborne forces
    once inserted.
                                     ______

              Questions Submitted by Senator Kirsten E. Gillibrand
                                     cyber
        5. Senator Gillibrand. Secretary McHugh and General Odierno, I was
    recently named to the Board of Visitors of West Point and attended my
    first meeting last week. I am highly impressed by the Army Cyber Center
    headquartered at West Point, and the quality cyber education our cadets
    are receiving. However, I am concerned that there is no dedicated cyber
    military occupational specialty (MOS) and career path for a true cyber
    expert. Given the outside competition to pull these experts away from
    the Army at the end of their contracts, what is the Army doing to
    create a cyber career track for officers and enlisted personnel?
        Mr. McHugh and General Odierno. The two branches currently
    providing the greatest numbers to the growing cyber workforce are the
    Military Intelligence and Signal Corps. Officers and enlisted personnel
    from these branches are being assigned and tracked, both within the
    current cyber mission force units as well as outside, through the
    application of skill identifiers. Additionally, the Army's Human
    Resources Command has established a personnel management cell
    responsible for the assignment and distribution of these key personnel
    in the cyber workforce.
        We expect to establish a distinct cyber career field as early as
    2015. We have been working toward this end for the past year. This work
    is important for several reasons. A distinct career field will help
    meet doctrinal/organizational requirements; it will establish cradle-
    to-grave cyber career paths for Army personnel; it will facilitate the
    tracking of trained personnel; and it will aid in preventing the loss
    of perishable skills.

        6. Senator Gillibrand. Secretary McHugh and General Odierno, do you
    see a need for a cyber MOS, and if so, can you update me on where in
    the creation process is the cyber MOS, and if not, can you explain why
    not?
        Mr. McHugh and General Odierno. Yes, we have made the decision to
    establish a distinct cyber career field. We expect it to be in place by
    2015. As a bridging strategy, adjustments were made a few years ago to
    certain military intelligence and signal specialties that are being
    used to meet the immediate requirements until new cyber specialties are
    defined. Creating a new career field or MOS for Army personnel is a
    rightfully deliberate process. We are currently working on the Army
    doctrine that will underpin the functions, roles, and responsibilities
    of the Army's contribution to the greater Joint cyber mission force.
    This work will be inextricably linked to Joint doctrine and will also
    address the cyber capabilities at lower Army echelons and units
    required to secure and defend our networks and enable the network-
    enabled squad, platoon, company, and battalion. The development of this
    doctrine will also identify the number and type (officer, enlisted) of
    cyber specialties that need to be created to support cyber throughout
    our operating and generating forces.

        7. Senator Gillibrand. Secretary McHugh and General Odierno, are
    there other areas within Army cyber for which you believe you need
    additional authorizations?
        Mr. McHugh and General Odierno. The Army conducts cyberspace
    operations under Titles 10, 40, 44, and 50 of the U.S.C. These
    authorities were generally written prior to the advent of the Internet
    and the rapid growth in information technology. Today's cyber threat
    environment presents three critical issues: (1) the rapid appearance of
    threats and immediate impacts to our networks in cyberspace; (2) the
    growth in capabilities and capacity by numerous state and non-state
    actors who operate within cyberspace; and (3) the potential for
    adversaries to leverage cyberspace to cause significant damage to our
    networks and prevent us from ensuring the defense of the Nation. These
    cyber threat issues pose significant operational and policy challenges
    to Army cyberspace operations. The Army is working closely with various
    elements of the Department of Defense (DOD) to address these
    operational and policy challenges. We have not identified specific
    cyberspace operations issues that require additional legislative
    authority, but we will raise those issues through appropriate agency
    processes, should the need for specific legislation become apparent.

        8. Senator Gillibrand. General Odierno, the National Commission on
    the Structure of the Air Force recently released their findings which
    highlighted the importance of the National Guard and Reserve in the
    U.S. cyber mission. Specifically, it noted that the Guard and Reserve
    were uniquely positioned, because of their part-time status, to attract
    and retain the best and the brightest in the cyber field. Additionally,
    the National Defense Authorization Act (NDAA) for Fiscal Year 2014 has
    directed DOD to look at the integration of the Guard in all its
    statuses into the cyber workforce. I have long agreed with this
    assessment, and introduced the Cyber Warrior Act, which would establish
    National Guard cyber teams in each State to leverage this talent pool.
    Do you agree with this general assessment of the role of the Guard and
    Reserve in the cyber mission, and will you look closely at these
    recommendations to determine how they might apply to the Army, and
    specifically to how the Army might incorporate the Army National Guard
    and Army Reserve in the Army's cyber mission?
        General Odierno. The Army's Reserve components are essential
    integrated elements of the Total Army approach to cyberspace.
    Headquarters Department of the Army, the Army National Guard, and the
    U.S. Army Reserve have developed a Total Army Reserve component cyber
    integration strategy that supports Joint and Army cyber requirements.
    The Army is currently employing existing Reserve component cyber
    capabilities while simultaneously working to build additional capacity
    and capability in the Army National Guard and U.S. Army Reserve.
    Reserve component cyber forces are supporting operations worldwide
    today, to include in Afghanistan. As we look to the Army's future force
    structure we realize our citizen-soldiers must continue to play an
    integral part in cyberspace missions. Total Army Analysis 2016 to 2020
    includes approved resourcing of 429 and 400 spaces in the cyber force
    for the Army National Guard and U.S. Army Reserve, respectively. As the
    Army implements its plans for a Total Force approach to cyberspace
    operations, it will continue to assess and analyze missions and
    manpower in order to refine and better define those requirements for
    both the Active and Reserve components.

                    defense finance and accounting services
        9. Senator Gillibrand. Secretary McHugh, you and I previously spoke
    on the issue of Defense Finance and Accounting Services (DFAS) and a
    proposal that the Army is considering to restructure its financial
    enterprise in a way that would impact how the Army uses DFAS. The
    civilian employees currently working at DFAS sites like the one in
    Rome, NY, ensure the centralization, professionalism, and efficiency of
    DOD's accounting. I appreciate that my staff had the opportunity to be
    briefed last week about the process. I would like to follow up with you
    on a few points. Your team said yesterday that they do not expect
    significant impacts to the functions and responsibilities of the DFAS
    in Rome until January 2016. Do you foresee any significant changes to
    the work load of DFAS Rome after 2016?
        Mr. McHugh. The Army fully intends to rely on the DFAS for future
    finance and accounting services. However, 13 years of war, the Army is
    expected to decrease its overall demand for DFAS services due to
    reductions in force structure and contingency operations. DFAS Rome
    provides services in contract pay, travel pay, and accounting, all of
    which will reduce as funding and requirements are reduced.
        The Army completed full fielding of its General Fund enterprise
    resource planning (ERP) system, which standardizes business processes,
    creates efficiencies, improves effectiveness, and greatly enhances the
    Army's ability to achieve auditable financial statements.
        As good stewards of American taxpayers' dollars, the Army and DOD
    are looking to improve processes through automation. Such efficiencies
    may reduce the Army's demand for DFAS services in the long-run, but are
    not targeted at any specific DFAS location. We are testing some of the
    Army's organizational changes through small pilot programs that should
    not have significant impact on DFAS. The Secretary of the Army, in
    consultation with the Secretary of Defense and with Congress, will
    review final recommendations that could cause changes to any DFAS
    location or revisions to the execution of processes, before
    implementation.

        10. Senator Gillibrand. Secretary McHugh, do I have your commitment
    that any decisions about which roles would be transferred to the Army
    and which would be maintained with DFAS will be done in concert with
    the Office of the Secretary of Defense (OSD)?
        Mr. McHugh. Yes, we will ensure any decisions are made in concert
    with OSD.

        11. Senator Gillibrand. Secretary McHugh, do I have your commitment
    to continue to engage with my office throughout this whole process?
        Mr. McHugh. Yes. We have briefed your staff on Army Financial
    Management Optimization and will continue to engage with them at
    appropriate times throughout our decisionmaking and implementation
    process.

                         sexual assault and harassment
        12. Senator Gillibrand. Secretary McHugh, I believe that the recent
    case of Brigadier General Sinclair highlights many of the problems with
    the military justice system, including the sentence. You ultimately
    have the power to determine at what grade Sinclair will be retired. Do
    I have your commitment that you will give serious consideration to his
    retirement grade?
        Mr. McHugh. Yes, I have this responsibility and take it seriously
    in all cases. I have referred Brigadier General Sinclair's retirement
    request to the Army Grade Determination Review Board for their review
    and recommendation. Upon receipt of the results of the Board, I will
    make the final decision on his retirement grade.

        13. Senator Gillibrand. Secretary McHugh, I understand that unlike
    the other Services, sexual assault and harassment fall under the same
    program in the Army, but that you remain under the DOD directive that
    sexual harassment is an equal opportunity offense. I recently held a
    hearing that highlighted the links between sexual harassment and
    assault both in terms of the behaviors of predators and the results for
    survivors. Have you found combining the two to be an effective
    strategy, and are there challenges for you with the DOD directive?
        Mr. McHugh. Yes, the Army is currently the only Service that
    incorporates sexual harassment as part of its sexual assault prevention
    and response program. Army research indicates that in approximately 30
    percent of sexual assault cases, sexual harassment or similar behavior
    preceded the alleged sexual assaults. Furthermore, studies have shown
    that the attitudes and behaviors commonly associated with sexual
    harassment often create a climate where this type of inappropriate
    conduct leads to more egregious actions, including sexual assault.
        In 2008, my predecessor, the former Secretary of the Army, Pete
    Geren III, approved the integration of Sexual Assault Prevention and
    Response, with civilian and Military Prevention of Sexual Harassment
    into the Sexual Harassment/Assault Response and Prevention (SHARP)
    Program. The creation of the SHARP Program brought with it two
    significant changes in the Army's approach toward eliminating sexual
    offenses. The first was a joint decision by the Secretary of the Army
    and the Chief of Staff of the Army, following recommendations from
    Army-level working groups, to change the Army's sexual assault
    prevention and response strategy. The decision resulted in a concerted
    effort to increase focus on prevention, offender misconduct, and
    accountability.
        As a result, the Army decided to combine these programs and
    functions to focus on correcting behaviors associated with sexual
    harassment as a means to prevent sexual assault and further our efforts
    to achieve the cultural change required.
        I believe the Army's strategy and programmatic approach is sound.
    Other research, including information cited in the DOD Sexual Assault
    Prevention Strategy (April 2014), confirms that a hostile work
    environment has an impact on the likelihood of sexual assault. Subject
    matter experts have determined that climates that are demeaning and
    objectifying to women increase the risk of sexual assault by 5 to 6
    times.
        The Army is continually examining, assessing, and integrating best
    practices. We've recently expanded our assessment efforts to fully
    evaluate the effectiveness of the SHARP Program as well as other SHARP
    initiatives the Army has instituted. The efficacy of the consolidation
    of sexual assault and sexual harassment is something we plan to address
    in the future. However, I anticipate the synergy created from combining
    the two programs will prove effective in addressing the negative
    attitudes and behaviors that lead to a culture conducive to sexual
    assault.
        As for challenges with the DOD directive, the Army has not
    encountered any. DOD has been supportive of our initiative in combining
    sexual harassment/sexual assault and understands there is a strong
    correlation between the amount of sexual harassment in a unit and the
    rate of sexual assault within the unit.

        14. Senator Gillibrand. Secretary McHugh, are there lessons learned
    that you can share relating to combining these two types of offenses
    into one program office?
        Mr. McHugh. The most important lesson learned is the need to
    clearly articulate the roles and responsibilities in Army guidance/
    regulations earlier in the process. Although the program was combined
    in 2009, and we started working the consolidation of those two
    functions at the Department level, it wasn't until June 2012 that we
    were able to send implementation guidance to the field concerning the
    roles and responsibilities within the new SHARP Program. This guidance
    provided direction on placing full-time SHARP personnel at brigade or
    equivalent units as well as information on transferring all sexual
    assault cases and all formal sexual harassment complaints to the
    appropriate Brigade SARC/SHARP. We've implemented training modules that
    include information on sexual harassment and provided instructions to
    commanders via the SHARP Guidebook. Currently, we're in the process of
    codifying the integration of sexual assault and sexual harassment in
    Army Regulation (AR) 600-20, Army Command Policy, which we're planning
    to publish before the end of this current fiscal year.

        15. Senator Gillibrand. Secretary McHugh, last year the DOD
    Inspector General (DODIG) evaluated the handling of 501 sexual assault
    cases by Military Criminal Investigative Organizations (MCIO) and found
    that 56 had significant deficiencies. Of the 56 cases, 13 were Army
    Criminal Investigation Division (CID) investigations that were returned
    to CID for reconsideration. CID agreed to reopen 9 of the 13 cases.
    They declined to pursue additional investigative activity in the four
    remaining cases because they believed it would not alter the outcome of
    the case or a significant amount of time had elapsed since the
    incident, causing additional investigative activity to be useless. I am
    very concerned about bad investigations harming victims' confidence in
    the system. What measures has the Army's CID put in place to ensure the
    accuracy of these investigations and the proper investigation of all
    sexual assault cases?
        Mr. McHugh. The U.S. Army CID is dedicated to providing the highest
    quality criminal investigations to assure justice for the victims it
    serves. Since the receipt of the DODIG report, CID has issued guidance
    to all of its field elements re-emphasizing the need to conduct timely
    and thorough sexual assault investigations, and highlighting the
    comments and recommendations provided by the DODIG report.
        CID and the U.S. Army Military Police School (USAMPS) established
    the most robust and aggressive sexual assault-related training across
    DOD in 2005. Understanding the need to institutionalize the training,
    an 80-hour Special Victim Unit Investigator Course (SVUIC) was
    established in 2009. The course has since been fully accredited by the
    Federal Law Enforcement Training Accreditation Board. The course
    consists of nationally identified experts from around the United States
    composed of civilian detectives, civilian and military lawyers,
    civilian psychologists, and medical experts. The head instructor and
    proponent, Mr. Russell Strand, received the fiscal year 2012 Visionary
    Award from Ending Violence Against Women International. The course has
    supported training for sexual assault investigators and attorneys from
    all the Services and the Coast Guard. Through this course, CID has
    trained over 300, or 43 percent, of its field CID special agents since
    fiscal year 2010. A critical task selection board composed of highly
    qualified experts develops the curriculum and programs of instruction
    at USAMPS. The board re-evaluates each course every 3 years.
        The SVUIC course has integrated the Forensic Experiential Trauma
    Interview (FETI). The FETI technique draws on best practices of child
    forensic interviews, trauma interviews, critical incident stress
    management, and motivational interview techniques, and combines them
    into a simple, three-pronged approach, unlocking the trauma experience
    in a way that is better understood. The FETI technique has been
    featured as a best practice by numerous national organizations,
    including the International Association of Chiefs of Police, Ending
    Violence Against Women International, Battered Women's Justice Project,
    and the New York State Police Academy. Additionally, the technique is
    being used by Department of Homeland Security criminal investigative
    agencies.
        In order to enhance its investigative efforts, in 2009 CID hired 22
    Special Victim Investigators and positioned them at 9 major
    installations; this year, CID is adding 8 more. The Special Agents-in-
    Charge in the field established a multidisciplinary approach to sexual
    assaults with the Special Victim Investigators, Special Victim
    Prosecutors, Victim Advocates, and medical staffs. CID has Forensic
    Science Officers, with Masters of Forensic Science degrees, at all CID
    battalions providing forensic guidance to the special agents. These
    capabilities are also used everywhere the Army is deployed. In an
    effort to ensure transparency and keep victims informed, CID mandated
    that agents brief victims on the status of the investigation at least
    once every 30 days.
        Finally, CID has an intensive case review process and quality
    assurance program. This program incorporates an extensive
    Organizational Inspection Program requiring quarterly staff visits by
    the higher headquarters, and initial command inspections for all new
    commanders and special agents-in-charge. The Inspector General (IG)
    team conducts inspections for each battalion on a biannual schedule.
    The inspections are based on standards of thoroughness, timeliness, and
    timely reporting of the investigations. The IG also evaluates the
    effectiveness of the special victim teams and assesses CID's standing
    in the community, work with special victim prosecutors, and
    coordination with commanders. The deficiencies and systemic issues are
    documented and disseminated across the command and incorporated into
    unit training plans to ensure that CID special agents receive the
    training necessary to address shortcomings.

        16. Senator Gillibrand. Secretary McHugh, the evaluation also found
    that there were differences between the MCIOs' policies and gaps in all
    of their work. What is the Army doing to ensure that CID is using the
    best practice in investigating cases of sexual assault?
        Mr. McHugh. The U.S. Army CID meets regularly with the Air Force
    Office of Special Investigations and the Naval Criminal Investigative
    Service (to include the Coast Guard) to discuss new policies, share
    best practices and evolving techniques, and address how to refine
    existing policies.
        On April 23, 2013, CID published the Sexual Assault Investigation
    Handbook, which focuses on sexual assault investigations using the best
    practices established in training and through investigative experience.
    Because the handbook is a CID specific publication, updates are made in
    a timely manner. For example, CID handbook was recently revised to
    reflect information provided by the DODIG inspections, as well as
    recent training events. CID has provided the handbook to the other
    MCIOs. In August 2013, the U.S. Army Military Police School
    incorporated the sexual assault guidance, policies, and procedures into
    the Army Doctrine and Training Publication 3-39.12, titled ``Law
    Enforcement Investigations.''
        CID special agents and instructors regularly attend training events
    focused specifically on sexual assault investigations, to include the
    International Association of Chiefs of Police annual conference, Crimes
    Against Women annual conference, and the Ending Violence Against Women
    International annual conference. CID agents use training events to
    develop and refine best practices, that are then implemented into the
    CID policies and training.
        CID has also published 52 policies that updated or enhanced current
    sexual assault investigative practices. These policies guide the
    special agents throughout the investigative process from crime scene
    processing, identification, preservation, and collection of evidence to
    interviews of victims and interrogation of the subjects.

        17. Senator Gillibrand. Secretary McHugh, in January 2013, the
    Government Accountability Office issued a report in which they found
    that ``military health care providers do not have a consistent
    understanding of their responsibilities in caring for sexual assault
    victims who make restricted reports of sexual assault.'' These
    inconsistencies can put DOD's restricted reporting option at risk,
    undermine DOD's efforts to address sexual assault issues, and erode
    servicemembers' confidence. As a consequence, sexual assault victims
    who want to keep their case confidential may be reluctant to seek
    medical care. What is the Army doing to ensure that health care
    providers understand their responsibilities to protect the
    confidentiality of victims who file a restricted report of sexual
    assault?
        Mr. McHugh. The Army takes very seriously the confidentiality of
    sexual assault victims filing a restricted report. The following
    measures are in place to ensure health care providers understand their
    responsibilities to protect the confidentiality of victims who file a
    restricted report of sexual assault:

        a.  In fiscal year 2013, the Army Medical Command Center and School
    (AMEDDC&S) reviewed and revised SHARP training in all entry-level
    officer and enlisted courses Program of Instruction. This serves as the
    entry-level training required by Army Regulation 600-20, Army Command
    Policy, and Army Medical Command (MEDCOM) Regulation 40-36, Medical
    Facility Management of Sexual Assault, and includes management of
    unrestricted versus restricted cases of sexual assault. All military
    providers are exposed to this information through this venue. The
    MEDCOM SHARP Program Office regularly reviews and updates this material
    with the AMEDDC&S. The MEDCOM civilian healthcare providers receive
    initial SHARP training during their new employee orientation.
        b.  All healthcare providers (military, civilian, and contractor)
    are annually required to take Sexual Assault Prevention/Response
    Training for Healthcare Providers, a Joint program under the Army
    Training Requirements and Resources System. Training compliance is
    tracked through the Digital Training Management System. This block of
    instruction thoroughly covers unrestricted versus restricted reporting
    medical case management.
        c.  In June 2013, all MEDCOM personnel met with their leaders
    through the Army mandated Leader Engagement. This small group, leader-
    led training allowed for additional review of care to victims of sexual
    assault and to discuss reporting options for sexual assault cases. It
    emphasized the importance of maintaining confidentiality of all sexual
    assault cases, but in particular, the nuances of a restricted case.
        d.   All healthcare personnel are required to complete annual
    Health Insurance Portability and Accountability Act (HIPAA) training.
    HIPAA guidelines require confidentiality of medical information
    regardless of whether the victim elects restricted or unrestricted
    reporting.
        e.  The MEDCOM SHARP Program Office and the Office of The Surgeon
    General Sexual Assault Work Group are working with the Defense Health
    Agency Psychological Health Council to ensure a tightly woven safety
    net for patients following sexual harassment/assault. One of the many
    products this Work Group is producing is algorithms for medical
    management of restricted versus unrestricted reporting. This
    illustration will assist providers who do not manage sexual assault
    cases on a regular basis to better understand the routing of patients,
    and allow enhanced management within Army Military Treatment Facility
    Sexual Assault Medical Management Offices.

                               combat integration
        18. Senator Gillibrand. Secretary McHugh and General Odierno, this
    year the Army has been at the forefront of opening positions and
    opportunities to women. The Army appears to be following a rigorous,
    scientifically-based process for establishing gender neutral
    occupational standard and recent news releases have made this a
    generally open and transparent process. However, some details remain
    unknown. Could you describe in more detail the process and progress you
    are making in developing gender neutral occupational standards and the
    process you are going through at Fort Stewart to test them?
        Mr. McHugh and General Odierno. The Army is conducting a physical
    demands study to develop valid, safe physical performance tests that
    can predict a soldier's ability to perform the physically demanding
    tasks of currently closed MOS. The study is a multi-phase study that is
    currently on track and scheduled to be complete by the end of fiscal
    year 2015.
        Branch proponent subject matter experts, in coordination with the
    U.S. Army Research Institute of Environment Medicine (USARIEM),
    identified 31 tasks that are physically demanding and critical to
    occupational performance. These tasks were verified by 500 soldiers
    from 8 brigades across 5 installations. Human physiology is a critical
    aspect of physical performance assessment and USARIEM uses a full human
    use research protocol to measure and evaluate the physiological
    requirements (endurance, strength, power, agility) needed to complete
    all 31 occupational tasks to standard. Measurements were taken for the
    Combat Engineer Occupations at Fort Hood, TX, in August 2013, Field
    Artillery occupations at Fort Bliss, TX, in December 2013, and for
    Armor and Infantry occupations at Fort Stewart, GA, in March 2014.
        In the next few months, we will develop task simulations that will
    effectively and efficiently measure performance by producing the same
    physiological demands as the actual physical tasks. In July 2014, we
    will select ``candidate'' predictive physical performance tasks for
    Combat Engineer occupations that will measure the performance of a
    large sample of soldiers to perform the simulations and predictive
    tests. Similar tests will be conducted for each subsequent occupation
    career field. Finally, we will select a battery of 5 to 7 predictive
    physical tests, evaluate the performance of the actual tasks, and
    compare it to the predictive test scores to validate test standards or
    adjust test standards, as needed. Once validated in a large sample over
    a sufficient time period, the predictive tests can be used for entrance
    into combat arms occupations.

        19. Senator Gillibrand. Secretary McHugh, could you provide details
    on the social and cultural research you are conducting relative to your
    integration studies?
        Mr. McHugh. The purpose of the Gender Integration Study is to
    examine the cultural and institutional factors affecting integration.
    As part of this effort, U.S. Army Training and Doctrine Command
    (TRADOC) is conducting a series of surveys, focus groups, and site
    visits with soldiers to gain insight into their views, concerns, and
    experiences regarding integration. Survey populations and focus groups
    include officers and enlisted soldiers across all cohorts and
    components, cadets from all accession populations, and soldiers from
    various units to include combat engineer, brigade modernization
    command, U.S. Army Sergeant Majors Academy, and 1st Brigade, 1st Armor
    Division; site visits include Process, Policy, and Programs staffs for
    all components and the Ranger Training Brigade.
        The surveys are tailored to provide specific information to the
    study team regarding factors affecting integration. Such factors
    include, but are not limited to, perceptions and views of soldiers
    regarding integration; the levels of experience and interaction of male
    soldiers working with female soldiers; agreement/disagreement with
    common stereotypes; and concerns for/about fraternization, favoritism,
    discrimination, unit cohesion, and readiness.
        Analysis of the various surveys, focus groups, and site visits
    continues and will be used to develop strategies for gender
    integration.

        20. Senator Gillibrand. Secretary McHugh and General Odierno, the
    Army did a 100 percent stand-down training at multiple levels in
    preparation for the repeal of Don't Ask, Don't Tell (DADT), which by
    all measures was successful, but, to my knowledge, nothing similar is
    being done in preparation for women in combat specialties even though
    women are already being moved into combat units. Are you developing or
    have you developed gender-based training similar to the training
    provided to the force in preparation for the repeal of DADT that will
    ease integration of women into previously closed units and positions?
        Mr. McHugh and General Odierno. Since women are already present in
    about 92 percent of all U.S. Army open occupations, the Army will focus
    on integrating the training units that will be specifically impacted.
    The Army requires all impacted units to conduct Equal Opportunity
    Refresher Course (EORC) and SHARP training. This training reinforces
    the Army's values of dignity and respect.

        21. Senator Gillibrand. Secretary McHugh, is that training
    currently being provided?
        Mr. McHugh. Yes, every time a position, unit, or occupation opens,
    the unit conducts the EORC and SHARP training.

        22. Senator Gillibrand. Secretary McHugh and General Odierno, with
    the changes that come with combat integration, I am curious to hear
    whether changes must also be made to the Army's recruitment policies.
    Has the Army's Recruiting Command established tests to determine
    whether an individual qualifies for the mental and physical rigors of
    combat arms occupational specialties in addition to the cognitive
    analysis and aptitude test, and do you plan to do so?
        Mr. McHugh and General Odierno. The Army has tasked the U.S. Army
    TRADOC to conduct a physical demands study in order to develop valid,
    safe, physical performance tests that can predict a soldier's ability
    to perform the physically demanding tasks of currently closed MOS. The
    performance tests will allow the Army to select soldiers, regardless of
    gender, who are capable of safely performing the physically demanding
    tasks of a specific occupation. Additionally, soldiers will be required
    to complete MOS-specific occupational training prior to being awarded
    the MOS. Once the occupational-specific performance tests are
    developed, the Army will determine when and where they will be
    implemented during the accession of new soldiers.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                         armored multi-purpose vehicle
        23. Senator Chambliss. General Odierno, why has the Army adopted an
    acquisition strategy for the replacement of the 52-year-old M113
    vehicle that delays full rate production (FRP) for 9 years and invests
    over $600 million through fiscal year 2021 in an Engineering,
    Manufacturing, and Development phase to produce only 29 prototype
    vehicles over 5 years when Stryker is an off-the-shelf solution that
    could go into immediate production for 4 of the 5 desired AMPV
    variants?
        General Odierno. No existing off-the-shelf vehicle meets AMPV
    operational requirements. After an extensive Analysis of Alternatives
    (AoA) study which examined 115 candidate vehicles against those
    operational requirements, the Army determined that any existing vehicle
    would require design modifications to meets AMPV requirements. The
    study also determined that the Stryker does not currently meet the
    force protection requirements for all AMPV mission roles. Additionally,
    the analysis found that the Stryker, as currently designed, lacks
    sufficient off-road mobility to maneuver in the same operational
    environment as Armored Brigade Combat Team (ABCT) combat vehicles.
    Although the Stryker provides improved force protection against
    underbody threats, it lacks protection against direct fire and indirect
    fire threats. The Army's 360 degree force protection and mobility
    requirements are critical to the AMPV's role within the ABCT formation.
        The AMPV acquisition strategy allows industry to make flexible
    design trades and propose AMPV solutions that meet the Army
    requirements. The Army is holding a full and open competition to find
    the best value solution for the Army's needs, and has not specified or
    limited the competition to any vehicle platform.
        The 29 prototype vehicles produced will support testing to ensure
    that the design proposed will provide the increased mobility and force
    protection required of the AMPV. The Army looks forward to a full and
    open competition among all vendors.

        24. Senator Chambliss. General Odierno, what analysis has the Army
    done to overturn its own conclusions set out in a 2008 AoAs that
    recommended a mixed fleet for the replacement of the M113 vehicles in
    the ABCT that was overwhelmingly weighted toward a Stryker solution,
    and which found that a mixed fleet based on mission provides the best
    equipment for the warfighter?
        General Odierno. The 2008 Combat and Tactical Vehicle Strategy was
    a limited scope study following the M113 divestiture direction. The
    2008 study briefly looked at several vehicles as potential replacement
    options and deemed the Stryker an acceptable, but not preferred,
    candidate vehicle. The Army conducted a more detailed AoA in 2011 to
    identify the most cost-effective solution that could provide the
    required capability for replacing the M113 while reducing technical,
    schedule, and cost risk. The AoA used discriminating characteristics
    and operational conditions, and identified five mission roles that the
    M113 vehicle performed within the ABCT: General Purpose, Medical
    Treatment, Mission Command, Medical Evacuation, and Mortar Carrier. The
    study then identified 115 vehicles, both foreign and domestic, that
    were viable candidates to fulfill the five mission roles. All
    candidates were evaluated against four screening categories: mission
    equipment package suitability, rough-order-of-magnitude average
    procurement unit cost, initial performance analysis on mobility, and
    initial performance analysis on protection attributes compared with the
    base M113. The study identified four candidates for further
    consideration: a turret-less Bradley Fighting Vehicle, a Mobile
    Tactical Vehicle Light with added force protection, the Caiman Multi-
    Terrain Vehicle, and a Stryker Double-V Hull. Additionally, the AoA
    informed the requirements process and validated the capabilities needed
    of the replacement system, which were further validated by the Joint
    Requirement Oversight Council in 2013.

        25. Senator Chambliss. General Odierno, why should funds be spent
    to upgrade the Bradley to just meet the AMPV requirement for protection
    against Improvised Explosive Devices (IED) when a Double-V Hull (DVH)
    Stryker has twice the IED protection of the AMPV requirement and six
    times lower operating costs?
        General Odierno. The Army is not directing an upgrade to the
    Bradley as the solution to meeting the AMPV requirements. The current
    effort for upgrading the Bradley's under belly protection is an ongoing
    effort to support the Bradley Family of Vehicles and our warfighters
    operating in those systems. The Bradley will be maintained as the
    principle Infantry Fighting Vehicle for the near future with the
    cancellation of the GCV program and the additional protection measures
    will support the ABCT's mission. The AMPV Request for Proposals (RFP)
    provides for full and open competition to find the best value solution
    for the Army's needs.

        26. Senator Chambliss. General Odierno, Bradley is a 33-year-old
    design that entered service in 1981. By the time the Army waits 9 years
    for FRP to begin, the design will be 42-years-old, and by the end of
    the production run for all 2,900 AMPV vehicles 10 years later, the
    Bradley design will be 52-years-old--the same age as the obsolete M113
    is now. How does the Army justify not leveraging the most modern
    vehicle and the largest component of its combat vehicle fleet, the
    Stryker?
        General Odierno. The Army has not specified any vehicle, either
    Bradley or Stryker, as the basis for AMPV designs in the pending
    solicitation. The AMPV acquisition strategy allows industry to make
    flexible design trades and propose AMPV solutions that meet the Army's
    requirements. The Army is holding a full and open competition to find
    the best value solution for the Army's needs, and has not specified or
    limited the competition to any specific platform or vehicle.
        Moreover, relevant combat vehicles in the force today have been
    recapitalized and modernized periodically to incorporate state-of-the-
    art design features. Accordingly, current vehicles such as the Bradley
    and Abrams cannot be compared to versions used in the year they were
    introduced.
        No vehicle exists today that could immediately enter FRP and meet
    the AMPV requirements. The Army came to this conclusion after an
    extensive AoA study that examined 115 candidate vehicles. The study
    determined that the Stryker DVH does not currently meet the force
    protection requirements for all AMPV mission roles. Additionally, the
    analysis determined that the Stryker DVH as currently designed lacks
    sufficient off-road mobility to maneuver in the same operational
    environment as ABCT combat vehicles. The study also concluded that
    although the Stryker DVH provides improved force protection against
    underbody threats, it currently lacks protection against direct fire
    and indirect fire threats. The Army's 360 degree force protection and
    mobility requirements are critical to the AMPV's role within the ABCT
    formation. The Army looks forward to a full and open competition among
    all vendors.

        27. Senator Chambliss. General Odierno, I understand the Stryker
    could be in FRP almost immediately based on existing, combat-proven
    designs. Does the Army believe the best strategy for the warfighter is
    to wait 19 years for the M113 to be replaced with a Bradley variant
    that offers half the IED protection of a DVH Stryker?
        General Odierno. The acquisition strategy and current schedule
    projects the first unit equipped to occur in 7 years/fiscal year 2021
    assuming no further delays in the program.
        The Army has not specified any vehicle, either Bradley or Stryker,
    as the basis for AMPV designs in the pending solicitation. The AMPV
    acquisition strategy allows industry to make flexible design trades and
    propose AMPV solutions that meet the Army requirements. The Army is
    holding a full and open competition to find the best value solution for
    the Army's needs, and has not specified or limited the competition to
    any specific platform or vehicle.
        No vehicle exists today that could immediately enter FRP and meet
    the AMPV requirements. The Army came to this conclusion after an
    extensive AoA study that examined 115 candidate vehicles. The study
    determined that the Stryker DVH does not currently meet the force
    protection requirements for all AMPV mission roles. Additionally, the
    analysis determined that the Stryker DVH as currently designed lacks
    sufficient off-road mobility to maneuver in the same operational
    environment as ABCT combat vehicles. The study also concluded that
    although the Stryker DVH provides improved force protection against
    underbody threats, it currently lacks protection against direct fire
    and indirect fire threats. The Army's 360 degree force protection and
    mobility requirements are critical to the AMPV's role within the ABCT
    formation. The Army looks forward to a full and open competition among
    all vendors.
                                     ______

                 Questions Submitted by Senator Lindsey Graham
                                ground vehicles
        28. Senator Graham. General Odierno, how would a 1- to 3-year delay
    impact the Army's acquisition plan for the AMPV as currently
    structured?
        General Odierno. A 1- to 3-year delay in the AMPV RFP would put the
    larger combat vehicle portfolio investment plan and alignment at risk,
    delay initial fielding of the AMPV until at least fiscal year 2022 to
    fiscal year 2024, and delay replacements of the M113s, to include
    vehicles used at the echelons above brigade.
        Any delay in the AMPV program would have negative impacts on the
    combat vehicle industrial base and would ripple through the combat
    vehicle portfolio affecting suppliers at all tiers. As the AMPV program
    commences, it would disrupt the production and development plans of
    Abrams, Stryker, and Bradley as funds previously allocated for these
    programs would have to be redirected to support the AMPV program.
        Operationally, a 1- to 3-year delay would leave soldiers with
    inadequate M113 platforms, which provide much lower levels of mobility,
    survivability, force protection, and networking capability than the
    AMPV will provide. The M113 lacks the adequate space, weight, power,
    and cooling (SWaP-C) capabilities necessary to accept the Army's
    inbound network, reducing the commander's ability to maneuver and
    communicate across the full width and depth of the battlefield.

        29. Senator Graham. General Odierno, how would an AMPV delay impact
    the Army and its soldiers who could potentially be deployed in Vietnam-
    era M113s on the battlefield?
        General Odierno. The M113 family of vehicles has inadequate
    survivability and force protection, and it lacks the SWaP-C to
    incorporate future technologies and the Army's forthcoming
    communications network. The M113 no longer provides commanders with
    viable capabilities to maneuver across the full breadth of the
    battlefield. The limited protection provided by the current M113s is
    not sufficient to keep our soldiers safe. If additions were made to the
    M113 platform to meet the protection requirements then the vehicle
    would lack the power and mobility to accomplish its mission in the ABCT
    formation. The M113 family of vehicles was terminated in 2007. Since
    then, there has been an ongoing effort to replace them. Any delay to
    the AMPV program would increase the risk to soldiers deploying in
    support of future conflicts.

        30. Senator Graham. General Odierno, which vehicle is your number
    one priority for combat vehicle modernization?
        General Odierno. A new Infantry Fighting Vehicle remains the Army's
    number one combat vehicle modernization priority. However, due to
    significant fiscal constraints, the Army will conclude the GCV program
    upon completion of the technology demonstration phase, expected in June
    2014. Instead, the Army is focusing its efforts on refining concepts,
    requirements, and key technologies in support of a future Infantry
    Fighting Vehicle. This includes investment in vehicle components,
    subsystem prototypes, and technology demonstrators. In the future, we
    anticipate initiating a new combat vehicle program informed by these
    efforts, as resources become available.
        Within today's fiscal environment, the AMPV has emerged as the
    Army's major combat vehicle modernization program. The AMPV will
    replace the Army's aging and operationally obsolete M113 Family of
    Vehicles to fill critical capability gaps within the ABCT. The M113
    Family of Vehicles lacks adequate survivability, force protection, and
    mobility to remain a force multiplier within our armored formations.
    Additionally, the M113 lacks the SWaP-C capacity to incorporate the
    future technologies and inbound network capability upgrades required by
    commanders to maneuver across the full breadth of the battlefield. The
    AMPV program is on budget and schedule, and will deliver a significant
    and necessary upgrade to the ABCT.
                                     ______

                    Questions Submitted by Senator Ted Cruz
                   awarding purple heart to fort hood victims
        31. Senator Cruz. Secretary McHugh, section 565 of the NDAA for
    Fiscal Year 2014 requires you to review the terrorist attacks committed
    by Nidal Hasan at Fort Hood in 2009 in order to finally award the
    Purple Heart to the dead and wounded that earned this award in the
    terrorist attack on a military installation nearly 5 years ago. The
    families of the victims and Congress were told that no award of the
    Purple Heart was possible as Mr. Hasan's trial was ongoing. The trial
    is now over. Hasan has been dishonorably discharged and no longer
    retains his military rank. In fact, he said: ``I was on the wrong side
    of America's war, and I later switched sides.'' You have the guilty
    verdict from the trial, and you have the very clear authorization
    language from the NDAA. The families of the victims have suffered
    enough. Can you please tell me, and more importantly the families and
    the wounded who are still with us, that the award for the Purple Heart
    is forthcoming, and when will it be awarded?
        Mr. McHugh. The Army is currently reviewing the eligibility for and
    award of the Purple Heart to victims of the tragic shootings at the
    Recruiting Station in Little Rock, AR, and at Fort Hood, TX, in
    accordance with section 565 of the NDAA for Fiscal Year 2014. Section
    565 specifically states the Secretary of the Army shall assess whether
    the members who were killed or wounded was a ``result of an act of an
    enemy of the United States.''
        As we review the cases and investigations, as well as the reports
    and reviews of these shootings, we will determine if the incidents may
    be characterized as either ``international terrorist attacks'' or
    ``acts of an enemy of the United States.'' Previous reviews of
    available information indicate that the attacks were the result of
    criminal acts of individuals, and that, regardless of the perpetrators'
    characterization of their own actions, they were neither
    ``international terrorist attacks'' nor the acts of ``an enemy of the
    United States'' as those terms are defined in U.S. law.
        We are currently reviewing all of the Purple Heart award criteria
    to determine if the victims of the attacks meet any of the current
    eligibility criteria and the results of this review will be presented
    to Congress later this summer.

                     proposed cuts to brigade combat teams
        32. Senator Cruz. General Odierno, the Army's budget proposes that
    we cut six BCTs by 2019. This is an astounding amount of land combat
    power that you are saying we must eliminate. I am greatly troubled by
    these proposed cuts and am not convinced that other less painful
    measures have not been taken first. For example, the Army's own press
    release states that the Army is going to spend $7 billion on renewable
    energy projects. This is in addition to the Air Force spending money on
    windmills in areas that don't have wind and the Navy buying algae fuel.
    During a Senate Armed Services Committee hearing last month with
    Secretary of Defense Hagel, he said these projects may be luxuries in
    light of the current budget. Do you agree, and if so, why?
        General Odierno. The $7 billion figure refers to the total contract
    capacity of the Army Renewable Energy Multiple Award Task Order
    Contract (MATOC), not a commitment to buy $7 billion of renewable
    energy. The power purchased through the MATOC will be funded through
    the existing Army utility account over a term of up to 30 years,
    requiring no additional appropriated dollars or diversion from other
    accounts. In addition, this contract capacity is available for use by
    all of the Military Services.
        The Army now spends over $1 billion annually on utility bills for
    our installations. During the next 30 years, absent efficiency gains
    and/or lower cost energy, it is projected that the Army's total utility
    bill will be in excess of $40 billion. The Army's plan is to reallocate
    a portion of this amount to fund renewable energy projects on our
    installations. These projects are executed in concert with the private
    sector, which provides engineering and technical expertise along with
    capital funds to cover the costs of construction.
        Awards under the MATOC were made to a total of 48 companies,
    including 20 small businesses. The award recipients that are qualified
    through this process will be able to compete for future renewable
    energy projects issued as task orders under the MATOC. MATOC projects
    issued as task orders will be owned, operated, and maintained by the
    selected task order contractors, not the Army.
        The Army Energy Initiatives Task Force currently has over 265
    megawatts of renewable energy projects in the acquisition or
    construction phase, utilizing different procurement vehicles, all of
    which are expected to avoid future utility costs. These projects will
    be priced at or below projected conventional grid parity. Savings are
    in the form of avoided future costs or stabilization of dramatically
    escalating energy costs. Some projects will provide total installation
    energy requirements from on-site generation. Others will provide energy
    in emergency situations, making our installations' platforms for
    resiliency either to project military power or respond to domestic
    emergencies. These and future investments in renewable energy will add
    to, not detract from, Army readiness.

        33. Senator Cruz. General Odierno, should the Army cancel those $7
    billion in renewable energy projects and try to recoup some of those
    savings for Army BCTs?
        General Odierno. Funding for renewable energy projects under the $7
    billion Army Renewable Energy MATOC will come from future utility
    bills, not additional appropriated dollars or diversion from other
    accounts. Canceling the MATOC will not result in savings as the Army
    must continue to pay its utility bills. The $7 billion figure refers to
    the total contract capacity of the MATOC, not a commitment to buy $7
    billion of renewable energy. The power purchased through the MATOC will
    be funded through the existing Army utility account over a term of up
    to 30 years. Additionally, this contract capacity is available for use
    by all of the Military Services.

                                 national guard
        34. Senator Cruz. General Odierno, last month Secretary of Defense
    Hagel stated with respect to the National Guard versus Active Duty
    Army, that increasing or protecting the Guard from cuts is not
    reasonable stating that, ``we must prioritize readiness, capability,
    and agility.'' Setting aside readiness and agility--do you agree with
    Secretary Hagel in his statement last month that National Guard and
    Reserve units are truly less capable than their Active Duty
    counterparts, and if so, why, and can you also please explain that
    comment?
        General Odierno. Secretary Hagel made it clear during his March 4
    testimony before this committee that he does not believe the Guard and
    Reserve aren't capable, but they have different responsibilities that
    we need to balance. The Army has relied on the Reserve component as an
    integral partner over the last 13 years in support of worldwide
    contingency operations and they have met all assigned mission
    requirements. However, there are certain capabilities that are better
    suited for the Active component and others that are better suited for
    the Reserve component. In general, organizations that are large and
    complex, such as ABCTs, are easier and cheaper to sustain at high
    levels of readiness if in the Active component. Units that are smaller,
    less complex, and primarily composed of soldiers with skills easily
    sustained in civilian employment, such as transportation companies or
    certain construction engineer units, are far more cost effective in the
    Reserve component. Readiness, capability, and agility are all critical
    to the success of the both the Reserve component and the Active
    component.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                             TUESDAY, APRIL 8, 2014

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

                       ARMY ACTIVE AND RESERVE FORCE MIX

        The committee met, pursuant to notice, at 9:34 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Reed, Nelson,
    Udall, Manchin, Gillibrand, Blumenthal, Donnelly, Hirono,
    Kaine, King, Inhofe, McCain, Sessions, Chambliss, Wicker,
    Ayotte, Fischer, Graham, Vitter, Blunt, Lee, and Cruz.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody. The committee
    welcomes General Raymond T. Odierno, USA, Chief of Staff of the
    Army; General Frank J. Grass, ARNG, Chief of the National Guard
    Bureau; and Lieutenant General Jeffrey W. Talley, USAR, Chief
    of the Army Reserve and the Commanding General of the U.S. Army
    Reserve Command. Gentlemen, thank you for your service and
    thank you for joining us today for this very important hearing
    on the Army's size and structure.
        For more than a decade, the men and women of the Active
    Army, the Army National Guard, and the U.S. Army Reserve, have
    shared the burden of the wars in Iraq and Afghanistan. They
    have all done what we have asked and more, and demonstrated
    great professionalism and dedication even after repeated
    deployments.
        All three components grew during the decade-plus of war in
    Iraq and Afghanistan. Now, with the end of the war in Iraq and
    the reduction of our presence and our role in Afghanistan, it
    is understandable that our Services will shrink somewhat.
    Because of the difficult choices imposed by budget caps and
    sequestration, reduction in end strength and force structure
    will be faster and deeper than many expected. In developing a
    plan to address the budget caps, the Army faces the unenviable
    task of generating the needed savings while minimizing military
    risk.
        The Department of Defense's (DOD) fiscal year 2015 budget
    request proposes end strength reductions through fiscal year
    2017 that would leave the Nation with an Active Army of
    450,000, or 20 percent less from its wartime high of 569,000.
    It would leave the Nation with an Army National Guard of
    335,000, or 6 percent less than its wartime high of 354,000;
    and the Army Reserve at 195,000, or 10 percent less than its
    high of 205,000. But these end strength numbers assume that the
    defense budget caps will be increased by $115 billion for the
    fiscal years 2016 through 2019.
        If the budget caps for those years remain unchanged, the
    Army will be required to cut even deeper, reducing the Active
    Army to 420,000, the National Guard to 315,000, and the U.S.
    Army Reserve to 185,000 by fiscal year 2019. The Active Army
    would then be required to divest 680 aircraft, or 23 percent of
    its aviation structure, and inactivate up to 13 of its
    remaining 37 brigade combat teams (BCT), while the National
    Guard would lose 111 aircraft, or 8 percent of its aviation
    force structure, and inactivate up to 6 of its remaining 28
    BCTs.
        General Odierno testified last week that at those levels
    the Army would not be able to meet the requirements of our
    defense strategy and that, ``this will call into question our
    ability to execute even one prolonged, multi-phased major
    contingency operation.''
        Earlier this year, most of our Governors signed a letter to
    the President in which they opposed any cuts to the Army
    National Guard in fiscal year 2015 and through the balance of
    the Future Years Defense Program (FYDP). They also asked that
    all of the National Guard's current operational capabilities,
    as well as its current end strength of 350,000, be preserved
    without change. Many of us would also like to be able to avoid
    cuts to the defense budget, not only to the National Guard, but
    also to Active-Duty Force structure, to military compensation
    and benefits, to training and readiness, and equipment
    modernization. Unfortunately, the budget situation does not
    offer us that option. We have many difficult choices ahead of
    us.
        For instance, the Army proposes to save $12 billion by
    restructuring its aviation assets. This proposal would
    consolidate the Army's Apache attack aircraft in the Active
    component by taking Apache attack aircraft out of the National
    Guard and transferring Black Hawk helicopters to the National
    Guard instead.
        I look forward to the testimony of our witnesses on that
    subject on how the components of the Army will resize,
    restructure, and reorganize to make the reductions required by
    the budget caps now in law, and the impact that these changes
    would have on our ability to meet our national defense
    strategy.
        Again, our committee is grateful to the Services and to
    each of your component contributions to our Nation.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman. Would you put the
    charts up on both sides?
        [The chart referred to follows:]

        Senator Inhofe. I'd like to remind everyone why we're here
    today. We're talking about the yellow force structure wedge.
    The yellow wedge in there, that's end strength, and I think
    we're all familiar with this. Each member has a copy of this
    chart up here. That's significant because it shows the year and
    the amount of cuts.
        If you look down below you'll see efficiencies and all
    that. A lot of times people think that through efficiencies we
    can accomplish these goals. You can see by this chart that you
    can't do that.
        I was going to cover the force mix. I agree with the
    chairman's comments on this and I think you covered it very
    well.
        These cuts come at a time where we're confronting a more
    dangerous and volatile world. In fact, the threats we face are
    outpacing our ability to deter and confront them as a result of
    the massive cuts associated with sequestration. General
    Odierno, you testified last week that 450,000 Active soldiers,
    the number of Active soldiers we will have by the end of fiscal
    year 2017, define the risk as significant in executing the
    Defense Strategic Guidance (DSG). If the Army goes to
    sequestration levels of 420,000 Active soldiers, the Army will
    not be able to implement the DSG.
        At the heart of the Total Army force mix issue is the
    Army's proposal to restructure its aviation assets. While
    everyone is focused on the mix of Apaches in the Army and
    Reserve, the budget request also divests the entire fleet of
    Kiowa Warrior armed scout helicopters and the TH-67 training
    helicopters, and transfers 111 modern UH-60L helicopters from
    the Active to the Reserve component. Black Hawks became
    available because the Army cut three active combat aviation
    brigades in the budget request, so you don't need,
    theoretically, that many.
        I want to hear all these arguments played out today. We
    need to understand the impact of taking our Army down below the
    pre-September 11, 2001, level. I am very concerned that we are
    sacrificing too much capability at a time when we should be
    increasing our current structure and capabilities in these
    uncertain times.
        As I noted in the Army posture hearing last week, we have
    been wrong in the past when it comes to assumptions regarding
    the size of our ground forces and the capabilities required to
    protect this country. We're poised to repeat this same mistake.
    I recalled when we had the Secretary of the Army here that the
    Secretary and I used to sit next to each other on the House
    Armed Services Committee and can remember testimony back in
    1994 that in 10 more years we would no longer need ground
    troops. We were sure wrong then. I think we're wrong today.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        General Odierno, welcome.

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

        General Odierno. Thank you, Mr. Chairman and Ranking Member
    Inhofe. Before I start, I just want to let the committee know
    that as soon as we're done with the hearing I'll be traveling
    to Fort Hood to visit with the soldiers, families, commanders,
    and wounded, and will attend the memorial service tomorrow.
    Things continue to progress there. I'm satisfied that, as we
    continue to investigate and look at this, if we had not
    implemented some of the lessons learned in 2009, the tragedy
    could have been much worse than it was. However, we still have
    much to learn about what happened, why, and what we have to do
    in terms of our mental health screening and assessments, as
    well as taking care of our soldiers. The Army is committed to
    thoroughly understanding what we must do and the actions we
    must take, and we look forward to reporting out to you what we
    have found as we continue and conclude our investigations at
    Fort Hood.
        Mr. Chairman, I'm truly humbled to lead the extraordinary
    men and women of our Army, who volunteer to raise their right
    hand and serve our country. As a division, corps, and theater
    commander for over 5 years in Iraq, I've personally led and
    seen the tremendous sacrifice the soldiers from the Active
    Army, Army National Guard, and U.S. Army Reserve have made for
    our Nation.
        As the Chief of Staff, my focus is on ensuring all soldiers
    from all components are properly trained, equipped, and ready.
    Over the last 13 years, the Army has met the call to defend the
    Nation during two wars. From 2001 to 2011, the Army's budget
    nearly doubled as we restructured, modularized, and modernized
    the entire force, especially our National Guard and U.S. Army
    Reserve. We needed our National Guard and the U.S. Army Reserve
    to serve as an operational reserve. We optimized the Army for
    the known demands of Afghanistan and Iraq and our emphasis was
    on gaining predictability for our deploying units.
        With the war in Iraq over, and as we continue to reduce our
    commitment in Afghanistan, we must confront our difficult
    fiscal environment. We must make tough but necessary choices.
    We must ensure we have the best Army possible, even under full
    sequestration. In developing a total Army solution for the
    future, the Secretary of Defense directed the Army to not size
    for large, prolonged stability operations. Furthermore, we were
    not to retain force structure at the expense of readiness, and
    to develop balanced budgets that permitted the restoration of
    desired levels of readiness and modernization by the end of the
    sequestration period.
        The Secretary of the Army and I provided additional
    guidance to fulfill the needs of our component commanders
    first, and then to disproportionally reduce our Active Forces
    while implementing modest reductions in our Guard and Reserve
    Forces. The Army and the Office of the Secretary of Defense
    (OSD) conducted a transparent, open, and highly collaborative
    budget formulation, force structure, and aviation restructure
    decision process that included representatives from all
    components at every level. Additionally, experts and analysts
    within DOD assessed all proposals for their viability, ensuring
    the Army could meet its defense strategy requirements.
        Finally, numerous meetings of the Joint Chiefs and
    combatant commanders examined these proposals before a final
    decision was made by the Secretary of Defense. The result is a
    balanced approach that gives us the best Army possible, even if
    sequestration continues in fiscal year 2016. The plan calls for
    end strength reductions of 213,000 soldiers, with a
    disproportionate cut of 150,000 coming from the Active Army,
    43,000 from the Army National Guard, and 20,000 from the Army
    Reserve. These reductions to the Active Army represent 70
    percent of the total end strength reductions, compared with 20
    percent from the National Guard and 10 percent from the U.S.
    Army Reserve.
        We could reduce up to 46 percent of the BCTs from the
    Active Army and up to 22 percent of the BCTs from the National
    Guard. This will result in an Army going from a 51 percent
    Active and 49 percent Reserve component to a 54 percent Reserve
    and a 46 percent Active component mix. The Army will be the
    only Service in which the Reserve component outnumbers the
    Active component, and we believe under these fiscal constraints
    it's appropriate.
        The Aviation Restructure Initiative (ARI) allows us to
    eliminate obsolete air frames, sustain a modernized fleet,
    reduce sustainment costs, and efficiently organize ourselves to
    meet our operational commitments and imperatives.
    Disproportionate reductions come from the Active component
    aviation. We will inactivate and eliminate three complete
    combat aviation brigades from the Active component. We will
    move all LUH-72s from the Active component to Fort Rucker in
    order to train pilots across all three components. In the
    National Guard we'll maintain 10 aviation brigades. We will
    move Apaches to the Active component while increasing the fleet
    of UH-60s by sending 111 of the most modern Black Hawk
    helicopters to the National Guard. The National Guard will also
    retain all of its LUH-72s and CH-47s.
        In the end, the Active component will be reduced by 686
    aircraft, which is 86 percent of the total reduction. The
    National Guard will be reduced by 111 aircraft, which is 14
    percent of the total reduction. ARI will result in better and
    more capable formations which are able to respond to
    contingencies at home and abroad.
        My goal remains to sustain the National Guard and U.S. Army
    Reserve as an operational reserve. To accomplish this, we must
    take moderate reductions to overall end strength in order to
    invest in appropriate training and sustainment levels. Combat
    Training Center (CTC) rotations and maintaining more modern
    equipment is expensive. We need to have the resources to fund
    collective training and to sustain equipment modernization. By
    taking the modest end strength reductions to the National Guard
    and Reserve, we can continue to retain them at the current
    record-high levels of readiness and modernization.
        Finally, let me address the calls for a national commission
    to examine Army force structure and why we believe that such a
    commission is unnecessary. First, the Army worked our plans to
    downsize the force and reduce spending levels in an open,
    transparent, and collaborative manner that has been approved by
    the combatant commanders, the Joint Chiefs of Staff, the Office
    of the Secretary of the Army, and the Secretary of Defense
    following months of deliberation and analysis.
        Second, the Army continues to provide Congress with our
    intent, rationale, and proposed plan for the total Army.
        Third, our plan disproportionately reduces Active Forces
    over National Guard and Reserve Forces. With our current and
    future budget levels, cuts will happen. Our proposal adequately
    balances the importance of readiness, responsiveness,
    operational requirements, future requirements, and cost, while
    providing the most effective and efficient force for the budget
    allocated.
        No one is fully satisfied with the final outcome, including
    myself. However, the reality is that the funding in the future
    will not allow us to have everything we may want. These cuts
    will still occur even if we delay our decisions or fail to
    address the issue as a total Army. The results will be a
    hollowing out of our Army. Our soldiers will be less prepared
    and this will cost more lives in the next conflict.
        Our Army is made up of professionals who have superbly
    executed their assigned missions under extraordinary
    circumstances. This Total Force plan reflects the continued
    commitment and sacrifice of soldiers from every component of
    our Army. This is not about Active versus National Guard or
    U.S. Army Reserve. This is about providing the best total Army
    for our Nation.
        Our Army is getting smaller. We must be more ready in all
    three components to respond to future threats. This plan allows
    us to balance end strength, readiness, and modernization across
    the Army and sustain our critical National Guard and U.S. Army
    Reserve Forces as viable operational reserves.
        Thank you, Mr. Chairman, and thank you to the entire
    committee for allowing me to testify. I look forward to your
    questions.
        [The prepared statement of General Odierno follows:]
               Prepared Statement by GEN Raymond T. Odierno, USA
        Chairman Levin, Ranking Member Inhofe, and other distinguished
    members of the committee, thank you for the opportunity to speak with
    you about the total force policy for our Army.
        Let me begin by thanking each member of the committee for your
    support and commitment to the soldiers, civilians, families, veterans,
    and wounded warriors of our Army, particularly while we remain at war
    and with the specter of great fiscal challenges and strategic
    uncertainty. The Nation's investment in your Army over the past decade
    has been decisive in ensuring the success of American soldiers on the
    battlefield and achieving our national security objectives.
                                  introduction
        Despite declining resources, the demand for Army forces continues
    to increase. More than 70,000 soldiers are deployed today and about
    85,000 soldiers are forward stationed in nearly 150 countries including
    nearly 20,000 on the Korean Peninsula. Our soldiers, civilians, and
    family members continue to serve with the competence, commitment, and
    character that our great Nation deserves. I am truly humbled to lead
    the extraordinary men and women of our Army who volunteer to raise
    their right hand and serve our country. As a division, corps, and
    theater commander for over 5 years in Iraq and now as the Chief of
    Staff, I know full well the tremendous sacrifice the soldiers from the
    Active Army, Army National Guard, and U.S. Army Reserve have made for
    our Nation.
                             strategic environment
        Throughout our Nation's history, the United States has grown the
    Army to fulfill the expanded demands of war and then drawn down
    military forces at the close of every war. Today, however, we are in
    the process of rapidly drawing down Army forces before the war is over.
    As we consider the future size and organization of our Army, it is
    imperative we consider the world as it exists, not as one we wish it to
    be. The recent headlines alone--Russia's unlawful annexation of Crimea,
    the intractable Syrian civil war, missile launches by North Korea--just
    to name a few, remind us of the complexity and uncertainty inherent in
    the international security environment. It demands that we make prudent
    decisions about the future capability and capacity that we need within
    our Army. Therefore, we must ensure our Army has the ability to rapidly
    respond to conduct the entire range of military operations, from
    humanitarian assistance and stability operations to general war.
                           adapting the army for war
        The Army over the last 13 years has met the call to defend the
    Nation during two wars. In support of our war efforts, the Army's
    budget nearly doubled as we restructured, modularized, and modernized
    the entire force, especially our National Guard and Reserve. To meet
    our combatant commanders' operational requirements, we grew the Active
    Army from 480,000 to 570,000 soldiers and the Army National Guard from
    350,000 to 358,000 soldiers. We also significantly increased the full-
    time support of our National Guard from 45,555 to 59,270 personnel (30
    percent) and our Reserve from 19,278 to 24,672 personnel (28 percent).
    We increased these full-time support personnel to facilitate building
    and sustaining the unit readiness required to meet the rotational
    demands. We needed the National Guard and Reserves to be more ready and
    to serve as an operational reserve. We built the structure (1st Army)
    that enabled the rotational mobilization, training, and deployment of
    our Guard and Reserve Forces. We optimized the Army for the known
    demands of Afghanistan and Iraq. Our emphasis was on predictability and
    rotational readiness. We equipped and modernized the Reserve component
    to match their Active component counterparts. We included the National
    Guard combat formations in our Army Force Generation process to include
    Combat Training Center (CTC) rotations. From 2001 to 2011, the Army
    budget grew from $79 billion to $138 billion (74 percent). We increased
    the National Guard budget from $6.9 billion to $16.1 billion (132
    percent) and the Reserve budget from $4.7 billion to $8.2 billion (73.8
    percent) to address shortfalls in individual and unit training, medical
    and dental readiness, and other areas that were inhibiting our
    achieving and sustaining desired readiness levels. Additionally, the
    overseas contingency operations funding received during this time
    period also facilitated the Army in meeting the increased demands of
    the two theaters of war.
                      developing a total army force policy
        The war in Iraq is over and we continue to significantly reduce our
    forces in Afghanistan. However, we remain in a period of great
    strategic uncertainty and fiscal ambiguity. Over the past 4 years, the
    Army has absorbed several budget reductions while simultaneously
    conducting operations overseas and rebalancing the force to the wider
    array of missions called for in the defense strategy. From fiscal year
    2012 to fiscal year 2021, the Department of Defense (DOD) will take
    approximately $900 billion in reductions with the Army share of those
    reductions being approximately $265 billion.\1\ Given that personnel
    constitute about half of the Army's budget, reductions in end strength
    and force structure are unavoidable. Our goal remains to properly
    balance end strength, readiness and modernization across our Total
    Army. To achieve these levels of spending reductions while still
    fulfilling the strategic demands for a ready and modern Army, an
    integrated Total Army approach was required.
    ---------------------------------------------------------------------------
        \1\ Consistent with the funding caps specified in the Budget
    Control Act of 2011, the fiscal year 2013 budget proposed $487 billion
    in DOD funding reductions over 10 years, of which the Army's share was
    an estimated $170 billion. In addition, sequestration was triggered in
    2013, forcing an additional $37 billion reduction in fiscal year 2013
    and threatening a further total reduction in DOD funding of
    approximately $375 billion through fiscal year 2021, with the Army's
    portion estimated at $95 billion.
    ---------------------------------------------------------------------------
                         secretary of defense guidance
        In developing our plan to size and shape the Total Army, we first
    took guidance from our civilian leadership. DOD directed the Army to
    not size for large, prolonged stability operations. For the Army, this
    equates to taking risk in our depth and endurance characterized by
    later arriving forces, notably our large Guard combat formations--
    divisions, brigade combat teams (BCT), field artillery brigades, and
    aviation brigades. As we began building our fiscal year 2015 budget,
    the Secretary of Defense specifically directed the Services to not
    retain force structure at the expense of readiness to avoid a hollow
    force. The Secretary recognized that immediately reducing Defense
    budgets as a result of sequestration-level funding would adversely
    affect readiness and modernization in the next 4-5 years, but Services
    were directed to develop balanced budgets that permitted the
    restoration of desired levels of readiness and modernization by fiscal
    year 2021.
               secretary of the army and chief of staff guidance
        The Secretary of the Army and I provided additional guidance to
    first focus on fulfilling the needs of our combatant commanders to the
    greatest extent possible within reduced resource levels. Specifically,
    we directed that we disproportionately reduce our full-time forces as
    low as we responsibly could first and then consider modest reductions
    in our Guard and Reserve Forces to achieve balance among and within the
    components in terms of end strength, readiness, and modernization.
                             force planning process
        The Army and the Office of the Secretary of Defense conducted a
    transparent, open, and highly collaborative budget formulation, force
    structure, and aviation restructure decision process that included
    representation of all components at all levels and incorporated
    elements of their input. Additionally, the National Guard Bureau
    represented the views of the Adjutants General in all deliberations and
    at the request of the National Guard Bureau, Army leadership engaged
    State Adjutants General on the budget, force structure, and aviation
    restructure plans on numerous occasions beginning in August 2013.
        The 2013 Strategic Choices and Management Review, the 2014
    Quadrennial Defense Review and fiscal year 2015 Program Budget Review
    gave us the opportunity to take a hard look at how best to size and
    organize our Army. We considered the unique attributes,
    characteristics, and complementary nature of the three components. This
    Total Army plan establishes the structural conditions to ensure our
    National Guard forces meet State responsibilities while ensuring we
    have adequate Active Forces to meet ongoing operational demands that
    require presence, forward stationing and in some cases no notice
    deployments. All components are necessary and this plan allows both the
    National Guard and U.S. Army Reserve to continue to provide relevant
    forces to implement the defense strategy domestically and overseas.
        All proposals were examined during the process. Many were
    infeasible because they did not faithfully adhere to Secretary of
    Defense guidance, failed to meet the operational demands of our
    combatant commanders, or did not achieve the necessary funding
    reductions once fully burdened costs were incorporated. Our Army is
    made up of professionals across all components who have superbly
    executed their assigned missions under extraordinary circumstances.
    This plan reflects the continued commitment and sacrifice of soldiers
    from every component of our Army. No one is fully satisfied with the
    final outcome, including myself. However, the reality is that the
    funding in the future will not allow us to have everything we may want.
    We must make tough but necessary choices in order to balance end
    strength, readiness, and modernization across the Total Army so that
    all of our soldiers, regardless of component, can accomplish their
    missions.
                                  end strength
        Our goal in executing reductions has been to maintain the proper
    balance between end strength, readiness, and modernization across the
    Total Army. We cannot hollow out the Army by becoming over-manned and
    unprepared for future contingencies. We are reducing end strength as
    rapidly as possible, while still meeting our operational commitments,
    to concentrate remaining funds on rebuilding readiness. However, to do
    this we must accept greater risk in our modernization programs in the
    near term. Therefore, consistent with the defense guidance, we are in
    the process of drawing down end strength. By the end of fiscal year
    2015, we will reduce the Active Army from a wartime high of 570,000 to
    490,000, the Army National Guard from 358,200 to 350,200, and the Army
    Reserve from 205,000 to 202,000 soldiers.
        But with sequestration-level caps in fiscal year 2016 and beyond,
    the Army will be required to further reduce Total Army end strength to
    420,000 in the Active Army, 315,000 in the Army National Guard, and
    185,000 in the Army Reserve by the end of fiscal year 2019. At these
    end strength levels, we will not be able to execute the defense
    strategy. It will call into question our ability to execute even one
    prolonged, multi-phased major contingency operation. Our Army will not
    have sufficient capacity to meet ongoing operational commitments and
    simultaneously train to sustain appropriate readiness levels.
        This would be a total reduction of 213,000 soldiers since 2011,
    with 150,000 coming from the Active Army, 43,000 coming from the Army
    National Guard and 20,000 from the Army Reserve. These end strength
    reductions to the Active Army represent 70 percent of the Total Army
    end strength reductions compared with 20 percent from the National
    Guard and 10 percent from the U.S. Army Reserve. As we are executing
    the reductions from the war time end strength gains from the Active
    Army, this plan will retain approximately 53,000 full time support
    positions in the National Guard in order to facilitate support for
    future operations. This represents approximately 8,000 full time
    support positions above pre-war levels. Our Total Army plan will also
    result in going from a 51 percent Active and 49 percent Reserve
    component mix in fiscal year 2012 to a 54 percent Reserve and 46
    percent Active component mix by the end of fiscal year 2017. The Army
    will be the only Service in which the Reserve component outnumbers the
    Active component.
        The President's fiscal year 2015 budget request provides a balanced
    and responsible way forward in the midst of ongoing fiscal uncertainty.
    It allows the Army to reduce and reorganize forces, but incurs some
    risk to equipment modernization programs and readiness. Under the
    fiscal year 2015 budget request, the Army will decrease end strength
    through fiscal year 2017 to a Total Army of 440-450,000 in the Active
    Army, 335,000 in the Army National Guard, and 195,000 in the Army
    Reserve. This should be the absolute floor for end strength reductions.
    In order to execute the defense strategy, it is important to note that
    as we continue to lose end strength our flexibility deteriorates as
    does our ability to react to a strategic surprise. Our assumptions
    about the duration and size of future conflicts, allied contributions,
    and the need to conduct post-conflict stability operations are
    optimistic. If these assumptions are wrong, our risk grows
    significantly.
        These cuts will be particularly felt by our generating force that
    mans, trains, and equips our Army. We do not scale the generating force
    with the operating force in order to have capability to grow the Army
    in a time of war. It currently comprises about 18 percent of the Army,
    far below the ratio of the other Services. At a 440-450,000 end
    strength in the Active Force, the Army will be at risk to meet our
    generating force requirements by having to reduce to historically low
    manning levels of 83,000.
        We believe that the Total Army plan balances the reductions
    appropriately across all components and achieves balance, even at the
    lowest estimated sequestration levels. This will ensure that we have
    the resources necessary to continue to train and maintain the Army and
    to have a force that we can still modernize effectively for the future.
                        brigade combat teams restructure
        We have undertaken a comprehensive reorganization of Army units to
    better align force structure with limited resources and increase unit
    capability. Reorganization of the current operational force of Active
    Army Infantry, Armored, and Stryker BCT from 38 to 32 reduces tooth to
    tail ratio and increases the operational capability of the remaining
    BCTs. All Active Army and Army National Guard BCTs will gain additional
    engineer and fires capability, capitalizing on the inherent strength in
    combined arms formations.
        Previous budget cuts coupled with sequestration-level funding could
    result in a reduction of up to 46 percent of the BCTs from the Active
    Army and up to 22 percent of the BCTs from the National Guard. Most of
    our contingency plans call for our forces being ready and deployed
    within 90 days to meet requirements. If we are forced to reduce to the
    lowest BCT levels under the current law caps, the available inventory
    of ready units will not meet the requirements. This would cause our
    national leaders to have to make the decision of either not providing
    needed forces to our combatant commanders or deploying unready, not
    fully manned BCTs with limited logistical support. Both increase the
    risk to mission success and our American soldiers. Thus, our ability to
    maintain the appropriate number, mix, and types of BCTs across the
    Total Army is essential.
                        aviation restructure initiative
        We cannot afford to maintain our current aviation structure and
    still sustain modernization while providing trained and ready Aviation
    units across all three components. Therefore, we have conducted a
    comprehensive review of our strategy and developed an innovative
    concept to restructure our aviation fleet to address these issues. We
    considered operational commitments, readiness levels, future
    requirements and costs. Army leadership listened carefully to National
    Guard concerns over this plan, especially the desire of the National
    Guard to maintain aviation brigades. The Aviation Restructure
    Initiative (ARI) allows us to eliminate obsolete airframes, sustain a
    modernized fleet, reduce sustainment costs while maintaining all
    aviation brigades in the Reserve component. However, we will eliminate
    three full aviation brigades in the Active component.
        The ARI is a cascading transition of Aircraft across the Total
    Army. It begins as we divest the Army's oldest or non deployable
    helicopters, the fleet of OH-58A/C, Kiowa Warriors, and TH-67s. We have
    not been successful in developing and fielding a new armed aerial scout
    aircraft for over 2 decades. For more than 2 decades, our interim
    solution has been the OH-58D Kiowa Warrior. It has served us well but
    to keep it flying safely for another decade will require a significant
    investment of billions of dollars. Investing that sort of money in an
    aging platform simply does not make sense, if we have an option.
        Next, we will replace the OH-58Ds in the Active component with AH-
    64 Apaches already in the Active Force and with Apaches in the National
    Guard. In our analysis of alternatives, we compared the Kiowa Warrior
    to other available aircraft, and determined that the AH-64 ``E'' Apache
    helicopter with the Modern Target Acquisition and Designation System
    and teamed with unmanned aerial systems (UAS) is the overwhelming
    preferred aircraft in the armed aerial scout role. Teaming the AH-64E
    with UAS further expands our aerial scout capabilities. The ``Echoes''
    can control the flight of the UAS and their sensors, and if armed,
    their weapons as well. Adding this new dimension to Army aviation is a
    significant increase in capability, but it also increases the training
    requirements of the ``Echo'' aviators as they are now controlling
    multiple aircraft and passing data and commands between them and with
    troops in contact on the ground, all while piloting their own aircraft,
    often at night and in dangerous terrain and weather. This teaming has
    already started in combat operations in Afghanistan with considerable
    success due to highly skilled aviators and ample unit training. Without
    using the Apaches to fulfill both our attack and armed aerial scout
    roles, we cannot generate the capacity required to fulfill combatant
    commander operational demand at our current Active component/Reserve
    component force mix. This plan allows us to facilitate the necessary
    collective training for this high demand, low density aircraft,
    especially as we reduce our Apache shooting battalions from 37 to 20 in
    order to facilitate them in the armed aerial scout role.
        The Apaches removed from the National Guard will be replaced with
    our modernized UH-60L and they will continue to receive UH-60M
    Blackhawks as part of already scheduled modernization efforts. By
    retiring the Kiowas and Kiowa Warriors and consolidating the Apaches in
    the Active Army to increase our total operational capacity, we will
    displace over 150 Blackhawk medium lift helicopters. The Active Army in
    turn will transfer 111 Blackhawk helicopters to the Army National Guard
    and 48 Blackhawk helicopters to the U.S. Army Reserve. These UH-60
    Blackhawks will significantly improve National Guard capabilities to
    support combat missions and increase support to civil authorities, such
    as disaster response, while sustaining security and support
    capabilities to civil authorities in the states and territories.
        Finally, the Army will transfer nearly all Active Army LUH-72
    Lakota helicopters to the U.S. Army Aviation Center of Excellence at
    Fort Rucker, Alabama, and procure an additional 100 LUH-72 Lakotas to
    round out the training fleet. These airframes will replace the TH-67
    Jet Ranger helicopter fleet as the next generation glass cockpit, dual
    engine training helicopter. Army and DOD leadership listened carefully
    to National Guard concerns over their need to retain LUH-72s to
    accomplish state missions. At current funding levels, this plan will
    enable the Army National Guard to retain all of its LUH-72 aircraft.
        Under this plan, the disproportionate reductions, as in end
    strength, come from the Active component. Eighty-six percent of the
    total reduction of aircraft (687 of 798) will come out of the Active
    component compared with 14 percent of aircraft (111 of 798) from the
    Guard and Reserve components. The Active Army's overall helicopter
    fleet will decline by about 23 percent, and the Army National Guard's
    fleet of helicopters will decline by approximately 8 percent. We have
    already made the decision to eliminate three entire aviation brigades
    from the Active component while we sustain all our aviation brigades in
    the Reserve components. The National Guard will also retain all LUH-
    72s, CH-47s and gain additional UH60s to accomplish state missions
    while giving up their AH-64s in order for the Army to meet critical
    mission requirements.
        The resulting Active and Reserve component aviation force mix as a
    result of the ARI will result in better and more capable formations
    which are able to respond to contingencies at home and abroad. With
    this proposal, we achieve a leaner, more efficient, and capable force
    that balances operational capability and flexibility across the Total
    Army. Overall, we believe this plan will generate a total savings of
    about $12 billion.\2\
    ---------------------------------------------------------------------------
        \2\ See Attachment on Aviation Restructure Initiative savings
    estimate.
    ---------------------------------------------------------------------------
                             readiness and training
        Our Army must be able to rapidly deploy, fight, sustain itself, and
    win against complex state and non-state threats in austere environments
    and rugged terrain. Readiness levels are determined primarily by the
    need to support requirements as given by our combatant commanders and
    our overall budget authorities to train, man, equip, and sustain Army
    units. Also, various statutes and regulations proscribe our ability to
    access, mobilize, train, deploy, employ, off-ramp, and cycle our Guard
    and Reserve Forces. We focus our highest readiness on those units that
    most likely will be the earliest deployers during a crisis response.
    These units are not solely Active forces. Numerous National Guard and
    Reserve units, especially critical enablers, are part of this mix.
    Additionally, in determining readiness levels we must keep in balance
    the need for National Guard Forces to respond in a crisis and execute
    their State responsibilities.
        Our training levels for the various components are directly related
    to desired readiness levels. Home Station Training along with
    culminating events at CTCs are the primary tool the Army uses to reach
    necessary collective training levels for our units. A typical Active
    BCT will conduct a CTC rotation every 2 years and reach brigade level
    proficiency at the end of that training. They will have the ability to
    rapidly respond to crisis. A National Guard BCT will conduct a CTC
    rotation every 7-10 years with the goal of reaching company level
    proficiency. However, they will require additional training and
    preparation prior to any deployment.
        The duration of this additional training for National Guard BCTs is
    dependent on several factors, including pre-mobilization readiness and
    complexity of the assigned mission. Experience shows us that high end
    war fighting capabilities require greater collective training to
    achieve combat proficiency. Due to the geographic dispersion of most
    National Guard BCTs and coupled with limited opportunity for
    collective-level combined arms training, they require greater post-
    mobilization collective training time to reach necessary deployment
    readiness levels. This process also substantially increases their
    overall cost compared to an Active BCT.
        For our aviation brigades, the requirement to conduct
    reconnaissance and surveillance and air ground integration requires
    sustained collective training that is much greater than just
    maintaining individual pilot or crew proficiency. The collective
    training between manned and unmanned systems along with coordination
    with ground forces in order to deliver accurate and effective fires is
    critical as we build our combined arms capabilities.
        As overall end strength declines, the necessity to sustain
    readiness becomes a greater imperative. This will also result in
    increasing demand for our Guard and Reserve Forces. Maintaining them as
    a strategic reserve is not practical in the current security
    environment. Combatant commanders' requirements to help shape their
    theaters are growing, especially in the Asia-Pacific region, so it is
    highly likely that operational unit readiness will be fully consumed
    and dwell times will be significantly reduced. We have already suffered
    in our overall readiness because of reduced funding under sequestration
    in fiscal year 2013. In order to ensure all components have the
    necessary dollars to fund training and sustain readiness, it is
    critical to balance end strength and force structure reductions across
    the Total Army.
                                 modernization
        Currently, our Guard and Reserve are the most modernized in the
    history of our Army. Over the last decade, the Army has improved the
    Equipment On Hand and equipment modernization levels for both the Army
    National Guard and the Army Reserve. Overall equipment on hand levels
    have improved significantly as a result of increased congressional
    funding and a focused effort by the Army to increase the modernization
    of the Reserve components. More importantly, the equipment provided to
    the Army National Guard and the Army Reserve has been the same modern
    equipment provided to the Active component, resulting in significant
    increases in modernization to 86 percent for the Army National Guard
    and 76 percent for the Army Reserve. Our modernization efforts will
    continue to emphasize improving operational capability, flexibility,
    and modernization across all components to ensure a ready and capable
    Total Army. However, more modern equipment is more expensive to
    maintain. If we are unable to balance our reductions in end strength
    and force structure across all components, the result will be an
    inability to sustain that modern equipment effectively and to obtain
    the capabilities needed for future operations.
                national commission on the structure of the army
        There have been some calls for a National Commission to examine
    Army force structure. They point to a similar commission for the Air
    Force that looked at their structure and mix of forces between their
    Active, National Guard, and Reserve. We do not recommend a commission
    and believe it will hinder the Army's ability to balance end strength,
    readiness, and modernization as we downsize the force and fulfill
    congressional direction to reduce spending.
        First, as stated earlier, the Army worked our plans to downsize the
    force and reduce spending levels in an open, transparent, and
    collaborative manner. Action officers, general officers, and senior
    civilian leadership from the National Guard Bureau, Office of the Chief
    of Army Reserve, Office of the Secretary of Defense, Joint Staff and
    combatant commands participated in the analysis and deliberations.
    Numerous meetings of the Joint Chiefs addressed these issues. Opposing
    views and proposals were thoroughly debated in these meetings.
    Additionally, experts and analysts within DOD assessed all options for
    their viability in ensuring the Army could meet its defense strategy
    requirements. All of these conversations and analysis were considered
    before the final decision was made by the Secretary of Defense.
        Second, the Army continues to be open and transparent in providing
    Congress with our intent, rationale, and proposed plan for the Total
    Army. We have and continue to explain our plan in person to Governors
    and Adjutant Generals. We have and continue to explain our plan in
    person to Governors and Adjutant Generals. While no one is excited
    about losing any assets, Governors especially understand that fiscal
    constraints require common sense solutions.
        Third, our plan disproportionately reduces Active ground and
    aviation forces, and includes modest reductions to our National Guard
    and Reserve. National Guard and Reserves must be a part of the
    reductions and excluding them will mean increasing reductions in the
    Active and Reserve component, readiness, and modernization, thereby
    increasing the risk to the Army's ability to implement the defense
    strategy. We remain committed to working closely with Members of
    Congress on this issue, but believe a commission will impede the Army's
    ability to carry out its mission.
                                    closing
        We have taken the overwhelming majority of reductions in this plan
    from the Active component. We know the importance of all three
    components and this plan is not about Active versus the National Guard
    or Reserve; this is about providing the best Total Army for our Nation.
    Our Army is getting smaller and we must be more ready in the Active,
    the National Guard, and U.S. Army Reserve to respond to future threats.
    This proposal allows us to balance end strength, readiness and
    modernization for all of our components and sustain our valuable Guard
    and Reserve Forces as a viable operational reserve.
        Regardless of component--Active, Guard, or Reserve--our soldiers
    have served honorably with distinction and have fought bravely and
    tenaciously on battlefields to defend our country. Their service and
    sacrifice is something we must never forget. Therefore, it is incumbent
    on us to ensure they are organized, trained, and equipped to answer the
    Nation's call at home and abroad whenever and wherever they are needed.
    Our recommendation delivers the best Total Army that will allow them to
    do just that.

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Levin. Thank you very much, General Odierno.
        General Grass.

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

        General Grass. Chairman Levin, Ranking Member Inhofe, and
    members of the committee, it's an honor to testify here today.
    I'm pleased to participate with General Odierno and General
    Talley to discuss the important issues before us.
        Before I continue, Chairman Levin, on behalf of the
    guardsmen, both Army and Air, please accept our thanks for your
    distinguished career of service to the Nation. Everyone who
    wears a uniform today has been positively impacted by your
    leadership.
        Chairman Levin. Thank you very much.
        General Grass. Let me begin by saying, to meet the
    challenges of today and tomorrow will take nothing less than a
    concerted effort by the total Army, Active, Reserve, and Guard.
    The Guard is committed to being a part of that team.
        As I look to the future and envision the National Guard, I
    do so mindful of the last 12-plus years, fighting as part of a
    Combined Joint Force. Today's Army National Guard is the best-
    manned, best-trained, and best-equipped in its history. It is
    accessible, ready, capable, and provides a significant value to
    the taxpayers. Your Guard has proven time and again that we
    fight our Nation's wars, we defend the Homeland, and we have
    the structure to build enduring partnerships, both overseas and
    at home.
        During the last 12-plus years, we have deployed guardsmen
    overseas more than 760,000 times. Domestically, National Guard
    soldiers and airmen responded to emergencies in 53 States and
    territories in fiscal year 2013. Our highly successful State
    partnership program has yielded strong military-to-military
    relations where 15 of our partner nations, from Estonia to
    Jordan, El Salvador to Mongolia, have paired with our States
    and deployed 79 times.
        None of this is possible without the support we've received
    from this committee and our parent Services. The assistance
    Congress has provided in the form of the National Guard and
    Reserve equipment account has been invaluable. We must be
    careful to preserve the operational force we've built in the
    National Guard, but sequestration already threatens the Total
    Force.
        The National Guard provides our country, our Army, and our
    Air Force with flexible military capability and capacity that
    cannot be easily replaced once it's gone.
        I recently returned from an overseas trip to visit the
    outstanding guardsmen and guardswomen mobilized. In my travels,
    I am frequently told by commanders that when you see our
    soldiers in the combat zone they are indistinguishable as to
    whether they are guardsmen, Active Duty soldiers, or Army
    reservists. This is exactly the way we want it and we should be
    resolved to ensure it remains that way.
        I am proud to say that the Guard units and soldiers have
    accomplished every mission assigned to them. This includes BCTs
    conducting counterinsurgency operations and combat aviation
    brigade deployments, and nonstandard units such as agricultural
    business development teams. We have done all of these missions
    side-by-side with our joint, interagency, and international
    partners.
        This integration did not occur overnight, nor did the
    evolution from strategic reserve to operational force. It
    happened far from home, apart from families, and with great
    sacrifice.
        Our National Guard soldiers tell me they want to remain
    operational at some predictable level, with deployment
    opportunities. They look forward to integrated, realistic, and
    challenging annual training periods and weekend training
    assemblies, such as those that our CTCs and our state-of-the-
    art equipment provides.
        What I just outlined for you is how I see the Army National
    Guard as a truly solid partner both overseas and at home.
    However, given the current fiscal uncertainty and turbulence, I
    am concerned that this vision is at high risk. Congress
    provided much-appreciated relief with the Bipartisan Budget Act
    (BBA). However, even with the BBA, the Army National Guard
    fiscal year 2015 budget might be reduced as much as $1 billion
    from the fiscal year 2014 level.
        Chairman Levin. Could I please interrupt you, General
    Grass, for 1 minute?
        We are about to lose a quorum, and while we have a quorum,
    I want to ask the committee to consider 1 civilian nomination
    and a list of 131 pending military nominations. First, I would
    ask the committee to consider the nomination of Brian McKeon to
    be Principal Deputy Under Secretary of Defense for Policy. Is
    there a motion to report that nomination?
        Senator Inhofe. I so move.
        Chairman Levin. Is there a second?
        Senator Reed. Second.
        Chairman Levin. All in favor say aye. [Chorus of ayes.]
        All opposed, nay. [No response.]
        The ayes have it. The motion is carried.
        Now I ask the committee to consider a list of 131 pending
    military nominations. All these nominations have been before
    the committee the required length of time. Is there a motion to
    favorably report them?
        Senator Inhofe. I so move.
        Chairman Levin. Is there a second?
        Senator Reed. Second.
        Chairman Levin. All in favor say aye. [Chorus of ayes.]
        All opposed, nay. [No response.]
        The ayes have it. The motion is carried.
        [The list of nominations considered and approved by the
    committee follows:]
     Military Nominations Pending with the Senate Armed Services Committee
     Which Are Proposed for the Committee's Consideration on April 8, 2014.
        1. In the Marine Corps, there are 82 appointments to the grade of
    colonel (list begins with Bamidele J. Abogunrin) (Reference No. 1309).
        2. Col. John R. Ewers, Jr., USMC, to be major general (Reference
    No. 1474).
        3. In the Air Force Reserve, there are 43 appointments to the grade
    of brigadier general (list begins with Mark W. Anderson) (Reference No.
    1480).
        4. LT6 John E. Hyten, USAF, to be general and Commander, Air Force
    Space Command (Reference No. 1508).
        5. RADM(lh) Margaret G. Kibben, USN, to be rear admiral (Reference
    No. 1526).
        6. Capt. Brent W. Scott, USN, to be rear admiral (lower half)
    (Reference No. 1529).
        7. MG Wendy M. Masiello, USAF, to be lieutenant general and
    Director, Defense Contract Management Agency (Reference No. 1538).
        8. VADM Sean A. Pybus, USN, to be Vice Admiral and Deputy
    Commander, U.S. Special Operations Command (Reference No. 1539).
        Total: 131

        Chairman Levin. Thank you very much. Sorry to interrupt,
    but I think all of you can understand this and welcome the
    interruption.
        General Odierno. I appreciate that very much, Senator.
        Chairman Levin. It's not often you appreciate being
    interrupted, but I think in this case you probably do.
    [Laughter.]
        General Grass. Yes, sir.
        Chairman Levin. Thank you.
        General Grass. This will require the Army National Guard to
    accept risks in fiscal year 2015 in certain areas. Our BCTs
    will be limited to achieving individual, crew, and squad-level
    proficiency. Personnel will have fewer opportunities to attend
    schools and special training. Our armories, which average 44
    years in age, will lack funding to repair those facilities
    except for those that have health and safety issues.
        Looking forward, when reduced funding levels return in 2016
    we will have to make further difficult decisions. We also face
    the prospect of a reduction in Army National Guard end strength
    to 315,000 by 2019. This is unacceptable risk and it
    jeopardizes the DSG.
        These fiscal challenges come at a time when we are faced
    with asymmetric threats and conventional threats from state and
    non-state actors, to include our physical environment.
        As I close, I would like to leave you with a very simple
    but critical thought. The very core of the National Guard is
    our most important resource, our people who have volunteered to
    serve. The well-being of our soldiers, their families, and
    their employers remains a top priority of every leader
    throughout the Guard. We will continue to aggressively work to
    eliminate sexual assaults and suicides across the force and
    maintain faith with our people, the very same people who put
    their faith in us.
        Mr. Chairman and distinguished members of the committee,
    your National Guard is a combat-tested and proven hedge against
    uncertainty in this turbulent security and fiscal environment.
    Thank you for the opportunity to appear before you today.
        [The prepared statement of General Grass follows:]
                 Prepared Statement by GEN Frank J. Grass, ARNG
                                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 of the Army and Air National
    Guard. The National Guard serves with distinction as the Department of
    Defense's (DOD) primary combat reserve to the Army and Air Force and as
    the Governor's military force of first choice in times of domestic
    crisis. Each day citizen-soldiers and airmen serving throughout the
    Nation help to achieve our Nation's overseas and domestic security
    objectives by doing three things extraordinarily well: fighting
    America's wars, protecting the Homeland, and building global and
    domestic partnerships. These three overlapping operational missions
    align within Chairman Dempsey's strategic direction to deter threats,
    assure partners, and defeat adversaries while also providing localized,
    reliable, on-demand security and support to Americans within their own
    neighborhoods. The National Guard stands poised to build upon its 377-
    year legacy as an operational force deeply engrained within the
    foundation of American strength and values.
        Today, thanks to the support of Congress and the American people,
    after 12 years of war the operational National Guard is the best
    manned, trained, equipped, and led force in its history. We are able to
    do all of this because of our great citizen-soldiers and airmen.
    Today's Guard is accessible, ready, and capable; and I might add, it
    provides a significant value to the American taxpayer.
    Accessible
        There is no limit to accessibility due to a full suite of
    authorities available to access and employ the Guard. Since September
    11, our leaders have mobilized our National Guard members more than
    760,000 times for overseas operations. We have filled every request for
    forces while also meeting every request to support domestic response
    missions at home. At the same time the National Guard is present in
    approximately 3,000 communities and immediately accessible to their
    governors in the event of a domestic incident or natural disaster. The
    National Guard is scalable and able to provide forces for any
    contingency or emergency.
    Ready
        The National Guard is at its highest state of readiness as a result
    of readiness funding and equipment modernization provided by Congress.
    I want to especially thank Congress for support provided in the
    National Guard and Reserve Equipment Account which have been critical
    to our equipment and modernization upgrades. Your support ensures that
    the men and women of the National Guard have the resources they need
    when called upon by the Nation.
        The Army National Guard adheres to the same individual readiness
    requirements as the Active Army. It differs when it comes to collective
    training. This difference is by design. All Army units, regardless of
    component, follow the same training strategy. The Army strategy
    reflects the characteristics of the components and maintains some parts
    of the Active Army at a higher state of readiness for nearly immediate
    employment. Leveraging the inexpensive cost of dwell, Army Guard units
    maintain sufficient collective proficiency to support leader
    development and are ready to quickly surge to a higher level of
    readiness. Our Brigade Combat Teams culminate their progressive force
    generation cycle at Combat Training Center rotations like their Active
    Duty counterparts. If mobilized, these units can achieve Brigade Combat
    Team level proficiency after 50-80 days of post-mobilization training.
    When deployed for operational missions Guard and Active Army units are
    indistinguishable. Army Guard Brigade Combat Teams will not replace
    early deploying Active Army Brigade Combat Teams in their overseas
    ``fight tonight'' missions. Army Guard Brigade Combat Teams are well-
    suited for surge and post surge mission sets.
        The National Guard is the ``fight tonight'' force in the Homeland;
    ready to respond rapidly and decisively to the Governor's requirements.
    Just as the Active Army and Air Force are forward-deployed around the
    world the National Guard is forward-deployed in communities across
    America. This forward presence saves lives.
    Capable
        The capability of the National Guard is exactly as it should be
    today. Our units, soldiers, and airmen have accomplished every mission
    assigned to them, including the broadest range of mission sets
    possible: from Brigade Combat Teams conducting counterinsurgency
    operations and Combat Aviation Brigade deployments, to expeditionary
    wings operating around the world, as well as non-standard units such as
    Agribusiness Development Teams. We have done all of these missions
    side-by-side with our joint, interagency, and international partners.
        The Army National Guard allows the Nation to rapidly expand the
    Army though mobilization with trained and ready units. The only way you
    can do this is if the Army Guard has sufficient capacity with the same
    training, organization, and equipment maintained at appropriate
    readiness levels. Maintaining an Army Guard with similar force
    structure to the Active component is important to growing future combat
    leaders and providing the necessary strategic depth we need in our land
    forces.
        Domestically, we have proven time and again our ability to meet the
    needs of the governors and our citizens, regardless of the scope of the
    crisis. Whether responding to a natural disaster such as Hurricane
    Katrina or Sandy, Colorado flooding, California wildfires, or the
    Boston Marathon Bombing, the National Guard is everywhere when it is
    needed.
    Value
        As an adaptive force capable of rapidly generating as-needed
    forces, today's National Guard offers significant fiscal value to the
    Nation for tomorrow's turbulent security environment. The National
    Guard's lower personnel costs and unique capacity-sustaining strengths
    also provide efficiencies to free up critical resources for Total Force
    modernization, recapitalization, and readiness. At one third of the
    cost of an Active Duty servicemember in peacetime the Guard provides a
    hedge against uncertainty while allowing us to address our fiscal
    situation. Furthermore, every dollar invested in the National Guard
    allows for a dual use capacity that provides the Governors and the
    President capabilities to meet the demands both within and beyond U.S.
    borders.
        DOD faces tough decisions on how to balance readiness while
    preserving force capacity as a strategic hedge in an uncertain and
    complex world. Already cuts in fiscal year 2015 have significantly
    impacted our readiness in that no National Guard Brigade Combat Teams
    will be sent to our Combat Training Centers. In fiscal year 2016, if
    BCA level cuts are imposed, DOD and the National Guard will have to
    make even more difficult decisions than those in this budget request.
    We will face greater reductions in manpower, our modernization and
    recapitalization efforts will be delayed significantly, and the
    frequency of critical collective training and leader development
    experiences, such as Combat Training Center rotations, will diminish or
    even go away. As a Total Force, this will impact the National Guard's
    ability to provide forces for overseas and domestic contingencies.
    However, as we move forward in this difficult financial environment,
    today's unprecedented National Guard readiness posture offers options
    to preserve both capability and capacity rather than choose between
    them. This investment should not be squandered.
    Accountability
        Ensuring the National Guard is an effective and accountable steward
    of public resources begins with every soldier and airman. Innovations
    that improve efficiency must continue to be encouraged and implemented.
    Everyone in the National Guard--from general officers to privates and
    airmen--must adhere to, and embody, the ethical standards articulated
    in our core values.
        Our responsibility must be to ensure that the American people feel
    confident that our actions, with regard to the use of resources, are
    above reproach. We must audit activities, both inside and outside of
    the National Guard Bureau, to bolster an environment of full
    accountability if we hope to continue to earn the respect of the
    American public and to recruit the best and brightest that America has
    to offer.
        We are currently doubling our efforts to ensure that we remain good
    stewards of the taxpayer's money. Despite having an already lean
    headquarters we have followed the Secretary of Defense's directive to
    decrease our headquarters staff by 20 percent. We are completing a
    major overhaul of our contracting process through a number of steps, to
    include a revamped organizational structure to provide greater senior
    leadership oversight, improved formal training, an internal contract
    inspection program, and a rewritten National Guard Acquisition Manual.
    We will continue to actively advance our methods of increased
    accountability as we hold ourselves to the highest standards of fiscal
    ethics and integrity.
                                   the future
        Looking to the future, there are three things the National Guard
    will continue to do for this Nation extremely well. First, we will
    execute the warfight as the proven combat Reserve for both the Army and
    Air Force. Second, we will protect the Homeland as the ``fight
    tonight'' force in our local communities. Finally, the structure of our
    force, the very nature of our force, is trained for the warfight and
    ready to respond in the Homeland, allowing us to continue to build
    enduring partnerships both at home and abroad.
    Fighting America's Wars
        DOD continues to meet the challenges posed by the persistent,
    evolving, and emerging threats and to engage around the world. The
    operational capabilities of the National Guard are an integral part of
    these efforts. Over the last decade, the American people's investment
    has ensured the National Guard is an operational and integral force.
    Some 115,000 guardsmen have 2 or more deployments. Furthermore, fiscal
    year to date, the National Guard has deployed more than 11,000
    personnel to 11 countries. However, we expect these deployments to
    decrease over time as the conflict in Afghanistan draws down.
        There is no question that National Guard citizen-soldiers and
    airmen training, equipment, and capabilities closely mirror that of
    their Active component counterparts. We are also an adaptive force that
    is changing as the threats to the United States evolve. Modernization
    and equipping of Army Guard units gives the Nation a rapidly scalable
    land force to address threats to the United States and its allies.
    Sustaining the advantages of today's National Guard requires
    maintaining a high state of readiness through some level of operational
    use, relevant training, and continued investment in modernization and
    force structure. Thanks to the Bipartisan Budget Act we remain that
    strong operational force, but without further action by Congress the
    National Guard, along with the Army and Air Force, will have to make
    difficult choices about readiness and modernization.
        A force of citizen-soldiers and airmen that has met or exceeded
    established readiness and proficiency standards, the National Guard is
    a crucial operational asset for future contingencies. We will remain
    adaptable as we plan and prepare to operate effectively in the joint
    operational environment as part of the Army and Air Force and execute
    emerging missions.
    Protecting the Homeland
        The National Guard provides the Governors with an organized,
    trained, and disciplined military capability to rapidly expand the
    capacity of civil authorities responding under emergency conditions.
    Prepositioned for immediate response in nearly every zip code across
    the country the National Guard can quickly provide lifesaving
    capabilities to the States, Territories, and the District of Columbia.
    Whether it is the 3,100 National Guard members supporting recent winter
    storms across 12 States, 7 Civil Support Teams supporting water
    decontamination in West Virginia, or the Dual Status Command concept in
    support of the Super Bowl, our soldiers and airmen are always ready.
    Should the ``worst day in America'' occur, our fellow citizens and
    State Commanders in Chief expect us to be there; ready to respond
    quickly and effectively.
        The National Guard also assists U.S. Northern Command and the
    Military Services in the daily execution of Federal missions such as
    providing immediate response against weapons of mass destruction or
    industrial accidents. Every day Air National Guard fighters are
    protecting the Nation's skies and the Army National Guard air defense
    forces are protecting the Homeland. The National Guard supports the
    Department of Homeland Security to assess the vulnerabilities of our
    Nation's critical infrastructure, assists in interdicting transnational
    criminals at our borders, conducts wildland firefighting, and augments
    security during special events. The National Guard community-based
    tradition spans 377 years of localized experience and national service
    in times of need and is America's clear first choice for military
    response in the Homeland.
    Building Global and Domestic Partnerships
        Each day, the National Guard strengthens and sustains partnerships
    around the world and within our communities. The National Guard's
    innovative State Partnership Program pairs individual States with
    partner nations to establish long-term cooperative security
    relationships in support of the geographic combatant commands. The
    State Partnership Program is a joint security cooperation enterprise
    highly regarded by U.S. Ambassadors and combatant commanders around the
    world that has evolved over 20 years and currently consists of 68
    partnerships involving 74 countries. As a result of these strong
    military-to-military relationships, 15 partner nations--from Estonia to
    Jordan, from El Salvador to Poland--have paired up with our States and
    deployed 79 times together to Iraq and Afghanistan. National Guard
    airmen and soldiers participated in 739 State Partnership Program
    events across all combatant commands in fiscal year 2013 alone.
        The three fundamental characteristics of the State Partnership
    Program that help define its success are, first and foremost, the
    enduring relationships fostered; the ability to share the National
    Guard's highly relevant domestic operations expertise; and lastly, the
    National Guard's interagency and intergovernmental role in response to
    domestic crises and disasters. Additional benefits of the State
    Partnership Program include economic co-development, educational
    exchanges, agricultural growth to build food security, and support to
    other Federal agencies such as the State Department. National Guard
    civilian expertise in areas such as engineering, emergency management,
    infrastructure development, and reconstruction are in significant
    demand within developing nations that are eager to partner with
    America, but require sustained trust-building engagements before
    relationships can realize their full potential. Some of today's State
    partnerships span more than 20 years. During that time, the individual
    careers of National Guard soldiers and airmen have matured alongside
    those of their counterparts in partner countries thereby creating
    enduring relationships. Overall, the complementary nature of the
    National Guard's three core competencies provides a powerful security
    cooperation enabler for combatant commanders to employ.
        We also serve our individual States and the Nation from within the
    same communities where we live and work when out of uniform. The local
    relationships we forge with our public and private partners provide
    daily benefits that strengthen communities through programs such as
    Youth ChalleNGe--a successful community-based program that leads,
    trains, and mentors 16-18 year old high school dropouts. Over the past
    21 years, 121,976 former dropouts have taken the ``ChalleNGe'' and
    demonstrated the program's success. These programs enable seamless
    public-private synergy.
    Our People
        At the very heart of these core competencies is our most important
    resource--our people. The well being of our soldiers, airmen, their
    families, and their employers remains a top priority for every leader
    throughout the National Guard. We will continue to aggressively work to
    eliminate sexual assault and suicides across the force and maintain
    faith with our people--the very same people who have put their faith in
    us.
                     prevent sexual assault and harassment
        Sexual assault is a crime, a persistent problem that violates
    everything we stand for. All of us have a moral obligation to protect
    our members from those who would attack their fellow servicemembers and
    betray the bonds of trust that are the bedrock of our culture.
    Eliminating sexual assault in the National Guard remains a moral
    imperative, with leaders setting and enforcing standards of discipline,
    creating a culture that instills confidence in the system, and a no
    tolerance culture for inappropriate relationships or sexist behavior.
        To assist us in preventing sexual assault and harassment, in August
    2012 the National Guard Bureau established the Office of Complex
    Investigations within the Bureau's Judge Advocate's Office to assist
    the Adjutants General in responding to reports of sexual assault
    arising in a non-Federal status. To date the Bureau has certified 92
    specially trained investigators that are able to assist the States and
    to respond to their needs when an incident of sexual assault or
    harassment arises. The efforts of the Office of Complex Investigations
    to work in close collaboration with the State military leadership has
    been a tremendous success and invaluable enabler in assisting the 54
    States, Territories, and the District of Columbia in addressing this
    most serious problem.
    Suicide Prevention
        One of the strengths of the National Guard is that we are
    representative of our great American society. Unfortunately, this also
    means that the suicide trends our society struggles with are also
    present in the National Guard. While suicides in the Air National Guard
    are decreasing, the Army National Guard rates remain high. Although
    there have been a below average number of Army National Guard suicides
    year to date in 2014, there were 119 suicides in 2013, the highest per
    year number over the past 6 years.
        To better understand and address this serious issue we have taken a
    number of actions. We have reached out to the State Mental Health
    Directors and Commissioners for opportunities to partner with and
    establish relationships, which will allow us to ensure that appropriate
    State, local, and community resources are available to our citizen-
    soldiers and airmen. Furthermore, each State, Territory, and Air
    National Guard wing currently has a licensed behavioral health provider
    that provides clinical mental health assessments, education,
    information, and referrals for our soldiers and airmen. These providers
    also act as subject matter expert advisors to our senior leaders. We
    are also working with the Air Force to learn from its superior suicide
    prevention program. Fortunately, Congress allocated $10 million for
    additional Army National Guard behavioral health counselors in the
    fiscal year 2014 budget. The National Guard Bureau also has
    representation in suicide prevention at the DOD level where we
    participate on suicide prevention committees and councils, and to
    ensure we are getting the best information and the latest research.
    This is a complicated problem; however, I assure you that the National
    Guard will engage all support programs in order to work collaboratively
    to address this heartbreaking challenge.
    National Guard Psychological Health Program
        Our Psychological Health Program provides ready access to high
    quality mental health services to our airmen, soldiers, and their
    families. We provide support to our members in several ways. Our State
    Directors of Psychological Health (DPH) are very effective at directly
    addressing help-seeking behaviors and reducing stigma by educating all
    levels of leadership about psychological health as part of force
    readiness. In calendar year 2013 Air National Guard DPHs worked 3,500
    clinical cases, 17,000 information and referrals visits, made 54,000
    outreach contacts, mitigated 243 suicides and managed 336 high risk
    cases in the National Guard. We work closely with the Department of
    Health and Human Services (HHS) to leverage services and support for
    our members by increasing access to behavioral healthcare and offering
    mental health vouchers through the Substance Abuse and Mental Health
    Services Administration Access to Recovery program. Through HHS, the
    Health Resources and Service Administration identifies specific
    federally funded health initiatives and programs to better support
    health care needs for the National Guard population, especially in
    remote, rural areas. Additionally, the Centers for Medicare and
    Medicaid, through our close working relationship with HHS, has trained
    all National Guard contracted counselors on the Affordable Care Act for
    guardsmen who may be uninsured or under-insured. Finally, we have a
    total of 174 Army and Air National Guard mental health counselors
    throughout the 54 States, Territories, and the District of Columbia
    that are available to our guardsmen who are in need of assistance.
    National Guard Family Programs
        As Overseas Contingency Operations wind down in 2014, funding is
    also expected to decrease for our family readiness programs that are
    tied to the challenges our guardsmen face when dealing with a
    deployment. Our lessons learned during the last 12 years have shown
    that we cannot go back to pre-September 11 assumptions with little to
    no support infrastructure for geographically-dispersed servicemembers
    and their families. Our family programs leverage a network of strategic
    partnerships that enhance well-being through increased access to
    outreach services. For instance, 454 Army National Guard Assistance
    Center specialists and 91 Air National Guard Airman and Family
    Readiness Program Managers are spread throughout the Nation and offer
    immediate outreach and referral for servicemembers and families.
    Moreover, each of the 101 National Guard State Child and Youth Program
    Coordinators provide support to our servicemembers' children that in
    2013 saw more than 50,000 National Guard children participate in events
    such as youth camps and councils. Maintaining access to current
    services and resources, particularly those that build strong family and
    spouse relationships, and strengthen financial wellness and employment
    will pay dividends in future years and will directly contribute to the
    readiness of our force.
                               fiscal challenges
        Before closing I would like to address the fiscal challenges we are
    facing. The investments made in the National Guard as an operational
    force have served the Nation well over the past 12 plus years. None of
    this is possible without the support we have received from this
    committee and our parent Services. However, the uncertain fiscal
    environment in the future will certainly impact the Guard. Secretary
    Hagel has already outlined the significant drawdown in force structure,
    including reductions in the Army and Air National Guard. Secretary
    Hagel has already outlined the significant drawdown in force structure,
    including reductions in the Army and Air National Guard. While Congress
    provided relief in fiscal year 2014 and 2015 with the Bipartisan Budget
    Act, the Budget Control Act (BCA) remains the law. The failure to
    address the cuts required by the BCA will impact our ability to
    modernize and recapitalize our equipment, particularly in the Air
    National Guard. It will also degrade the readiness of the Army National
    Guard.
        These fiscal challenges come at a time when we are faced with
    asymmetric and conventional threats from state and non-state actors; to
    include our physical environment. These challenges demand the full
    capability the National Guard currently provides, both at home and
    overseas, and its ability to adapt to meet critical future missions. We
    can reduce the Force Structure of the Army Guard to 335,000 spaces,
    with an end strength of 345,000 Army guardsmen and still comply with
    the Defense Strategic Guidance; albeit at increased risk. Any cuts
    below this present too high of a risk in my view, not only in terms of
    the threats we face overseas, but also in the Homeland.
                  closing remarks: always ready, always there
        The National Guard is always there when the Nation calls. Whether
    serving in uniform or in their capacity as civilians, national
    guardsmen are vested in a culture of readiness and volunteer service.
    Time and time again, I see examples of where innovative civilian skills
    complement military training in operations both overseas and at home.
    Likewise, the military expertise garnered from the past 12 years of
    consistent operational use has improved our ability to support the
    Homeland. Whether responding to a manmade or natural disaster or
    planning for future emergencies with first responders, the unique
    combination of civilian and military experience pays tremendous
    dividends to the American taxpayer. Today's National Guard is flexible
    and scalable to America's changing needs on any given day. The National
    Guard has been and will remain ``Always Ready, Always There'' for our
    Nation.
        I want to thank you for your continued support of our citizen-
    soldiers and airmen. I look forward to your questions.

        Chairman Levin. Thank you very much, General Grass.
        General Talley.

      STATEMENT OF LTG JEFFREY W. TALLEY, USAR, CHIEF OF THE ARMY
    RESERVE AND COMMANDING GENERAL OF THE U.S. ARMY RESERVE COMMAND

        General Talley. Chairman Levin, Ranking Member Inhofe,
    distinguished members of the committee, thank you very much for
    the opportunity to appear before you today. It's an honor to
    represent America's Army Reserve, a lifesaving and life-
    sustaining Federal force for the Nation.
        I would like to begin by thanking the committee for the
    steadfast support you have provided to all members of our Armed
    Forces and their families.
        The Army Reserve is a community-based force of 205,000
    soldiers and 12,900 civilians living and operating in 54 States
    and territories and 30 countries. We provide almost 20 percent
    of the total Army force structure for only 5.8 percent of the
    budget. That's a great return on investment, especially given
    the positive economic impact we make everywhere we are.
        As the only component of the Army that is also a single
    command, we are embedded in every Army service component
    command and combatant command, and we currently have almost
    20,000 soldiers serving around the globe, with 6,000 still in
    Afghanistan. We also provide a unique linkage to industry and
    America's private sector, as most of our troops are traditional
    reservists who work in technical careers in the civilian sector
    that directly correlate to what they do in the Army Reserve. In
    fact, most of the total Army's support and sustainment
    capabilities, such as our attorneys, chaplains, civil affairs,
    military history, logistics, information operations, postal,
    personnel, medical, doctors, nurses, chemical, transportation,
    public affairs, full spectrum engineering, and all of that are
    in the Army Reserve.
        Because the majority of these soldiers are traditional
    Reserve soldiers, they keep their technical skills sharp at
    little or no cost to DOD. Currently, 74 percent of all the
    doctoral degrees and almost half of all the master's degrees in
    the total Army are held by Army Reserve soldiers.
        I'd like to take a few minutes to share some stories that
    illustrate our unique capabilities and the dedication of our
    Army Reserve soldiers and families. On November 8, 2013, a
    typhoon struck the Republic of the Philippines. The Army
    Reserve has almost 4,000 soldiers permanently assigned
    throughout the Pacific and most of them are organized under the
    9th Mission Support Command, which is commanded by Brigadier
    General John E. Cardwell. I received a call the same day from
    General Caldwell and also from General Vincent K. Brooks, who's
    the Commanding General for U.S. Army Pacific, about the crisis
    and the need for immediate assistance for the Philippines. I
    authorized and supported the immediate use of a Logistics
    Support Vessel stationed in Hawaii and within 48 hours we had
    13 crew members, all traditional reservists, preparing to set
    sail.
        I also called Major General W. Gary Beard to Active Duty,
    an Army Reserve individual mobilization augmentee serving in
    U.S. Army Pacific Command (USARPAC), who left immediately for
    the Philippines to assist in leading ground coordination
    support of USARPAC.
        We conducted many more missions, but this illustrates the
    ability of the Army Reserve to respond and act quickly. We
    exercised that capability every day in service to requirements
    at home and abroad.
        On October 29, 2012, Super Storm Sandy hit New York and New
    Jersey, resulting in immediate need for assistance. That day I
    authorized to Active Duty our emergency preparedness liaison
    officers (EPLO) for full-time support to the Federal Emergency
    Management Agency (FEMA). EPLOs provide direct linkage to DOD
    in time of crisis. Our EPLOs, supporting FEMA and linked to
    Army North and U.S. Northern Command (NORTHCOM), quickly
    identified military assistance requirements. Within 48 hours we
    had multiple units on Active Duty and en route to the east
    coast to assist their fellow citizens.
        Specifically, I had three dewatering and pump units
    providing relief located at Breezy Point, where they executed
    dewatering missions and support to our citizens. In addition,
    we had two Chinook helicopter teams activated to provide
    support to the National Guard Joint Task Force Headquarters.
        These are just some of the examples of how the Army Reserve
    can immediately respond to assist Americans in need during a
    complex catastrophe. As the Commanding General for the U.S.
    Army Reserve Command, I have the authority to order immediate
    help when and where needed to assist our first responders, our
    police and our firefighters, and our great State force--the
    Army and Air National Guards.
        In the case of Super Storm Sandy, I ordered the troops to
    Active Duty via annual training for 29 days, which then gave us
    time to convert the orders over to 12304[a] mobilization
    orders, as requested by General Charles H. Jacoby, Jr., USA,
    the NORTHCOM Commander. The Army Reserve, as a dual mission
    force, can routinely provide this type of support to States in
    need, as authorized under the National Defense Authorization
    Act of 2012.
        My last story is about an Army Reserve family, the
    Henshields. Don and Janet Henshield are like so many military
    families. They love their country and they're proud to have
    their most precious resource, our sons and daughters, serve in
    the military. What makes Don and Janet extra special, in my
    opinion, is the fact that they had three boys serve in combat
    in Iraq and Afghanistan, all as Army Reserve soldiers. Their
    sons' names are Landon and Cody, and a son-in-law named Jacob.
    All three became wounded warriors. The wounds and experience of
    war were severe, so severe, in fact, that they would no longer
    be able to do what they wanted most, to serve as soldiers in
    the Army.
        The many months of multiple surgeries and treatments, both
    physical and mental, took a tough toll on that family,
    especially when they found out that Landon, who was finally
    recovering from his war wounds, had developed cancer.
    Eventually, Landon died. As Cody and Jacob continue to struggle
    with their own wounds and the grieving associated with losing
    Landon, my wife and I got to know this family well. In fact, my
    wife visited with them regularly during this entire tragic
    ordeal.
        But this story has a happy ending. Normally what I've seen
    in similar circumstances is a family that hates the military.
    But not here. Don, Janet, and the whole family appreciated the
    tremendous support the Army Reserve and our whole Army family
    gave them under the most difficult situation you could ever
    find yourself as a family. Their courage, their commitment to
    our Army and to the Nation, make my contributions and those of
    so many others pale in comparison. Don and Janet represent to
    me the best of what it means to be American. I will miss
    Landon, especially our talks about my Jeep J-10 pickup, which
    is a classic, and on television, Duck Dynasty, he liked that
    show. But he taught this soldier a lot about giving and a lot
    about dying.
        In closing, since September 11, 2001, more than 275,000
    Army Reserve soldiers have been mobilized. Like all Reserve
    components, we have become part of the operating force, and I'm
    sure we all agree that we must preserve that capability.
    Essential to this effort is the necessity to maintain our full-
    time support, which is currently authorized at 13 percent, the
    lowest of any Service or component. The DOD average for the
    Reserve component is 19.4 percent full-time support.
        In addition to increasing our full-time authorizations on
    parity with the DOD average, I urge your support on two very
    important legislative proposals that have been submitted to the
    committee on modifying the military technician program. These
    proposals allow for greater flexibility and upward mobility for
    our members in and out of uniform.
        As you are aware, I have provided the committee a statement
    that outlines the challenges of the Army Reserve and some
    specific ways the committee and Congress can assist us in
    keeping us viable and strong in service to others. I ask for
    your continued support for all of our Services and components
    as we keep America secure and prosperous.
        I very much look forward to your questions, twice a citizen
    and Army Strong.
        [The prepared statement of General Talley follows:]
               Prepared Statement by LTG Jeffrey W. Talley, USAR
                                  introduction
        Chairman Levin, Ranking Member lnhofe, distinguished members of the
    committee, thank you for the opportunity to represent the more than
    200,000 soldiers, civilians, and family members of the U.S. Army
    Reserve. On their behalf, I would like to thank the committee for the
    steadfast support you have provided to them, especially during the past
    12 years.
                      america's operational reserve force
        The Army Reserve is America's dedicated operational Federal Reserve
    of the Army--a premier provider of trained, equipped, ready, and
    accessible soldiers, leaders, and units to the Total Army, the Joint
    Force, and our combatant commanders worldwide.
        Since September 11, 2001, more than 275,000 \1\ Army Reserve
    soldiers have been mobilized and seamlessly integrated into the Active
    Army and the Joint Force. Today, more than 19,000 still serve in direct
    support of Army Service component commands and combatant commands
    across the globe, including nearly 4,000 \2\ soldiers in Afghanistan.
    ---------------------------------------------------------------------------
        \1\ 275,542 since September 11, 2001, as per G-3/5. Source: HQDA
    system ``MDIS'' Mobilization Deployment Information System.
        \2\ From G-3/5: as of March 11 2014, 18,990 AR soldiers were on
    duty in support of ASCC/COCOMS, and 3,951 Army Reserve soldiers were in
    Afghanistan.
    ---------------------------------------------------------------------------
        Yet, while we are no longer in Iraq and could soon be out of
    Afghanistan, we face a world, as Secretary Hagel recently described it,
    that is growing ever more ``volatile, . . . unpredictable, and in some
    instances, . . . threatening to the United States.'' \3\
    ---------------------------------------------------------------------------
        \3\ ``We are repositioning to focus on the strategic challenges and
    opportunities that will define our future: new technologies, new
    centers of power and a world that is growing more volatile, more
    unpredictable, and in some instances more threatening to the United
    States.''
    ---------------------------------------------------------------------------
        Continued regional instability, violent extremism, the
    proliferation of weapons of mass destruction, and any number of other
    factors, would seem to predict that the future global security
    environment is likely to be even more complex and potentially dangerous
    than it is today. So we must be prepared to meet the threats and
    challenges of the future.
               army reserve capabilities vital to mission success
        Never before in the history of our Nation has the Army Reserve been
    more indispensable to the Army and the Joint Force, and the reason is
    the critical skills and capabilities they bring to the fight--skills
    often acquired through soldiers' civilian careers and honed in service
    to our Nation.
        We not only provide professional skills and capabilities vital to
    the success of the Total Army and the Joint Force--but we also provide
    capabilities not found anywhere else in the Active Army, the Army
    National Guards, or our sister Services. Most, if not all, of those
    capabilities are vital during major combat operations but also vital
    during times of local and national emergencies affecting the Homeland.
        Those capabilities include theater-level transportation and
    sustainment, pipeline and distribution management, railway and water
    terminal operations as well as other high demand career fields such as
    doctors and nurses, lawyers, engineers, and cyber warriors. Put simply,
    Army Reserve citizen-soldiers add the operational flexibility and
    strategic depth so essential to the Army's ability to Prevent, Shape,
    and Win across the full range of military operations in which our
    Nation is, and will continue to be, engaged.
        A significant portion of the Army's technical enablers--including
    90 percent of civil affairs, 65 percent of logistical units; 60 percent
    of doctors, nurses, and other health professionals; 40 percent of
    transportation units; 35 percent of engineers; 24 percent of military
    police, as well as quartermaster and ordnance units--are provided by
    the Army Reserve. As a single command with an authorized end strength
    of 205,000 soldiers and 12,600 civilians arrayed under a variety of
    theater commands, the Army Reserve has the flexibility to quickly
    tailor or task-organize for any mission in sizes ranging from
    individuals to large formations.
        Indeed, steady demand for Army Reserve capabilities has introduced
    a new paradigm of reliance on the Army Reserve as an essential part of
    our national security architecture.
        As a dedicated Reserve Force under Federal control, the Army
    Reserve is an indispensable Total Army partner that is ready and
    accessible 24/7. It provides direct and immediate access to high-
    quality, operational soldiers, leaders, and units for both planned and
    emerging missions. Our focus to support the Army's Regionally Aligned
    Forces ensures that Army Reserve soldiers and leaders will be ready to
    support the Department of Defense's global requirements.
                      defense support of civil authorities
        In the National Defense Authorization Act (NDAA) for Fiscal Year
    2012, with the enactment of section 12304a of title 10, U.S.C.,
    Congress provided the Department of Defense with new Reserve component
    access authority that allows soldiers to be involuntarily mobilized for
    up to 120 days to assist our fellow Americans in the United States
    during domestic emergencies, when Federal Assistance is requested by
    the Governors. The same lifesaving and life-sustaining capabilities so
    essential to missions abroad make the Army Reserve an optimum force for
    preserving property, mitigating damage, and saving lives here at home.
        In fact, key capabilities in high demand during a major disaster,
    such as an earthquake or hurricane, are prominent in the Army Reserve
    and nearly all Defense Support of Civil Authorities response missions
    could benefit from the Army Reserve's unique capabilities and core
    competencies. In addition to those already mentioned, Army Reserve
    capabilities also include aviation lift, search and rescue, or
    extraction; quartermaster units (food, shelter, potable water, heated
    tents, et cetera); protection of key infrastructure; supply; civil
    affairs; public affairs; public and civilian works; as well as a
    significant portion of full spectrum engineer capability--with some
    capabilities almost exclusively within the Army Reserve.
        Our Expeditionary Sustainment Commands deploy to locations devoid
    of infrastructure and quickly open seaports and airports, while our
    logistics and supply chain personnel are experts at moving supplies
    into affected areas.
        Army Reserve aviation units include medical evacuation helicopters,
    and fixed wing aircraft that can provide quick transportation in a
    disaster response area, and heavy lift helicopters that can rapidly
    move relief supplies, equipment and construction material into
    devastated areas.
        Our Engineer units include search and rescue teams, debris removal
    capabilities, horizontal and vertical construction, and bridge
    construction capabilities. We even have a prime power company,
    headquartered at Fort Belvoir, VA, that provides commercial-level
    electrical power to affected areas.
        We also provide 100 percent of the Army's Emergency Preparedness
    Liaison Officers (EPLO), and nearly 50 percent of the Department of
    Defense's EPLOs, who maintain communications between the Department of
    Defense, Federal, State, and local governments, and nongovernmental
    organizations to coordinate assistance between all parties during
    emergency response events. They serve as subject matter experts on
    specific capabilities, limitations, and legal authorities and keep
    track of Army Reserve capabilities in their States and regions.
        Thus, the same trained and ready forces that provide indispensable
    and immediately accessible capabilities for operations abroad, today
    stand ready to support domestic emergency and disaster relief efforts
    at home.
                     a good return on america's investment
        The Army Reserve provides all of these capabilities, and nearly 20
    percent of the Army's trained soldiers and units, for just 6 percent of
    the total Army budget.
        We are the most efficient and cost-effective Reserve component and
    the lowest ratio of full-time support to end strength in the entire
    Department of Defense--about 13 percent. With our unique structure of
    combat support and combat service support, or technical enablers, the
    majority of our soldiers are traditional Army Reserve soldiers, with
    full-time jobs in the public and private sectors that keep their
    technical skills sharp at little or no cost to the Department of
    Defense.
        For many missions supporting a Combatant Command's Theater Security
    Cooperation Strategy such as Build Partnership Capacity, it makes sense
    to leverage the capabilities of the Army Reserve, especially since
    Congress increased direct access to our capabilities with the enactment
    of section 12304b of title 10, U.S.C., in the NDAA for Fiscal Year
    2012. So, in this era of constrained fiscal resources, using the Army
    Reserve is a particularly cost-effective way to mitigate the risks
    while simultaneously maintaining an operational reserve.
        In addition to the return on investment the Army Reserve provides
    to the Army and the Department of Defense, there is also a return in
    the form of a positive economic impact to States and communities across
    the United States.
        Each year the Army Reserve invests billions in local communities,
    in the form of payroll to local soldiers and Army Reserve civilian
    employees; utilities and other services to municipalities; civilian
    contractors and administrative support; as well as professional,
    scientific and technical services in areas like environmental clean-up
    and protection--which in turn generates tens of thousands of new food
    industry, service-related, and other non-Department of Defense jobs,
    creating new income for families and a positive economic climate for
    State and local communities.
                    a new generation of army reserve leaders
        For these and many other reasons, the Army Reserve that some people
    still recall from the 1990s is long gone. As my predecessor testified 3
    years ago to the Senate Appropriation subcommittee, ``I have seen the
    Reserve of the future and it is now.''
        Today's citizen-soldiers are highly educated and professionals in
    their civilian careers. They are our doctors, lawyers, academics,
    scientists, engineers, and information technology specialists on the
    leading edge of their fields--a new generation of soldiers who grew up
    with technology in their hands, practice it in their professions and
    leverage it while in uniform. Today, 75 percent of the doctorate
    degrees in the Total Army and half of the master's degrees are found in
    the Army Reserve. Our soldiers' education and skills are invaluable to
    the civilian career fields in which they work, but they are also
    invaluable to the Army Reserve.
        Physically and mentally fit, and fundamentally resilient, Army
    Reserve soldiers are America's steady state, operational reserve Force.
    In times of crisis or national emergency, the Army Reserve can respond
    quickly to our Nation's call. A ready Army Reserve not only offers the
    Nation an insurance policy, but it can provide an opportunity to create
    a ``Soldier for Life'' when soldiers leave Active service due to
    downsizing. Transitioning these soldiers to the Army Reserve helps the
    Army keep faith with them and their families who have a propensity to
    serve. Becoming a ``Soldier for Life'' preserves the taxpayer's
    investment in training them and offers new military career tracks that
    may bridge the transition for soldiers and their families.
        Offering a continuum of service option supports the Chief of Staff
    of the Army's recent guidance to leverage the unique attributes and
    responsibilities of each component and preserves the operational
    experience gained from more than 12 years of war while continuing to
    prepare soldiers and units for future challenges.
                       fiscal year 2015 budget and beyond
        In his February 24 preview of the fiscal year 2015 budget,
    Secretary Hagel echoed the Chief of Staff of the Army's concern for the
    future, citing the need to ensure a ``highly ready and capable Army,
    able to dominate any opponent across the full spectrum of operations.''
        To achieve the balance between the budget caps and military
    strength, the Secretary said, we must reduce our structure by fiscal
    year 2017 in all three components. The Army Reserve will reduce from
    our current end strength of 205,000 to 195,000.
        While ``the changes would result in a smaller Army,'' the Secretary
    said, the reductions ``would help ensure that the Army remains well-
    trained and clearly superior in arms and equipment.''
        General Odierno's directive for an Army Reserve end strength of
    195,000 soldiers by 2017 is an acceptable risk to sustain a ready and
    operational Army Reserve. It preserves the combat tested experience of
    today's generation that will be used to train the next generation and
    keep us prepared for the future.
        Conversely, if the Budget Control Act remains unchanged for fiscal
    year 2016 and beyond, and the Army Reserve is directed to significantly
    lower its end strength by another 10,000 soldiers, it would negatively
    impact our ability to provide technical enablers, skills, and
    capabilities vital to success in many missions.
      america's army reserve: a lifesaving, life-sustaining force for the
                                     nation
        Whether it is providing trained and ready forces for combat
    missions, contingency operations abroad, or saving lives and protecting
    property at home, today's Army Reserve is America's lifesaving, life-
    sustaining force for the Nation.
        For more than 12 years, through two major conflicts and numerous
    contingency operations, the Army Reserve became a full partner with
    America's Active-Duty Forces. We now have more combat veterans in our
    ranks than at any point in recent history, and many thousands more
    preparing to serve if called.
        Indeed, I can say, without hesitation, that we have, quite
    literally, the best Army Reserve in history. In the future, they may be
    needed more than ever.
        Thank you for the steadfast support Congress has always provided
    our Army Reserve men and women who have served our country so
    selflessly during the past 12 years, and continue to do so every day.

        Chairman Levin. Thank you so much, General Talley.
        Let's have a 7-minute first round.
        General Odierno, first, please pass along to the Fort Hood
    family and the Army family, the thoughts and the condolences of
    this committee, if you would.
        On the ARI, what I'd like to do is first call on you,
    General Grass, to outline the alternative that you've offered.
    Then, I'm going to call on General Odierno to comment on that
    proposal. I think we have to get into this issue. It's one of
    the important issues that we are going to be struggling with.
    General Grass, could you outline the proposal which you offered
    to the Chiefs as an alternative to the one which they adopted?
        General Grass. Thank you, Mr. Chairman. First, let me say
    that over the past 12-plus years as we've deployed our aviation
    teams, I've had an opportunity to visit some of those
    facilities, to visit the great men and women, and they are very
    thankful for the upgrades that we've received, almost $900
    million in upgrades over the years.
        They have fought hard, no doubt. A unit just returned from
    Missouri, my home State, after many hours in combat. In fiscal
    year 2013 we actually attracted 45 Active Duty AH-64 pilots. I
    hope whatever the outcome is, we can continue to attract those
    Active Duty folks as they make that decision to go back into
    civilian life, but stay with us in the National Guard. That 45
    represented a savings of $36 million to DOD by being able to
    bring them in. But something larger than that was the combat
    experience they brought to the Guard in addition to our
    warriors.
        Sir, as a member of the Joint Chiefs of Staff, we have
    fought and we have discussed these topics many times. I
    provided my best military advice. I have assessed the risk,
    I've given the cost, but the decision's been made, Mr.
    Chairman, and my job now is to begin to look at the effects
    across the States and figure how we're going to execute this
    plan.
        Chairman Levin. Let me ask you this about the $12 billion
    in savings which will result from your proposal. About $10
    billion, as I understand, comes from the Kiowa Warrior
    cancellation, in effect, of the upgrades. Is that true?
        General Odierno. Yes and, in addition to that, the
    elimination of three complete combat aviation brigades out of
    the Active component. It's a combination of eliminating all OH-
    58Ds and OH-58A/Cs, as well as eliminating three complete
    aviation brigades out of the Active component.
        That causes us to generate a savings that enables us to
    reinvest that savings back into training, back into modernizing
    the fleet that we have, and actually moving some aircraft from
    the Active to the Reserve component in terms of UH-60s.
        Chairman Levin. Could you give us for the record the
    portion of the $12 billion that is in the budget before us for
    the authorization bill before us? In other words, how much of
    that $12 billion in savings is actually counted in the 2015?
        General Odierno. All of it, sir.
        Chairman Levin. Pardon?
        General Odierno. All of it.
        Chairman Levin. All the $12 billion?
        General Odierno. Not in 2015, now. That's across the total
    FYDP.
        Chairman Levin. Right. If you could break it down year-by-
    year for us?
        General Odierno. In 2015 it's approximately about $2
    billion.
        Chairman Levin. If you could give us for the record how
    that's broken down, that would be helpful.
        General Odierno. I will.
        [The information referred to follows:]

        In fiscal year 2015, total cost avoidance is $245.01 million; in
    fiscal year 2016, $223.12 million; in fiscal year 2017, $257.22
    million; in fiscal year 2018, $308.32 million; and in fiscal year 2019,
    $423.42 million, for a total of $1.46 billion across Program Objective
    Memorandum fiscal years 2015 to 2019. The remaining $10.5 billion in
    cost avoidance are from purchases and modernization efforts which will
    no longer be required in fiscal year 2020 and beyond.

        Chairman Levin. As I understand, your testimony, General
    Odierno, was clear in terms of whether or not we should have a
    committee appointed the proposal that there be a commission.
    I'm wondering if our other two witnesses would comment on that
    proposal. General Grass, then General Talley? General Odierno
    has already indicated his opposition to that proposal. What is
    the Guard's view of it?
        General Grass. Mr. Chairman, a year and a half ago when I
    stepped into this job we were faced with similar challenges,
    different in some ways, as the Air Force struggled with the
    2013 budget. At that point, General Welsh and I, both coming on
    to the jobs, committed to work together and try to find a
    solution that was best for the total Air Force and for the
    Nation.
        General Welsh set on a path and we included in his
    committee, in his team effort, an Air National Guardsman. He
    included an Active National Guard and an Air Reserve Guardsman
    in that team, which helped set the path. That team came up with
    about half of the solutions that the committee had proposed
    when they made their announcement in February.
        Since then, the information we've received from that
    committee has been very helpful, and we're continuing to look
    at its recommendations. As we look to 2023 and with the fiscal
    realities we're facing, who would not want an independent look?
    This committee is going to have to help us through this. I
    would think you would want an independent look as well.
        Chairman Levin. Thank you.
        General Talley?
        General Talley. Mr. Chairman, thank you for the question.
    To be frank, it's not clear to me today why we need a
    commission. I understand the bill that's been introduced, but I
    think the Army, Active, Guard, and Reserve, working through
    Congress, can lead through these challenging times. If a
    commission were to be established, as directed by Congress, I
    think obviously, to echo what General Grass has said, we have
    to make sure that those members truly understand and represent
    the different components.
        The final comment I would make is, it's very important to
    me to caution anybody from applying Army Reserve conclusions
    from commissions of other Services. I'm thinking specifically
    of the recent report from the Air Force commission [National
    Commission on the Structure of the Air Force: Report to the
    President and Congress delivered on January 30, 2014]. There
    were some interesting recommendations that came out of that
    that I'm concerned could affect the U.S. Army Reserve Command.
        Thank you, sir.
        Chairman Levin. My final question is to General Odierno. Is
    it correct that Acting Deputy Secretary of Defense Christine
    Fox tasked the Office of Cost Assessment and Program Evaluation
    (CAPE) to conduct its own independent assessment of the Army
    force mix options, including aviation and restructure issues? I
    understand that the CAPE analysis agreed with the Army's
    assessment as reflected in the budget request.
        First of all, is that true, very quickly if you can give us
    a yes or no to it? If not, give us a more accurate or complex
    answer. But also, can you tell us whether or not the results of
    that analysis were shared with the Council of Governors?
        General Odierno. Mr. Chairman, yes, they did an independent
    assessment; and yes, it was shared with the Council of
    Governors, the assessment that they did.
        Chairman Levin. Thank you.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        I want to get back to the end strength question. This would
    be for General Grass and General Talley. By the end of fiscal
    year 2015, the Army end strength will be 450,000 Active,
    335,000 Guard, and 195,000 Reserve. In General Odierno's
    statement in talking about force levels he said: ``The Army
    will be able to execute the 2012 DSG at this size and component
    mix, but at significant risk.''
        Do the two of you agree with his statement? Does that
    represent your feelings of your components?
        General Grass. Senator, yes. The 335,000 force structure
    level is not consistent with what the governors and adjutants
    general have asked for. We've actually asked for a higher end
    strength. But at the 335,000, yes, we could.
        Senator Inhofe. You could do it, but at significant risk?
        General Grass. Significant risk.
        Senator Inhofe. Do you agree with that, General Talley?
        General Talley. Yes, Senator.
        Senator Inhofe. All right. For all three of you: Without a
    long-term solution to sequestration, let's assume the worst
    happens. The Army end strength would then be 420,000, the
    National Guard at 315,000, and the Reserve at 185,000. At the
    Army posture hearing last week, General Odierno said at 420,000
    end strength sequestration levels, the Army could not execute
    the DSG.
        Does this hold true for the Reserve and the Guard?
        General Grass. Senator, yes, it does.
        General Talley. Yes, Senator.
        Senator Inhofe. General Odierno, on January 7, at a
    National Press Club event, you said: ``First is the Army. For
    many years now, it's structured to be complementary, and what I
    mean by that is, you have an Active component that has a
    certain capability, you have a National Guard that has a
    certain capability, and you have an Army Reserve that has a
    certain capability. The capabilities are not interchangeable.''
        Then, General Grass, 2 days later at the same forum you
    said: ``However the Army looks or however the Air Force looks,
    we have to be interchangeable. We'll never be identical to
    them. They're not going to be, and we're not going to try. They
    will never be identical to us because of that Homeland mission,
    where we roll out the gate. But we have to be complementary to
    each other.''
        It appears that you agree that Active and Reserve Forces
    must be complementary, but you don't agree on the
    interchangeability. I'd like to ask why that would be. Let's
    start with you, General Odierno.
        General Odierno. Thank you, Senator. First, it has to do
    with a combination of things. When I look at the force, I look
    at readiness, I look at responsiveness, and I look at all kinds
    of things. The bottom line is, because of the Active component
    being collocated, having ranges, air ranges, and ground ranges
    readily available to them on a daily basis, they're able to
    sustain a significantly higher readiness rate. They're more
    capable and they're more responsive. They provide us a
    capability that the National Guard will not.
        But with mobilization time, with post-mobilization
    training, then the National Guard can provide us that
    capability. But it is not the same capability. They are not
    interchangeable. They are complementary to each other. The
    Active component provides the initial force, no notice, and
    capable of responding, especially for the more complex
    organizations.
        For less complex organizations, actually they're closer to
    being interchangeable, for example, a maintenance unit or a
    transportation unit. Where it becomes difficult is when you
    require a significant amount of collective training, which is
    BCTs, aviation units, et cetera. That's where they are not
    completely interchangeable; they're complementary.
        Senator Inhofe. General Grass, 2 days later you made your
    statement.
        General Grass. Senator, I've made three trips overseas
    since I've been in this job, and every time I hear the same
    thing. The commanders on the ground, and it doesn't make any
    difference which Service or which country in some places
    they're supporting, tell me they can't tell the difference.
        Senator Inhofe. This is a disagreement between the two of
    you, is that right?
        General Odierno. It is.
        Senator Inhofe. All right, that's fine. When you see
    statements like that, we need clarification up here around this
    table.
        For all three of you, what I've heard in testimony and in
    the press recently is that the National Guard can provide
    combat troops at a fraction of the cost of the regular Army. We
    constantly hear cost as the compelling argument for retaining
    National Guard end strength and there are models that can prove
    that assertion.
        These factors, I'm sure, played a major factor in the
    Department of the Army's planning for component size and mix.
    However, cost is only one of many factors to consider in
    deciding Army force mix. Equally, if not more important, are
    other factors, such as readiness and demand, that should be
    used in determining the mix.
        I'd like to hear from each of you as to what should the
    critical factors be in determining the appropriate size and mix
    of the Army and of our Reserve component?
        General Odierno. Senator, first a couple. We look at
    flexibility and agility. We look at readiness levels. We look
    at responsiveness. We look at current operational commitments.
    We look at future requirements and we look at cost. Those are
    the things that we take a look at. I would say in the proposal
    that we have provided that's why we're taking 70 percent of the
    total reductions out of the Active component. That gets after
    the cost factor.
        However, in order to sustain flexibility, agility,
    readiness, and responsiveness, we have to sustain a level of
    Active component structure. With sequestration, we take 150,000
    soldiers out of the Active component. That is a significant
    reduction, 46 percent reduction in BCTs. We're removing three
    complete aviation brigades. We're taking a significant amount
    out of the Active component, which is directly related to the
    cost factor.
        I cannot go any lower. In order to meet our budget
    requirements, we had to take a smaller portion out of the
    National Guard and U.S. Army Reserve, understanding that they
    do cost less. That's why we took a much smaller reduction out
    of the National Guard and the U.S. Army Reserve.
        Senator Inhofe. I appreciate that, and that's the reason I
    asked the question. It appears to me that everything nowadays
    is budget-driven.
        What do you think about the cost factor? Do you agree with
    General Odierno?
        General Grass. Senator, there's a tough issue that always
    comes up every year, and it's what the right mix is between the
    Active component and the Guard. That starts with understanding
    the requirement the Nation is asking us to do and how much time
    we have to get ready to go. Then we can determine what
    readiness levels our Guard needs to be at. For those in the
    Homeland, though, they have to be ready all the time at some
    level.
        Senator Inhofe. Do you agree, General Talley?
        General Talley. Sir, I do agree with General Odierno's
    assessment. For me, it's about performance, cost, and risk.
    Performance is about effectiveness. You have to be effective.
    Cost is you want to, obviously, be efficient, but you can't
    just look at it as a money drill. You have to be effective and
    efficient, so you have to balance that risk, low or high risk,
    which is why, as General Odierno described, in our Active
    component we have to have those combat formations ready to go.
    It's a little easier for me to have combat support and service
    support in the Army Reserve to provide that support to the
    combat formations of the Active component or to the National
    Guard.
        Senator Inhofe. My time is expired, but I'm glad you
    brought up the risk factor. Risk means lives and I think we all
    need to understand it. We do understand it.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Senator Reed.
        Senator Reed. Thank you very much, Mr. Chairman.
        General Odierno, we understand Active Forces are in various
    levels of readiness, with I presume still the 82nd being the
    lead division in terms of hours in getting units out the door.
    But are you prepared to order any of your Active Forces into a
    combat situation virtually immediately, given transportation
    and all the other issues aside, because of their readiness?
        General Odierno. Right now, as I have publicly said before,
    we are building readiness right now. Because of the
    sequestration and how it's been executed, our readiness is
    lower than it normally would be. By the end of this summer, we
    plan on having about 14 to 16 brigades ready, so we would be
    prepared to immediately send them as soon as they were noticed,
    including the combat service support structure that would go
    with that.
        Senator Reed. General Grass, let's move forward to the end
    of the summer. Would you be prepared to send one of your
    National Guard brigades immediately into combat without any
    training?
        General Grass. Senator, no.
        Senator Reed. Thank you. There is a difference between
    Active Forces and National Guard Forces in terms of national
    security and the ability to respond quickly. I sense, and the
    point you're trying to make, General, as the Active Force gets
    smaller, the ability to project these forces immediately
    becomes more critical; is that correct?
        General Odierno. It is. The smaller we get, the more ready
    we have to be, in the Active component, in the National Guard,
    and the U.S. Army Reserve.
        Senator Reed. My observation has been that our National
    Guard when they're deployed and our Reserve when they're
    deployed is one Army. There is no difference. The skill level,
    ironically, is sometimes higher in the Reserve and National
    Guard because pilots, for example, have been flying the same
    platform for 20 years, and in the Army you move around.
        But the issue also is the unit you deploy. The typical
    deployment unit is a brigade. You train at the brigade level, I
    assume, General Odierno, is that correct?
        General Odierno. We do, Senator. We train at the battalion
    and brigade level. The advantage we have is at our
    installations, whether it be Bliss, Bragg, Carson, or other
    installations. They have the air space and ground capability,
    and they're collocated with all the aviation, their ground
    forces, and their support. They can train at a battalion,
    brigade, and even division level, if necessary, where in the
    Guard we can't until we deploy them to a CTC. That's the
    difference. We just have the resources and capability to do it.
    But if they had those they could do it as well. But they don't
    have the time or the large installations to do that.
        Senator Reed. General Grass, essentially, again, my
    recollection is that Guard units are extremely capable. In
    fact, as I would suggest, some of the individual guardsmen have
    more skills than some Active Forces because of their
    experience. But typically the training level and the training
    test of the year is at the platoon and company level; is that
    fair?
        General Grass. Yes, Senator.
        Senator Reed. Yes, it is. I don't want to cut you off.
        General Grass. With the projections that we have right now
    for fiscal year 2015, we'll have to drop that level. We won't
    have the funding. Then we will also lose two of our rotations
    to the CTC.
        Senator Reed. That's something that we all have to reflect
    upon in terms of the costs, as Senator Inhofe pointed out, of
    the sequestration impact. But typically, how often does one of
    your brigades assemble and go to a training center?
        General Grass. Senator, before the war started we had 15
    brigades that were held at a higher state of readiness. They
    were given more resources. Of our 32 brigades at that time, we
    eventually came down to 28. But of those 15 that received
    greater resources, they got a chance about 1 in every 7 or 1 in
    every 8 years, depending on whether they were light or heavy.
        The real value, though, of the CTC is not just the
    rotation. The rotation will ratchet it up to whatever level you
    want to go in there at. It's premier, there's nothing like it
    in the world. The real value is when you step up and you sign
    up for that rotation, even at the squad and individual crew
    level, you begin to focus at that brigade operational level.
        Senator Reed. General Odierno, what's the impact on your
    rotations at the National Training Center (NTC), given the
    budget?
        General Odierno. Last year we had to cancel eight rotations
    to the NTC. We're in catch-up mode this year. We're going to be
    able to do a full complement in 2014 and 2015. This year, we
    have all Active components and one National Guard brigade. In
    2015, we have two National Guard brigades and the rest Active
    component going through. That's because we're in catch-up mode
    and we're trying to catch up on readiness. Our worry is that in
    2016 it goes down again.
        Senator Reed. But this goes back to the point that the
    force, the smaller Active Force you're building has to be able
    to go out the door almost immediately. That means that you have
    to catch up with your Virtual Clearance Training going through
    the NTC, and then you have to, as General Grassley just said,
    keep adding each year additional National Guard brigades.
        General Odierno. That's exactly right, Senator.
        Senator Reed. But a National Guard brigade, even if we get
    back to the pre-this budget and this sequestration, it was
    about an average of once every 7 years a brigade would go
    through; is that correct, General Grass?
        General Grass. Senator, I didn't hear.
        Senator Reed. If we went back to pre-sequestration, it was
    about once every 7 years that a typical brigade would go
    through?
        General Grass. Yes. It was 1 in 7 or 1 in 8, depending on
    whether you were a light or a heavy.
        General Odierno. The only other point I'd make, Senator,
    would be the other thing that happens. You're not done when you
    finish a CTC rotation. When an Active unit finishes, they go
    back to home station and they continue to train on the lessons
    they learned at the CTC. There's just a good advantage in terms
    of the readiness levels.
        With the Guard, we try to do the same thing. It helps them
    to develop their training plans that follow. But it just takes
    them a longer period of time in executing because of the
    limitations that they have.
        Senator Reed. Just a final point. You might take it for
    questions for both you, General Odierno and General Grass,
    about this issue of the Apaches versus Black Hawks. One of the
    key things that an Apache crew has to do is fire their weapons
    frequently. There are door gunners on Black Hawks, but a
    different platform. My sense, again, please correct me if I'm
    wrong, is that access to ranges for regular forces are much
    easier. They're right on post. Whereas access to National Guard
    units, it's challenging. You have to get the aircraft or use
    other aircraft. Is that fair?
        General Odierno. It is. The other piece I would argue, it's
    the collective training aspect, integrating the aviation.
        Senator Reed. The one point, I think, because it's one
    thing going down the range, which I couldn't do, and hit
    anything flying a helicopter, but you also have to work with
    ground troops on a constant basis, so that they're comfortable
    and you're comfortable. Is that another fair assessment?
        General Odierno. That is.
        Senator Reed. Thank you very much, gentlemen.
        Chairman Levin. Thank you, Senator Reed.
        Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman.
        General Odierno, if we return to the sequestration level
    budgets, what effect will that have on the ARI? Do you think
    it's going to force major changes with these plans, that
    they're all going to have to be rethought?
        General Odierno. No, ARI is something we have to do and we
    will do it. If it goes to sequestration, the current ARI
    proposal will remain the same.
        Senator Fischer. Can you elaborate on that for me?
        General Odierno. Sure. What that means is that on ARI we
    are going to eliminate all OH-58Ds, which are scout
    helicopters. We're going to eliminate the OH-58A/Cs, which are
    the older model of the scout helicopter. We are going to get
    rid of our TH-67 single-engine training aircraft that are at
    Fort Rucker. We are going to eliminate three combat aviation
    brigades out of the Active component completely. We have 13,
    we're going to go to 10.
        In the National Guard, they will maintain 10 brigades, but
    we will take all the Apaches and move them into the Active
    component, to replace the OH-58Ds that are being removed, so we
    have 10 complete brigades. We will move 111 UH-60s from the
    Active component, from the 3 brigades to be inactivated, to the
    U.S. National Guard and to the Army Reserve.
        The other thing is we were initially going to take 100
    Light Utility Helicopters (LUH) out of the Guard. We are now
    going to keep every one of those in the National Guard. We will
    take all the LUHs out of the Active component and put that in
    the training base in order for them to train all of the pilots
    from the National Guard, Reserve, and the Active component.
        Senator Fischer. Will you be deactivating some of these
    brigades?
        General Odierno. We will deactivate three combat aviation
    brigades in the Active component.
        Senator Fischer. General Grass, do you have anything to add
    to that?
        General Grass. Senator, we're fielding 212 Lakota aircraft
    in the National Guard. We have used them extensively already in
    the Homeland and actually have deployed some to Germany for
    rotation. I thank the committee and others that fielded those
    and had the vision years ago to change out from our old UH-1s
    many years ago.
        But overall, none of us like what we have to do. I'm sure
    General Odierno would tell you the same thing. None of us like
    what we're having to do. My big concern right now is trying to
    figure out how I'm going to move, how many States I'll have an
    impact on, and what's the cost to facilities and to retrain
    pilots. I have to tackle that because the decision's been made.
        Senator Fischer. General Talley, do you have anything to
    add to that as well?
        General Talley. Yes, Senator. The Army Reserve has two
    Apache battalions. We're swapping out two Apache battalions for
    two assault battalions to give us lift capability, since we're
    predominantly combat support and service support. It's actually
    better suited for us. We're very pleased with the ARI as it
    relates to the Army Reserve.
        Senator Fischer. General Grass, you mentioned you have to
    look at how many States are going to be affected by this. Do
    you have any idea right now how many?
        General Grass. Senator, if you take the Kiowa Warriors that
    Tennessee flies and then we have 9 States that fly the Apache
    today, that's 10 States. Then, when you take the maintenance
    units, we're estimating right now, and this is just an
    estimate, probably about 22 States in the total shuffle to move
    aircraft and people around and to re-gear up facilities to
    handle a different type of aircraft.
        Senator Fischer. You mentioned the requirements for
    facilities and installations. Specifically, do you know how
    many States would be affected by the changes that are going to
    require costs?
        General Grass. Senator, we don't have that analysis yet,
    but I can get that to you as soon as we've done the analysis.
        [The information referred to follows:]

        The Aviation Restructure Initiative (ARI) should not require
    construction and probably will not require renovations to existing Army
    National Guard aviation facilities.
        The ARI redirects helicopters by type and results in a net loss of
    total aircraft for the Army National Guard. Therefore, we do not
    anticipate needing new facilities, nor do we anticipate the need to
    shut down any existing facilities.
        There are already Black Hawks in Army National Guard aviation
    facilities where Active component Black Hawks will replace Army
    National Guard Apaches. The UH-60 Black Hawk has the same profile as
    the AH-64 Apache, so we do not expect any requirements to change Army
    National Guard aviation facilities. For example, hangar doors will not
    have to be changed and no additional space is needed to house Black
    Hawks where Apaches are currently housed.

        Senator Fischer. General Odierno, do you have any idea
    about the cost analysis on the facilities and installations
    that are going to be affected? Any time you make changes, it's
    going to add to costs. Do you have any idea?
        General Odierno. I can't give you the specific numbers. I
    will give those to you.
        Senator Fischer. Thank you.
        General Odierno. But that has been incorporated into all
    our analysis.
        [The information referred to follows:]

        Based on our analysis, the Aviation Restructure Initiative (ARI)
    will not require construction or renovations to existing Army aviation
    facilities. The Army has sufficient facility capacity to cover aviation
    assets realigned under ARI. In fact, the Army is reducing in size,
    freeing capability in all components.

        Senator Fischer. Do you think you're going to be satisfied
    that everything's been considered up to this point?
        General Odierno. I think we've done extensive work on this
    for over a year and I'm confident that we have captured most. I
    will never say that we've captured everything, but we will
    continue to look at it and make sure we do, to ensure that we
    understand all the costs.
        Senator Fischer. General Odierno, I understand the
    reasoning behind moving all the Apaches into Active Duty is so
    that they're ready now. You had talked before that the Active
    Duty is the initial force. There's no notice, so we can handle
    anything that happens. Do we have the logistical capability to
    deploy that many helicopters immediately?
        General Odierno. Actually, in terms of Apaches
    specifically, we're reducing from 37 battalions of OH-58s and
    Apaches to 20. We have the capability. That's one of the
    reasons. We're reducing almost 50 percent of the attack
    aviation capability in the Active Army, even with the movement
    of the aircraft from the National Guard. We have the
    infrastructure and we have the maintenance to sustain all
    these. We have less aircraft in the end, significantly less
    aircraft. We have the ability to do that.
        Senator Fischer. Are you then looking at making personnel
    cuts to those operations because of the decrease in the
    aircraft?
        General Odierno. Some will have to and they will retrain.
    We're reducing the numbers of people, so we will have to take
    people out of the Active component who are working in some of
    these areas.
        Senator Fischer. Thank you.
        General Grass, how's the National Guard going to implement
    the changes that are required under the aviation plan? It's my
    understanding it's not going to be an even swap, is it, between
    the Apaches and the Black Hawks?
        General Grass. Senator, no, it will not. Part of it is
    taking Lima model modernized Black Hawks and replacing some of
    our older, more expensive to fly Alpha models. It'll also
    require some reductions in full-time manning as we adjust the
    numbers downward.
        Senator Fischer. How's the Guard going to do that? If we
    don't authorize a Base Realignment and Closure (BRAC) process,
    how are you going to do it just through the budget?
        General Grass. Senator, first of all, identifying those
    States, this is much larger than just the Apache discussion,
    especially as we look down the road. It's brigades. It will
    affect just about every jurisdiction in the United States when
    we look at this to get down to the 315,000 some day that we
    face.
        We're trying to manage that now. Actually, by May we have
    to load in the 2017 force structure into the Army's total
    analysis program so that we can start building that structure
    now. It gets pretty serious. The States have been told what the
    cuts are. They don't agree with them. They're trying to offer
    countermeasures of what structure they might trade.
        Senator Fischer. Do you believe we will even have to have a
    BRAC process? Don't you think we'll be forced to do a lot of
    this just through budget?
        General Grass. Senator, I don't know how we're going to be
    able to maintain. I mentioned before our armories are 44 years
    old at the average. I don't know how we're going to be able to
    maintain these facilities and not have them start falling down
    if we don't close something, as structure goes away.
        Senator Fischer. Can that happen through a budget process?
        General Grass. Yes, ma'am.
        Senator Fischer. Thank you, sir.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Fischer.
        Senator Udall.
        Senator Udall. Thank you, Mr. Chairman.
        Good morning, gentlemen. Thank you for your service. Thank
    you for being here to share your important perspectives on this
    issue. I would be remiss if I didn't more broadly talk about
    the tremendous courage, commitment, and dedication that the
    Army's demonstrated under your leadership.
        I would also like to comment specifically about Colorado.
    We're the proud home of tens of thousands of Active Duty,
    Reserve, and National Guard soldiers. We've watched with awe as
    they've answered our Nation's call time and again.
        Last week, General Odierno, we talked a little about what's
    happening in Colorado the last couple of years. We've had the
    worst wildfires and flooding in our State's history, and it was
    the Army that came to our rescue. Active Duty and National
    Guard soldiers fought the flames, rescued our citizens from
    rising flood waters, and saved countless homes. Then, when it
    was over, they've been helping us rebuild our State.
        Then, at the same time, you have thousands of soldiers from
    Fort Carson, CO, reservists and National Guardsmen, who are
    doing heroic work overseas, just as they have done since
    September 11, 2001.
        My point of view is that we need our Army to be able to
    perform all of those roles with the same skill, honor, and
    courage that they've demonstrated over the last decade. No one
    doubts the value of the Guard or questions the incredible
    service of our citizen soldiers. But we need to ensure that our
    Total Force remains well-trained, well-equipped, and ready.
    It's not about the Active Duty or the Guard; it's about our
    Army. That's why it's so important that we get this decision
    right.
        In that spirit, I know it's been addressed, I think, early
    in the hearing, but I want to make sure I have it and we do
    have it right. General Odierno, let me direct a comment and a
    question to you. Some of my colleagues in Congress are
    considering legislation that would establish an independent
    commission to examine the total Army's force structure. As I
    understand it, the proposal would freeze National Guard troop
    and equipment levels pending the release of the commission's
    findings.
        Would you describe the effect such a freeze would have on
    the Total Force, considering that similar studies have taken, I
    think, up to 2 years to complete?
        General Odierno. I would, Senator. We estimate that if it
    was delayed it would cost us $1 billion a year. The problem
    with that is, I've already submitted $10.7 billion for unfunded
    requirements for 2015. This would be another billion dollars.
    That means it directly comes out of readiness. There's no other
    place for it to come out of if this is not done. If it's
    delayed 2 years it would be $2 billion, $1 billion a year of
    savings that we have already forecast. That would increase the
    unfunded requirements.
        Again, my other concern is then it would exacerbate our
    already problematic readiness levels in all three components.
        Senator Udall. To put it plainly, if the current plan is
    blocked or delayed, would additional Active Duty Army brigades
    be at risk of deactivation?
        General Odierno. It would not be immediately. But readiness
    and training would be. If they don't execute our plan over the
    long term, then by 2019 it will result in additional Active
    units coming out. It would be up to somewhere between 20,000
    and 30,000 additional soldiers that would have to come out if
    ARI is not implemented.
        Senator Udall. General Grass, let me turn to you. How have
    the AH-64s been used to support Homeland defense and civil
    support missions? Let me give you an example. In Colorado,
    we've benefited greatly from having National Guard Black Hawks
    available to perform search and rescue missions, evacuate flood
    victims, drop water on wildfires, and even deliver hay to
    cattle stranded by blizzards.
        Have Apaches ever been used for those purposes, and
    wouldn't it make sense to have those utility aircraft available
    to governors for in-State missions?
        General Grass. Senator, if you would allow me first to
    congratulate your folks from the Colorado Army and Air National
    Guard. I had a chance to visit during the floods and that was
    the third disaster in 18 months. I also had a chance to go up
    afterwards and have an opportunity to see Colorado, Wyoming,
    Kansas, and Utah repair the road between Lyons and Estes Park
    in record time.
        Senator Udall. Yes.
        General Grass. Senator, to answer your question, there is
    one time when the Columbia disaster occurred, the Columbia
    Space Shuttle, and an Apache was used under the direction of
    the National Aeronautics and Space Administration to locate hot
    spots out across the lands of Louisiana, Mississippi, and
    Texas, mainly Texas and Louisiana. But the main mission of
    those Apaches is to support, to be the combat Reserve of the
    Army.
        Senator Udall. General, thank you for the work you did. It
    was uplifting to have all those Guard units from all the
    surrounding States. That road was due to be completed a month
    or 2 after it actually was finished and put back into
    operation. It was quite a moment for everybody, and it showed
    when we work together, private sector and government sector, we
    can really do remarkable things. Thanks again for the
    involvement there.
        General Odierno, if I could come back to this attack
    aircraft question. Will moving the attack aircraft to the
    Active component relegate the Reserve component to a support
    role rather than a combat role? Is there any intent by the Army
    or the DOD leadership to return the National Guard to a lower
    tier status? After you comment, General Grass, I'd like your
    comment.
        General Odierno. No, and in fact, the reason we are
    recommending aircraft moving is actually to increase readiness
    and increase their capability. UH-60s have flown more combat
    hours in Iraq and Afghanistan than any other aircraft by far.
    It's the centerpiece of everything that we do. Their need for
    combat operations will continue because it's the centerpiece.
        The other piece I would say is that it will also allow us
    the ability to reinvest in the readiness of the National Guard
    and U.S. Army Reserve. It'll free up dollars so they can
    sustain the readiness to, in my opinion, be closer to a fully
    operational reserve, which is what we all want.
        Senator Udall. General Grass, would you care to comment?
        General Grass. Senator, I've received letters from the
    governors as well as the adjutants general on the very issue
    you bring up. There's a concern. They want to stay as a member,
    as a combat Reserve of the Army and the Air Force. It is a
    concern of theirs.
        Senator Udall. Thank you.
        General Odierno, can you describe the process by which the
    force structure plan was designed, reviewed, and approved? For
    example, were all of the Joint Chiefs included in the process
    before the budget was finalized?
        General Odierno. This has been a 14-month process, where we
    had meetings that were attended by all the Joint Chiefs, all
    the combatant commanders, all the Service Secretaries, and all
    leaders in OSD. We had multiple meetings, multiple iterations
    of this, where we looked at all different types of courses of
    action. That has been going on. It went on for a very long
    period of time.
        Senator Udall. I believe you believe the plan is in the
    best interests of the military and the U.S.'s national
    security?
        General Odierno. I do, Senator. These are tough choices,
    and I want to make it clear. The Army needs a ready National
    Guard, we need a ready Army Reserve, but these are necessary.
    That's why, again, we took the majority of the cuts from the
    Active component, because we recognize that. We think this is
    the best total Army package for the dollars that we have been
    allocated.
        Senator Udall. Thank you for that.
        Thanks again, gentlemen. I look at the three of you and I
    see the Army. Thank you for being here.
        Chairman Levin. Thank you very much, Senator Udall.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        General Odierno, last week when you were here you stated
    that the security situation in the world was more unpredictable
    than at any time you'd ever seen it in your career. But you
    also stated, in answer to questions, that we are in danger of,
    or possibly have reached a point, or are reaching a point, of a
    hollow Army. Would you elaborate on that, especially in light
    of our ability to respond to contingencies, since the world is
    more unpredictable in your view?
        General Odierno. The problem we have, Senator, is because
    of the significance of the sequestration cuts that we've taken
    and will take again in 2016. It will directly impact readiness,
    because it would force us to take out significant force
    structure, which we can't do fast enough. Our readiness levels
    for the next 3 or 4 years will be lower, and it'll impact our
    ability to deploy ready forces. We will still deploy forces,
    but they will not be as ready as we would like them to be.
        It will take us up until fiscal year 2019 to even begin to
    rebuild the Army as we're used to seeing it, which is an Army
    that is ready to go across all three of its components in the
    appropriate time frames that we've defined for each component.
        We are moving towards a hollow force for the next several
    years. We're doing everything we can to keep that from
    happening. In the end, in 2019 the other part we have, even if
    we fully execute our plan, we'll have a ready force, but it'll
    be much smaller. Then you start thinking about what's the
    deterrent capability of that force.
        Senator McCain. How much difference does it make if we are
    able to give you relief from a renewed sequestration after this
    2-year hiatus? What difference would that make to you?
        General Odierno. Depending on how, what the relief is, it
    will definitely impact----
        Senator McCain. Say we gave it, just did away with it as
    far as the defense side is concerned.
        General Odierno. That would allow us to keep more end
    strength in all components. I think what we're thinking would
    be about the 450,000, 335,000, and 195,000 levels. It would
    allow us to sustain ourselves at a higher level. It would also
    allow us to start reinvesting in our modernization, which we've
    had to cut significantly as well.
        Senator McCain. Would it give you some change in your
    opinion about the approaching hollow force situation?
        General Odierno. Significant difference, because in order
    to keep out of the hollow force, you need sustained funding
    over a long period of time. That would allow us that sustained
    funding to enable us to sustain our readiness.
        Senator McCain. I'm not trying to put words in your mouth
    because you've been very candid with this committee. But this
    really is the difference between your confidence in maintaining
    the security of this Nation, as you have opined and I agree,
    and the most unpredictable period in recent history. Not being
    able to maintain an ability to respond, since Secretary Gates
    said, ``In the 40 years since Vietnam, we have a perfect record
    in predicting where we will use military force next. We've
    never once gotten it right. If you think about it, from
    Grenada, to Haiti, to Somalia, to Panama, to Iraq twice, to
    Afghanistan, to Libya twice, the Balkans and so on, not one of
    these cases did we have any hints 6 months ahead of the start
    of hostilities that we were going to have military forces in
    those places.''
        You agree with that, obviously?
        General Odierno. I do, Senator.
        Senator McCain. Again, I'm not trying to put words in your
    mouth, but do you share my opinion that we are literally
    putting our national security at some risk if we continue
    sequestration as it is presently programmed to be?
        General Odierno. I believe across the Joint Force, not only
    the Army but the entire Joint Force, it puts it at risk. The
    last comment I would make is it also puts our young men and
    women at much higher risk when we use them if we don't have the
    money necessary. That's also a deep concern of mine.
        Senator McCain. I just hope that every Member of Congress
    can hear those words of yours, General Odierno, because I
    continue to be puzzled and deeply disappointed that colleagues
    on both sides of the aisle don't realize the danger that we're
    putting our national security in.
        General, would you agree that the A-10 is probably the best
    close air support (CAS) mission-capable aircraft ever?
        General Odierno. The A-10 was built to be a CAS aircraft.
    It's provided support, has the guns, has the maneuverability,
    and it has the visibility that's important to provide CAS for
    our soldiers.
        Senator McCain. Do you believe that there is right now an
    adequate replacement for it?
        General Odierno. There's not the same replacement for it, I
    will say that. But they have provided CAS with other platforms
    in Afghanistan successfully. They have proven that they can do
    it in other ways. Obviously, we prefer the A-10.
        Senator McCain. I think it depends on what kind of conflict
    you're talking about, doesn't it?
        General Odierno. It does. Each conflict is very different
    and the capabilities that you might need will be very
    different.
        Senator McCain. But I'm not sure you could substitute a
    helicopter for an A-10.
        General Odierno. You cannot. It is not the same. You
    cannot. It's a different capability.
        Senator McCain. An F-35 is cost prohibitive, wouldn't you
    agree?
        General Odierno. It'll be a while before we get the F-35,
    so again, there's a vulnerability period that I worry about.
        Senator McCain. But also cost. I believe the A-10 is about
    $15 million and the F-35, God only knows what it will cost by
    then. It just doesn't make sense to replace the perfectly
    capable aircraft with a far more, by a factor of 10, expensive
    aircraft to replace it, which would probably have not any
    greater capability. Would you agree with that?
        General Odierno. Senator, I probably don't know enough
    about the F-35 to comment on that. But I will say the A-10 has
    performed well. CAS is an important mission to our ground
    forces. We are working with the Air Force to come up with new
    solutions as we move away from the A-10 if that's what the
    decision is.
        Senator McCain. The reason why I'm pressing you on this is
    because unnamed ``administration officials'' continue to say
    there'll be no more land wars, which then if you accept that
    means that you really don't need an A-10. But as Secretary
    Gates said, in the last 40 years we have never anticipated one
    of the conflicts that arose. To then eliminate the A-10 with
    some future capability it seems to me is a roll of the dice.
        I don't ask you to respond to that because I don't want to
    get you in any more trouble than I usually do.
        I thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator Manchin.
        Senator Manchin. Thank you, Mr. Chairman.
        Thank you all again for being before us. I want to thank
    General Odierno for coming back. He was just here last week.
    General Grass and General Talley, good meeting you in the
    office. I appreciate your coming.
        Just a few questions. I know there's a big difference, a
    little bit of a big difference, or in my mind a difference,
    between the roles of the Guard and the roles of the Army and
    the Reserve. With that, and I think the Apache shows there's a
    difference of approach of how we do this.
        I was looking at the $40 million plus of difference between
    a battalion of Guard and a battalion of the Army operating the
    same aircraft. With that being said, I think, General Odierno,
    you gave us a complete list of the savings and it was about $12
    billion.
        We're talking about operational and strategic capability,
    what role the Guard's going to play. If that's the case, the
    Guard today is a different Guard than what we had before,
    General Grass. I have to be honest with both of you. In my
    former role as Governor of West Virginia, I worked very closely
    with the Guard, the Army Guard and the Air Force Guard. I saw
    and I still see a better connect between the Air Force Guard
    and the Air Force than I do the Army Guard and the Army. I'm
    thinking hopefully you can work through that, or if you're
    moving closer to working in more of a succinct pattern.
        Can you give me some examples of areas where you think you
    are working closer together?
        General Grass. Senator, first I want to applaud U.S. Army
    Forces Command, General Daniel B. Allyn, USA, who has reached
    out to our States and our units and he's working very closely
    with the adjutants general. I've received some very positive
    comments back where he's aligning Active divisions with some of
    our brigades and our divisions.
        I'll give you an example. The 86th Brigade out of Vermont
    is going to do a rotation this summer at the Joint Readiness
    Training Center at Fort Polk. The 10th Mountain Division, who
    they're aligned with, is going to provide them some additional
    military intelligence support. We had hoped later on, when the
    10th Mountain goes through their warfighter, we'll be able to
    take some folks out of the 86th Brigade.
        I saw this work so well before, really before September 11,
    2001, as our forces were deploying to Bosnia and we did
    rotations and were aligned with the Active corps, and our
    divisions aligned very well with them.
        Senator Manchin. Do you have any?
        General Odierno. Senator, for 13 years we've worked very
    closely together, closer than any other Service probably in the
    history of this country, Active and Guard. I reject your
    thought there, because we've been very close. We've worked
    together, we've trained together, and we've fought together. In
    my mind, we're close.
        This is like a family spat here. We're arguing over a
    little bit of resources. I'm here speaking for all three
    components. I'm the only one under title 10 who's responsible
    for ensuring that a total Army is here. I want you to know, I
    am dedicated to that. I am absolutely dedicated to make sure
    that we have the right Guard, the right Active, and the right
    Reserve. It is critical to our future.
        This is about our future, and what I'm trying to do is,
    with the dollars allocated, come up with the best answer for
    the future of the Army. As was said, Force Readiness Command
    (U.S. Coast Guard) has an extensive Total Force policy. The
    Secretary of the Army has an extensive Total Force policy. I'm
    comfortable with that. Again, this is a spat about resources.
    Let's not interpret that as not close relations between the
    Guard, because there's significant close relationships between
    the Guard, Active, and U.S. Army Reserve throughout our Army,
    sir.
        Senator Manchin. With all that being said, and we're
    talking about money, it comes down to the bottom line.
        General Odierno. Right.
        Senator Manchin. Last year, Congress learned that the Army
    accumulated $900 million worth of Stryker vehicle repair parts,
    many of which were unneeded or obsolete. This year the Army
    effectively cancelled the Ground Combat Vehicle (GCV) after
    investing almost $1 billion in the program. I'm sure you see
    the same reports.
        My point is that perhaps if we focus more closely on some
    of the waste and things of that sort, maybe we wouldn't be
    having our so-called ``family spat.''
        General Odierno. Senator, I would argue if we got
    predictable budgets we wouldn't have to do that. That $1
    billion cut in the GCV is because we have unpredictable budgets
    and we have sequestration. That was not originally part of the
    plan.
        Senator Manchin. How about the Stryker parts and all that?
        General Odierno. I'd have to look more into Stryker parts.
    That was in Afghanistan. I'll take a look at that. I think
    you're right, I think there are some efficiencies that we
    should gain.
        Senator Manchin. The thing I was concerned about is
    training to the lowest tier. If there's going to be cutbacks in
    the training that the Guard and the Reserve does, is that going
    to put you in a different tier as far as readiness? General
    Grass, do you have concerns of that?
        General Grass. Yes, sir, I do, and it will, especially as
    we look at 2016 and beyond. It's going to have an impact in
    2015, but 2016 and beyond it gets worse. I think General
    Odierno would agree that the training seats are going to begin
    to disappear. We're already seeing some of that in some of our
    aviation seats, as well as schools that will be available
    starting in 2015.
        Senator Manchin. That would almost immediately put you in
    the strategic reserve, right?
        General Grass. Senator, we've had such great support over
    the years with the deployment of 760,000. Probably 46 percent
    right now of our Guard is combat veterans. Our leadership is
    strong. But over a few years I think we would definitely see a
    loss.
        Senator Manchin. General Talley, do you have a concern?
        General Talley. Senator, I think the concern affects all
    three components of our Army, as our ability to have operations
    tempo (OPTEMPO) money is going to draw down because of the
    effects of sequestration if that's not reversed. All three
    components are going to have less ability to be ready.
        In the Army Reserve right now, if we execute all the
    individual training tasks that we're supposed to execute, it
    eats up about 34 days of our 39 training days that we're
    authorized. We rely on that extra OPTEMPO money to make sure
    we're ready, particularly as we get closer to being in the
    window, if you will, for availability. It absolutely will have
    an impact.
        Senator Manchin. General Odierno, my final question here. I
    understand that there are different challenges, of course, for
    the personnel in the Active Forces than those in the Guard and
    Reserve. The Active Duty Army units typically rotate through a
    CTC, I believe every 2 years, and according to the briefings of
    the Army, National Guard units will only have that opportunity
    on a rotation of 7 to 10 years.
        General Odierno. Every 7 to 10 years, depending on the
    brigade availability.
        Senator Manchin. That again will put them in a different
    tier, just not having the training available.
        General Odierno. Right. It also has to do with mobilization
    time and other things. It's a combination of what we talked
    about in terms of how much time they're called up and how much
    they're not. That was all factored in as we do this.
        Senator Manchin. I'd like to work with you on the waste
    factor, sir.
        General Odierno. Absolutely.
        Senator Manchin. My time is running out, but this is really
    something very much concerning to me, and I think a lot of this
    can be avoided if we can get our cost effectiveness.
        Thank you, sir.
        Chairman Levin. Thank you, Senator Manchin.
        Senator Wicker.
        Senator Wicker. Thank you very much, Mr. Chairman.
        General Grass, let's talk about the Regional Counterdrug
    Training Academy (RCTA) program. These schools, including one
    located in Meridian, MS, have the unique mission of providing
    combatant commands, law enforcement agencies, community-based
    organizations, and military personnel with training to support
    and enhance their capabilities to detect, interdict, disrupt,
    and curtail drug trafficking.
        I have visited with our RCTA in Meridian. I found it to be
    an outstanding facility with a world-class faculty. I've met
    with our law enforcement and uniformed service members who've
    benefited from the classroom lectures and hands-on practical
    training provided in Meridian. Members of this committee may be
    interested to know that many graduates of the program return to
    their home jurisdictions as instructors.
        The feedback I've received from these individuals has been
    effusive, as well as feedback from our governors, adjutants
    general, and law enforcement leaders. This is not only for the
    Meridian RCTA, but also the four sister schools located
    throughout the country. Based on their testimonials, our RCTAs
    are of utmost importance. Interesting to note, we have five of
    them nationally, General, and the entire cost to the government
    is less than $5 million for all five of these.
        I was disappointed to learn that President Obama's budget
    request contains zero funding for these schools. Just for the
    benefit of the chairman and the ranking member, I intend to
    work with my colleagues on this committee to try to ensure that
    we can find that $5 million.
        General Grass, you are, I believe, a supporter of the RCTA
    program, is that correct?
        General Grass. Senator, yes, I am. I have visited Meridian.
        Senator Wicker. Do you agree that these training academies
    are productive institutions that have contributed to our
    national security and public safety?
        General Grass. Senator, these facilities have trained over
    600,000 law enforcement agents since they were established.
        Senator Wicker. Let me ask you to elaborate, then, on your
    testimony last week before the House Appropriations Committee.
    Indeed, DOD has directed you to close these five training
    centers, is that correct?
        General Grass. Yes, sir. We've been directed in 2015 to
    close them.
        Senator Wicker. Am I correct that we're really talking just
    under $5 million to keep all of these open?
        General Grass. Senator, I think that was the figure that we
    were given, what was available this year. Let me go back and
    get the actual figure, what they needed to run before we
    received a reduction, if you'd like me to do so.
        Senator Wicker. It would be fair to say that a relatively
    modest investment will keep these invaluable programs open and
    available for these hundreds of thousands of participants?
        General Grass. Yes, sir.
        Senator Wicker. It's also my understanding that law
    enforcement officers and National Guard personnel staff have
    contacted the National Guard Bureau in support of the RCTA
    program. Are you aware of these communications, General?
        General Grass. I'm not aware of the law enforcement
    contact, but I am aware of a number of adjutants general that
    have reached out and had the conversation with me.
        Senator Wicker. Okay. Would you be willing to sit down and
    listen to some of these law enforcement testimonials?
        General Grass. Senator, yes, I would.
        Senator Wicker. I know you're busy.
        Then, finally, do you believe the value of the RCTA program
    warrants authorization by Congress?
        Senator Wicker. Senator, yes, I do.
        Senator Wicker. Thank you very much
        Mr. Chairman, I yield back the balance of my time.
        Chairman Levin. Thank you very much, Senator Wicker.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        General Odierno, some pretty straightforward, quick
    questions. This also may be for the record. What would be the
    cost of leaving the National Guard as is and implementing the
    rest of the plan, in other words maintaining National Guard
    strength at 354,000 instead of 335,000?
        General Odierno. In terms of end strength only, or the
    whole?
        Senator King. Just take the plan as is, but just not reduce
    the National Guard component. What I'm looking for is what are
    the savings anticipated from that piece of the reduction?
        General Odierno. Roger. It's somewhere around $6 to $7
    billion, I could get you the exact number, which accounts for
    annual training of AH-64s, the procurement of additional AH-
    64s, and the payment of end strength. Then also it's about the
    training of the BCTs that would be reduced, the two that would
    be reduced, and the sustainment of those capabilities. It's
    about that number, somewhere in there.
        Senator King. Is that per year?
        General Odierno. It's somewhere close to $1 billion
    annually, and then there are some one-time costs that you would
    have to pay for.
        Senator King. We've had some experience in this. How long
    does it take to bring a Guard unit up to combat readiness?
        General Odierno. It depends on the type of unit and the
    mission that they're going to do. Over the last 10 years, this
    is an average, based on our records that we've kept, they give
    them 1 years' notice for mobilization. That's the requirement.
    Then once they become mobilized, we train them somewhere
    between 95 and 145 days to prepare them to go to either Iraq or
    Afghanistan, depending on the unit.
        Over the last 6 years, that was reduced because there was
    legislation passed that reduced the amount of time that they
    could be mobilized. It reduced their time they could be
    mobilized and it reduced the amount of training they would do.
    We had to adjust missions based on that adjustment that we were
    given as well.
        Senator King. But it sounds like what you said is basically
    a year and a half from the time you say we need them to the
    time they're in the field.
        General Odierno. Until the time they can deploy.
        Senator King. With the regular Army what's the time?
        General Odierno. It depends on the different readiness
    levels. But for the top tier readiness, which is the first 8 to
    10 brigades, they can go out the door immediately, and it's
    just a matter of how long it takes them. Beyond that, it's
    probably about 30 days later.
        Senator King. There really is a significant difference
    between the two in terms of readiness, particularly in a more
    or less emergency situation.
        General Odierno. There is.
        Senator King. General Grass, I'm a former Governor, so I
    have lots of warm feelings about the National Guard. They were
    enormously helpful to us. We had an enormous natural disaster
    when I was in office that the Guard was absolutely critical.
        On the other hand, I don't understand. Can you make the
    argument to me why a National Guard unit needs Apache
    helicopters? I know you're supportive of the agreement, but be
    an advocate for a minute and explain to me what the argument is
    out there, because we don't have someone at this table to make
    it, why a National Guard unit needs Apaches?
        General Grass. Senator, I go back in the history of the
    Guard, of who we are from our Founding Fathers, our foundation
    in 1636. It was men and women who would leave their farms, grab
    their muskets, and consider themselves infantrymen. There's a
    long tradition of being a part of the combat forces of the
    United States military.
        In every war we've been called forward, and that combat
    capability has come out. But that combat capability is really
    where we get the bulk of our leaders that execute complex
    missions in responding to major catastrophes in the Homeland. I
    often thought after Hurricane Sandy of those 12,000 troops. It
    probably took six brigades worth of colonel-level leadership on
    down and staff to execute those kinds of missions. We rely
    heavily on our combat force for that capability.
        Senator King. But there are combat functions for Guard
    units. It's not like the Apaches are the only combat function
    for a Guard unit, right?
        General Grass. Yes, sir. No, there are other combat
    capabilities.
        Senator King. But the basic idea is that the Guard would
    like to maintain and have its hand in this piece of the combat
    readiness.
        There's an article in this morning's newspaper that quotes
    a member of the other body that says that this proposal, that
    is to get rid of the Apaches from the Guard, trades one
    capability for another. It, ``significantly reduces personnel,
    many of whom are aviation personnel with years of experience as
    either pilots or in aircraft maintenance. Over 6,000 of these
    personnel, in whom the Army has invested significant time and
    money, will be forced out of a job and will be cut from the
    Army National Guard as a result of this proposal.''
        General Odierno, is that a true statement?
        General Odierno. First off, I don't know about the number
    6,000. I think that's a bit high. I would argue that that's
    happening across the entire force. I'm cutting 150,000 Active
    component soldiers who we've invested an incredible amount of
    money in, who have multiple tours in combat, and that we're
    also cutting out of the Army. This is happening across every
    single component and this is happening in significant numbers
    because of the reduced budget.
        I would say many of those individuals will be retrained to
    fly UH-60s or LUHs or other aircraft, because they're only
    losing 111 aircraft. If you have 2 pilots per aircraft, that's
    222 pilots. There are some sustainment people that are behind
    that. But 6,000 is a pretty high number. They just have to
    retrain some of this great experience to go on UH-60s.
        In the Active component, we're cutting 700 aircraft. The
    reduction of experienced combat pilots is actually greater in
    the Active component, seven times greater than it is in the
    National Guard or U.S. Army Reserve.
        Senator King. On the National Guard side they are going to
    be gaining Black Hawks, is that correct?
        General Odierno. 111 Black Hawks, sir.
        Senator King. Mr. Chairman, that's what I have at this
    time. I yield back the remainder of my time. Thank you.
        Chairman Levin. Thank you, Senator King.
        Senator Graham.
        Senator Graham. General Grass, can you tell us how long it
    takes to mobilize and deploy a BCT in the Guard?
        General Grass. Senator, using the training strategy that
    was published in December 2013, it's 71 days, the tasks that we
    have to accomplish if we're at company-level proficiency. It's
    87 days at platoon. I might mention that on our attack aviation
    over time we got better and better at this. We have modernized
    aircraft, and our post-mobilization time for our attack is
    about 71 days now, unless you're a non-modernized unit and
    you're going through an upgrade. Then it's about 113 is what
    the facts show.
        Senator Graham. What's the difference in missions of a
    Black Hawk and an aircraft attack aircraft?
        General Grass. Senator, it's combat versus support for the
    most part.
        Senator Graham. Isn't that the big difference, that they'll
    be flying Black Hawks, but they will not be flying attack
    helicopters?
        General Grass. Yes, sir.
        Senator Graham. Will the National Guard have any attack
    capability?
        General Grass. No, Senator.
        Senator Graham. That's the big deal, whether or not you
    should divest the Army National Guard of the ability to have
    attack aviation assets.
        General Odierno, you said last week that, knowing we're $17
    trillion in debt, probably 500,000 would be a moderate risk
    Army, is that right?
        General Odierno. That's correct, sir.
        Senator Graham. If we got to 500,000, that would take some
    of these problems off the table for the big Army, right?
        General Odierno. Yes, sir.
        Senator Graham. Do you know the cost difference between a
    450,000 or say a 420,000-person Army on the Active side and a
    500,000-person Army?
        General Odierno. It's $1 billion per 10,000 people, sir.
        Senator Graham. We need to add that up and see what you get
    for that money.
        General Odierno. That would be $8 billion a year, sir.
        Senator Graham. $8 billion. For $8 billion, what kind of
    difference would we be able to achieve in terms of the Army?
        General Odierno. If all the readiness dollars came with it,
    obviously that's a key part of this, and modernization dollars,
    that would enable us to have up to 32 to 34 brigades. It would
    allow us to have more aviation, which we need. It would allow
    us to have more air defense, ballistic missile defense
    capability, that we need, so we wouldn't be struggling with
    some of the demand and density of equipment that we have. It
    would allow us to meet prolonged, longer-term conflicts that we
    might have to face in the future. It would also allow us to
    probably do two at once.
        Senator Graham. Would it also create more deterrence in
    your mind?
        General Odierno. I think it would obviously create more
    deterrence.
        Senator Graham. The world as you see it today, are the
    threats to the Nation rising, about the same, or going down?
        General Odierno. I know the uncertainty has grown
    significantly, and the unrest that we see, whether it be in
    Europe, whether it be in the Middle East, or whether it be on
    the Korean Peninsula, seems to be ratcheting up a bit, not
    going down.
        Senator Graham. General Grass, would you support an
    independent commission to look at the Army force mix between
    the Guard, Reserve, and Active Duty?
        General Grass. Senator, I had mentioned earlier my
    experience with the Air Force commission, which is different,
    no doubt, because it was a different time. But looking forward
    to 2023 and where we're headed with sequestration, I don't see
    any problem with having an independent look, especially for
    this committee.
        Senator Graham. Thank you.
        My view is it would be wise, but the wisest thing we could
    do is find a way to give some sequestration relief. I will be
    introducing with Senator Leahy a commission, and I would like
    the commission to look at the effect of sequestration and have
    an independent view of that. I trust General Odierno. I think
    you've just been an outstanding commander, but I want somebody
    outside the Army looking at what we're doing to the Army, to
    tell the committee, if they could, the effects of
    sequestration.
        From the Reserve component, General Talley, what are we
    losing in the Reserve as a result of sequestration?
        General Talley. Senator, thank you for the question. I
    think the short answer is we're losing readiness. If
    sequestration stays in effect long term, I won't be able to
    have the additional OPTEMPO money that I need to make sure that
    those technical enablers that the Army relies on every day,
    which is predominantly from my component, as well as providing
    that direct support to the combatant commanders.
        Senator Graham. What does that mean to you, General
    Odierno?
        General Odierno. What that means is that we lose depth.
    They provide us the depth that we need. Frankly, in a lot of
    combat support and combat service support, that depth is pretty
    thin. We rely a lot on the National Guard and U.S. Army Reserve
    for combat support and combat service support capability.
        Senator Graham. When you look at the African theater, do
    you think it would be wise for us to beef up our military
    training presence, our intelligence capability, and Special
    Operations Forces capability in Africa?
        General Odierno. We have slowly been doing that, Senator,
    over the last couple of years. It's much more this year than it
    was last year, and I think it's something that we have to
    continue to do.
        Senator Graham. When you do that, that comes at the expense
    of something else in this budget environment, correct?
        General Odierno. It does. We have to pay for that, sir.
        Senator Graham. From a Korea point of view, it seems fairly
    unstable. What's the likelihood in your mind that the current
    regime in Korea would do something very provocative that could
    lead to a larger shooting conflict than we've seen in the last
    couple of weeks?
        General Odierno. I don't know the percentage. What I would
    say, though, is just recently we've seen, again, the launching
    of ballistic missiles. We've seen some artillery being fired. I
    worry that we continue to ratchet this up a bit more. I just
    worry where that could head. I think we have to be very
    cognizant and aware that they are conducting some provocation
    that could elicit a response from South Korea which then could
    begin to escalate. I think it's something that's very dangerous
    and it's important for us to understand that we have to be very
    careful here, because I think we are unsure what the leader
    over there is going to do.
        Senator Graham. Do you talk to our allies frequently
    throughout the world?
        General Odierno. I do, sir.
        Senator Graham. Is there a general impression throughout
    the world that America is in retreat in terms of our actual
    strategy?
        General Odierno. I wouldn't say that, what I would say is
    they expect us to lead.
        Senator Graham. Do they see us leading?
        General Odierno. When I talk to my counterparts, they want
    to know how we're doing and how we're going to implement in the
    future. We talk about how we're going to lead. Whether they
    believe that or not I will leave up to them. They don't say
    that to me.
        Chairman Levin. Thank you, Senator Graham.
        Senator Nelson.
        Senator Nelson. General Odierno, I agree with you in your
    response to Senator McCain. The future sequestration cuts would
    clearly diminish our capacity to be in a state of readiness as
    we want to to meet the world's threats.
        I want to get into the cuts to the Guard. Basically, the
    Department of the Army has suggested approximately 32,000 cuts
    to the National Guard. General Grass, your recommendation,
    whether it was imposed on you or whether it came from you, is
    roughly about 12,000 cuts. That's a difference of about 20,000,
    and I suppose that it's going to be Congress that is going to
    decide this difference.
        What I want to get to, General Grass, is the difference in
    the States as to the threat that is facing each of the Guards
    in the State, be it Army or Air Guard. If you use CAPE analysis
    on simultaneous events using historical data, it would
    reallocate the Guard among the States as to the ones that have
    the largest threats.
        My State of Florida is now the third largest State. We have
    surpassed New York in population. But New York and Florida also
    have the threat of hurricanes in common. We have a peninsula
    that sticks down into the middle known as Hurricane Highway.
    But New York found out that it was suddenly threatened with
    Hurricane Sandy, very significant damage, along with those
    other northeastern States. Sandy, Katrina, and the 2004
    hurricanes were taken into consideration. We had four
    hurricanes hit Florida in 2004.
        What it shows is that about a third of the States ought to
    be increased in National Guard and about two-thirds of them
    ought to be decreased. I understand you're not in the business
    of going around and telling existing Guards. But when a cut is
    going to be imposed on you, be it your 12,000 cut nationally or
    General Odierno's 32,000 cut, then a 12,000-member Florida
    Guard gets cut one-twelfth, 1,000, 800 for the Army, 200 from
    the Air Guard.
        That just doesn't seem right. Why in the world?
        General Grass. Senator, first of all, none of us want to
    make the cuts we're having to make. One of the issues that we
    deal with right now, especially in the Army, is trying to
    figure out where we can take risk, it's all about risk now when
    we have to make these cuts, and still fulfill the requirements
    for a governor to be able to call up his or her Guard and get
    them there on the ground within a timely timeframe so that they
    can respond and save lives.
        We're working very closely with FEMA and NORTHCOM right now
    to look at what we call the worst night in America. We've done
    some great analysis looking at those scenarios across the
    United States. We've never been totally able to quantify the
    requirements. We have 54 State plans now. We know how each
    State plans. Your State, sir, has been tremendously helpful in
    providing us their experiences. Unfortunately, because of the
    hurricanes, they've created tremendous capability. They've
    provided us their plan.
        We're taking those plans. If you imagine the Gulf Coast and
    the east coast, right now I can pretty much tell you what each
    State needs for a CAT-5.
        What we haven't been able to isolate in the past is to be
    able to tell you, of the 10 essential functions that we use in
    pretty much every State disaster, where do they come from in
    that disaster? How many will come in from other States?
        Senator Nelson. Let me just interrupt you here because
    we're running out of time. Is this the modeling that you're
    talking about?
        General Grass. Yes, Senator.
        Senator Nelson. Okay. But there's something also known as
    consequence management. Why do you pick modeling over
    consequence management?
        General Grass. Senator, it is a part of the calculus. In
    the end it will be.
        Senator Nelson. What did the Florida Adjutant General say
    to you about what a 1,000 cut in Florida from a 12,000 strength
    would do with hurricane season approaching?
        General Grass. Senator, I have had calls, I've had letters
    from every adjutant general about the proposed cuts, that it's
    unacceptable to them, especially when I talk about the 315,000
    number we have to get to. This is just an immediate step, but
    full sequestration takes us back to even worse cuts, and it
    will have an impact on our response times.
        Senator Nelson. Now you're modeling it, and the State
    plans, which are synchronized between the National Guard and
    the local responders, and you're looking at the gaps. Is that
    how you're going to allocate the cuts nationally?
        General Grass. Senator, first we have to understand the
    requirement by region. But each State day-to-day for the
    smaller events has a capability they need. There's a certain
    type of capability that they need, the 10 functions that I
    mentioned.
        Senator Nelson. Did the Florida Guard accept this kind of
    allocation of cuts, assuming that General Odierno's 32,000 cut
    nationally is what is the final figure?
        General Grass. Senator, I haven't had a single State accept
    them yet.
        Senator Nelson. So the answer is no?
        General Grass. No.
        Senator Nelson. Did the Florida Guard argue that there are
    other States that have a much larger Guard that do not have the
    threats and therefore there ought to be a reallocation among
    the States as to the actual threats?
        General Grass. Senator, they have made that case.
        Senator Nelson. Apparently, not successfully.
        General Grass. Senator, we're still in the deliberations.
        Senator Nelson. I thought these were your recommendations.
        General Grass. Senator, we have to get to the May
    timeframe. Right now, the States are coming back with their
    proposed trade spaces for force structure reductions. By May,
    we have to load that into the total Army analysis program.
        Senator Nelson. That means things are going to change in
    May?
        General Grass. Sir, it depends on what comes out of the
    debate and discussion that will occur with all the States
    present. They'll have a chance again to make their case.
        Senator Nelson. Okay. Then while you're listening to the
    States, I would just add my voice. Hurricanes are a way of
    life. Back in the early part of the last decade, I can tell you
    the Florida Guard knew how to take care of business, and had
    they been in New Orleans there wouldn't have been the problem
    that occurred there because they knew what to do. I don't want
    to lose that capability.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Nelson.
        Senator Lee.
        Senator Lee. Thank you, Mr. Chairman.
        Thank you all today for your testimony and to your faithful
    service on behalf of our country.
        You all have been forced to make some difficult decisions
    and you've been put in an unenviable position, having to deal
    with scarce and declining resources. I know that you've made
    those decisions with the security of our country and the safety
    of the men and women who serve under you as your highest
    priority.
        The Army's restructuring plan for aviation, of course,
    calls for the divestment of several fleets of helicopters and
    also for the remissioning of all National Guard Apache
    battalions over to the Active component. Of course, this means
    that if this plan were implemented, the National Guard would no
    longer have aviation attack flyer on-target capabilities.
        As has been highlighted to some extent already today, the
    National Guard's Apache battalions have performed exceptionally
    well in past wars, providing readiness and providing strategic
    depth for the Army and some of the best-trained personnel in
    the world. As one example of this, I will point, as one
    prominent example of this, to the Utah National Guard's 1-211th
    Attack Reconnaissance Battalion, that has deployed three times
    in the last 14 years, including multiple tours in Afghanistan,
    where it received the German Presidential Unit Streamer from
    our German allies in that conflict.
        While understanding the need to reduce costs and to
    prioritize modern equipment over older aircraft, I do have some
    concerns about getting there by divesting the valuable and very
    cost-effective national defense asset that we have in our
    National Guard Apache battalions. General Grass, if I could
    start with you, can you tell me, did the National Guard have a
    proposal for aviation restructuring that would have maintained
    some of the National Guard attack capabilities with the Apache
    while simultaneously ensuring that the Army had the equipment
    necessary to make up for the capabilities that would be lost
    from the divesting of the Kiowa Warrior?
        General Grass. Senator, first, let me say that I want to
    applaud the men and women of the National Guard that have flown
    this mission and all of our Army forces that have flown the
    mission. The Guard did 12 battalion rotations and 5 company
    detachment rotations. We have a detachment right now out of
    Tennessee that flies the Kiowa Warrior that is at mobilization.
    They will do their mission, come home, and they will change
    missions.
        I would tell you that I was included in every discussion. I
    provided my best military advice and I provided options. But
    now, sir, since the decision's been made I have to begin to
    plan for the future. I come back to sequestration, that this
    will be just a series of cuts that are going to continue as we
    look out to the future by 2016 when we take even further
    reductions.
        Senator Lee. You refer to the fact that you outlined other
    options. Can you tell me whether some of those options included
    what I've described?
        General Grass. Senator, yes, they did.
        Senator Lee. Why did you think it was important to maintain
    some attack aviation capability within the National Guard?
        General Grass. Senator, I think every National Guardsman
    wants to maintain a close relationship with our Army, and we
    want to continue to look like our Army and to work closely. I
    think going forward, looking at multi-component forces, I think
    we definitely have some opportunities coming in the future.
        Senator Lee. One of the justifications for the ARI is that
    State Guard and governors will have more aviation equipment,
    including transport capability, which some have suggested might
    be more suitable to their Homeland security missions than the
    Apache. General, to your knowledge has the Governor of any
    State requested more transport capabilities as opposed to
    Apaches? In other words, have any of them asked for more Black
    Hawks rather than Apaches?
        General Grass. No, sir.
        Senator Lee. Not one?
        General Grass. No, sir. They have asked for CH-47 Chinooks.
        Senator Lee. In addition to this, I would note that we had
    50 States and territorial governors who wrote a letter to
    President Obama in February asking that the proposed changes to
    the Guard's combat aviation capabilities be reconsidered. I do
    think that's significant.
        General Grass, many National Guard aviators and crew have
    flown the Apache for many decades, and they've made the choice
    to stay in the National Guard with this mission in mind, to
    continue to serve in connection with the Apache. Can you tell
    me whether there have been any studies completed or any
    analysis conducted to estimate how many personnel from our
    National Guard Apache battalions might remain in the National
    Guard if they need to be retrained to fly the Black Hawk?
        General Grass. Senator, I'm not aware of any studies. I
    know, looking at changes in structure that turbulence always
    creates, no matter what the discipline is, some folks will just
    not or probably don't have the time to get away and retrain.
        Senator Lee. Is there any historical precedent you can
    think of that might give us some insight into what that might
    look like?
        General Grass. I think some of the recent changes that have
    occurred, especially over the last 4 years, with the Air Force.
        Senator Lee. Those would indicate that we might see some
    departures?
        General Grass. Yes, sir. The restructuring may require a
    pilot to go requalify on a new platform and they may have to
    travel much greater distances. In this case, we wouldn't have
    the same, but what we find is employment becomes an issue, and
    family becomes an issue, especially when they're getting close
    to retirement. You lose that experience.
        Senator Lee. Thank you.
        I see my time has expired. Thank you very much.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Lee.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        Thank you both for your service.
        General Grass, the Chief of the National Guard has a unique
    role among the members of the Joint Chiefs, in that you serve
    as chief military adviser to the Secretary of Defense for non-
    Federalized Guard matters, but not necessarily owning or
    controlling the Guard the same way that other Chiefs own their
    Services. Given the Guard's dual State and Federal roles and
    command structures, does this cause a structural challenge for
    you on how to guard input factors into budget and planning
    decisions?
        General Grass. Senator, first let me say, and thanks to
    this committee, I'm proud to be able to serve in this capacity
    as a member of the Joint Chiefs. I think one of the huge values
    of being able to serve here is to be able to provide that
    advice that comes from the National Guard, not just in
    responding to disasters, but also across the 54 States and
    territories.
        I think from a budget perspective, I've been received very
    well by the Joint Chiefs. I've been able to provide my input on
    every discussion. I've been able to provide issue papers when I
    possibly disagreed or a Service Chief and I maybe disagreed. I
    was still able to bring my message forward to the Deputy
    Secretary. Then once the decision's made, sir, it's my job to
    execute.
        Senator Donnelly. Is there anything that can be done to
    improve this situation or do you think it's working
    appropriately right now?
        General Grass. Senator, I recently sat down and I read the
    charter, the history of the Joint Chiefs of Staff. I think
    there are growing pains. I looked at the Marine Corps and it
    took almost 25 years before they went from being just an
    advisory role to a full member. We are a full member. I think
    it's historic what this committee has done and what DOD has
    done to welcome us into this. I think there's huge value for
    the future for being a member of the Joint Chiefs of Staff.
        Senator Donnelly. Thank you.
        General Odierno, as we have discussed before, and we
    appreciate all your efforts on this, I view the mental and
    behavioral fitness of our soldiers also as a readiness issue. I
    appreciate the Army's leadership on implementing smart
    behavioral health screening policies. In particular, I want to
    highlight the leadership the Army has shown on implementing
    annual enhanced behavioral health assessments for all Active
    Duty soldiers, not just those in the deployment cycle, but for
    all Active Duty soldiers, as part of their periodic health
    assessments.
        I understand the Army is working on implementing the same
    policy and tools in annual assessments for the Reserve
    component. I was wondering, General, what the status of that
    effort is at this time?
        General Odierno. First off, a couple things have happened
    that are good. First, the Army National Guard utilizes the
    director of psychological health to assess all of their
    programs. That's a new initiative that we put into place. They
    support all 54 States and territories when they're doing this.
        Second, we have incorporated telebehavior health, which is
    really good for the Guard and Reserve because it enables them
    now to not necessarily have to be right there, but we can do it
    over long distance, where we then can utilize some of the Army
    capabilities when we have behavioral health. But there's still
    a lot more work to be done.
        The other piece we've done is TRICARE Reserve Select, which
    is a low-cost, premium-based health plan which you approved for
    the Reserve component. That's enabling them to go outside to
    get this help. We now have some things in place that will help
    us. We're also putting behavioral health specialists at the
    brigade level at all the components.
        A combination of all of these things are beginning to help
    us. We still have a distinct challenge in the Reserve
    component, and that is reaching out to them on a regular daily
    basis like we can with Active component soldiers, because of
    the fact that they are spread out over large distances and they
    have other jobs where they're not in daily contact. But the
    Guard and Reserve are putting in several different initiatives
    that help them to reach out.
        We're nowhere near where we need to be, but we have made
    some progress.
        Senator Donnelly. General, this is a little bit different
    from the original question, but one of the things I've heard is
    you've worked so hard to eliminate any stigma to seeking help.
    But I have still heard that some Army members or Reserve
    members would rather see somebody outside the uniform, I guess
    would be the way to put it. Has there been any thought in terms
    of making sure that there is, in towns where you have such a
    big place or in bases where you have such a huge presence, to
    having somebody just outside the gates who may not be connected
    per se to the Army, but is there to provide those kinds of
    services?
        General Odierno. Each one of our major installations in the
    Active component is working very closely and have a
    relationship, that they have a behavioral health network that
    is available, and they identify what that network is so people
    have options. As I said earlier, for the Reserve component it's
    now TRICARE Select, and that helps them then to, obviously,
    seek help outside of the uniformed military to do this.
        Senator Donnelly. Thank you.
        Do you know, General Grass, whether there is an effort to
    provide the same type of annual behavioral health assessments
    for the Guard as well?
        General Grass. Senator, yes, there is. Today we have 167
    mental health clinicians across the Guard, both with the Army
    and Air. At the Air level, we are at each wing. In the Army
    level, we have a contracted clinician in every State. We also
    have 24 additional in our high-risk areas of the State.
        Thanks to Congress, we have another $10 million this year
    that we're applying to additionally bring on. I've been working
    with the Air Force on converting some of those contract
    positions to permanent civilian positions. We want to do the
    same with the Army, so that you put someone in the State
    headquarters or in a unit that's going to be there and when the
    contact runs out you don't lose them. You bring them from, as
    you said, sir, that community, that they understand the
    problems we're dealing with.
        Senator Donnelly. This would be for both of you. Are there
    any challenges to that drive to provide those services?
    Obviously, there are financial challenges because of resources.
    Are there any other challenges on this end we can be helping
    you with to try to make sure that you have the tools necessary
    to provide those services?
        General Odierno. I'd say a couple of things. We have the
    tools, so I don't think we need help from you. There are some
    things we have to do internally. That's hiring more behavioral
    health specialists.
        The only other thing, I mentioned the other day in the wake
    of Fort Hood, is it has to do with our getting commander access
    to information, and there are some internal things we can do,
    but there might be some legislative things that we have to look
    at. That should come out of some of the studies we're doing
    based on what happened at Fort Hood.
        Senator Donnelly. Okay.
        General Grass. Senator, if I could add one thing. We've had
    great support from the Army on this, but a lot of our
    capability and our resources have come through Overseas
    Contingency Operations (OCO) money. As that money dries up,
    we're concerned about what we'll have left behind there to
    execute the mission.
        We're working very closely with the Department of Health
    and Human Services and the Department of Veterans Affairs,
    because one of the concerns that I have as over 100,000 men and
    women are coming out of Active Duty with 4 to 6 years in
    combat, is how it's going to have an impact? We hope to attract
    them in the Guard, but how is that going to have an impact on
    them and their mental health? I don't think we as a Nation have
    tackled that yet.
        Senator Donnelly. General Odierno and General Grass, thank
    you, and thank you to all the men and women who serve our
    country.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator Sessions.
        Senator Sessions. Thank you.
        General Odierno, thank you for your service. You've been
    given a tough job. All of us need to know that.
        General Grass, I think your recent comment about the danger
    to the morale and spirit of soldiers who've served us, even in
    combat, maybe more than one or two or three deployments, when
    they're said that they're not needed any more, worries me. I
    think it's a danger to the Service.
        We've known all along we're going to have to draw down the
    numbers after the peak of Iraq and Afghanistan. We've been
    preparing for that. But it's just not something we ought to
    take lightly.
        General Odierno, I know you will wrestle with it and try to
    do the best you can, and you're being asked to do some very
    tough things.
        My impression, General Odierno, as you said at the
    beginning, is that the Guard is being listened to effectively,
    and you're doing your best to shape a force for the future that
    reflects their contributions and the Active Duty contributions.
    In fact, if your plan is carried out, the Guard will have a
    larger percentage of the Total Force than they had before,
    either before September 11, 2001, or after September 11, 2001.
    Is that correct?
        General Odierno. That is correct, Senator.
        Senator Sessions. I thank you for doing that. I think the
    Guard makes great contributions and the Army Reserve does, and
    at a reasonable price, and I appreciate that.
        With regard to the total numbers, I hope we don't have to
    go to 420,000. That number to me is lower than I would have
    thought possible, or maybe it's not possible. We're going to
    have to look at those numbers hard.
        General Odierno, maybe someone else would be better able to
    answer this, but I'll just ask you first. What about civilian
    personnel? We've been told and I understand that as many as
    100,000 new civilian personnel were added to the total work
    force after September 11, 2001. I'm wondering what kind of
    reduction in their numbers should occur with regard to our
    overall constant desire for military leadership and Congress to
    have more available at the point of the spear and less
    available in the establishment bureaucracy, for lack of a
    better word.
        General Odierno. Senator, so far, since we started in 2012,
    we've reduced the U.S. Army civilians by approximately 20,000.
    We will continue to reduce them over the next 5 fiscal years as
    well. They are coming down as well. It's a bit harder to
    predict because it's based on number of budget dollars, but
    we've directed a 25 percent reduction in all headquarters, both
    civilians and military. That's part of this. We have reduced
    civilians in every one of our installations and we're
    continuing to do this. Army Materiel Command has done a study
    on how we will reduce civilians there.
        All of that we are continuing to work, and we will continue
    to see reductions in our civilian workforce as we move forward.
        Senator Sessions. It seems to me that the logical thing
    would be to, as we've drawn down the size of the Active-Duty
    Force, reduce civilians to support that force, number one.
    Number two, we were facing life and death events every day in
    Iraq and Afghanistan with troops being deployed, and we need to
    have the kind of civilian support staff that made sure that
    they got what they needed, when they needed it, because lives
    were at stake. Could you go lower than that? How much lower do
    you think, and why shouldn't we have a greater percentage
    reduction in civilian than we do in Active uniformed personnel?
        General Odierno. I think what we're trying to do is
    proportionally cut based on our assessment. In other words, I
    think over time you will see proportionate cuts in the civilian
    work force as it is in the military as well.
        We're also, by the way, just to add something else,
    reducing contractors significantly. We began that process this
    year. We are continuing to go after that, and we're trying to
    reduce contractors first, then civilians, and then military.
    That's the thought process we're going through as we move
    through this. But we still have lots of work to do here.
        Senator Sessions. I respect the difficulty of this. This is
    a huge institution and you're trying to make changes over time.
    But with regard to the budget numbers, next year's 2015 budget
    beginning in October would be $498 billion, basically the same
    as this year, and then go to $499 billion in 2016, which is
    another tight, flat year with no increases.
        Then the next year it jumps $13 billion to $536 billion,
    and grows at 2.5 percent a year for the next 4 years after
    that.
        I guess what it seems to me from the outside looking in, of
    all the challenges you face, it's trying to stay within those
    numbers now, because you're making decisions now to reduce
    structure and personnel and so forth that will create savings
    in the years to come, but it's hard to effectuate and capture
    those savings this year.
        Would you share with us how you see the current stress
    you're under, as opposed to the longer-term trajectory?
        General Odierno. For the next 3 to 4 years, until we get to
    those numbers you just described, it's impacting our readiness
    and our modernization programs. We've had to reduce readiness
    in the Active, Guard, and Reserve. We've had to cut
    modernization programs. We've had to delay procurement of
    equipment. All of that is happening now.
        Around fiscal year 2020, if sequestration goes out to its
    final stages, that will be the first time that we are able to
    start to balance the right amount of readiness, force
    structure, and modernization. That will allow us then to build
    a complete, ready force as we move forward.
        Senator Sessions. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Sessions.
        Senator Vitter.
        Senator Vitter. Thank you, Mr. Chairman.
        Thanks to all of you for your service, as well as, of
    course, your testimony today.
        When not mobilized, I assume it's clear National Guard and
    Reserve personnel train less than Active Duty. For instance,
    the Guard has far fewer rotations at CTCs like the Joint
    Readiness Training Center at Fort Polk. What impact does that
    less frequent training have on skill proficiency and
    interchangeability?
        General Odierno. The Guard is able to do individual
    proficiency and small unit proficiency. They get good at their
    individual military occupational specialty. They can do some
    small unit, platoon level capability, maybe at home station.
    But without having CTC rotations, it's much more difficult to
    get to company, battalion, and brigade. The more complex the
    organization, the more difficult it is. The complex
    organizations are BCTs and aviation brigades. Less complex
    organizations, such as transportation units and maintenance
    units, can do a lot of it at home station. But the impact is
    really on the more complex, integrated, and collective training
    that has to be done, that they're simply not able to do. In an
    Active unit you can do it at your home station because you have
    the ground, air-space, and facilities to do it and you're
    collocated together, where the Guard is spread out and they
    don't have that. They need the training center in order to
    build that readiness.
        Senator Vitter. Generals, we've all heard a lot about
    possibly including an amendment that would restrict funds from
    being used to retire any aircraft associated with Air National
    Guard or Air Force Reserve units until a study could be done,
    basically for a couple of years. It strikes me that that would
    be reasonable if nothing were changing and no cuts were
    happening in that time period. But, of course, the threat is
    that major things are changing, major reductions have to be
    made in that time period.
        That would be a decision. Taking things off the table is an
    affirmative decision in the context of all of those other
    changes and cuts that would have to be made. Isn't that a
    fundamental problem with a 2-year pause, protecting some assets
    and not others?
        General Odierno. It creates $1 billion a year for 2 years.
    As I mentioned earlier, I already submitted a $10.7 billion
    unfunded requirements problem that we have in the Army already.
    This would add to that. It would directly impact readiness of
    all three components if, in fact, a commission is established.
        Then if the commission does not go along with our
    recommendations and comes in with another, you go on a whole
    other significant amount of bills, up to $11 or $12 billion,
    which we'd have to find. Everything is zero sum. It would just
    delay that, so it would further delay the readiness. It would
    further delay our ability to respond. It would further delay
    our capabilities in this very uncertain world that we have.
        Senator Vitter. Generals, can you respond to my basic
    concern that a major 2-year pause, protecting some things,
    holding some things harmless, in the context of major changes
    or reductions that are happening in those same 2 years, is an
    affirmative decision?
        General Grass. Senator, if I could comment, again, my only
    experience with this was with the Air Force and as we stepped
    in we had moves that needed to occur going back to 2010 when
    the commission was stood up in 2013. We had to get agreement to
    go ahead and make those moves or it would have had a major
    impact. But we were able to do that.
        General Talley. Senator, I think from a commission
    perspective as it relates to the Army, my concern is the Air
    Force commission came out and there's a lot of analogies that
    are being drawn, even though one of the members asked for those
    analogies not to be drawn to apply that to the Army Reserve.
    Specifically, one of those recommendations is to eliminate the
    U.S. Air Force Reserve Command. That issue's been brought to me
    many times, almost weekly. If there's an Army commission, we're
    concerned that there could be similar conclusions.
        I guess my concern is I'm not sure we need a commission. I
    think the Army needs to move forward and execute its right-
    sizing of the Total Force, working with Congress. But if
    Congress does decide to move forward with an Army commission,
    it's going to be critical to make sure that we have the right
    representation from all three components and folks that truly
    understand how the total Army is integrated and synchronized.
        Senator Vitter. General Odierno, if there were this 2-year
    pause and this $1 billion hit to the Active Army, I assume that
    could certainly affect Army end strength. How low could that
    push it? Lower than 420,000?
        General Odierno. If the decision by the commission is to
    not take any structure out of the Guard and not do the ARI, it
    would result in somewhere between 20,000 to 30,000 additional
    people out of the Active Army. It would go somewhere between
    390,000 and 400,000.
        Senator Vitter. We're talking about well below what you
    consider your absolute minimum level.
        General Odierno. Which is 450,000.
        Senator Vitter. Right.
        I know the Guard has proposed a plan that accounted for
    about $1.7 billion in offsets. I wonder if each of you can
    address that wherever you're coming from, positive or negative,
    including why the Army couldn't accept that particular plan?
        General Talley. Senator, again, as I look out to full
    sequestration coming back in 2016, we looked at the Army Guard
    and said that we have to be willing to pay part of the bill. If
    we are not, sequestration is still going to take the money at
    some point unless Congress elects to put money back in there.
        But at the same time, I rely heavily, we rely heavily, on
    our Services for research and development, for acquisition, for
    schools, et cetera. We have to get the balance right. When I
    proposed to the adjutants general that a reduction in our
    budget, the $1.7 billion, which ends up at about roughly 12
    percent of our total obligation authority, was a good number
    that is consistent with some of the discussions we've had with
    the Secretary of Defense, that number definitely would reduce
    our full-time manning. It would reduce some of our military
    construction, our sustainment of our facilities; it would
    reduce there.
        It is painful, no doubt. But as I look out over the next 10
    years at what we have to do, I could see no other alternative.
        General Odierno. As the National Guard provided us the
    alternative, which was well thought out, there are several
    issues with it as far as I'm concerned. In their proposal, it
    significantly reduces the amount of force structure that leaves
    the National Guard. It actually proposes that we take more.
    We're already taking three complete aviation brigades out of
    the Active component. It proposes we take more aviation out of
    the Active component.
        We are already moving from 37 shooting battalions to 20
    shooting battalions in the Active component. We cannot go any
    lower than that. We simply cannot. We will not be able to meet
    our operational commitments if we do that. For me, that made it
    a bit more difficult.
        What I'm concerned about in the National Guard is that if
    we don't take any force structure down, you're going to have
    this mismatch between force structure and readiness. That's
    what we've done in the Active. We've taken 150,000 out of force
    structure so we can pay for readiness. We don't have to take as
    much out of the Guard to pay for readiness because they're
    cheaper, so we have proposed taking a little bit out of the
    Guard so we can pay for the readiness, because we want them to
    be an operational reserve.
        But if we maintain more structure, they're headed towards a
    strategic reserve because we are not going to be able to pay
    for their training. That, I think, is necessary for them to
    have in order to sustain the level of readiness that they've
    achieved over the last 10 to 12 years, with huge investments in
    OCO money that we have used to obtain this level of readiness.
        In my mind, that was my concern about it. Again, we want to
    come with the right solution and we think the one we've come up
    with cuts less end strength, less percentage of end strength,
    out of the Guard, and we're able to maintain at a higher
    readiness level, which is important to all of us. That's really
    what the difference is. But again, it was a well thought out
    proposal that they gave us.
        Chairman Levin. Thank you.
        Senator Vitter. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Vitter.
        Senator Blunt.
        Senator Blunt. Thank you, Mr. Chairman.
        General Odierno, last week, you and Secretary McHugh were
    here. I'd like to follow up on just one thing that came up last
    week on the mental health issues. My understanding from last
    week was that when a soldier leaves an installation his or her
    medical health records follow them to the next post, but their
    mental health record does not follow them. Is that right?
        General Odierno. Sir, we're working our way through this.
    This is something we're looking into. The mental health record
    can go to certain people, but it is not distributed completely.
    One of the problems we have is that commanders don't know that
    this has transitioned. The medical professionals might, but the
    commanders don't know.
        That's what we're trying to work out now and figure out how
    we can look at that and what we can do to help with these
    problems, because that's something that we have faced for some
    time now and we have not been able to solve yet. We're trying
    to work through legal issues, the Health Insurance Portability
    and Accountability Act, and other things that are out there
    that allow us to do this to protect our soldiers and provide
    them the right care as we identify it.
        Senator Blunt. At some level we have to start dealing with
    these mental health issues, both in how we treat them and how
    we pay for them, how we communicate them like they're health
    issues. I assume from your answer you're trying to determine at
    least what level in the command structure all records need to
    be available as decisions are made?
        General Odierno. That's correct, so we can get them the
    right care, so we understand there might be a problem, so we
    understand and we can make sure that they are getting the right
    capabilities that they need in order to help themselves. That's
    really the key piece of this.
        In reality, the other piece is, we're even looking at
    things that, if somebody has a significant medical issue, do we
    even allow them to do a change of station. Let's fix it where
    he or she is, unless we think it's better for him or her to
    move. That would be a conscious decision that we would make as
    well.
        Those are all the things that we have to constantly review
    as we look at this very difficult problem.
        Senator Blunt. The National Institutes of Health says that
    1 out of 4 adults has a diagnosable and treatable mental health
    issue. I don't know if it's higher or lower in the military,
    but I suspect the military is pretty reflective of overall
    society in that regard. Both as a society and as the
    institutions that defend us, we just can't continue to act like
    somehow this is something nobody else has to deal with but the
    one individual you're talking to, nobody else.
        I'll be supportive and hope to be helpful of whatever
    you're doing there.
        I appreciated Senator McCain's remarks about the A-10. I
    think there is a real gap here and we need to be thinking about
    how to fill that gap. General Talley, F-16s are one of the
    supposed replacements, but I don't think the F-16s do all that
    the A-10s do in terms of close combat support. Am I right on
    that or do you want to make a comment about that?
        General Talley. Sir, I don't. That's outside my area of
    expertise. Anything you want to ask about the Army or technical
    enablers, I can talk for hours.
        Senator Blunt. In terms of CAS for the Army, you don't have
    a sense of which of those aircraft would be better?
        General Talley. Sir, I'll leave those comments to General
    Odierno and to others, sir.
        Senator Blunt. Okay. General Odierno, do you want to follow
    up at all? One of the potential replacements is we put the F-16
    in and I don't think it does the same things.
        General Odierno. I've said this a couple times, not in this
    hearing. But I would say the F-16 is designed for CAS. It is
    designed to provide support for our soldiers. Its visual
    capability enables us to provide CAS. In Afghanistan, more than
    50 percent of the CAS missions have been flown by F-16s.
        Remember this is a counterinsurgency environment. We have
    to work with the Air Force what the right platform is or what
    the tactics, techniques, and procedures (TTP) are that we need
    to provide CAS across the wide variety of potential scenarios
    that we're going to have to operate in. We do know the A-10
    works in those scenarios today. We have to work with them to
    make sure that we have that capability.
        General Welsh has been very specific about saying they will
    ensure that we have the right CAS. Soldiers like the A-10. They
    can see it and they can hear it. They have confidence in it.
    That's the one thing that we have to account for as we move
    forward.
        Senator Blunt. I would hope before we replace the A-10 we
    know that we're replacing them with something that works and
    there's no gap between the thing that would work and the
    ability to have that particular replacement as something that
    would work.
        General Grass, in the coming and going here as we do, I
    know you mentioned some mobilization figures for the Guard.
    Could you repeat those to me? It seems to me there's some real
    disagreement about readiness as it relates to the Guard.
        General Grass. Senator, what I mentioned in my opening
    statement was 760,000 mobilizations of Army and Air Guard. Of
    that, just over 500,000 have been Army Guard.
        Senator Blunt. In terms of readiness?
        General Grass. Over time, again going back to pre-September
    11, 2001, resources weren't always there for all the right
    reasons. We were at peacetime and we were taking a peace
    dividend. As long as we could meet our State missions and a
    certain level of training in peacetime, we were able to have
    some reduced levels of funding.
        But as the war started, we had to ramp up quickly. What has
    happened over the last 12\1/2\ years, thanks to the great work
    of Congress and of the Services, they've helped us get up to a
    level where we've reduced the amount of post-mobilization time
    significantly. Over time that will atrophy, especially as the
    resources go away, and as we get out into full sequestration we
    will slowly atrophy back to at a lower level of training.
        Senator Blunt. I believe what you said, General Odierno, is
    that a lot of the OCO money, the Iraq and Afghanistan money,
    has been used over this 12-year period of time to be sure that
    the Guard was ready?
        General Odierno. Yes, it has. In fact, we have this
    organization called First Army whose total responsibility is to
    train the Guard and Reserve. We have to reduce that because a
    lot of that--we built that up over the last 10 or 12 years with
    OCO dollars as they were preparing the Guard and Reserve to go.
    That organization is shrinking in the Active component and with
    input from the U.S. Army Reserve and the National Guard, that
    organization was the main trainer of them and will continue to
    be.
        We're still going to have that organization, but it's not
    going to be robust or as big as it once was because that was
    funded in OCO money.
        General Talley. Senator, can I get in on that for just a
    minute?
        Senator Blunt. Yes.
        General Talley. In the Army Reserve, since we're technical
    enablers, our requirements at a mobilization site are generally
    2, 3 weeks. We've consistently gotten in and out of the
    mobilization site ready to go in less than a month. Normally
    it's 2 to 3 weeks.
        Every mission that's ever come down to the Army Reserve,
    we've been at C1 or C2, which is the highest level of
    readiness, 60 days prior to the late entry date. That says a
    lot about the ability of the Army Reserve to generate readiness
    quickly.
        Then, to tack onto what the Chief is talking about, that
    OPTEMPO money, that extra money, is how we buy back and
    maintain that readiness. On First Army, most of First Army is
    actually Army Reserve. Almost the majority of First Army's
    structure is provided by me out of the U.S. Army Reserve
    Command. It's a great organization, very helpful in helping us
    get all the Army Reserve components ready to go.
        Senator Blunt. I would think if the force was truly
    interoperable and the readiness issue could be dealt with, that
    as you're reducing the full-time force that you'd want to
    actually be increasing the backup, part-time force. I'm going
    to let you talk about that, General. That'll be my last
    question.
        General Odierno. Thank you. Forces Command, which is the
    commander of all continental forces in the continental United
    States, to include U.S. Army Reserve, National Guard, and
    Active, has put together a plan that will better integrate
    training at several different levels to increase the
    capabilities of the Guard and the Reserve. This was at the
    request of the Guard and the Reserve. They wanted us to do
    this, and General Grass talked about it earlier, where we're
    integrating better Active, Reserve, and National Guard when we
    can in training, which will help us to do this.
        We have to come up with new ways to do this, but there are
    ways we can come up with that will continue to ensure we have
    the right readiness levels.
        Senator Blunt. I thank all of you.
        Chairman Levin. Thank you very much, Senator Blunt.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        General Odierno, I wanted to follow up on some of the
    questions that Senator Blunt asked you about the A-10. There
    are different kinds of CAS, aren't there?
        General Odierno. There are, ma'am.
        Senator Ayotte. Yes. Some CAS is done at the 10,000 foot
    level with precision-guided bombs, correct?
        General Odierno. That's correct.
        Senator Ayotte. Then there's the CAS that saved 60 of our
    soldiers in Afghanistan last year from A-10s, where they dealt
    with a situation where the A-10s were flying at 75 feet off the
    ground, using their guns, and they were within 50 feet of
    friendlies. Isn't that what the A-10 is best at that kind of
    CAS?
        General Odierno. Yes, ma'am.
        Senator Ayotte. When you talked about vulnerability, I
    think in response to Senator McCain's question about the A-10,
    they aren't worried about the TTPs about that lower mission,
    getting down. I think the F-16 is a great platform, so I don't
    want to diminish the strength of the F-16.
        But as I understand it, the F-16 has to go a lot faster
    down there because it doesn't have the same type of
    survivability that the A-10 would. Can you help me understand
    this?
        General Odierno. You have CAS that provides, again, systems
    that are further away. You have CAS that provides with troop
    contact, which is close contact and medium contact. There's
    different depths of the battlefield. The A-10 has over the
    years provided us great CAS very close in when we need it,
    along with the Apache helicopter. But the A-10 has different
    capabilities than the Apache. They are not interchangeable
    either. It's given us a significant capability.
        The F-16 provides some capability. It is operated at a
    higher level. That's one of the things you have to look at. Can
    they operate at lower levels? I think that's one of the things
    that we're working with the Air Force; can they, and what are
    their capabilities?
        Senator Ayotte. I know that you and I talked about this
    last week as well. When we talk about developing TTPs for CAS,
    we're talking about that scenario, where we're talking about
    the support needed on the ground, also having the capacity to
    distinguish between the friendlies and the enemy. Because the
    A-10 can get low and go at a slower pace, and also it's a
    titanium tank, it has more survivability, correct?
        General Odierno. That's correct, ma'am.
        Senator Ayotte. Would you agree with me? You've said in the
    past that for that mission the A-10 is the best.
        General Odierno. It is.
        Senator Ayotte. I know when you talked to Senator McCain he
    asked you about the F-35 and whether the F-35 could replace the
    A-10, and I think you said: ``I don't know.''
        General Odierno. What I said is, I know the F-35 is being
    built to replace, and I'm not familiar enough with the exact
    capabilities.
        Senator Ayotte. Right. That's fair. I think the F-35 is an
    important platform as well.
        However, one of the concerns I have, even if we assume that
    the F-35A can replace the A-10, is that our plan right now has
    a gap, because under what General Welsh has introduced, all of
    the A-10s would be retired by fiscal year 2019 and even the
    best-case scenario, the F-35A is operational in 2021. There's a
    gap there.
        We don't know the answer to this question on the TTPs of
    whether the F-16s or other platforms can perform this low
    function that is so critical to our men and women on the
    ground. I know you agree with that because we have lots of
    stories to tell and you have way more stories to tell than me
    on this.
        I think this is a very important issue that we should not
    overlook and I am hopeful that this committee will address,
    because I see a gap here until we know the answer to these
    questions. This is a gap we can't afford, because these are our
    men and women on the ground who are taking the bullets and we
    want to make sure that we give them the very best when it comes
    to this mission. Would you agree with me on that?
        General Odierno. I'm always concerned about making sure our
    soldiers who are in contact have the best capability possible
    for them across all of our capabilities.
        Senator Ayotte. Great. Thank you, General. I appreciate it.
        I wanted to ask both you and General Grass a question on
    another issue. This is the issue that I know, General Odierno,
    you've already mentioned, that we want the Guard and Reserve to
    be operational. It has been operational in Iraq and
    Afghanistan. This is so important. We couldn't have fought
    those wars without their support. Training and readiness is
    really the key to all of this.
        One issue that I see in all of this is that not only you
    train individually, but you train as a group, correct? This
    readiness involves both.
        How important, General Grass, are the CTC rotations in your
    view in terms of the preparedness of the Army National Guard
    and the BCTs to ensure that they have CTC rotations?
        General Grass. Senator, they are critical. I know in the
    past we've done about once every 7 or 8 years with certain
    brigades. What I learned is that over time, I'm sure it's the
    same for the Active Force, when they get the mission, they know
    their rotation is coming up, that focuses all their training.
    For our men and women, that's every weekend drill, that's every
    additional staff period, that's the annual trainings for years
    leading up to that rotation.
        Senator Ayotte. General, as I look at this proposal, under
    the fiscal year 2015 proposal, no National Guard BCTs will be
    sent to CTCs, is that right?
        General Odierno. There's two, ma'am.
        Senator Ayotte. There's two. Okay, so you're going to send
    two under the fiscal year 2015 proposal. Okay, so I didn't
    understand that correctly.
        General Odierno. There's one undecided, so there may be up
    to three. But two for sure, maybe three. It depends, frankly,
    on availability of Active brigades. In 2014 there is one and in
    2015 there are two.
        Senator Ayotte. Okay.
        General Grass, do you feel that we're prioritizing this
    amount of training with regard to the BCTs, sending them to the
    CTCs, with the proposal before us?
        General Grass. Senator, we're very pleased to have the
    rotation. The 86th Brigade will go to Fort Polk this summer and
    they're very excited about it, and the 10th Mountain will go
    along and support them.
        What we're concerned about is the money going away in 2015.
    We have two allocated rotations for 2015. We'd love to have
    another one. I think for the long term what we ought to
    examine, especially with the resources dwindling, what can we
    afford, and then build a plan consistent with what the men and
    women of the Guard can do as well, because there is a
    commitment.
        Seven years may be too infrequent, but we have to find that
    right number for them.
        Senator Ayotte. I think of all the issues that we hopefully
    can work on is this issue of making sure that there's enough
    training. I know that's been the focus of all of you in some of
    the difficult choices that you've had to make in terms of force
    structure and readiness. I look forward to continuing to talk
    with you about this issue.
        Thank you all for your service and what you've done for the
    country and continue to do.
        Chairman Levin. Thank you, Senator Ayotte.
        I just have a few additional questions. First, General
    Grass, you made a very important point about your concern about
    the availability of funds for mental health needs once OCO
    either goes away or is dramatically reduced further. That, I
    think, means that you all need to be sensitive about trying to
    find a way to build this into the base. I would just simply
    make that point. It's something I frankly had not thought much
    about until you made that reference, General Grass. Thank you
    for that, and I would just urge you, all of you, to think about
    how we build into the base what we need for the additional
    mental health for our troops as they come home.
        I'll just ask a quick question. General Odierno, is that
    something which is on your radar?
        General Odierno. It is, it's very much on our radar. We are
    actually increasing our behavioral capability even this year
    and next year. We are trying to increase it so we get it out of
    OCO completely.
        Chairman Levin. All right, thank you.
        General Grass, separate and apart from the issue of trading
    Apaches for Black Hawks, is it accurate that there has been an
    unmet requirement for Black Hawks in the Guard?
        General Grass. Senator, I'm not aware of one.
        Chairman Levin. You're not aware that the governors or
    adjutants general have sought additional Black Hawks in the
    past before this issue of the trade came up?
        General Grass. No, sir. They have sought more Chinook
    aircraft.
        Chairman Levin. They have sought them, but there may or may
    not be a requirement; is that it?
        General Grass. Yes, sir.
        Chairman Levin. Senator King asked me to ask you this,
    General Grass. As the reductions in size are made, do you know
    yet whether those reductions will be allocated proportionately
    to the States, or will there be other factors that will be
    considered? Do you know that yet?
        General Grass. Senator, we're in the middle of developing
    those metrics. But to be fair, we have to look across the
    States and consider their Homeland mission, consider their
    structure within the State that can respond to the Army's and
    Air Force's needs. But also the other thing that we take into
    consideration are the demographics of the area of support,
    looking out 10 to 15 years from now.
        Chairman Levin. Okay, I see Senator Cruz has arrived.
    Senator Cruz.
        Senator Cruz. Thank you, Mr. Chairman.
        General Odierno, General Grass, and General Talley, thank
    you for your service. Thank you for being here.
        General Odierno, I'd like to start by just making a comment
    about the brave men and women at Fort Hood. I was down there
    last week visiting with the heroes and, as tragic as that
    shooting was, I have to tell you it was at the same time
    inspirational. One young soldier I visited with in particular
    had been shot twice, was recuperating, and was in the hospital
    with his fiance and his mother and his sister. As he was
    sitting there and the commanding general came in and he saw the
    Ranger patch on his uniform, this young soldier leaned forward
    and said: ``I want to be a Ranger; can I go to Ranger school?''
    This was 48 hours after he was shot. He's recuperating and the
    only thought he had was that he wanted to be a Ranger and fight
    for our country. It's a powerful testament to the extraordinary
    men and women who serve in our Army and serve in the military,
    and I know all of us are praying for those soldiers or
    remembering those soldiers and are standing with them.
        One question that has obviously been discussed in the past
    week has been the question of concealed carry on military
    bases. I recognize that's a question on which there's a
    difference of opinion in the military and a difference of
    opinion in the civilian world. There are some soldiers who feel
    quite strongly that concealed carry would be a sensible change
    in policies. There are others who may disagree.
        It has been a long time since this committee has held a
    hearing examining that question, examining the policy benefits
    and detriments of allowing concealed carry on military bases.
    In your view, would that be a productive topic for a hearing
    for this committee?
        General Odierno. There's clearly a difference of opinion on
    this. I would just say, Senator, that our assessment is that we
    right now probably would not initially support something like
    that. But all of this is always worth a discussion if we think
    it's important.
        Senator Cruz. Thank you for that. I do agree it's a
    question worth further examination, because I think we are all
    agreed that we want to implement policies that will maximize
    the safety of the men and women who are serving on our base.
    Obviously, Fort Hood has now twice, in a very short time
    period, suffered through a traumatic experience. I'll tell you,
    the community has come together even more strongly in the
    aftermath of that.
        I'd like to ask another question focused on the proposals
    of the Army to reduce its Active Duty end strength after more
    than a decade of war. I understand that the Army can handle
    much of the reduction through normal attrition, but that there
    will be some soldiers with several tours in Iraq or
    Afghanistan, in other words, some of our most valued combat
    veterans, who under the current plan will not be allowed to
    reenlist or otherwise stay on in Active Duty.
        The question I would ask you is, if we go down that path,
    wouldn't it make sense for the Nation if we could find places
    for those soldiers in the National Guard, so that we don't lose
    this experience?
        General Odierno. Senator, it does. We're working programs
    now as we go through this to ensure that. We have some
    limitations that we're working our way through now in terms of
    recruiting and how we do that and get them exposed to the
    National Guard. We clearly would love to keep this experience
    in the National Guard or the U.S. Army Reserve, either one,
    because as you said, they have great experience, they have
    great contributions, and the fact that we have to draw down
    150,000 means there's going to be some incredibly capable
    people that will leave the Army that we would certainly like to
    continue to serve.
        Senator Cruz. General Grass, I would welcome your views as
    well on the ability of the Guard to absorb and provide a home
    for some of these combat veterans and ensure that we have their
    contribution to readiness going forward.
        General Grass. Senator, actually, as General Odierno
    mentioned, we have programs already where we're having an
    opportunity to talk with the soldiers who are going to be
    getting out and talking about what part of the country they're
    going in. We also have the ability to retrain them. If the
    skill that they've been serving on Active Duty doesn't exist in
    their home town, we can get them additional skills. We can
    actually do that before they leave Active Duty now, which is a
    huge success from the past.
        Senator, one of the things that I'm really pushing hard on
    is looking at the mix between our prior service and non-prior
    service. When the war started, the Army National Guard was
    sitting at about 50 percent prior service and 50 percent non-
    prior, which meant that everyone we recruited in the non-prior
    had to go to basic training, they had to go to advanced
    individual training. They had no experience when they came out.
    All of those prior service recruits already qualified, had
    great experiences.
        As the war unfolded, a lot of people that came off of
    Active Duty and with two or three deployments felt that they
    had served their Nation and they wanted to get on with their
    civilian life. So, our numbers went down to about 20 percent
    prior service, 80 percent non-prior. That has cost us
    additional in recruiting and training.
        We would really like to get back to about a 50-50 split and
    be able to capture all those great young men and women coming
    off Active Duty into the Guard.
        General Talley. Senator, if I may, as we transition from
    Active component to Reserve component, as we lose those quality
    soldiers from our Active component, it's critical that we bring
    them into our Reserve component. But we really shouldn't look
    at them as no longer being a soldier. We want them to be a
    soldier for life, which means in the regular Army, the Army
    Reserve, or one of our 54 Army National Guards.
        In the Army Reserve, we created the Employers Partnership
    Program that was replicated across all Services and components
    and now it's called Heroes to Hire at the OSD level, so we can
    help those soldiers; instead of pushing them out, we can pull
    them out, give them into a civilian career in the private
    sector, that we can train them for in the Army Reserve and that
    will allow them to be one of our enablers.
        To your opening comments, all I have to say is: Rangers
    lead the way.
        Senator Cruz. Thank you and thank you for that comment and
    your service.
        Let me ask one final question, which is, at a time when
    budget resources are certainly scarce it seems to me there's a
    difficult policy question of the right balance between Active
    Duty, Reserve, and Guard, and each has a different impact on
    cost structure and also our readiness. The question I would ask
    to all three of you is: would you support the idea of an
    outside independent commission to study and analyze the proper
    mix for Active and Reserve component forces for the Army?
        General Odierno. Thank you, Senator. I think I'm on the
    record of not supporting that commission, and let me give you
    reasons why. I think I owe you that, obviously. First, a lot of
    us compare it to the Air Force commission, but in the Air Force
    proposal, initially they didn't cut anything out of the Active
    component. All their cuts were out of the Reserve component,
    where in our case 70 percent of the reductions are coming out
    of the Active component to begin with. We believe it's been a
    real fair assessment.
        Besides that, this has not been a surprise. For the last
    year, 12 to 18 months, we've done detailed analysis internal to
    the Army and we've done external to the Army. The RAND
    Corporation has studied this.
        In addition to this, CAPE has validated our Total Force
    levels as well as the ARI. We've had outside validate this.
        In my mind, I'm not sure what additional expertise would be
    brought to this by a commission. In addition to that, it would
    cost us $1 billion additionally a year if we delay this 2
    years. I worry about that because we already have significant
    unfunded requirements.
        Thank you, sir.
        Senator Cruz. General Grass, General Talley?
        General Grass. Senator, I think your question to me is, is
    there a value in an external look at the Reserve component
    versus the Active component balance. I will tell you,
    throughout my career every time we've had fiscal challenges,
    this comes up. My personal opinion is that it never hurts to
    have another look at that balance, because we all learn from it
    over time.
        I do think, going forward, no matter what comes out of the
    budget, and General Odierno and I have talked about this, we
    have to build more multi-component opportunities similar to
    what we had on pre-September 11, 2001, where we had what was
    called the Title 11 embedded officers and noncommissioned
    officers from Active Duty into our Guard units. I think that's
    the kind of thing we have to look to in the future, and how do
    we get there with the challenges that we've all been handed,
    with the great difficulties in the fiscal horizon.
        General Talley. Senator, it's not clear to me why we need
    an Army commission. I think the Army, working together and
    leading through some of the challenges we're having, which are
    really, to be frank, an impact of the serious budget issues
    that have been placed upon this Service, I think we can resolve
    them.
        If Congress makes the decision to go forward with the
    commission, the only thing I would ask is it's critical to make
    sure that all three components are well represented and
    integrated. As I mentioned earlier in the hearing, my concern
    is when I look at the Air Force commission that just concluded,
    there are already some comparisons being drawn out of one of
    the recommendations, to eliminate the U.S. Air Force Reserve
    Command, and how that might apply to the U.S. Army Reserve
    Command, which is a great title 10 response force for the
    Nation. I'm a little leery and question whether or not this is
    needed.
        Thank you, sir.
        Senator Cruz. Thank you, gentlemen.
        Chairman Levin. Thank you very much, Senator Cruz.
        Senator Blunt, do you have any additional questions?
        Senator Blunt. No. Thank you.
        Chairman Levin. One of the things I've been impressed by
    this morning is how you work together as one Army, even under
    these circumstances, where you're asked questions which require
    you to give your different perspectives, to the best of your
    ability you do everything you can to support the concept of one
    Army and come to support each other. It's a very impressive
    performance here this morning. I want to thank you all for what
    you do for our Nation and thank you for your testimony.
        General Talley. Army Strong.
        Chairman Levin. This hearing is now adjourned.
        [Whereupon, at 12:52 p.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                  Questions Submitted by Senator Jeff Sessions
                                 army personnel
        1. Senator Sessions. General Odierno, please explain the difference
    in processes for removing uniformed personnel and civilians in the
    Army.
        General Odierno. Aside from punitive discharges or dismissals under
    the Uniform Code of Military Justice, or separation or retirement for
    physical disability, soldiers may also be administratively separated on
    both a voluntary or involuntary basis. Involuntary separation may occur
    for a variety of reasons including: unsatisfactory performance,
    misconduct, alcohol or drug abuse, rehabilitation failure, failure to
    meet weight standards, convenience of the government, reduction in
    force, strength limitations, or budgetary constraints.
        To ensure that only those noncommissioned officers (NCO) who
    consistently maintain high standards of professionalism, performance,
    and efficiency are retained, the Army uses a centralized selection
    board process to consider Regular Army and U.S. Army Reserve (Active,
    Guard, Reserve) NCOs in the rank of staff sergeant through command
    sergeant major/sergeant major for denial of continued service based
    upon permanent filing of derogatory information (poor performance and/
    or disciplinary actions) into an NCO's official records. This process
    is known as the Qualitative Management Program board.
        In addition, because the Army cannot achieve projected end strength
    requirements through natural attrition or the reduction of accessions
    alone, the Army has implemented the centralized board process, known as
    the Qualitative Service Program, to consider select NCOs for denial of
    continued service. This process is necessary to reduce projected excess
    NCOs that would otherwise perpetuate promotion stagnation across the
    Force and negatively impact viable career paths in an All-Volunteer
    Force. The Army must have the capability to shape the Force by grade
    and skill while retaining soldiers with the greatest potential for
    future contributions. NCOs with between 15 and 20 years of Active
    service are offered early retirement under authority established in
    Public Law 112-81 (section 504, National Defense Authorization Act for
    Fiscal Year 2012). Soldiers with less than 15 years of Active service
    are entitled to involuntary separation pay and may elect to transfer to
    the Reserve component to qualify for a non-regular retirement. All
    affected soldiers are given a 12-month period to transition from Active
    service in order to take full advantage of transition assistance
    programs.
        Voluntary officer separations occur with submission and approval of
    unqualified resignations. Otherwise, officers may be dismissed from
    service by virtue of a court-martial, or administratively separated by
    board action. The most common method of administrative separation
    results from two consecutive non-selections for promotion. Promotion
    boards provide a regular, equitable method of ensuring the Army
    promotes and retains the best-qualified officers, and matches the
    officer cohort by grade with force structure requirements. Other types
    of administrative separation include: (1) approved recommendations for
    elimination by Boards of Inquiry for substandard performance of duty,
    moral, or professional dereliction, or in the interests of national
    security; and (2) selection for early discharge or retirement by force
    reduction boards. While eliminations occur as needed, based upon
    officer behaviors, reduction-in-force (RIF) boards are used to
    accelerate officer losses when required by significant, short-term
    force structure reductions, congressionally-mandated strength
    limitations, or budgetary constraints.
        Reductions in the civilian workforce are accomplished through a
    combination of incentive programs to prompt voluntary early retirement
    or separation and RIF. The RIF process is objective and systematic, and
    ranks employees in retention order, based on veterans' preference,
    length of service, and credit for performance. Employees are placed on
    a retention register and compete for retention within a competitive
    area (usually within the commuting area). Employees with the highest
    retention standing remain in their current assignments or are
    reassigned if their positions have been eliminated, while employees
    with the lowest retention standings are separated or reduced in grade.
    Employees who are expected to be affected by RIF are entitled to at
    least a 60-day advance notice and have appeal rights.

        2. Senator Sessions. General Odierno, is it easier to terminate
    employment of soldiers than civilian employees?
        General Odierno. There is no easy way to compare involuntary
    separations of civilian and military personnel as the applicable
    procedures are significantly different.
        Civilian reductions are governed by title 5, U.S.C., and military
    reductions are governed by title 10, U.S.C. Although there are well-
    established procedures to terminate employment of both military and
    civilian personnel for cause, the real challenges occur when we need to
    reduce the size of the force.
        Before implementing a civilian RIF, various information concerning
    each individual employee must be reviewed, including service
    computation dates, career status, veterans' preference, and overall
    performance ratings. All of these must be considered when determining
    the order of release of civilians. Additionally, prior to implementing
    a RIF, there are a host of actions that must take place: competitive
    areas must be published at least 90 days prior to a RIF; each position
    must be assigned to a competitive level (these denote interchangeable
    positions); affected employees' employment records must be reviewed for
    accuracy; and unions, where they exist, must be given an opportunity to
    be heard.
        Under the provisions of title 10, U.S.C., and established Army
    policy, we use a variety of procedures to draw down the size of the
    military, including Officer Separation Boards, Selective Early
    Retirement Boards, Enhanced Selective Early Retirement Boards for
    officers, and Qualitative Service Program and Precision Retention for
    enlisted members. Implementation timelines and requirements are
    different for each type of procedure. Like civilian RIFs, all the
    procedures used to reduce the military force are tied directly to the
    force structure requirements by grade.

        3. Senator Sessions. General Odierno, what does an Active Duty
    brigade combat team (BCT) cost per year?
        General Odierno. There are three types of BCTs in the Army and each
    has different personnel, equipment, and training costs. The three types
    are Infantry, Armor, and Stryker.
        The Assistant Secretary of the Army (Financial Management and
    Comptroller) models, the Cost and Economics Forces Cost Model and the
    G-3/5/7 Training Resource Model, were used to generate a total cost for
    each of the BCT types. The models assume that the units will be fully
    manned, equipped, and trained for Decisive Action operations. The
    models address five cost categories: (1) Personnel; (2) Operating Tempo
    (OPTEMPO); (3) Defense Health Program; (4) Installation Services; and
    (5) Post Production Software Support. The following table reflects
    those modeled cost estimates for the three BCTs:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        OPTEMPO costs are generated from the Training Requirements Model;
    all other costs are generated from the Forces Cost Model. The above BCT
    cost estimates may not reflect the funding the Army actually receives
    to man, equip, and train the BCT force structure.
        The above does not include allocation of costs associated with
    research, development, test, and evaluation, acquisition, facilities,
    combat support, and combat service support outside of BCT.

        4. Senator Sessions. General Odierno and General Grass, as the Army
    reduces end strength, how many soldiers and civilians had positions
    terminated as opposed to attrition?
        General Odierno. The Army drawdown plan for soldiers relies on
    reduced accessions and natural attrition in order to achieve end
    strength targets. Between fiscal year 2012 and fiscal year 2013, Army
    end strength decreased by approximately 17,600 soldiers. Natural
    attrition and reduced enlisted and officer accessions accounted for 98
    percent of these reductions. The Army's use of involuntary separation
    measures in this time period was very minimal, separating approximately
    280 officers via reduced promotion opportunities and 120 enlisted
    soldiers via the Qualitative Service Program.
        In terms of the reductions of Federal civilian workforce, as the
    overall workload and mission requirements decrease, the Army will
    eliminate civilian workforce positions, as needed. The preferred course
    of action in reducing positions remains use of voluntary methods,
    including limiting replacement hiring, offering voluntary early
    retirement, reassigning employees to vacant positions, and authorizing
    voluntary separation incentives. RIF is the method of last resort as it
    adversely affects our civilian employees and their families. Moreover,
    there are temporary losses of organizational efficiency and high costs
    from unemployment compensation, lump-sum annual leave payouts, and
    permanent change of station cost.
        Over the last fiscal year, the Army eliminated 30,000 positions.
    These eliminations overall were 96 percent voluntarily and 4 percent
    involuntary separations. The voluntary separations included
    resignations, retirements, and transfers out of the Department of the
    Army. The approximate 1,200 involuntary separations included civilian
    RIF and temporary employees separated as workload decreased.
        General Grass. The Army National Guard has been able to maintain
    military and civilian employment at or below fiscal year 2014 funding
    levels through attrition and without resorting to terminations. At this
    time, no military or civilian personnel have been terminated. In
    upcoming fiscal years, individual State cuts will be driven by force
    structure changes. Individual States will ultimately handle how
    military and civilian positions will be eliminated, as necessary. At
    this time, we do not know what those changes are by State. Therefore,
    we cannot yet conduct an accurate analysis. States that will not be
    able to reach established end strength through attrition in the future
    will have their accession missions adjusted accordingly and will have
    to conduct retention boards.
        Our projected fiscal year 2015 to fiscal year 2019 authorization
    levels, outlined in the table below, draw down our employment
    consistent with direction from the Secretary of Defense and resource
    reductions implemented by the Department of the Army. In regard to
    title 5 civilians, we expect attrition to be sufficient to reach
    current overall downsizing targets that average about 4 percent per
    year for a total decrease of 209 positions.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                               reserve component
        5. Senator Ayotte. General Odierno, are you examining the roles and
    missions of the Reserve component?
        General Odierno. Yes. The Reserve component has been, and will
    continue to be, an important Army asset, providing the Nation with
    capacity and capability in peace and war. As the Army considers
    assigning roles and missions to the Reserve component, it does so with
    a real appreciation of the historical contributions of the Guard and
    Reserve, the unique capabilities these components provide, and an
    awareness of the emerging complex security environment. Our
    responsibility to be good stewards of increasingly limited resources
    informs our examination of Reserve roles and missions, as well. The
    Army plan reduces the Active component slightly more than the Reserve
    component, but does not fundamentally shift the roles or missions of
    the Reserve component. Although some minor, incremental shifts in
    missions could occur, these would only be made in the interests of
    sustaining the readiness of the Total Army.

        6. Senator Ayotte. General Odierno, do you see areas where you
    might be able to increase your reliance on the Reserve component in
    order to save money?
        General Odierno. We have made a fundamental decision that we will
    rely more on the U.S. Army Reserve and the Army National Guard. This
    will be necessary since we are taking a much larger reduction in the
    Active component than in the Reserve component. The Reserve component
    plays an important role in peace and war, and will make up more than 50
    percent of the Total Army end strength. Reserve formations are best
    suited to predictable, infrequent deployments, domestic missions, and
    providing operational and strategic depth to the Joint Force in
    contingency operations. Missions the Reserve component conducts in
    support of civil authorities, such as disaster relief, reinforce the
    Reserve component's competency to provide critical capabilities
    necessary for overseas operations. We will continue to retain the
    Reserve component as an operational reserve and employ it as funding
    permits.

                            equipment modernization
        7. Senator Ayotte. General Odierno, in your prepared statement, you
    state the Army National Guard has 86 percent modernized equipment and
    the Army Reserve has 76 percent modernized equipment. What is the
    equipment modernization percentage for the Active component?
        General Odierno. The equipment modernization percentage for the
    Active component was 91 percent as of December 2013. Over the last
    decade the modernization percentages for all components has steadily
    improved. The rate of improvement is 32 percent for the Active
    component, 37 percent for the Army National Guard, and 30 percent for
    the Army Reserve. It is also important to note that the modernization
    percentage of critical dual use equipment, those items used by the Army
    National Guard and the U.S. Army Reserve to support both wartime
    operations and domestic response incidents, is 85 percent for the Army
    National Guard and 74 percent for the U.S. Army Reserve.

                     national guard youth challenge program
        8. Senator Ayotte. General Grass, what is your assessment of the
    National Guard Youth ChalleNGe program?
        General Grass. The National Guard took the steps 20 years ago to
    create an intervention program, the National Guard Youth ChalleNGe
    program. The mission of the National Guard Youth ChalleNGe program is
    to intervene in and reclaim the lives of 16- to 18-year-old high school
    drop-outs, producing more graduates with values, life skills,
    education, and self-discipline necessary to succeed as productive
    citizens.
        Today, we have 35 programs in 27 States, Washington, DC, and Puerto
    Rico. Over the past 3 years, we opened the doors to three new National
    Guard Youth ChalleNGe program sites, with two programs on target to
    open in 2015 and another in 2016. The number of at-risk youth who have
    benefitted from the program now stands in excess of 122,000 as we close
    out the 20th year anniversary of the National Guard Youth ChalleNGe
    program. A newly formed Congressional Youth Challenge Caucus has
    enabled new perspective for growth and sustainment and has already
    positively changed the path of so many of the Nation's struggling
    youth. We are also optimistic in this time of fiscal constraints that
    the National Guard Youth ChalleNGe program will continue to receive the
    necessary funding and congressional support to maintain the current
    programs and to continue on the path of growing future sites.

                        retaining talent and experience
        9. Senator Ayotte. General Odierno, the Army is in the midst of its
    largest downsizing in a generation. Thousands of qualified and
    experienced soldiers will leave the Army in the next 5 years, some will
    leave voluntarily and some will leave involuntarily. How important is
    it that we try to retain as much of this experience as possible?
        General Odierno. It's vitally important that we retain this talent
    and experience. The drawdown is an opportunity to shape the Army of the
    future by ensuring that we retain only our very best soldiers. The Army
    will continue to have incredible opportunities for these soldiers, and
    we will strive to keep them on Active Duty, if possible, or in the
    Reserve component.

        10. Senator Ayotte. General Odierno, how can the Army try to retain
    the experience of soldiers that are being voluntarily or involuntarily
    separated?
        General Odierno. It's vitally important that we retain this talent
    and experience leaving Active Duty in the Reserve components. As the
    Army transitions and reshapes the force, we will proactively engage
    soldiers who are pending transition from Active Duty. To facilitate the
    Army drawdown, programs are in place to ensure we provide Active Army
    soldiers maximum opportunities to continue their service in the Reserve
    component. For example, the Army has focused its Reserve component
    recruiting efforts at high transition Active component locations,
    starting with an ongoing pilot program at Fort Hood. Our strategy is to
    engage Active component soldiers by appealing to their sense of service
    and providing them the opportunity to be a ``Soldier for Life.''
    Utilizing the skills and experience of Active component soldiers in the
    Guard and Reserve is beneficial to not only the Army, but also to the
    soldiers and their families.

                           state partnership program
        11. Senator Ayotte. General Grass, what is your assessment of the
    New Hampshire National Guard's State Partnership Program with El
    Salvador?
        General Grass. The State Partnership Program relationship between
    New Hampshire and El Salvador is very strong and continues to grow. El
    Salvador is one of the top 8 countries out of 21 in priority for U.S.
    Southern Command (SOUTHCOM). The New Hampshire National Guard is a
    strong performer in the State Partnership Program in terms of their
    execution of events and focusing on events that strengthen U.S. and New
    Hampshire ties with El Salvador and that continue to build the capacity
    of the El Salvadoran military.
        New Hampshire and El Salvador formed their State Partnership
    Program relationship in March 2000. Since that time, they established a
    robust partnership that includes a solid mix of military-to-military,
    military-to-civilian, and civil security cooperation events. The New
    Hampshire National Guard focuses on building lasting relationships
    founded in a friendly, professional exchange of expertise in military,
    civic, business, and educational arenas of El Salvador. This supports
    SOUTHCOM security cooperation goals and is mutually beneficial to both
    El Salvador and the New Hampshire National Guard. The New Hampshire
    National Guard coordinates closely not only with the Security
    Cooperation Office in El Salvador, but also the U.S. Agency for
    International Development and other agencies, in order to foster
    relationships outside the military. The goal is to continue to mature
    the program by integrating different New Hampshire organizations, such
    as local police and fire departments, Homeland security, fish and game
    managers, charitable groups, and local school districts into the
    program.
        The New Hampshire National Guard conducted 89 separate events from
    fiscal year 2000 through the end of fiscal year 2013. Three events are
    complete for fiscal year 2014 with 11 still to be executed. In fiscal
    year 2015, the New Hampshire National Guard and El Salvador are
    planning for 15 different events. These events, both past and future,
    cover such topics as mountain operations, network security, females in
    the military, hazardous materials, and Mobility Support Advisory
    Squadron operations. All events are coordinated between SOUTHCOM, the
    Embassy Security Cooperation Office, and the El Salvadoran military and
    government.
        El Salvador is a continuing partner in operations in the U.S.
    Central Command area of responsibility. They participated in 13
    Operation Iraqi Freedom rotations and Phase I and II of the
    International Security Assistance Force. Last year, an El Salvadoran
    Police Advisory Team deployed to Afghanistan with several members of
    the New Hampshire National Guard, serving the unit by filling critical
    shortages. Those soldiers, and the relationship that New Hampshire has
    with El Salvador, proved to be of great value to the unit during the
    deployment.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            THURSDAY, APRIL 10, 2014

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

                   POSTURE OF THE DEPARTMENT OF THE AIR FORCE

        The committee met, pursuant to notice, at 9:36 a.m. in room
    SD-106, Dirksen Senate Office Building, Senator Bill Nelson,
    presiding.
        Committee members present: Senators Levin, Nelson,
    McCaskill, Hagan, Donnelly, Kaine, King, Inhofe, McCain,
    Chambliss, Wicker, Ayotte, Fischer, Blunt, and Lee.

                OPENING STATEMENT OF SENATOR BILL NELSON

        Senator Nelson [presiding]. Good morning. The committee
    meets this morning to discuss the plans and programs of the
    U.S. Air Force in our review of the fiscal year 2015 budget and
    the Future Years Defense Program (FYDP).
        Senator Levin will be here in about an hour and he has very
    graciously asked me to stand in for him.
        We welcome the Honorable Deborah Lee James, Secretary of
    the Air Force; and General Mark A. Walsh III, USAF, Chief of
    Staff of the Air Force. This will be Secretary James' first
    posture hearing as Secretary and we welcome you, Madam
    Secretary. We are grateful to each of you for your service to
    the Nation and for the very professional service of the men and
    women under your command. We pay tribute especially to the
    families because of the obviously vital role that the families
    play in the success of the men and women in our Armed Forces.
        In the last 13 years, Air Force personnel and equipment
    have played a key role in support of our national security
    goals in Iraq, Afghanistan, and elsewhere all around the globe.
    We've relied heavily on Air Force strike aircraft to take on
    important ground targets, Air Force manned and unmanned aerial
    vehicles to provide intelligence, surveillance, reconnaissance,
    (ISR) and support from that, and Air Force tankers and cargo
    aircraft to support the coalition air operations. On behalf of
    this committee, please extend our gratitude to the men and
    women of the Air Force.
        The witnesses this morning face huge challenges as they
    strive to balance the need to support ongoing operations and
    sustain readiness with the need to modernize and keep the
    technological edge in the three domains of air, space, and
    cyber space that are so critical. These challenges have been
    made particularly difficult by the spending caps imposed in the
    Budget Control Act, caps that were modestly relieved for 2015.
        However, these caps are scheduled to resume again in 2016
    and then beyond. These caps already seriously challenge our
    ability to meet our national security needs and have already
    forced all of the military departments to make painful
    tradeoffs and, unless modified for years after fiscal year
    2015, they're going to threaten our long-term national security
    interests.
        The Air Force is proposing significant force structure
    changes to ensure that it will have the right size and mix of
    assets and capabilities to meet strategic needs in the manner
    consistent with a tight budget. The Air Force proposal includes
    major shifts in both strategic and tactical aircraft, with
    reductions shared among the Active-Duty Force, the Air National
    Guard, and the Air Force Reserve.
        One example is the Air Force plan to retire the entire A-10
    fighter force. This is an effort to avoid the cost of
    maintaining the whole logistics pipeline for the aircraft fleet
    to try to be more efficient. But members of this committee have
    concerns about the proposal. We need to understand the Air
    Force plan. Is it effective? Is it efficient?
        Another example is the Air Force wanting to retire 46 older
    C-130 aircraft, mostly in the Guard and the Reserve, leaving
    300 aircraft to support tactical operations, a 14 percent
    reduction. This would eliminate the 32 aircraft increase in the
    C-130 in the force that was required by section 1059 of the
    National Defense Authorization Act (NDAA) for Fiscal Year 2013,
    which would provide direct support airlift capability for the
    Army.
        Another example is the Air Force reversal of its position
    to retire the entire U-2 fleet and keep the Global Hawk Block
    30 remotely piloted aircraft fleet that the Air Force tried to
    retire for the last 2 years.
        My final example is the Air Force wanting to reduce the
    number of Predator and Reaper combat air patrols (CAP). The
    previous goal was 65 CAPs; the new goal is 55 CAPs. The Air
    Force wants to significantly reduce certain high-demand/low-
    density forces, such as the Airborne Warning and Control
    System, the Joint Surveillance and Target Attack Radar System
    (JSTARS), and the Compass Call fleets.
        I will insert the rest of the statement in the record. I
    want to turn to the ranking member, Senator Inhofe.
        [The prepared statement of Senator Nelson follows:]
                   Prepared Statement by Senator Bill Nelson
        The committee meets this morning to discuss the plans and programs
    of the United States Air Force in our review of the fiscal year 2015
    annual budget and the Future Years Defense Program. I want to welcome
    Secretary James and General Welsh to the committee this morning. This
    will be Secretary James' first posture hearing as Secretary and I want
    to welcome you, Madame Secretary.
        We are grateful to each of you for your service to the Nation and
    for the truly professional service of the men and women under your
    command and pay tribute to their families, because of the vital role
    that families play in the success of the men and women of our Armed
    Forces.
        Over the past 13 years, Air Force personnel and equipment have
    played a key role in support of our national security goals in Iraq,
    Afghanistan, and elsewhere around the world. Over this time, we have
    relied heavily on Air Force strike aircraft to take on important ground
    targets, Air Force manned aircraft and unmanned aerial vehicles to
    provide intelligence, surveillance, and reconnaissance support, and Air
    Force tankers and cargo aircraft to support coalition air operations. I
    hope you will extend, on behalf of the committee, our gratitude to the
    men and women of the Air Force and their families for the many
    sacrifices that they have made on our behalf.
        Our witnesses this morning face huge challenges as they strive to
    balance the need to support ongoing operations and sustain readiness
    with the need to modernize and keep the technological edge in the three
    domains of air, space, and cyberspace that are so critical to military
    success. These challenges have been made particularly difficult by the
    spending caps imposed in the Budget Control Act--caps that were
    modestly relieved for fiscal year 2015 in the Bipartisan Budget Act
    that we enacted earlier this year. However, these caps are scheduled to
    resume again in fiscal year 2016 and beyond. These caps already
    seriously challenge our ability to meet our national security needs,
    have already forced all of the military departments to make painful
    trade-offs. Unless modified for years after fiscal year 2015, they will
    threaten our long-term national security interests.
        The Air Force is proposing significant force structure changes to
    ensure that it will have the right size and mix of assets and
    capabilities to meet strategic needs in a manner consistent with a
    tight budget environment. The Air Force proposal includes major shifts
    in both strategic and tactical aircraft programs, with reductions
    shared among the Active-Duty Force, the Air National Guard, and the Air
    Force Reserve. Here are some examples:

             The Air Force is planning to retire the entire A-10
            fighter force. This is an effort to avoid the costs of
            maintaining the whole logistics pipeline for an aircraft fleet
            and be more efficient. I know that other members and I have
            concerns about this proposal. We need to understand whether the
            Air Force plan is effective, not just efficient.
             The Air Force also wants to retire roughly 46 older C-
            130 aircraft (mostly in the Guard and Reserve), leaving roughly
            300 aircraft to support tactical operations, roughly a 14
            percent force reduction. This would more than eliminate the 32-
            aircraft increase in C-130s in the force that was required by
            section 1059 of the National Defense Authorization Act for
            Fiscal Year 2013 to provide direct support airlift capability
            for the Army.
             The Air Force has reversed its position and now wants
            to retire the entire U-2 fleet and keep the Global Hawk Block
            30 remotely piloted aircraft (RPA) fleet that the Air Force
            tried to retire for the last 2 years.
             The Air Force wants to reduce the number of Predator
            and Reaper RPA Combat Air Patrols (CAP) it will support. The
            previous goal was 65 CAPs, and the new goal would be 55 ``fully
            supported'' CAPs.
             Finally, the Air Force wants to make significant
            reductions in certain high-demand/low-density forces, such as
            the Airborne Warning and Control System, Joint Surveillance and
            Target Attack Radar System, and Compass Call fleets.

        Two years ago, Congress created a National Commission on the
    Structure of the Air Force to make recommendations on policy issues
    that are directly relevant to these force structure decisions. We have
    received the Commission's final report and we look forward to receiving
    testimony from the Air Force and the members of the Commission about
    that report after the recess.
        As these major force structure changes are contemplated, the Air
    Force is expected to play a key role in implementing defense strategic
    guidance calling for a shift to refocus emphasis to the Asia-Pacific
    region. I hope our witnesses today will help us understand how this
    strategic shift is reflected in the Air Force budget and in the
    Service's future plans.
        In addition, the Air Force faces a continuing challenge in managing
    its acquisition programs, including the Joint Strike Fighter--the most
    expensive Department of Defense acquisition program in history--and a
    new tanker and a new bomber. I hope that our witnesses will explain the
    steps taken or planned to control costs on these programs. We are
    working to schedule an acquisition reform hearing early next month, at
    which we should have further opportunity to explore these issues.
        I look forward to the testimony of our witnesses.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        I would observe and I sincerely believe that this is
    certainly the most difficult time in the years that I have
    served in the House of Representatives and the Senate, not just
    for the Air Force but for all of our Services. I can't think of
    two people I'd rather have at the helm of the U.S. Air Force
    than our two witnesses today.
        This is the last of our Service posture hearings for the
    fiscal year 2015 budget and soon this committee will be
    starting to draft the NDAA, what I consider to be the most
    important bill that comes along each year. I think we're going
    to do a little better and quicker job than we did last year.
        U.S. interests are being challenged across the globe in
    ways that I haven't seen in all my years of serving in this
    body. Yet the threats to our national security are growing. The
    readiness and capability of our military are being degraded by
    drastic budget cuts. We're all in agreement with that.
        Just 2 weeks ago, Secretary of Defense Chuck Hagel said:
    ``American dominance on the seas, in the skies, and in space
    can no longer be taken for granted.'' Mr. Chairman, when I say
    that in Oklahoma, they don't believe this could happen; this is
    still America. That's quite a statement, that American
    dominance on the seas, in the skies, and in space can no longer
    be taken for granted.
        Put in the context of this hearing, the ability of our Air
    Force to provide air dominance is at risk, which puts America
    at risk. While I appreciate the Air Force prioritizing funding
    for the F-35, the KC-46, and the Long-Range Strike Bomber
    (LRSB), budget cuts are driving force structure decisions that
    increase risk at an unacceptable level. I would read these
    cuts, but it's already been done by our chairman.
        I am interested in hearing from our witnesses about the
    current status of the LRSB, the F-35, and the KC-46 and how
    they plan to increase readiness levels. There are concerns
    about the aerospace industrial base. That has to be a concern.
    A lot of times we depend on buyers outside this country to keep
    the industrial base going. I think we're going to be in that
    position once again. We're concerned about the morale of the
    airmen and the modernization and sustainment of our nuclear
    forces.
        Finally, on base realignment and closure (BRAC), this is
    one area where I do disagree with statements that have been
    made in previous committees on having another BRAC round. One
    of the things that is certain in a BRAC round is that the first
    2 to 4 years it costs money, and there's never been a time when
    we can less afford the cost for money that should be going to
    readiness, and for that reason, I would be opposing that.
        Thank you, Mr. Chairman, and I look forward to hearing from
    our witnesses.
        Senator Nelson. We will insert your full statement into the
    record, and if you would summarize it now, Secretary James.

    STATEMENT OF HON. DEBORAH LEE JAMES, SECRETARY OF THE AIR FORCE

        Ms. James. Thank you so much, Mr. Chairman, Senator Inhofe,
    and other members of the committee. General Welsh and I very
    much appreciate the opportunity to come before you today. I
    will say on a personal level, it is a huge honor and privilege
    for me to be the 23rd Secretary of the Air Force and to be in a
    position to represent the more than 690,000 Active Duty,
    National Guard, Reserve, and civilian airmen, plus all of their
    families. Thank you so much for mentioning the families; it is
    very important.
        I just surpassed my 100th day in office, so call it 3\1/2\
    months, and it has been busy for me. I've now been to 18 bases
    in 13 States, plus I just returned a couple of weeks ago from a
    trip to the theater of operations, including several stops to
    visit with our airmen in Afghanistan.
        Whenever I visit a location, three things always pop right
    up at me. First of all, I see leaders at every level who are
    taking on tough issues and doing their utmost to solve them.
    Second, I see superb, and I mean superb, Total Force teamwork
    everywhere I go, from the highest of the high to the lowest of
    the low, right on the flight line. Third, I see amazing and
    innovative airmen who are enthusiastic about service to our
    country. They're doing a fabulous job. That has been
    particularly helpful to me, to see these folks on the front
    line doing their jobs day-in and day-out and inquiring with
    them directly just how the various decisions that we make here
    in Washington will be impacting their lives. Without question,
    the number one thing on their minds is our force downsizing and
    if they will or will not be able to remain in our Air Force.
        Mr. Chairman, we're in extremely challenging times both
    from a security environment standpoint as well as the fiscal
    environment, and all of this coupled together really did cause
    us, as you said at the outset, to have to make some very tough
    choices. But of course we have to start with the strategy. We
    have a strategy of today, which is to, number one, defend the
    Homeland; number two, build security globally by projecting
    U.S. influence and deterring aggression; and number three, if
    necessary, standing ready to fight and win decisively against
    any adversary.
        There's also a strategy for tomorrow. We can't lose sight
    of tomorrow. This requires us to invest in the right
    technologies and the right platforms so that we can be prepared
    to operate in a very volatile and unpredictable world and, just
    as Senator Inhofe said, a world in which we cannot take for
    granted that we will continue to command the skies and space.
        Your Air Force is crucial in that strategy, both from the
    standpoint of today as well as from the standpoint of tomorrow.
    But of course, the trouble that we're all dealing with is that
    the likely budget scenarios won't make ends meet. So our fiscal
    year 2015 budget does hit the targets of the Bipartisan Budget
    Act, but it also contains for us in the Air Force an additional
    $7 billion in the Opportunity, Growth, and Security Initiative.
    That's our piece of the overall $26 billion initiative, which,
    if approved, would help us with additional readiness and high
    priority investment programs.
        That's the fiscal year 2015 story. For 2016 through 2019,
    we're asking for higher levels in the President's budget than
    the sequestration level budgets currently in law. We're doing
    this because we feel that those sequestration budget levels in
    2016 and beyond simply would compromise our national security
    too much.
        The overall budget picture we're presenting to you today,
    as you said, is hard choices, nothing but hard choices, and
    assumptions of what we think are the most prudent risks.
    Believe me, Mr. Chairman, there just wasn't any low-hanging
    fruit to help this time around.
        I'd like to quickly give you my three priorities as
    Secretary of the Air Force and then weave in some of these hard
    budget decisions that we made along the way. The priorities for
    me are, number one, taking care of our people, and number two,
    balancing today's readiness with tomorrow's readiness. That
    means, of course, our modernization for the programs of
    tomorrow. Number three, we need to ensure the world's best Air
    Force is the most capable, but at the best price to the
    taxpayers, and that means make every dollar count.
        Taking care of people, for me, everything comes down to
    people ultimately. It's always about people. Of course, we will
    have fewer people as we go forward. We will be a smaller Air
    Force in all of our components. Taking care of people means
    recruiting the right people, retaining the best people, making
    sure that we develop them, having the right balance between our
    Active, our Guard, and our Reserve. By the way, our plan going
    forward does rely more heavily on our Guard and Reserve. It was
    collaborative in the way we put it together. We had Active,
    Guard, and Reserve at the table throughout, including some of
    our adjutants general who helped put this plan together.
        It also means that we need to shape the force. At the
    moment, we have too many of certain types of people, too few of
    others. As we downsize, we also need to shape so that we get in
    sync for the future.
        It means diversity of thought at the decisionmaking table.
    It means important family programs need to be protected. It
    means dignity and respect for all, continuing to work on sexual
    assault and stamping it out, and making sure that everybody is
    on top of our core values and leading with those core values:
    integrity, service, and excellence.
        It also means fair compensation. Although, Mr. Chairman, we
    are proposing that we slow the growth in compensation, this
    slowing of the growth and getting smaller are two of those very
    hard decisions that we had to make that no one is totally happy
    with, but we felt that we had to make them so that we could
    free up money for readiness and modernization for tomorrow.
        Which leads me to my second priority, and that's achieving
    that balance between today and tomorrow. Our fiscal year 2015
    budget requests money to fully fund flying hours and other high
    priority readiness issues. Our readiness has taken a hit over
    time. Today, it is not where it should be and it's not where
    we're satisfied. If our proposal is approved, we will see
    gradual improvements in full-spectrum readiness over time. It
    won't all get solved in 1 year, but over time, if approved,
    this will put us on the right path, particularly to be able to
    operate in a contested environment, an environment where they
    may be shooting at us, jamming us, and taking other measures to
    interfere.
        At the same time, we have to invest now so that we are not
    beaten 10 or 15 years in the future by the adversaries that we
    will face in the future perhaps. For this reason, we're
    committed to our top three programs, which have already been
    mentioned, as well as our intercontinental ballistic missiles
    (ICBM) and our bombers, which is two-thirds of our nuclear
    triad.
        In our 5-year plan we also begin to replace the aging
    platforms that are involved with combat rescue, the Combat
    Rescue Helicopter (CRH) program, and new technologies like jet
    engine technologies that promise reduced fuel consumption,
    lower maintenance, and helps to ensure a robust industrial
    base.
        To pay for all of this, here come some of the hard choices
    again. We had to propose important cuts where we believe we are
    appropriately balancing our risk. You already mentioned the A-
    10, which is a wonderful aircraft, but there are other aircraft
    that can cover that very sacred close air support (CAS)
    mission. We will cover that mission in the future using these
    other aircraft.
        You mentioned the U-2. We have decided to retire the U-2,
    keep the Global Hawk, which is a newer platform, but over time
    the sustainment costs have come down on that. We feel that over
    time, that can be less expensive and get the job done, though
    we have to make some investments to get it there.
        There are a number of these others. I won't go into detail
    because I suspect we'll go into them a great deal in the
    questions. But none of these were easy. We would love to have
    just about all of them back in our budget, if we could. But we
    simply couldn't.
        That leads me to my third priority and that's to make every
    dollar count. This is value to the taxpayers, best capability
    at the lowest cost. This to me means we have to keep these
    acquisition programs on budget and on schedule. No more of
    these terrible cost overruns like we've seen in the past.
    That's a personal goal of mine.
        I want to deliver auditability as a fundamental principle
    of good stewardship going forward. We're going to be trimming
    overhead. The Secretary of Defense told us to do a 20 percent
    reduction of headquarters' staff over 5 years. We're going to
    do it in 1 year and we're looking to do better than 20 percent.
    I do have to join with Secretary of Defense Hagel and ask that
    you consider another round of BRAC in 2017.
        All of what I just said is under the higher levels of the
    President's budget over 5 years. If we have to return to those
    sequestration levels, we've thought that through as well and it
    gets tougher and tougher. If we return to sequester level
    budgeting in fiscal year 2016, in addition to everything I just
    said, we would also have to retire up to 80 more aircraft,
    including the KC-10 tanker fleet. We would have to defer some
    important sensor upgrades that we want to do to the Global Hawk
    which would bring it up to parity with the U-2. We'd have to
    slow the purchases of F-35s. We'd have to do fewer Predator and
    Reaper CAPs. We would not be able to do that next-generation
    jet engine program I told you about. We would likely also have
    to reevaluate the CRH, as well as take other actions.
        Bottom line, Mr. Chairman, is that sequestration level
    funding is not a good deal for the country and we ask for your
    support to stick with us and please consider those higher
    levels.
        I'd like to wrap up now by telling you my vision for the
    Air Force 10 years from now. I see an Air Force that will be
    smaller, but will be very capable. It will be innovative and it
    will be ready. It will be a good value for the taxpayers and it
    will be recognized as such. We'll be able to respond overseas
    when we're asked to step up to the plate to any mission and
    we'll also be on the ready here at home when disaster strikes.
    We'll be more reliant, not less but more, on our Guard and
    Reserve, because it makes good sense from the mission
    standpoint and for the taxpayers' value.
        Most importantly, we will be powered by the best airmen on
    the planet, who live our core values of integrity, service, and
    excellence, and cultivate a culture of dignity and respect for
    all.
        I want to thank the members of this committee for all that
    you do for us and for our Nation, and would yield to General
    Welsh.
        [The joint prepared statement of Ms. James and General
    Welsh follows:]
            Joint Prepared Statement by Hon. Deborah Lee James and
                          Gen. Mark A. Welsh III, USAF
                                  introduction
        America's airmen and Air Force capabilities play a foundational
    role in how our military fights and wins wars. The Air Force's agile
    response to national missions--in the time, place, and means of our
    choosing--gives our Nation an indispensable and unique advantage that
    we must retain as we plan for an uncertain future. Whether responding
    to a national security threat or a humanitarian crisis, your Air Force
    provides the responsive global capabilities necessary for the joint
    force to operate successfully.
        It takes the combined efforts of all of our military Services and
    the whole of government to deny, deter, and defeat an enemy, and over
    the last decade this integration has tightened. Just as we depend on
    our joint partners, every other Service depends on the Air Force to do
    its job. Whether it is Global Positioning System information to
    navigate waterways, airlift to get troops to and from the fight,
    manning intercontinental ballistic missile (ICBM) silos to deter
    aggression, or reconnaissance and satellite communication to tell
    forces where enemy combatants gather or hide, the Air Force provides
    these capabilities, as well as many others. Here at home, our airmen
    patrol the skies ready to protect the Homeland and are integral to the
    movement of people and lifesaving supplies when disasters, like
    Hurricane Sandy or the California wildfires, strike. This capability to
    see what is happening and project power anywhere in the world at any
    time is what global vigilance, global reach, and global power are all
    about.
        The current fiscal environment requires the Air Force to make some
    very tough choices. When making decisions about the best way for the
    Air Force to support our Nation's defense, the abrupt and arbitrary
    nature of sequestration created a dilemma between having a ready force
    today or a modern force tomorrow. To best support national defense
    requirements, comply with the Defense Department's fiscal guidance, and
    meet defense strategy priorities, as updated by the 2014 Quadrennial
    Defense Review (QDR), we attempted to preserve capabilities to protect
    the Homeland, build security globally, and project power and win
    decisively. To do this the Air Force emphasized capability over
    capacity. We worked hard to make every dollar count so we could protect
    the minimum capabilities for today's warfighting efforts, while also
    investing in capabilities needed to defeat potential high-end threats
    of the future. Moving forward, we seek to maintain a force ready for
    the full range of military operations while building an Air Force
    capable of executing our five core missions: (1) air and space
    superiority; (2) intelligence, surveillance, and reconnaissance (ISR);
    (3) rapid global mobility; (4) global strike; and (5) command and
    control, all against a well-armed and well-trained adversary in 2023
    and beyond.
                             strategic environment
        The U.S. Air Force has long enjoyed technological superiority over
    any potential adversary. However, the spread of advanced technology has
    eroded this advantage faster than anticipated. The proliferation of
    nuclear weapons, cyber capabilities, cruise missiles, ballistic
    missiles, remotely piloted vehicles, air defense systems, anti-
    satellite development efforts, and technologically advanced aircraft,
    including fifth generation fighters, are particularly concerning.
    Increased access to such capabilities heightens the potential for the
    emergence of additional near-peer competitors--adversaries capable of
    producing, acquiring, and integrating high-end capabilities that rival
    or equal our own and can possibly deny our freedom of action. This
    means we may not be able to go where we need to in order to protect our
    national security interests. This dynamic security environment creates
    both opportunities and challenges for the United States. As we address
    known threats, we must also have the vision to understand the changing
    strategic landscape, and keep an open mind with regard to which of
    these changes represent true threats, and which may present strategic
    opportunities.
                               fiscal environment
    Historical Perspective
        The Air Force has always had to balance what we can do
    (capability), how much we have to do it with (capacity), and how well
    trained and responsive we need to be (readiness). However, over time
    our trade space has been shrinking. As an Air Force, with respect to
    aircraft and personnel, we are on course to be the smallest since our
    inception in 1947. After peaking at 983,000 Active component airmen in
    1952, we have consistently gotten smaller. While the military as a
    whole has grown since September 11, the Air Force has further reduced
    our Active component end strength from 354,000 to just over 327,600
    today. Also, the Air Force post-war budget drawdowns in the 1950s and
    1970s were followed by major acquisition programs that fielded most of
    our current missile, bomber, tanker, fighter, and cargo inventory, yet
    post-September 11 investments have replaced less than 5 percent of the
    currently active combat aircraft. Since 1990, our aircraft inventory
    has decreased from 9,000 to 5,400 aircraft, and the average aircraft
    age has increased from 17 to 27 years. Additionally, since 1962, our
    annual budget's non-blue total obligation authority (TOA) (funding that
    the Air Force does not control and cannot use to balance other
    requirements) has risen to more than 20 percent of our total Air Force
    TOA.
        This narrow trade space and constrained funding leave no room for
    error. Past drawdown strategies suggest that the Air Force should
    prioritize high-end combat capabilities; near-term procurement of
    highly capable and cost-effective weapons and munitions as force
    multipliers; and long-term research and development for the next-
    generation weapon delivery platforms. Simultaneously, we must gain and
    maintain readiness across the full range of operations.
    Fiscal Realities
        In fiscal year 2015, the Air Force must be able to execute national
    defense requirements while also recovering from the impacts of fiscal
    year 2013 sequestration, and adjusting to the fiscal year 2014
    Bipartisan Budget Act (BBA) funding levels and the uncertainty in the
    future years planned budget top line for fiscal year 2016 and beyond.
    We are working hard to make the right choices that maximize each
    taxpayer dollar and ensure we can meet national security needs today
    and in the future.
    Effects of Fiscal Year 2013 Budget and Sequestration
        The magnitude of the cuts generated in fiscal year 2013 by
    sequestration was difficult to absorb in the short term. We stood down
    31 Active component squadrons for more than 3 months. We initiated
    civilian furloughs, putting extreme stress on the workload and personal
    finances of our civilian workforce. We cut maintenance of our
    facilities, in many cases by 50 percent, and delayed major maintenance
    actions, including depot aircraft overhauls.
        With support from Congress, the Air Force was able to realign $1.7
    billion into operations accounts. This allowed us to cover our overseas
    contingency operations requirements and enabled us to resume flying
    operations, but these budget adjustments came at a sacrifice to future
    weapon system modernization. Of the units affected by the fiscal year
    2013 sequestration, only about 50 percent have returned to their
    already degraded pre-sequestration combat ready proficiency levels, and
    it will take years to recover from the weapon system sustainment
    backlog.
    Fiscal Year 2014 Game Plan
        Though the BBA and the fiscal year 2014 Appropriations Act provided
    partial sequestration relief in fiscal year 2014, and some help for
    fiscal year 2015, they do not solve all of our problems. The additional
    funds help us reverse our immediate near-term readiness shortfalls and
    enable the Air Force to build a plan that mostly shields our highest
    priorities, including: flying hours; weapon system sustainment; top
    three investment programs; and key readiness requirements such as
    radars, ranges, and airfields. However, the tightening fiscal caps
    combined with the abrupt and arbitrary nature of sequestration clearly
    drove the Air Force into a ``ready force today'' versus a ``modern
    force tomorrow'' dilemma, forcing us to sacrifice future modernization
    for current readiness.
        This dilemma is dangerous and avoidable and will continue to be a
    threat in 2015 and beyond. If given the flexibility to make prudent
    cuts over time and avoid sequestration, we can achieve significant
    savings and still maintain our ability to provide global vigilance,
    global reach, and global power for the Nation.
    Fiscal Year 2015 and Beyond--Long-Range Vision
        The fiscal year 2015 President's budget (PB) is our effort to
    develop and retain the capabilities our Nation expects of its Air Force
    within the constraints placed upon us. The least disruptive and least
    risky way to manage a post-war drawdown is to wait until the end of the
    conflict to reduce spending and to provide a ramp to the cuts.
    Sequestration provides no such ramp. However, the fiscal year 2015 PB
    in conjunction with the BBA does allow for a more manageable ramp, as
    seen in Chart I, Air Force Budget Projections. This funding profile
    allows us to move toward balance between capability, capacity, and
    readiness.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Maintaining the fiscal year 2015 PB top line level of funding will
    provide the time and flexibility to make strategic resourcing choices
    to maximize combat capability from each taxpayer dollar. If we continue
    to be funded at the fiscal year 2015 PB top line level we can continue
    a gradual path of recovery to full-spectrum combat readiness, preserve
    munitions inventories, and protect investments such as the new training
    aircraft system and the next generation of space-based systems.
    Additionally, the President has proposed an additional Opportunity,
    Growth, and Security Initiative to accompany the fiscal year 2015
    budget request. For the Air Force, this $7 billion additional
    investment would enhance our readiness posture, enable us to fund
    critical modernization programs, accelerate recapitalization efforts,
    and improve our installations and bases.
        A sequestration-level budget would result in a very different Air
    Force. We are aggressively seeking innovative cost savings and more
    efficient and effective ways of accomplishing our missions, however
    these initiatives will not be sufficient to reach sequestration funding
    levels. To pay the sequestration-level bill we will have to sacrifice
    current tanker and ISR capacity by divesting KC-10 and RQ-4 Block 40
    fleets, all of our major investment programs will be at risk, and our
    readiness recovery will be significantly slowed due to required cuts in
    weapon system sustainment and ranges.
                  fiscal year 2015 budget decision methodology
        During the development of the fiscal year 2015 budget submission,
    the Air Force took a bold but realistic approach to support the Air
    Force 2023 framework and the 2012 Defense Strategic Guidance, as
    updated during deliberations on the 2014 QDR. To do this within fiscal
    guidance, including the Strategic Choices and Management Review, we had
    to make difficult trades between force structure (capacity), readiness,
    and modernization (capability). As a result, the Air Force established
    four guiding principles to steer our strategy and budget process.

        (1)  We must remain ready for the full-spectrum of military
    operations;
        (2)  When forced to cut capabilities (tooth), we must also cut the
    associated support structure and overhead (tail);
        (3)  We will maximize the contribution of the Total Force; and
        (4)  Our approach will focus on the unique capabilities the Air
    Force provides the joint force, especially against a full-spectrum,
    high-end threat.

        When building the budget, there were no easy choices. We divested
    fleets and cut manpower that we would have preferred to retain. We
    focused on global, long-range, and multi-role capabilities, especially
    those that can operate in contested environments, which meant keeping
    key recapitalization programs on track. We made these choices because
    losing a future fight to a high-end adversary would be catastrophic.
    Full-Spectrum Readiness
        Because of our global reach, speed of response, and lethal
    precision, the Air Force is the force that the Nation relies on to be
    first in for the high-end fight. This is our highest priority. To do
    this we must be ready across the entire force. This means we need to
    have the right number of airmen, with the right equipment, trained to
    the right level, in the right skills, with the right amount of support
    and supplies to successfully accomplish what the President tasks us to
    do in the right amount of time . . . and survive.
        Over the past 13 years, the Air Force has performed exceptionally
    well during combat operations in Iraq and Afghanistan. However, these
    operations have focused on missions conducted in a permissive air
    environment and with large footprints for counterinsurgency. This left
    insufficient time or resources to train across the full range of Air
    Force missions, especially missions conducted in contested and highly
    contested environments. To ensure success in future conflicts, we must
    get back to full-spectrum readiness. We can only get there by funding
    critical readiness programs such as flying hours, weapon system
    sustainment, and training ranges, while also balancing deployments and
    home-station training--in short, reducing operational tempo. This will
    not be a quick fix; it will take years to recover. If we do not train
    for scenarios across a range of military operations, including a future
    high-end fight, we accept unnecessary risk. Risk for the Air Force
    means we may not get there in time, it may take the joint team longer
    to win, and our military servicemembers will be placed in greater
    danger.
    Fleet Divestment
        Given the current funding constraints, the Air Force focused on
    ways to maximize savings while minimizing risk to our Joint Forces and
    our ability to support national defense requirements. Every aircraft
    fleet has substantial fixed costs such as depot maintenance, training
    programs, software development, weapons integration, spare parts, and
    logistics support. Large savings are much more feasible to achieve by
    divesting entire fleets rather than making a partial reduction to a
    larger fleet. This allows us to achieve savings measured in the
    billions rather than ``just'' millions of dollars.
        Upon first glance, divesting an entire fleet is undesirable because
    it removes all of a fleet's capabilities from our range of military
    options. For example, divesting the A-10 causes a loss of combat-tested
    aircraft optimized to conduct the close air support mission. However,
    the A-10 cannot conduct other critical missions, such as air
    superiority or interdiction, and cannot survive in a highly contested
    environment. Air superiority, which gives ground and maritime forces
    freedom from attack and the freedom to attack, is foundational to the
    way our joint force fights. It cannot be assumed, must be earned and is
    difficult to maintain. One of the dramatic advantages of airpower in a
    major campaign is its ability to eliminate second echelon forces and
    paralyze the enemy's ability to maneuver. As the Air Force becomes
    smaller, we must retain multi-role aircraft that provide greater
    flexibility and more options for the Joint Force Commander.
        Another example is the Air Force's U-2 and RQ-4 Global Hawk Block
    30, high-altitude ISR aircraft. The U-2 has been the combatant
    commanders' high-altitude ISR platform of choice due to its exceptional
    reliability, flexibility, survivability, and sensor capabilities. In
    the current fiscal environment, the Air Force cannot afford to maintain
    both platforms. While both have performed marvelously in Afghanistan
    and other theaters worldwide, the Global Hawk RQ-4 Block 30 provides
    unmatched range and endurance and, after multiple years of focused
    effort, now comes at a lower cost per flying hour. With responsible
    investment in sensor enhancements, the Global Hawk RQ-4 Block 30 can
    meet high-altitude, long endurance ISR requirements. Therefore, long-
    term affordability after near-term investments provides a stronger case
    for the RQ-4 Global Hawk Block 30 in a constrained funding environment.
        To support combatant commanders and act as good stewards for the
    taxpayer, we need to divest entire fleets of aircraft to achieve large
    savings while preserving the capabilities the Air Force uniquely
    provides to the Joint Force.
    Active Component/Reserve Component Mix
        American airmen from each component--Regular Air Force, Air
    National Guard, and Air Force Reserve--provide seamless airpower on a
    global scale every day. The uniformed members of today's Total Force
    consist of approximately 327,600 Regular Air Force airmen, 105,400 Air
    National Guardsmen, and 70,400 Air Force Reserve airmen actively
    serving in the Selected Reserve, as authorized by the National Defense
    Authorization Act for Fiscal Year 2014. Over the past 2 decades, to
    meet combatant commander requirements and the demands of recurring
    deployments, the Air Force has increasingly called upon its Total
    Force. This elevated use of the Air National Guard and Air Force
    Reserve has transformed a traditionally Strategic Reserve Force into a
    force that provides operational capability, strategic depth, and surge
    capacity. As the Air Force becomes smaller, each component will
    increase reliance on one another for the success of the overall
    mission.
        To meet Department of Defense (DOD) strategic guidance for a leaner
    force that remains ready at any size, the Air Force plans to remove
    approximately 500 aircraft across the inventories of all three
    components, saving over $9 billion. Additionally, the Air Force has
    instituted an analytical process of determining the proper mix of
    personnel and capabilities across the components to meet current and
    future requirements within available resources. Air Force leadership
    representing the Active and Reserve components, including adjutants
    general, teamed to develop the Air Force fiscal year 2015 Total Force
    Proposal (TFP-15) that preserves combat capability and stability for
    our Total Force. Taking into account recent lessons learned and
    existing fiscal realities, this compilation of actions maximizes every
    dollar and leverages opportunities to move personnel and force
    structure into the Reserve component, while still preserving capability
    and capacity across all three components. To do this, the Air Force
    plans to transfer aircraft from the Active component to the Air
    National Guard and the Air Force Reserve, including the transfer of
    flying missions to locations that would otherwise have no mission due
    to fleet divestments. This effort helps the Air Force maintain combat
    capability within mandated budgetary constraints by using the strength
    and unique capabilities of the Guard and Reserve components to make up
    for capabilities lost as Active Duty end strength declines, a concept
    known as compensating leverage. Leaders from all three components
    developed the TFP-15 plan which accomplishes these objectives using the
    following principles as guidelines:

             Where possible, replacing divested force structure
            with like force structure (e.g., A-10 with F-16);
             Adding similar force structure without driving new
            military construction;
             Adding same-type force structure to units where
            possible and returning mission sets to locations where they
            were previously located;
             Considering opportunities to realign force structure
            to the Reserve component prior to any decision to completely
            divest aircraft; and
             Considering new aircraft deliveries as options for
            mission transition at uncovered locations.

        In January 2013, as part of the Air Force's effort to optimize the
    capabilities of the Active and Reserve components, the Secretary of the
    Air Force and the Chief of Staff of the Air Force (CSAF) established
    the Total Force Task Force (TF2) to explore and leverage the unique
    strengths and characteristics of each component. This task force
    conducted a comprehensive review of Total Force requirements, offered
    ideas for improving collaboration between the three components, and
    gave us a starting point for future Total Force analysis and assessment
    efforts. To continue the body of work initiated by the TF2, and
    facilitate a transition to a permanent staff structure, the CSAF
    directed the stand-up of a transitional organization, the Total Force
    Continuum (TF-C), on October 1, 2013. The TF-C is continuing to develop
    and refine decision support tools that will help shape and inform the
    fiscal year 2016 budget deliberations.
        The Air Force has made great strides in understanding how a three-
    component structure can operate as a powerful, efficient, and cost-
    effective Service that maximizes the integrated power of our air,
    space, and cyberspace forces. This needs to be the way we do business,
    without even thinking about it. We will continue to seek ways to
    strengthen and institutionalize the collaboration and cooperation
    between the components, including reviewing the National Commission on
    the Structure of the Air Force's findings. Our initial examination of
    the Commission's report suggests a great deal of symmetry between many
    of their recommendations and current Air Force proposals for the way
    ahead. The Air Force is committed to ensuring that our Total Force is
    fully synchronized to deliver an unparalleled array of airpower
    anywhere in the world.
    Recapitalization Vs. Modernization
        One of the most critical judgments in building the Air Force plan
    for 2015 and beyond was how to balance investment in our current aging
    fleet against the need to buy equipment that will be viable against
    future adversaries. Forced to make tough decisions, we favored funding
    new capabilities (recapitalization) over upgrading legacy equipment
    (modernization). We cannot afford to bandage old airplanes as potential
    adversaries roll new ones off the assembly line. For example, the
    backbone of our bomber and tanker fleets, the B-52 and KC-135, are from
    the Eisenhower era, and our fourth generation fighters average 25 years
    of age. That is why our top three acquisition priorities remain the KC-
    46A aerial tanker, the F-35A Joint Strike Fighter, and the Long Range
    Strike Bomber (LRS-B).
        The KC-46A will begin to replace our aging tanker fleet in 2016,
    but even when the program is complete in 2028 we will have replaced
    less than half of the current tanker fleet and will still be flying
    over 200 KC-135s. Similarly, our average bomber is 32 years old. We
    need the range, speed, survivability, and punch that the LRS-B will
    provide. Tankers are the lifeblood of our joint force's ability to
    respond to crisis and contingencies, and bombers are essential to
    keeping our Air Force viable as a global force. In our fiscal year 2015
    budget submission, we have fully funded these programs.
        The F-35A is also essential to any future conflict with a high-end
    adversary. The very clear bottom line is that a fourth generation
    fighter cannot successfully compete with a fifth generation fighter in
    combat, nor can it survive and operate inside the advanced, integrated
    air defenses that some countries have today, and many more will have in
    the future. To defeat those networks, we need the capabilities the F-
    35A will bring. In response to tightening fiscal constraints, the Air
    Force has deferred four F-35As in the Future Years Defense Program
    (FYDP). If the President's projected top-line enhancements are not
    realized, and future appropriations are set at sequestration-levels,
    the Air Force may lose up to 19 total F-35As within the FYDP.
        Moving forward, we cannot afford to mortgage the future of our Air
    Force and the defense of our Nation. Recapitalization is not optional--
    it is required to execute our core missions against a high-end threat
    for decades to come.
                           making every dollar count
    Program Stewardship
        The Air Force and our airmen are committed to being good stewards
    of every taxpayer dollar. One way we are doing this is by making sound
    and innovative choices to maximize combat capability within available
    resources. Recently, the Air Force announced its intent to proceed with
    the program to ensure the continued availability of the Combat Rescue
    Helicopter (CRH). The CRH contract award protects a good competitive
    price and effectively uses the $334 million Congress appropriated to
    protect the program.
        Another example of maximizing the bang out of each taxpayer buck is
    the KC-46A tanker contract. The recapitalization of the Air Force's
    tanker fleet is one of our top three priorities, and the fixed-price
    contract for 179 aircraft represents an outstanding return on
    investment for the Air Force and the American people. The program is
    currently on track in cost, schedule, and technical performance, and in
    the fiscal year 2015 PB we were able to save $0.9 billion in KC-46A
    Aircrew Training System and other KC-46A program risk adjustments based
    on successes to date. Keeping this program on a stable funding path is
    imperative to meeting our contractual obligations and ultimately to our
    Air Force's ability to meet national defense requirements.
        The Air Force remains committed to delivering space capabilities at
    a better value to the taxpayer. In cooperation with Congress and the
    Office of the Secretary of Defense, we have used the Efficient Space
    Procurement strategy to drive down costs of two key satellites, Space-
    Based Infrared System (SBIRS) and Advanced Extremely High Frequency
    (AEHF). Through stable research and development funding, block buys,
    and fiscal authority to smooth our spending profile combined with
    strong contracting and negotiation approaches using fixed price
    contracts and ``should cost'' reviews, the Air Force has been able to
    achieve significant savings. For satellites 5 and 6 of the AEHF
    program, these practices reduced Air Force budget requirements $1.6
    billion \1\ from the original independent cost estimate of the Cost
    Assessment and Program Evaluation office (CAPE). For SBIRS 5 and 6
    these practices have already reduced the budget $883 million \2\ from
    the original CAPE estimate and negotiations are still ongoing. Since
    our policy is to fund to the CAPE independent cost estimates, these
    savings are real dollars that are now available to reduce the pressure
    on our budget.
    ---------------------------------------------------------------------------
        \1\ Fiscal year 2012-fiscal year 2017 savings
        \2\ Fiscal year 2013-fiscal year 2018 savings
    ---------------------------------------------------------------------------
        Perhaps the best results are on the Evolved Expendable Launch
    Vehicle (EELV) program where we have used competition, long term
    contracts (where there is only one provider), and good understanding of
    costs to get better deals for the government. This year's budget
    reduces the program by $1.2 billion. Combined with prior year Air Force
    reductions and savings for the National Reconnaissance Office, we have
    reduced the total program by $4.4 billion since its ``high water mark''
    in the fiscal year 2012 budget. The Air Force remains committed to
    driving competition into the launch business and we are actively
    supporting new entrants in their bids for certification. At the same
    time we must maintain our commitment to mission assurance that has
    resulted in unprecedented success. We have had 68 successful EELV
    launches and 30 additional successful National Security Space launches
    in a row, but we know that the only launch that matters is the next
    one.
        These are just a few examples of how the Air Force is optimizing
    our allocated resources. Good stewardship of the taxpayer's dollars
    demands we look for more efficient ways to accomplish the mission as an
    inherent part of our program and budget decisionmaking process every
    year.
    Energy
        To enhance mission capability and readiness, the Air Force is
    diligently managing our resources including our demand for energy and
    water. By improving the efficiency of our processes, operations,
    facilities, and equipment, the Air Force can generate cost savings and
    decrease our reliance on foreign energy sources. The Air Force has
    reduced its facility energy consumption by 20 percent since 2003 and
    has instituted a number of fuel saving initiatives, reducing the amount
    of fuel our aircraft have consumed by over 647 million gallons since
    2006. Additionally, we are investing $1.4 billion across the FYDP for
    next generation jet engine technology that promises reduced fuel
    consumption, lower maintenance costs, and helps ensure a robust
    industrial base. By instituting aircraft and installation efficiencies
    over the past 5 years, we avoided an energy bill $2.2 billion higher in
    2013 than it would have been otherwise.
    Base Realignment and Closure
        As we make efforts to become more efficient by improving and
    sustaining our installations, we also recognize we carry infrastructure
    that is excess to our needs. The Air Force is fully involved in the
    Office of the Secretary of Defense-led European Infrastructure
    Consolidation efforts. Since 1990, the Air Force has decreased European
    main operating bases from 25 to 6, returning more than 480 sites to
    their respective host nations and reduced Air Force personnel in Europe
    by almost 70 percent. While we have made large reductions in base
    infrastructure overseas, and previous base realignment and closure
    (BRAC) rounds made some progress in reducing U.S. infrastructure, we
    still spend more than $7 billion operating, sustaining, recapitalizing,
    and modernizing our physical plants across the Air Force each year.
    While our best efforts to use innovative programs have paid dividends,
    such as recapitalizing our housing through privatization and pursuing
    public-public and public-private partnerships, we continue to spend
    money maintaining excess infrastructure that would be better spent
    recapitalizing and sustaining weapons systems, training for readiness,
    and investing in our airmen's quality of life needs. The Air Force has
    limited authority under current public law to effectively consolidate
    military units or functions and then divest real property when no
    longer needed. To save considerable resources, we request BRAC
    authority in 2017.
    Military Compensation
        Military compensation has risen over the last decade and has helped
    the Air Force to recruit and retain a world class force in the midst of
    an extended period of high operations tempo. To sustain the recruitment
    and retention of airmen committed to serve the Nation, military
    compensation must remain highly competitive. However, in light of
    projected constraints on future defense spending, DOD needs to slow the
    rate of growth in military compensation in order to avoid deeper
    reductions to force structure, readiness, and modernization efforts
    critical to support the warfighter and the national defense. The Air
    Force supports the military compensation recommendations and will
    reinvest the savings back into readiness to provide our airmen with the
    necessary resources to remain the best-equipped and best-trained Air
    Force in the world.
                                     airmen
    Innovative Force
        We are the best Air Force in the world because of our airmen. We
    continue to attract, recruit, develop, and train airmen with strong
    character who are honor bound, on- and off-duty, by the Air Force's
    core values of Integrity First, Service Before Self, and Excellence in
    All We Do.
        We depend on a workforce that leads cutting-edge research, explores
    emerging technology areas, and promotes innovation across government,
    industry, and academia.
        The budgetary constraints in fiscal year 2014 and beyond force the
    Air Force to become smaller. However, as we shrink, we must continue to
    recruit and retain men and women with the right balance of skills to
    meet Air Force mission requirements, and maintain a ready force across
    the full-spectrum of operations. Attracting science, technology,
    engineering, and mathematics talent to our civilian workforce has been
    hampered by furloughs, hiring and pay freezes, and lack of professional
    development opportunities. Despite fiscal constraints, the Air Force
    needs to continue to attract and nurture our Nation's best and
    brightest into both our military and our civilian workforces, because
    it is our innovative airmen who continue to make our Air Force the best
    in the world.
    Airmen and Family Support
        Airmen and their families are our most important resource. We are
    committed to fostering a culture of dignity and respect, and to
    ensuring an environment where all airmen have the opportunity to excel.
    As a result, the Air Force will preserve our core services programs
    (fitness, childcare, and food services) and warfighter and family
    support programs. Unfortunately, the budget environment necessitates
    consequential reductions to morale, welfare, and recreation programs at
    U.S.-based installations to affect cost savings. We will do so in a
    manner that provides commanders as much flexibility as possible to
    respond to their individual military community needs and unique
    geographic situations.
    Air Force Sexual Assault Prevention and Response
        The Air Force's mission depends on airmen having complete trust and
    confidence in one another. Our core values of Integrity, Service, and
    Excellence, define the standard. Sexual assault is absolutely
    inconsistent and incompatible with our core values, our mission, and
    our heritage. As such, our Sexual Assault Prevention and Response
    (SAPR) program is a priority both for ensuring readiness and taking
    care of our airmen.
        During the last year, the Air Force has worked hard to combat
    sexual assault. We have invested in programmatic, educational, and
    resourcing efforts aimed at reinforcing a zero tolerance environment.
    Our SAPR office now reports directly to the Vice Chief of Staff of the
    Air Force. We revamped our wing and group commanders' and senior non-
    commissioned officers' sexual assault response training courses,
    established full-time victim advocates with comprehensive training and
    accreditation requirements, and implemented the Defense Sexual Assault
    Incident Database to streamline data collection and reporting efforts.
        The Air Force has been DOD's leader in special victim capabilities,
    particularly with the success of the Air Force's Special Victims'
    Counsel (SVC) program. The SVC program provides victims with a
    dedicated legal advocate whose sole job is to help the victim through
    the often traumatizing legal process following an assault. So far the
    results have been exceptional. Since the program's implementation, more
    than 565 airmen have benefited from SVC services, and in fiscal year
    2013, 92 percent of the victims reported that they were ``extremely
    satisfied'' with SVC support. Due to its success, the Secretary of
    Defense has directed all Services to stand up similar SVC programs. The
    Air Force has also established a team of 10 Special Victims' Unit
    senior trial counsels and 24 Air Force Office of Special Investigations
    agents who have received advanced education and training to work sexual
    assault cases.
        Providing a safe, respectful, and productive work environment free
    from sexual innuendo, harassment, and assault is the responsibility of
    every airman, and the Air Force is committed to realizing this vision.
    Diversity
        The Nation's demographics are rapidly changing, and the makeup of
    our Air Force must reflect and relate to the population it serves. To
    leverage the strengths of diversity throughout our Air Force, our
    leaders must develop and retain talented individuals with diverse
    backgrounds and experiences, and create inclusive environments where
    all airmen feel valued and able to contribute to the mission. Air Force
    decisionmaking and operational capabilities are enhanced by enabling
    varied perspectives and potentially creative solutions to complex
    problems. Moreover, diversity is critical for successful international
    operations, as cross-culturally competent airmen build partnerships and
    conduct the full range of military operations globally.
        The competition for exceptional diverse talent will remain fierce.
    To compete with other government agencies and the business sector to
    attract and recruit the Nation's finest talent, the Air Force must
    develop an accessions strategy that taps new markets of diverse, high
    performing youth. In a similar sense, the Air Force must continue
    targeted development of existing talent, and continue to promote a
    comprehensive mentorship program that trains all airmen to view
    operational problems and opportunities through a diversity lens.
    Force Management
        In fiscal year 2014 and fiscal year 2015, we will implement a
    number of force management programs designed to reduce the overall size
    of the force while maintaining our combat capability. The goal of these
    programs is to make reductions through voluntary separations and
    retirements, maximizing voluntary incentives to ensure a smooth
    transition for our airmen. To meet current funding constraints,
    significant reductions in total end strength over the FYDP are
    required, and may impact up to 25,000 airmen. These reductions are
    driven largely by the divestiture of associated force structure and
    weapons systems, headquarters realignment, and a rebalancing of
    aircrew-to-cockpit ratios in a post-Afghanistan environment.
    Realignment efforts will also reduce Headquarters Air Force funding by
    20 percent immediately and combatant command headquarters funding
    through a 4 percent annual reduction reaching 20 percent by fiscal year
    2019. We have developed a plan to retain high performing airmen so that
    we can accomplish the mission our Nation expects.
                              america's air force
    A Global, Ready Force
        Over the past 35 years, the Air Force has been called upon more
    than 150 times to conduct combat or humanitarian operations in more
    than 50 countries around the world. It is impossible to predict when
    America will call on its Air Force next. It is our job to be ready.
        The evolving complexity and potentially quick onset of warfare
    means that future conflicts will be a ``come as you are'' fight. There
    will be precious little time to ``spin up'' units that are unready to
    carry out their designated missions. Currently, the combatant
    commanders' requirement for fighter squadrons essentially equals the
    number of squadrons in the Air Force, and the requirement for bomber
    aircraft and ISR platforms is much greater than the number currently in
    the inventory. In simple economic terms, our supply across Air Force
    capabilities is less than or equal to the demand. Tiered readiness is
    not an option; your Air Force is either ready or it is not.
    Air Force Core Missions
        Airmen bring five interdependent and integrated core missions to
    the Nation's military portfolio. These core missions have endured since
    President Truman originally assigned airpower roles and missions to the
    Air Force in 1947. While our sister Services operate efficiently within
    the air, space, and cyber domains, the Air Force is the only Service
    that provides an integrated capability on a worldwide scale. Although
    the way we operate will constantly evolve, the Air Force will continue
    to perform these missions so that our military can respond quickly and
    appropriately to unpredictable threats and challenges.
        Air and Space Superiority . . . Freedom from Attack and the Freedom
            to Attack
        Air and space superiority has long provided our Nation an
    asymmetric advantage. The Air Force's fiscal year 2015 budget request
    focuses on the capabilities necessary to ensure we can provide the
    theater-wide air and space superiority our combatant commanders
    require.
        Since April 1953, roughly 7 million American servicemembers have
    deployed to combat and contingency operations all over the world.
    Thousands of them have died in combat. Not a single one was killed by
    bombs from an enemy aircraft. Air superiority is a fundamental pillar
    of airpower and a prerequisite to the American way of modern, joint
    warfare--we cannot fail. In calendar year 2013, the Air Force flew over
    27,000 air superiority sorties, accounting for over 37,000 flight
    hours. These sorties directly supported critical missions, such as
    homeland air sovereignty with Operation Noble Eagle and the protection
    of the President of the United States. Additionally, the Air Force flew
    numerous Theater Security Posture missions in the U.S. Central Command
    and U.S. Pacific Command areas of responsibility.
        To ensure we can provide unmatched air superiority capability and
    manage the risk associated with combat force reductions and emerging
    advanced technologies, the Air Force is modernizing munitions and
    platforms. In fiscal year 2015, the Air Force continues to invest in
    the AIM-120D and AIM-9X air-to-air missiles and develop new munitions
    to address future threats. Upgrades to the F-22 program and the
    procurement of the F-35A will also provide required capabilities to
    help ensure freedom of movement in contested environments. Continued
    upgrades to fourth generation platforms, such as the Joint Air-to-
    Surface Standoff Missile Extended Range for the F-16, are also
    necessary to ensure sustained viability in the future. These added
    capabilities will ensure the Air Force is prepared to survive today and
    meet tomorrow's challenges for control of the air.
        America's freedom to operate effectively across the spectrum of
    conflict also includes its ability to exploit space. Every day joint,
    interagency, and coalition forces depend on Air Force space operations
    to perform their missions on every continent, in the air, on the land,
    and at sea. In calendar year 2013, the Air Force launched 8 National
    Security Space (NSS) missions totaling 68 consecutive successful EELV
    launches to date and 98 consecutive successful NSS missions. In fiscal
    year 2015, the Air Force will acquire 3 launch services and plans to
    launch 10 NSS missions. The Air Force will also continue the evaluation
    and certification of potential new entrants.
        The space environment is more congested, contested, and competitive
    than ever, requiring the Air Force to focus on Space Situational
    Awareness (SSA). Our SSA modernization efforts include: moving forward
    with acquisition of the Space Fence (near-Earth SSA capability);
    defining the Space-Based Space Surveillance follow-on system; fielding
    the Geosynchronous Space Situational Awareness Program; continuing work
    with our Australian partners to field an advanced space surveillance
    telescope (deep-space SSA capabilities); and fielding the Joint Space
    Operations Center mission system (SSA command and control and data
    integration and exploitation).
        The Air Force remains fully committed to the long-term goal of
    fostering international relationships and supporting ongoing security
    efforts with partner nations around the globe. Teaming with allies and
    partners not only helps cost and risk-sharing, it also increases
    capability and capacity to support contingency operations. Space is an
    area in which we have made significant progress in building
    partnerships.
        Underpinning all of these capabilities is our ability to
    effectively operate in and through cyberspace. The advantages of
    effective cyberspace operations in speed, ubiquity, access, stealth,
    surprise, real-time battlespace awareness and information exchange, and
    command and control are manifest in every Air Force mission area and
    nearly every mission area has come to depend on them. Global strike;
    fused ISR; force and personnel movement; telemedicine; global
    logistics; financial systems; joint aerial network linkages; space
    control; remotely piloted aircraft and vehicle command and control;
    target deconfliction; fires coordination; and even aspects of national
    strategic (including nuclear) command and control, rely on cyberspace
    superiority. Despite the strategic risk this dependence introduces, the
    advantages to those mission areas are too great to forego, so the Air
    Force must continue to lead and leverage the advantages of cyberspace
    superiority.
        Intelligence, Surveillance, and Reconnaissance . . . Delivering
            Decision Advantage
        Air Force globally integrated ISR provides commanders at every
    level with the knowledge they need to prevent strategic surprise, make
    decisions, command forces, and employ weapons.
        Our ISR airmen identify and assess adversary targets and
    vulnerabilities from hideouts to bunkers to mobile launchers with
    greater accuracy than ever seen in the history of warfare. In 2013
    alone, airmen flew over 27,000 ISR missions, enabled the removal of
    1,500 enemy combatants from the fight, provided critical adversary
    awareness and targeting intelligence to U.S. and coalition forces in
    over 350 troops-in-contact engagements, enhanced battlespace awareness
    through 630,000 hours of sustained overwatch of tactical forces and
    communication lines, and identified over 350 weapons caches and
    explosive devices that would have otherwise targeted American and
    partner forces. ISR reduces uncertainty about our adversaries and their
    capabilities, strengthens deterrence, prompts adversaries to act more
    cautiously, provides intelligence that allows commanders a
    decisionmaking advantage, and delivers real-time information on which
    troops rely to fight effectively and win.
        In recent years, the development of Air Force ISR capabilities has
    focused mainly on meeting the needs of permissive combat environments.
    In more contested future environments, gaining and maintaining an ISR
    advantage will become increasingly difficult and even more important.
    Therefore, the Air Force will focus primarily on enhancing ISR
    capabilities for operations in contested environments. Accomplishing
    this will require updating the current mix of ISR assets, while also
    giving significant and sustained attention to modernizing Air Force ISR
    systems, capabilities, and analytical capacity.
        Rapid Global Mobility . . . Delivery on Demand
        The Air Force's rapid global mobility capability is truly unique.
    There is no other force in the world that would have the confidence to
    place its fighting men and women at the end of an 8,000 mile logistical
    train. The fact that we are able to reliably supply a military force of
    100,000 \3\ troops in a landlocked country half a world away during an
    active fight is simply amazing.
    ---------------------------------------------------------------------------
        \3\ At their peak, U.S. military forces in Afghanistan consisted of
    100,000 military members and over 112,000 contractors. Source: CRS 2011
    report ``DOD Contractors in Afghanistan and Iraq''
    ---------------------------------------------------------------------------
        On any given day, airmen deliver critical personnel and cargo and
    provide airdrop of time-sensitive supplies, food, and ammunition on a
    global scale. Averaging one take-off or landing every 2 minutes, every
    day of the year, America's mobility fleet provides a capability
    unmatched by any air force across the globe. Whether it is sustaining
    the warfighter in any environment or delivering hope with humanitarian
    assistance, our airmen ensure that the whole of government and
    international partners are strengthened with this unique capability to
    get assets to the fight quickly, remain in the fight, and return home
    safely.
        In calendar year 2013, airmen flew 26,000 airlift missions, and
    over the course of 345 airdrops, the Air Force dropped 11 million
    pounds of combat-enabling sustainment to coalition forces on the ground
    in Afghanistan. As the linchpin to power projection at intercontinental
    distances, Air Force tanker crews flew 31,700 missions and aeromedical
    evacuation crews airlifted 5,163 wounded soldiers, sailors, airmen,
    marines, and injured civilians around the globe. Since September 11,
    America's tanker fleet has offloaded over 2.69 billion gallons of fuel
    to joint and coalition air forces, and the Air Force has logged an
    astounding 194,300 patient movements.
        To ensure global reach, the Air Force will continue to protect this
    vital mission by recapitalizing our aging aerial tanker fleet with the
    KC-46A, modernizing the inter-theater airlift fleet, and continue
    supporting the C-130J multi-year procurement contract that will extend
    beyond fiscal year 2018.
        Global Strike . . . Any Target, Any Time
        The Air Force's nuclear and conventional precision strike forces
    can credibly threaten and effectively hold any target on the planet at
    risk and, if necessary, disable or destroy it promptly--even from bases
    in the continental United States. These forces possess the unique
    ability to achieve tactical, operational, and strategic effects all in
    the course of a single combat mission. Whether employed from forward
    bases or enabled by in-flight refueling, global strike missions include
    a wide range of crisis response and escalation control options, such as
    providing close air support to troops at risk, interdicting enemy
    forces, supporting special operations forces, and targeting an
    adversary's vital centers. These capabilities, unmatched by any other
    nation's air force, will be of growing importance as America rebalances
    its force structure and faces potential adversaries that are
    modernizing their militaries to deny access to our forces.
        In calendar year 2013, the Air Force flew 21,785 close air support
    sorties in Operation Enduring Freedom, including over 1,400 sorties
    with at least 1 weapons release. In the rebalance to the Pacific, the
    Air Force rotated 5 fighter squadrons and 3 bomber squadrons to forward
    locations in Guam, Japan, and Korea to project power and reassure our
    regional partners and flew over 43,000 missions bolstering theater
    security and stability. We continue to invest in the Pacific theater to
    ensure viability of our Air Force bases through a combination of
    hardening, dispersal, and active defenses.
        The Air Force will focus future efforts on modernizing global
    strike assets to ensure that American forces are prepared to act when,
    where, and how they are needed. The multi-role F-35A is the centerpiece
    of the Air Force's future precision attack capability, designed to
    penetrate air defenses and deliver a wide range of precision munitions.
    Procuring the F-35A aircraft remains a top priority, and we plan to
    achieve initial operational capability in 2016.
        The backbone of America's nuclear deterrence is the ICBM fleet. To
    ensure the ICBM's viability through 2030, the Air Force will invest in
    updated warhead fuzes, as well as beginning guidance and propulsion
    modernization programs and modernization of launch facilities and
    communication centers. While the LRS-B is the bomber of the future, the
    Air Force will continue to modernize current B-2 and B-52 aircraft to
    keep these nuclear capabilities viable. The Air Force will ensure we
    are able to maintain the flexibility to deploy nuclear forces in a
    manner that best serves our national security interests.
        Command and Control . . . Total Flexibility
        Air Force command and control systems provide commanders the
    ability to conduct highly coordinated joint operations on an unequaled
    scale. Getting the right information to the right person at the right
    time is essential to the American way of war. The capability to deliver
    airpower is also intimately dependent on the ability to operate
    effectively in cyberspace, a domain in and through which we conduct all
    of our core missions and which is critical to our command and control.
    Operations in cyberspace magnify military effects by increasing the
    efficiency and effectiveness of air and space operations and by
    integrating capabilities across all domains. However, the Nation's
    advantage in command and control is under constant attack with new and
    more capable threats emerging daily in the areas of cyber weapons,
    anti-satellite systems, and electromagnetic jamming. Our adversaries
    are making advances by electronically linking their own combat
    capabilities, which create new military challenges.
        To counter these challenges, the Air Force will prioritize
    development and fielding of advanced command and control systems that
    are highly capable, reliable, resilient, and interoperable, while
    retaining the minimum command and control capacity to meet national
    defense requirements. More importantly, we will recruit and train
    innovative airmen with the expertise to build, manage, secure, and
    advance our complex and diverse command and control systems.
                                   conclusion
        Ultimately, our job is to fight and win the Nation's wars. While,
    the Air Force's fiscal year 2015 budget submission remains strategy-
    based, it is also shaped by the fiscal environment. At the levels
    requested in the President's budget, the Air Force protects the
    capabilities required to prevail in the more demanding operational
    environment in years to come. By making tough choices today we set
    ourselves on a path to produce a ready and modernized Air Force that is
    smaller, yet still lethal against potential adversaries in the future.
    Regardless of the strategic tradeoffs made, at sequestration-levels it
    is not possible to budget for an Air Force that is capable of
    simultaneously performing all of the missions our Nation expects. We
    would end up with a force that is less ready, less capable, less
    viable, and unable to fully execute the defense strategy. While we
    would still have the world's finest Air Force able to deter
    adversaries, we would also expect to suffer greater losses in scenarios
    against more modern threats.
        Airpower . . . because without it, you lose!

        Senator Nelson. Thank you, Madam Secretary.
        General Welsh.

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

        General Welsh. Thank you, Senator Nelson, Ranking Member
    Inhofe, and members of the committee. It's always an honor to
    appear before you. Thank you for the chance.
        Ladies and gentlemen, your Air Force is the finest in the
    world and we need to keep it that way. We built this budget to
    ensure that Air Force combat power remains unequaled, but that
    does not mean it will remain unaffected. Every major decision
    reflected in our fiscal year 2015 budget proposal hurts. Each
    of them reduces capability that our combatant commanders would
    love to have and believe they need. There are no more easy cuts
    and we simply can't ignore the fact that the law as currently
    written returns us to sequestered funding levels in fiscal year
    2016.
        To prepare for that, the Air Force must cut people and
    force structure now to create a balanced force that we can
    afford to train and operate in 2016 and beyond. We started our
    budget planning by making two very significant assumptions.
    First, was that the Air Force must be capable of winning a
    full-spectrum fight against a well-armed, well-trained enemy;
    and second, ready today versus modern tomorrow cannot be an
    either/or decision. We must be both.
        We also knew the overwhelming majority of reductions in our
    budget would have to come from readiness, force structure, and
    modernization, and we tried to create the best balance possible
    between readiness, capability, and capacity across our five
    core mission areas, because we needed to reduce our planned
    spending in other areas by billions of dollars a year. Trimming
    around the edges just isn't going to get it done.
        We were forced to take a look at cutting fleets of aircraft
    as a way to create the significant savings that are required.
    We have five mission areas with air or space craft that could
    be reduced. In the air superiority mission area, we already had
    reductions in our proposal, but eliminating an entire fleet
    would leave us unable to provide air superiority for a full
    theater of operations, and no other Service can do that.
        We looked at our space fleet, but no combatant commander is
    interested in impacting the precise navigation and timing,
    communications, missile warning, or space situational awareness
    and other special capabilities that those assets provide. ISR
    is the number one shortfall our combatant commanders identify
    year after year. They would never support even more cuts than
    we already had in our plan in that mission area.
        We have several fleets in the global mobility mission area.
    I spoke with Chief of Staff of the Army General Raymond T.
    Odierno, USA, to ask what he thought about reductions in the
    airlift fleet. His view was that a smaller Army would need to
    be more flexible, more responsive, and able to move more
    quickly. He did not think further reduction of airlift assets
    beyond our current plan was a good idea. I agree.
        We looked at our air refueling fleets and considered
    divesting the KC-10 as an option. But analysis showed us that
    mission impact was just too significant. As the boss said,
    however, if we do return to sequestered funding levels in 2016,
    this option will have to be back on the table.
        We looked at KC-135s as well, but we would have to cut many
    more KC-135s than KC-10s to achieve the same level of savings.
    With that many KC-135s out of the fleet, we simply can't do the
    mission.
        In the strike mission area, cutting the A-10 fleet would
    save us $3.7 billion and another $500 million in cost avoidance
    for upgrades that wouldn't be required. To achieve the same
    savings would require a much higher number of either F-16s or
    F-15Es. But we also looked at those options. We ran a very
    detailed operational analysis comparing divestiture of the A-10
    fleet to divestiture of the B-1 fleet, to reducing the F-16
    fleet, to deferring procurement of a number of F-35s until
    outside the FYDP, or to decreasing readiness by standing down a
    number of fighter squadrons, as we did in fiscal year 2013.
        We used the standard Department of Defense (DOD) planning
    scenarios, and the results showed that from an operational
    perspective, cutting the A-10 fleet was clearly the lowest risk
    option. While no one is happy about recommending divestiture of
    this great old friend, it's the right military decision, and
    representative of the extremely difficult choices that we're
    being forced to make. Even if an additional $4 billion became
    available, I believe the combatant commanders would all tell
    you that they'd rather have us fund more ISR, airborne command
    and control capability than retain the A-10 fleet.
        The funding levels we can reasonably expect over the next
    10 years dictate that for America to have a capable, credible,
    and viable Air Force in the mid-2020s, we must get smaller now.
    We must modernize parts of our force, but we can't modernize as
    much as we planned, and we must maintain the proper balance
    across our five mission areas.
        Thank you for your continued support of our Air Force and
    my personal thanks for your unending support of our airmen and
    their families. The Secretary and I look forward to your
    questions.
        Senator Nelson. Thank you, General.
        In an expression of collegiality, I'm going to call on our
    ranking member first. Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        The most important question would be to General Welsh.
    Would you like to recognize who that pretty little girl in blue
    is behind you?
        General Welsh. Senator, I'd be honored to. This is my wife
    of 36 years, Betty. She rocks. [Laughter.]
        Senator Inhofe. Great. Thank you very much.
        Again, during the Senate Armed Services Committee hearing
    earlier this year on worldwide threats, Director of National
    Intelligence James R. Clapper testified that over his last 50
    years in intelligence, he has not experienced a time when we've
    been beset by more crises and threats around the globe.
        The Air Force has reduced the size of its combat squadrons
    since September 11, 2001, from 75 to 55. It is projected to
    reduce the number to 48 by the end of fiscal year 2019. The
    fiscal year 2015 budget alone puts the number of fighter
    aircraft below the 1,900 requirement determined by the Air
    Force to meet our national military requirements, and that
    smaller force has an average age of over 30 years.
        Based on the briefings that we have received in this
    committee, I would just ask the two of you how much more risk
    can we accept right now?
        Ms. James. I'll speak first and give you my opinion,
    Senator. I think we are at the point where we can accept no
    more risk. I think this is the bottom. It should not go any
    deeper than that. As you point out, should all three things
    happen at once in the National Military Strategy, meaning the
    two contingencies plus defense of the Homeland all going on at
    once, we are below the level that we need in terms of fighters.
    Of course, if not everything goes wrong at once we'll be able
    to handle it.
        Senator Inhofe. Do you generally agree with that, General?
        General Welsh. Senator, I would just say that if you look
    at our standing requirement versus the actual projected
    organizational size of our Air Force today, and for sure by
    fiscal year 2019, every fleet we have is low-density/high-
    demand by definition. The requirement is greater than what we
    own.
        Senator Inhofe. I agree with that, and I'd like to just get
    that on the record, because when we talk about readiness we're
    talking about risk. When we're talking about risk, we're
    talking about lives. Then the American people understand how
    serious this is.
        Several of us, I think including some of you, didn't think
    that the decision to stand down 31 squadrons last year was the
    right thing to do. My feeling was when you put the cost in
    there to recover. I understand only 50 percent of those are now
    recovered, but in terms of maintenance, in terms of pilot
    training, is that good economics, to stand down those
    squadrons?
        General Welsh. Senator, I do not believe it is. It's going
    to take us 10 years or so to recover readiness in the Air Force
    to where you would like it to be for the Nation.
        Senator Inhofe. I agree with that. I think it's worth
    bringing out now. I may have some questions for the record, but
    I'm saving the longest question for last now because of all the
    controversial things we're dealing with in terms of our assets,
    the A-10 is the one that has received the most attention. You
    did address this, of course, very accurately in your comments.
        I think that the Air Force request divests the entire 283-
    aircraft A-10 fleet. It is something that has probably
    attracted more attention from more people. What I'd like you to
    do, using this chart, which you are very familiar with, is
    explain the following questions. What alternatives were you
    looking at against retiring the A-10? Why were they not chosen?
    We list four requirements up there on this chart that you're
    familiar with.
        Second, has the Air Force discussed the retirement of the
    A-10 with the other Services, especially the Army? I'm sure
    that you and General Odierno have talked about this. Maybe you
    could share those comments or those experiences with us.
        What other aircraft of the Air Force and other Services can
    execute the close air combat, search and rescue, and airborne
    forward air controller missions? What other ones can perform
    this same mission? How do they stand against each other? I know
    that Senator Ayotte is going to have more specific questions
    about this, but if you could just address this chart and
    explain it to us, that might be helpful.
        [The chart referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        General Welsh. Senator, this chart is from the analysis I
    mentioned in my opening comments that was done. We compared
    with an operational analysis against the DOD standard
    warfighting profiles that our requirements are measured
    against. Each of these is an independent option, so we ran
    multiple runs of our analytical models, one divesting the A-10
    fleet, one divesting the B-1 fleet, one just taking squadrons
    that we will retain, but having them not current, not flying
    them at all. We divested 350 F-16s as an option to create the
    same amount of savings as we could with the A-1. Then we
    deferred 40 F-35s outside the FYDP and ran that as a model in
    its own right.
        Those are the things that we analyzed against the problem
    we have in meeting our warfighting requirements that the
    combatant commanders present us. When we did that analysis, all
    this chart represents is that from an operational perspective,
    clearly the least operational risk came from the divesting of
    the A-10 fleet.
        One of the things that I think that effort highlighted for
    me--I followed the debate closely. The great thing about this
    is we have a lot of people passionate about what they do, about
    the airplane they fly, about the mission we perform, and that's
    a wonderful thing. I don't see anything wrong with the debate.
        But I am concerned that we're talking about some of the
    wrong things, because this isn't about whether or not the A-10
    is a great aircraft or whether it saves lives on the
    battlefield. It is a great aircraft and it does save lives. So
    does the F-16, which, in fact, has flown more CAS sorties than
    the A-10 all by itself over the last 8 or 9 years. So does the
    F-15E, the B-1, the AC-130, the B-52. They're all great and
    they've all saved lives on a battlefield.
        Senator Inhofe. Yes, General Welsh, and I understand that.
    I'm just saying this has risen to the point where it seems to
    be the most controversial of these cuts, and I wanted to give
    you a chance to explain it.
        The other part of my question was, have you talked to the
    other Services, and I said particularly the Army.
        General Welsh. Yes, sir. We brief all the Services in the
    course of our budget process. What General Odierno specifically
    has said to me is that he hates to see the A-10 go, as do I,
    but that he trusts us to do CAS for the Army. That's what the
    Air Force provides them.
        Senator Inhofe. Thank you, General Welsh.
        Thank you, Mr. Chairman.
        Senator Nelson. Thank you, Senator Inhofe.
        Madam Secretary, DOD's budget includes numerous personnel-
    related proposals intended to slow the growth of personnel
    costs. For example, a 1 percent pay raise for most military
    personnel is lower than the current projected 1.8 percent that
    would take effect under current law. Another example is a 1-
    year pay freeze for general and flag officers. Another one is a
    slight reduction in the growth of housing allowance over time,
    such that it would cover 95 percent of housing expenses rather
    than 100 percent. Another is a phased reduction by $1 billion
    of the annual direct subsidy provided to military commissaries,
    down from the current subsidy of $1.4 billion. Another is the
    increased enrollment fees and pharmacy copays and a
    consolidation of TRICARE.
        DOD has testified that the savings achieved by these
    proposals, estimated to be at $2.1 billion and $31 billion over
    the FYDP, would be used to invest in modernization and
    readiness. I'll ask either one of you, do you agree with these
    proposals and why do you think they're needed?
        Ms. James. Mr. Chairman, I do agree with these proposals.
    These are among the difficult choices, because I think we all
    want to do the absolute utmost for our people. But all of these
    proposals amount to a slowing of the growth in military
    compensation at a time where we're coming off of a decade where
    military compensation has risen quite a bit. I believe it's 40
    percent over the last dozen years or so. Also, it's a time of
    still unprecedented high quality in recruiting and retention.
        I mentioned in my opening comments that the number one
    thing on our airmen's minds as I have traveled around has been
    the downsizing, and there is, of course, this great desire to
    remain in the Air Force. We are actively working to try to
    attract as many as possible in certain categories through
    voluntary incentives to leave our Air Force and use involuntary
    only when necessary.
        But my point is at a time like this we can afford to slow
    the growth in compensation, so I do support it.
        Senator Nelson. General, aren't these proposals going to
    have a negative impact on recruiting and retention?
        General Welsh. Senator, I can't answer that question until
    we've done it. There's no indication right now, as we discuss
    these things, that there's going to be a retention problem or a
    recruiting problem. We haven't had a recruiting problem in
    almost 20 years in the Air Force.
        The operational impact is that for us these savings would
    save a little over $3 billion across the FYDP. As a comparison,
    divesting of the U-2 fleet is saving us a little over $2
    billion. If we can retain capability that our warfighters
    really desire and need by making these cuts, I think there's a
    number of airmen who will listen to this discussion and
    understand that this will be helpful.
        All we're trying to do is take a growth curve in pay and
    entitlements that has been spectacular because of the help of
    the U.S. Congress. You've been wonderfully good to us for the
    last 12 to 15 years in this area, but the growth rate is not
    sustainable. I think we all know that. All we're trying to do
    is get it to a sustainable curve.
        It's a very emotional topic, I understand that.
        Senator Nelson. Were the Air Force senior enlisted
    personnel consulted on this, and did they agree with these
    proposals?
        General Welsh. Yes, sir, the Chief Master Sergeant of the
    Air Force consulted with our Enlisted Board of Directors,
    composed of the command chief master sergeants of every major
    command in the Air Force, throughout the entire process, and
    all the joint senior enlisted leaders were in the tank sessions
    where we discussed this with the Chairman.
        Senator Nelson. Did they agree?
        General Welsh. Yes, sir, they did.
        Senator Nelson. Let me ask you about JSTARS. Your budget
    indicates that you want to start a plan to buy a version of a
    business jet, modified to carry some of the new radar that
    would have synthetic aperture radar, and also a ground moving
    target indicator capability. You also indicate in your budget
    that you believe that you could have two such aircraft
    delivered in fiscal year 2019, with an initial operating
    capability (IOC) in 2021, and fully operational in 2025.
        You also plan to rely on the Global Hawk Block 40 with its
    multi-platform radar technology, unless further sequestration
    causes you to retire the entire Global Hawk Block 40 fleet.
        A couple of years ago, General Norton A. Schwartz, USAF,
    Chief of Staff of the Air Force from 2008 to 2012, and who is
    now retired but when sitting here said the following, ``The
    substance of the analysis of alternatives (AOA) indicated that
    a blend of Global Hawk Block 40 and a business class ISR
    platform was the least cost, highest performing alternative.
    The reality, however, is that there is, notwithstanding the
    AOA, not enough space to undertake a new start business class
    ISR platform. We simply don't have the resources.''
        General, how is it that the Air Force didn't have the
    resources back then in 2012 and now in 2014, after several
    rounds of budget cuts, enough money to start a new JSTARS
    replacement?
        General Welsh. Senator, you would have to ask General
    Schwartz for the justification of what he put into his
    analysis. But his statements were before sequestration became
    the law. As we look out 10 years now with that law in place, we
    have the option of not modernizing at all in this arena, which
    is unacceptable to our combatant commanders. It will leave us
    with a fleet of aircraft that is not viable 10 years from now.
    Or, we can look within our own resources and figure out a way
    to recapitalize, which is what we've done.
        That's why these choices are so hard. We're not waiting for
    magic money to appear. We are going to trade. Both in this area
    and in the E-3 fleet, our proposal is to modernize from our own
    top line, because we don't see any other way to do it. If we
    don't do it 10 years from now, we'll be in a conflict with a
    completely unusable platform.
        Senator Nelson. You're going to have to break all records
    and field a JSTARS replacement by 2021?
        General Welsh. Yes, sir, we are.
        Senator Nelson. Good luck.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman. I want to thank
    both of our witnesses for being here and for your service to
    our country.
        I wanted to ask both of you, Secretary James and General
    Welsh, whoever you think is the most appropriate, to answer
    this question. Just so we understand, for the record, is this
    an accurate description of the Air Force's proposed A-10
    divestment: All Active Duty A-10 units would be divested in
    2015 and 2016, plus the Boise Air National Guard unit in 2015?
        General Welsh. Yes, ma'am.
        Senator Ayotte. All remaining A-10 Air National Guard and
    Air Force Reserve units divested in fiscal years 2017 to 2019?
    In other words, the entire A-10 fleet divested by 2019?
        General Welsh. Yes, ma'am.
        Senator Ayotte. As we've talked about in the past, the F-
    35A is not going to be, even by best estimates, fully
    operational until 2021, is that correct?
        General Welsh. Yes, ma'am, that's correct.
        Senator Ayotte. Thank you.
        This is not the first time that the Air Force has tried to
    divest the A-10, is it?
        General Welsh. No, ma'am, it's not.
        Senator Ayotte. In fact, I believe back in 1993 or around
    that time there was an effort to divest the A-10. In fact, at
    that time that effort was stopped because there was serious
    concern that the Air Force, and this is from a Government
    Accountability Office (GAO) report, had not adequately
    emphasized the CAS mission. I'm very glad that it was not
    divested then because, as we know, the CAS mission is a very,
    when you think about our men and women on the ground,
    preeminent, mission in terms of their support.
        I was recently in Afghanistan and I was really struck by
    the number of people on the ground, men and women in uniform,
    our special forces operators and our Army soldiers, who,
    unsolicited, came up and asked me to convey and to make sure
    that people understood how important they believe that the A-10
    was to them on the ground. In fact, I had a special operator
    tell me about an event that had happened the night before with
    an A-10 that he believed saved him and his position that he was
    in and people that he was with.
        I believe in answer to Senator Inhofe's questions, you said
    that you had spoken to General Odierno about the divestment of
    the A-10; is that true?
        General Welsh. Yes, ma'am, we have spoken.
        Senator Ayotte. One of the things that he has said in the
    hearings leading up to the posture hearings for the Army when
    he's been asked about the A-10, I think is something that is of
    deep concern. General Odierno has said that the Army would
    actually have to work with the Air Force to develop the
    tactics, techniques, and procedures (TTP) the Army needs to
    provide CAS across the wide variety of potential scenarios that
    we're going to have to operate.
        One of those scenarios is in the close contact. For
    example, 75 feet off the ground, General Odierno believes that
    the troops seeing the presence of the A-10, but also the
    ability of the A-10 to go at a slower pace, means that these
    TTPs still need to be developed. He said: ``We know that the A-
    10 works in those scenarios today.'' In fact, as you've agreed
    with me in the past, he has told us this is the best CAS
    platform.
        One of the concerns that I have is that the Chief of Staff
    of the Army is basically saying we'll have to come up with new
    solutions if we move away from the A-10. Would you agree with
    me, when we talk about CAS missions, that not all CAS missions
    are the same? Some are conducted at higher levels, at the
    10,000-foot level, with precision bombing, and some missions
    are conducted at a much lower elevation, closer to the troops.
        This was the mission that General Odierno expressed direct
    concern to this committee about not yet having the TTPs in
    place. To me, this is a deep consideration as we look at the A-
    10.
        The Air Force has told us that other aircraft have
    conducted 80 percent of the CAS missions in Iraq and
    Afghanistan. I would like to ask you about that statistic.
    According to information that my office received that came from
    U.S. Air Force's Central Command, the 80 percent statistic
    includes aircraft that fly CAS missions, but never attack
    targets on the ground, and does not take into account how many
    passes are used. If that's true, a B-1 flying at thousands of
    feet, that never drops a bomb, is counted the same as an A-10
    that flies 75 feet above the enemy position and conducts 15 gun
    passes within 50 meters of friendly ground forces. This is
    actually a scenario that happened in Afghanistan last year that
    saved 60 of our troops.
        General Welsh, can you tell me whether that 80 percent
    statistic that the Air Force has cited counts the CAS missions
    that never attack targets on the ground?
        General Welsh. Yes, ma'am, it does. It also includes A-10
    missions that never attack targets on the ground.
        There aren't many A-10 missions that fly at 75 feet and do
    15 gun passes, Senator. We have pilots in the F-16s who have
    hit the ground trying to strafe inside caves and have died. We
    have a major sitting two rows behind me who serves as my aide-
    de-camp who saved a lot of lives at Combat Outpost Keating in a
    huge fight, who's an F-15E pilot.
        Our F-16s have been doing CAS with full TTPs with the Army
    since the late 1970s. The F-15Es have been doing it for the
    last 10 years. I don't know why anybody would tell you we need
    to develop tactics. That's not true.
        Senator Ayotte. This is General Odierno, this isn't just
    anyone. He's the Chief of Staff of the Army, who testified
    before the committee that he believes that there needs to be
    TTPs developed for the CAS mission, if the A-10 is divested.
        General Welsh. I'm just telling you they are in place.
    We've been using them for the last 8 years in Afghanistan and
    Iraq. We don't need new TTPs.
        Senator Ayotte. General, I think this is something that we
    should have this conflict addressed, because this was testimony
    that General Odierno gave before this committee. When he was
    asked about the A-10, I think he made clear that those who are
    on the ground prefer the A-10.
        I want to make clear that I in no way diminish the mission
    of the F-16s. But I think you and I would both agree that the
    F-16s certainly have to take a faster pass than the A-10s, and
    that the A-10s have a focus on the CAS mission, not that the F-
    16 can't have a part of that mission. But I in no way am
    diminishing the F-16s.
        But General Odierno has made clear before this committee
    that they prefer the A-10; it is the best CAS airframe. Just
    having been on the ground recently in Afghanistan and hearing
    from our men and women in uniform, and it's not like I was
    going out asking their opinion about the A-10, I was very
    struck by what they came up to me and said, unsolicited, about
    their view of the A-10 and how important they felt that the A-
    10 was to have on the ground, what they're doing every day, and
    what they're facing.
        I think this is a very important consideration for this
    committee, particularly since we're not going to have the F-35A
    on line until 2021.
        Thank you, General. [Pause.]
        Chairman Levin [presiding]. Thank you very much, Senator
    Ayotte.
        General Welsh. Mr. Chairman, is there any chance I might
    make a comment? This is such an important issue, I want to make
    sure that it's clear.
        Chairman Levin. Please.
        General Welsh. The issue really isn't about the A-10 or
    even CAS. It's about all the things we provide as an air
    component to a ground commander. For the last 12\1/2\ years
    we've been doing CAS. That's what's visible. Air forces have to
    be able to do more than just a CAS fight. We must be prepared
    to fight a full-spectrum fight against a well-trained foe. If
    you do that, where you save big lives on a battlefield for the
    ground commander as an air commander is by eliminating the
    enemy nations will to continue to fight, by eliminating their
    logistical infrastructure, their command and control
    capabilities, their resupply capabilities, and by providing air
    superiority so your ground and maritime forces are free to
    maneuver and are free from air attack, which we have never had
    to deal with because we're good at this.
        The other thing you have to do is eliminate the enemy's
    reinforcement capability. You have to eliminate their second
    echelon forces so they can never commit them against our ground
    forces. Those are the places you save big lives on a big
    battlefield.
        Then, of course, you have to do CAS. We have a lot of other
    airplanes that do CAS that can do those other important things.
    The A-10 is not used in that way. That doesn't mean it's not a
    great platform. It doesn't mean it's not a critical mission.
    But the comment I have heard, that somehow the Air Force is
    walking away from CAS, I admit frustrates me. We have
    battlefield airmen in our Air Force who live, train, fight, and
    die shoulder-to-shoulder with soldiers and marines on the
    battlefield.
        I have a son who is a Marine Corps infantry officer. That
    lady there [gestures to woman behind him, his wife Betty] is
    not letting me make CAS a secondary consideration, if anybody
    in the Air Force tries to.
        CAS is not an afterthought for us. It never has been. It's
    a mission. It's not an aircraft; it's our mission, and we'll
    continue to do it better than anyone on Earth. Those great A-10
    pilots who do it so well will transition to the other fighters
    I've mentioned and they'll ensure we do it better than anybody
    else.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you.
        Senator McCaskill.
        Senator McCaskill. Thank you, Mr. Chairman, and thank you
    all for being here today.
        General Welsh, in March I had the opportunity to go to the
    139th Airlift Wing of the Missouri National Guard in St.
    Joseph. They fly C-130s, and do a critical training mission for
    other members of the Guard and, frankly, for our allies. One of
    the reasons that is a cost-effective base for the National
    Guard and for our Nation's military is because of the training
    that they're providing, and getting revenue for, to many pilots
    from across the world.
        I think you probably know the problem. They don't have a C-
    130J, and if they don't get a C-130J, then those countries are
    no longer going to come to get trained at St. Joseph. Then all
    of a sudden, we have a different problem in terms of that
    infrastructure that is so vital to the rest of the Guard across
    the country.
        I'll never forget when I was in Afghanistan and I got in a
    C-130 to go up north. I was up in the cockpit area with the
    pilots and we were talking about where I was from, and they
    were two National Guardsmen from Maryland. They said they just
    came from Rosecrans and just trained there on this aircraft,
    and they were so complimentary of the training they had
    received.
        I really want to ask you. You can't update everybody and
    expect the Guard to be what it needs to be if they don't get
    the updated J model. Is it possible that you can figure out a
    way to get at least one J model to St. Joseph fairly quickly,
    so they will not be in a real problem in terms of their
    training mission?
        General Welsh. Senator, of course, we can look at the plan
    for St. Joseph. But I'll tell you this. What we're doing right
    now is building the long-term C-130 modernization plan for all
    the components. By the end of this FYDP, by 2019, we will
    actually have four locations where there are J models in the
    Active Force and four locations where we have J models in the
    other components, three in the Guard and one in the Reserve.
        We actually have the plan in place. We don't have that many
    J models coming off the production line over the next 4 or 5
    years to dramatically alter the numbers going into place yet in
    the Reserve component. It clearly has to be part of the plan.
        We're putting the whole plan together. We would love to get
    that done and come brief you and everyone else interested in
    it.
        Senator McCaskill. That would be great. I just know that
    because of the training mission there for our allies, I would
    hope that they would be at or near the top of the list in terms
    of receiving a J model.
        Secretary James, I am scratching my head about the lack of
    competition on the commercial launch program. In December, you
    announced plans to compete up to 14 additional launches by
    2017, but at the same time, you committed to 35 to the one
    entity that is doing this now, frankly, without competition.
    That worries me. It worries GAO. It worries all of us.
        I am a big believer that competition is our best friend in
    keeping costs down. I need some explanation and some
    reassurance from you that you are committed to competition in
    this area and what you intend to do to make sure that there is
    more competition going forward, rather than just one in 2015.
    It worries me that we could do one in 2016 and one in 2017,
    which really means there will be no competition, because
    obviously, that's not sustainable for anybody else, to not have
    an opportunity to get into the playing field.
        Ms. James. Senator, I am absolutely committed to
    competition. This particular contract you're speaking of was
    actually signed before I arrived in DOD, but let me give you
    the background, because I have asked a lot of questions about
    it as well.
        In the world of these satellite launches, in the world of
    the Evolved Expendable Launch Vehicle (EELV) program, there are
    what I will call heavier launches, and there are lighter
    launches. There's different techniques and capabilities
    required to get different things into space, depending on
    whether they fall into this heavier category or lighter
    category. There are no entrants coming on scene and we are
    working to get them qualified, first to compete for the lighter
    launches, if all goes well, we expect that will be done this
    year, in 2014, and subsequently to be able to compete as well
    for the heavier launches. If all goes well, according to the
    program, that should be by 2017.
        By that point everything will be open for competition. But
    as you point out, at the moment, we have the one entity that is
    doing all of it and will be doing all of it for some time, at
    least through 2014 when the new entrants hopefully are
    qualified.
        Why did they sign this contract back in December? The
    answer that I believe to be true is they had a deal. The deal
    was $1.2 billion less than the should-cost of the government,
    so it seemed like it was a very good buy for the taxpayers to
    lock in. I think it's 36, not 35, if I'm not mistaken, of what
    are called core. These tend to be for the heavier launches.
        As you point out, there are these other launches, the
    lighter ones, and we are going to be having eight of these over
    the next several years. Seven out of those eight ought to be
    competitive, and I'm working it to see if we can't get the
    eighth of the eight competitive.
        Senator McCaskill. That would be terrific. I know it's
    great if we save money, but I guarantee you they're still
    making money off of it, which they should. Nothing wrong with
    that. The real way to get the value for the government is for
    there to be somebody competing against them for price.
        Ms. James. I think the very threat of that competition
    helped to bring that cost down.
        Senator McCaskill. I think that's probably true.
        Finally, I wanted to compliment the Air Force on your
    efforts with the Special Victims' Counsel program. It's my
    understanding that you have seen a 32 percent increase in
    reporting of sexual assaults and a 39 percent increase in
    unrestricted reporting, and that is an unbelievably good sign,
    because obviously that means these victims are getting that
    support at the crucial moment, which is empowering them to feel
    like they are not going to continue to need to hover in the
    shadows, that they can come forward, and they can hold the
    perpetrators accountable. I know that is because of these
    Special Victims' Counsels.
        I think you have really been a role model for the other
    Services on this. You stood up first and you have done it in a
    way that has ensured the victims' counsels' independence, and I
    know that yesterday you received an award from the Department
    of Justice for this program. I wanted to take a minute, if you
    have any comment about what you need going forward, and
    especially if you would just comment about reassuring Special
    Victims' Counsel that they should not take the ruling in the
    Sinclair case the wrong way, because that victim advocate was
    doing what she was supposed to do for that victim. This was not
    undue command influence. That was a tortured decision by that
    judge.
        I want to make sure that there aren't victims' counsels out
    there that are all of a sudden getting the wrong message that
    they shouldn't act. When the prosecutor wants to drop a case
    and the victims' counsel sends a letter to the command saying
    it shouldn't be dropped, that's exactly what they should be
    doing. I want to make sure that you guys have sent that message
    to your folks.
        Ms. James. I'll begin and then maybe General Welsh can also
    add his comments.
        Chairman Levin. Before you begin, Madam Secretary, let me
    interrupt. A vote has started. We're going to try to work right
    through this vote. Some of you may want to run over, vote, and
    come back. We will continue in any event.
        Ms. James. I also want to say, I certainly can't take
    credit for it. You can and the Air Force can. This is a great
    program. We will be increasing it a bit, but we think our
    numbers are about right, maybe a little bit more of an
    increment.
        A couple other tidbits of information. There is a very high
    level of satisfaction from victims who have used victims'
    counsels. That, of course, will breed, I think, greater usage
    in the future.
        Everywhere I go, by the way, all my travels, I always meet
    privately with Sexual Assault Response Coordinators, the
    victims' counsel, if they're available and so forth. What I
    hear anecdotally is absolutely on target with what this overall
    data suggests. We're totally in favor of it and going to stand
    behind it for the future.
        General Welsh. Senator, I would just add that the Special
    Victims' Counsel represents the victim and only the victim.
    That's where their allegiance lies. That's what we expect,
    that's what we train them, and that's what we expect from them.
    If we see anything else, in fact, we'll step in.
        I would also just mention that, while we're proud of this
    program and we think it's one of the few game-changing things
    we've been able to find, we're still looking for all the
    others. This is a never-ending campaign. We have a lot of work
    to do.
        Senator McCaskill. Thank you very much.
        Chairman Levin. Thank you very much, General Welsh.
        Secretary James, you're really right. Senator McCaskill is
    the one who should be looked to for credit for this program.
    She really has been an extraordinary leader in pushing this
    program, and there is no easy solution. But there is a solution
    and a big part of it is this victims' counsel which she has led
    the effort to create.
        But thank you. She is right, the Air Force has been the
    role model on this in terms of implementing it. We want to
    thank you for that.
        Senator Wicker.
        Senator Wicker. Thank you, and thank you to both of our
    witnesses.
        Welcome, Secretary James, to your first posture hearing. I
    know you are working with my office to get down to Keesler Air
    Force Base and we look forward to scheduling that soon and
    hosting you on the Gulf Coast of Mississippi.
        Madam Secretary and General Welsh, I want to talk about C-
    130Js. I remain convinced that some elements of the total force
    plan, such as the proposal to relocate C-130J aircraft from
    Keesler to Little Rock, may adversely impact our intra-theater
    airlift capability at a time when our Services are evolving,
    and I believe the Air Force must make force structure decisions
    based on long-term global force requirements, as well as
    concrete and defensible data.
        Accordingly, I'm concerned that the transfer of C-130Js
    from Keesler may not, in fact, do not, actually produce
    promised financial savings. Under the President's proposal, a
    new airlift group would be established at Little Rock. This
    group would be comprised of the 10 C-130Js that are currently
    at Keesler. It seems to me that establishing a new group at
    Little Rock would require the costly relocation of military and
    civilian full-time employees. I do not believe the numbers add
    up to savings, and I want to explore that with the two of you
    during the next several days as you provide written answers to
    the following questions.
        Number one, what are the specific differences in costs to
    perform the C-130J flying mission at Keesler versus Little
    Rock?
        [The information referred to follows:]

        The C-130J mission costs the same regardless of where it is
    performed in terms of aircrew and maintenance manpower, flying hours,
    and depot maintenance. The cost to support the mission with 209
    positions for medical, personnel, and other functions is also the same
    whether the Air Force support the aircraft at Keesler or Little Rock.
    Moving the C-130Js to Little Rock reflects a decision to retain 209
    support positions at $10.5 million per year in order to maintain an Air
    Force Reserve Component presence at the ``Home of the Herk'' and
    enhance integration of the Reserve, Guard, and Active components. The
    alternative is to divest the 209 positions already at Little Rock.
    Although requiring the Air Force to leave more billets at Little Rock,
    the move to the "Home of the Herk" is in line with the National
    Commission on the Structure of the Air Force report's recommendations
    to integrate the Active and Reserve components as much as possible.

        Senator Wicker. Number two, is it correct that the Air
    Force's proposal would move maintenance and wing management
    personnel from Keesler to Little Rock, where we would have to
    switch C-130 models and stand up another wing to support them?
        [The information referred to follows:]

        No, it is not correct that the Air Force's proposal would move
    maintenance and wing management personnel from Keesler to Little Rock.
    Both maintenance and wing management personnel are already in place at
    Little Rock in Detachment 1. The activation of the 913th Airlift Group
    is simply a name change for Detachment 1. The transition from the C-
    130H to the C-130J shrinks Detachment 1 from 686 manpower positions to
    618 in the 913th Airlift Group.

        Senator Wicker. Number three, will it be more cost-
    efficient to maintain the two C-310J squadrons at Keesler Air
    Force Base?
        [The information referred to follows:]

        It will not be more cost efficient to maintain the two C-130J
    squadrons at Keesler Air Force Base. The most cost efficient course of
    action for the C-130J enterprise is reflected by the fiscal year 2015
    President's budget, which saves $116 million Future Years Defense
    Program. Additionally, keeping an AFRC presence at Little Rock
    contributes to the Air Force's Total Force C-130 enterprise and
    increases integration of Reserve, Guard, and Active component airmen.
    This leads to improved processes as well as more effective and
    efficient employment of the C-130 fleet.

        Senator Wicker. Will the new 913th Airlift Group require
    the movement or hiring of additional military and civilian
    employees?
        [The information referred to follows:]

        No. Since Detachment 1 shrinks from the 686 current state to the
    618 in the 913th Airlift Group, Little Rock will see a reduction in Air
    Force Reserve component personnel.

        Senator Wicker. Number four, how does the Air Force save
    money by moving a squadron from Keesler, which has an existing
    maintenance capacity, existing wing management structure, and
    brand new ground infrastructure, to a base that will have four
    wings located on it?
        [The information referred to follows:]

        The Air Force saves money through the consolidation of the C-130Js
    at Little Rock in conjunction with a reduction in excess C-130 capacity
    across the enterprise. Keesler is the only wing within the Air Force
    Reserve Command with two C-130 flying units, so moving the 10x C-130Js
    from Keesler to Little Rock balances the force while maximizing the
    savings of divesting excess C-130 capacity.

        Senator Wicker. Number five, how does the Air Force save
    money by moving C-130Js from a base with two C-130J squadrons,
    including a C-130J simulator, to a base that has only an Air
    Force Reserve detachment that trains on legacy Air Guard C-
    130Hs?
        [The information referred to follows:]

        The Air Force saves money through the consolidation of the C-130Js
    at Little Rock in conjunction with a reduction in excess C-130 capacity
    across the enterprise. Little Rock is the ``Home of the Herk'' for all
    three components and already has a large C-130J footprint, including
    simulators. The fiscal year 2015 President's budget decisions maintain
    a C-130 center of excellence at Little Rock with a regular Air Force C-
    130J combat coded mission, the C-130J formal training unit (AMC), the
    C-130H formal training unit (Air National Guard), and the AFR C-130J
    combat coded mission with Active Associate.

        Senator Wicker. Those are my five specific questions. But
    also, while you're looking at that, let me get back to one of
    my first questions and point out that the Air Force Reserve
    Command (AFRC) states that they're going to save 616 manpower
    positions by consolidating their 10-PAA C-130J unit with Air
    Mobility Command's (AMC) 19th Airlift Wing at Little Rock, vice
    retaining the 10 C-130Js at Pope under the 440th Airlift Wing.
    The manpower savings generate approximately $116 million across
    the FYDP and are realized by deactivating the 440th Airlift
    Wing at Pope and downsizing AFRC's Little Rock fleet.
        Here's my point. The data seem to talk about a move from
    Pope to Little Rock which is not actually taking place. The
    aircraft never went to Pope. The aircraft are at Keesler. My
    question is this: Isn't it a fact that most or even all of the
    manpower positions are based on savings in overhead positions
    that would exist from a Pope to Little Rock move, but that, in
    fact, do not exist for a Keesler to Little Rock move?
        [The information referred to follows:]

        The savings in the Pope to Little Rock move reflected by the fiscal
    year 2015 President's budget are the result of divesting: the C-130H
    missions at both Pope and Little Rock, expeditionary combat support
    squadrons at Pope, and Pope overhead. The cumulative effect of these
    changes resulted in elimination of 1,779 Reserve manpower billets
    (1,302 at Pope, 68 at Little Rock, and 409 at Keesler). Since this move
    accounts for the National Defense Authorization Act for Fiscal Year
    2013 transfer of the C-130J mission from Keesler to Pope in fiscal year
    2014, then it is the same savings as a Keesler to Little Rock move.

        Senator Wicker. I've taken most of my time with asking
    these questions for the record, because I want specific answers
    and I want to explore with you two whether the savings are
    actually there. But in the time remaining, I would welcome your
    verbal comments. General, why don't we begin with you, sir.
        General Welsh. Senator, because of the material we've
    already sent you, this has been looked at as an enterprise move
    by both AMC and by AFRC. That is where the total savings come
    from both in people and money. The benefit to us is that it
    allows us to get rid of about 47 C-130Hs over time, to get down
    to what we believe is the required number of tactical
    airlifters as defined by the Mobility Capabilities Assessment-
    2018.
        To do that, the synergy of putting things together at
    Little Rock for both training and to put three combat-coded
    squadrons in one place, Active, Guard, and Reserve, there is
    some real benefit in terms of being able to train people and in
    terms of being able to consolidate instructors to minimize
    excess support equipment, infrastructure, et cetera. That's the
    effort.
        All the numbers are tied, though, to an enterprise move as
    you suggest. They're not all based on just a Keesler to Pope
    move. We'll get you your detailed answers to these questions.
    We'd love to have this discussion, and for any questions you
    have we'll get our mobility experts from AMC and the
    representatives from AFRC to come discuss this with you.
        Senator Wicker. Okay, thank you.
        Secretary James, do you want to add anything to that?
        Ms. James. Senator, I would tell you in our budget and in
    our Air Force today we're on the absolute what we either need
    for a requirement or in some cases we're under requirement. If
    you go through different aircraft and different types of
    programs, we're either at the requirement or under.
        With respect to C-130s, my understanding is at the moment
    we have too many C-130s. I'm giving you the big picture story
    in the aggregate. I'm giving you the big picture story. We have
    more than what we need against the requirement for tactical
    airlift. The big picture is bringing down those overall numbers
    of C-130s nationwide.
        As to what goes where and why, I'd prefer the Chief to
    answer that because I'm not as familiar with that.
        Senator Wicker. Very good. General Welsh, you're going to
    get back to me with specific answers on the record to these
    questions, and then we will visit.
        General Welsh. Yes.
        Thank you very much, and thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Wicker.
        I'm going to have to run and vote, I believe. We're going
    to recess until one of my colleagues gets back here, which
    should be any minute. But if you have to take care of other
    business for a few minutes, don't worry about that and just get
    back here within 5 minutes in any event.
        [Recess]
        Senator Donnelly [presiding]. Thank you very much. Thank
    you for continuing to be patient with us through these votes. I
    will tell you that this year I did not expect to be chairing a
    hearing at any point in the Senate Armed Services Committee,
    but here we are. [Laughter.]
        Thank you, General Welsh, for your service. Secretary
    James, congratulations on your appointment. You have our best
    wishes and we are pulling very strongly for your success
    because your success means our country's success.
        In regards to preliminary data to Military Times and others
    regarding suicides and mental health, I've spoken twice with
    General Odierno about the Army's work to implement annual
    enhanced behavioral health screenings for all Active Duty
    servicemembers in the periodic health exams, regardless of
    deployment status. Does the Air Force similarly conduct annual
    behavioral health screenings for our airmen, and what do these
    screenings entail?
        General Welsh. Senator, we do with some career fields. We
    don't call it the same thing, but for example, for all of our
    special operators, our explosive ordnance disposal technicians,
    and our security forces members who operate outside the wire,
    we do have a special program to monitor them as they return
    from deployments and follow their progress.
        Air Force Special Operations Command has built a program
    that I think is spectacular as part of the U.S. Special
    Operations Command effort in this arena to not only track the
    behavior and assess their health, but also to track improvement
    over time and use it as an indicator of whether or not they can
    be used in the mission until they've recovered.
        Air Force-wide, we do not have a comprehensive annual
    behavioral health analysis program.
        Senator Donnelly. Do you have a difference in the screening
    between airmen who are in deployment cycle and those who have
    not or have never deployed overseas?
        General Welsh. Sir, we do, and we've actually studied this.
    In the Air Force there is no correlation between suicide rate,
    for example, and whether you have deployed or not.
        Senator Donnelly. Okay. In regards to your initiative in
    suicide prevention or trying to assist in mental health
    challenges that folks have, what initiatives have you found
    that have been the most helpful in trying to deal with these
    issues?
        General Welsh. Senator, I think the ones that we've just
    talked about. All of our commanders here recently discussed it
    with all of our wing commanders at a conference back in
    December. I think all of them would tell you that the things
    that make the most difference are face-to-face exchanges with
    people, not a study or a new Air Force program. It's knowing
    your people better. It's staying connected with them,
    understanding what makes them tick, and understanding the
    things in their body language and their behavior as you would
    with your best friend, for example.
        Senator Donnelly. Sure.
        General Welsh. Those are the things that have been most
    successful. Our actual suicide prevention and resiliency
    program has been very successful. It's gotten a lot of rave
    reviews and awards over the last 3 to 4 years. I'm very proud
    of the program, as are the people who run it.
        The problem we have with this terrible illness that results
    in this kind of behavior is it can spike on you unexpectedly.
    We are in the middle of a spike like that right now. We have
    had 32 suicides, the latest one was last night, inside the
    total Air Force this calendar year. Our rate per 100,000 is up
    to about 18. Last year it was down around 14.
        In fact, I started drafting a letter that I did the first
    review of last night, to send to every commander in the Air
    Force, reemphasizing this program and requiring them to put out
    details to their people of what's going on over the next 30
    days and have these face-to-face discussions.
        Senator Donnelly. Secretary James and General Welsh, we
    would like to continue to work on this with you, because when I
    was over in Israel recently we met with the Israeli Defense
    Force, their leaders, in regards to this issue. Much of what
    they're doing is, instead of top-down, it is bottom-up. Their
    officer closest to the individual is who does a lot of the
    providing of information, that a person's suffering or
    challenged right now.
        Obviously, as you said, it's not only deployment; it is
    people who are at home as well. It's personal relationships, it
    is financial challenges that folks face. For some of them,
    they're afraid of what it might to do their career. We want to
    make sure we're working closely with mental health facilities
    in nearby bases and places that they can go to and feel that
    their privacy will be protected.
        We would appreciate the chance to continue to work with you
    on this as it has become such a challenge for us.
        Ms. James. Yes, and if I could just jump in with maybe a
    couple of final points. As the Chief said, we are undergoing a
    spike and the question is why. We certainly have both asked
    this question. Is it the time of year? Do these things happen
    periodically? There doesn't seem to be a reason to say for it,
    but we're not finished asking the questions and we want to try
    to get to the bottom of it.
        Maybe the mental health assessment idea that you just put
    forth, which is being done elsewhere in the military, is
    something that we ought to at least consider to beef up our
    program. It's something to at least think about. As the Chief
    said, we have a very good program, but you can't argue with the
    statistics and at the moment our statistics are up and that's
    worrying.
        Senator Donnelly. General, in regards to A-10s, there are
    A-10s in Fort Wayne, IN, and they are being replaced by F-16s
    by approximately 2019. I was just wondering how the Air Force
    determined the timeline for those conversions and which bases
    would go first and what factors are taken into account in
    determining when to transition each unit?
        General Welsh. Senator, we wanted to bring F-16s that were
    being made available as F-35s were fielded to not lose that
    capability and retain as much as we could by moving it into the
    Reserve component. That was the timing of the F-16s being
    available. We adjusted the A-10 departures for the units that
    the F-16s would go into based on that.
        The decision on which units would actually get the F-16s or
    some other airplane to backfill the A-10 mission was actually
    reached in consultation with the Director of the Air National
    Guard and the National Guard Bureau, working with the State
    Attorneys General.
        Senator Donnelly. Just one other thing I want to touch on
    quickly. As we look at the F-35 and we look at the costs that
    have been involved, as you look down into the future, do you
    expect that the F-35 fleet may need to be reduced to remain
    financially sustainable?
        Ms. James. Never say never. It's possible, and I think we
    have a study that is due out to report in the June or July
    timeframe that's going to relook at the requirements and so
    forth.
        General Welsh. I think right now the most important thing
    for the F-35 cost over time, whether it's production cost,
    purchase cost, or sustainment cost, is that we keep a
    production ramp going and we keep flying them. We're learning
    an awful lot about how to operationalize maintenance on this
    airplane together with the company, with the Joint Program
    Office, and with the Marine Corps and the Navy, as we do more
    and more sorties at Eglin, Yuma, Edwards, et cetera.
        We're up to 3,500 actual flight sorties now on the F-35.
    We're not having to use projected data any more. We can see
    what it costs. We know which parts are failing, we know which
    tasks are tougher to do and the cost that goes into that. We
    are starting to get a better and better picture of what this
    will cost to maintain over time.
        Every Service Chief--Marine Corps, Navy, and Air Force--is
    focused on this. We just had a maintenance summit at Eglin Air
    Force Base. The company attended. I get routine updates now
    about every 2 weeks from the head of Lockheed Martin
    Aeronautics on the initiatives they've taken away from that to
    start reducing maintenance activity and cost. We'll stay on
    this every single day.
        Senator Donnelly. Thank you. Thanks, both of you.
        Thank you, Mr. Chairman.
        Chairman Levin [presiding]. Thank you, Senator Donnelly.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        General Welsh, it's somewhat amusing to hear you defend the
    F-35 again, the first trillion dollar weapons system in
    history, plagued by incredible inefficiency and waste, and is a
    shocking story of the really serious problems we have with
    acquisition in America. Yesterday, we heard at a hearing that
    there could be another 4- to 6-month delay. You didn't mention
    that, I guess, because of software problems.
        The Air Force ignored the fundamental principal of fly-
    before-you-buy and this program has turned into a national and
    defense scandal.
        By the way, I happened to see an article in Defense News
    that said: ``Lieutenant General Charles Davis said he's
    frustrated by a system that allows politicians to block
    military brass recommendations.'' We recommended that there
    were serious and terrible problems with the F-35 10 years ago,
    General, and it was ignored by these same people. I don't need
    to be told by an Air Force general about cost savings and what
    we need to defend this Nation. The role of this committee is to
    see that that is done. I hope you will mention to Lieutenant
    General Charles Davis that we are fulfilling our
    responsibilities and our role, and the F-35 is certainly an
    example of us perhaps not doing enough.
        I want to talk to you about the EELV. According to a GAO
    report, it gained the distinction of being the program that is
    contributing to the most cost growth within the entire major
    defense acquisition portfolio as a percentage of the whole. The
    Air Force has cited full and open competition as being the key
    component to getting the costs down. But your proposal, the DOD
    proposal, is to cut in half the number of EELV launches subject
    to competition.
        How does that match up? How do you say that competition is
    the key to reducing these costs and yet cut in half the number
    of launches?
        General Welsh. Senator, we didn't cut the number of
    competitive launches. We delayed them. The contract that we
    have with United Launch Alliance (ULA) guarantees them 36
    booster cores of the 50 that we expect to buy between 2013 and
    2017 and launch by 2019. That contract and the mechanism of
    that contract, we believe the threat of competition in that
    contract, actually has saved us $4.4 billion in this program
    since our projections in 2012.
        Senator McCain. Let me get this straight. It saved you $4
    billion, but the GAO says it has experienced the most cost
    growth within the entire defense acquisition portfolio.
    Something's wrong with that story, General.
        Ms. James. If I could maybe jump in, Senator McCain, the
    GAO report is comparing two separate baselines. The one that
    they are referencing with this huge cost growth actually
    includes 10 years and many additional launches. It's a little
    bit of a comparison between apples and oranges.
        Senator McCain. Okay, then over 10 years they've had the
    most cost growth.
        Ms. James. No. Futuristic 10 years, I mean to say.
        But your overall point is right, over years it has had big
    cost growth. But competition, which we are committed to and
    we're bringing on as quickly as possible, will help bring that
    down.
        Senator McCain. But your proposal to Congress is to cut the
    launches in half or delay half of the launches. How do you
    justify that?
        Ms. James. The launches in question were delayed because
    the Global Positioning System satellites currently in orbit are
    lasting longer than anticipated. Therefore, we don't need to
    launch the replacements as early as originally anticipated.
        Senator McCain. You're cutting in half the number of
    launches that are subject to competition, Madam Secretary. Why
    would you want to do that?
        Ms. James. The competition schedule is to have hopefully
    new entrants qualified by the end of this year to do----
        Senator McCain. There are already people who have proven
    with launches that they can do it efficiently and at lower
    cost.
        Ms. James. It turns out, as I have learned, there are
    heavier launches and lighter launches, and they are not fully
    qualified to do the heavier launches yet. They have to get
    qualified in both categories and we're doing it as quickly as
    possible under an agreement, as I understand it, that the new
    entrants as well as the government have agreed to.
        Senator McCain. I'm also interested in a breakdown of the
    savings estimates and in what specific areas the Air Force
    achieved or is expecting savings, because if you are able to do
    that, it's a dramatic turnaround from what GAO has ascertained.
        Before December 2013 when the Air Force agreed to the 36-
    rocket block buy with the prime contractor, the Air Force was
    aware of the facts that are the basis of the first two reasons
    it cites today. Wasn't that it? Wasn't that the case?
        Ms. James. This contract in question was signed before I
    got there. But as I asked questions about it, and I have since
    I arrived at DOD, that 36-core buy, the reason why they did it,
    locked it in for the heavier launches. At the moment, only ULA
    is qualified to do it, and locked in a price which was
    significantly below the should-cost of the government.
        Senator McCain. You're saying that none of the competitors
    are capable of the heavier launch? Is that what you're saying?
        Ms. James. That's my understanding, that's correct. They
    have not qualified through the process yet.
        Senator McCain. General Welsh, yesterday, Lieutenant
    General Christopher C. Bogdan, USAF, the Program Executive
    Officer for the F-35 Lightning II Joint Program Office, said
    that delays in the F-35's critical software may be the most
    significant threat to the program's ability to support on time
    the military Services' IOCs. Do you share his concerns about
    the delays in software development?
        General Welsh. Senator, software development for this
    program has been a concern from day one.
        Senator McCain. Yes, that is true. My question is do you
    share his concerns about the future capability of the software?
        General Welsh. Sir, his specific concern is about after the
    IOC version that the Air Force has, the next level of software
    development. The 3I software which we will need for IOC at the
    end of 2016, I do not have a concern about that and neither
    does General Bogdan. His concern is for the 3F version, which
    is what we require for full operational capability by 2021.
    He's concerned that it could be 4 to 6 months late to deliver,
    which would delay our operational tests. He also stated that he
    believed there are things we can do between now and then to
    accelerate that timeline, and we will support the effort to do
    that.
        Senator McCain. There's a lot of things we could have done
    for the last 10 to 15 years as well, General, and we didn't.
    People like you came to Congress and gave us information that
    turned out to be totally incorrect. Maybe it was optimistic,
    maybe it was using false information. But we are now looking at
    the first trillion dollars weapons system in history and we're
    talking about replacing a very inexpensive A-10 with the most
    expensive weapon system in history--that, in my view, does not
    have any increase in capability.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator McCain.
        Senator King.
        Senator King. Thank you, Mr. Chairman.
        General Welsh, I'm going to get back to the F-35 in a
    minute. But one of the proposals is to retire the U-2 and use
    the Global Hawk as a replacement. My understanding is that
    there are some missions and functions that the U-2 can provide
    us that the Global Hawk can't or at least can't at the present
    time. Are we losing any important capability? Could you discuss
    that decision with us, please?
        General Welsh. Senator, there are things that the U-2 can
    do today that the Global Hawk can't do. There are some sensors
    it can carry that the Global Hawk cannot carry, and it will
    require a new adaptor being built for the airplane for just
    under $500 million to be able to carry those sensors. One of
    note is the optical bar camera that's used to do treaty
    verification in places like the Middle East.
        Because the Global Hawk operates at a lower altitude than
    the U-2, the sensor ranges, even when the final sensors are in
    place, will not be quite as long. You won't have the same range
    of look with the sensors. Today's sensors that operate off the
    Global Hawk, some of the sensors are not as definitive in the
    products they provide as the U-2. The combatant commanders
    prefer the U-2 sensor image for the things today.
        The decision on the U-2 versus Global Hawk this year is
    based on the fact that over time we believe strongly that the
    Global Hawk will be more cost effective as we go forward in the
    next 25 to 30 years.
        Senator King. I don't doubt that. The question is when do
    you make the changeover and how much will it save us if we make
    it 2 or 3 years from now as opposed to now after the Global
    Hawk capabilities are improved?
        General Welsh. Yes, sir. If the Air Force was voting and
    had the money, we'd keep them both, because there's a demand
    for that level of support by the combatant commanders. We made
    the trade because we don't have enough money to do both. It's
    the balance we've been talking about today. Every decision is
    hard here, sir.
        But we will be giving something up in the short-term while
    we modify the Global Hawk. With your help, hopefully we can
    modify the Global Hawk to improve its sensor capabilities and
    give it more ability to operate in weather.
        Senator King. I'd appreciate it, perhaps in a different
    forum or for the record, if you could give us a more detailed
    analysis of what we're giving up versus what we're gaining, so
    we can understand the risk analysis and the implications, if
    you could.
        General Welsh. Senator, we'd love to do that.
        [The information referred to follows:]

        The Air Force has conducted comparative analysis between the RQ-4
    and U-2 in peacetime and wartime scenarios. Neither the U-2 nor the RQ-
    4 can completely replicate or replace the other, even with potential
    upgrades. Mixed fleets capitalize on that relationship, but do so at
    cost levels unaffordable under Budget Control Act constraints. The Air
    Force provided a comprehensive classified mixed-fleet study to the six
    congressional defense committees on April 25, 2014. The study provides
    an assessment at proper classification levels, and we are willing to
    brief those detailed results to you upon request.

        Senator King. To get back to the Joint Strike Fighter
    (JSF), I'm a great believer in after-action assessments. What
    did we learn from this experience and how do we keep from
    repeating it again? Are you actively trying to seek lessons
    learned? Bad experiences are always the best teacher.
        General Welsh. Senator, I think General Bogdan of the
    Program Office, which is a Joint Program Office, of course, not
    an Air Force program office, has been working hard, as have his
    predecessors, I believe, to capture these lessons learned. He
    can give you chapter and verse on acquisition lessons learned
    from the beginning of the program.
        One of the big questions is do you try and produce a joint
    program in an area that has this many products you're trying to
    deliver. Three different versions of the same thing with
    different sets of requirements has made this very complicated.
        You can also talk about concurrency versus nonconcurrency,
    the fly-before-you-buy issue that Senator McCain raised. I also
    think as we capture those lessons we need to look at the
    rebaseline that occurred in 2011 and look at what has worked
    from 2011 until today and why it has worked, because for almost
    3 years now, we have been firmly on track with this program.
    The company has met guidelines. Price curves are falling along
    projected lines. We know what the airplane costs. We're
    operating the airplane. It's moving along well.
        I'm very confident on where the F-35 is today. There are
    lots of lessons we have to learn from the past, but I think we
    need to capture what changed in 2011 and why it has worked well
    for the last 3 years as part of this effort.
        Senator King. Thank you.
        Madam Secretary, you mentioned a phrase, I think I wrote it
    down right, ``we will be more reliant on the Guard and
    Reserve.'' Could you expand that somewhat? I know we had a big
    force structure hearing here with the Army the other day with
    regard to the relationship. Do you see a change in proportion
    between Active Duty, Guard, and Reserve in the Air Force? Is
    that feasible in the Air Force?
        Ms. James. It is, Senator. We think in terms of our 5-year
    plans. You are very focused on the fiscal year 2015 budget, but
    we look at it in terms of the 5-year plan. It already is there.
    It's already relying more on the National Guard and Reserve. If
    you do it by the numbers, if you do it by the airframe, more
    has been shifted.
        Again, I'm a newcomer on the scene, so in December I
    learned exactly how General Welsh and the rest of the team had
    put this plan together, and they did it in a highly
    collaborative way. It was General Welsh and General Frank
    Grass, the Chief of the National Guard Bureau and the head of
    the Air Force Reserve, together with some of the adjutants
    general, who sat down together and did a very detailed analysis
    mission-by-mission, going through the Air Force.
        It's not completely done yet. We're continuing to analyze.
    But the results that we already have were plugged into the
    budget and those are the results before you. We're bringing
    down the Active-Duty Force much more than the National Guard
    and Reserve. Again, no matter how you cut it, we're relying
    more on them in the future, which, as I said, makes good sense
    not only from a mission standpoint, but also from a value to
    the taxpayers standpoint.
        Senator King. Thank you.
        I should mention to both of you that the Subcommittee on
    Personnel had a hearing where we had enlisted testify. We had a
    question earlier about if the enlisted people support the
    personnel changes, the commissary, and the 1 percent pay
    increase. I made them all answer and they all said they do
    support this. They were very clear understanding that it's a
    zero sum game and if we don't make these changes then we're
    going to have to make reductions in readiness. They felt that
    in the long run, investments in readiness were more important
    to the troops than these adjustments in compensation. Is that
    your understanding, General?
        General Welsh. Senator, I believe that's exactly their
    feeling. More than anything else, the Service Chiefs and the
    Service senior enlisted leaders owe our people the confidence
    that they will go and do the very difficult jobs that we ask
    them to do, in very difficult and dangerous places, and come
    home safe. That's readiness.
        Senator King. These were the chief petty officers and the
    master sergeants of the four Services.
        Finally, General Welsh, I'm very concerned about cyber
    vulnerability, particularly with the Air Force, because it's
    all about communications. You're not all in one place at one
    time. Do you feel that you're adequately prepared? Are you
    working with U.S. Cyber Command (CYBERCOM)? Are you in good
    shape in terms of cyber vulnerability? Do you test? Do you have
    some really bright people trying to figure out how to make life
    difficult, to practice?
        General Welsh. Senator, I think everybody is vulnerable,
    and we all need to be concerned. But yes, the Air Force is
    fully connected. Air Force Space Command is where we have
    focused our cyber efforts so far. We also have airmen who work
    for CYBERCOM. We have airmen who work for the National Security
    Agency under their title 50 authorities. We are very closely
    connected in that arena, and I'm actually comfortable with
    where we are today because it's taken us a while to get here.
    But we have to accelerate in this area and create capability
    across our Air Force that we've never had before.
        Senator King. I hope you will have some very bright people
    who are playing the role of the enemy and trying to find the
    holes, because I believe the next Pearl Harbor is going to be
    cyber.
        General Welsh. Senator, we actually even play that in our
    red flag exercises now. Every major exercise we have includes
    play in the cyber domain, to include red team activity.
        Senator King. Thank you very much. Thank you both.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator King.
        Senator Fischer.
        Senator Fischer. Thank you, Mr. Chairman.
        First of all, I'd like to acknowledge the administration's
    release on Tuesday, April 8, of the U.S. Strategic Force
    Structure to comply with the New Strategic Arms Reduction
    Treaty. I know it was a long and difficult process that your
    staff worked on, so I thank you and all of those in DOD for
    your effort on this.
        I was pleased to see that the ICBM silos are kept in a warm
    status consistent with the congressional preference expressed
    in the NDAA from last year. Secretary James, one question I
    have is, will the empty silos be distributed across the ICBM
    force or do you think a whole squadron is going to be removed
    from that?
        Ms. James. That is to be determined, but my guess is it
    will be distributed across the force.
        Senator Fischer. When will that be decided for certain, do
    you know?
        Ms. James. I think over the next several months is what
    we're anticipating.
        General Welsh. The recommendation to the Secretary is going
    to be that we distribute them across the force. We've come to
    the recommendation position. The Secretary just hasn't seen it
    yet.
        Senator Fischer. I know that you're well aware of it, but
    last year's NDAA expressed that Congress' view was that the
    cuts should be distributed across the ICBM wings.
        Ms. James. I'll go with what he just said, Senator.
        Senator Fischer. Always good. Thank you.
        General Welsh, thank you for clarifying that for me. I
    appreciate it.
        Secretary James, it's also my understanding that DOD no
    longer plans to conduct the environmental study on the ICBM
    silos?
        Ms. James. That's correct.
        Senator Fischer. Thank you.
        Madam Secretary, I know that you've been investigating the
    recent incidents within the ICBM force and I do appreciate your
    attention to this matter. What steps do you think are necessary
    if we're going to improve the morale of these airmen?
        Ms. James. I think we need a holistic approach, Senator, to
    this community. I've believed that from the start. Action has
    been taken, and there's more action to follow. I think
    everybody is aware that they've announced changes to the
    testing and training regime of the ICBM forces. I at least
    felt, and I think we were all in agreement, that the way it was
    being done was breeding an unhealthiness and too much focus on
    scoring 100 percent on certain tests.
        They're going to fundamentally redo the training. That's
    one important thing. Over the next 5, 6 weeks, we're going to
    be looking at things such as incentives, accolades, and other
    types of issues that would directly benefit the people in the
    ICBM force, so that's another thing.
        We're also looking at leadership development within this
    community, how we're growing these young leaders, and what path
    they have for the future. There are a number of things. Of
    course, you're aware that there will be accountability for the
    people who have been involved as well, and as well as for the
    leaders.
        Senator Fischer. Thank you.
        General, did you have anything to add to that?
        General Welsh. No, ma'am. The Secretary's been out front
    leading this effort from the day we found out about it, and we
    are following in lockstep.
        Senator Fischer. Do you have follow-up right on base? Do
    you have commissions there? Do you see leadership coming
    together and working right on the bases? Or is this coming top-
    down?
        General Welsh. Both, Senator. The force improvement program
    that the commander of Air Force Global Strike Command
    commissioned actually was formed of teams from the wings
    themselves, people in every functional area and at every rank
    level. They were advised by experts in everything from human
    behavior, to training, to testing, and to other things. They
    put together a series of several hundred recommendations that
    we are now tracking down in several different categories.
        They're monitoring it locally. We're being briefed
    routinely at the Air Staff level. General Jack Weinstein,
    Commander of 20th Air Force, is the overall executor of this,
    and he's reporting weekly to the Commander of Air Force Global
    Strike Command.
        Senator Fischer. Great. Thank you.
        Madam Secretary, I know that the Air Force has prioritized
    things like the F-35, the new bomber, and the new tanker. Will
    you be able to protect these programs if we're going to be
    returning to sequestration levels in 2016? What's your outlook
    there?
        Ms. James. We certainly will make every effort to do so. If
    we return to sequestration in fiscal year 2016, however,
    whether it's the same quantities or not very much remains to be
    seen. I don't think we can protect them in an absolute fashion,
    but we do feel very strongly that they are our future; they're
    our top three programs. So vis-a-vis others, we will have to
    protect them strongly, yes.
        Senator Fischer. Are you making any concrete planning
    procedures right now in dealing with looking ahead if we are
    going to return to those levels? Or are these just thoughts
    that are happening at your level?
        Ms. James. We do have concrete plans, and, in fact, in all
    of the backup budget documents that are before you and your
    teams we've basically laid out two different ways to a fairly
    good level of detail. We've laid out how we would propose to
    proceed under the President's budget, which is, of course,
    higher level, 2016 through 2019, and we've also laid out how we
    would deal with it if we had to return to sequestration.
        Senator Fischer. Thank you. I understand that you are
    making those tough choices. The budget request, when you look
    at the funding for construction and facilities sustainment, do
    you think that level of funding is going to continue in the
    foreseeable future? How are you addressing that for facilities?
        Ms. James. Facilities budgets have been very nearly under
    siege, I would say. They have taken hits in the past. They are
    not today where we would like them to be. If we go to
    sequestration, I suspect they will be even lower. It's part of
    readiness, by the way. People think it's just a building, so
    what? It's important for readiness. It's important for people
    to do their jobs in a variety of ways.
        We would like to see the higher levels because that means
    higher levels for facilities as well as many other important
    programs.
        Senator Fischer. When you're looking at facilities, what
    kind of process do you use to prioritize updating,
    modernization, and construction?
        General Welsh. Senator, we have an Air Force-wide program
    that starts at the base level and goes up through the major
    commands for review and prioritization. The major commands have
    authority to use some portion of the budget based on their
    priorities, and then the remainder comes to the Air Force. We
    manage the overall prioritization at the Air Force level.
        In fact, right now one of the things we're looking at is
    the possibility of forming a new installation support center
    where we would do this prioritization under the direction of
    the Commander of Air Force Materiel Command, supporting all the
    other major command commanders, to try and save people and cost
    in the processes.
        Senator Fischer. Thank you very much.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Fischer.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman, and thanks to the
    witnesses.
        I don't want to plow ground that's already been plowed
    before I arrived at the hearing, but I'll just state that
    during the course of the year I've had good interaction with
    our Air Force personnel at Langley in Virginia and also
    personnel stationed abroad in travel either for this committee
    or for the Senate Committee on Foreign Relations. It was my
    pleasure to work as a member of the Senate Budget Committee
    with my colleagues to try to find a 2-year budget that reduced
    the impact of the sequester on the armed services in 2014 and
    2015, and I think we have a significant task before us in 2016
    and the out-years.
        We were making you deal with uncertainty, which was a
    horrible thing. Given the uncertainty you already deal with in
    the security challenges across the globe, to add budgetary
    uncertainty on top of that was something that Congress
    shouldn't have done. We have now provided some certainty, but I
    hope we can dig into the years 2016 and out and have a budget
    that's driven by our strategy rather than to continue to have
    to try to adjust, carve, and cut our strategy to fit a budget
    that in my view is not one that appropriately provides for the
    defense of the Nation.
        I wanted to ask a question about one item that is close to
    home in Virginia, and that's the Air Force Office of Science
    and Research. This is a facility that's located in Arlington
    that is an important facility for the Air Force. It operates in
    significant synergy with other science and research offices.
    The National Science Foundation, the Defense Advanced Research
    Projects Agency, and the Office of Naval Research are right
    there in the area, and other science and technology operations,
    like the Defense Geospatial Intelligence Agency at Fort
    Belvoir, are also partners in close proximity.
        I know there is a plan that crops up on occasion, I don't
    think this is the first time, to look at relocating that Air
    Force office to Wright-Patterson Air Force Base in Ohio. I've
    been in discussions with folks who work there, the scientists
    and researchers who love where they work and love where they
    live, and they are not excited about the prospect of moving.
        I wonder if you could talk about the status of that
    evaluation from a timing standpoint and what would be reasons
    why a facility that's doing a good job where it is, with a
    high-quality workforce, should be put on the block for
    potentially moving?
        Ms. James. The evaluation is completed and it's staying
    put.
        Senator Kaine. I do not want to snatch victory from the
    jaws of defeat, Mr. Chairman. I will stop my questioning there.
        Chairman Levin. We're all delighted.
        Senator Kaine. Thank you very much.
        Chairman Levin. Senator Lee is next.
        Senator Lee. Thank you very much, Mr. Chairman, and thank
    you to Secretary James and General Welsh for being here today.
        General Welsh, I especially appreciate our conversations
    over the last few years regarding the F-35. The State of Utah
    is very pleased, couldn't be more pleased, with the fact that
    Hill Air Force Base was ultimately selected to host the first
    operational F-35s. I appreciate your hard work in moving that
    decision forward.
        Secretary James, you talked a little in your testimony
    earlier this morning about preventing cost increases, the need
    to do that and the need to prevent delays in these three major
    procurement programs that we've talked about. Can you elaborate
    on your plans to do that just a little bit and give us some
    insight into how that might work?
        Ms. James. What I personally intend to do is conduct
    regular program reviews on these programs and meet with the
    program managers, as well as industry, as well as go out and
    see what's happening in the field. This is what I did in
    industry and this is what I'm hoping to bring to the table now
    that I'm in government.
        Essentially, it's relentlessly keeping to the program and
    keeping accountability on the program. That's what it's all
    about, and I do have confidence, particularly with the three
    big programs, that the people that we have in charge of those
    programs are well-qualified and they have their eye on the
    ball, not only of the technical capability, but also their eye
    on the ball of the cost containment. I do feel confident in
    that. But it requires persistent focus and persistent
    leadership.
        Senator Lee. Thank you.
        I'll ask both of you to respond. In the face of a decreased
    budget that the Air Force has to work with, do you think that
    the work being done at the Air Force depots to maintain and
    modernize our current weapons systems is likely to become more
    critical to our military readiness? What thoughts do you have
    generally about how our maintenance and modernization work and
    can be used in a way that increases our readiness while saving
    us money?
        Ms. James. As far as I know and believe, but I'm anxious to
    come and visit some of our depots, they're already critical to
    our readiness story. They will remain so and probably become
    even more so in the future. That's point one.
        Point two, I think, is there has been a lot of progress,
    particularly at the depots, to get costs better under control,
    new ways of doing business, new procedures, and new processes.
    I think that sort of an approach, stepping back and taking a
    fresh look at how we do things and asking ourselves if we can
    do it differently and more cost effectively, needs to be a
    hallmark for the rest of the Air Force as we look at processes
    and procedures.
        Senator Lee. General Welsh, do you agree with that or have
    anything to add to it?
        General Welsh. No, Senator, I agree completely with the
    Secretary. They've always been critical. We've just made it
    tough for them to do their job. I think to borrow Senator
    McCain's phrase, what people like me need to do is make sure
    that the innovations that our depots show routinely, the
    workforce we have there, feels valued, proud, and respected. We
    hurt them last year with furloughs and the government shutdown.
    So we have to try very hard to not go in that direction again.
        Senator Lee. What would be the impact on the Air Force if
    the Air Force were unable to retire the equipment that it's
    identified in the President's budget?
        Ms. James. If we're not permitted to retire the equipment
    or make these other changes in force structure that we're
    talking about, the problem is you'll have a higher level of
    force structure and probably, we fear, pay for it out of the
    operation and maintenance readiness accounts. When you have
    higher force structure and not enough money to pay for it, the
    training and the proper maintenance and so forth, that then
    gets you unready forces or so-called hollow forces. That is the
    number one thing we want to guard against.
        Senator Lee. That could compound our already significant
    problems.
        Ms. James. Absolutely. That's the way we feel about it.
        Senator Lee. Secretary James, in our Subcommittee on
    Personnel hearing a couple of weeks ago, I questioned Secretary
    Jessica Wright about an incident in March at the Air Force
    Academy involving a cadet who was asked to take down a Bible
    verse that had been quoted on the whiteboard right outside of
    his hallway. I asked some follow-up questions in writing and
    received the response on that. The response relied heavily on
    Air Force Instruction 112.11, which states that:

              ``Leaders at all levels must balance constitutional
            protections for an individual's free exercise of
            religion or other personal beliefs and the
            constitutional prohibition against government
            establishment of religion. For example, they must avoid
            the actual or apparent use of their position to promote
            their personal religious beliefs to their subordinates
            or extend preferential treatment for any religion.''

        This was the instruction that was cited by the Air Force to
    justify the command actions taken at the Academy, given that
    the cadet in question was, as I understand it, as it was
    explained to us, a cadet leader.
        Can you help me understand why it is that there's a
    different standard that would apply to the freedom of religious
    expression for leaders within the Air Force, whether it be the
    Academy or elsewhere, than for airmen who are not in leadership
    positions?
        Ms. James. Before I come to that, if I may tell you, I
    think the policy itself, when you read the policy on paper,
    seems to make good sense and it's this balance situation. But I
    think what we're perhaps learning is that in practice, when you
    get down to the people who are the real people, either at the
    Academy or on the flight line and so forth, sometimes there are
    these gray areas where situations are confusing. Then, what do
    we do and are we doing the right thing or not?
        The bottom line that I want you to know is that the Chief
    later this month is going to be gathering all of the chaplains
    from the major commands, general counsel, and the Manpower and
    Reserve Affairs, and we're all going to go off site and we're
    going to talk about this policy. We're going to put it up
    against the recent laws that have been passed, against the new
    DOD instruction, look at what the other Services are doing, and
    try to see if there are ways that we can clarify this policy,
    because sometimes where the rubber meets the road it's a little
    hard to know what to do.
        But as you say, what we're trying to do is hit that
    balance, so that there is dignity and respect for all
    religions, including those who have no religion. But it's
    proving difficult sometimes in the field to implement. At least
    we have some examples of this.
        Senator Lee. I appreciate that a lot, Madam Secretary, and
    I'd love to follow up with you after that happens. I think it's
    important that review occurs, especially considering the fact
    that the Air Force policy in question, the one that I quoted,
    has some significant ambiguities in it to start with. It's made
    more ambiguous still by the use of words like ``apparent,''
    that could be read quite easily to suggest that almost any
    expression of religious belief, at least by someone in a
    leadership position, as innocuous as someone saying ``I like
    this scripture from the Book of Galatians,'' which is all this
    cadet had done, could somehow run afoul of this policy.
        That policy, to the extent that it's interpreted that way,
    I think runs afoul of section 532 of the NDAA for Fiscal Year
    2014, which says: ``Unless it could have an adverse impact on
    military readiness, unit cohesion, and good order and
    discipline, the Armed Forces shall accommodate individual
    expressions of belief.''
        I think that weights the scale much more heavily on the
    side of freedom of religion and freedom of religious expression
    than the Air Force policy appears to accommodate. I'd encourage
    you strongly to take that into account.
        Thank you very much to both of you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Lee. Would you
    keep us all informed on progress with those discussions?
    There's a lot of sensitivity from all directions on this issue.
        Senator Hagan.
        Senator Hagan. Thank you, Mr. Chairman.
        To both the Secretary and General Welsh, thank you very
    much for everything you do and for your service. Welcome.
        I am deeply concerned about a proposal from the Air Force
    that's in discussion now that would remove all of the C-130s
    stationed at Pope Army Air Field at Fort Bragg. These actions
    would leave no airlift at the Home of the Airborne, and it's
    something that I definitely oppose. This is a rushed proposal
    that would attempt to push through a drastic decision before
    Congress has the opportunity to review it through the full
    authorization and appropriation process.
        I recognize the Air Force, like the rest of DOD, is facing
    significant fiscal challenges. We understand that. But I
    question the completeness of the cost analysis that I've seen.
    I'm troubled by the lack, the true lack, of consultation with
    the Army units that would be directly affected by this
    proposal. I worry that the Air Force is considering force
    structure changes based upon considerations other than the
    greatest military value.
        General Welsh, I wanted to ask about the cost analysis. I'm
    concerned, as I said, about the completeness that's been
    provided so far. The Air Force has stated that shifting the 33
    percent of the Airborne training that the 440th currently
    provides to off-station units will result in no additional
    cost, even though the average cost of 1 flying hour for a C-
    130H is over $4,000. A comparable unit to the 440th providing
    support from over 750 miles away would cost an additional
    $20,000 per mission.
        I understand the Air Force is saying that, even though the
    individual missions will cost more when the 440th supports
    units at Fort Bragg, the cost to the Air Force will not
    increase because this support comes from allocating flying
    training hours, which the units will not exceed.
        Here's my problem with this argument. Allocated flying
    training hours are a finite amount of funding, especially in
    our fiscally constrained environment. The Airborne training is
    prioritized and, while I'm confident that the 82nd Airborne's
    training will be a high priority of the global response force,
    if missions to support Fort Bragg will end up costing more,
    it's going to reduce the amount of flying training hours
    available to support the other Army units. It would then
    require increased funding or the readiness of other units
    would, in fact, suffer.
        Has the Air Force looked broadly enough at the cost of
    removing the planes from Pope and inactivating the 440th?
        General Welsh. Senator, I believe we have. But if we can't
    convince you with the data, then we better relook at the data.
    I don't know what you've actually been given already.
        Senator Hagan. Not nearly enough.
        General Welsh. We'll get you what you need, ma'am.
        This was put together as a much broader proposal than Pope.
    It's an enterprise look at the C-130 enterprise by AMC and
    AFRC. There were issues that involved everything from
    recruiting for the Reserve unit at Pope to ways to consolidate
    a fleet and get rid of more C-130Hs overall to bring that cost
    down.
        The costs were much broader that General Selva was looking
    at than just the cost of training the 82nd. But if you don't
    have the data you need to understand this, we need to get it to
    you and have this discussion.
        [The information referred to follows:]

        The fiscal year 2013 President's budget decision to divest the C-
    130Hs currently at Pope Air Force Base was due to the combination of
    excess capacity in intra-theater airlift (as cited in the Mobility
    Capabilities Assessment and Defense Strategic Guidance), and Budget
    Control Act of 2011-level funding, which cut $54 billion from the Air
    Force's budget. These two factors contributed to the Air Force's fiscal
    year 2015 President's budget decision to reduce the C-130 enterprise
    from 358 to 328 Total Aircraft Inventory across the Future Years
    Defense Program (FYDP). The 440th Airlift Wing was deactivated to
    capitalize on the efficiencies that exist at Little Rock Air Force Base
    based on the large C-130J footprint already in place. These
    efficiencies allowed the Air Force to realize savings of over 600
    manpower positions by relocating the C-130Js from a base with a wing
    structure (Pope Army Airfield) to a base with a group structure (Little
    Rock Air Force Base) and subsequently divesting the 440th Airlift Wing.
    Air Mobility Command will also avoid a $1.5 million training site
    activation cost and an annual $100,000 training contract position at
    Pope Air Force Base by consolidating Air Force Reserve Command's C-130J
    squadron at Little Rock Air Force Base, where ample training capacity
    already exists. The Air Force estimates saving $23.2 million per year
    ($116 million across the FYDP). The savings is more than enough to make
    up for costs incurred by off-station units supporting Fort Bragg
    training events. Fort Bragg's airborne training requirements will be
    supported through the Joint Airborne/Air Transportability Training
    construct the Air Force already uses for 66 percent of the missions at
    Fort Bragg, as well as 100 percent of the missions at Fort Benning,
    Fort Campbell, Fort Lewis, and other Army locations which do not have
    colocated Air Force C-130 aircraft.

        Senator Hagan. I'm really concerned about the lack of input
    from the units that would be affected by these proposed
    changes. How many of the 82nd Airborne Jumpmasters were
    consulted before proposing to remove all of the C-130s from
    Pope?
        General Welsh. I doubt if any of them were consulted.
        Senator Hagan. How about battalion and brigade commanders?
        General Welsh. Ma'am, that's not who we would talk to. The
    U.S. Army was consulted and we briefed this recommendation to
    them before the budget was finalized.
        Senator Hagan. Was the commanding general of the 82nd
    Airborne consulted?
        General Welsh. I do not know if the Army talked to him or
    not, ma'am.
        Senator Hagan. My understanding is that none of the
    affected Army units at Fort Bragg were consulted.
        General Welsh. You'd have to talk to the Department of the
    Army about that, Senator. We don't consult directly with the
    units in the field.
        Senator Hagan. The 82nd Airborne is dependent on the Air
    Force for their airborne operations, and it really is the best
    example of joint operations. I think it's very important that
    the Air Force at least consider inputs from all stakeholders in
    these very important decisions. That's why I think the Air
    Force may be looking too narrowly at just the cost. You have to
    take into account other factors, such as the effect on the
    readiness of the 82nd Airborne, on the Special Operations
    Forces that are all right there at Fort Bragg, and then all the
    other units at Fort Bragg. That's my main concern.
        Obviously, I oppose moving the C-130Js from Pope. But I am
    troubled also that in an Air Force proposal you would still
    transfer away the C-130Hs. The H models at Pope were only being
    transferred in the fiscal year 2013 force structure plan if the
    440th was going to receive the upgraded J model. The 2005 BRAC
    final report stated that at Pope, ``The synergistic multi-
    service relationship will continue between Army airborne and
    the Air Force airlift forces, with the creation of an Active
    Duty-Reserve associate unit which provides greater military
    value and offers unique opportunities for jointness.''
        Then, in 2012, the Air Force proposed the retirement on a
    number of the C-130s, and Congress pushed back on that
    proposal. But it's important to note none of those cuts at that
    time were coming from Pope.
        The question to me is, are there clear signals about the
    importance of collocating these C-130s with the airborne forces
    at Fort Bragg? It's like if the J models didn't come to Pope,
    why would you transfer the H models away? What analysis has the
    Air Force performed to suggest that the H reductions should
    come from Pope rather than other locations?
        General Welsh. Senator, we'll get you something for the
    record, and we need to come show you that. We'll get
    representatives from AMC and from AFRC to come walk through
    that with you or your staff, your choice.
        [The information referred to follows:]

        The fiscal year 2013 President's budget decision to divest the C-
    130Hs currently at Pope Air Force Base was due to the combination of
    excess capacity in intra-theater airlift (as cited in the Mobility
    Capabilities Assessment and Defense Strategic Guidance), and Budget
    Control Act of 2011-level funding, which cut $54 billion from the Air
    Force's budget. These two factors contributed to the Air Force's fiscal
    year 2015 President's budget decision to reduce the C-130 enterprise
    from 358 to 328 Total Aircraft Inventory across the Future Years
    Defense Program (FYDP). The 440th Airlift Wing was deactivated to
    capitalize on the efficiencies that exist at Little Rock Air Force Base
    based on the large C-130J footprint already in place. These
    efficiencies allowed the Air Force to realize savings of over 600
    manpower positions due to locating the C-130Js from a base with a wing
    structure (Pope Army Airfield) to a base with a group structure (Little
    Rock Air Force Base) and subsequently divesting the 440th Airlift Wing.
    Air Mobility Command will also avoid a $1.5 million training site
    activation cost and an annual $100,000 training contract position at
    Pope Air Force Base by consolidating Air Force Reserve Command's C-130J
    squadron at Little Rock Air Force Base, where ample training capacity
    already exists. The Air Force estimates saving $23.2 million per year
    ($116 million across the FYDP). These savings more than enough make up
    for costs incurred by off-station units supporting Fort Bragg training
    events.
        While the Air Force has great respect for Fort Bragg's jumpmasters,
    battalion commanders, and brigade commanders, we typically do not
    consult them when making force structure and basing decisions. After
    the Secretary of the Air Force approved the fiscal year 2015 Program
    Objective Memorandum, all Service Secretaries and Chiefs of Staff met
    with the appropriate members of the Office of the Secretary of Defense
    to discuss proposed plans, including force structure cuts. It was at
    this venue that Air Force and Army senior leaders discussed the
    proposal to divest excess C-130s and deactivate the 440th Airlift Wing.
    The Army posed no opposition to the Air Force's proposal during the
    process.
        The Air Force is confident that Fort Bragg's airborne training
    requirements will be supported through the Joint Airborne/Air
    Transportability Training construct the Air Force already uses for 66
    percent of the missions at Fort Bragg as well as 100 percent of the
    missions at Fort Benning, Fort Campbell, Fort Lewis, and many other
    Army locations which do not have colocated Air Force C-130 aircraft.

        General Welsh. But this was part of a very detailed
    enterprise look that they took. This comes back to a refrain
    that I'm really sorry to have to keep repeating, but everything
    hurts in this budget. There isn't enough money to keep all the
    C-130Hs and the new C-130Js. We are going to get smaller in
    every mission area.
        Senator Hagan. I think the cost analysis is what we're
    looking for the reasoning, and the discussion and consultation
    with the 82nd Airborne unit that is located at Fort Bragg. To
    think that you're taking all the airlift away from Pope Army
    Air Field, with the collocation there at Fort Bragg and our
    Special Operations Forces, I think a lot more discussion needs
    to take place other than the cost analysis that I haven't seen,
    that you're talking about, in this one specific area.
        General Welsh. Ma'am, I'm confident that there has been
    discussion between the Air Force operations group, which will
    remain at Fort Bragg to manage the training support for the
    82nd, and the 82nd Airborne Division. I'm confident that's
    happened. We don't deal with budget requests and coordination
    from Headquarters Air Force to Army individual units, at the
    request of the U.S. Army. We go to their headquarters and
    assume that they will do that.
        But we'll make sure we get you what you need.
        Senator Hagan. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Hagan.
        Senator Inhofe.
        Senator Inhofe. Yes, just a couple of follow-up questions,
    Mr. Chairman. One thing that hasn't been mentioned that you and
    I have talked about is the Air Force requesting the funding to
    recapitalize joint North Atlantic Treaty Organization (NATO)
    intelligence, I think from Molesworth to Crichton. Can you tell
    us why this project is important, General?
        General Welsh. Senator, I'll try to. There are some great
    benefits to this program from an intelligence perspective.
    First is that it allows U.S. European Command (EUCOM) and U.S.
    Africa Command (AFRICOM), who are supported by this Joint
    Analysis Center, to keep their intelligence analysis capability
    on the same continent, which seems like a silly thing to say,
    but it's really important to be in the same time zone for
    coordination of activity.
        The second thing it does is it allows them to keep an
    integrated intelligence coordination organization between
    EUCOM, AFRICOM, and NATO. A lot of the colonial powers that
    know a lot more about Africa than we do are actually connected
    to EUCOM. This allows their analysts to be connected to AFRICOM
    for their support. It also lets us be interoperable,
    interchange, and share more intelligence with NATO.
        The other part of this that's spectacular is that the
    business case model is fantastic. We close three installations
    to have one. We recapitalize, we pay this back in 4 years, and
    then we save $78 million a year after that. We run the old
    analysis center concurrently as we build the new one, so it's a
    turnkey operation. We don't lose capability. I think everything
    about this one is good.
        Senator Inhofe. Okay. That's good and that's a good
    explanation. I appreciate that.
        Let me just share with both of you that I've been
    privileged; for 8 years in the House, a total of 24 years, I
    think, I've never missed one of either the Paris Air Show or
    the Farnborough Air Show after that. We've always been so proud
    of our country and our pilots that show up there and have
    demonstrations. We walk around, or at least I do, and I look at
    all the competition that's out there, the Eurofighter, the
    Rafael, the Typhoon, the Gripen, and the ones that are being
    developed.
        Those are not, as I understand it, going to be stealthy.
    When I look and I see what the Chinese and the Japanese are
    doing, I might be wrong and you can correct me if I am, they
    aren't in about the same position of development as we are on
    the F-35 with the PAK-FA and the J-20?
        General Welsh. Senator, I don't think the J-20 or the PAK-
    FA will be as capable as the F-35. I do believe they will be
    more capable than our legacy aircraft are, which is why we need
    the F-35.
        Senator Inhofe. Yes. I'm with you. I don't want an equal
    fight there. I want to have something that's better.
        I'd like to ask you, Madam Secretary, if you would join me
    in encouraging the administration and the military to have a
    presence at the next show that comes up. In my recollection,
    over the last 24 years last year was the first year we had no
    military presence at all, no military and all that. I think we
    have to be a player in the world and that sends the wrong
    signal, I think, if we don't show up.
        Do you have any thoughts on that?
        Ms. James. I'm not fully up to speed on what presence is
    planned, with one key exception. I plan to be there, so that's
    at least a little bit of a presence. But please allow me to
    look into what kind of aircraft and other officials.
        Senator Inhofe. I understand we're going to have an F-35,
    but it's going to be the United Kingdom. They're taking it.
        I will allow that and I look forward to visiting with you
    about it. Hopefully, we can have a better showing this next
    time.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Let me finish this round. Perhaps, even though Senator
    Shaheen is on her way, I'll ask my first round questions.
        Let me ask you both, Secretary James and General Welsh, the
    National Commission on the Structure of the Air Force has
    estimated some significant savings by shifting its component
    mix more to the Active Duty and the Reserve Forces. Can you
    promptly get to us a summary and a briefing of the analysis
    which you have not quite completed, wherever you are? Get us
    what's available as promptly as you can, with a summary and a
    briefing next week or so, so we can consider your analysis to
    the extent it's available when we have our hearing on the
    commission's report later this month?
        Ms. James. Yes, we will do that.
        [The information referred to follows:]

        Yes, the Total Force-Continuum will work to provide what
    information they have completed prior to the hearing on April 29, 2014.
    The Air Force is undertaking a comprehensive review of every mission
    area to determine the optimum Active and Reserve component balance. The
    foundational data and analytical approach applied is highly consistent
    with what was used by the National Commission on the Structure of the
    Air Force. We strengthen this analysis with a recently developed high
    velocity analysis model that uses more highly refined data and analysis
    to arrive at a more precise Active/Reserve component mix
    recommendation. This enhanced precision comes through modeling that
    better accounts for rotational and non-rotational force analyses and
    the impacts of Active/Reserve component rebalancing choices on defense
    planning scenarios that include Homeland defense requirements. Our
    initial assessment of all 42 National Commission on the Structure of
    the Air Force recommendations is highly positive, concurring with the
    majority of them. We expect to have 80 percent of the force assessed
    using the high velocity analysis process by the end of 2014.

        Chairman Levin. Will you also let us know at that time what
    the process is that you're going to be using to respond to or
    react to the report of that Commission, unless you know that
    process now? You could share it with us now. In other words,
    when that report comes out, what's going to be your process in
    terms of reviewing it?
        Ms. James. Of course, the report came out a couple of
    months ago now and we have been thoroughly reviewing it as we
    have been going forward.
        Chairman Levin. I misspoke. What is the process you're
    using, rather than what will be the process?
        Ms. James. We have a group within DOD now, which we're
    keeping in perpetuity, called the Total Force Continuum Office.
    This is an Active, Guard, and Reserve full time. They are
    actively, with us as the leaders, reviewing these proposals in
    detail.
        Chairman Levin. When will that be completed?
        Ms. James. We expect to complete a lot before the hearing,
    that's for sure. But the more follow-on analysis, if we can put
    more of the structure into the National Guard and Reserve, we
    project that will be ready for the next budget submission.
        Chairman Levin. Can you give us that interim briefing next
    week, then?
        Ms. James. Yes.
        Chairman Levin. Back to the A-10s. Has there been air to
    ground testing and has there been CAS testing of the F-35A at
    all?
        General Welsh. We've just begun release testing for
    weapons. We've dropped one weapon out of the airplane so far.
    The software version we need for IOC that we should get in 2015
    is when we'll be able to start doing more weapons delivery as
    you would see in a limited CAS profile.
        When the F-35 reaches its IOC, we don't anticipate we will
    be using that in the CAS role. We'd be using the F-16
    primarily, with the F-15E and the B-1 in support if the
    environment allowed it.
        Chairman Levin. Would you say just a small percentage of
    your testing? You've only had one bomb dropped, I guess.
        General Welsh. I believe we've only dropped a weapon out of
    one airplane, so far. I may be wrong. But that was within the
    last month, so we haven't done a lot.
        Just releasability testing. It's not targeting anything.
    It's just making sure the system works.
        Chairman Levin. On the Global Hawk, I guess you have
    changed the position on the Global Hawk versus the U-2. How
    much will it cost to enable the Global Hawk to achieve
    equivalent capability to the U-2?
        General Welsh. Sir, it's roughly $1.6 billion total, and it
    would include an initial cost of around $450 million, for an
    adaptable mount that we can put the sensors that the U-2
    carries onto the Global Hawk. The other thing we have to do
    over time is create a de-icing system for the airplane. We have
    to develop new sensor capability to make it compatible with the
    products currently delivered to the combatant commanders by the
    Global Hawk, and that's going to take us a good amount of time,
    probably 10 to 12 years, to complete the entire process.
        We're counting on the lower cost upfront, per flying hour
    over time, lower sustainability costs, and the increased
    processing capabilities of the airplane. There are things you
    can do with it as a computer that you can't do with the U-2.
    But it's going to take a while and it's going to take some
    investment, sir, to get there.
        Chairman Levin. One of the costs I understand is that while
    the Global Hawk is operating, other aircraft need to fly along
    with it. Is that correct, that it will have some positive
    contact with it?
        General Welsh. I'm not aware of that requirement, sir. I'm
    not sure what that refers to.
        Chairman Levin. If you could check that out and see whether
    other aircraft have to be in positive contact with the Global
    Hawk while it's flying. If that's true, could you then tell us
    whether the cost of that is included in the comparison of the
    U-2 and the Global Hawk?
        General Welsh. Yes, sir, we will.
        Chairman Levin. That's all I have. Senator Chambliss.
        Senator Chambliss. Thank you, Mr. Chairman.
        First of all, let me say to both of you, these are
    difficult times we are in. We understand that. We appreciate
    the efforts that you make to try to do the best you can with
    the resources that we have given you. We fully understand that
    part of the problem that you're having to deal with, or 99
    percent of it, comes from this side of the dais. But we still
    want to make sure that we're spending our money in the right
    way.
        I'd be remiss if I didn't say to both of you, thanks for
    your recent visits to Moody Air Force Base. It's a pretty
    special place down there, and any time we have the Secretary
    and the Chief come down within a short period of time like the
    two of you did, it just is a huge boost to morale, particularly
    with the decisions that have been made just before you got
    there. You were very well received.
        General Welsh, let's talk a little more about JSTARS.
    Everybody that's come before this committee has testified that
    they are not receiving today the ground moving target indicator
    support that they need, and yet the budget calls for a 40
    percent reduction in the JSTARS fleet, presumably to fund the
    acquisition of a replacement platform. We're talking about a
    major reduction here, obviously.
        I want you to walk me through, again, the plan for phasing
    in this reduction and standing up the replacement platform,
    please, sir?
        General Welsh. Senator, the intent here is to make sure
    that we have an airborne sensor with command and control
    capability on board in 2023 and beyond. That's the point here.
    We have to figure out how to keep this very valuable capability
    that all of our combatant commanders want. They don't want to
    give up any of it today, but we know of no other way to make
    sure they have it 10 years from now other than to give some up
    and recapitalize within our own resources. We don't have
    another option.
        The game plan is to give up one airplane in 2015, I believe
    is the start, and I'll doublecheck that and then five more in
    2016. The intent would be to then follow through on the
    recommendations from our AOA that has been completed to look at
    a business jet model, a smaller, more cost-efficient aircraft.
    Miniaturization of sensors has allowed us to do a lot more
    processing on an airframe of that size. We believe it can do
    the same dynamic targeting mission and ISR mission that JSTARS
    currently does along with the airborne command and control.
        We believe that this is just the kind of a turnover of that
    capability within the wing at Robins Air Force Base. We just
    keep doing the mission there. As we build new capability, we
    fold it into the unit and we transition in place.
        We think that's the right approach. We don't want to lose
    the capability in the unit, the credibility in the unit, and
    the expertise, because it's a very specialized skill set. It is
    a matter of giving up some readiness today to make sure that we
    have capability tomorrow.
        Senator Chambliss. Are you confident we're going to be able
    to have that replacement with an IOC date of 2021?
        General Welsh. Sir, that's our best guess at this point in
    time. Until we get started on this, the acquisition strategy
    has not been developed.
        Senator Chambliss. What I'm hearing you say is, we're going
    to retire planes in 2015 and 2016 and we're willing to give up,
    because of these budget constraints, some of our ISR capability
    within that timeframe, irrespective of what our needs might be
    there, and look towards 2021 when we'll start building back
    that capability to get to where we are now. Is that what I'm
    hearing you say?
        General Welsh. Yes, sir, what you're hearing me say is that
    within the Air Force budget, that's the only way we can figure
    out how to do this to make sure that the capability doesn't go
    away completely 10 years from now.
        Senator Chambliss. The A-10 obviously is a major issue.
    It's the only weapon system you really talked about in any
    specifics in your opening comments, so I know how important it
    is to you. I hear what you're saying, that it's not the
    capability of the airplane, but it's what you can afford with
    the dollars you have.
        But here's a question, though, that, really in order to
    satisfy this panel up here as we move into markup, I think
    clearly needs to be answered. The A-10, as I understand it, has
    some assets that are entirely  different  from  ground  support
     that  can  be  given  by  the F-15 and the F-16. Great
    airplanes, no question about it. But the A-10 has more bullets,
    it can fly at a lower altitude, and provide a different type of
    cover from what an F-16 or an F-15 may give, even though what
    they give may be adequate under the circumstances, as I'm
    hearing what you say. I'm not disagreeing with you.
        But the A-10 is a peculiar weapon system that has been
    extremely valuable over the last decade to fight the fight that
    we've been fighting. Did you consider, as you made this
    decision, not phasing out all of the A-10s over the next 2 to 3
    years versus phasing  out  some  of  them,  also  phasing  out
    some  pretty  antiquated F-16s that we have out there, and look
    towards filling that gap with all of these airplanes with F-35s
    as we look into 2020 and beyond?
        Can you walk me through that, General, and tell me what the
    thought process was relative to just eliminating A-10s with no
    backfill there and utilizing F-16s and F-15s totally, versus
    phasing out some of both?
        General Welsh. Senator, we did. I'll just give you one
    example. We looked at the possibility of keeping the A-10s that
    we had already done a wing replacement on. If we did that, we
    would have saved about $1 billion a year. We then would still
    be looking for $3 billion from some other mission capability.
        The operational analysis we did was really the key to this.
    When we looked at all the options, the benefits of getting rid
    of a fleet, in this case the A-10 fleet, with its logistical
    infrastructure, the supply tail, all that, gave us the savings
    we needed to balance the books.
        It's interesting to me that part of the discussion we're
    having is very similar to the discussion that was going on 40
    years ago today in  the  U.S.  Air  Force.  We  did  the
    competitive  flyoff  between  the A-7 and the A-10 on what
    should be the next CAS platform for the Air Force, and a very
    impassioned, dedicated, hardworking, and talented A-7 force was
    saying the A-10 will never be able to do the CAS mission.
        The mission will continue. We'll figure out how to do it
    better than it's ever been done before with the platforms we
    have. At some point in time, I believe the Air Force will have
    another dedicated CAS platform. But it won't be in the near
    term with the funding levels that we are looking at right now,
    sir. I just don't see that being possible.
        Senator Chambliss. I would just close by saying that it's
    already been alluded to earlier that we've had the conversation
    over the last couple of years of the retirement of the Global
    Hawk. I've forgotten now whether it's Block 30 or Block 40 that
    I inquired your predecessor about, but my understanding was the
    Air Force plan was to take a brand new Global Hawk off the line
    and immediately mothball it, which just was a dumb decision to
    everybody sitting around here.
        It pleases me in one way that we're now reversing that
    decision. But it is an indication that the Air Force has
    changed their minds on some of these platforms. I just hope we
    don't come back here next  year,  General,  and  you  say  we
    made  this  decision  on  the A-10 and now we've decided that's
    not the right decision. But I respect you and know that you
    have tough decisions to make and know this is not one of the
    more pleasant decisions you're having to make.
        But we're going to continue to dialogue with both of you as
    we go through this. Thanks to both of you for your service.
        Chairman Levin. Thank you very much, Senator Chambliss.
        Senator Shaheen.
        Senator Shaheen. Thank you, Mr. Chairman.
        Thank you, Secretary James and General Welsh, for being
    here this morning and for everything you do for our country.
        I was very encouraged, General Welsh, to see in your
    testimony that the KC-46A continues to be one of the Air
    Force's top priorities. Obviously, as somebody who represents
    New Hampshire and the Pease Air National Guard Base, home of
    the 157th Air Refueling Wing, we are very pleased to see that
    remains a priority and very pleased and proud of Pease that
    they will be, we hope, one of the first bases to receive those
    tankers.
        Secretary James, I understand you're going to be coming up
    to Pease, and so we look forward to being able to show you
    firsthand the great work of the 157th and the Air National
    Guard from New Hampshire who are based at Pease.
        I am concerned, however, about what our lack of action to
    address sequestration may be doing to exacerbate the budget
    challenges that you face. In a Defense News article last
    November, the Assistant Secretary of the Air Force for
    Acquisition, Dr. William A. LaPlante, was quoted as saying that
    during the government shutdown the KC-46 program was within 24
    hours of breaching its contract. I assume that if sequestration
    continues, if we have further budget uncertainties, that
    breaching contracts is a potential challenge that we might
    experience and that would drive up costs.
        I wonder if either of you could talk about the impact that
    our unpredictable budget cycle and sequestration are having as
    we're trying to look at ensuring that the contracts that you've
    entered into can continue and that we don't breach those
    contracts and drive up costs.
        Ms. James. I totally agree, Senator, that sequestration was
    a bad deal with the uncertainty of it, the actions that the
    military was forced to take. I wasn't even here at that time. I
    was in industry, and it was bad for industry, too. It was bad
    for everybody all around.
        We're very grateful to have this bit of certainty now in
    fiscal year 2014. We have a number that we've targeted in
    fiscal year 2015, and that's good.
        Our budget proposal for 2016 through 2019, the President's
    budget is at a higher level, and we've thought through and a
    lot of our testimony has been how we would spend that money. We
    feel like that's the bare minimum. However, we've also thought
    through what we would have to do in the event sequestration-
    level budgets return and there's a lot of additional hurt that
    would occur.
        As you point out, breaking contracts and things of this
    nature is very dire. If we went back to sequestration, we would
    have to relook a lot of things to include that. There would be
    program stretch-outs. There would be more cancellations. We
    certainly advocate and hope that we would not return to
    sequestration.
        The other thing that's very worrisome is that sequestration
    would once again hit our readiness in a very bad way. You're
    aware of standing down flying units and how our readiness
    suffered. We have to get on a sustainable path to grow that
    readiness in the future. Again, we ask you, please, let's not
    return to sequestration level.
        Senator Shaheen. Certainly I hope that we will see some
    action in the Senate and in Congress to address sequestration
    in the coming budget years. As I said, I very much appreciate
    your commitment to the KC-46A and keeping it on the priority
    list.
        We had a Subcommittee on Readiness and Management Support
    hearing a couple of weeks ago about information technology (IT)
    costs to the military and defense as a whole. Obviously, one of
    the places where there's been some real concern has been in the
    effort of the Air Force to finish the Expeditionary Combat
    Support System (ECSS), which as I understand has now cost the
    Air Force about $1.1 billion and taken 8 years, and yet we
    don't really have a system that is operational.
        I know that there's another IT system in process, the
    Defense Enterprise Accounting and Management System (DEAMS),
    which I gather is having a little better luck in terms of being
    operational. But it still has significant cost overruns.
        What are the lessons learned from these operations? How do
    we keep those kinds of cost overruns and putting in place
    systems that don't actually work from happening again?
        Ms. James. The ECSS actually has been cancelled.
        Senator Shaheen. Right.
        Ms. James. Much as you said, Senator, it was a lot of money
    over quite a few years and precious little, if anything, to
    show. I think there was some residual positive impact, but not
    nearly enough for the amount of money spent. Looking back on
    that and trying to do a case study, it was a mess. We didn't
    understand the data as it was, the so-called ``as-is status.''
    We didn't understand quite where we were trying to take the
    data, to ``to-be status.'' We had the wrong kind of contract
    vehicle. I think we have a very good case study of what went
    wrong.
        What we're doing for the future, and I take this
    personally, is, just as I am conducting regular program reviews
    on JSF, on KC-46, on the big acquisition platform programs, I'm
    also doing it on the IT programs. We are religiously applying
    those lessons learned from the ECSS situation to the programs
    as we go forward, to try to make sure this sort of thing
    doesn't happen again.
        Senator Shaheen. Okay. Given where the DEAMS program is and
    the fact that its cost has quintupled from $419 million to $2.1
    billion, is it going to be fully deployed at that $2.1 billion
    level? Are there ways in which we can keep further costs from
    adding to the bottom line of that system?
        Ms. James. I will have to go back and doublecheck the
    figures that you just stated. I'm not quite sure about these
    figures. But I will say this on DEAMS. DEAMS, like some of the
    other programs we've talked about this morning, has had a long,
    storied history, but then it's had recent history. The recent
    history is trending in the right direction, that things are
    starting to turn around, that costs are beginning to come under
    control, that we've figured out where we're trying to go in a
    much more precise way.
        I'm encouraged about the future. But of course, there's
    never going to be the ability to go back and redo the past. We
    will forever have that bumper sticker that, whatever we said
    way back then would be the cost, it's forever going to be more
    than that. But my job, as I see it, is from this point forward
    making sure that we stay on top of these programs.
        Senator Shaheen. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Shaheen.
        I just have one additional question and then I'll call on
    colleagues to see if they have any additional questions. This
    has to do with the number of Predator and Reaper CAPs. In this
    budget there's a new goal of 55 sustainable CAPs. Secretary
    Gates had announced that there was going to be 65 CAPs.
    Information that your staff provided us makes the distinction
    between a 65-CAP goal, said to be a surge goal, and a 55 CAP,
    which is called sustainable.
        Can you tell us what the difference is between a
    sustainable 55 CAP and a surge 65 CAP, other than 10?
        General Welsh. Mr. Chairman, the surge is what we can do if
    we took training lines, training crews, all the capability we
    have resident in the United States, to support forward deployed
    remotely piloted aircraft. We could surge that for some period
    of time. It would eat into our training pipelines. It would not
    be something you'd want to maintain over time.
        The steady state is what we could actually deploy and
    operate around the world with the force we have in place to do
    so, and it's a total force effort. We have Guard, Reserve, and
    Active Duty units doing this.
        Chairman Levin. Is this a budget-driven reduction or
    change?
        General Welsh. The drop from 65 to 55? Actually, Mr.
    Chairman, it's not. This goes back to how we recapitalize the
    ISR enterprise as an airman. The combatant commanders, other
    than the Commander of the International Security Assistance
    Force in Afghanistan, don't really need 65 orbits of things
    like Predators and Reapers. That's not what they want for an
    ISR theater laydown of forces. As we come out of Afghanistan,
    we think it's very important to figure out how much of that we
    continue to need for counterterrorism operations and who should
    be conducting those inside the U.S. military. We think we need
    to look at that in terms of when you go to U.S. Pacific Command
    and ask Admiral Locklear what he wants. He wants broader area
    ISR with the ability to narrow down in some places, to do this
    focused look that you get from a Predator or Reaper.
        We believe we need to recapitalize by trading some of that
    capability we currently have into new capability that will
    allow us to do different types of collection, in different
    types of threat environments, so not all permissive, but some
    nonpermissive capabilities as well. That's what we're trying to
    do. Bringing the plan down from 65 to 55 actually lets us start
    in that direction.
        Chairman Levin. We thank you both. Senator Chambliss said
    it well, that you're doing a really good job with what's been
    provided. There will be differences, obviously, that Congress
    will have with your recommendation. That's what both of us are
    here for, to use our best judgment. But we know that there are
    some real constraints here, and hopefully we're going to be
    able to do something about sequestration. I hope most of us
    have not given up on trying to reverse, repeal, and reduce the
    continuing impact of sequestration continuing this year, for
    that matter, but when it really comes back in a roaring way in
    2016.
        We thank you, and we will stand adjourned.
        [Whereupon, at 12:11 p.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                   Questions Submitted by Senator Joe Manchin
                         air force and air guard cyber
        1. Senator Manchin. General Welsh, in previous testimony in front
    of the Senate Armed Services Committee, General Keith Alexander stated
    the National Guard could play a huge role in the Nation's cyber
    security mission, and the Director of National Intelligence, James
    Clapper, and the Defense Intelligence Agency Director, Major General
    Michael Flynn, endorsed this opinion. The Air Force requested $40
    million as part of an unfunded priority list for five Air Guard Cyber
    Protection Teams. How many Air National Guard cyber units are there?
        General Welsh. There are currently three established Air National
    Guard cyber units, the 143rd Cyber Operations Squadron, 262nd Cyber
    Operations Squadron Network Warfare Squadron--both in Washington
    State--and the 261st Cyber Operations Squadron in California. By fiscal
    year 2016, there will be a total of five Air National Guard squadrons
    stood up to support the Cyber Protection Team (CPT) mission, to include
    the three existing Cyber Operations Squadron with two new Cyber
    Operations Squadron in Iowa and Maryland. In fiscal year 2016, the Air
    Force will fill a requirement for two enduring CPTs by drawing on the
    five Air National Guard squadrons.

        2. Senator Manchin. General Welsh, in your opinion, how are these
    units best able to participate as part of the front line of defense in
    cyber on the Homeland?
        General Welsh. The CPTs help defend the Department of Defense (DOD)
    information environment and our key military cyber terrain. While their
    area of responsibility will primarily be DOD's networks, they will be
    integrated into government-wide processes for responding to national
    threats. By sharing expertise, indications, and warnings with other
    government agencies such as the Departments of State, Justice, and
    Homeland Security, as well as key partners and allies, these forces
    will play a critical role in securing the Homeland and our entire
    critical infrastructure.
        While DOD has limited authorities to directly act outside of the
    DOD's information networks, utilizing the Air National Guard to build
    some of these teams has the additional benefit of creating a cyber-
    defense capacity which can be made available to State governments under
    control of their governors to defend their critical infrastructures.

                           integrity in the air force
        3. Senator Manchin. Secretary James, you noted in your testimony
    the Air Force core values of integrity, service, and excellence. The
    cheating scandal at Malmstrom Air Force Base highlighted a problem with
    integrity. Whether this relates to cheating on a test, sexual assault,
    or protecting classified material, for some people, integrity is
    sometimes out of reach. Edward Snowden is an example of a lack of
    integrity, but perhaps there was a level of frustration or no outlet to
    blow the whistle on what he perceived was incorrect. In your view, what
    system or structure does the Air Force have in place to voice concerns
    when cheating or other issues are happening?
        Ms. James. There are various avenues through which Air Force
    personnel may voice their concerns. First is through the chain of
    command. Air Force Instruction 1-1, Air Force Culture, August 7, 2012,
    paragraph 1.7.1, provides guidance concerning the chain of command
    within the Air Force. Specifically, it states, ``Everyone is a part of,
    and subject to, the chain of command and must use it properly. The key
    principle is to resolve problems and seek answers at the lowest
    possible level. If it becomes necessary for you to continue up the
    chain, you should, if practicable, request assistance at each level
    before going to the higher level and advise that you are doing so.
    (There are qualifications to this guidance covered in subparagraphs
    1.7.4.5 and 1.7.4.6 below).'' Subparagraphs 1.7.4.5 and 1.7.4.6 provide
    information on the Sexual Assault Prevention and Response (SAPR)
    Program and the Inspector General (IG), ensuring that Air Force
    personnel are aware of those avenues outside their chain of command to
    report concerns.
        The SAPR Program provides servicemembers with the opportunity to
    make both unrestricted and restricted reports of sexual assault;
    restricted reporting enables a servicemember to report an allegation of
    sexual assault to specified personnel outside the member's chain of
    command without triggering an investigation (see AFI 36-6001, SAPR
    Program, September 29, 2008, Incorporating Change 1, September 30,
    2009, Certified Current, October 14, 2010, Chapter 3).
        Under the Air Force Complaints Resolution Program, Air Force
    personnel have the right to present a complaint to an IG without going
    through the chain of command (see AFI 90-301, Inspector General
    Complaints Resolution, August 23, 2011, Incorporating Change 1, June 6,
    2012, paragraphs 2.1.1, 2.4). In addition to having the right to
    present personal complaints, Air Force personnel have the
    responsibility to report fraud, waste, abuse, or gross mismanagement; a
    violation of law, policy, procedures, instructions, or regulations; an
    injustice; and any abuse of authority, inappropriate conduct, or
    misconduct through appropriate supervisory channels or to an IG (see
    AFI 90-301, paragraph 2.1.1). Finally, all Air Force personnel must
    promptly advise the Air Force Office of Special Investigations of
    suspected criminal misconduct (see AFI 90-301, paragraph 2.1.1).
        AFI 1-1, paragraph 1.7.4, also highlights other staff agencies
    where Air Force personnel may voice concerns, to include Equal
    Opportunity, the Staff Judge Advocate, and the Chaplain.

                 intelligence, surveillance, and reconnaissance
        4. Senator Manchin. General Welsh, you stated in your testimony the
    U-2 aircraft should be retired and replaced by the Global Hawk Block 40
    aircraft. However, the Global Hawk platform is presently unable to
    complete the same intelligence, surveillance, and reconnaissance (ISR)
    mission without upgrades. How much will it cost for the Global Hawk to
    completely replace the U-2?
        General Welsh. The Global Hawk is unable to completely replace the
    U-2. Per congressional direction, the Office of the Secretary of
    Defense is studying the cost and potential options to improve Global
    Hawk capability. Their analysis is ongoing. The Global Hawk does
    provide capabilities the U-2 cannot provide namely greater range,
    persistence, and multiple simultaneous imagery modes. The U-2 can carry
    larger payloads, operate at higher altitudes, provide unique imagery
    modes, and has inherent capabilities that make it suitable for
    particular classified missions. The Air Force plans to invest $2.23
    billion to modernize the RQ-4 Block 30 over the next 10 years.

        5. Senator Manchin. General Welsh, you stated the Joint
    Surveillance and Target Attack Radar System (JSTARS) program would have
    to retire two aircraft and the replacement aircraft would not be
    acquired until after 2020. How many aircraft can the Air Force afford?
        General Welsh. In fiscal year 2016, the Air Force will retire five
    JSTARS aircraft to resource recapitalization of the JSTARS fleet. Our
    plan is to reinvest these resources to fund the next generation JSTARS
    aircraft. NextGen JSTARS will be a smaller, more efficient aircraft
    with on-board battle management command and control (BMC2) operators,
    modernized sensors, C2 suite, and communications package. Operation and
    sustainment costs will be lower for NextGen JSTARS when compared to
    legacy E-8C aircraft. The anticipated procurement for NextGen JSTARS is
    16 total, with 2 delivered within the fiscal years 2015-2019 Future
    Years Defense Program (FYDP). NextGen JSTARS increases the operational
    capability and capacity while reducing the long-term sustainment costs
    for this critical BMC2 weapon system.

        6. Senator Manchin. General Welsh, when will these new aircraft
    achieve fully operational capability?
        General Welsh. The projected full operational capability date for
    JSTARS recapitalization is 2025. This is consistent with funding
    requested in the fiscal year 2015 President's budget and the draft
    Capability Development Document.
                                     ______

              questions submitted by senator kirsten e. gillibrand
                                 cyber mission
        7. Senator Gillibrand. Secretary James, as you are aware, the
    National Commission on the Structure of the Air Force recently released
    their findings, which highlighted the importance of the National Guard
    and Reserve in the U.S. cyber mission. Also, the National Defense
    Authorization Act (NDAA) for Fiscal Year 2014 directed DOD to look at
    the integration of the Guard in all its statuses into the cyber
    workforce. I have long agreed with this assessment, and introduced the
    Cyber Warrior Act which would establish National Guard cyber teams in
    each State to leverage this talent pool. What actions, if any, are you
    taking to incorporate these recommendations into the Air Force cyber
    force?
        Ms. James. The Air Force is undertaking a comprehensive review of
    every mission area to determine the optimum Active and Reserve
    component balance. The Air Force Total Force Continuum Office and Air
    Force Space Command are examining the potential contributions of the
    Reserve components to Air Force CPTs, using existing Air National Guard
    network warfare squadrons and Air National Guard units that are in the
    process of re-missioning. We expect to have recommendations for a way
    ahead later this year.

        8. Senator Gillibrand. Secretary James, does the fiscal year 2015
    budget request incorporate funding for training, proficiency, and
    developmental opportunities for the Reserve components in line with the
    Active component?
        Ms. James. Yes, the fiscal year 2015 budget includes funding for
    Air Reserve component cyber training and certifications, to include
    associated schoolhouse allocations, in line with the mission and force
    composition.
        The Air Reserve component provides funding for the temporary duty
    training costs involved and the Active component (Air Education and
    Training Command) budgets for the actual training classes. For fiscal
    year 2015, the Air Force Reserve was provided 1,188 training positions
    and the Air National Guard was provided 1,327 training positions. This
    meets the operational and mission requirement of the current Air
    Reserve component force.

        9. Senator Gillibrand. Secretary James, do you see a need for a
    dedicated cyber military occupational specialty as a way to recruit and
    retain Air Force cyber warriors?
        Ms. James. The Air Force has occupational specialties for our cyber
    airmen. For example, our enlisted airmen have two career fields
    dedicated to cyberspace operations. Our Cyber Warfare Operations Airmen
    (Air Force Specialty Code (AFSC) 1B4) conduct ``on the keyboard''
    operations in cyberspace and our Digital Network Analyst Airmen (AFSC
    1N4X1A) conduct ``highly-specialized'' cryptologic cyber intelligence
    operations throughout the cyberspace domain. Our Cyberspace Operations
    Officers (17D) conduct operations across the spectrum of conflict from
    defensive to offensive operations in cyberspace. Our intelligence
    officers (14N) execute the core Air Force intelligence functional
    competencies of analysis, collection, integration, and targeting but
    tailor them to the unique military challenges of cyberspace. By
    focusing our airmen in AFSCs we are able to monitor and tailor
    accession levels requirements and retention status more closely and
    balance those requirements against Service end strength. As a result, I
    can tell you that our cyberspace defense operations airmen are
    currently 66 percent manned and are eligible to receive a selective
    reenlistment bonus. Likewise, our digital network analysts are
    currently 60 percent manned and are eligible to receive a selective
    reenlistment bonus. In our officer examples, our cyberspace operations
    officers are currently manned at 93 percent. Our intelligence officers
    are currently manned at 92 percent. Neither officer career field
    warrants a retention bonus at this time. In addition, we have tools
    available to incentivize the workforce should officer retention become
    an issue.

        10. Senator Gillibrand. Secretary James, the Army has located a
    dedicated cyber center at West Point in my Home State of New York that
    is working to not only train cadets for future cyber careers but to
    promote cyber across the Army as well. What kind of work is being done
    at the Air Force Academy to recruit and train cyber officers and
    promote cyber across the Air Force?
        Ms. James. The Air Force Academy offers cyber programs to all
    cadets as well as specific offerings to computer science-cyber warfare
    and computer network security majors. The newly created computer and
    network security degree focuses on cyber operations and technologies
    with courses in low-level programming, computer hardware, digital
    forensics, reverse-engineering, and cyber policy. The Air Force Academy
    indicates that cadet interest in these majors is at an all-time high.
    They will graduate 36 cadets with the computer science-cyber warfare
    major in May 2014, 3 cadets with computer and network security degrees
    in 2016 and is on target to graduate 30 cadets with computer and
    network security degrees in 2017. In addition, The Air Force Academy is
    engaged with organizations to include intelligence, the other Service
    Academies, Penn-State, National Security Agency, U.S. Cyber Command
    (CYBERCOM) and the National Reconnaissance Office, to name a few in
    expanding and integrating external talent and influence in the Air
    Force Academy's cyber programs. We are very proud of the work the Air
    Force Academy and the cadets are doing to advance the study of cyber in
    academia.

        11. Senator Gillibrand. Secretary James, the Air Force Research
    Laboratory's (AFRL) Information Directorate is located in my Home State
    of New York, at Rome. I am very proud of the work that is being done
    there to promote cyber not only in the Air Force, but across the Total
    Force. Are there any plans to expand the work being conducted by AFRL
    Rome, specifically as it relates to cyber?
        Ms. James. The AFRL Information Directorate leads the discovery,
    development, and integration of affordable warfighting information
    technologies for our air, space, and cyberspace force. The fiscal year
    2015 President's budget requests $1.05 billion of funding across the
    FYDP for science and technology research in the areas of connectivity
    and dissemination, autonomy, and decision support, processing and
    exploitation, and cyber science and technology. This request is 9.8
    percent, or $94.2 million, higher than the fiscal year 2014 President's
    budget and will enhance critical research in assured communications,
    cyber resiliency, cross-domain data dissemination, and other
    technologies that will empower Air Force missions in contested
    environments.
        Of the additional $94.2 million, approximately $35 million will be
    used to expand and accelerate cyber-focused research efforts. The AFRL
    Information Directorate's cyber research will develop technologies to
    provide trust and assurance, create agile and resilient networks,
    support cyber situational awareness, and assure effective missions.
        The funding discussed above assumes that the caps per the Budget
    Control Act of 2011 will not be imposed in fiscal year 2016 and that
    the funding levels projected in the fiscal year 2015 President's budget
    FYDP will be realized.
        Cyberspace is essential to all Air Force missions, and actions in
    cyberspace can have significant digital, kinetic, and human effects. In
    Rome, New York, the dedicated scientists and engineers at the AFRL
    Information Directorate are conducting research critical to protecting
    and assuring vital Air Force missions.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                             a-10 costs and savings
        12. Senator Ayotte. Secretary James and General Welsh, based on the
    proposed divestment of the A-10, how much does the Air Force expect to
    save? In your answer, please provide the fiscal year 2015 numbers, the
    annual amount over the FYDP, and please differentiate between savings
    and cost avoidance.
        Ms. James and General Welsh.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                         Fiscal Year
                                                   -------------------------------------------------------    FYDP
                                                       2015       2016       2017       2018       2019
    ----------------------------------------------------------------------------------------------------------------
    Military Personnel............................      -82.8     -236.9     -328.8     -381.5     -439.5   -1,469.5
    Flying Hours..................................     -188.4     -270.8     -283.6     -323.8     -445.5   -1,512.1
    WSS, Procure, RDT&E...........................      -68.1     -123.9     -155.2     -175.5     -173.5     -696.2
                                                   -----------------------------------------------------------------
      2015 President's Budget Savings.............     -339.3     -631.6     -767.6     -880.8   -1,058.5   -3,677.8
    ----------------------------------------------------------------------------------------------------------------

        The Air Force expects to save almost $3.7 billion across the FYDP
    with an additional $627 million in cost avoidance savings due to
    activities such as the wing replacement program no longer being
    required.
        In  addition  to  these  financial  costs,  delays  to  A-10
    retirement  will  disrupt  the F-35 beddown, due to the impact on
    maintenance personnel. Should Congress block the retirement of the
    Regular Air Force A-10s in fiscal year 2015, the Air Force will be
    forced to under-man F-35 units until qualified personnel become
    available either through end strength increases or reduced manning from
    other mission areas with maintenance personnel.

                                 a-10 missions
        13. Senator Ayotte. General Welsh, in addition to close air support
    (CAS), what are the other primary missions of the A-10?
        General Welsh. The A-10C primary missions are: CAS, forward air
    control (airborne), and combat search and rescue.

                    possible actions on a-10 contrary to law
        14. Senator Ayotte. Secretary James, section 143 of the NDAA for
    Fiscal Year 2014 states that you ``may not retire, prepare to retire,
    or place in storage'' any additional A-10 aircraft for calendar year
    2014, which includes the first 3 months of fiscal year 2015. In
    addition, Congress may decide to extend this prohibition in the NDAA
    for Fiscal Year 2015. Until that decision is made, I believe the Air
    Force should not take any steps to prepare to retire the A-10 or reduce
    the modernization or readiness of the A-10 fleet. On January 24, 2014,
    you were notified of congressional concerns about the Air Force's
    decision to cease all Suite 8 development of the operational flight
    program for the A-10. I appreciate your willingness to reverse that
    decision. However, it has since come to our attention that the Air
    Force may be taking other steps to prepare to retire the A-10 in
    potential violation of current law, including allotting no flight hours
    for the A-10 weapons school and operational test squadron at Nellis Air
    Force Base in fiscal year 2015, canceling A-10 modernization programs,
    and ending normal sustainment and modernization processes. Has the Air
    Force taken these steps?
        Ms. James. No, in compliance with the NDAA for Fiscal Year 2014,
    the Air Force allocation plan includes funding to support the A-10
    weapons instructor course for the  first  4  months  of  fiscal  year
    2015,  which  will  fund  activities  through  class 14-B, and
    operational test squadrons at Nellis Air Force Base are funded for the
    entire fiscal year. As long as A-10 qualified pilots and aircraft
    remain, flight hours will be provided.
        We have evaluated ongoing A-10 sustainment and modernization
    programs and will continue those that are consistent with our current
    force structure plan. In light of the fiscal year 2015 budget request
    position to retire A-10 aircraft by 2019, we will prepare a waiver to
    10 U.S.C. section 2244a, a prohibition on modifications to retiring
    aircraft, to enable these ongoing efforts to continue.

        15. Senator Ayotte. Secretary James, can you also confirm whether
    the Air Force has not allotted flight hours for fiscal year 2015 for
    squadrons at Osan Air Force Base, Moody Air Force Base, Davis-Monthan
    Air Force Base, as well as the Idaho Air National Guard squadron?
        Ms. James. Flight hours for Active Duty units at Osan, Moody, and
    Davis-Monthan Air Force Bases are funded for 6 months; and the Idaho
    Air National Guard unit at Gowen Field is funded through at least the
    first quarter. Additionally, the Air National Guard will adjust flying
    hours, as necessary, depending on how many pilots are selected for
    retraining into the F-15E.

                       challenging the 80 percent number
        16. Senator Ayotte. General Welsh, the Air Force has been saying
    that aircraft other than the A-10 have conducted 80 percent of the CAS
    missions in Iraq and Afghanistan. According to information my office
    received that originated with the U.S. Air Force Central Command, the
    80 percent statistic includes aircraft that fly CAS missions but never
    attack targets on the ground and does not take into account how many
    passes are used. Can you please tell me whether that 80 percent
    statistic that the Air Force has cited counts CAS missions that never
    attack targets on the ground?
        General Welsh. All aircraft types considered in the 80 percent
    statistic have attacked targets on the ground at some point in time.
    The 80 percent statistic accounts for the total number of all CAS
    missions tasked in the Air Tasking Order. More specifically, this
    number is for those missions that actually flew, regardless of whether
    or not the aircraft actually supported troops on the ground involved
    with a troops in contact situation. If we look at only those CAS
    missions where aircraft actually supported troops on the ground in
    Afghanistan from 2008 to 2013, then the A-10 would account for 22
    percent of the CAS effects, which include kinetic events, shows of
    force, and shows of presence.

        17. Senator Ayotte. General Welsh, does it not take into account
    how many passes are used?
        General Welsh. The 80 percent statistic does not take into account
    how many passes were used in a single mission.

                             air force auditability
        18. Senator Ayotte. Secretary James and General Welsh, Secretary
    Hagel said that DOD needs ``auditable statements . . . to reassure the
    public, and Congress, that we are good stewards of public funds.'' Do
    you share Secretary Hagel's belief that we need auditable statements to
    ensure the Air Force is a good steward of our tax dollars, especially
    in this period of difficult budget cuts?
        Ms. James and General Welsh. Yes, we share Secretary Hagel's belief
    that we need auditable financial statements. Auditable financial
    statements will help provide Congress and the American public
    confidence that the Air Force is spending taxpayers' funds judiciously.
    Our current budget environment makes this effort even more urgent.
    Audit readiness will improve the efficiency and effectiveness with
    which we apply the funds entrusted to the Air Force.

                        special victims' counsel program
        19. Senator Ayotte. Secretary James and General Welsh, section 1716
    of the NDAA for Fiscal Year 2014 required the Services to establish the
    Special Victims' Counsel (SVC) programs to provide independent legal
    advice for victims of sexual assault. The Air Force's pilot program
    provided a model for the other Services. How is the Air Force's SVC
    program going?
        Ms. James and General Welsh. The Air Force SVC program is doing
    tremendously well. Annually in April, the Department of Justice
    recognizes a Federal agency that provides outstanding contributions to
    the field of victim advocacy. The 2014 Federal Service Award was
    awarded to the Air Force SVC program for its provision of legal
    representation to victims of sexual assault.
        As of May 9, 2014, the SVC program has represented 837 victims of
    sexual assault and guided victims through 140 courts-martial, 167
    Article 32 hearings, and participated in over 1,360 interviews with
    investigators and trial and defense counsel. In July 2014, the SVC
    program will add 4 more judge advocates, for a total of 29 judge
    advocate generals serving as full-time SVC. This growth will help the
    program expand to meet the new requirements of section 1716 of the NDAA
    for Fiscal Year 2014 to represent child victims of sexual assault and
    adult victims of stalking and sexual misconduct other than sexual
    assault, such as indecent exposure and indecent recording and
    broadcasting. SVCs' annual training will now include sessions that
    address representing children.

        20. Senator Ayotte. Secretary James and General Welsh, what kind of
    feedback are you getting from victims?
        Ms. James and General Welsh. Since the SVC program's inception,
    SVCs have provided victims with surveys at the end of their
    representation. In response, more than 90 percent of the victims
    represented by SVCs have conveyed that they are ``extremely satisfied''
    with the advice and support the SVC provided; 99 percent would
    recommend other victims request a SVC; 93 percent indicated their SVC
    advocated on their behalf; and 96 percent indicated their SVC helped
    them understand the investigation and court-martial processes.
        Victims regularly add comments such as, ``I am extremely
    appreciative of the SVC program, in the beginning prior to being
    assigned an SVC it was a very scary, confusing, and draining
    experience. Once I was assigned [an SVC] everything became much
    clearer, and I truly felt I was being protected.'' And, ``her expertise
    and knowledge of the law made me feel at ease. She was truly on my
    side, and that's the only side she was ever going to be on. To have
    that kind of security is incomparable. As a victim, I feel that her
    services are absolutely necessary for any sexual assault victim.''

        21. Senator Ayotte. Secretary James and General Welsh, according to
    testimony from Secretary Wright in the Subcommittee on Personnel of the
    Senate Armed Services Committee, DOD sexual assault reports are
    significantly up in fiscal year 2013. Is the Air Force seeing increased
    reporting of sexual assault?
        Ms. James and General Welsh. Yes. In fiscal year 2012, the Air
    Force had 790 reports; this increased to 1,047 reports in fiscal year
    2013 (635 unrestricted reports and 412 restricted reports). This
    represents a 32.5 percent increase in overall reporting, a 41 percent
    increase in unrestricted reports, and a 21 percent increase in
    restricted reports. This increased level of reporting comes with no
    significant evidence suggesting that the number of incidents has
    increased at the same rate. Therefore, we are guardedly optimistic that
    the increased number of reports may represent increased sexual assault
    survivor confidence in our response programs and trust in the chain of
    command to provide supportive victim services and to hold offenders
    appropriately accountable.

        22. Senator Ayotte. Secretary James and General Welsh, how much of
    this increased reporting can be attributed to the SVC program?
        Ms. James and General Welsh. We cannot directly correlate the level
    of increase in reporting to the SVC program; nevertheless, the data
    shows that SVC-represented restricted reporters have converted their
    reports to unrestricted at a higher rate (51 percent over the life of
    the program) than the overall Air Force conversion rate (15.57 percent
    in fiscal year 2013). In addition, we have received a total of 905
    requests for an SVC since the program began (338 requests of those were
    received in fiscal year 2014). We also know that of SVC-represented
    victims, 99 percent who have completed our SVC survey have stated they
    would recommend an SVC to other victims of sexual assault.

        23. Senator Ayotte. Secretary James and General Welsh, are more
    victims willing to file unrestricted reports?
        Ms. James and General Welsh. Because they present a full range of
    options for getting needed care to victims, the Air Force considers
    both the restricted and unrestricted reporting options to be integral
    components of a healthy SAPR program. We have noted a general increase
    in both restricted and unrestricted reports over the last several
    years; however, the ratio of restricted to unrestricted reports has
    stayed relatively unchanged since 2009 (for every 10 total reports,
    there have been between 3.5 and 4.5 restricted reports). Between fiscal
    year 2012 and fiscal year 2013, the percentage of reports that
    converted from restricted to unrestricted increased slightly from 14.54
    percent to 15.57 percent.

                                 kc-46a program
        24. Senator Ayotte. Secretary James and General Welsh, does the KC-
    46A program remain on track?
        Ms. James and General Welsh. Yes, the KC-46A program remains on
    track for acquisition Milestone C at the end of fiscal year 2015.
    Boeing has met all contractual requirements to date. The KC-46
    development program is 53 percent complete. Boeing is behind its
    internal schedule for Engineering and Manufacturing Development (EMD)
    aircraft #1 (767-2C Configuration) due to design updates from a wire
    audit which identified safety of flight spatial integration issues,
    internal engineering changes, and functional test corrections. In each
    case, corrective actions are being applied to the remaining EMD
    aircraft. As a result, we expect first flight of EMD #1 to occur in the
    fall of this year and first flight of the KC-46 (EMD aircraft #2) to
    occur in the second quarter of calendar year 2015.

        25. Senator Ayotte. Secretary James and General Welsh, what is the
    current status of the KC-46A program regarding development, fielding,
    and beddown?
        Ms. James and General Welsh. The KC-46 program is in the EMD phase
    of the acquisition process. The program is scheduled to exit the EMD
    phase and enter the production phase with low rate initial production
    authorization as part of the Milestone C decision in August 2015.
    Fielding and beddown of the KC-46 will begin in 2016. The program is on
    track to meet these dates.
        Between 2016 and 2028, the Air Force is planning to base 179 KC-
    46As at a formal training unit (FTU) and up to 10 main operating bases
    (MOB). For the MOBs, current plans call for up to eight installations
    in the continental United States (CONUS), with up to two Active Duty,
    four Air National Guard, and two Air Force Reserve installations.
        Below is the KC-46A aircraft delivery schedule:

             First aircraft arrives at MOB 1 (McConnell AFB, KS):
            February 2016
             First aircraft arrives at FTU (Altus AFB, OK): May
            2016
             First aircraft arrives at depot (Tinker AFB, OK): May
            2018

        The Air Force announced the following KC-46A FTU, MOB 1 final
    basing record of decision (ROD) on April 22, 2014:

             FTU (Active Duty) ROD: Altus AFB, OK
             MOB 1 (Active Duty) ROD: McConnell AFB, KS

        For MOB 2 (Air National Guard), a ROD is scheduled for
    congressional rollout in summer 2014. As we continue to field the
    remaining KC-46As at up to six additional CONUS MOBs, we will make
    future final basing decisions approximately 3 years prior to projected
    aircraft delivery. While we anticipate the criteria for future MOBs
    will remain essentially the same as we move forward with those basing
    actions, we plan to revalidate the criteria and then use the same
    strategic basing process. Under current plans, tanker units not
    selected for KC-46A will continue to perform their current mission, and
    will continue to benefit from capital investments in the KC-135s,
    providing critical capabilities for the foreseeable future.

        26. Senator Ayotte. Secretary James and General Welsh, are there
    any outstanding issues this committee needs to be aware of regarding
    the KC-46A at this time?
        Ms. James and General Welsh. Based on its internal integrated
    master schedule, Boeing is behind schedule completing power-on for EMD
    aircraft #1 (767-2C configuration). This delay results in schedule
    pressure to the EMD #1 first flight, now scheduled for summer 2014.
    Boeing identified the causes of the power-on delay, and is applying
    corrective action on the remaining EMD aircraft. EMD #2 will go to the
    Boeing finishing center late this summer for military component
    installations to become the first KC-46A configured aircraft. EMD #2
    first flight remains on schedule for early calendar year 2015. The Air
    Force is closely monitoring the progress of these aircraft; and will
    update the committee of any changes in status.
                                     ______

                    Questions Submitted by Senator Roy Blunt
                          air force cyber capabilities
        27. Senator Blunt. General Welsh, what is the current DOD mission
    assignment demand for Air Force cyber capabilities or entities that are
    focused on cyber security, information operations, and cyber
    intelligence?
        General Welsh. CYBERCOM's Cyber Mission Force construct constitutes
    the preponderance of DOD demand signal for cyber security and
    intelligence. The Air Force has been tasked to provide over 1,700
    personnel in 39 teams through fiscal year 2016. Approximately 60
    percent of these personnel are from various cyber operations career
    fields, and the other 40 percent consist of cyber intelligence
    personnel.
        Twenty of these teams are CPTs, which defend the DOD information
    environment and our key military cyber terrain. These teams perform
    several functions, including mission assurance, compliance inspections,
    and red team activities.
        Information Operations (IO) is a function performed by the IO cells
    integrated into our Air Operations Centers (AOC). The Air Force does
    not have dedicated IO capabilities that it provides to the joint
    community, apart from those within AOCs to integrate IO into air
    operations.

        28. Senator Blunt. General Welsh, what current capacity or entities
    meet the existing demand of the above mentioned missions
    simultaneously?
        General Welsh. The Air Force currently performs cyber operations
    through units in the 24th Air Force's 67th Cyber Wing and 688th Cyber
    Wing. They are supported by cyber intelligence personnel provided by
    the Air Force Intelligence, Surveillance, and Reconnaissance Agency's
    (AFISRA) 659th Intelligence Surveillance and Reconnaissance Group. We
    currently have units which conduct training for all of these
    disciplines, such as the 39th Information Operations Squadron (IOS) and
    its associate unit, the Vermont Air National Guard's 229 IOS.
        In the future, however, cyber operations and intelligence will be
    fused at the team level through the cyber mission force construct. Air
    Force Cyber will present teams to CYBERCOM complete with offensive,
    defensive, and cyber intelligence capabilities, made up of personnel
    from the 24th Air Force and AFISRA.

        29. Senator Blunt. General Welsh, do you anticipate an increased
    demand for Air Force Cyber Red Team capabilities?
        General Welsh. Currently, the joint community demand for Red Team
    capabilities is expressed in our requirement to provide 20 CPTs to
    CYBERCOM, and we are maximizing our recruiting and training pipeline
    capacity to meet this requirement. Once these teams are built and
    operating, I expect the joint community will assess any capability or
    resource gaps. At that time, we may see additional requirements emerge.

        30. Senator Blunt. General Welsh, the Air National Guard is
    currently proposing the elimination of Air Force capacity for Cyber Red
    Teams. How do you propose to replace capacity, which took over 10 years
    to develop in some cases, considering that the demand for threat
    emulation is increasing?
        General Welsh. Air Force Cyber Red Team capability is transitioning
    into the CYBERCOM Cyber Mission Force construct. The Cyber Mission
    Force construct does not constitute a decrease in Air Force Cyber Red
    Team capability, but rather a force presentation model for Air Force
    cyber capability to CYBERCOM, who will then employ all types of Cyber
    Mission Forces to meet both service and broader requirements. The Air
    Force is currently exploring the right mix of Active, Guard, and
    Reserve components to perform these roles in the future.

        31. Senator Blunt. General Welsh, were you personally aware of such
    a reduction by the Air National Guard to Air Force Cyber Red Team
    capabilities?
        General Welsh. The Air National Guard is not eliminating Red Team
    capabilities from its cyber portfolio. The Air Force will see an
    overall growth in Red Team capacity as we roll out our Cyber Mission
    Forces. The appearance of a reduction is probably due to the Air
    National Guard forces being integrated into CYBERCOM forces rather than
    service capabilities as they were previously used.

        32. Senator Blunt. General Welsh, did the directors of the Air
    Force, among the A1, A5, and/or A8 or their staffs, recommend such a
    reduction?
        General Welsh. The Air Force directors in question did not
    recommend a reduction in Air National Guard Red Teams. In fact, the Air
    National Guard indicates that they are not eliminating their red team
    capacity; rather, they are pivoting their current cyber force structure
    to align with Cyber Mission Force demand from CYBERCOM. The Air
    National Guard is projecting growth in Red Team capacity as we roll out
    Cyber Mission Forces. This action is consistent with Active Duty
    component as we build Red Team capacity through the Cyber Mission Force
    construct. With the help of our Guard and Reserve components, we will
    be better able to gauge whether we are adequately meeting the demand
    for Red Team capabilities.

        33. Senator Blunt. General Welsh, were the directors of the Air
    Force or their staffs aware of such a reduction by the Air National
    Guard to Air Force Cyber Red Team capabilities?
        General Welsh. The Air Force Staff and the National Guard Bureau
    were involved in the process of presenting Air Force total force teams
    to CYBERCOM for employment under proper authority to conduct
    operations. While these teams will no longer conduct cyberspace Red
    Team missions under Air Force authority, we anticipate they will be
    fully employed conducting the Red Team mission under CYBERCOM Cyber
    Mission Force nomenclature.

        34. Senator Blunt. General Welsh, given the increasingly active
    cyber warfare environment, have you expressed or plan to express future
    Air Force requirements for cyber Red Team capacity?
        General Welsh. At this time, we are building significant Red Team
    capacity through the Cyber Mission Force construct, and we are
    exploring options for utilizing a Total Force approach (Regular Air
    Force, Air National Guard, and Air Force Reserve personnel). Once we
    have met this requirement, we will be better able to gauge whether we
    are adequately meeting the demand for Red Team capabilities.
                                     ______

      Questions Submitted by Hon. Tim Scott, a Senator from the State of
       South Carolina (Senator Scott is not a member of the Senate Armed
                              Services Committee)
                        in-kind contributions for leases
        35. Senator Scott. Secretary James, 10 U.S.C. 2667 gives you
    authority to provide leases that ``will promote the national defense or
    be in the public interest.'' Further, under subsection (c) paragraph
    (1)(F), you have the authority to accept in-kind consideration ``of
    such other Services relating to activities that will occur on the
    leased property as the Secretary concerned considers appropriate.''
    This appears to provide the Secretary of the Air Force broad authority
    and discretion to accept in-kind contributions for leases. Can you
    please provide me with your interpretation of 10 U.S.C. 2667 and
    specifically what limitations, if any, subsection (c) paragraph (1)(F)
    places on your ability to accept in-kind contributions?
        Ms. James. Congress has, through the enactment and revision of 10
    U.S.C. 2667, granted this office significant authority in the
    management of non-excess real property resources at the Department of
    the Air Force's disposal. However, that authority is not unlimited. 10
    U.S.C. 2667 constrains the authority to outgrant in two significant
    ways. First, 10 U.S.C. 2667, (b)4 requires that the Air Force receive
    consideration, in cash or in kind, at an amount not less than fair
    market value. This means that whatever consideration our grantee offers
    must be a tangible, quantifiable value in order to be credited towards
    the full fair market value.
        Second, that which is accepted as in kind consideration must be of
    significant value to the U.S. Government. 10 U.S.C. 2667c provides five
    examples of appropriate in kind consideration. Each is a construction,
    utility, or maintenance service for property used by our Service.
    Congress has clearly demonstrated an interest in narrowly tailoring
    payment in kind to real property related expenses. In accordance with
    section 2823 of the Conference Report to H.R. 1585, the NDAA for Fiscal
    Year 2008, modified 10 U.S.C. 2667, and deleted the broader ``facility
    operation support'' in favor of a provision of utility services and
    real property maintenance services. Further, the conference report
    limited ``real property maintenance services'' to pavement clearance,
    refuse collection and disposal, grounds and landscape maintenance, and
    pest control.
        Guided by this expression of intent, the Air Force has not taken an
    expansive view of the authority granted under 10 U.S.C. 2667, c(1)f.
    Rather, we have generally sought to meet the fair market value
    requirement by obtaining the benefits provided in 10 U.S.C. 2667, c(1)a
    thru e, or otherwise receiving benefits closely related to the
    Services' real property needs. In all cases, we read the `provision of
    services' as those that say benefit to the Federal Government,
    primarily the Air Force.

                                charter schools
        36. Senator Scott. Secretary James, keeping in mind the February 2,
    2010, Air Force Memorandum on Air Force Policy on Charter Schools and
    Installation Involvement that states, ``Installation commanders are
    encouraged to support parental and community efforts to develop and
    enhance learning opportunities for all children and especially military
    connected students. These opportunities can include traditional public
    school, private schools, virtual schools, home schools, and charter
    schools.'' Can you please describe the actions the Air Force has taken
    thus far to implement the above guidance and DOD's future plans?
        Ms. James. Since publishing our 2010 memorandum, we have continued
    to emphasize both the quality of education and available options for
    our airmen and their families. The Air Force has updated installation-
    level guidance in August 2013 with a comprehensive checklist to assist
    commanders when a charter school is proposed. While charter schools
    operating on military reservations remain under supervision and
    authority of State educational authorities, the availability provides
    another possible option for our airmen's family members, whether
    through advanced curriculum, progressive learning styles,
    methodologies, or meeting special needs for children with individual
    education plans. The presence of a charter school on a military
    installation also provides a very unique opportunity for partnering and
    relationships on a community level. The Department of Defense Education
    Activity, a field activity of the Office of the Secretary of Defense,
    can also be an additional resource for DOD-wide plans for educational
    practices, support, and availability.

        37. Senator Scott. Secretary James, do you believe that the
    installation of a high performing charter school on base will provide
    enhanced learning opportunities, increase the quality of life for
    parents and base communities, and promote the national defense or be in
    the public interest?
        Ms. James. The Air Force anticipates the success of charter schools
    located on military installations to be similar to those that are
    already on military installations. While some charter schools are
    located on military installations, installation leadership is limited
    in what might be described as ``directive interaction'' with the school
    since it remains under the purview of the State educational authority.
    However, as with all schools on military installations, leadership
    remains concerned about the quality of education provided to military
    family members as that impacts the overall quality of life in the base
    community. We encourage continued appropriate engagement with school
    leadership that educate our students, regardless of the type of school.

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                            TUESDAY, APRIL 29, 2014

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

    RECOMMENDATIONS OF THE NATIONAL COMMISSION ON THE STRUCTURE OF THE AIR
                                     FORCE

        The committee met, pursuant to notice, at 9:38 a.m. in room
    SD-G50, Dirksen Senate Office Building, Senator Carl Levin
    (chairman) presiding.
        Committee members present: Senators Levin, Manchin,
    Shaheen, Donnelly, Kaine, Inhofe, McCain, Chambliss, Wicker,
    Ayotte, Graham, and Blunt.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody.
        I want to welcome our first panel of witnesses. Secretary
    Deborah Lee James, Secretary of the U.S. Air Force, and General
    Mark A. Welsh III, USAF, the Chief of Staff of the U.S. Air
    Force. Welcome back to the committee this morning. We look
    forward to your testimony on the recommendations of the
    National Commission on the Structure of the Air Force (the
    Commission).
        During the second panel, we are going to hear from most of
    the commissioners themselves.
        First, both of you please convey our thanks to the men and
    women of the Air Force, and their families, for their valiant
    service and the many sacrifices that they have made and
    continue to make for our Nation. Thanks to both of you for your
    long careers of leadership and service.
        We are here this morning to consider the recommendations of
    the Commission. Congress established the Commission in the
    National Defense Authorization Act for Fiscal Year 2013, and
    this was a direct result of force structure proposals that were
    highly controversial, to say the least.
        For example, the Air Force had proposed to eliminate the C-
    27 cargo aircraft fleet not long after senior Air Force
    officials told the committee that the Air Force could not
    complete the direct support mission for ground forces without
    the C-27.
        Similarly, the Air Force had proposed to cancel the Global
    Hawk block 30 remotely piloted aircraft system soon after the
    Under Secretary of Defense for Acquisition, Technology, and
    Logistics had certified that the Global Hawk block 30 program
    was essential to national security and that there was no other
    alternative that would provide acceptable capability to meet
    the joint military requirement at less cost.
        In addition, the manpower and aircraft force structure
    changes, which had been proposed, would have fallen
    disproportionately on the Air National Guard. Governors,
    adjutants general, and other important stakeholders also
    complained that they had not been provided an opportunity for
    input in the process through which these proposals were
    developed.
        So we established the Commission to provide an independent
    view on the future structure of the Air Force. The Commission
    was directed to give particular consideration to alternative
    force structures that would, first, meet current and
    anticipated requirements of the combatant commands; second,
    achieve an appropriate balance between the Active-Duty and
    Reserve components of the Air Force, taking advantage of the
    unique strengths and capabilities of each; and third, ensure
    that the Active-Duty and Reserve components of the Air Force
    have the capacity needed to support current and anticipated
    Homeland defense and disaster assistance missions in the United
    States; and maintain a peacetime rotation force to support
    operational tempo goals of 1:2 for Active-Duty members of the
    Air Force and 1:5 for members of the Reserve components of the
    Air Force.
        The Commission submitted its report at the end of January.
    Among the report's major recommendations are that the Air Force
    should shift to a greater reliance on the Air Reserve
    components. The Commission's report suggests that the Air Force
    could move to a 58/42 mix of Active Duty to Reserve component
    as compared to the current 65/35 mix. The Air Force, it was
    recommended, should place greater reliance on the Air Reserve
    component contribution for specific missions, such as
    cyberspace, global integrated intelligence, surveillance, and
    reconnaissance (ISR), special operations, and intercontinental
    ballistic missile forces.
        This morning, we are going to hear from our Air Force
    witnesses about their views on the Commission's
    recommendations, including specifically which of the
    recommendations they support, which ones they do not, and what
    concrete plans the Air Force has for implementing
    recommendations with which they agree.
        In the second panel, we will hear from the commissioners
    about their recommendations. We will offer them the opportunity
    to clarify any issues surrounding those recommendations, and of
    course, we will welcome the commissioners' views on steps that
    the Air Force is taking to implement their recommendations.
        The commissioners who will be with us today are: Lieutenant
    General Dennis M. McCarthy, U.S. Marine Corps Reserve (Ret.)
    and the Chairman of the Commission; Les Brownlee; General
    Raymond E. Johns, Jr., U.S. Air Force (Ret.); Dr. Janine A.
    Davidson; Dr. Margaret C. Harrell; and Lieutenant General Harry
    M. ``Bud'' Wyatt III, Air National Guard (Ret.).
        On behalf of the committee, I want to thank all of you, all
    of our commissioners, whether you are here or you are not here,
    for the tireless efforts that you have made and the dedication
    which you have shown to producing a timely report and
    recommendations which will significantly aid Congress and--I am
    sure the Air Force agrees--will help the Air Force and the
    administration in charting a course for the Air Force to become
    even more effective and efficient.
        My full statement will be made part of the record.
        [The prepared statement of Chairman Levin follows:]
                    Prepared Statement by Senator Carl Levin
        I want to welcome our first panel of witnesses, Secretary James and
    General Welsh, back to the committee this morning to testify on the
    recommendations of the National Commission on the Structure of the Air
    Force. During the second panel, we will hear from most of the
    commissioners themselves.
        First, please convey our thanks to the men and women of the Air
    Force and their families for their valiant service and the many
    sacrifices they have made and continue to make for our Nation. And
    thanks to both of you for your long careers of leadership and service.
        We are here this morning to consider the recommendations on the
    National Commission on the Structure of the Air Force. Congress
    established the Commission in the National Defense Authorization Act
    for Fiscal Year 2013. This was a direct result of forces structure
    proposals that were highly controversial, to say the least.
        For example, the Air Force had proposed to eliminate the C-27 cargo
    aircraft fleet not long after very senior Air Force officials told the
    Committee that the Air Force could not complete the direct support
    mission for ground forces without the C-27. Similarly, the Air Force
    had proposed to cancel the Global Hawk Block 30 remotely piloted
    aircraft system soon after the Under Secretary of Defense for
    Acquisition, Technology and Logistics certified that the Global Hawk
    Block 30 program was essential to national security and there was no
    other alternative that would provide acceptable capability to meet the
    joint military requirement at less cost. In addition, the manpower and
    aircraft force structure changes that had been proposed by the Air
    Force would have fallen disproportionately on the Air National Guard.
    Governors, Adjutants General, and other important stakeholders also
    complained that they had not been provided an opportunity for input in
    the process through which these proposals were developed.
        Congress established the Commission to provide an independent view
    on the future structure of the Air Force. The Commission was directed
    to give particular consideration to alternative force structures that
    would:

             meet current and anticipated requirements of the
            combatant commands;
             achieve an appropriate balance between the regular and
            Reserve components of the Air Force, taking advantage of the
            unique strengths and capabilities of each;
             ensure that the regular and Reserve components of the
            Air Force have the capacity needed to support current and
            anticipated homeland defense and disaster assistance missions
            in the United States;
             provide for sufficient numbers of regular members of
            the Air Force to provide a base of trained personnel from which
            the personnel of the Reserve components of the Air Force could
            be recruited;
             maintain a peacetime rotation force to support
            operational tempo goals of 1:2 for regular members of the Air
            Force and 1:5 for members of the Reserve components of the Air
            Force; and
             maximize and appropriately balance affordability,
            efficiency, effectiveness, capability, and readiness.

        The Commission submitted its report at the end of January. Among
    the reports major recommendations are:

             The Air Force should shift to a greater reliance on
            the Air Reserve components. The Commission report suggests that
            the Air Force could move to a 58/42 mix of Active Duty to
            Reserves, as compared to the current 65/35 mix.
             The Air Force should place greater reliance on the Air
            Reserve component contribution for specific missions, such as
            Cyberspace, Space, Global Integrated Intelligence, Surveillance
            and Reconnaissance, Special Operations, and Intercontinental
            Ballistic Missile Forces.
             The Air Force should take additional steps to improve
            integration of the forces of the Active Duty, Air National
            Guard, and Air Force Reserve.

        This morning, we will hear from our Air Force witnesses about their
    views on the Commission's recommendations, including specifically which
    of those recommendations they support, which ones they oppose, and what
    concrete plans the Air Force has for implementing recommendations with
    which they agree.
        In the second panel, we will hear from the commissioners about
    their recommendations and offer them an opportunity to clarify any
    issues surrounding those recommendations. We will also welcome
    commissioners' views on steps the Air Force is taking to implement
    their recommendations.
        The commissioners who will be with us today are Dennis M. McCarthy,
    the Chairman of the Commission, Les Brownlee; General Raymond Johns,
    Jr., USAF (Ret); Dr. Janine Davidson; Dr. Margaret C. Harrell; and Lt.
    Gen. H.M. ``Bud'' Wyatt, ANG (Ret). On behalf of the committee I want
    to thank you all for your tireless efforts and dedication to producing
    a timely report and recommendations which will significantly aid
    Congress, and, I believe the Air Force agrees, the administration in
    charting a course for the Air Force to become more effective and
    efficient.

        Chairman Levin. I now call on Senator Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman. Let me thank both
    of our witnesses, Secretary James and General Welsh, for all
    the individual attention they have given us. General Welsh, you
    brought your greatest asset, Betty, with you out to Oklahoma
    when we received the Commander in Chief's Installation
    Excellence Award at Altus. I appreciate both of you being there
    at that time. I just appreciate the fact that you are hands-on
    and willing to do that and not just delegating things to other
    people. Two great people at the helm that I appreciate very
    much.
        We are forced to retire key assets, as the President said,
    such as the A-10, the Airborne Warning and Combat System
    (AWACS), the U-2, the Joint Surveillance and Target Attack
    Radar System (JSTARS), the EC-130, and delay procurement of
    some of our F-35s. We are unable to increase the number of E/A-
    18s. I support funding on all these aircraft. We will continue
    to work with the chairman to find offsets to pay for these what
    I consider to be critical assets.
        Since the attacks of September 11, 2001, the Air Force has
    been called upon again and again to defend the Nation. Its
    Guard, Reserve, and Active Duty components have proven that
    they are, indeed, the world's greatest air force. We are all
    indebted to you, Secretary James and General Welsh, and all of
    our airmen and civilians under your command for their service
    and sacrifice.
        The Air Force, like all the Services, is being forced to
    make difficult decisions on how to remain combat-ready while
    being as cost effective as possible. With these problems in
    mind, our committee established a commission to determine what
    changes, if any, should be made to the force structure of the
    Air Force to strike its delicate balance.
        As the Commission outlined in its total force concept, each
    component must be an integral part of the future of the U.S.
    Air Force, and I could not agree more. I also believe that each
    component has its own critical role in the total force. Just as
    the Active Force could not perform all of its missions without
    the Reserve Force, neither can the Reserve Forces maintain
    combat effectiveness without the experience and institutional
    knowledge of its Active Forces.
        So as we proceed with this hearing, I look forward to
    seeing how you guys are going to make all this stuff work.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Let me now call upon Secretary James. Again, we thank you
    for your great work.
        We are going to be in an unusual situation this morning at
    about 11 a.m., as we are going to begin six votes. Now, it is
    not totally extraordinary that we have a vote or two that we
    work around, but this morning apparently there are six votes
    that will begin at 11 a.m. We are going to try somehow or other
    to work around those votes, but it will be a huge challenge. If
    possible, we would ask the witnesses to be as succinct as
    possible. This is an important issue and we obviously have to
    and want to spend time on it. I just want to make you all aware
    that at 11 a.m. you will be seeing people come and go and come
    and go for whatever length of time it takes to finish this
    hearing.
        Secretary James.

    STATEMENT OF HON. DEBORAH LEE JAMES, SECRETARY OF THE U.S. AIR
                                 FORCE

        Ms. James. Thank you, Mr. Chairman, Senator Inhofe, and
    other members of the committee. General Welsh and I very much
    appreciate the opportunity to come before you today.
        Mr. Chairman, in light of your upcoming retirement, may I
    just take a moment to thank you and say how grateful all of us
    are for the work that you have done over the years for our
    entire military team but especially for the U.S. Air Force. We
    will miss you a great deal.
        Chairman Levin. Thank you very much. I really appreciate
    that, but I think I heard words here that I am not gone yet.
        Ms. James. You are not gone yet. That is true. I just
    wanted to get my digs in. We thank you.
        Chairman Levin. I very much appreciate it.
        Ms. James. May I also request, Mr. Chairman, that our
    prepared statement be included in the record.
        Chairman Levin. It will be.
        Ms. James. Mr. Chairman and members of the committee, I
    want to begin by stating loudly and clearly that I am a big
    believer in our Total Force and I have been for decades
    throughout my service in Government as well as my time in the
    private sector.
        I have to admit, though, that before my confirmation I was
    concerned that one of my biggest challenges would be working on
    this Active Duty, National Guard, and Reserve relationship
    going forward and on the Total Force in general because from
    what I had heard on the outside, including from some of you
    during courtesy calls, was that the relationship had become
    very fractured, which was a personally painful message to me,
    particularly dating back from my experience as Assistant
    Secretary of Defense for Reserve Affairs in the 1990s because,
    you see, during that period, I used to refer to our Air Reserve
    components as the super stars amongst all of our Reserve
    components. To hear that the relationship had become fractured
    was personally painful, and I very much wondered how we had
    gotten to this state of play but, more importantly, how were we
    going to repair it and take advantage in the future of the
    talents and the capabilities of our National Guard and Reserve
    within the Total Force concept.
        If we flash forward, as it turns out, since my confirmation
    and since I have learned of all the work that has gone on since
    the fiscal year 2013 situation that you referenced, Mr.
    Chairman, I can tell you there has been tremendous progress
    moving forward towards transparency and inclusiveness across
    the board. More important, there have been real progress and
    real results as reflected in the fiscal year 2015 proposal
    before you, as well as in our plans for fiscal year 2016 and
    through 2019, the so-called out-years. We are not done yet, by
    the way.
        So here is how it all happened. Prior to my coming on
    board, former Secretary Donnelly and General Welsh commissioned
    a tiger team, I will say, and we called it the Total Force Task
    Force, or TF2 for short. This was a tiger team of three
    generals from each of the Reserve components. Their charge was
    to conduct a comprehensive review of the Total Force
    requirements, recommend ideas for improving collaboration, and
    figure out a way to balance Total Force capabilities.
        As part of this, General Welsh's charge to the team was as
    you go through and analyze mission-by-mission, push as much as
    possible into the Reserve components for the future, of course,
    within operational capability parameters. So that was the
    charge from the top.
        Now, as we mentioned a couple of weeks ago in our posture
    statement, leadership from all three components, including
    several adjutants general, teamed up to figure out the right
    balance of force structure and personnel across the Air Force
    so that we were leveraging the right capabilities. Let me now
    give you some of the results. Again, I want to underscore we
    are not done yet.
        While the whole Air Force is getting smaller and as we are
    divesting additional aircraft, we laid in force structure
    changes to take advantage of the Guard and Reserve's strengths.
    For example, in the area of ISR, we have increased Reserve
    components' presence in the MQ-1 and nine fleets of remotely
    piloted aircraft. We are going from 17 percent to 24 percent
    representation in that arena. In fiscal year 2016, we are
    adding three Air Force Reserve cyber units, approximately a 30
    percent increase. Real results in the area of ISR and cyber.
        In fiscal year 2015, we are decreasing Active component end
    strength by 17 percent but only decreasing the Air Force
    Reserve and Air National Guard end strength by 3 percent and .4
    percent, respectively. In the future, we hope to garner enough
    savings by moving capability and capacity to the Reserve
    components so that future end strength cuts may not be
    necessary. No proportionality in terms of reductions. It is, in
    fact, disproportional, meaning we are taking more out of the
    Active Duty and relying more on the Guard and Reserve.
        As we plan to rely more on the Guard and Reserve in the
    future, another piece of evidence is that we are budgeting
    better for the man-days of Guard and Reserve usage, a 70
    percent increase in planned man-years over the next 2 years.
    This is so that we can plan and plug in National Guard and
    Reserve to operational missions on a day-to-day basis.
        Another one of TF2's charters was to be the conduit to the
    Commission that was standing up and doing its work, providing
    results of our internal reviews, as well as offering expertise
    and personnel to support in a variety of ways. Let me take this
    moment to add the thanks that you offered to the Commission. I
    would like to do the same for the expertise and the efforts
    that they have accomplished on our behalf. We have been working
    very closely with them throughout the process, and we find that
    we are in agreement with the vast majority of their
    recommendations. Overall in my opinion, the body of work that
    they have produced will really help us advance the ball
    tremendously, and I thank them for it.
        In fact, the Air Force agrees with 86 percent of the
    recommendations, with another 11 percent that we need to do a
    little bit more analysis before we can take an initial
    position. That means, when you add it all up, we may well end
    up agreeing with upwards of 90 percent of the entire
    Commission's recommendations.
        Last week, we did provide a comprehensive list to your team
    on each of these recommendations, our associated efforts, and
    what we think about it, and we expect to have a way forward on
    each of them or a reason why we feel we cannot accomplish those
    recommendations by next year, essentially the budget submission
    of next year. We will know more along the line. It is not all
    due at the end of next year, but certainly we will have a
    position by February 2015.
        Now, there are two areas that I do want to call to your
    attention where we have a disagreement with the Commission. The
    first was the assertion--not really a recommendation, but the
    assertion--that a 58/42 Active to Reserve ratio is the proper
    go-forward strategy or a workable go-forward strategy for our
    Total Force. General Welsh and I both feel that we have not
    done enough analysis to agree with that. It might be right. It
    might not be right. We need to do a mission-by-mission
    approach, and that is the path that we intend to take. So for
    now, certainly for fiscal year 2015, we would disagree with
    that ratio, due to not having enough information.
        The second one has to do with the disestablishment of the
    Air Force Reserve Command. We are all for integration and, of
    course, that is the basis of that recommendation. The
    Commission wants to seek more integration. But we feel that in
    fiscal year 2015 we do not have a good alternative way to
    manage and provide for and take care of 70,000 members of the
    Air Force Reserve. We would disagree with that proposition, at
    least for fiscal year 2015.
        Let me now tell you the TF2 is no longer in existence. That
    was a temporary organization, but we now have a new
    organization called the Total Force Continuum (TF-C). This is
    another group of generals who are going to lead the charge and
    help us drive the train forward to make sure that we keep this
    ball rolling.
        There are a number of areas that we are working on. I would
    just like to highlight a few of them for all of us.
        One is called the continuum of service, and the Commission
    talked a great deal about this. We totally agree that we need
    to make it easier for people to flow between Active Duty,
    Guard, Reserve, and back at different times in their career. We
    have a number of initiatives we have identified, including some
    of the same ones that the Commission identified, to help get us
    there, to include, we have contracted for a new enterprise-wide
    Total Force personnel and pay system to facilitate the
    Continuum of Service. We are integrating at all levels
    increasingly from the senior staffs on high to unit levels. In
    the last 6 months, I would like to tell you all that we have
    integrated three force support squadrons, one at Peterson Air
    Force Base (AFB) in Colorado, one at March AFB in California,
    and one at Pease AFB in New Hampshire. This is where one unit
    is essentially serving all of the three different components in
    the geographic area with respect to personnel systems, working
    well so far. That is 6 months old.
        Over the last 3 years, we have also increased our
    associations in the Air Force from 102 to 124, which is a 22
    percent increase. An association is essentially where you have
    a squadron of aircraft and that squadron is shared by both
    Active Duty personnel, as well as Reserve component personnel.
    It is a form of integration and we are kicking it up a notch
    and doing more of these in the future.
        I am very interested in initiatives that will help us to
    retain talent within the Total Force. Again, as we flow back
    and forth between Active Duty, Guard, and Reserve, and
    particularly as the Active Duty downsize, how do we capture
    that talent into the Guard and Reserve. For example, we have
    opened up the Palace Chase Service Commitment Waiver Program
    and reduced the Active Duty service commitment payback from 3
    Reserve years for every year of Active commitment, down to one
    for one and extended the program to include rated officers. The
    bottom line there is we are making it easier and more
    attractive to people to enter the Guard and Reserve.
        I have also taken several initiatives that are within my
    authority. I have moved out on the use of aviator retention pay
    to be able to pay that pay to traditional reservists. In other
    words, as an aviator leaves Active Duty and they are going into
    the Guard and Reserve, I want to be able to pay that incentive
    pay to aviators that are entering the Guard and Reserve. I have
    moved out to seek authority from the Office of the Secretary of
    Defense to get that done.
        I just signed a letter delegating authority to the Director
    of the Air National Guard and the Chief of the Air Force
    Reserve to approve indispensability accessions at the grades of
    colonel and below. That should streamline the process from the
    time a person leaves Active Duty to the time they can actually
    enter the Guard and Reserve. At the moment, the process is too
    long and we lose good people due to that lengthy process. We
    want to streamline that going forward.
        There are other examples as well. I will not go into them
    unless we get into it during questions and answers, Mr.
    Chairman. But the point that I want to leave you with is that
    we are pushing hard and we are leaning forward to make changes
    as quickly as possible when we think it makes sense to do so.
    But we do need time on a couple of these matters that I have
    mentioned that we have to study carefully, the second- and
    third-order effects. We must not rush.
        The TF-C team, as I said, will be helping us lead the
    charge, and I intend to meet with them regularly so that I am
    doing my part to push these things through the system as
    quickly as possible.
        Now let me wrap up, Mr. Chairman. I would just like to give
    you where I hope to see our Guard and Reserve 10 or 15 years
    from now. I will not still be in the seat, but I will be
    watching. Here is my vision of where I hope we are going and
    where we will be going.
        Our Air Force will be smaller, but it will be more capable.
    It will be innovative. It will be more integrated and it will
    be ready. Our Air Force will be a good value for our taxpayers
    and able to respond when our Nation asks us to respond
    overseas, as well as when disaster strikes here at home. We
    will be led by a new chief, not this chief, because our time
    will be up, but we will be led by a new chief who has had, by
    that time, major Reserve component experience because they will
    have served jointly together. People will flow more easily
    between the components than they do today. Overall, we will be
    more reliant on our Guard and Reserve going forward, and we
    will have leaders at all levels that understand one another
    better because they will have served together more. Hopefully,
    we will not need to be debating these issues or talking so much
    about these issues of integration because it will just be the
    natural course. It will be the way that we just simply do
    business. So that is my vision of where I hope we will be in
    the next 10 to 15 years.
        I thank you very much for the opportunity to appear before
    you, and I would yield to General Welsh.
        [The joint prepared statement of Ms. James and General
    Welsh follows:]
            Joint Prepared Statement by Hon. Deborah Lee James and
                          Gen. Mark A. Welsh III, USAF
                                  introduction
        The U.S. Air Force is the finest in the world. Through the years,
    innovative airmen from all three components of the Total Force--Regular
    Air Force, Air National Guard, and Air Force Reserve--have fought side-
    by-side providing unequalled airpower for America. Judged in its
    entirety, the evolution of these components into an integrated fighting
    force is a great success story.
        Since the 1960s, the Air Force has implemented policies
    specifically designed to maximize Total Force capabilities. Among these
    early policies were the comparable structuring of Active and Reserve
    component units; equal training and evaluation standards for Active and
    Reserve component forces; and an integrated approach to equipping,
    supporting, and exercising all Air Force units.
        Over the past 2 decades, to meet combatant commander requirements
    and the demands of recurring deployments, the Air Force has
    increasingly called upon its Total Force. This elevated use of the Air
    National Guard and Air Force Reserve has transformed a traditionally
    strategic reserve force into a force that provides operational
    capability, strategic depth, and surge capacity. As the Air Force
    becomes smaller, we will rely more on each component for the success of
    the overall mission.
        The uniformed members of today's Total Force consist of
    approximately 327,600 Regular Air Force airmen, 105,400 Air National
    Guard airmen, and 70,400 Air Force Reserve airmen actively serving in
    the Selected Reserve, as authorized by the National Defense
    Authorization Act for Fiscal Year 2014. Together, these airmen provide
    unmatched airpower on a global scale every day. While we have
    experienced challenges at the policy level, at the tactical and
    operational levels, where it really counts, it is impossible to tell
    the difference between an Active Duty, Guard, or Reserve airman . . .
    that's the ultimate testament to our Total Force.
                             total force task force
        Our integration has not been without challenges. Recently the
    components diverged on key issues, creating an environment that did not
    emphasize transparency, understanding, or agreement, and compromised
    the essential bond of institutional trust between the Regular Air
    Force, Air National Guard, and Air Force Reserve. This became evident
    during development of the Air Force's fiscal year 2013 budget proposal,
    which opened up significant disagreement between the three components
    about future force structure recommendations. Recognizing the growing
    gaps between the three components and in order to identify a better way
    ahead, the Secretary of the Air Force and the Chief of Staff of the Air
    Force established the Total Force Task Force (TF2) on January 28, 2013.
        Led by three major generals representing each of the components,
    the TF2 was chartered to conduct six tasks:

              Task 1: Conduct a comprehensive review of policies, previous
            independent and Air Force-directed studies on the Total Force,
            existing Total Force functional and mission analysis, and Air
            Force organizational and operational initiatives to establish a
            baseline that defines the status of Air Force-wide Total Force
            integration efforts.
              Task 2: Use the comprehensive review to identify strategic
            questions and critical assumptions to frame the planning
            effort.
              Task 3: Develop options that balance Total Force capabilities
            to meet the full range of current and future mission
            requirements.
              Task 4: Identify legal, policy, operational, and
            organizational changes that will enhance our ability to
            integrate future Total Force capabilities.
              Task 5: Assist the National Commission on the Structure of
            the Air Force by:

            (1)  Providing results of the internal comprehensive review
    that defined the baseline status of Air Force Total Force efforts;
            (2)  Offering personnel to support the Commission with specific
    areas of expertise; and
            (3)  Coordinating requests for information to the Air Force
    headquarters staff.

              Task 6: Build an engagement plan to inform and educate
            internal and external stakeholders throughout the process.

        Additionally, the Chief of Staff directed the task force to lean
    forward and push as much into the Reserve component as possible,
    without negatively impacting operational capabilities or required
    response timelines. So the task force conducted a comprehensive review
    of Total Force requirements, offered many ideas for improving
    collaboration between the three components, and presented a starting
    point for future Total Force analysis and assessment efforts. This
    resulted in a fiscal year 2015 budget proposal with more reliance on
    the Reserve component. For example the Air Force pushed F-15Es, B-1Bs,
    and C-130Js into the Reserve component through the collaborative Total
    Force proposal (TFP-15). We are also leveraging the unique cyber skills
    of our Reserve component by standing up three Air National Guard
    network warfare units in fiscal year 2015, and we have increased the
    number of intelligence, surveillance, and reconnaissance units in the
    Air Force Reserve from 0 in 2008 to 11 squadrons and 1 group in 2013.
        To continue the body of work initiated by this task force and
    facilitate a transition to a permanent staff structure, the Chief of
    Staff then directed the stand-up of a transitional organization, the
    Total Force Continuum (TF-C) on October 1, 2013. TF-C is currently
    working under our Strategic Plans Division, and we will continue to
    ensure that this group has all the support necessary to further enhance
    and solidify our Total Force efforts. We are greatly encouraged by the
    results thus far.
             national commission on the structure of the air force
        The National Commission on the Structure of the Air Force (NCSAF)
    was commissioned to consider whether the Air Force:

        1.  Meets current and anticipated requirements of the combatant
    commands;
        2.  Achieves an appropriate balance between the regular and Reserve
    components of the Air Force, taking advantage of the unique strength
    and capabilities of each;
        3.  Ensures that the regular and Reserve components of the Air
    Force have the capacity needed to support current and anticipated
    homeland defense and disaster assistance missions in the United States;
        4.  Provides for sufficient numbers of regular members of the Air
    Force to provide a base of trained personnel from which the personnel
    of the Reserve components of the Air Force could be recruited;
        5.  Maintains a peacetime rotation force to support operational
    tempo goals of 1:2 for regular members of the Air Force and 1:5 for
    members of the Reserve components of the Air Force; and
        6.  Maximizes and appropriately balances affordability, efficiency,
    effectiveness, capability, and readiness.

        The Commission delivered its report to the President and Congress
    on January 30, 2014.
        During the review, the Air Force and the Commission worked
    together. TF2 provided the Commission with approximately 450 documents.
    Air Force leaders took part in 11 public hearings and 6 closed
    meetings. In the end, the Commission's report contained 42
    recommendations. Our initial examination of the NCSAF report suggests a
    great deal of symmetry between many of the recommendations from the
    Commission and current Air Force proposals for the way ahead,
    particularly in the areas of continuum of service, more associations,
    and greater collaboration and integration.
        Of the Commission's 42 recommendations, the Air Force agrees with
    86 percent of the recommendations. For example, staff integration (#6),
    the Air Force has already taken steps to integrate staff with members
    of all three components on Headquarters Air Force and major command
    staffs. Beginning in the Fall of 2014, the component personnel staffs
    will begin integrating under a Total Force, Air Force Office of
    Personnel (TF AF/A1). We expect this to improve our ability to identify
    and close personnel policy and legislative gaps between the components.
    The A1 is the first of our Deputy Chiefs of Staff to implement a Total
    Force organization with more to follow. Full operational capability
    within the TF AF/A1 is projected for October 2016.
        We also agree in principle with cost approach (#1), the Commission
    recommends the Defense Department adopt a ``fully burdened cost
    approach.'' The Air Force agrees that we should use a ``burdened cost
    approach,'' and in a memo dated April 11, 2014, the Air Force Chief of
    Staff, the Chief of the National Guard Bureau, the Director of the Air
    National Guard, and the Chief of the Air Force Reserve, restated their
    commitment to incorporating this type of approach into ``cost analysis
    as soon as it is sufficiently mature. Currently, the most mature model
    is the Individual Cost Assessment Model (ICAM), which is being
    developed by AFRC in coordination with the Air Force Office of Studies
    and Analyses, Assessments and Lessons Learned (A9), and should be
    complete sometime this summer. Until ICAM or an appropriate burdened
    life-cycle cost tool is ready, the memo establishes AFI 65-503 costing
    factors as the analytic baseline which accounts for over 87 percent of
    the burdened costs.
        Eleven percent or five of these recommendations require further
    analysis before we can take an initial position. This includes the
    recommendation for the Air Force to include personnel tempo accounting
    in the Air Force Integrated Personnel and Pay System (#38). The Air
    Force needs more analysis of the details, specifically the definitions
    and tracking systems. We will have the initial policy review of these
    five recommendations done by May 31, 2014, and we are optimistic that
    we will be able to implement some or most of each recommendation.
        We do not concur with one recommendation--to disestablish the Air
    Force Reserve Command. We disagree because we currently do not have a
    way of managing the readiness, force management, and administrative
    oversight of Reserve airmen without it. As we become more integrated,
    if it makes sense to do this in the future, then perhaps we would agree
    with this recommendation.
        The report also suggests an aggregate Active component/Reserve
    component ratio of 58-42, which we disagree with because there is
    insufficient in-depth analysis to determine that ratio. The symbiotic
    relationship between the Active and Reserve components does not lend
    itself to a one-size-fits-all ratio. Mission by mission, platform by
    platform--the right mix varies. Currently our Active component/Reserve
    component ratio is 65-35. If the detailed, mission specific analysis we
    are currently conducting supports a 58-42 mix, then in the future we
    may agree with this assertion. We expect to have force mix options for
    80 percent of our mission capabilities complete by the end of 2014.
        Overall, we are very grateful for the Commission's hard work and
    expertise. We are also optimistic about the future due to the symmetry
    between the Commission and the task force. Due to the close
    cooperation, the Air Force was able to start working on many of the
    recommended initiatives before the final report was released.
                 transforming the total force to one air force
        In addition to the Air Force's close cooperation with the
    Commission, standing up TF2 and its successor TF-C, we have achieved
    more transparency and cooperation between the components in other ways.
    For example, we included two state adjutants general in our the fiscal
    year 2015 budgetary discussions and decision meetings; eliminated the
    use of non-disclosure agreements in budget discussions in order to be
    more transparent in Air Force decision making; energized the ``3-to-1''
    initiative which seeks efficiencies by combining the components'
    separate personnel and pay systems; and over the past 3 years increased
    associate units by 22 percent, and we have committed to associate every
    new F-35A and KC-46A unit based in the continental United States.
        As we restructure our Air Force to appropriately balance Active
    component (full-time) and Reserve component (mostly part-time) forces
    to ensure a symbiotic, mutually beneficial relationship, we must be
    very careful. If we get the balance wrong, the strength of each
    component is diminished, so getting that right is essential. There is
    little margin for error. For example, how do you build a force that
    best meets both State and national requirements at the least possible
    cost without losing operational effectiveness? Determining the right
    balance is not easy, and it is different in every mission area.
    Although there will not be clear agreement in every case, we are
    performing thorough analysis to quantify and optimize the Active and
    Reserve component mix to meet national defense strategy in each of our
    core mission areas, while also responding to State's title 32
    requirements. The key is that we do it openly, transparently, and with
    all stakeholders in the discussion.
        In the future, we will be more reliant than ever before on our
    Guard and Reserve, because it makes both operational and fiscal sense
    for us to move in that direction. While we have come a long way, more
    work must be done to achieve true integration.
                                   conclusion
        Tomorrow's Air Force must be a lean, agile, efficient Total Force
    team that meets national security demands while also being the most
    capable and credible force we can afford. Moving forward, we are
    committed to comprehensively transforming the Air Force and the way we
    do business, but this will not happen in 1 year or even 2. To ensure we
    can continue to meet combatant commander requirements, we must take
    deliberate and synchronized actions. With the help of the office of the
    Secretary of Defense and Congress, we will be able to achieve the
    transformation to One Air Force, optimized to be the best use of
    taxpayer dollars and provide unmatched airpower to America.
        The U.S. Air Force is the finest in the world and the evolution of
    the Total Force is a great success story, but much of the story has yet
    to be written. To remain the finest Air Force in the world, we must
    rejoin the formation and fly forward together. Only together can we
    optimize the strengths of each component to provide the global
    vigilance, global reach, and global power that America expects its
    airmen to deliver.

        Chairman Levin. Thank you very much, Secretary James.
        General Welsh, welcome and we look forward to your
    testimony.

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

        General Welsh. Thank you, Mr. Chairman, Ranking Member
    Inhofe. Sir, thank you for recognizing the fact that my wife
    Betty does rock. [Laughter.]
        It is always an honor to be here with the distinguished
    members of the committee.
        I would like to add my thanks to the Secretary's to the
    members of the Commission for what I believe is a tremendously
    useful report.
        As Secretary James mentioned, the only recommendation with
    which we actually do not agree is the disestablishment of the
    Air Force Reserve Command. Today's reality is that we simply do
    not have the ability to properly oversee the individual
    readiness, force management of part-time airmen, personnel
    development, and force support issues related to the Air Force
    Reserve without the structure that that command currently gives
    us. Clearly, as the Commission suggests, we should be working
    toward developing the integrating capabilities that will allow
    us to at least consider such an initiative at some point in the
    future.
        But there are so many other great initiatives in this
    report that we do support. I believe that cooperation,
    transparency, and viability of our Total Force construct will
    have more impact on the combat capability of our Air Force in
    the future than any other factor except the budget. The
    Secretary and I, along with Lieutenant General James ``JJ''
    Jackson, Chief of the Air Force Reserve, and Lieutenant General
    Stanley ``Sid'' Clarke, Director of the Air National Guard,
    both of whom join us here today, are all in on ensuring we
    operate as one Air Force. But the hurdles we face in that
    effort are not easy. If they were, we would not be sitting here
    today. At the heart of the challenge is how to balance the
    cost-effectiveness that taxpayers deserve with the operational
    capability that the Nation demands.
        As the boss mentioned in early 2013, we stood up the TF2 to
    look at the proper balance of force structure between Active
    Duty and Reserve components. The intent was to make our Air
    Force more efficient without losing operational capability or
    responsiveness in a crisis. We asked the TF2 to look at each of
    our mission areas, platform-by-platform, and develop a plan to
    push as much force structure as possible into the Reserve
    component without going past those operational breaking points
    that would keep us from being able to accomplish the mission or
    to manage and sustain the force effectively over time. There is
    no doubt that Reserve component airmen are more cost effective
    if used properly.
        But we have learned that the optimal component ratio for
    each mission area and each aircraft in that mission area is
    different. For example, the mobility mission is perfectly
    suited for a component mix weighted toward the Reserve
    component. In fact, 56 percent of our mobility mission is
    already in the Reserve component. In contrast, the steady,
    longer-term deployment requirements of our airborne command and
    control platforms makes them much more difficult for Reserve
    airmen and their employers to support in a much broader way
    than they already do today.
        We have been working very hard for over a year to better
    understand the many significant factors that impact this
    analysis. We have done this side-by-side with the Air National
    Guard, the Air Force Reserve, the National Guard Bureau, two
    great State adjutants general, and a team of outstanding
    research analysts. We agreed on a decision support tool and a
    common cost model and have looked together at options for the
    best balance between Active and Reserve Force structure. We
    expect to have the force mix option for 80 percent of our
    mission forces, both aircraft and people, complete by the end
    of 2014, and we will include as many of these solutions as
    possible in the fiscal year 2016 Program Objective Memorandum
    (POM). There is nothing simple about this analysis and there
    are no shortcuts to getting it right.
        In their report, the Commission suggests that we should
    pursue an Active to Reserve aggregate ratio of 58 percent to 42
    percent. This number was the output of financial analysis aimed
    at saving a set amount of money over time. To be fair, the
    report calls the 58/42 ratio an estimate, but I am not
    comfortable with an estimate for something that is this
    important. The proper force ratio should be an output of
    detailed financial, operational, and force sustainment
    analysis. When we have completed the detailed mission area
    analysis currently in progress, we will be able to present and
    defend a plan with specific Active/Reserve ratios for each
    mission and for each aircraft within that mission. By putting
    those together, we will be able to show you the best overall
    force mix. To pursue an overall 58/42 ratio today without that
    analysis risks being penny wise and pound foolish.
        What I ask of you today is a little time and trust. Our
    Total Force has been working this really hard side-by-side for
    the last year. We have made great strides and will continue to
    improve. But hasty decisions without thorough analysis could
    literally break our Air Force, and I do not think you want that
    any more than we do.
        Your Air Force is the finest in the world, and the
    evolution of our Total Force over the years is a tremendous
    success story. But there are a lot of chapters yet to be
    written in that book. We need to be as good at the headquarters
    level as our airmen are at the operational and tactical levels.
    Those airmen, who have been fighting side-by-side for years, do
    not see the difference between an Active Duty member, a
    guardsman, or a reservist. Those who benefit from American air
    power really do not care. They just know that without it, you
    lose.
        The boss and I look forward to your questions.
        Chairman Levin. Thank you both.
        Because of the votes coming up at 11 a.m., let us try a 6-
    minute round here to start off.
        Both of you have basically said that you cannot really
    conclude that a 58/42 mix as a goal for the ratio of Active
    Duty to Reserves is the right mix. As I understand it, this is
    a goal which the Commission has set.
        Madam Secretary, you have given us some daylight today on
    some of the assessments, the analysis that you have made. It
    was not in your written statement, but in your oral statement,
    you gave us two or three examples. How far along are you in
    this analysis? Are you within a month, 2 months, 4 months?
    Where are you?
        Ms. James. Mr. Chairman, the plan is to have 80 percent of
    the Air Force fully analyzed by the end of this year. I will
    yield to General Welsh to try to give an assessment of how far
    we have come to date, but some of the things that are high on
    the list to review in the upcoming months are bombers, civil
    engineers, space, tankers, fighters. There are additional
    reviews done but we do project 80 percent of it can be done by
    the end of this year.
        Chairman Levin. How much has been done now? What percent
    would you estimate?
        General Welsh. Mr. Chairman, I would estimate 40 to 50
    percent is complete, and some of that is reflected in the
    manpower numbers that the Secretary mentioned in this
    particular budget as we shift more manpower and cut it from the
    Active-Duty Force as opposed to the Reserve component.
        Chairman Levin. Okay. Now, is it fair to say then that most
    of the analysis will be completed in time for the fiscal year
    2016 budget?
        Ms. James. Yes.
        General Welsh. Mr. Chairman, that has been the intent since
    we began this effort.
        Chairman Levin. But some of it is available now, 40 to 50
    percent, whatever it is.
        Ms. James. Yes, and that has been folded into the fiscal
    year 2015 plan before you, as well as the out-years of 2016
    through 2019.
        Chairman Levin. We cannot identify as to where your current
    analysis that you have completed has been folded into the 2015
    budget request. So what we will need you to do, for our record
    and as promptly as you can, is to give us the impact of
    whatever analysis you have completed on budget so that we can
    see how it has been folded into the 2015 budget request. All
    right?
        Ms. James. We will do that, Mr. Chairman.
        [The information referred to follows:]

        Given that the fiscal year 2015 budget cycle was well ahead of our
    Total Force mix analysis effort, we first proceeded with developing our
    fiscal year 2015 Total Force Proposal (TFP). After its completion, our
    Total Force-Continuum office assessed the TFP against their efforts to
    date to ensure the proposal was consistent. The Chief and I will work
    to guarantee these two processes are even more integrated as we move
    into future budget cycles.

        Chairman Levin. If you can do that within the next few
    weeks because we are going to be marking up the budget.
        There are obviously some recommendations here on weapons
    systems which are major recommendations, and we do not know
    whether or not that is a result of a completion of your
    analysis on this force balance or not. We need to know that.
    You have made recommendations here on some really critical
    weapons systems. Is that a result of the analysis or is that a
    prediction of the analysis or what is it? It is very important
    to us that we have your analysis in front of us in the next
    couple weeks. I am not saying finish the 80 percent. If you
    cannot finish it, you cannot finish it in time, but if it is 40
    or 50 percent, we have to see how it directly impacts that
    budget request.
        General Welsh. Mr. Chairman, to be clear, the divestiture
    recommendations we are making are not due to this analysis. The
    divestiture recommendations are intended to create the best Air
    Force we can possibly have 10 years from now based on
    sequestered funding levels while maintaining capability and
    readiness in the interim.
        Chairman Levin. Are they not affected by the analysis?
        General Welsh. Sir, the analysis then follows up with how
    do you best posture that force over time. For example, we
    know----
        Chairman Levin. Why would it not affect that analysis,
    though? Why would the analysis, in terms of the relationship
    between Active Duty and Guard, not have an effect on some of
    this budget that is in front of us?
        General Welsh. Sir, it does have an effect, but I am saying
    all the divestitures are not based on our analysis. That is all
    I am saying.
        Chairman Levin. Are any of them?
        General Welsh. All the divestitures will affect the
    analysis we are doing, but the divestitures are based on Total
    Force capability today and 10 years from now. That is what that
    is intended to address, and now we are looking at how do we
    best posture the Total Force to provide that. If there are ways
    that we can identify in the analysis that we complete through
    December of this year that allow us to do that more
    efficiently, then we will be able to do that. That is what the
    Total Force analysis is doing.
        Chairman Levin. If you are going to be saving billions of
    dollars, which is what the plan, I think, is from this
    analysis, you would not need as many, I presume, divestitures.
    You might not need as many divestitures. Is that not true?
        General Welsh. Sir, if we went today to a 58/42 percent
    mix, as the Commission recommendations, we would save about $2
    billion a year. That does not get anywhere near the $20 billion
    delta between our plan 3 years ago that is currently in our
    force structure projection and the $20 billion less we have in
    fiscal year 2015, actually available, to move toward that
    projection. The corrections are much larger than just the
    adjustment we can make by moving even 36,000 Active airmen into
    the Reserve component, as the suggestion to go to 58/42 percent
    means. Force structure has to go.
        Chairman Levin. Yes, but it could affect some of the
    divestitures even if it is only $2 billion out of $20 billion.
    Would that not be true?
        General Welsh. Yes, but if we do not make divestitures now,
    the problem gets worse each year. That is the difficulty with
    this.
        Chairman Levin. Got you. Thank you. My time is up. Thank
    you very much.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        I do not think anyone is going to argue with the great
    contributions of the Guard and Reserve in Iraq, Afghanistan,
    and it has really been great. But a lot of the effectiveness is
    due partly to the fact that the pilots got their training and
    experience while serving in the Active component. I assume that
    this is something that was taken into consideration in this
    whole mix thing, that you still have to have a source of this
    training and that has historically come from the Active
    component. Has that been considered?
        Ms. James. Yes, Senator Inhofe, that is very much the case,
    and any time that we can have well-experienced people who have
    Active Duty service as part of our Guard and Reserve, that
    makes all of us better. Yes, that is an important factor, that
    we have a healthy Active Duty that can feed the Guard and
    Reserve.
        Senator Inhofe. That is true, but there are also external
    factors, and I have not heard anyone say anything about these.
    I recall 5 years or so ago I was active in extending the
    mandatory retirement of airline pilots from 60 to 65. Now that
    may be coming back to haunt us now because there is going to be
    a surge of retirements. That means there is going to be a surge
    of recruitments drawing from the Guard and Reserve and the
    Active component. Has that been considered? Do you consider
    that to be a problem?
        Ms. James. We are monitoring that closely, and yes, we are
    projecting. One of the reasons why I was interested in that
    aviator incentive pay in the Guard and Reserve that I
    referenced was so that even as those aviators that leave Active
    Duty, that we have an extra incentive to hopefully keep them in
    the Guard and Reserve to retain the talent.
        Senator Inhofe. That is good. That is something that
    occurred to me. I even commented about that 5 years ago that
    this was going to happen. I did not know it would happen in the
    environment that we are in today, but nonetheless, it is there.
        On all the missions that I mentioned in my opening
    statement, I look at these different vehicles that we have, the
    assets that we have and I can find justification for all of
    them from the A-10 to AWACS and everything else. I know that
    the chairman and I have looked to see where can we find funding
    to retain as much of this as possible. I look at this and I
    think we really cannot cut a lot of these. However, I am aware
    of the fact, General Welsh, of the negative impact if Congress
    does not allow you to retire these assets.
        Give us a little of your insight having to do with what
    happens if you are not able to retire some of the assets that
    you think you should be able to retire.
        General Welsh. Sir, wherever we are not able to take
    savings from those divestitures, we will have to take
    reductions somewhere else in areas that we do not think are as
    significant a capability in terms of what the combatant
    commanders expect us to provide.
        We also have a game plan that allows divestiture of assets
    and cross-training of people and transition of those people
    into different roles in our Air Force. That plan would have to
    be relooked at. We have units that are affected who are
    scheduled to divest aircraft and transition to new mission
    areas. If they do not transition, that transition plan will
    have to be relooked at because we might not have a new mission
    capability to fill in behind them when they eventually do
    retire because we will put the capabilities available someplace
    when it is available.
        Senator Inhofe. You always keep in mind the risk that is
    increasing as these decisions are made.
        General Welsh. Yes, sir. We believe the least risk from an
    operational perspective is clearly with the divestiture plan we
    put forward, and that is what our operational analysis shows.
        Senator Inhofe. A minute ago, you said in your statement
    what I am asking for is a little more time. I know the chairman
    mentioned that. Do you feel that is pretty much under control
    now in terms of the changes that are going to have to be made,
    that there should be adequate time to do this?
        General Welsh. Sir, I firmly believe and have for the last
    year that by the 2016 budget, we will have the great majority
    of the long-range plan fully analyzed and discussed with the
    entire Total Force arena.
        Senator Inhofe. Is there anything either one of you wanted
    to add? Because it was my understanding that one of the
    recommendations that you did not agree with was the
    disestablishment of the Air Force Reserve. You covered that. Is
    there anything in addition to that that you would like to
    comment on?
        Ms. James. I would just underscore that I think the
    underlying reason why the Commission made that recommendation
    has to do with integration. They are trying to, of course,
    reduce excess infrastructure, and we are all for that, but also
    to encourage better integration. I just wanted to say we
    wholeheartedly agree with the thrust of integration, and we are
    doing a variety of things to get us to that ultimate
    destination.
        I would come back to the point that to do a
    disestablishment, particularly in fiscal year 2015, an
    immediate disestablishment, before we are in any way capable of
    doing that further integration, I think it could do harm to the
    70,000 strong Air Force Reserve. That is why, again, we said
    give us some more time to work on the thrust of integration. I
    think we are making good progress but do not agree that that
    can be done in the immediate future.
        Senator Inhofe. I appreciate that. I think as difficult as
    the assignment is, I cannot think of two people I would rather
    have at the helm making those decisions than the two of you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman. I feel kind of
    isolated out on a wing. I hope I get out of the penalty box
    sometime. [Laughter.]
        Thank you to the witnesses for your testimony today.
        Just a feedback. I have been very impressed in Virginia in
    my visits to Langley AFB in watching the degree of integration
    between the Reserve and Active components. The 1st and the
    192nd fighter wings are there and they fly and maintain F-22s.
    As a layperson coming in, it is hard to distinguish between the
    Active components and the Reserve components, they work so well
    together. I gather in the Commission report, there is also
    references to some Langley examples dealing with the
    intelligence reservists who serve in that function there. I
    have seen some great work already in progress.
        Just a technical question first. Is the fiscal year 2015
    budget request already trying to implement some of these
    Commission recommendations? I gather you agree with most. The
    58/42 we understand you are still studying and the issue about
    the command structure. But does the fiscal year 2015 budget
    already take into account some of these recommendations, or was
    that budget prepared before the Commission report was
    finalized?
        Ms. James. Maybe I could start, and then General Welsh
    could also elaborate.
        My answer to that question would be that we have been
    supporting and working with the Commission all along. We have
    been sharing ideas all along, even as the fiscal year 2015
    budget was being put together. There are, I will say, examples
    of Commission ideas and so forth which we agreed with and it
    was maybe call it a mutual idea. I gave a couple of examples in
    the cyber world, in the ISR world. Just the very fact that we
    are bringing the Active Duty down more, substantially more,
    than we are the Guard and Reserve, that reflects the agreement
    that we need to rely more on our Guard and Reserve in the
    future.
        General Welsh. Sir, there are also some other initiatives
    that the Commission recommends that we fully support and have
    been engaged on for a while, some of the service continuum
    issues that the Secretary mentioned in her opening comments to
    allow officers to move more freely between components over time
    and to develop integrated career planning over time. We have a
    three-in-one initiative which is basically a way to manage the
    total Active Duty component and Reserve component airmen
    through one personnel system and process. We have a ways to go
    on this, but we are actually beta testing it at three bases
    today: one Active, one Guard, and one Reserve. We have already
    integrated senior Reserve component officers onto the air staff
    in key positions. We will do much more of that. We have put
    Active Duty officers in as wing commanders in Guard units. We
    have Reserve component officers as vice commanders in Active
    Duty units. We need to do more and more of that going forward,
    which is something the Commission strongly supports, and we
    began that in this last year.
        Senator Kaine. Great.
        Secretary James, you testified in your verbal testimony
    about the cyber and ISR work. There is, obviously, a huge need.
    In Virginia, we have a lot of cyber and information technology
    workforce, and many are in the Reserve or National Guard. I am
    concerned generally about our ability to attract and retain,
    whether it Guard or Active Duty or Reserve, the right cyber
    workforce, given the challenges that we have. If you could talk
    a little bit about how the integration between Guard and
    Reserve works in the cyber field and how we might use things
    like the continuum to try to attract and retain that workforce
    that we will need for the future, that would be great.
        Ms. James. Let me make a couple of comments and then yield
    to General Welsh.
        I agree with you, and I too am interested in peeling back
    the onion in terms of how is it that we will attract and retain
    not only to the Guard and Reserve but also to our civilian
    workforce. We have growing cyber needs across the board. I am
    particularly interested in exploring more what types of
    incentives that we may need because I am convinced that
    probably this is a specialized workforce. What may be sorts of
    promotion opportunities? Do we need to break it out separately.
    This is something that I would be very interested in and will
    be exploring more in the months to come.
        General Welsh. Senator, I would just tell you that there is
    a very rich recruiting pool for a cyber workforce that the
    Guard and Reserve can actually take advantage of much easier
    than the Active component can take advantage of, especially in
    some parts of the country. We are trying very hard to figure
    out with the Air National Guard and the Adjutants General
    (TAG), where those places are. We have already begun with new
    units in those areas to do cyber targeting, cyber intelligence,
    et cetera. We will continue to do that.
        Senator Kaine. It is also a recruiting pool, though, that
    has a lot of other people interested in that talent. It is a
    very competitive one.
        Last thing just quickly on the continuum of service. Your
    description of it in your written and verbal testimony today is
    interesting as an approach to manage the careers of those who
    want to remain active or remain in the mission and potentially
    move back and forth between Active Duty, Guard, and Reserve. It
    is also, done correctly, potentially a cost-saver.
        We are spending time talking about things like compensation
    reductions. If we are trying to save money, one way is to look
    at benefits, but another way is to look at just the personnel
    structure itself, less the benefits issues than the structure.
    Does this continuum of service model offer us some potential
    ways to deal with our cost issues that are not benefit
    reduction but a different strategy that might be effective?
        General Welsh. Yes, Senator, clearly it does. The most
    difficult issue probably over time will be the ability of the
    Reserve component to manage officers to develop them for senior
    executive positions, if you will, in the Air Force, the Total
    Force, in a way that is different than they have been able to
    in the past. This is going to require a huge commitment from
    the Guard and Reserve. They understand that and they are
    committing to it, but you cannot take someone at the one-, two-
    , three-star level, put them into a senior position who is not
    currently well-qualified and experienced enough to do the work.
    It is easy to say we should identify positions to fill. The
    hard part is going to be training people over time who have
    other jobs, who have families that are stable and do not move
    routinely to prepare them for those jobs. We can do it. We have
    the officers capable of it, but we have to commit to this as an
    institution. That is where we are trying to go.
        Senator Kaine. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Kaine.
        Senator McCain.
        Senator McCain. Thank you.
        I thank the witnesses for being here today.
        Madam Secretary, in the Commission report, ``if, as
    expected, the Air Force proposes to divest entire fleets such
    as A-10 and the KC-10 aircraft, such retirements would likely
    project substantial savings. However, the units that operate
    those aircraft reflect decades of investment in those men and
    women who fly and maintain them, as well as in the facilities
    the Air Force likely will need for emerging missions and a new
    way of using the Total Force. Because any such divestitures
    would be subject to congressional approval, the Commission
    recommends that the Air Force develop and provide Congress a
    detailed, complete, and comprehensive plan explaining how the
    Air Force will achieve missions undertaken by such platforms in
    the future and how it will retain the highly trained personnel
    from these fleets.''
        Secretary James, so far this committee has not received
    anything like a complete and comprehensive or detailed plan
    while a major capability of the U.S. Air Force, which is the
    close air support (CAS) role, is being either contemplated or
    proposed to be eliminated. I would ask for your thoughts as to
    what would replace the A-10 aircraft in its CAS role.
        Ms. James. Senator McCain, we will always strive to do
    better in terms of the communications. This year, I believe on
    day one when the budget rolled out, we offered an operational
    laydown in greater detail for committees, the staffs, and
    whatnot. We will always endeavor to do better and take the
    lessons learned from this year.
        In terms of the A-10, what is intended to replace the
    percentage that the A-10 was doing in terms of CAS in the
    immediate future would be the other aircraft, such as F-16, F-
    15E, and so forth that are capable----
        Senator McCain. What is ``so forth''? Tell me again the
    ``so forth'' here.
        Ms. James. F-15E, F-16, B-1 bombers, some of our unmanned--
    --
        Senator McCain. The B-1 bomber will now be used for CAS?
        Ms. James. It is my belief that the B-1 bomber has done
    some CAS in Afghanistan. We would cover it with existing
    aircraft, and, of course, down the line----
        Senator McCain. That is a remarkable statement. That does
    not comport with any experience I have ever had nor anyone I
    know has ever had.
        See, this is an example. You are throwing in the B-1 bomber
    as a CAS weapon to replace the A-10. This is the reason why
    there is such incredible skepticism here in Congress, believe
    me. Under the present environment, I cannot speak for the
    committee. I can only speak for myself and several others. You
    will not pursue the elimination of the finest CAS weapon system
    in the world with answers like that. I hope you will come up
    with something that is credible to those of us who have been
    engaged in this business for a long time.
        General Welsh. Senator, may I offer some additional data?
        Senator McCain. Sure.
        General Welsh. Sir, the B-1 has been executing CAS missions
    in Afghanistan for some time now, for a number of years----
        Senator McCain. It has been able to perform a very
    extremely limited number of missions of CAS, General. Please do
    not insult my intelligence.
        General Welsh. Sir, may I finish my answer?
        Senator McCain. Yes.
        General Welsh. The F-16 has flown 40,000 CAS sorties in
    Afghanistan since 2006, which is about 16,000 more than the A-
    10 itself has flown. We have flown a number of CAS missions
    with multiple airplanes, including all the ones the Secretary
    mentioned, in Afghanistan and performed them successfully.
        I think the issue here, though, is that all of our fleets
    of aircraft represent an incredible investment of resources
    over time by Congress. But the Nation and the laws that govern
    us have decided to spend less on Department of Defense (DOD)
    funding. We are cutting capability and capacity in every single
    mission area in our U.S. Air Force with the 2015 budget. We
    will not be able to fully replace that mission capacity in any
    mission area, and we will not be able to save all the people in
    those mission areas and still meet the budget.
        Senator McCain. I have yet to meet, General, an Army
    commander with responsibility for troops on the ground that
    believes that a B-1 or an F-16 replace the capability of the A-
    10. If you know of someone, I would be glad to meet and talk to
    them. Those are the ones whose judgment I rely on because they
    are the ones whose people are in harm's way.
        Secretary James, the Evolved Expendable Launch Vehicle
    (EELV) was consolidated between Boeing and Lockheed Martin.
    Since that time, with no competition, predictably the EELV cost
    growth has been the highest of any system in the Air Force, 166
    percent. Under Secretary of Defense Frank Kendall directed that
    the Air Force, ``aggressively introduce a competitive
    procurement environment in the EELV program.'' Secretary
    Kendall elaborated the Air Force wanted to obtain the positive
    effects of competition as quickly as possible. At that time,
    Secretary Kendall authorized the Air Force to purchase up to 36
    rocket cores from United Launch Alliance (ULA) on a sole-source
    basis and up to 14 through a competitive process.
        So you came forward by cutting the 14 EELV down to 7, and
    one of the reasons given by Major General Robert Murray was,
    quote, in order to honor the long-term commitment buy that the
    Air Force has with ULA. ULA has had 166 percent inflation
    associated with their program.
        I have asked for an Inspector General (IG) investigation of
    this whole process. We need competition. I will not go into
    what you gave me as a response before. Your responses do not
    hold water. We do not know what the payload is, and you are
    saying that because they cannot make the payload.
        By the way, the rocket motors are made in Russia. Rocket
    motors are made in Russia, and we want to continue reliance on
    a program that the Russians are key elements in providing this
    capability?
        Ms. James. Senator, I will be answering the two letters
    that you sent me, I promise, by the deadline that you have
    requested. I welcome the DOD IG investigation that you have
    requested because getting a new set of eyes and ears on this
    competition question will be of help to me. Of course, this
    entire acquisition strategy and contract was put in place
    before I became secretary. I welcome some advice from the DOD
    IG as to whether it is anti-competitive or not. I want
    competition and I am going to be working toward that.
        As far as the RD-180, that, of course, is worrying. It is
    under review, and we expect to have more to say from that
    review on the way ahead within the next month.
        Senator McCain. It seems to me that we should be
    encouraging the capability to manufacture rocket motors here in
    the United States of America rather than being dependent upon
    Vladimir Putin.
        I thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator McCain.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman.
        Thank you, witnesses.
        What is your overall feeling on the utility of having this
    independent Commission review and make recommendations on the
    future structure of the Air Force? Has it been beneficial in
    making appropriate and solid decisions?
        Ms. James. I think so, yes, in my opinion. I was saying
    earlier I think it is a very fine body of work, and there is a
    huge amount of symmetry that we have together. There is a
    little bit more that we need to explore, as we said, and we
    feel particularly in these two areas that to go too quickly
    could actually be harmful. But overall, it has been a good
    experience.
        Of course, we have to go back. The reason why the
    Commission was put in place in the first place was because
    there was such dissatisfaction and a fracturing between the
    components and so forth, and that is not good. Hopefully, we
    will never go back to that. But the overall body of work, I
    think, has been excellent.
        Senator Donnelly. General?
        General Welsh. Yes, sir. I completely agree. I think it has
    been tremendous to look at. The first time I read the report, I
    was struck by the different perspective on the same problem
    that the report presented to the way we looked at the problem.
    I think that is always helpful. I think there is information in
    there, there is analysis in there that will help us be a better
    Air Force down the road, and that is the whole purpose.
        Senator Donnelly. If this Commission route were to be used
    for some of our other Services, what are the recommendations
    you would make to us in the learning curve, in how it was done?
    What are the things that you have found to be really beneficial
    and what are some of the bumps in the road that maybe we could
    avoid if we use this process again for one of the other
    Services in the future?
        Ms. James. First of all, we are certainly not recommending
    that you do that.
        Senator Donnelly. Oh, no, I understand that.
        Ms. James. If you were to do that, certainly the close
    coordination has been essential. I mentioned the TF2. Having a
    body within the Air Force, which was the liaison which was
    supplying certain expertise, which was receiving requests for
    information, getting it staffed out so that the Commission
    could get answers to its questions, that sort of association
    has proven to be excellent.
        General Welsh. Senator, there is an addendum to this
    report. I believe it was authored by Secretary Brownlee and Dr.
    Davidson that highlights the fact that the Services are
    different and that the findings of this Commission should not
    be transferred clearly to another Service.
        Senator Donnelly. There is no guilt by association here. Do
    not worry.
        General Welsh. Oh, no, I do not mean that at all.
        What I mean is that the dynamic is completely different in
    the Services in the way we communicate, the way we integrate,
    the way the Total Force operates today before the Commission's
    work. I think that facilitated a lot of the effort that was put
    into this. We had a lot of Active Duty members who were excited
    about talking to the Commission. We had all component forces
    talking to our TF2. We were working in the same direction in
    parallel channels which, I think, made this better for
    everyone.
        Senator Donnelly. What I was wondering is, what are the
    most beneficial parts of this, having another set of eyes
    looking at the same thing, maybe coming from a different
    perspective and coming up with some other ideas on these
    things.
        General Welsh. Sir, I believe the operational work that our
    TF2 has done, the analysis that focuses on operational future
    is well supported by the predominance of the work the
    Commission did, which is looking at force management and
    development of an integrated force over time. The two working
    together are very helpful.
        Senator Donnelly. I want to ask you a question that is
    specific to a fighter wing in Indiana, the 122nd. They are
    going to be transitioning from A-10s to F-16s in 2019, and we
    have been working collaboratively with the Air Force on that.
    Eventually, the F-35 is planned to take the place of the F-16s.
    As you look at this and as you go into full-rate production on
    the F-35s, have you begun to look at how you intend to field
    that aircraft in a balanced way to take advantage of the skills
    and cost-effectiveness of Guard units as well?
        General Welsh. Yes, sir, we have. Our original plan was the
    same force bed-down approach that we used for both the KC-46
    and the F-35. We started with a flying training first and then
    an Active Duty base and then a Guard base. The intent was to
    continue to alternate that way over time and mix the Air Force
    Reserve into the Reserve component bed-down. I think that for a
    bed-down on all these things, as force structure changes we
    have to reassess how we are doing bed-down planning. I think as
    the Total Force integrates, if we move more force structure in
    the Reserve component, which is completely our intent, then the
    way that the bed-down proceeds will have to be assessed and
    evolved over time. But there is clearly an intent to bed down
    across all three components.
        Senator Donnelly. As we look at the Commission report and
    as we look forward in changing the Active and Reserve component
    mixes, what are the training and responsiveness and dwell time
    issues that you are going to have to take into consideration as
    the mix may change from like 60-something/30-something to maybe
    60/40, 58/42, that kind of thing?
        General Welsh. Sir, the one benefit the Air Force has is
    that for an individual airman, we measure readiness the same
    way. Our Reserve component units are equally ready to do the
    mission when they are fully trained as their Active Duty units
    are, and we try to keep individuals fully trained, all the
    time. One of the hidden success stories in our Air Force is the
    ability of the Guard and Reserve to keep those aircrews and the
    people who support are trained to the same level as the Active-
    Duty Force. It is not easy. They do phenomenally well at this.
    It is why for the last 14 years we have been able to support an
    incredible rotational presence with volunteers and from the
    Reserve component.
        Going forward, we have to make sure we are able to continue
    to do that. Some of that is based on the fact that we have
    experienced people in the Reserve component who are grown in
    the Active component and then migrate to the Reserve component.
    That strong Active component has to be a focus, as does the
    transition into the Reserve component planning. All of those
    are things that the Commission addresses in their report and
    are areas that we fully agree with.
        Senator Donnelly. Thank you both. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Donnelly.
        Senator Wicker.
        Senator Wicker. Thank you very much, and thank you both for
    returning to testify so soon after your previous visit to this
    committee.
        Before we get to the topic of this hearing today, I want to
    briefly mention that I visited mainland Japan and also Okinawa
    during the break to review our security posture in Asia. My
    trip included a visit to the 18th Wing at Kadena Air Base on
    Okinawa, which is located a few hundred miles from North Korea
    and from China and Taiwan.
        During my visit, I met with our frontline fighter pilots,
    special operators, combat search and rescue crews, and
    intelligence professionals. Without a doubt, I can say that air
    superiority is a vital element of our pivot to Asia, and all
    Americans should be proud of these troops working in the
    region.
        Now, let me return to a subject that we visited earlier,
    and it has everything to do with this topic of this hearing,
    and that is, Keesler AFB. Madam Secretary, you will be visiting
    Keesler on May 29. Of course, we in Mississippi are proud of
    Keesler and the fact that they won the 2013 Air Force
    Installation Excellence Award. We look forward to hosting you
    in Mississippi and on the Gulf Coast.
        I want to restate my belief that the Air Force Total Force
    plans, proposal to relocate C-130J aircraft from Keesler AFB to
    Little Rock is shortsighted. This move will adversely impact
    our intra-theater airlift capability at a time when our
    Services are evolving toward a more rotational deployment
    model. I believe the Air Force must make force structure
    decisions based on long-term global force requirements, as well
    as concrete and defensible data.
        I am sticking to my script because I am choosing my words
    carefully this morning.
        I am convinced that the transfer of C-130Js from Keesler
    will not actually produce promised financial savings since a
    new airlift group would have to be physically established at
    Little Rock. It seems to me that establishing a new group at
    Little Rock would, in fact, cost additional dollars because it
    would require the costly relocation of military and civilian
    full-time employees. The numbers just do not add up to savings.
        During our Air Force posture hearing on April 10, I asked
    the Air Force to provide this committee and my office with
    written answers to specific questions about the proposed
    Keesler C-130J move. Our committee has not received these
    answers. So I hope you will commit to getting answers back to
    me perhaps before the end of the week.
        At his nomination hearing on March 11, General Paul J.
    Selva, USAF, nominated to be the Commander of U.S.
    Transportation Command, provided an answer to a question for
    the record to this committee that states, ``there is no cost to
    move 10 C-130Js from Keesler to Little Rock. In fact, there are
    savings associated with this move, with the largest coming from
    the merger of real power.''
        However, following a meeting with Lieutenant General
    Jackson of the Air Force Reserve, the Air Force Reserve Command
    provided a written response to Congressman Steven Palazzo of
    Mississippi. That said: ``keeping the 10 C-130Js at Keesler AFB
    would save 209 positions.'' I understand that these positions
    are new overhead positions composed of medical personnel
    support and group staff.
        Who is this committee to believe? Who is Congressman
    Palazzo's committee to believe? General Selva, who said during
    his nomination hearing on March 11 that moving the C-130Js to
    Little Rock would save jobs? The written response from the Air
    Force Reserve Command saying that keeping the aircraft at
    Keesler AFB will save 209 jobs?
        I hope you can see why Senators would be confused by these
    conflicting statements. I would also hope you would go back and
    relook this entire proposal that appears not to be rooted in
    any financial savings at all.
        Finally, I would point out to members of this committee,
    Mr. Chairman and Mr. Ranking Member, that the Commission's
    recommendations do not specifically endorse or recommend the
    transfer of C-130Js based at Keesler. In fact, the C-130Js at
    Keesler are already part of one of the most successful total
    force installations in the country, with Active and Reserve
    component airmen working seamlessly together. All of the
    efficiencies and synergies the Air Force would hope to obtain
    at Little Rock are already in place at Keesler. As such, I do
    not buy the Air Force total force justification for moving the
    C-130s to Little Rock.
        I do not expect to resolve this issue this morning at this
    hearing, but I strongly suggest, General and Madam Secretary,
    that it would be prudent for the Air Force to consider keeping
    these aircraft at Keesler in order to provide the best value to
    the warfighter and the taxpayers.
        In summary, from either a Total Force consideration or the
    consideration of taxpayers' dollars, this move from Keesler to
    Little Rock simply does not add up.
        I thank the committee for their indulgence in this respect.
        Chairman Levin. Thank you very much, Senator Wicker.
        Senator Manchin.
        Senator Manchin. Thank you, Mr. Chairman.
        I want to thank the witnesses for their testimony before
    the committee today. Your leadership has demonstrated success
    in both self-evaluation as a Service to find improvements and
    in enhancing the partnership between all of your components.
        With that, General, if I may, I am very impressed by the
    Air Force and the Air National Guard partnership that you all
    have been able to work a little bit better than some of our
    other branches. I appreciate that very much, both on domestic
    and international missions.
        General Alexander, former head of the U.S. Cyber Command,
    the Director of the National Intelligence, James Clapper, and
    the Defense Intelligence Agency Director, General Michael
    Flynn, have all stated that the Guard could play a huge role in
    the Nation's cybersecurity mission.
        The Commission recommended extensive use of Air Force
    Reserve airmen for the cyber mission.
        I understand the Air Force requested $40 million as part of
    an unfunded priority list of five Air National Guard cyber
    protection teams.
        How many Air National Guard cyber units are there
    currently, sir?
        General Welsh. Senator, we have six currently, and we are
    looking at how do we expand that capability over time. I was
    recently in Washington State. For example, just to highlight
    the way this can work, a number of the members of the cyber
    squadron there work at places like Google, and so they bring
    incredible expertise onto the job every day. That is what we
    are looking to take advantage of.
        Senator Manchin. That is what we were looking at, how would
    these units best be able to participate as part of the front
    line of the defense in cyber on the Homeland. You are trying to
    integrate that, I would say, with using the expertise we have
    in the field.
        Also, General, the Army's special operations Guard units in
    West Virginia have, in the testimony of Admiral McRaven,
    performed magnificently. I am interested in the special
    operations units of the Air National Guard and Reserve. One
    Commission recommendation was to increase Guard and Reserve
    presence through greater integration. The downsizing of the
    Army, however, is projected to affect the training and
    readiness of the National Guard. As the Air Force downsizes,
    will training and readiness also be affected for units of Air
    Force special operations?
        General Welsh. Yes, sir. The special operations community
    and the platforms and people inside it are part of the current
    Total Force analysis that we have ongoing right now to
    determine would it benefit from a greater shift in the Reserve
    component or would it not. The problem is we cannot shift
    everything more and more in the Reserve component. We have to
    decide where the best places are. That is what our analysis is
    focused on. But the special operations community has performed
    superbly in both the Active Duty and the Reserve component, and
    we are looking right now whether we can move more into the
    Reserve component.
        Senator Manchin. This is for either one of you. I keep
    looking at cost-effectiveness and just as a private citizen, as
    a business person, looking at it, would the Guard not be the
    best bang for our buck in support of our regular Air Force and
    other Services? I am just saying that for some reason the cuts
    seem to be disproportionate. It does not make any sense if they
    are more cost-effective.
        Ms. James. The National Guard and Reserve, though people
    might debate the preciseness of it, they are without question
    less expensive than the Active Duty, provided they are not
    being used all the time. If they are being used all the time,
    essentially that equates to two things. We are going to be
    studying additional areas, and cyber is front and square in
    that. We are preparing to stand up some new cyber units as an
    immediate impact in fiscal year 2015, but we are not done yet
    with cyber. That is an additional area that we think will bear
    fruit going forward.
        I do want to also say that cost is an important element,
    but it is not the only element, as we look at this total
    equation. Maybe, General Welsh, you could elaborate on that.
        General Welsh. Sir, I think one of the things the
    Commission's report highlights is that the Active Duty
    component is not a secondary consideration here. If you are
    looking at Active versus Reserve component, the idea that a
    Reserve component squadron of any type is more available, more
    prepared, more ready to walk out the door to do the Nation's
    business than an Active squadron, is simply not true. That is
    not why they are in the Reserve component. They are extremely
    capable, but you have to have a model that balances that cost
    efficiency with the responsiveness that the Nation and the
    missions we do demand. We can build that. We are just trying to
    figure out exactly how does that model look.
        Senator Manchin. My last question would be on private
    contractors within the Air Force. I have been trying to get
    answers on how many contractors you have branch-by-branch. Do
    you know how many private contractors that you have working or
    have within the Air Force?
        Ms. James. I will say I do not know that off the top of my
    head, but I could come back to you for the record.
        [The information referred to follows:]

        Although the Air Force contracts with private companies for the
    performance of commercial activities, the Air Force does not track or
    maintain the number of contractor employees working within the Air
    Force. However, the Air Force is improving the ability to track
    contractor full-time equivalents (FTE) based on previous congressional
    direction. The Air Force obligated approximately $24.6 billion for
    service contracts equating to an estimated 136,200 contractor FTEs in
    our Fiscal Year 2013 Inventory of Contract Services input to the Office
    of the Secretary of Defense (OSD). Approximately 25 percent of this
    estimate is based on contractor provided man-hour data into our
    Contract Manpower Reporting Application with the remaining 75 percent
    based on the OSD-developed average cost methodology.

        Ms. James. I will also say this, though. We, of course,
    have a challenge from the Secretary of Defense to reduce
    headquarters by 20 percent in terms of the money over 5 years.
    What we are doing in the Air Force is not over 5 years. We are
    going to get it done basically over 1 year. We are going to do
    better than 20 percent reduction. Contractors will be a piece
    of that. It will be more than contractors, but we are
    aggressively going over headquarters reductions to include
    contractors.
        Senator Manchin. My concern was that basically men and
    women in uniform perform the same function, can do it, I think,
    much more cost-effective and better than anybody else can do
    it. I have seen a lot of the cutbacks in the military as far as
    men and women in uniform. Contractors have not been cut back
    proportionately. In fact, in some areas they have grown. I am
    very much concerned about that. If you all could, let me know
    where you stand on that and what your plans are and how it
    works into your budget. Thank you.
        Chairman Levin. Thank you very much, Senator Manchin.
        Senator Chambliss.
        Senator Chambliss. Thanks, Mr. Chairman.
        Madam Secretary and General Welsh, thanks for your
    commitment and your service.
        We are going through some very difficult times, obviously.
    As we talked about during your posture hearing, you have some
    tough decisions you are having to make while we are trying not
    to be too much of a problem on this side of the dais.
    Obviously, it is incumbent on us to ask those tough questions
    about the tough decisions that you made. I want to comment on
    what I have heard you say here today because you are so focused
    on the Reserve component.
        I see you have General Jackson with you, General Welsh. He
    is a great asset to the Air Force, as well as to the Reserve. I
    had the opportunity to meet with him briefly, a very focused
    meeting last week relative to what is going on specifically at
    Robins, as well as specifically in the Reserve today, and the
    direction in which he and the two of you together are taking
    the Reserve.
        I also had a chance to meet with our JSTARS folks. We had
    the TAG, and General Jim Butterworth is obviously very focused
    on that issue. As I told the folks at JSTARS, we knew that we
    were buying an old platform when we bought the 707s. I just
    wish that we had made the decision that you are making today 5
    years ago. I know we were being called upon then. The demand on
    JSTARS was really very strong, but that demand is not going to
    weaken. Whether it is another conflict we ultimately are
    engaged in or whether it is the drug wars, there are just so
    many uses for that weapons system. I think the decision is
    probably the right decision. I just wish we had made it 5 years
    ago. That does not help us today.
        But the fact of the matter is I remain concerned, General,
    as I expressed to you during the posture hearing, that as we
    transition to the business jet platform, I am really concerned
    that this $73 million that we have in the budget today is not
    going to be sufficient to move us in the direction which you
    outlined that we need to go. That is, by 2021 we are back up to
    the full component of platforms that we have today.
        While I am going to be gone by the time we start
    considering this again, I do know your concern and your belief
    that this is one of the more important platforms that we have.
    Obviously, it was one of the top programs in your priority
    list. I simply say that I urge you to remain focused on that.
    As we move forward in this budget cycle, I want to make sure we
    do everything we can to provide you with the right number of
    resources to get us to that ultimate goal in 2021.
        But it is not a part of this, as I said to you before the
    hearing. I had a great meeting with General Bruce Litchfield.
    He is doing a terrific job on the depot side. While there was a
    lot of anxiety at Hill and Robins about the movement of a
    three-star to Tinker and downgrading, the feeling was the
    downgrading from a two-star to a one-star--this thing is
    working like I envisioned it would work. General Litchfield is
    providing the right kind of leadership at exactly the right
    time for the three depots. I am confident they are all going to
    get just stronger over the years. Particularly with the lack of
    funding to buy new weapons systems, it just means that we are
    going to have to maintain a lot of old systems for a long time
    to come. With his leadership, particularly his vision for
    making sure that our depots do it the right way, we are going
    to position the Air Force depots for the long term to be the
    strongest depots across the system. I was very pleased to hear
    his comments and his vision, Madam Secretary and General Welsh,
    about the future of the maintenance of Air Force weapons
    systems.
        I am pleased to hear, Madam Secretary, you particularly
    alluding to the fact of this integration. We have proven with a
    blended wing of JSTARS that it can work. There was a lot of
    angst on both sides, the Active Air Force as well as the Guard,
    when we put that wing together, but it has worked. We have
    proven through that process, as well as through the activation
    of reservists in Iraq and Afghanistan, that we do have a
    blended force today that can carry out any mission that is
    given to either the Reserve, the Guard, or the Active Duty
    folks. The Active Duty now understands that those Guard and
    Reserve folks can come in and immediately pick up the banner.
        What I particularly like about what you said is that you
    are going to take more advantage of the private sector and
    particularly in the area of cybersecurity, which is our next
    battlefield. I think we all agree that that is the most likely,
    although usually we are wrong about that. But we have to be so
    focused on cyber now, and there is so much talent in the
    private sector that if you do take advantage of it and bring
    them in for what you need, let them go back to the private
    sector, and continue to have that free flow, that just makes
    all the sense in the world to me. I am pleased to hear you are
    thinking that way about the future of the Guard and Reserve and
    their relationship with the Active Duty.
        You covered this, but just to make sure we are on the
    record, General Jackson and I looked at the military
    construction project that we are going to have in the next
    budget. It is going to be a splendid building that we are going
    to be moving the Reserve to. Just to make sure there is no
    doubt in the minds of anybody, Madam Secretary, General Welsh,
    it is my understanding from what you have said publicly and
    privately that the one portion of the Commission's report you
    disagree with is basically the disestablishment of the Reserve
    over any period of time. Maybe reconfiguration. I understand
    that. But I want to make sure there is no doubt about your
    clarity on that point. Madam Secretary?
        Ms. James. I absolutely do not agree with the
    disestablishment of the Reserve Command until and unless such
    time perhaps in the future that we had really totally cracked
    the integration nut so well that we would no longer need a team
    of people who currently are at that command who are specialized
    in taking care of 70,000 reservists. It is a big job and it is
    something that we have to continue at least for the immediate
    future. I keep saying in the distance because integration is
    the name of the game, and if there would be a way to evolve to
    such a point in the future, we should at least be open to that.
        Senator Chambliss. General, any additional comment?
        General Welsh. No, sir. I agree with that.
        If the question is about the Air Force Reserve at large, I
    absolutely would not ever support getting rid of the Air Force
    Reserve.
        Senator Chambliss. The other question. Is there any
    question in the mind of either one of you about the reception
    of the Active-Duty Force of Guard and Reserves coming in and
    standing side-by-side with them with the training and the
    preparation that they now get for the mission that they are
    being assigned and integrating with the Active-Duty Force?
        General Welsh. Senator, I do not think so. I think the
    training is good. I think one of the things that the Commission
    recommends in terms of better integration that we
    wholeheartedly support is the idea that we have to look hard at
    should we have multiple commissioning sources, for example, our
    commissioning programs. Should we have different noncomissioned
    officer professional military education programs, or should we
    integrate that to create this continuum of service across the
    components and train and develop our people in more similar and
    integrated ways? So that is the way we think we should have it.
        Senator Chambliss. Thank you.
        Thanks, Mr. Chairman.
        Chairman Levin. Thank you, Senator Chambliss.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        Let me just say that I appreciate both of your being here.
    Secretary James, we are very much looking forward to your
    coming to New Hampshire on Friday. I look forward to joining
    you there.
        I fully agree with the comments that have been made not
    only by Senator Chambliss but others around the table that we
    have a great opportunity in the Reserve component when it comes
    to enhancing our cyber capabilities. If we can harness those
    resources in the private sector, I think we have an opportunity
    to really enhance the workforce of the Air Force on this
    incredibly important issue and certain threat to our Nation
    that I know all of us want to work toward.
        I also wanted to say for both of you and also to the
    members of the Commission that I thought that this Commission
    report was very well done. I think that the work that you are
    both doing and the thoughts you have on implementing the
    Commission are important. I think it also highlights the
    coordination and importance of the relationship between the
    Active Duty, Guard, and Reserve.
        Let me just say that we are glad you are not going to
    eliminate the Air Force Reserve anytime soon. I know that
    Colonel Graham appreciates that as well.
        But in any event, the thing about the report that really
    struck me is that in the report itself, the work of the Pease
    Air National Guard 157th Air Refueling Squadron was
    highlighted, and it was highlighted in a way that I think
    demonstrates some of the coordination that has been happening
    between the Active Duty and the Guard and Reserve. In the
    actual report, there was a farewell speech by a former
    commander of the active associate unit to the 64th Air
    Refueling Wing talking about what he had learned from his time
    at the New Hampshire Air National Guard and how much he--in
    that experience of being an Active Duty commander who was
    associated with the Guard unit at the 157th Air Refueling Wing,
    that he really came to appreciate the importance and the ethic
    of the Guard and Reserve and the amount of organization and
    coordination. It was, I thought, very inspiring and also an
    example of what we can accomplish--not only have accomplished
    but will continue to accomplish to a greater extent in some of
    the recommendations that have been made by this Commission.
        Secretary James and General Welsh, we are very proud of the
    work being done by the 157th and looking forward, when you come
    on Friday, to highlighting what is happening at Pease and also
    the preparedness that they have put into being named as the
    Guard unit that will receive the KC-46A. I look forward to
    seeing you in New Hampshire, and just would ask, is everything
    on track for the KC-46A?
        Ms. James. Yes.
        Senator Ayotte. Fantastic. That was an easy answer.
        General Welsh. We will actually start flying in June the
    first test sortie for the first test aircraft. There are four
    on the production line now. Everything is on schedule.
        Senator Ayotte. Terrific. Thanks.
        Chairman Levin. They are entitled to one easy answer at
    least. [Laughter.]
        Senator Ayotte. Usually I am asking all the easy questions
    too.
        Chairman Levin. I do not mean from you. I mean, overall,
    one.
        Senator Ayotte. It could probably be said so for me too.
        But I thank you both. This Commission report is important.
    I appreciate your testimony today and look forward to seeing
    you in New Hampshire.
        Chairman Levin. Thank you very much, Senator Ayotte.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        Do both of you agree that the Commission process has
    probably been more helpful than harmful?
        Ms. James. It is too bad that there was the friction that
    caused the need to stand up a Commission, but the actual
    Commission report, the commissioners, the work was very
    helpful.
        General Welsh. Yes, sir.
        Senator Graham. General Welsh, I have a parochial interest
    here since I am in the Air Force. I just really think you have
    been a good commander for the Air Force. I just want you to
    know that, that we have had our problems and you have been a
    very good, ``speaking truth to power'' Chief of Staff.
        Secretary James, I have nothing but high marks for you.
        Sequestration. As we talk about how to rearrange the Air
    Force, regardless of funding problems--I think that is part of
    what the Commission did. Right? Most of this has nothing to do
    with money. Is that true? Structural changes. How much of this
    is driven by money, the lack of money, in terms of the
    Commission's report?
        General Welsh. Sir, the Commission's report, I think, could
    have been done when we had plenty of money. Those inputs would
    have been great----
        Senator Graham. I want to put that in one bucket, that this
    is really about structural changes.
        I think you get it about the Air Force Reserve. We just put
    the Chief of the Guard Bureau on the Joint Chiefs of Staff to
    have a stronger voice for the Guard when it comes to national
    security matters. I think the idea of trying to take the chain
    of command and absorb the Air Force Reserve and not have its
    own structure would probably deny you some information you
    might need otherwise, or at least some control over the force.
    But you are on top of that.
        Now, let us talk about the Air Force in terms of budgets. I
    do not want to lose sight of this. Maybe we should have a
    commission to look at what kind of Air Force we would have if
    sequestration went into effect, but we do not really need that
    commission. Tell us, General, if we do not fix sequestration
    beyond the next 2 years, what kind of Air Force will we have?
        General Welsh. Senator, the decisions that we have reached
    and the recommendations we made in the 2015 budget are intended
    to prepare the Air Force for returning, as the law directs, to
    sequestered funding levels in 2016. If we cannot make the
    reductions and divestitures that we talked about in both people
    and hardware over the next 2 years, we will have an Air Force
    in fiscal year 2016 that we cannot afford to train or operate.
    It will look like it did last year with 33 squadrons sitting on
    the ramp, or worse, for the entire year. We have to balance
    this Air Force to a size that we can afford to train, operate,
    and we have to modernize over time or we become basically
    irrelevant against the threat 10 years from now.
        Senator Graham. The 2-year adjustments that you need better
    prepare you, but if you got everything you wanted in the next 2
    years, you would still have a major problem if sequestration
    kicks back in. Right?
        General Welsh. Yes, sir.
        Senator Graham. Over time, it would be pretty devastating
    to the Air Force as we know it today?
        General Welsh. Sir, as you can hear from the discussions on
    every issue, it changes the Air Force.
        Senator Graham. There is a parochial nature of Congress
    which is, I am sure, frustrating for managers, but it is part
    of democracy. The airframes that we have in our State we tend
    to know better. We tend to know the people. So we push back. I
    understand that. That is part of democracy.
        But what I want to focus the committee on is if we
    implemented everything in this recommendation, that is no
    substitute for fixing sequestration. Is that correct, Secretary
    James?
        Ms. James. That is correct.
        Senator Graham. From your point of view, what would we be
    doing to the Air Force if we kick back in sequestration in
    2016?
        Ms. James. To sum it up, I fear we would be a far less
    capable Air Force of meeting the national strategy requirements
    that we have. I fear that we would be a less ready Air Force to
    the point where we would still step up to the plate, do our
    best, but we would put more people's lives at risk, we would
    put more aircraft at risk, and so forth because we would be
    less ready and less capable.
        Senator Graham. Let us say, General Welsh, if for some
    reason the negotiations with the Iranians broke down and we had
    to use military force, no boots-on-the-ground but air power and
    sea power, to stop the nuclear program in Iran from maturing,
    if that situation arose 10 years from now, what capability
    would we lose to deal with an Iran because of sequestration?
        General Welsh. Sir, all the things that have been
    negatively impacted over the last 10 years of our activity in
    the Middle East, which have basically been the high-end part of
    the Air Force, the ability to operate against a very capable,
    more technically-proficient threat, the capability to operate
    integrated air defense networks against more advanced fighter
    aircraft to actually drop weapons on a broader scale than a few
    targets a day, all the things that make an Air Force capable of
    fighting an air campaign, those are the things we have not been
    doing.
        Senator Graham. We would have less stealth capability over
    time, not more. Is that correct?
        General Welsh. Sir, we would have less capability and
    capacity in every mission area.
        Senator Graham. Do you see a static nature of the enemies
    of the country over the next 10 years, or do you think they are
    going to improve their offense and defensive capabilities?
        General Welsh. Sir, I believe it is undeniable that they
    will improve. That is why we must modernize. Not modernizing an
    air force for a super power is not an option if you want to be
    successful.
        Senator Graham. If you had to sum up the effect of
    sequestration on the ability of the Air Force to fly, fight,
    and win, would you agree with me it would be the biggest blow
    to the Air Force in peacetime in the history of the country?
        General Welsh. Sir, it would certainly be the biggest blow
    in the history of the Air Force. My concern is not that we
    would still fly, fight, and win, but that it would be more
    costly, and the costs would come in terms of the men and women
    who----
        Senator Graham. Do we put winning at risk?
        General Welsh. Sir, I think winning is at risk now in some
    scenarios. That is what sequester does to us.
        Senator Graham. Secretary James, do you agree with the
    statement of General Welsh that if we go forward with
    sequestration, we will be doing the most damage, far beyond
    what any enemy has been able to do to the U.S. Air Force in
    terms of capability?
        Ms. James. I do.
        Senator Graham. Congress will have shot down more planes
    than any enemy of the Nation. Congress would reduce capability
    beyond anything that our adversaries possess. Would that be a
    fair statement?
        Ms. James. Sequestration will compromise our national
    security too much. I hate to put it all on the side of one part
    of government, but you can hear us. We do not want
    sequestration.
        Senator Graham. I will just close out. In my view, Congress
    would be doing more damage to the Air Force than any enemy,
    present or future. Thank you.
        Chairman Levin. Thank you very much, Senator Graham.
        I am going to call on Senator Shaheen. The votes have
    started, and as soon as she is done, if there is no one else
    back, she would then excuse the two of you. I just want to add
    my thanks to you.
        Congress has passed a law which makes no sense called
    sequestration. You have to live with it. That is a different
    issue in a way for the structural changes that have been
    recommended by the Commission, but nonetheless, you have
    addressed them this morning because of questions. You have done
    the very best job you could with sequestration. You have used
    your best judgment. We may not agree with all your judgment,
    but now it is thrown in our lap for the next couple of months
    to try to pass a bill.
        I just want to thank you both for the way in which you have
    tried to deal with the menu that has been delivered to you by
    this restaurant.
        We will stand adjourned if no one is back as soon as
    Senator Shaheen is done with her questions. Then at that point,
    she can excuse the two of you. Thank you both.
        Senator Shaheen.
        Senator Shaheen. Thank you very much, Chairman Levin.
        Thank you both, Secretary James and General Welsh, for
    being here and for all of the good work that you are doing. I
    have to say I share Senator Levin's comments about the need to
    address sequestration and hopefully this committee can help
    lead the way with the Senate and we can roll back those
    automatic cuts and put in place something that makes more
    sense.
        Chairman Levin. Forgive the interruption. Apparently I did
    not make it clear that we will be getting to the second panel
    the best we can. I guess I did not make that clear. So thank
    you.
        Senator Shaheen. The Commission discusses receiving
    feedback from a variety of outlets regarding the potential of
    the Reserve component of the Air Force. Obviously, I know
    Senator Ayotte has already raised our pride in New Hampshire
    with the Air Guard and the 157th Air Refueling Wing. This is
    something that we pay close attention to.
        In fact, the report states--and I quote--``these assertions
    were so unanimous and came from so many disparate sources that
    the Commission could not discount them.''
        I wonder, Secretary James, if you could talk a little bit
    more about the untapped potential of the Air Force's Reserve
    component and what you might see in the future to better
    utilize this capacity.
        Ms. James. I do in the aggregate still see that there is
    untapped potential, and by the end of this year in time for the
    next budget submission, we will have methodically gone through
    mission-by-mission many more categories and have a more
    complete plan to tap that potential of the National Guard, the
    Reserve, but still having a healthy Active Duty. Right? It is
    always getting that right balance and right mix.
        As the Chief said earlier, we have probably reviewed 40 to
    50 percent already. A good deal of that or some of that at
    least is reflected in our fiscal year 2015 plan which is before
    you, as well as the 2016 to 2019 5-year plan that you also have
    access to.
        There is more to go. We are going to be looking at
    everything from additional cyber to security police to bombers
    and fighters. There is a whole panoply of work that is yet
    ahead, and we have this core team which is called the TF-C. It
    is a follow-on to that initial tiger team of generals, Active
    Duty, Guard, and Reserve, that we stood up. We now have a new
    group of Active Duty, Guard, and Reserve generals who are
    helping lead the charge and helping us study it and helping us
    staff the ideas.
        I mentioned I am going to be getting together with this
    group regularly. I have already started, but I want to keep
    that up. The Chief is going to be doing the same thing. That
    way we will be continuing to drive the train and bring a sense
    of urgency to the table.
        Senator Shaheen. That is great.
        Did you have anything to add, General Welsh?
        General Welsh. No, ma'am.
        One quick thing. The TF-C is just an indication that we are
    continuing it before we make it permanent. We had to free up
    some Active Duty one-star positions so that we could legally
    put people full-time onto the Air Staff as general officers.
    There are some laws that limit us there in how many general
    officers we can have working on the Air Staff. We have found
    those positions. The next group of people in this job will be
    there on a permanent change of station type of assignment so we
    can have a little more continuity over time in those three
    positions that are driving this train.
        Senator Shaheen. Thank you.
        Secretary James, I know you are going to be in New
    Hampshire on Friday to see firsthand the 157th Refueling
    Squadron. But one of the things that I thought was impressive
    in the Commission's report was how favorably it talks to the
    value of active associations and the integration that has
    happened at Pease with respect to the Active Duty and Reserve.
    I wonder if you can talk a little bit more about that and about
    the Air Force's plans for moving them forward.
        Ms. James. Associations in which we have essentially a
    squadron's worth of aircraft which is then shared by some
    combination of Active Duty, Guard, and Reserve has been a great
    advancement for us in the area of integration. I mentioned
    earlier that we have gone over time from, I think it is, 102 to
    124. So currently we have 124 separate associations of one type
    or another across the country. We are learning the lessons and
    tweaking all of the time, studying what we have done, and
    hoping to do more in the future. Of course, as you mentioned,
    we have committed, in terms of bedding down new aircraft, the
    KC-46, the F-35, and so forth. We want to continue this forward
    in very much a Total Force spirit.
        Senator Shaheen. Good. Thank you very much.
        The report also notes that the Air Force generally does not
    incorporate Homeland security demands from governors. Sometimes
    it struggles to meet day-to-day requirements both at home and
    abroad. I wonder, General Welsh, if you can talk about to what
    extent the Air Force incorporates Homeland demands into its
    force structure planning.
        General Welsh. Senator, one of the things that General
    Frank Grass has been trying to do at the National Guard Bureau
    is help us with the issue of not having a set of defined
    requirements for title 32 support. If we had those, whether
    they were by State, regional, whatever they were, we could
    ensure that the right force structure is available to meet
    those needs. Right now, we do not have those defined
    requirements. A lot of work is being done within the Guard
    Bureau and with the States to produce that, and we are looking
    forward to seeing it.
        Clearly, it is our job to support the governors with Air
    Force force structure in some component whenever it is
    necessary. Everyone in the Active component lives in a State
    somewhere, and I want my family in that State to have great
    support when the Guard or Reserve are called up to assist the
    governor as well. This is in all of our best interests.
        Senator Shaheen. Is this something that you think this
    committee ought to look at better defining in statute?
        General Welsh. Senator, I think you would need to check
    with General Grass. I do not know the current status of this,
    but I know that this effort has been underway for a year at
    least and probably longer than that. But if they can identify
    those requirements, I think everyone would have a little more
    clarity into what is actually required to support the
    governors' needs because they vary, as you well know, by State
    and by region.
        Senator Shaheen [presiding]. My time is up, and thank you
    both very much for your panel.
        I think we will recess until the chairman comes back. Then
    we will take up the second panel. Thank you all. [Recess.]
        Chairman Levin. We are going to come to order without
    certainty as to how many of us are going to get back at what
    point. Many of you are already familiar, for better or worse,
    with the way in which we sometimes have to operate. I will
    apologize for it, but I think you all are probably familiar
    with the way this place operates or does not operate.
        I know that Senator Inhofe is on his way back. I believe he
    wanted us to soldier on here, so we will.
        General McCarthy, we are going to call on you as Chair of
    the Commission to kick this off, and then we will see if other
    Commission Members want to contribute. Thank you all again for
    your service. I made some comments about this commitment you
    made and the recommendations you delivered were very positive.
    I think the Air Force also, from testimony this morning and
    from other meetings, has indicated they find that this work is
    very helpful to them. General, please begin.

    STATEMENT OF LT. GEN. DENNIS M. McCARTHY, USMCR (RET.), CHAIR,
        NATIONAL COMMISSION ON THE STRUCTURE OF THE AIR FORCE;
      ACCOMPANIED BY HON. ERIN C. CONATON, VICE CHAIR; HON. R.L.
      `LES' BROWNLEE, MEMBER; DR. JANINE A. DAVIDSON, MEMBER; DR.
     MARGARET C. HARRELL, MEMBER; GEN. RAYMOND E. JOHNS, JR., USAF
          (RET.); AND LTG HARRY M. `BUD' WYATT III, ANG (RET.)

        Mr. McCarthy. Thank you, Mr. Chairman. On behalf of all of
    my colleagues, thanks to you and the members of the committee
    for allowing us to testify today. I would ask that our written
    testimony be included in the record.
        Chairman Levin. It will be.
        Mr. McCarthy. Mr. Chairman, as you pointed out earlier this
    morning, the statute that created the Commission set forth six
    specific issues that we were to consider. We did our utmost to
    address each of them directly and to provide actionable
    recommendations.
        In summary, our recommendations flow from three main
    findings.
        First, that today's Air Reserve components--and I stress
    today's Air Reserve components--with the full concurrence of
    the great Americans who serve in those components comprise an
    operational reserve, not the strategic reserve of former years.
        Second, that the three components of the Air Force all meet
    a single standard of readiness and capability.
        Third, that many of the laws, regulations, and personnel
    management systems in effect today were designed for the
    strategic reserve era of a previous century.
        These findings led us to 42 separate but, we believe,
    mutually supporting recommendations that revolve around 2
    central themes: integration and rebalancing. Greater
    integration of the three components will lower risk to the
    Nation, will give all airmen more flexible opportunities to
    serve, and we believe will save money. Rebalancing the Air
    Force or changing the mix of full-time and part-time personnel
    will allow more efficient use of the Total Force, will provide
    a better mix of experience within units, and will create more
    opportunities to leverage the unique skills and talents that
    are found in all three Air Force components.
        The integration and rebalancing that we recommend will
    require a number of enabling actions. These enabling actions
    are needed to change laws, regulations, and policies that
    worked when members of the Air Force Reserve and Air National
    Guard met 1 weekend a month and for 2 weeks of summer training.
    But today's operational reserve, especially as it becomes more
    integrated with the Active Duty component, needs new
    regulations and controls. Areas such as duty and pay status
    rules, higher tenure limits, and unnecessarily rigid barriers
    between title 10 and title 32 forces all should be reexamined.
        Not all the enabling actions will come in law. Air Force
    regulations must be reexamined and revised where necessary to
    reflect the one Air Force envisioned by Secretary James and
    General Welsh.
        Mr. Chairman, I am proud of the work done by the Commission
    and our staff. We are all anxious to respond to your questions
    and to those of your colleagues. Thank you.
        [The prepared statement of the National Commission on the
    Structure of the Air Force follows:]
     Prepared Statement by The National Commission on the Structure of the
                                   Air Force
        Chairman Levin, Ranking Member Inhofe, and members of the
    committee: We have had the honor and privilege of serving as members of
    the National Committee on the Structure of the Air Force, which you
    established in the National Defense Authorization Act to address issues
    that arose during your consideration of our U.S. Air Force's proposed
    budget for fiscal year 2013.
        On behalf of our staff we thank you for the opportunity to serve in
    this capacity, to testify here today, and to respond to your questions
    on our report and recommendations.
        We have been gratified and reassured by the breadth of positive
    comment that our work has received since its delivery on January 30,
    from members of the Senate and the House, leadership of the Air Force,
    Governors, and other interested citizens, and, most importantly,
    individual airmen across our Total Force. While it would be unrealistic
    to expect that any set of meaningful recommendations could achieve
    unanimous praise, we believe that this reception generally affirms that
    our deliberations and conclusions are in the mainstream of informed
    opinion, and we are pleased that Secretary James and General Welsh are
    giving serious thought to our work and leaning forward towards
    implementation in a number of ways that are consistent with our themes
    and recommendations.
        It has been very helpful to gain insight from the Secretary and the
    Chief of Staff on their current thinking with regard to our proposals
    regarding integration of the total force. They seem ready to move
    towards a rebalanced force that meets challenging budget realities
    through a further focus on the cost-effective options inherent in the
    Air Force Reserve and Air National Guard.
        Our findings and the 42 recommendations we presented are a holistic
    roadmap to improving our national security by making full use of the
    tremendous depth of talent available in all 3 Air Force components. In
    implementing the advice that this Commission has provided to Congress,
    the President, the Department of Defense (DOD), and the Air Force, it
    is paramount that our report not be viewed as a wish list of ideas. We
    intended them to form a coherent, cohesive, and achievable whole. As we
    will explain more fully in this testimony, the recommendations can be
    clustered into specific areas of force structure improvements that, if
    allowed to work in tandem, will lead to an end state of total force
    integration, better force management, and improved national security.
        From the outset we recognized that the Commission's primary purpose
    was to ensure that the United States of America has the strongest and
    most effective Air Force possible in these most dangerous times. The
    statutory charter required us to consider these specific issues:

             the requirements of combatant commanders,
             the balance between Active and Reserve components,
             the capacity for homeland defense and disaster
            assistance,
             the need for the regular Air Force to provide a base
            of trained personnel for the Reserve components,
             the force structure sufficient to meet operational
            tempo goals of 1:2 for the Active component and 1:5 for the
            Reserve components, and
             the means to balance affordability, efficiency,
            effectiveness, capability, and readiness.

        Over the course of our research and analysis--especially as we
    expanded our scope beyond the beltway by visiting installations and
    talking to personnel of all ranks and components--we realized there
    were two other overarching issues we needed to address: how to make the
    most of the skills, experience and, most importantly, the resolve of
    the men and women serving in every component of the Air Force; and how
    to maximize the taxpayers' investment in those exceptionally trained
    and dedicated airmen.
        Both require a longer perspective on force and resource management
    than merely slashing end strength, which we realize is a decision no
    Service likes to make. The ultimate goal of our analysis and subsequent
    recommendations is to optimize the Total Air Force, preserve capacity,
    and maintain a strong and broadly capable Air Force. We found pathways
    to achieving these ends through total force integration, improved force
    management that allows the Air Force to maintain its current capacity
    at reduced cost, and better coordination among Federal and State
    entities in the area of defense support for civil authorities.
        While ours is a forward-looking report, we did look at the
    historical record, from the militia model used at the founding of the
    Nation all the way through the debates over the 2013 budget that led to
    the legislation creating this Commission. We looked at the foundations
    of the Air Force, the Air National Guard, and the Air Force Reserve. We
    concluded that the Nation and its Air Force are navigating a different
    strategic and economic environment than existed 40 or 20 years ago, or
    even within the past decade. We are far beyond the era of the strictly
    ``strategic Reserve''; we are in an era of a total operational Air
    Force. We are beyond a time of seemingly limitless resources; we are in
    a time when frugal fiscal management is not just a vital public trust,
    but a necessity. We are beyond the mindset of war as strictly an
    overseas enterprise; we must prepare for conflicts and dangers in
    space, cyberspace, and the Homeland. We are beyond the notion of
    measuring a nation's defense posture strictly in the number and range
    of projectiles it can deliver; we are in an era when creative
    management of the Nation's military talent pool is an effective weapon
    of war.
        One important thing that emerged from our review of history is
    confirmation that the Air Force has been a forward-looking service. It
    already has instituted and developed a good model of integrated, multi-
    component forces: the ``associate wings'' in which Active and Air
    Reserve components share missions and equipment. The Air Force also has
    led the way among the Services in creating a viable total force in that
    all three components are held to the same standard of operational
    readiness. Additionally, the Air Expeditionary Force concept provides a
    model of rotational deployments that can and does rely on contributions
    from all components.
        The Commission determined that not only should the Air Force
    continue on the path it has already forged toward total force
    integration, but that it could pick up the pace of integration. Doing
    so will enhance the cross-component operational capability it already
    is relying upon in both daily and surge operations.
        The Air Force took a significant step even before our Commission
    formed by chartering a ``Total Force Task Force.'' The Commission met
    on several occasions with the Task Force leaders and our staffs
    coordinated continuously. The Air Force has now established a
    permanent, follow-on organization known as the Total Force Continuum,
    and we have been encouraged by their apparent commitment to the
    implementation of many of our recommendations.
                    implementing commission recommendations
        Although we did not specify in our report a specific sequence of
    implementation, it is clear that our recommendations lay out a series
    of changes in force structure and force management that will lead to a
    leaner and more streamlined organization comprised of integrated
    operational units and headquarters staffs. Since we delivered our
    report on January 30, with further analysis factoring in the work the
    Air Force is already doing in its Total Force Continuum initiative, the
    Commission staff has drafted an implementation strategy we believe
    could be a basis for a Total Force Continuum implementation plan.
        Our 42 recommendations can be clustered into 6 areas. Action on the
    majority of our recommendations should begin now, capitalizing on work
    we have been told is already under way. We see much transformational
    work coming in the first 2 years, and we envision early successes that
    will set the stage for future progress. Across the six clusters of
    recommendations, progress can continue simultaneously, but within each
    there must be some sequencing.
    Recommendation Clusters and Sequencing
        Cost Metrics: Recommendations 1, 36, and 37
        DOD should adopt one universal fully-burdened, life-cycle cost
    approach for calculating military personnel costs (1), establish a
    single metric for measuring the personnel tempo (PERSTEMPO) across the
    Total Force (36), and update the definition of non-deployment PERSTEMPO
    to account for all situations when an Air Reserve component airman may
    be unavailable for civilian responsibilities because of military
    obligations (37). Work on these three recommendations should begin
    immediately--the Cost Assessment and Program Evaluation (CAPE) office
    has already begun work on the life-cycle cost calculations--and could
    be implemented within 12 to 18 months, ahead of fiscal year 2017
    budgeting.
        Homeland Defense and Defense Support for Civil Authorities (DSCA):
            Recommendations 22, 31, and 32
        The Secretary of Defense should revise its agreement with the
    Council of Governors to enable Air Force leadership to consult directly
    with the Council of Governors (22), a task which could be accomplished
    within this year. The President should direct the Departments of
    Defense and Homeland Security to develop with the Council of Governors
    national requirements for Homeland Security and Disaster Assistance
    (31). This recommendation should be initiated immediately with a
    validated requirement lists for homeland security and disaster
    assistance accomplished by the end of fiscal year 2016. With such a
    list, DOD and the Air Force should treat Homeland Defense and DSCA as
    real priorities and governors as essential stakeholders in the planning
    process (32).
        Infrastructure: Recommendations 2 and 4
        In the National Defense Authorization Act for Fiscal Year 2015 and
    Defense Appropriations Act, Congress should allow the DOD increased
    flexibility in applying budget cuts across budget categories (2); such
    flexibility will be needed to accomplish many of our manpower
    management recommendations. We believe Congress should also allow the
    Air Force flexibility in closing or warm basing some installations (4),
    but this is an end-state recommendation over the course of the next 5
    years as total force integration progresses. As our proposed i-Wing
    concept is adopted and reliance on the Air Reserve components
    increases, identifying the installations--Active, Reserve, or Guard--
    best suited for basing certain operations with various multi-component
    mixes will be clearer. Reduction in command, control, and
    administrative overhead coupled with horizontal fielding of new
    equipment will allow a smaller infrastructure footprint and inherently
    lower cost. Maintaining excess infrastructure would not only fail to
    take advantage of those cost savings, it would offset the savings we
    foresee in improved personnel and talent management.
        This timeframe also provides the Air Force and Congress an
    opportunity to examine studies of past base closures and realignments,
    evaluating which closures achieved cost goals, which did not, and why.
        Human Resources and Continuum of Service: Recommendations 15, 16,
            17, 18, 19, 35, 38, 39, 40, 41, 42
        The Air Force should immediately revise the rules for current
    Active Duty Service commitments to enable members to meet the
    commitment in some combination of Active, Reserve, and Guard Service
    (40). This is the first step toward establishing a Continuum of Service
    pilot project to commence by October 1 of this year (39). Congress can
    enable true Continuum of Service by amending restrictive aspects of
    current statutes that mandate ``up-or-out'' career management policies
    to enable the Air Force to retain airmen of all components actively
    working in career fields where substantial investment in training and
    career development has been made and where it serves the needs of the
    Air Force (42). The Air Force can then develop a new service construct
    allowing for multiple career track options--whereby some airmen could
    pursue leadership positions at higher ranks while others choose to
    maintain operational specialties--each with different high-year tenure
    controls, where such additional tenure serves the needs of the Air
    Force (41).
        To enable both Continuum of Service and true total force
    integration requires many changes in human resources policies and
    procedures. Human resources standards have been, and remain, stove-
    piped among the three components. We recommend that the Air Education
    and Training Command Commander in coordination with the AF/A1 develop a
    Total Force competency standard for officers, noncommissioned officers,
    and enlisted airmen across all specialties and career fields before the
    end of fiscal year 2016 (18). As part of that recommendation, AETC
    should conduct a comprehensive curriculum review to support
    professional and technical military education goals necessary for
    airman of all components to acquire cross-component skills and
    knowledge. This review should be completed by fiscal year 2017 and a
    Total Force competency standard implemented by fiscal year 2018. With
    this standard in place, the Air Force can establish effective control
    measures to ensure that both Active and Air Reserve component airmen
    have adequate paths and opportunities for advancement and career
    development (15), provide for equality in awards, decorations, and
    promotions (16), allow equal access to non-resident education to
    personnel of all components (19), and achieve proportionate
    representation of the components among faculty and students in
    professional military education positions (17).
        Other human resources issues cannot wait. The Air Force should
    accelerate the development of the long-awaited Integrated Pay and
    Personnel System (AF-IPPS.) In our report we urge that this should be
    concluded not later than 2016, far ahead of the 2018 timeline the Air
    Force is currently abiding by (35). The Air Force should also include
    PERSTEMPO accounting in AF-IPPS so that all types of duties are
    accurately and consistently calculated across the components (38).
        Institutional Process: Recommendations 3, 6, 11, 12, 20, 21, 23,
            24, 33, and 34
        Changes in institutional processes can be subdivided into two
    areas: those concerning the corporate process and budgeting, and those
    governing personnel management. Action on all of these recommendations,
    which pave the way for smoother integration of components into an
    optimized Total Air Force, should begin immediately.
        In the corporate process, the Secretary of the Air Force should
    discontinue use of non-disclosure agreements (23) and should continue
    current practices that advance engagement with the Adjutants General in
    development of the Air Force Program (24).
        As the Air Force acquires new equipment, force integration plans
    should adhere to the principle of proportional and concurrent fielding
    across the components (11). There is no more significant element to an
    integrated total force than a fully integrated fielding plan for all
    equipment, especially aircraft.
        The Air Force should plan, program, and budget for increased
    reliance on the Reserve components by about 15,000 man years annually
    (3) while increasing Air Reserve capacity to provide recurring
    operational support for the Air Force's steady state and rotational
    requirements (20). The Air Force should also include in all future
    budget submissions a specific funding line for ``operational support by
    the Air Reserve component'' to clearly identify and program those funds
    intended to permit routine, periodic employment of the Air Reserve
    components (21). These initiatives can begin with the current budget
    cycle, especially as it serves as a reversible alternative to the Air
    Force's current plans to cut end strength across the components.
        Congress can significantly clear the way for both Continuum of
    Service and total force integration by addressing the matter of legal
    duty statuses. Currently, more than 30 duty statuses govern Reserve
    component airmen; Congress should reduce that number to no more than 6
    (33). The Quadrennial Review of Military Compensation and the Reserve
    Forces Policy Board both have previously made this recommendation, as
    did the 2008 report of the Commission on the National Guard and
    Reserve. We do not believe any further study of this issue is
    necessary. Reducing the number of duty status categories will make it
    easier for Air Reserve component airmen to serve in an operational
    capacity, and will simplify the task of implementing an integrated pay
    and personnel system.
        There are several other institutional barriers that need to be
    removed before total force integration can be realized, and we believe
    these policy changes should commence immediately.

             The Air Force should modify AFI 90-1001
            ``Responsibilities for Total Force Integration'' to establish
            selection and assignment criteria, the minimum proportion of
            leadership positions that must be filled by the associating
            components, and the methods to ensure compliance (12). AF/A1
            should then reassign airmen in disestablished Air Force Reserve
            units to integrated title 10 units.
             The Air Force should unify personnel management for
            all three components under a single integrated organization,
            A1, in the Headquarters Air Staff (34).
             The Air Force should integrate the existing staffs of
            the Headquarters Air Force, the Air Force Reserve, and the Air
            National Guard (6).

        Integration and Rebalancing: Recommendations 5, 7, 8, 9, 10, 13,
            14, 25, 26, 27, 28, 29, 30.
        Recommendation 6 above is also an immediate first step toward total
    force integration. Although final completion of this process will
    likely be 4 or 5 years down the road, the Commission believes that the
    bulk of its integration and rebalancing recommendations must proceed
    immediately.
        The Air Force already is looking closely at all mission areas to
    determine the possibilities in rebalancing forces to draw on more Air
    Reserve component personnel and assets. In our report we singled out a
    few of these that seemed to hold the most opportunity for significant
    rebalancing:

             Cyberspace (25)
             Space (26)
             Global Integrated Intelligence, Surveillance and
            Reconnaissance (27)
             Special Operations (28), and
             Intercontinental Ballistic Missiles (ICBM) (29).

        In the ICBM mission area, the Air Force should expand its current
    pilot program of providing Air Reserve component security forces for
    ICBM wings by the end of fiscal year 2016, and then expand the concept
    into missile maintenance functions and the missile field helicopter
    mission between fiscal year 2017 and 2019.
        Additionally, we recommend that the Air Force should replace some
    of the 1,800 Active component instructor pilots with prior-service
    volunteers from the Air Reserve components who would not then rotate
    back to operational squadrons (30).
        All of these recommendations go toward our report's overall theme
    of rebalancing the force in order to rely more heavily on the Air
    Reserve component for steady state and operational missions rather than
    cutting end strength. The combination of full-time and part-time
    positions should be determined for each unit depending on weapon system
    requirements, deployment, and rotation schedule based on optimum
    matching of the needs of the Air Force, families, and employers (8).
    Exactly how much rebalancing requires thorough, open-minded study. In
    our models, we looked at the rebalancing needed to save the same amount
    of money the Air Force sought to save in cutting 27,000 airmen from the
    Total Force. We arrived at a transfer of 36,000 positions from the
    Active component to the Air Reserve components with the corresponding
    funding of 15,000 additional man years per year, as described above.
    The advantages of such a strategy is that the Air Force creates
    opportunities for the trained, dedicated airmen in the Total Force
    instead of irreversibly losing them, and it maintains both steady state
    capacity and the ability to surge.
        In the report we offered an example of such a force mix, setting
    the overall balance at 58 percent in the Active component and 42
    percent in the Air Reserve component. Subsequent response to the report
    has latched on to this 58/42 figure as the standard we proposed. We
    want to stress here that this 58/42 mix is not one of the Commission's
    42 recommendations; rather, it is an illustrative example, something
    the Air Force could do to meet budget goals. That said, we do believe
    that it is an achievable goal and would be a standard the Air Force
    could set out to attain as it continues its thorough mission-by-mission
    study of force mix. While we agree with the Air Force that it needs to
    do a bottom-up review, we also feel the Service needs to establish a
    concrete goal, one that would achieve the most savings in personnel
    costs while maintaining the greatest return on taxpayer investment in
    personnel training and experience. Without such a goal, the bottom-up
    study might never achieve its maximum potential.
        The Air Force can reach maximum efficiency, maximum readiness, and
    maximum cost savings with a totally integrated structure while still
    maintaining the three components: the Active, Reserve, and Guard. We
    envision expanding the Air Force's current associate wing structure
    into what we call the i-Wing concept, a fully integrated operational
    wing with integrated groups, squadrons, and flights. To start, the Air
    Force should discontinue the practice of separate designated
    operational capability (DOC) documents for Active and Reserve units of
    the same type and place the i-Units under a single DOC statement (13).
    The Air Force should use an existing associate wing with an established
    record of success as an initial i-Wing pilot program. Meantime, the Air
    Force should ensure that integrated units are filled competitively by
    qualified airmen irrespective of component; however, key deputy
    positions should always be filled by an opposite component member: if a
    wing commander is active, the vice wing commander should be from a
    Reserve component, and vice versa; if a squadron commander is a
    reservist or Guardsman, the deputy should be active, and vice versa
    (14). In anticipation of total integration of units by all three
    components, the Chief of Staff of the Air Force in coordination with
    the Director of the Air National Guard should change the Air Guard's
    wing-level organizations to groups where airmen population and
    associated equipment are more realistically sized at the group level
    (10).
        In the second phase of the i-Wing construct, the Chief of Staff of
    the Air Force should direct the phased integration of Air Force Reserve
    associations of flights, squadrons, groups, and wings into
    corresponding Active component organizations in order to eliminate the
    current redundant organizational overhead of classic associations (7).
    Ultimately, Air Force flights, squadrons, groups, and wings in active
    associations also should be integrated into corresponding Air National
    Guard organizations in order to eliminate the association's redundant
    organizational overhead (9). We recognize that title 32/title 10
    considerations make this consolidation more complex, so we recommended
    that the unit level integration process begin with the ``classic''
    associations.
        Eventually, with full integration at every level of operations,
    from flights to squadrons to groups to wings to Numbered Air Forces to
    MAJCOMS, a command and control headquarters specifically for the Air
    Force Reserve becomes unnecessary. However, the role of the Chief of
    the Air Force Reserve becomes more vital than ever as an advisor to the
    Chief of the Air Force on matters pertaining to the Reserves and as an
    advocate for the full integration of Reserve airmen in all aspects of
    their Air Force careers. Consequently, we recommend that, when
    integration of Air Force Reserve units is sufficiently advanced,
    Congress should amend 10 U.S.C. Sec. 10174 to retain the statutory
    rank, roles, responsibilities, and functions of the Director, Air
    National Guard, and Chief of the Air Force Reserve but disestablish the
    Air Force Reserve Command (5). Though the Air Force will be
    inactivating the Reserve Numbered Air Forces, wings and squadrons, the
    Headquarters Air Force, MAJCOMS, and their Numbered Air Forces and
    subordinate units will all see increased representation by Air Reserve
    component airmen.
        One of the rewarding aspects of our Service on this Commission was
    meeting the skilled, devoted men and women serving in the active Air
    Force, the Air Force Reserve, and the Air National Guard. We were also
    impressed with the Service's leadership at all levels, from senior NCOs
    to Secretary James and General Welsh. We have heard the argument that
    reservists need their own command in order to grow their careers. We
    are convinced that Air Force leadership can accomplish the goal of
    total force integration as we have laid out in our report. We are also
    convinced that the culture of a truly integrated total force will allow
    the talented airmen of every component equitable opportunities to
    advance their careers and attain assignments based on their skills and
    leadership qualities and not simply on the basis of serving in one
    component or another.
        Changes, from corporate process to component culture, is never
    easy; however, the alternative, clinging to the status quo, could leave
    the Air Force slipping down the dangerous slope toward a hollow force.
    If Congress, the DOD, and the Air Force keep focused on the end
    vision--a true, multicomponent Total Force, managed with new human
    capital policies that reduce administrative overhead and capitalize
    upon the unique strengths of the three components--the Air Force will
    thrive and the Nation will be safer and more secure. We feel that
    Congress should work closely with the DOD and the Air Force to ensure
    that the Commission's recommendations come to fruition through periodic
    reports and feedback.
                              beyond the air force
        In the months since our report was delivered, we have fielded
    numerous questions about how our report might apply to the other
    Services. Although some of the principles of force management and the
    concept of continuum of service we discuss in our report are not
    specific to any Service--and the changes in law we recommend regarding
    duty status and other personnel policies would extend to the other
    Services--issues pertaining to force structure are singular to each
    Service. We must stress, we studied the Air Force and only the Air
    Force, which is unique among the Services in the size of its deployable
    units and the cross-component readiness standards it maintains, among
    other matters.
        That said, we would like to reiterate the point we made in our
    Additional View on the Impact of DOD Implementation of the Federal
    Advisory Committee Act (FACA) which is published as Appendix D in our
    report. Our charter legislation made no mention that the Commission
    should be governed by FACA, but our sponsor agency, the DOD's Director
    of Administration and Management, advised us that because of that lack
    of mention, the Commission would be governed by FACA and a designated
    Federal officer assigned to monitor compliance. As the Commission
    proceeded with its work, it became increasingly clear that the DOD
    interpretation of FACA's purpose would have a significant negative
    impact on the Commission's operation. We did everything in our power to
    comply with FACA, and we delivered our report on time and under budget,
    but we strongly advise that, in any future legislation chartering a
    Commission such as ours, Congress should clearly state its intent of
    permitting such Commissions to enter into deliberative dialogue in the
    same manner as the legislative and executive branches do when they
    discharge their public trust.
        In summary, our Air Force and its components have done, and are
    doing, great things to move towards realization as a true Total Force.
    For reasons of effectiveness, culture, capability, and money, the
    conditions are right to advance to new levels--beyond association and
    interchangeability to true integration at every level and up and down
    the chain of command. Integration and rebalancing can reduce personnel
    costs while preserving end strength, capability, and readiness;
    consequential savings in personnel costs will permit recapitalization
    and modernization. Air Force missions at home and away, airmen, and the
    Nation will be better served by all of this.
        Thank you for inviting us to appear before you this morning to
    discuss the important work you allowed us to do.

        Chairman Levin. Thank you very much, General.
        Do any other members of the Commission want to add a
    comment before I start off with some questions? [No response.]
        Thank you again, all, for your service here.
        We have how many missing commissioners who are not here
    this morning?
        Mr. McCarthy. We have two who were not able to be here
    today.
        Chairman Levin. If you would pass along our thanks to them,
    we would appreciate it.
        Mr. McCarthy. I will do that, sir.
        Chairman Levin. I think almost all or all of your
    recommendations were unanimous. For instance, you agreed that
    the Air Force Reserve Command should be disestablished. Why has
    that generated such a negative reaction from our Air Force
    leaders?
        Mr. McCarthy. I would say that that is the recommendation
    that has produced the greatest amount of pushback. I think that
    speaking for myself--and I will allow my colleagues to join in,
    but part of the pushback has come from not fully understanding
    the recommendation. We never intended--and as I told Secretary
    James and General Welsh just a couple of months ago, it was not
    intended that the disestablishment of the Air Force Reserve
    Command would be a current-year action. It is intended as the
    finish line after this process of integration has moved Air
    Force Reserve units into a position where an Air Force Reserve
    Command is no longer necessary. We also stressed that the role
    of a three-star Chief of the Air Force Reserve would probably
    be more important going forward. Although we did not mention
    it, I think we have all come to understand that perhaps some of
    the things that are done today in the staff of the Air Force
    Reserve Command might need to transfer to the staff of the
    Chief of the Air Force Reserve. There is nothing in our
    recommendation that changes that.
        I know General Johns has some views on this. I would ask
    him to add them.
        Mr. Johns. Mr. Chairman, if I could start at the lowest
    level, the unit. Let's take a C-17 unit right now that has a
    mix at Charleston AFB of Active Duty and Reserve. Right now,
    the mix of aircrews is more Active Duty than it is Reserve. As
    the war draws down, we may not need that many people who are
    Active Duty crews. We can change the mix from being a
    preponderance of Active Duty to Reserve. Say we go to three
    Reserve and just two Active Duty units, switching it around.
    That is great. Now as we talk about continuum of service, let
    us let those airmen who are at Charleston stay there for their
    families, let them use their GI Bill, and let them become
    reservists, full-time or part-time, based on the needs of the
    Air Force and the needs of those individual families.
        Now let us look at the squadrons. Do we really need to have
    a separate Active Duty squadron and Reserve squadron or can we
    actually let them combine to have one squadron? We reduce two
    chains of command, flight commanders, operations officers,
    squadron commanders. Then the command should be open to Reserve
    or Active Duty in this case. We reduce the opportunity for both
    Active and Reserve components by getting rid of two squadrons
    and making one that is combined.
        One of the synergies is the Active Duty is much more aware
    of what it means to be a reservist and have to have that
    traditional role. The reservist also, maybe the commander, is
    very aware of the Active Duty. We want to grow the synergy at
    the unit level. From that squadron level, you move up to the
    operations group or to the wing. Do you need two wing
    commanders, or can the wings be combined and be open to
    Reserve, Guard, or Active Duty? You reduce opportunities on
    both sides--but again, the need allows us to do that. Then
    eventually, if that is all working and you have these pilot
    programs, you could move it up to the higher, to the numbered
    Air Force. Do you need a separate Reserve numbered Air Force or
    Active Duty? Can they be combined?
        The 18th Air Force, for example, at Scott AFB, is the
    numbered Air Force for Mobility Command, yet some of the forces
    come from the Reserve and the Guard. Why could the 18th Air
    Force not be a reservist or a guardsman, he or she best
    qualified, and open that up?
        If this eventually allows to have the integration at the
    unit level among our airmen who work together so very well,
    over time it could actually allow further integration up the
    chain, up to the Air Staff where those people who have those
    independent chains of command can come together, and we can
    allow those airmen to go from administrative and developmental
    and mentoring roles back to functional roles.
        It has to be evolutionary. I think that is where we are
    trying to go, that it is not about tomorrow. It is about a
    future opportunity, as the Secretary of the Air Force said, a
    possibility.
        Chairman Levin. How long would that evolution take? A
    reasonable estimate.
        Mr. Johns. Sir, I think to put a time----
        Chairman Levin. Or a range. Can you even tell us a range?
        Mr. Johns. Years. I would say 10 years. Maybe look where
    the Air Force has come with the integration of the Total Force
    units over the 102 that we have. Probably since about 2006 or
    so we started. That has been 8 years of doing that now, and
    some have worked better than others. I think it is into the
    future.
        Chairman Levin. Anyone else want to comment on that
    question? [No response.]
        We had some discussion with the first panel about this
    current ratio of 65 to 35 and the recommendation that it make a
    significant change in that.
        We had some real question as to how far along in their
    analysis they have gone and what the effect of that analysis
    might be on the current budget. General Welsh basically said
    that we have--I think he talked about a $20 billion challenge
    and that this is a $2 billion perhaps savings in the
    recommendations, if my memory is correct. But the $10 billion--
    it is $2 billion per year. $2 billion a year would be $10
    billion over the Future Years Defense Program (FYDP). The $20
    billion that he mentioned was also over the FYDP. Rather than
    being 10 percent of the financial or budget challenge $2
    billion of $20 billion, it is really $10 billion of $20
    billion, as I understand the report and the numbers.
        Any of you want to comment on that conversation? I think
    you were all here to hear it. General, do you want to kick off
    or anybody else on that particular question, whether or not
    implementing your recommendations would solve a significant
    part of the budget problem, at least more than 10 percent of
    it?
        Mr. McCarthy. We were obviously limited, Senator, in both
    the amount of time and the ability to analyze intricate budget
    details, but we had some good people on our staff. We started
    with what the Air Force had originally proposed at the time we
    were thinking about this and working on it. We attempted to
    demonstrate that as a matter of principle we thought it was
    better that if you reduced the size of the Active component end
    strength and proportionally increased the size of the Reserve
    component end strength, you could maintain the overall
    capability of the Air Force, at least the overall end strength
    of the Air Force, and save money. Since the Air Force had put a
    bogie in their plan of $2 billion, we demonstrated that a
    36,000-person shift of the type I have described would save the
    same $2 billion.
        First of all, that is not one of our recommendations. But
    second, we did not think of it as a first-year or an initial-
    year action but rather that the principle of preserving talent
    by increasing the Reserve component end strength as you
    decrease the Active component end strength was a principle that
    the Air Force should follow.
        My other commissioners may have some thoughts.
        Mr. Brownlee. Mr. Chairman, if I understand your question
    and if I can recall what General Welsh said, I think he
    referred to a $20 billion----
        Chairman Levin. Divestiture.
        Mr. Brownlee.--amount that would come as a result of
    divestiture. I thought he said over 10 years. Did he say 5?
        Chairman Levin. No. I think he said over--apparently he did
    not specify.
        Mr. Brownlee. I am sorry?
        Chairman Levin. Apparently he did not specify.
        Mr. Brownlee. Okay. The $2 billion--whether the transition
    would occur over 1 year or 2 years or 3 years to finally
    transition 36,000 from the Active to the Reserve component, the
    $2 billion that would be saved would be saved $2 billion per
    year for each year thereafter. I do not know how the
    divestiture----
        Chairman Levin. Let us assume the divestiture is divided by
    10 instead of by 5. Either way, a few billions is a big chunk.
        Mr. Brownlee. Sure. Eventually the transition of the force
    structure would catch up with the divestiture----
        Chairman Levin. Right, but even in the first year, if it
    was $2 billion savings even in----
        Mr. Brownlee. I do not think they are going to divest of
    all these airplanes in 1 year, nor would we propose to
    transition everything in 1 year.
        Chairman Levin. Right. How long a transition is it?
        Mr. Brownlee. How long should the transition be?
        Chairman Levin. What do you estimate the length of the
    transition?
        Mr. Brownlee. My personal view is, sir, it would take
    probably several years. You cannot simply move the force
    structure and the people with it. The people are people in the
    Active components. Some might be lost through attrition or
    other ways, or you can eventually board people out.
        The Air Force insisted that the Reserve component flying
    units had the same levels of readiness as the Active component.
    Given that and given that part-time forces generally cost less
    than full-time forces, we suggested that the Air Force should
    study the missions that the Active component is performing and
    transition all those missions it can over time to the Reserve
    component and, therefore, as the Chairman indicated, save money
    because you can perform those missions with forces that cost
    you less. That was the rationale behind what we recommended.
        We did not really address whether that should happen in 1
    year or 2 years. Some of those missions we believe could
    probably be transitioned faster than others, but over time,
    that kind of underlying principle should yield savings over
    time, and it would yield a larger Reserve component than Active
    Duty component.
        Chairman Levin. Right, and the savings, when they are fully
    achieved, could be $2 billion a year, but it takes a number of
    years to get to that point.
        Mr. Brownlee. The savings are there every year after that.
        Chairman Levin. Right, and continue after that. We do not
    know what divestiture could be avoided this year, for instance,
    because we do not know what part of the $2 billion would be
    available this year.
        Mr. Brownlee. Yes, sir.
        If I can make one other point from the Air Force point of
    view. It is that anything they do in this budget year--of
    course, if Congress says do not do what you proposed, do what
    the Commission proposed--they probably have a money issue right
    now. They have to go find money from somewhere else because
    their budget is up here. They have to stick with the
    President's budget, unless they send up a budget amendment and
    change it. They would have a shortfall. I can understand why
    they stick with that, and so anything that the committee might
    do that changes their budget is going to have to take into
    account where they make up the shortfall from what they have
    proposed.
        Chairman Levin. I think we follow that.
        I missed that vote. I am going to try to catch the
    beginning of the next vote. I will make sure that we check with
    others to see if they are coming back.
        General Welsh said that command and control units are not
    particularly well-suited for the Reserve components. First of
    all, do you agree with that assessment? I will ask it directly
    or do you have a comment about that?
        Mr. McCarthy. I would say first and foremost that we
    recognize that when you talk about a mix between Active and
    Reserve components, that it will be different in each of the
    mission areas and that clearly some areas are probably much
    better suited for a preponderance in the Active component or a
    preponderance in the Reserve component.
        As to command and control, I recall some testimony that we
    received that there was a very successful Reserve component
    command and control augmentation force. Ray [Raymond Johns] or
    Bud [Harry Wyatt], perhaps you could comment on that.
        Mr. Wyatt. If I could. Maybe in my mind, the way I like to
    look at it is to draw a distinction between readiness and
    responsiveness. It is one of the findings of the Commission. I
    think the Chief and the Secretary agree that one of the
    strengths of the Air Force is that as far as readiness is
    concerned, all of the components are trained to the same level
    of readiness.
        When you talk about command and control, the issue of
    responsiveness, how quick can you be ready to go, and
    especially in the command and control function, two issues. One
    is the responsiveness, and the other is the volume of the work
    that needs to be done in a particular command and control
    environment. While I agree with the Chief and the Secretary
    that maybe initially for those instantaneous responses in
    command and control, that might weight more heavily toward the
    Active component--for example, if a Libya pops up and you need
    some additional command and control experience, the readiness
    levels of the Guard and Reserve then are very appropriate to
    kick in and augment the Active component.
        I think that there is room for participation in this core
    function by all three components. That may be one of those core
    functions and mission areas that would be weighted more heavily
    toward that Active component when we talk about that 58/42
    percent ratio. The airlift is already more heavily comprised by
    the Reserve component percentage-wise, but that may be one of
    the core functions. I think that is where the Chief was going,
    was that maybe it should be more heavily weighted toward the
    Active component. But it is a core function that all the
    components can and should participate in.
        Chairman Levin. Anyone else want to comment on that
    question? [No response.]
        Okay. I hate to inconvenience you, but if you do not mind,
    I would like to go over and vote, check with colleagues that I
    can collar on the floor to see if they are coming back. Then I
    will come back in any event, if for no other reason than to
    adjourn the hearing. But there may be others that want to come
    back, so I am going to try to check that out while I vote.
        We will recess for 10 or 15 minutes. Thank you for your
    understanding. [Recess.]
        Thank you again. The committee will come back to order.
        I just have one additional question, and then we will
    adjourn.
        In your prepared testimony, General McCarthy, I believe
    that you directed Commission staff to draft an implementation
    strategy that could be the basis for the Air Force to execute a
    TF-C implementation plan. I wonder whether you could provide
    the committee with a copy of that implementation plan for our
    record.
        Mr. McCarthy. Certainly, Mr. Chairman, we can provide
    everything that we have.
        I would say that one of the things that we did in writing
    the report was, as you note, we first listed the
    recommendations in the order in which they appeared in the
    report, and then we grouped them by the agency or department
    who we thought would be responsible for implementation. What we
    probably should have done and what we have done since then is
    to provide another grouping of the recommendations that tend to
    relate directly to one another, and we think there are about
    six of those groupings. That became the basis of the staff
    thinking about the implementation. We were asked a lot about
    that. I would say that the Commission itself has taken no
    action on an implementation plan, but there is certainly some
    staff work that might be useful to the committee staff, and we
    would be happy to provide that.
        I would ask my colleagues if they want to comment on that
    further.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Levin. That would be helpful because even though
    we understand the limitation, it will not have had a formal
    Commission approval. Nonetheless, it would be very helpful to
    us and we would appreciate that, if you can do that.
        Anyone want to add a comment before we adjourn? [No
    response.]
        Thank you again for your tremendous work.
        Mr. Brownlee. Mr. Chairman, I might want to say one thing
    because of what Chairman McCarthy said. I think we had
    excellent leadership on this Commission from Chairman McCarthy.
    I tell you, he was focused on that due date like a laser and
    made sure that we all met that. We also benefited greatly from
    a very capable staff.
        Chairman Levin. We thank you all. We thank your staff.
        We will stand adjourned.
        [Whereupon, at 2:24 p.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
                  Questions Submitted by Senator Kelly Ayotte
                    guard and reserve operational readiness
        1. Senator Ayotte. Secretary James, the National Commission on the
    Structure of the Air Force (the Commission) report concluded that
    ``past and current Air Force leaders have committed the resources and
    effort needed to allow the Reserve components to maintain the same
    standards of skill and operational readiness as the Active component.''
    Do you agree that the Reserve components have maintained the same
    standards of skill and operational readiness as the Active component?
        Ms. James. Yes, the Reserve components have maintained the same
    standards of skill and operational readiness as the Active component.
    Congress and the Nation's leadership have improved the Reserve
    component's organizational structure, resulting in increased
    operational readiness levels of both our citizen airmen and equipment,
    such that today's Reserve component is a mission-effective force for
    our Nation.
        The surge capacity of the Reserve component is derived from its
    readiness, training, and integration with the Active Duty. The Reserve
    component is a Tier-1 ready force, capable of responding within 72
    hours. This is critical as speed is a decisive factor when crises
    erupt. By maintaining daily operational readiness, and by training and
    being inspected to the same standard as the Active Duty, the Reserve
    component can quickly respond to combatant commanders' requirements.

        2. Senator Ayotte. Secretary James, the Commission also suggested
    that shifting approximately 36,600 personnel to the Reserve component
    could yield savings of perhaps $2.0 billion per year in manpower costs
    with no reduction in Total Force end strength. Do you agree with that
    suggestion? Why or why not?
        Ms. James. The Chief of Staff directed the Total Force Continuum
    (TF-C) to study moving as many personnel to the Reserve component as
    possible, while maintaining capability and minimizing risk to capacity.
    The TF-C is currently utilizing the High Velocity Analysis (HVA) to
    evaluate force mix against wartime demand on all mission areas with 80
    percent of mission areas to be completed by December 2014. The results
    of the HVA will provide decision-quality options to influence force mix
    decisions going into the next budget development cycle.
        Rigorous analysis is mandatory to ensure we shift the correct
    personnel into the correct mission areas in order to meet national
    strategic objectives and to appropriately support the joint team.
    Analysis provides us with the operational bookends to balance the
    components without breaking the force. Moving personnel without fully
    understanding the impacts would be counterproductive, possibly damaging
    both readiness and combat capability.

        3. Senator Ayotte. Secretary James, when could this savings be
    achieved?
        Ms. James. Manpower shifts will require upfront investments with
    significant savings not accruing for several years, but we believe we
    will see some savings beginning in fiscal year 2016 and likely through
    the Future Years Defense Program (FYDP) based on early indications from
    the HVA. We expect to map out implementation phasing and we expect to
    achieve quick wins where work is already underway as well as areas
    where greater Reserve component capacity may need to be deployed. The
    HVA provides a roadmap across all Air Force mission areas which can be
    time-phased across the FYDP and beyond. HVA is also repeatable, so as
    strategy changes, the HVAs can be rapidly re-accomplished using the
    latest assumptions, such as changes in costing, demand signal, policy,
    and/or statute.

        4. Senator Ayotte. Secretary James, how specifically would this be
    accomplished?
        Ms. James. The results of the HVA will inform the Air Force
    strategy, planning, and programming process after major command and
    headquarters-level senior leader review and approval.

                                 cyber billets
        5. Senator Ayotte. Secretary James, how can we create greater
    collaboration and synergy between the cutting-edge commercial sector
    and the Air Force to improve the Air Force's computer network defense
    capabilities?
        Ms. James. The Air Force is actively engaged with the Department of
    Defense (DOD) Chief Information Office, the Defense Information Systems
    Agency, other Services, and defense industrial base partners to shape
    enterprise computer network defense capabilities based on Federal and
    DOD policy, government and industry best-practices and standards, and
    best-of-breed commercial solutions. Continuing participation in
    industry exchange, growth of our workforce through industry technical
    certifications, and hosting cyber defense tool pilots allow the Air
    Force to stay abreast of the latest trends. Specifically, the Air Force
    addresses automated cybersecurity solutions across the five lines for
    Air Force information network cybersecurity: (1) vulnerability
    scanning; (2) vulnerability remediation; (3) host-based security
    system; (4) server/host data-at-rest; and (5) comply-to-connect.
    Following ongoing gap analysis and requirements validation, the Air
    Force expects to draft a cybersecurity information system integrated
    capabilities document which is the foundation for future defensive
    capability acquisition. This will lead to a request for proposal to
    provide a holistic industry solution to address gaps across the five
    lines of effort.

        6. Senator Ayotte. Secretary James, what percentage of Air Force
    cyber billets are currently filled by members of the Reserve component?
        Ms. James. The Air Force has 46,000 airmen in today's cyberspace
    workforce. This 46,000 includes officer, enlisted, and civilian
    personnel in a variety of Air Force specialty codes and civilian
    occupational series. The Air National Guard has 12,400 airmen or 27
    percent of the cyberspace workforce and the Air Force Reserve has 2,800
    or 6 percent.

        7. Senator Ayotte. Secretary James, can we increase the number of
    cyber billets that are filled by members of the Reserve component?
        Ms. James. Air Force Space Command (AFSPC) is identifying
    opportunities where Reserve and Guard forces could be used to meet an
    operational need in cyberspace. The Air Force is exploring options now
    through AFSPC's force composition analysis in conjunction with the TF-C
    office to evaluate costs, opportunities, training pipeline impacts,
    suitability requirements, et cetera. We are researching the pros and
    cons of both unit-equipped and associate unit constructs, which enable
    shared equipment and facilities.

        8. Senator Ayotte. Secretary James, what is Air Force's plan going
    forward to increase the number of cyber billets in the Reserve
    component?
        Ms. James. The Air Force is investigating the ability of our Air
    National Guard and Air Force Reserve units to support cyber mission
    force steady-state requirements and surge capabilities. The cyber
    mission analysis is being done in two stages. The first stage will be
    complete December 2014. The second stage of analysis will be complete
    April 2015. After both stages of analysis are done, force mix options
    will be considered.

              air force adjudication of commission recommendations
        9. Senator Ayotte. Secretary James, where is the Air Force at in
    implementing those Commission recommendations you agreed with?
        Ms. James. Nine of the Commission recommendations are currently
    being worked:

             #1 Cost Approach: Air Force currently follows DOD
            guidance to use 87.5 percent of the fully burdened cost, the
            full cost to the Federal Government, to determine military
            manpower costs. The Air Force continues to work with DOD to
            develop and evaluate analytical tools to better calculate fully
            burdened as well as life-cycle costs of manpower.
             #3 Resourcing Reserve Component: After the TF-C HVA
            and the results of force mix options for each mission set are
            realized, the appropriate resourcing for appropriate employment
            of the Air Reserve component will be submitted for approval.
             #6 Staff Integration: Integration plans are ongoing
            throughout the Air Staff. The reorganization incorporates and
            provides Reserve component opportunity across headquarters Air
            Force positions.
             #17 Professional Military Education Positions: TF-C is
            working with the Air Force Learning Council to complete a
            review of student and instructor positions. The Air Force
            continues to provide a general officer Total Force briefing to
            each Air University Wing Commander course.
             #18 Total Force Competency Standard: The TF-C, working
            with the Air Force Learning Council, will complete a review of
            the Total Force curriculum in current education programs.
             #21 Operational Air Reserve Component Funding: The
            fiscal year 2014 Program Objective Memorandum includes 12304b
            funding in Operational Contingency Operations funds and the
            fiscal year 2015 budget. In addition, Air Force Instruction 36-
            2619 includes a requirement to mandate major command inclusion
            of operations and maintenance funding with military personnel
            man-day requests.
             #24 State Adjutants General: Through the Deputy
            Director of the Air National Guard, selected Adjutants General
            provide representation of the Air National Guard's State
            Adjutants General in the Air Force corporate process.
             #34 Integrated Personnel Management: AF/A1 is
            implementing integration plans.
             #36 Personnel Tempo Metric: Personnel tempo is an
            existing requirement for the Air Force Integrated Pay and
            Personnel System and is being worked to come on line.

        Four recommendations (#25 Cyberspace Airmen; #27 Global Integrated
    Intelligence, Surveillance, and Reconnaissance; #29 Intercontinental
    Ballistic Missile Mission; and #28 Special Operations) are being
    evaluated or are scheduled to be evaluated using the HVA tool.
    Additionally, the establishment of the Total Force Integration
    Executive Committee, chaired by the Air Force Assistant Vice Chief of
    Staff, will champion working groups and task appropriately.

        10. Senator Ayotte. Secretary James, which of those recommendations
    you agreed with will require congressional assistance?
        Ms. James. Based on an initial review, there are four
    recommendations that will require congressional assistance:

             #2 Budgeting Flexibility: Request relief and allow
            increased flexibility in applying budget cuts across budget
            categories, including installations.
             #4 Infrastructure: Congressional approval on Base
            Realignment and Closure and/or warm basing options.
             #33 Duty Status: After the Office of the Secretary of
            Defense's results from the review of existing authorities,
            assistance with approval of recommended changes through the
            Unified Legislative and Budgeting process.
             #42 Up or Out: After further analysis of the impacts
            of this initiative, legislative relief of current statutes
            would be required, if approved.

        In addition, more than half of the Commission's recommendations
    will require legislative revisions in order to be realized.

                                ANNEX A

        [The report of the National Commission on the Structure of
    the Air Force follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

     DEPARTMENT OF DEFENSE AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR
                   2015 AND THE FUTURE YEARS DEFENSE PROGRAM

                                  ----------

                           WEDNESDAY, APRIL 30, 2014

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

                    REFORM OF THE DEFENSE ACQUISITION SYSTEM

        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, McCaskill,
    Manchin, Blumenthal, Donnelly, Hirono, Inhofe, McCain, and
    Ayotte.

           OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

        Chairman Levin. Good morning, everybody.
        The committee meets today to assess the impact of the
    Weapon Systems Acquisition Reform Act (WSARA) of 2009, and
    other acquisition reform measures adopted over the last decade
    and to consider the need for further legislative and
    administrative improvements to the defense acquisition system.
        Six years ago, the committee held a similar hearing at a
    time of real crisis in the defense acquisition system. In 2008,
    half of the Department of Defense's (DOD) major defense
    acquisition programs (MDAP) had exceeded the so-called Nunn-
    McCurdy cost growth standards which had been established by
    Congress to identify seriously troubled programs. On average,
    these programs had exceeded their research and development
    budgets by an average of 40 percent, seeing their acquisition
    costs grow by almost 30 percent, and had experienced an average
    schedule delay of almost 2 years.
        The Government Accountability Office's (GAO) 2008 annual
    report on DOD's large weapon systems described an acquisition
    system in real disarray. The GAO report stated, ``Of the 72
    weapons programs that we assessed this year, no program had
    proceeded through system development, meeting the best
    practices standards for mature technologies, stable design, and
    mature production processes. 88 percent of the programs began
    system development without fully maturing critical technologies
    according to best practices. 96 percent of the programs had not
    met best practice standards for demonstrating mature
    technologies and design stability before entering the more
    costly system demonstration phase. No programs that we assessed
    had all of their critical manufacturing processes in
    statistical control when they entered production and most
    programs were not even collecting data to do so.''
        The problem as described in 2008 by GAO and others was that
    DOD was trying to build complex weapon systems without doing
    the upfront engineering, design, and cost estimating work
    needed to put an acquisition program on sound footing. We
    learned that as a rule of thumb, it can cost 10 times more to
    fix a problem after you have built a weapon system than it does
    to get it right the first time. That is why we should continue
    to insist on a ``fly-before-we-buy'' approach to major weapon
    systems, and that is why WSARA established a ``design-before-
    you-build'' policy for these acquisitions as well.
        WSARA, which Senator McCain and I introduced in early 2009
    and was enacted several months later, focused on getting things
    right at the beginning of an acquisition program by, first,
    establishing new standards to ensure the technological maturity
    of key technologies before they are incorporated into major
    weapons systems; second, establishing a new director of Cost
    Assessment and Performance Evaluation to ensure accurate
    estimates for the cost of these systems; third, requiring DOD
    to make early tradeoffs between costs, schedule, and
    performance to ensure reasonable and achievable acquisition
    objectives; and fourth, restoring DOD's system engineering and
    development testing capabilities, that is, the skills and
    procedures necessary to solve tough problems on the drawing
    board before they become bigger, more expensive problems.
        There is now evidence that our 2009 legislation has brought
    about some significant improvements. GAO's 2013 report states,
    ``Continuing a positive trend over the past 4 years, newer
    acquisition programs are demonstrating higher levels of
    knowledge at key decision points. Many of the programs are
    capturing the critical manufacturing knowledge prior to
    production.'' As a result, GAO has reported that, ``A majority
    of programs in the portfolio gained buying power in the last
    year as their acquisition unit costs decreased.''
        Similarly, GAO's 2014 report found that in the previous
    year, 50 of the 80 programs had reduced their overall costs,
    and 64 percent of the programs had increased their buying
    power, resulting in $23 billion of savings. In short, improved
    acquisition practices have resulted in significant cost
    reductions on many of our major acquisition programs, a result
    that was rarely achieved 5 or 6 years ago.
        WSARA is not the only major acquisition reform legislation
    that we have enacted since 2008. For example, in the National
    Defense Authorization Act (NDAA) for Fiscal Year 2008, we
    enacted the Defense Acquisition Workforce Development Fund
    (DAWDF), which has enabled us to hire and train engineers, cost
    estimators, program managers, information technology (IT)
    experts, logisticians, testers, and procurement specialists
    needed to successfully run the acquisition program. In the NDAA
    for Fiscal Year 2009, we required the military departments to
    establish configuration steering boards to prevent costly and
    unnecessary changes to program requirements for major weapon
    systems. In the NDAA for Fiscal Year 2012, we enacted measures
    to strengthen the detection, avoidance, and remediation of
    counterfeit electronic parts in defense systems.
        In addition, we have enacted Senator McCain's provisions to
    prevent abuses of cost-type contracts and multiyear contracts.
    We have enacted Senator McCaskill's legislation to ensure
    proper oversight of wartime contracting. We have enacted
    measures to protect contractor whistleblowers to prevent
    contractor conflicts of interest, to establish a database of
    contractor misconduct, to end the abuse of interagency
    contracting, to address the problem of excessive pass-through
    charges, and to control the operating and support costs that
    constitute up to 70 percent of the lifecycle costs of many
    weapon systems. We have required business process reengineering
    before we buy new IT systems and we have tied award and
    incentive fees to contractor performance.
        Senior defense officials have reinforced some of these
    reforms beginning with the Better Buying Power Initiative
    (BBPI) launched under Under Secretary Kendall and his
    predecessor, Ash Carter. GAO has reported that a single element
    of that initiative, the more aggressive use of ``should cost''
    analyses for MDAPs, will result in $24 billion in savings on
    contracts negotiated last year.
        Nonetheless, much more remains to be done. For instance,
    GAO's 2014 report on the acquisition of major weapon systems
    states that despite the improvements of the last 5 years, DOD
    has yet to fully implement a number of best practices such as
    fully maturing technologies before starting engineering and
    manufacturing development and bringing all manufacturing
    processes under control before starting production.
        DOD's track record in the acquisition of new IT systems
    remains abysmal, with repeated examples of systems that take
    years longer than expected to field, run hundreds of millions
    of dollars over budget, and end up being canceled without any
    benefit at all to the government.
        That is why I recently joined Senator McCain in sending
    letters in our capacities as chairman and ranking member of the
    Permanent Subcommittee on Investigations, on the Senate
    Committee on Homeland Security and Governmental Affairs, to
    several dozen acquisition experts seeking their views on
    deficiencies in the defense acquisition process, steps that
    should be taken to improve the efficiency and effectiveness of
    this process, and the extent to which recent legislative and
    policy reforms may have resulted in improvements. It is why
    Senator Inhofe and I recently joined with our counterparts on
    the House Armed Services Committee in signing a series of
    letters to industry associations seeking their views on a
    similar set of issues.
        Finally, I thank our witnesses for being here today. We
    look forward to their testimony. I now recognize Senator
    Inhofe.

                  STATEMENT OF SENATOR JAMES M. INHOFE

        Senator Inhofe. Thank you, Mr. Chairman.
        I think it goes without saying that we cannot afford to
    continue to award contractors $1.2 billion on a weapon system
    such as the Army Ground Combat Vehicle only to, shortly
    afterwards, terminate the program.
        I will have some specific questions about some of the other
    things that have happened such as the Crusader after $2 billion
    of investment and the Future Combat System (FCS), after $19
    billion of investment. That has been touched upon by our
    chairman in his opening remarks.
        Despite this, there has been progress in achieving defense
    acquisition reform. WSARA, as reported by the chairman, was
    largely written by the chairman and Senator McCain, and it has
    made important strides. Secretary Kendall's BBPI and the
    reissuance of the interim DOD instruction 5000.02 have also
    contributed to this effort.
        However, a lot of work has to be done. Recently, I was
    informed in the case of one MDAP, it took 80,000 man-hours to
    complete the paperwork to pass the defense acquisition system's
    first milestone and an additional 100,000 man-hours to produce
    the documents to pass the second milestone. This is wrong.
        Therefore, I am happy to see Secretary Kendall has launched
    an effort to streamline the acquisition process. I have also
    tasked GAO to perform a similar review, which I hope will be
    the foundation for next year's acquisition reform effort.
        But just streamlining the process will not suffice. We need
    to make sure that our acquisition professionals are properly
    trained. A 2009 DOD poll of senior program managers, the Fox-
    Ahern Report, found in a strikingly large number of fundamental
    areas, these senior officials believed that training was not,
    ``sufficiently practical or comprehensive.''
        WSARA has begun to remedy this. However, I added a request
    or a requirement in the last NDAA for DOD to redo the 2009
    study to see if progress was being made in training. Since the
    report is due soon, I hope that Secretary Kendall will be able
    to discuss some of those findings.
        I am also concerned that program managers are constantly
    being rotated in and out of acquisition programs. This is
    having a major adverse impact on the execution of programs.
    Figuring out a way to overcome this must be a vital element in
    the new acquisition reform.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe.
        We now welcome our two witnesses on our first panel this
    morning: Frank Kendall III, Under Secretary of Defense for
    Acquisition, Technology, and Logistics; and Mr. Michael J.
    Sullivan, Director of Acquisition and Sourcing Management at
    GAO. Secretary Kendall?

    STATEMENT OF HON. FRANK KENDALL III, UNDER SECRETARY OF DEFENSE
       FOR ACQUISITION, TECHNOLOGY, AND LOGISTICS, DEPARTMENT OF
                                DEFENSE

        Mr. Kendall. Thank you, Mr. Chairman.
        Chairman Levin, Ranking Member Inhofe, thank you for giving
    me the opportunity to discuss some of the measures DOD is
    taking to improve the productivity and performance of defense
    acquisition.
        I want to begin by expressing my appreciation for the work
    this committee has done in this area. Statutes like the DAWDF
    authorization, WSARA, and others, that the chairman mentioned
    that this committee has initiated and strongly supported, have
    been very beneficial to DOD and to the Nation.
        My written testimony has more detail, and I ask that it be
    admitted to the record.
        Senator Inhofe. Without objection.
        Mr. Kendall. I spent most of my professional life in
    defense acquisition either on the government side or in
    industry, a period of over 40 years. During that time, I have
    seen any number of attempts to improve defense acquisition. My
    view is that many of the things we have tried have had little
    discernible impact. The evidence, in terms of major program
    cost and schedule slips, shows very little statistical change
    over the years. I am tempted to draw three conclusions from
    that fact.
        The first is that fixing defense acquisition is not as easy
    as a lot of people seem to think it is.
        The second conclusion I am tempted to draw is that maybe we
    have been changing the wrong things. Defense acquisition is a
    human endeavor. My view is that we have focused too much on
    organizational structures, processes, and oversight mechanisms
    and not enough on providing people with the skills and the
    incentives they need to be successful.
        The third possibility is we have not been patient enough or
    sufficiently tenacious with the acquisition policies that we
    have tried to leave in place long enough to find out whether
    they really work or not. The frequent rotation of leadership,
    particularly political appointees and career military people,
    makes it harder to sustain any given initiative.
        The approach I am taking is one that Dr. Carter and I
    decided upon 4 years ago when he was Under Secretary and I was
    his Principal Deputy. We introduced the first set of what we
    called BBPIs. This is an approach of continuous incremental
    improvement based on pragmatism and evidence based on data. I
    can report to you today that after 4 years, I believe we are
    seeing changes for the better. Acquisition of a new cutting-
    edge weapon system is a complex job. It requires getting every
    one of hundreds of decisions right, in an environment where the
    real incentive systems are not always aligned with the goal of
    increased efficiency. This is particularly true in the current
    budgetary situation. There is great uncertainty about future
    budgets and planning is excessively difficult.
        The BBPI approach tries to identify the areas of
    acquisition where the greatest good can be achieved and to
    attack those opportunities. As we learned from our experience,
    we periodically make adjustments and bring in new ideas. In my
    written statement, I discuss some of the many initiatives we
    are currently pursuing under the second iteration of BBPI. Our
    third iteration is on the horizon. It is a pragmatic,
    incremental approach that spans actions like setting
    affordability caps to constrain program cost, bottoms-up
    ``should cost'' estimates, a focus on the professionalism of
    DOD's acquisition workforce, the creation of competitive
    pressures wherever possible, and a new emphasis on the
    acquisition of services as opposed to products. This is hard,
    detailed work. It takes time, constancy of purpose, and
    tenacity to be effective. But I do not believe there is any
    other way to achieve lasting improvement.
        Embedded within this process of continuous improvement on
    multiple fronts, there are some important cultural changes I am
    trying to implement. The academic business literature suggests
    that two things are necessary to effect major change in an
    organization: a period of 4 or 5 years of sustained commitment
    by senior leadership and a crisis. I am trying to supply the
    leadership. The budget situation is supplying the crisis.
        The first culture change is to move our workforce from a
    culture that values spending over controlling cost. In
    government, the built-in incentive system is to spend one's
    budget so that funds are not rescinded or reduced in subsequent
    budgets. Many of the BBPIs are intended to reverse this
    situation and force our managers to focus on cost.
        The other culture change is to move the government
    workforce away from a ``check the box'' or ``school solution''
    approach to acquisition to one based on professionalism, sound
    business, technical analysis, and most of all, critical
    thinking. The vast array of products and service types that DOD
    buys makes this a necessity. One-size-fits-all rules are often
    not the right answer to a given situation or problem.
        I do believe we are making progress, but I also believe we
    have ample room for additional improvement. With your support,
    I am determined to build upon the progress that we have made.
        I look forward to your questions. Thank you.
        [The prepared statement of Mr. Kendall follows:]
                  Prepared Statement by Hon. Frank Kendall III
        Chairman Levin, Ranking Member Inhofe and distinguished members of
    the committee, I appreciate the opportunity to testify today. I look
    forward to sharing with you a status of the Department's current
    efforts to improve our complex acquisition system, as well as exchange
    ideas for potential additional actions, including statutory actions
    that would improve the productivity and effectiveness of defense
    acquisition of products and services.
                       continuous incremental improvement
        The history of so-called ``acquisition reform'' spans multiple
    decades and includes multiple statutory and regulatory initiatives
    intended to improve the system but quite often, only minimally impact
    results. I have lived a great deal of this history. The data on major
    programs shows remarkably consistent behavior decade to decade. The
    approach I am taking is not one of acquisition reform; it is not
    revolutionary. I've seen too many management fads and slogan based
    programs that failed to address the fundamentals of what it takes to
    develop and field a new product. Improving defense acquisition is a
    long hard tedious job that requires attention to the hundreds of
    factors that affect acquisition results.
        The Department is following a process of continuous incremental
    improvement that focuses on the areas in which the most progress can be
    made. This process attacks the problem of improving acquisition on
    multiple fronts simultaneously and it is constantly evolving as we
    learn from our experience, study the evidence of the impact of our
    changes, and make adjustments. This is what we have been doing for
    almost 4 years now under the label of ``Better Buying Power (BBP),'' a
    phrase coined by my predecessor, then Under Secretary Carter, when I
    was his Principal Deputy. We are now 2 years into implementing the
    second set of continuous improvement initiatives known as BBP 2.0, and
    I have just begun to think seriously about what the next iteration BBP
    3.0, will look like. I can tell you, however, that it will be an
    incremental evolutionary adjustment to the current set of initiatives,
    and that most if not all of the initiatives put in place under BBP 1.0
    and 2.0 will continue. The hard part of bringing change to the Pentagon
    is not announcing new policies; it is following up to ensure that those
    policies are actually implemented, understanding their impact, and
    making any needed adjustments. Time and constancy of purpose are
    essential if this process is to be successful.
        Today I will discuss some of the many acquisition initiatives we've
    put in place, or that are in progress, to meet our national security
    needs, and I will also address some implementation challenges we face
    given the current budget environment. I will share with you my focus
    areas to improve acquisition outcomes, provide more effective
    incentives to industry, and deliver the products and services our
    taxpayers and service men and women expect and deserve.
    1. Better Buying Power--Status Update
        We are now 4 years since Dr. Carter and I began work on the first
    iteration of BBP, the set of policies we promulgated as part of then
    Secretary Gates efficiency initiatives in 2010. In the intervening
    years I've released the second iteration of BBP and I've also recently
    made some statements in public that BBP 3.0 may be on the horizon. Has
    all this made a difference? I believe it has, although I'm also certain
    that we have ample room for additional gains in productivity and other
    improved outcomes. The whole concept of BBP is of a commitment to
    continuous incremental improvement; improvement based on experience,
    pragmatism, and analysis of the evidence (i.e. data).
        When I introduced the second iteration of BBP, we had already made
    a number of adjustments (continuous evolutionary improvements) to the
    initiatives in the first iteration. Under 2.0, most of the BBP 1.0
    initiatives continued, either under the 2.0 label or just as good best
    practices we may not have emphasized under BBP 2.0. Where changes were
    made, this was clearly articulated in 2.0. For example, the overly
    restrictive guidance on fixed price incentive contract type (never
    intended to be as proscriptive as it may have been interpreted to be)
    was changed to emphasize sound decisionmaking about the best contract
    type to use in a given circumstance. We also relaxed the model
    constraints on time to recompete service contracts, which proved too
    restrictive.
        In general, BBP 2.0 moved us in an incremental way from the set of
    model rules that characterized BBP 1.0, to a recognition that in the
    complex world of defense acquisition, critical thinking by well
    informed and experienced acquisition professionals is the key to
    success--not ``one-size-fits-all'' the rules. This is equally true of
    the acquisition of contracted services for maintenance, facility
    support, information technology, or anything else we acquire from
    industry, as it is for the various aspects of the large programs and
    that we normally associate with defense acquisition.
        BBP 2.0 intentionally labeled, ``A Guide to Help You Think,'' is
    bookended by two critical areas: affordability and increasing the
    professionalism of our workforce, with middle sections focused on cost
    control, incentivizing industry, increasing competition, among others.
    I won't cover every initiative in BBP 2.0, but in general here is where
    I think we are in improving defense acquisition, and where I think we
    still need to go on these initiatives.
        Achieving Affordable Programs:
        We have a history of program cancellations and dramatic reductions
    in inventory objectives; the goal of the first bookend, affordability,
    is to ensure we do not start programs that we cannot afford--with heavy
    emphasis on long-term capital planning and enforcing affordability
    caps. Over the past 4 years we have continuously increased the number
    of major programs with assigned affordability targets (MS A or before)
    or caps (MS B) as programs come through the milestone review process. I
    recently reviewed the status of compliance, and in all but two or three
    cases, programs with caps have remained under their caps to date. The
    few that need to act immediately to reduce costs have estimates that
    are very close to their caps.
        To date, we have been successful in applying the caps. The
    affordability analysis process is also detailed in the new Department
    of Defense Instruction (DODI) 5000.02, and in most cases is followed by
    Service programming communities who execute the long term budget
    analysis needed to derive caps on sustainment and production. For
    smaller programs that are a fraction of the considered capability
    portfolio, assigning a cap can be problematic, but it still needs to be
    done to instill discipline in the requirements process.
        Looking forward however, the Department has a significant problem
    in the next decade affording certain portfolios; strategic deterrence,
    shipbuilding, and tactical aircraft are examples. This situation will
    have to be addressed in the budget process, but we are making
    reasonable progress in the acquisition system in constraining program
    cost, especially for unit production cost, which is easier to control
    than sustainment. Never the less, we have challenges particularly in
    understanding long term affordability caps outside the 5 year planning
    cycle, especially under sequestration level budget scenario.
        Controlling Cost Throughout the Acquisition Life Cycle:
        The implementation of `should cost based management' is another
    area that is well underway. ``Should cost'' challenges every manager of
    contracted work to identify opportunities for cost reduction, to set
    targets to achieve those reductions, and to work vigorously to achieve
    them. Managers at all levels should be requiring that these steps be
    taken and rewarding successful realization of cost savings. I am seeing
    more of the desired behavior as time passes.
        Although I am optimistic about these accomplishments, I still see
    cases where implementation appears more token than real. We also have
    work to do in understanding and teaching our managers the craft of
    doing ``should cost'' for our smaller programs (e.g. ACAT III's,
    Services, et cetera)--this remains a work in progress. Overall,
    ``should cost'' as a single measure alone, if fully implemented, will
    cause fundamental change in how we manage our funds.
        The letter the Under Secretary of Defense for Financial Management
    (Comptroller) and I signed 2 years ago laying out our expectations for
    major program obligation rate reviews is still operative; your job is
    not to spend your budget, it is to control costs while acquiring the
    desired product or service and to return any excess funds for higher
    priority needs. The chain of command still has to learn how to support
    that behavior instead of punishing it. For major program ``should
    cost'' realization, the saved funds will continue to remain with the
    Service or Agency, preferably for use in the program that achieved the
    savings. The practice of Should Cost helped develop a critical skill
    for our workforce. The ability to perform strategic analysis on major
    defense acquisition programs, set target cost goals, and execute
    accordingly--without fear of being punished for not spending the
    money--makes huge dividends for the Department.
        We are also gaining ground with regard to cooperation between the
    requirements and acquisition communities. My own partnership with the
    VCJCS and the JROC is intended to set the example in this area. We meet
    frequently to discuss issues of mutual concern and to reinforce each
    other's roles in the requirements and acquisition systems. The use of
    affordability caps and expanded use of Configuration Steering Boards or
    ``provider forums'' is strengthening the linkage to the requirements
    communities. There is an ancient debate about which comes first,
    requirements or technology. The debate is silly; they must come
    together. It cannot be a one time event in a program, but continuous.
    Requirements that are not feasible or affordable are just so many
    words. A program that doesn't meet the user's needs is wasted money.
        The BBP 2.0 program to increase the use of defense exportability
    features in initial designs is still in the pilot stage. This concept
    is sound, but the implementation is difficult because of some of the
    constraints on our budgeting, appropriations, and contracting systems.
    Support for US defense exports pays large dividends for national
    security (improved and closer relationships), operationally (built in
    interoperability and ease of cooperative training), financially
    (reduced US cost through higher production rates), and industrially
    (strengthening our base). This initiative will continue on a pilot
    basis, but hopefully be expanded as the implementation issues are
    identified and adjudicated.
        Incentivize Productivity and Innovation in Government and Industry:
        Through our research, the Business Senior Integration Group quickly
    found that in order to effectively incentivize our system, we needed to
    focus our attention on professional judgments about the appropriate
    contract type, as opposed to emphasizing one type over others. As we
    analyze the data on major programs, it shows that in general we get
    this right, particularly with regard to choices between fixed price and
    cost plus vehicles. We are still in the process of providing updated
    guidance in this area. One thing is clear from the data; where fixed
    price is used, there is benefit to greater use of fixed price incentive
    vehicles, especially in production contracts and even beyond the
    initial lots of production. We are increasing the use of fixed price
    incentive contracts in early production--and it is paying off.
        We have begun to monetize the value of performance above threshold
    levels, however this practice is still in its early phases of
    implementation. Requirements communities usually express a
    ``threshold'' level of performance and a higher ``objective'' level of
    performance, without any indication of how much in monetary terms they
    value the higher level of capability. It represents a difficult culture
    change for our operational communities to have to put a monetary value
    on the higher than minimum performance levels they would prefer--if the
    price were right. The Air Force Combat Rescue Helicopter was the first
    application of this practice and it is in the process of being applied
    more widely across the Department. Forcing Service requirements and
    budget decisionmakers to address the value they place on higher
    performance (which has nothing to do with the cost) is leading to
    better ``best value'' competitions where industry is well informed
    about the Department's willingness to pay for higher performance,
    innovation is encouraged, and source selections can be more objective.
        One of the strongest industry inputs we received in formulating the
    BBP 2.0 policies was that the ``lowest price, technically acceptable''
    (LPTA) form of source selection was being misused and overused. We
    provided revised policy guidance that, like other contracting
    techniques, LPTA should be used with professional judgment about its
    applicability. This technique works well when only minimal performance
    is desired and contracted services or products are objectively defined.
    LPTA does simplify source selection, but it also limits the
    government's ability to acquire higher quality performance. We seek
    continued feedback from industry, but I believe we have been successful
    in reducing the use of LPTA in cases where it isn't appropriate.
        Instituting a superior supplier incentive program that would
    recognize and reward the relative performance levels of our suppliers
    was a BBP 1.0 initiative that we have had great difficulty
    implementing. I'm happy to report that the Navy pilot program has
    completed the evaluation of the Navy's top 25 contracted service and
    product suppliers. The evaluation used the Contractor Performance
    Assessment Rating System data as its basis. Major business units within
    corporations were assessed separately. The Navy is providing results
    divided into top, middle, and lower thirds. Business units or firms in
    the top third will be invited to propose ways to reduce unneeded
    administrative and overhead burdens. The Superior Supplier Program will
    be expanded Department of Defense (DOD) wide over the next year. We
    expect this program to provide a strong incentive to industry to
    improve performance and tangible benefits to our highest performing
    suppliers. Finally, we expect to build on this Navy pilot and expand it
    to the other Services.
        BBP 2.0 encouraged the increased use of Performance Based Logistics
    (PBL) contract vehicles. These vehicles reward companies for providing
    higher levels of reliability and availability to our warfighters. If
    the business deal is well written and properly executed, then PBL does
    provide cost savings and better results. The data shows that we have
    not been able to expand the use of PBL for the last 2 years and that
    prior to that the use was declining. Declining budgets as well as the
    budget uncertainty itself, and therefore contract opportunities are
    part of this story, as is the fact the PBL arrangements are harder to
    structure and enforce than more traditional approaches. Those factors,
    combined with the imposition of sequestration, furloughs, and a
    government shut down last year are likely to have suppressed the
    increased use of PBL. This area will receive additional management
    attention going forward; we are going to increase the use of this
    business approach.
        Another major input to BBP 2.0 received from industry concerned the
    large audit backlog with the Defense Contract Audit Agency (DCAA). The
    backlogs both delay contract close out payments and extend the time
    before new awards can occur. Pat Fitzgerald, the DCAA Director, has
    worked very closely with the acquisition community. Pat is a regular
    participant in the monthly Business Senior Integration Group meetings
    that I chair to manage BBP implementation. Under Pat's leadership, DCAA
    is well on the way to eliminating most of the incurred cost audit
    backlog and expects to effectively eliminate the areas with the most
    excessive backlog over the next year. This is being accomplished
    despite all the workforce issues the Department has been forced to deal
    with.
        Strengthening discretionary research and development (R&D) by
    industry was an early BBP initiative. I am concerned that industry is
    cutting back on internal R&D as defense budgets shrink. This is an area
    we have tried to strengthen under BBP. We have made good progress in
    providing an online forum for industry to understand the Departments'
    technology needs and internal investments, and for industry to provide
    R&D results to government customers. If company R&D isn't being
    conducted, then these steps certainly can't substitute for doing the
    actual research. We will be tracking these investments carefully going
    forward, and I will be working with defense company Chief Executives
    and Chief Technology Officers to review their investment plans.
        The wisest course for industry is to continue adequate investments
    in R&D so as to be positioned for the inevitable future increase in
    defense budgets. Now is the time for all of us to invest in R&D. This
    requires discipline and commitment to the long term as opposed to
    short-term performance, however. Most of the Chief Executives I have
    discussed this with share this perspective; they recognize that the
    Department needs industry partners who are in this for the long term
    with the Department.
        Eliminate Unproductive Processes and Bureaucracy:
        I would like to be able to report more success in this regard, but
    I am finding that bureaucratic tendencies tend to grow and to generate
    products for use within the bureaucracy itself, together with the
    comfortable habits of years and even decades are hard to break. This is
    all even more true, in my opinion, within the Services than it is
    within the Office of the Secretary of Defense. On the plus side,
    however, we are making progress and I have no intention of stopping
    this effort.
        I have taken steps to reduce the frequency of reviews, particularly
    reviews at lower staff levels. Whenever possible we are combining the
    Office of the Secretary of Defense (OSD) and Service reviews or using
    senior level in depth reviews without preceding staff reviews and
    briefings. I have also instituted an annual consideration of major
    programs for delegation to the Services for management. Where the
    program risk has been significantly mitigated and/or all major
    Department investment commitments have already been made, I am
    delegating programs for Service oversight. I am also looking for
    opportunities to conduct pilot ``skunk works'' type oversight of
    programs which will, among other features, substitute in depth but
    short on scene reviews for the numerous formal documents with attendant
    staffing process that are normally required to support milestone
    decisions. I have also set firm and short time spans for staff review
    of some key documents so that issues are identified quickly and
    elevated rather than debated endlessly at the staff level.
        Our efforts to increase the role and primacy of the acquisition
    chain of command are also making progress, but have additional room for
    improvement. A full-day workshop the Service Acquisition Executives and
    I recently conducted with all the Department's Program Executive
    Officers (PEO) was very effective in communicating our priorities and
    in obtaining feedback on BBP and other initiatives. That feedback will
    be very helpful as we adjust our policies going forward. I also
    recently conducted a half-day workshop with our PEOs and Program
    Managers (PM) who manage and direct the Department's business systems.
    This is an area where I feel strongly that we can reduce some of the
    burdensome overhead and bureaucracy associated with these programs. I
    will need the support of Congress to achieve this, however.
        Time is money, and reducing cycle time, particularly long
    development times and extended inefficient production runs would
    improve the Department's productivity. I have reviewed the data on
    development timelines and they have increased, but not on the average
    by outrageous amounts; the average increase in major program
    development time over the last few decades is about 9 months. Much of
    this increase seems to be driven by longer testing cycles, brought on
    by the growth in the number of requirements that have to be verified,
    and by the increased complexity and size, and therefore development
    time, of the software components of our programs. We are still
    collecting data and analyzing root causes of cycle time trends, but the
    most debilitating one is obvious; budget cuts in general and
    sequestration cuts in particular are forcing the Department to adopt
    low production rates, in some cases below the theoretical minimum
    sustaining rate. Lowering production rates is stretching out our
    production cycle time and raising unit costs almost across the board.
        Promote Effective Competition:
        Competition works. It works better than anything else to reduce and
    control costs. Unfortunately the current data shows that the Department
    is losing ground in the percentage of contracted work being let
    competitively each year. The erosion is not huge, and I believe that
    decreasing budgets which limit new competitive opportunities are a
    major root cause. The Air Force launch program provides an example; we
    were moving aggressively toward introducing competition when budget
    cuts forced the deferral of about half the launches scheduled for
    competition. This is an area that I will be tracking closely and
    managing with the Service Acquisition Executives and agency heads in
    the coming months to try to reverse the recent trend.
        Under BBP we have recognized that for defense programs, head to
    head competition isn't always viable, so we are emphasizing other steps
    or measures that can be taken to create and maintain what we call
    ``competitive environments.'' Simply put, I want every defense contract
    to be worried that a competitor may take his work for DOD away at some
    point in the future. As I review programs, I ask each PM and PEO to
    identify the steps they are taking to ensure the existence of a
    competitive environment for the efforts they are leading.
        Open systems provide one opportunity to maintain competition below
    the prime level and to create a competitive environment for any future
    modifications or upgrades. Open systems and government ``breakout'' of
    components or subsystems for direct purchase are not necessarily in the
    interest of our primes, so careful management of interfaces and
    associated intellectual property, especially technical data rights, is
    key to achieving competition below the prime level and for future
    upgrades. Industry has a right to a fair price for intellectual
    property it has developed, but the government has many inherent rights
    and can consider the intellectual property implications of offerings in
    source selection. Our principal effort in this area has been to educate
    and train our workforce about how to manage this complex area. This is
    an effort that will bear fruit over time and in which I believe
    reasonable progress is being made. As we mature our practice in this
    area we need to also guard against overreaching; industry cannot be
    forced or intimidated into surrendering valid property rights, but the
    government has to exercise its rights and protect its interests at the
    same time as it respects industry's. Further, we in government must
    have strong technical and programmatic capabilities to effectively
    implement open systems. The Long Range Strike Bomber program is
    applying modular open systems effectively in its acquisition strategy
    and provides a good example of how this balanced approach can work--
    again if there is strong technical leadership by the government.
        Small businesses provide an excellent source of competition. Due in
    no small part to the strong leadership of the Department's Office of
    Small Business Programs Director, Mr. Andre Gudger, we have made great
    progress over the last few years. We have improved our market research
    so that small businesses opportunities are identified and we have
    conducted numerous outreach events to enable small businesses to work
    more effectively with the Department. While much of our effort has been
    directed toward increasing the amount of Department work placed with
    small businesses, this has been done with the recognition that work
    allocated to small businesses will be provided through competition, and
    competition that involves firms without the overhead burdens of our
    large primes. At this time the trends in our small business awards are
    positive, despite the difficulties of the last few years and I have
    strong expectations for our performance this fiscal year.
        The Department continues to emphasize competitive risk reduction
    prototypes--when the business case supports it. This best practice
    isn't called for in every program; the risk profile and cost determine
    the advisability of paying for competitive system level prototypes. The
    available data shows that when we do acquire competitive risk reduction
    prototypes we have to work harder on the government side to ensure that
    the relevant risk associated with the actual product we will acquire
    and field is really reduced. BBP 2.0 reinforces this maxim, and I
    believe we have been correctly applying it over the last few years.
    This is one of many areas where simply ``checking the box'' of a
    favored acquisition technique is not adequate; real understanding of
    the technical risk and how it can best be mitigated is necessary. It is
    also necessary to understand industry's perspective on these
    prototypes; industry cares much more about winning the next contract
    than it does about reducing the risk in the product that will be
    developed or produced under that contract. Competitive prototypes are
    successful when government acquisition professionals ensure that wining
    and reducing risk are aligned. The data shows that in many past cases
    they were not aligned.
        Improve Tradecraft in Acquisition of Services:
        We have increased the level of management attention focused on
    acquisition of services under both BBP 1.0 and 2.0. I still see this as
    the greatest opportunity for productivity improvement and cost
    reduction available to the Department. I have assigned my Principal
    Deputy, Alan Estevez, to lead the Department's initiatives in this
    area. He is working with the Senior Service Acquisition Managers that
    we established under BBP 1.0 in each of the Military Departments. We
    have also now assigned senior managers in OSD and in each of the
    Military Departments for all of the several major categories in which
    we contract for services: knowledge based services, R&D, facilities
    services, electronics and communication, equipment related services,
    medical, construction, logistics management and transportation.
        Our business policy and practices for services are improving. A
    counterpart to the often revised DOD Instruction for Programs, DODI
    5000.02, has been completed in draft and will soon be implemented. We
    have begun the process of creating productivity metrics for each of the
    service categories and in some cases for sub-areas where the categories
    are broad and diverse. We are also continuing efforts begun under BBP
    1.0 to improve our ability to conduct effective competition for
    services, including more clearly defined requirements for services and
    the prevention of requirements creep that expands and extends the scope
    of existing contracts when competition would be more appropriate.
    Services contracting is also an area in which we are focusing our small
    business efforts.
        Services are often acquired outside the ``normal'' acquisition
    chain by people who are not primarily acquisition specialists--they are
    often acquired locally in a distributed fashion across the entire DOD
    enterprise. Services are also often paid for with Operation and
    Maintenance (O&M) funds where specific efforts have much less
    visibility and therefore less oversight. The results achieved as a
    result of acquisition practices for service procurements are often not
    as evident to management, nor as well publicized as the results for
    weapon system. We are working to correct this by strengthening our
    business management (not just contract management) in these areas and
    to identify and encourage best practices, such as requirements review
    boards and the use of tripwires.
        In summary, I believe that we have made a good start at addressing
    the potential improvements that are possible in contracted services,
    but we have more opportunity in this area than in any other.
        Improve the Professionalism of the Total Acquisition Workforce:
        Increasing efficiency in our system is not possible without the
    other bookend to BBP 2.0. That is, improving the professionalism of the
    total acquisition workforce--which includes people who work in all
    aspects of acquisition; program management, engineering, test and
    evaluation, contracting and contract management, logistics, quality
    assurance, auditing, and many other specialties. All of these fields
    require high degrees of professionalism. I am proud of our workforce;
    it is highly professional, but there isn't a single person in the
    workforce, including me, who can't improve his or her professional
    abilities.
        Defense acquisition professionals have a special body of knowledge
    and experience that is not easily acquired. No one should expect an
    amateur without acquisition experience to exercise professional
    judgments in acquisition without years of training and experience it
    takes to learn the field. Like other highly skilled professions such as
    attorneys, physicians and military officers, our expertise sets us
    apart.
        Our workforce must deal with complexity. The problems we solve are
    not simple--we are entrusted to develop and field some of the most
    complicated and technically advanced systems in military history. It is
    an illusion to believe that defense acquisition success is simply a
    matter of applying the right, easily learned ``check-list'' approach to
    doing our jobs. There are no silver bullets that apply to all
    situations.
        It is not enough to know acquisition best practices; acquisition
    professionals must understand the ``why'' behind the best practices--
    that is, the underlying principles at play. Many of our products
    consist of thousands of parts and millions of lines of code. They must
    satisfy hundreds of requirements, and take several years to bring into
    production. Managing and understanding complexity is central to our
    work.
        The addition of this major category in BBP 2.0 was the most
    significant adjustment to BBP 1.0. The specific initiatives included
    several measures to enhance our professionalism. Under the Defense
    Acquisition Workforce Improvement Act the Department created three
    levels of acquisition proficiency. I don't believe that the standards
    for these levels as currently defined or implemented are adequate for
    the key leader acquisition positions that carry our highest levels of
    responsibility. We are in the process of creating and implementing
    higher standards for these positions. That process should conclude
    within the next year. As part of this initiative we are conducting a
    pilot program to establish professional qualification boards. The pilot
    is being conducted by the Developmental Test and Evaluation community
    under the leadership of DASD(R&E) for Developmental Testing, David
    Brown. These boards will help to establish a culture of excellence in
    our acquisition career fields and DOD-wide standards for our key
    leaders.
        We are also taking steps to better define the qualification
    requirements for all our acquisition specialties. These qualifications
    will rely more heavily on specific hands on work experience than we've
    had in the past. Finally we have taken steps to more fully recognize
    and reward our top performers. At my level this includes spotlight
    awards as well as our standard periodic awards. We are making a
    particular effort to recognize the contributions of teams as well as
    individuals and to recognize exceptional performance in the full range
    of defense acquisition activities. Recognition is key to growth and
    incentivizing our workforce to push themselves further. Without our
    people, DOD would not be able to procure and field next generation
    capabilities that keep us ahead of potential adversaries.
        I am increasingly concerned about the adverse effect budgetary
    uncertainty and precipitous cuts mandated through sequestration have on
    our workforce. There is a culture in the Pentagon and the military that
    getting the job done is what matters. We do not have a workforce of
    ``clock-watchers.'' Instead, the professional men and women that
    comprise our military and civilian workforce worry about getting the
    job done: whatever it may take and however long they may have to work,
    because our Nation's security depends on their efforts. However,
    continued budgetary uncertainty coupled with years of pay freezes and
    last summer's unavoidable sequestration related furloughs, has taken a
    toll on the overall morale of our workforce. I am deeply concerned that
    if we are unable to achieve and maintain budget stability, we will
    demoralize our workforce even further and erode the cadre of
    acquisition professionals that we have worked hard to recruit, train
    and retain.
        Relatedly, in the coming years, the Department faces challenges of
    a graying workforce. This is particularly prominent within the
    acquisition community, where seasoned and experienced PEOs and PMs are
    retiring in record numbers and newly-hired junior members of the
    workforce are not yet properly trained and qualified to take on the
    roles of PEOs and PMs. This will result in a ``bathtub'' effect for the
    readiness of the workforce for 2020-2030.
        Right now 21,000 members of our workforce are eligible for
    retirement, and 25,000 more soon will be. Those approaching retirement
    represent 50 percent of our workforce. Behind them--``the bathtub''--
    the mid-career workforce with low year groups--represent only 22
    percent of our workforce--they were largely hired during the
    significant downsizing efforts in the 1990s. We must learn from the
    1990s and be strategic now, even in a period of downsizing. Investing
    in our future leaders is essential for acquisition success.
        A final area of concern is what I call the ``revolving door.''
    Defense acquisition requires expertise in design and engineering,
    contract management, logistics, the sciences and other highly-technical
    professional fields. Recruiting essential talent from industry requires
    a significant easing of limitations on the revolving door between
    industry and government. Similarly, allowing government civilians to
    work in industry as part of their career broadening experience will
    promote greater integration between both public and private sectors. To
    allow for greater flexibility between government and industry workforce
    exchanges, legislative changes may be required.
        I am focused on doing everything I can to promote the professional
    development of the total acquisition workforce. Over the past 4 years,
    we have been able to build our workforce utilizing the Acquisition
    Workforce Development Fund, but the underlying concern remains:
    budgetary instability will result in decreased morale and lack of
    critical skill retention--skills that we may not be able to recover.
        If there is one legacy I would like to leave behind it is a
    stronger and more professional defense acquisition workforce than the
    one I inherited from my predecessors. The tide would seem to be against
    me because of events like pay freezes, sequestration, furloughs,
    shutdowns, and workforce reductions--all brought about by the current
    budget climate. However, if there is one thing that has impressed me
    during my 40 plus years in defense acquisition, most of it in
    government, it is the dedication, positive attitude, resilience, and
    desire to serve the taxpayer and our servicemen and women well that
    characterizes this country's acquisition professionals. We all owe a
    lot to these people and they, together with our industry partners, are
    the reason we currently have the best-equipped military in the world.
    2. Measuring Performance and the Impact of Improvement Initiatives
        I believe strongly in the use of data to support decisions.
    Historically, we have not tried to measure the impact of acquisition
    policies or to track the performance of acquisition organizations. We
    are making progress at measuring and understanding our performance.
    Last year I published the first edition of the ``Annual Report on the
    Performance of the Defense Acquisition System.'' The next report should
    be published shortly. Each year we will try to expand the data set with
    relevant information about all aspects of defense acquisition
    performance. We will also add analysis that will help us understand the
    root causes of good and poor results and that correlates the results we
    are seeing with our policies. We need to make decisions and track our
    performance via data and robust analysis, not anecdote or opinion. It
    isn't always easy to look in the mirror, and some government
    institutions or industry firms may not like what the report reveals,
    but the road to improvement has to begin with an understanding of where
    the problems lie.
        Overall, the first annual report gives us an initial historical
    baseline of cost, schedule, and technical performance against which we
    can compare recent results and set improvement objectives. This gives
    us both a sense of what the Department normally can achieve (i.e., the
    central tendency across multiple programs) and how varied our
    performance tends to be (i.e., the number and range of outliers). While
    we will never be able to eliminate cost or schedule growth entirely,
    these measures challenge us to improve both the norm while
    understanding and reducing the high outliers.
        Our analysis of the data shows that we have more work to do in
    aligning profitability with performance. This year's Annual Report on
    the Performance of the Acquisition System will provide the data. In
    most cases we get it right--good performance leads to higher profits
    and poor performance leads to lower profits. In some cases, however
    there is no discernable impact of performance on margins, and in a few
    cases profit actually moves in the opposite direction from performance.
    In addition to getting the correlation right we also need to make the
    correlation stronger and to tie increased rewards to real
    accomplishments. We want win-win business deals, but we aren't always
    obtaining them. As this work moves forward, my greatest challenge is
    identifying the relationships between the factors the Department can
    affect-policies, contract terms, incentives, workforce skills-and the
    outcomes I am trying to achieve. These analyses are essential steps in
    that process.
        Information Technology Acquisition:
        One area we are heavily focused on is improving outcomes with
    information technology (IT) acquisitions. We are evolving our approach
    to IT acquisition, which in some form is a part of virtually every
    program the Department acquires. Consistent with section 804 of the
    National Defense Authorization Act (NDAA) for Fiscal Year 2010, DODI
    5000.02 includes guidance to adopt a modular, open-systems methodology
    with heavy emphasis on ``design for change'' in order to adapt to
    changing circumstances consistent with commercial agile methodologies.
        To acquire IT successfully, one must start with well-defined
    requirements (or capabilities.) The Department has worked to condense
    timelines, increase collaboration between communities, and improve
    processes to deliver the right capabilities to the warfighter in
    operationally relevant timelines. The Chairman of the Joint Chiefs has
    modified the Department's Joint Capability Integration Development
    System by instituting a major change for Information System
    requirements development that introduces the ``Information Technology
    (IT) Box,'' enabling the delegation of authorities to specifically
    support the more rapid timelines necessary for IT capabilities through
    the Defense Acquisition System processes. The four sides of the ``IT
    Box'' include the organization that will provide oversight and
    management of the product; the capabilities required; the cost for
    application and system development; and the costs for sustainment and
    operations.
        Finding the expertise and skill sets required to develop and
    acquire capabilities for IT, particularly business systems, is a
    challenge for the Department. We are working to address the IT
    workforce issues. We established a Functional area for IT acquisition
    that includes the appropriate IT acquisition training into the Defense
    Acquisition University training curriculum. I will continue to work
    closely with the Department's Chief Information Officer to implement IT
    Policy including the transition to the Joint Information Enterprise
    architecture and standards and with the Department's Chief Management
    Officer (DCMO) to execute to the Business Enterprise Architecture. The
    Department recognizes the distinct challenges associated with acquiring
    IT capabilities and we are taking proactive steps to improve our
    processes to manage these programs for them. I am currently very
    focused on improving the acquisition of Defense Business Systems, most
    of which I had until recently delegated to the DCMO as acquisition
    Milestone Decision Authority.
                            concerns looking forward
        1.  Inefficiency Caused by Budget Uncertainty and Turmoil

        All of our efforts to improve acquisition outcomes are efforts to
    swim against the current of inefficiency caused by constant budget
    uncertainty and turmoil. As Secretary Hagel made clear when he
    testified about our budget submission, we have to restore balance to
    the Department. Until that occurs we will be underfunding readiness and
    modernization. This means that development programs will be stretched
    out inefficiently and that production rates will be well below optimal
    for many programs. All of this is hugely inefficient. The uncertainty
    about whether or not sequestration will be imposed makes it impossible
    to determine where the balance between force structure, readiness and
    modernization lies. In this environment the tendency is to hang on to
    assets that the Department may not ultimately be able to afford. As
    Secretary Hagel has indicated, we need a certain level of funding to
    sustain the force that is necessary to execute our national security
    strategy and we need to remove the threat of sequestration so that our
    planning can be on a sound basis.

        2.  Budget Cut Impacts on the Industrial Base

        I am concerned about the health of the industrial base as we
    continue to experience an uncertain budget climate. The Department
    continues to make this issue a top priority; at the most senior level,
    the Deputy's Management Action Group has met to specifically review
    industrial base budget implications and the Deputy and Secretary have
    taken action to ensure that we are doing everything possible to protect
    the critical companies and personnel that make up this important part
    of what I consider our ``total force structure.'' We are in the process
    of losing tens of thousands of engineers and skilled production workers
    from our industrial base.

        3.  Erosion of Technological Superiority Due to Cuts in Research
    And Development

        Over the past several decades, the United States and our allies
    have enjoyed a military capability advantage over any potential
    adversary. During Operation Desert Storm in 1991 we demonstrated how
    the impact of U.S. technological superiority, in the form of
    technologies such as precision weapons, stealth, wide area
    surveillance, and networked forces, led to a dominant U.S. military
    capability. That was over 20 years ago.
        Today we are seeing that other nations' advances in technologies,
    designed to counter this U.S. overmatch, are bearing fruit. This is
    true in areas like electronic warfare, air-to-air missiles, radio
    frequency and optical systems operating in non-conventional bandwidths,
    counter-space capabilities, longer range and more accurate ballistic
    and cruise missiles with sophisticated seekers, improved undersea
    warfare capabilities, as well as in cyber and information operations.
    While the United States still has significant military advantages, U.S.
    superiority in some key warfare domains is at risk.
        I believe that it is essential for us to remember three facts about
    R&D investments. First, our technological superiority is not assured.
    It takes active investments in both government and industry to keep our
    critical capabilities superior to those of potential adversaries. I
    believe we have come to assume technological superiority is a given; it
    is not. Second, R&D is not a variable cost. The number of items we
    would like to procure or the size of our force has nothing to do with
    how much R&D we should fund. It takes as much R&D to buy one production
    asset as it does to buy thousands. Despite this fact we have a tendency
    to cut R&D proportionately to other budget accounts that do represent
    variable costs. Third, time is not a recoverable asset. It takes a
    certain amount of time to develop a new weapon system. Once that time
    is lost it can never be recovered. Today, DOD is being challenged for
    technological superiority in ways I have not seen for many years. Our
    ability within the Department to respond to that challenge is severely
    limited by the current budget situation. While we try to resolve the
    issue of the future size of the Department, so we can plan effectively
    and execute our budgets efficiently, we are losing time, an asset that
    we can never recover.

        Legislative Initiative

        In the process of rewriting the Department's document that governs
    the acquisition process, DODI 5000.02, one fact became strikingly
    apparent to me: our system, over time, has accumulated levels of
    unnecessary statutory and regulatory complexity that is imposed on our
    program managers and other professionals. The page after page of DODI
    5000.02 tables listing these requirements made it clear to me that
    simplification is needed. The layers of well-intended statutory
    requirements and piles of regulation make the task of managing an
    acquisition program harder than it needs to be.
        The Department is currently in the process of comprehensively
    reviewing such statutes and regulations and developing legislative
    proposals to simplify the existing body of law while maintaining the
    overarching intent--in essence simplifying the existing structure
    without sacrificing the underlying intentions. The DOD team, led by Mr.
    Andrew Hunter, is working closely with congressional leadership and
    staff on this project. We realize that our goal is shared with
    Congress, particularly the two defense authorization committees, and
    appreciate the bipartisan support we have received for this project.
        The main body of work is scheduled to be finalized in time for
    congressional review and inclusion in the NDAA for Fiscal Year 2016. We
    also anticipate submitting some proposals based on our early insights
    to inform the proposed NDAA for Fiscal Year 2015. Potential candidates
    for fiscal year 2015 include: an alternative Milestone B certification
    for preliminary design review programs where no technology development
    is required, streamlining Clinger-Cohen Act compliance reviews for
    programs undergoing acquisition program reviews, and eliminating
    duplicative system sustainment plans among others.
                                   conclusion
        I want to thank this committee for its continuing support over the
    years. Legislation such as the Defense Acquisition Workforce
    Development Fund and the Weapons Systems Acquisition Reform Act have
    been valuable and important contributors to improved defense
    acquisition outcomes. I believe that steps like these, plus the various
    measures that Dr. Carter and I initiated under the first iteration of
    BBP, and that I have expanded upon and continued are in fact making a
    difference. I believe the evidence supports the assertion that we are
    making progress. Equally clearly, however, there is still ample room
    for improvement and much more hard work for us all to do.

        Chairman Levin. Thank you very much, Secretary Kendall.
        Mr. Sullivan?

      STATEMENT OF MICHAEL J. SULLIVAN, DIRECTOR, ACQUISITION AND
         SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE

        Mr. Sullivan. Thank you, Mr. Chairman, Ranking Member
    Inhofe, and members of the committee. Thank you for inviting me
    to testify today.
        I would like to briefly discuss the current state of weapon
    systems acquisitions, as well as potential new ideas for
    acquisition reform. I have a more detailed written statement
    that I have submitted for the record.
        Do we need to improve the acquisition process? Yes. Do we
    need new policies and legislation? In my estimation, while
    there is still room for improvement, WSARA of 2009 provided
    ample direction to move critical systems engineering knowledge
    to the front of the process. Likewise, DOD's BBPI provides
    sound, common sense business practices for controlling cost
    while still delivering needed capability.
        This hearing, it seems to me, is important because it
    allows us to explore other ways to improve the process both
    inside DOD and in the industrial base.
        Let me just run through some of the typical problems we
    face today.
        First, in today's acquisition environment, there continues
    to be a mismatch at the front of the process between
    requirements and available resources to meet those
    requirements. The three key processes for generating
    requirements, providing funding, and developing the products
    are still disjointed.
        Second, the stakeholders in this process sometimes have
    conflicting goals. Weapon systems often define budget levels,
    Service reputations, defense spending in localities, and the
    influence of many different oversight organizations.
        Third, the funding process is not as flexible as it should
    be. There are a few consequences when funds are not used
    efficiently and budgets to approve large program commitments
    must be submitted well ahead of the program's start.
        Fourth, DOD's relationship with industry forces less
    competition, more regulation, and once a development contract
    is awarded, it places considerable power in the hands of the
    contractor.
        Fifth, the program management workforce for DOD currently
    lacks the training, business experience, and career
    opportunities to ensure a highly professional management
    workforce. In addition, the tenures of our program managers are
    so short and the length of our product developments so long
    that there is little accountability for executing an efficient
    product development. For example, the Joint Strike Fighter
    (JSF) has seen six different program managers over an 11-year
    development so far. There is not much accountability when you
    have that many.
        I would add in addition to that at the higher levels, at
    the under secretary level, it would be great to see more
    continuity and longer tenures at that position. I think that
    also creates stability. We looked at that and found that since
    the position was created, I believe the average tenure of an
    Under Secretary for Acquisition, Technology, and Logistics is
    about 22 months.
        I also think that one of the reasons we have seen some of
    the trends, I think WSARA has had a lot to do with it, is
    because there has been stability there since Ash Carter and now
    Under Secretary Kendall. I think that has helped as well.
        Where do we go from here? I do not profess to know the
    answers, but I think there are areas that we can explore within
    the confines of the current system and the current environment.
        We must find practical ways to hold our top decisionmakers
    more accountable. The three separate processes that define an
    acquisition program should be able to work in concert. They
    need more incentive to view the process not as a zero sum game
    but a way to deliver the best capabilities within existing
    constraints by making appropriate trades across each of the
    processes. We should do more to attract, train, and retain a
    highly professional management force by establishing new career
    requirements, such as experience in both engineering and
    business, and require program managers to stay with the program
    from start to finish. We should also consider career tracks
    that reward program managers for execution of successful
    acquisition programs.
        We can also reinforce proper risk management at the start
    of new programs. There are about a dozen programs that are
    approaching Milestone B or are very close within the next year
    or 2. When you total up all of their development cost
    estimates, it comes to over $20 billion. Start with these
    programs to reinforce current policy and perhaps pilot new
    ideas that might bring more efficiencies.
        We should also consider a funding mechanism that can give
    flexibility to programs as they do encounter problems.
        Finally, we should consider new acquisition strategies that
    we have not used much before that show an understanding of and
    are able to leverage industry incentives. Some of these include
    more incremental acquisitions. I think we have seen a lot more
    of those in the last 3 or 4 years, and I think that is another
    reason why we have had better cost.
        They need to have well understood requirements, of course.
    That helps.
        I think it is worthwhile to look at time-certain
    development. If you have an incremental acquisition and you
    limit the development per increment to 4 or 5 years, I think
    you have a doable task, as long as the requirements are well
    understood.
        Finally, we should identify and investigate more ways to
    use contracting tools that reward cost consciousness by perhaps
    allowing more profit to the industry. If you are able to
    control costs, that might be a good idea.
        Mr. Chairman, these are just a few of the ideas to consider
    as we move forward. I am sure there are many more to consider.
        With that, I will conclude my oral statement. I look
    forward to going into more depth on some of these ideas as we
    take questions.
        [The prepared statement of Mr. Sullivan follows:]
                   Prepared Statement by Michael J. Sullivan
        Chairman Levin, Ranking Member Inhofe, and members of the
    committee: I am pleased to be here today to discuss weapon system
    acquisitions and where reform should focus next. Weapon systems
    acquisition has been on GAO's high risk list since 1990.\1\ Over the
    past 50 years, Congress and the Department of Defense (DOD) have
    explored ways to improve acquisition outcomes, including actions like
    the Weapon Systems Acquisition Reform Act of 2009 and DOD's own recent
    ``Better Buying Power'' initiatives. These and other reforms have
    championed sound management practices, such as realistic cost
    estimating, prototyping, and systems engineering. DOD's declining
    budgets and the impact of sequestration have lent additional impetus to
    reduce the costs of weapons. While some progress has been made on this
    front, too often we report on the same kinds of problems today that we
    did over 20 years ago. The cost growth of DOD's 2013 portfolio of
    weapon systems is about $448 billion and schedule delays average more
    than 2 years. To get better results the focus should not be on adding
    to or discarding acquisition policies, but instead on the incentives
    that work against them.
    ---------------------------------------------------------------------------
        \1\ GAO, High Risk Series: An Update, GAO-13-283 (Washington, DC:
    Feb. 2013).
    ---------------------------------------------------------------------------
        Today, I will: (1) provide summary cost and schedule information on
    DOD's portfolio of major weapon systems; (2) describe the policies and
    processes in place to guide those acquisitions; (3) discuss incentives
    to deviate from otherwise sound acquisition practices; and (4) suggest
    ways to temper these incentives. This statement draws from our
    extensive body of work on DOD's acquisition of weapon systems and the
    numerous recommendations we have made both on individual weapons and
    systemic improvements to the acquisition process. The work on which
    this testimony is based was conducted in accordance with generally
    accepted government auditing standards. Those standards require that we
    plan and perform the audit to obtain sufficient, appropriate evidence
    to provide a reasonable basis for our findings and conclusions based on
    our audit objectives. We believe the evidence obtained provides a
    reasonable basis for our findings and conclusions based on our audit
    objectives.
                trends in dod's portfolio of major acquisitions
        There can be little doubt that we can--and must--get better
    outcomes from our weapon system investments. As seen in table 1, the
    value of these investments in recent years has been on the order of
    $1.5 trillion or more, making them a significant part of the Federal
    discretionary budget.

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As one can see, cost and schedule growth for DOD's aggregate
    portfolio remain significant. For example, when measured against
    programs' first full estimates, the total cost of the portfolio has
    increased by nearly $448 billion with an average delay of 28 months in
    initial operating capability.\2\ Also, as indicated in table 1, 42
    percent of programs have had unit cost growth of 25 percent or more. On
    the other hand, we have recently seen some modest improvements in a
    large number of programs. For example, 50 of the 80 programs in the
    portfolio reduced their total acquisition costs over the past year. A
    number of these programs have improved their buying power by finding
    efficiencies.
    ---------------------------------------------------------------------------
        \2\ GAO, Defense Acquisitions: Assessments of Selected Weapon
    Programs, GAO-14-340SP (Washington, DC: March 31, 2014).
    ---------------------------------------------------------------------------
        While these modest improvements are encouraging, the enormity of
    the investment in acquisitions of weapon systems and its role in making
    U.S. fighting forces capable, warrant continued attention and reform.
    The potential for savings and for better serving the warfighter argue
    against complacency.
              one side of acquisitions: stated policy and process
        When one thinks of the weapon system acquisition process, the image
    that comes to mind is that of the methodological procedure depicted on
    paper and in flow charts. It is the ``how to'' side of acquisitions.
    DOD's acquisition policy takes the perspective that the goal of
    acquisition is to obtain quality products that satisfy user needs in a
    timely manner at a fair and reasonable price.\3\ The sequence of events
    that comprise the process defined in policy reflects principles from
    disciplines such as systems engineering, as well as lessons learned and
    past reforms. The body of work we have done on benchmarking best
    practices has also been reflected in acquisition policy.\4\ Recent,
    significant changes to the policy include those introduced by the
    Weapon Systems Acquisition Reform Act of 2009 and the Department's own
    ``Better Buying Power'' initiatives which, when fully implemented,
    should further strengthen practices that can lead to successful
    acquisitions.\5\ The policy provides a framework for developers of new
    weapons to gather knowledge at appropriate stages that confirms that
    their technologies are mature, their designs are stable, and their
    production processes are in control.\6\ These steps are intended to
    ensure that a program will deliver the capabilities required utilizing
    the resources--cost, schedule, technology, and personnel--available.
    Successful product developers ensure a high level of knowledge is
    achieved at key junctures in development. We characterize these
    junctures as knowledge points. While there can be differences of
    opinion over some of the specifics of the process, I do not believe
    there is much debate about the soundness of the basic steps. It is a
    clear picture of ``what to do.''
    ---------------------------------------------------------------------------
        \3\ Department of Defense Directive 5000.01, The Defense
    Acquisition System (May 12, 2003 and certified current as of Nov. 20,
    2007).
        \4\ GAO, Best Practices: DOD Can Achieve Better Outcomes by
    Standardizing the Way Manufacturing Risks Are Managed, GAO-10-439
    (Washington, DC: Apr. 22, 2010); Best Practices: Capturing Design and
    Manufacturing Knowledge Early Improves Acquisition Outcomes, GAO-02-701
    (Washington, DC: July 15, 2002); Best Practices: Better Matching of
    Needs and Resources Will Lead to Better Weapon System Outcomes, GAO-01-
    288 (Washington, DC: Mar. 8, 2001); and Best Practices: Better
    Management of Technology Development Can Improve Weapon System
    Outcomes, GAO/NSIAD-99-162 (Washington, DC: July 30, 1999).
        \5\ Pub. L. No. 111-23 as amended. Office of the Under Secretary of
    Defense, Acquisition, Technology and Logistics Memorandum: ``Better
    Buying Power: Mandate for Restoring Affordability and Productivity in
    Defense Spending'' (June 28, 2010). Office of the Under Secretary of
    Defense, Acquisition, Technology and Logistics Memorandum: ``Better
    Buying Power 2.0: Continuing the Pursuit for Greater Efficiency and
    Productivity in Defense Spending'' (Nov. 13, 2012).
        \6\ Interim Department of Defense Instruction 5000.02, Operation of
    the Defense Acquisition System (Nov. 26, 2013).
    ---------------------------------------------------------------------------
        Table 2 summarizes these steps and best practices, organized around
    three key knowledge points in a weapon system acquisition.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Our work over the last few years shows that, to the extent reforms
    like the Weapon Systems Acquisition Reform Act and DOD's Better Buying
    Power initiatives are being implemented, they are having a positive
    effect on individual programs. For example, we found that over 80
    percent of the 38 programs included in our annual assessment of weapon
    programs this year had conducted a ``should-cost'' analysis--one of
    DOD's Better Buying Power initiatives--and reported an anticipated
    savings of approximately $24 billion, with more than half of this
    amount to be reallocated to meet other DOD priorities. In addition, we
    recently reviewed several programs to determine the impact of the
    Weapon Systems Acquisition Reform Act and found that the programs are:

             making early tradeoffs among cost, schedule, and
            technical performance requirements,
             developing more realistic cost and schedule estimates,
             increasing the amount of testing during development,
            and
             placing greater emphasis on reliability.

        These improvements do not yet signify a trend or suggest that a
    corner has been turned and, in fact, we found in our annual assessment
    of programs that most are not yet fully following a knowledge-based
    acquisition approach. The reforms themselves still face implementation
    challenges, such as staffing and clarity of guidance and will doubtless
    need refining as experience is gained. We have made a number of
    recommendations on how DOD can improve implementation of the Weapon
    Systems Acquisition Reform Act.\7\
    ---------------------------------------------------------------------------
        \7\ GAO, Weapons Acquisition Reform: Reform Act Is Helping DOD
    Acquisition Programs Reduce Risk, but Implementation Challenges Remain,
    GAO-13-103 (Washington, DC: Dec. 14, 2012).
    ---------------------------------------------------------------------------
        To a large extent, the improvements we have seen tend to result
    from external pressure exerted by higher level offices within DOD on
    individual programs. In other words, the reforms have not yet been
    institutionalized within the services. We still see employment of other
    practices--not prescribed in policy--such as concurrent testing and
    production, optimistic assumptions, and delayed testing. These are the
    same kinds of practices that perpetuate the significant cost growth and
    schedule delays that have persisted in acquisitions through the
    decades. They share a common dynamic: moving forward with programs
    before the knowledge needed to reduce risk and make those decisions is
    sufficient.
        We have found that programs proceed through the critical design
    review without having a stable design, although we have made
    recommendations on the importance of this review and how to prepare for
    it.\8\ Programs also proceed with testing and production before they
    are ready. The F-35 Joint Strike Fighter program is a classic example
    of how concurrency can erode the cost and schedule of an acquisition.
    Further, some programs are significantly at odds with the acquisition
    process. Among these I would number the Ballistic Missile Defense
    System, Littoral Combat Ship, and airships. We also recently reported
    on the Unmanned Carrier-Launched Airborne Surveillance and Strike
    program which proposes to complete the main acquisition steps of
    design, development, testing, manufacturing, and initial fielding
    before it formally enters the acquisition process.\9\
    ---------------------------------------------------------------------------
        \8\ GAO-02-701
        \9\ GAO, Defense Acquisitions: Navy Strategy for Unmanned Carrier-
    Based Aircraft System Defers Key Oversight Mechanisms, GAO-13-833
    (Washington, DC: Sep. 26, 2013).
    ---------------------------------------------------------------------------
        The fact that programs adopt practices that run counter to what
    policy and reform call for is evidence of the other pressures and
    incentives that significantly influence program practices and outcomes.
    I will turn to these next.
        another side of acquisitions: incentives to deviate from sound
                                   practices
        An oft-cited quote of David Packard, former Deputy Secretary of
    Defense, is: ``We all know what needs to be done. The question is why
    aren't we doing it?'' To that point, reforms have been aimed mainly at
    the ``what'' versus the ``why.'' They have championed sound management
    practices, such as realistic estimating, thorough testing, and accurate
    reporting. Reforms have also added program decision points, reviews,
    and reporting requirements to help ensure these practices are used. We
    need to consider that these reforms mainly address the mechanisms of
    weapon acquisitions. Seen this way, the practices prescribed in policy
    are only partial remedies. The acquisition of weapons is much more
    complex than this and involves very basic and strongly reinforced
    incentives to pursue weapons that are not always feasible and
    affordable. Accordingly, rival practices, not normally viewed as good
    management techniques, comprise an effective stratagem for fielding a
    weapon because they reduce the risk that the program will be
    interrupted or called into question.
        I will now discuss several factors that illustrate the pressures
    that create incentives to deviate from sound acquisition management
    practices.
    Mismatch between Requirements and Resources
        A key cause of poor acquisition outcomes is the mismatch between
    the validated capability requirements for a new weapon system and the
    appropriate systems engineering knowledge, funding, and time that is
    planned to develop that new system. DOD's three key decisionmaking
    processes for acquiring weapon systems--requirements determination,
    resource allocation, and the acquisition management system--are
    fragmented, making it difficult for the department to achieve a
    balanced mix of weapon systems that are achievable and affordable and
    provide the best military value to the warfighter when the warfighter
    needs them. In addition, these processes are led by different
    organizations, making it difficult to hold any one person or
    organization accountable for saying ``no'' to an unrealistic
    requirement or for tempering optimistic cost and schedule estimates.
    While the department has worked hard to overcome this fragmented
    decisionmaking paradigm and policies have been written to force more
    integrated decisions and more accountability, we continue to see
    programs that have experienced cost and schedule growth. This is
    because weapon system programs often begin with validated requirements
    that have not been informed by solid systems engineering practices,
    often do not represent true ``needs'' as much as ``desires,'' have
    optimistic cost and schedule estimates, and, all too often, are
    unachievable. Program managers are handed a business case that can be
    fatally flawed, and usually have no recourse other than to execute it
    as best they can and therefore cannot be held accountable.
    Conflicting Demands
        The process of planning and executing the program is: (1) shaped by
    many different participants; and (2) far more complex than the
    seemingly straightforward purchase of equipment to defeat an enemy
    threat. Collectively, as participants' needs are translated into
    actions on weapon programs, the purpose of such programs transcends
    efficiently filling voids in military capability. Weapons have become
    integral to policy decisions, definitions of roles and functions,
    justifications of budget levels and shares, service reputations,
    influence of oversight organizations, defense spending in localities,
    the industrial base, and to individual careers. Consequently, the
    reasons ``why'' a weapon acquisition program is started are manifold
    and thus acquisitions do not merely provide technical solutions.
        While individual participants see their needs as rational and
    aligned with the national interest, collectively, these needs create
    incentives for pushing programs and encouraging undue optimism,
    parochialism, and other compromises of good judgment. Under these
    circumstances, persistent performance problems, cost growth, schedule
    slippage, and difficulties with production and field support cannot all
    be attributed to errors, lack of expertise, or unforeseeable events.
    Rather, a level of these problems is embedded as the undesirable, but
    apparently acceptable, consequence of the process. These problems
    persist not because they are overlooked or under-regulated, but because
    they enable more programs to survive and thus more needs to be met. The
    problems are not the fault of any single participant; they are the
    collective responsibility of all participants. Thus, the various
    pressures that accompany the reasons why a program is started can also
    affect and compromise the practices employed in its acquisition.
    Funding Dynamics
        There are several characteristics about the way programs are funded
    that create incentives in decisionmaking that can run counter to sound
    acquisition practices. First, there is an important difference between
    what investments in new products represent for a private firm and for
    DOD. In a private firm, a decision to invest in a new product, like a
    new car design, represents an expense. Company funds must be expended
    that will not provide a revenue return until the product is developed,
    produced, and sold. Thus, leading companies have an incentive to follow
    a disciplined approach and acquire requisite knowledge to facilitate
    successful product development. To do otherwise could have serious
    economic consequences. In DOD, there can be few consequences if funds
    are not used efficiently. For example, as has often been the case in
    the past, agency budgets generally do not fluctuate much year to year
    and, programs that experience problems tend to eventually receive more
    funding to get well. Also, in DOD, new products in the form of budget
    line items can represent revenue. An agency may be able to justify a
    larger budget if it can win approval for more programs. Thus, weapon
    system programs can be viewed both as expenditures and revenue
    generators.
        Second, budgets to support major program commitments must be
    approved well ahead of when the information needed to support the
    decision is available. Take, for example, a decision to start a new
    program scheduled for August 2016. Funding for that decision would have
    to be included in the fiscal year 2016 budget. This budget would be
    submitted to Congress in February 2015--18 months before the program
    decision review is actually held. DOD would have committed to the
    funding before the budget request went to Congress. It is likely that
    the requirements, technologies, and cost estimates for the new
    program--essential to successful execution--may not be very solid at
    the time of funding approval. Once the hard-fought budget debates put
    money on the table for a program, it is very hard to take it away
    later, when the actual program decision point is reached.
        Third, to the extent a program wins funding, the principles and
    practices it embodies are thus endorsed. So, if a program is funded
    despite having an unrealistic schedule or requirements, that decision
    reinforces those characteristics instead of sound acquisition
    practices. Pressure to make exceptions for programs that do not measure
    up are rationalized in a number of ways: an urgent threat needs to be
    met; a production capability needs to be preserved; despite shortfalls,
    the new system is more capable than the one it is replacing; and the
    new system's problems will be fixed in the future. It is the funding
    approvals that ultimately define acquisition policy.
    Industry Relationship
        DOD has a unique relationship with the Defense industry that
    differs from the commercial marketplace. The combination of a single
    buyer (DOD), a few very large prime contractors in each segment of the
    industry, and a limited number of weapon programs constitute a
    structure for doing business that is altogether different from a
    classic free market. For instance, there is less competition, more
    regulation, and once a contract is awarded, the contractor has
    considerable power.\10\ Moreover, in the Defense marketplace, the firm
    and the customer have jointly developed the product and, as we have
    reported previously, the closer the product comes to production the
    more the customer becomes invested and the less likely they are to walk
    away from that investment.\11\ While a Defense firm and a military
    customer may share some of the same goals, certain key goals are
    different. Defense firms are accountable to their shareholders and can
    also build constituencies outside the direct business relationship
    between them and their customers. This relationship does not fit easily
    into a contract.
    ---------------------------------------------------------------------------
        \10\ Barry D. Watts and Todd Harrison, Sustaining Critical Sectors
    of the Defense Industrial Base (Washington, DC: Center for Strategic
    and Budgetary Assessments, 2011).
        \11\ GAO, Best Practices: Successful Application to Weapon
    Acquisitions Requires Changes in DOD's Environment, GAO/NSIAD-98-56
    (Washington, DC: Feb. 24, 1998).
    ---------------------------------------------------------------------------
        J. Ronald Fox, author of Defense Acquisition Reform 1960-2009: An
    Elusive Goal, sums up the situation as follows. ``Many defense
    acquisition problems are rooted in the mistaken belief that the defense
    industry and the government-industry relationship in defense
    acquisition fit naturally into the free enterprise model. Most
    Americans believe that the defense industry, as a part of private
    industry, is equipped to handle any kind of development or production
    program. They also by and large distrust government `interference' in
    private enterprise. Government and industry defense managers often go
    to great lengths to preserve the myth that large defense programs are
    developed and produced through the free enterprise system.'' But
    neither the defense industry nor defense programs are governed by the
    free market; ``major defense acquisition programs rarely offer
    incentives resembling those of the commercial marketplace.'' \12\
    ---------------------------------------------------------------------------
        \12\ J. Ronald Fox, Defense Acquisition Reform, 1960-2009: An
    Elusive Goal (Washington, DC: U.S. Army Center of Military History,
    2011).
    ---------------------------------------------------------------------------
    The Right People
        Dr. Fox also points out that in private industry, the program
    manager concept works well because the managers have genuine
    decisionmaking authority, years of training and experience, and
    understand the roles and tactics within government and industry. In
    contrast, Dr. Fox concludes that DOD program managers often lack the
    training, experience, and stature of their private sector counterparts,
    and are influenced by others in their Service, DOD, and Congress. Other
    acquisition reform studies over the past decade have highlighted this
    issue as well.\13\ The studies highlight the need for a more
    professional program manager cadre within each of the Military
    Services, and new incentives and improved career opportunities for
    acquisition personnel. In 2006, we reported that program managers
    indicated to us that the acquisition process does not enable them to
    succeed because it does not empower them to make decisions on whether
    the program is ready to proceed forward or even to make relatively
    small trade-offs between resources and requirements as unexpected
    problems are encountered. Program managers said that they are also not
    able to make personnel shifts to respond to changes affecting the
    program.\14\
    ---------------------------------------------------------------------------
        \13\ Defense Business Board, Report to the Secretary of Defense:
    Linking and Streamlining the Defense Requirements, Acquisition, and
    Budget Processes (2012); Assessment Panel of the Defense Acquisition
    Performance Assessment Project for the Deputy Secretary of Defense,
    Defense Acquisition Performance Assessment Report (Jan, 2006).
        \14\ GAO, Best Practices: Better Support of Program Managers Needed
    to Improve Outcomes, GAO-06-110 (Washington, DC: Nov. 30, 2005).
    ---------------------------------------------------------------------------
        We have also reported on the lack of continuity in the tenure of
    key acquisition leaders across the timeframe of individual programs. A
    major acquisition can have multiple program managers during product
    development. For example, the F-35 Joint Strike Fighter program has had
    six different program managers since it was approved to start
    development in 2001. Other key positions throughout the acquisition
    chain of command also turn over frequently. For example, the average
    tenure of the Under Secretary of Defense for Acquisition, Technology,
    and Logistics since the position was established in 1986 has been only
    about 22 months. Consequently, DOD acquisition executives do not
    necessarily stay in their positions long enough to develop the needed
    long-term perspective or to effectively change traditional incentives.
    Moreover, their decisions can be overruled through the cooperative
    actions of other acquisition participants. The effectiveness of reforms
    to the acquisition process depends in large measure on a cadre of good
    people who may be inadequately prepared for their position or forced
    into the near-term perspective of their tenures. In this environment,
    the effectiveness of management can rise and fall on the strength of
    individuals; accountability for long-term results is, at best, elusive.
                           where do we go from here?
        I do not necessarily subscribe to the view that the acquisition
    process is too rigid and cumbersome. Clearly, this could be the case if
    every acquisition followed the same process and strategy without
    exception, but they do not. We repeatedly report on programs where
    modifications of the process are approved. DOD refers to this as
    tailoring, and we see plenty of it.
        While one should always be looking to improve the process and make
    it more efficient, at this point, the focus should be to build on
    existing reforms by holding decisionmakers more accountable, tackling
    existing incentives, and providing new ones. To do this, we need to
    look differently at the familiar outcomes of weapon system
    acquisitions--such as cost growth, schedule delays, large support
    burdens, and reduced buying power. Some of these undesirable outcomes
    are clearly due to honest mistakes and unforeseen obstacles. However,
    they also occur not because they are inadvertent but because they are
    encouraged by the incentive structure. I do not think it is sufficient
    to define the problem as an objective process that is broken. Rather,
    it is more accurate to view the problem as a sophisticated process
    whose consistent results are indicative of its being in equilibrium.
    The rules and policies are clear about what to do, but other incentives
    force compromises. The persistence of undesirable program outcomes
    suggests that these are consequences that participants in the process
    have been willing to accept.
        Drawing on our extensive body of work in weapon system acquisition,
    there are six areas of focus regarding where to go from here. These are
    not intended to be all-encompassing, but rather, practical places to
    start the hard work of realigning incentives with desired results.
        Hold decisionmakers accountable from top to bottom: Our work over
    the years benchmarking best practices at leading commercial product
    developers and manufacturers has yielded a wide range of best practices
    for efficiently and quickly developing new products to meet market
    needs. Firms we visited described an integrated process for
    establishing product requirements, making tradeoffs among cost and
    product performance well ahead of a decision to begin product
    development, and ensuring that all decisionmakers--requirements
    setters, product developers, and finance--agree to and are held
    accountable for the business case presented to the program manager for
    execution of a new product's development. These firms had trained
    professionals as program managers with backgrounds in technical fields
    such as engineering and various aspects of project management. Once
    empowered with an achievable, executable business case, they were in
    charge of product development from beginning to end. Therefore, they
    could be held accountable for meeting product development cost,
    schedule, and performance targets.
        Today, getting managers to make hard decisions, when necessary, and
    say no to those that push unrealistic or unaffordable plans continues
    to be a challenge because the critical processes to acquire a new
    weapon system are segregated, independent, and have different goals.
    DOD must be open to examining best practices and implementing new rules
    to really integrate the processes into one and holding all communities
    accountable for decisions. I do not pretend to have all the answers on
    how to change the current environment, but it is clear that top
    decisionmakers cannot be held accountable to work in concert on such
    large and critical investments unless they begin with an executable
    business case. Congressional and DOD leadership must be in concert on
    this.
        Attract, train, and keep acquisition staff and management: Dr.
    Fox's book does an excellent job of laying out the flaws in the current
    way DOD selects, trains, and provides a career path for program
    managers. I refer you to this book, as it provides sound criticisms. We
    must also think about supporting people below the program manager who
    are also instrumental to program outcomes, including engineers,
    contracting officers, cost analysts, testers, and logisticians. There
    have been initiatives aimed at program managers and acquisition
    personnel, but they have not been consistent over time. RAND, for
    example, recently analyzed program manager tenure in DOD and found that
    the intent of policies designed to lengthen tenure may not have been
    achieved and no enforcement mechanism has been readily apparent over
    time.\15\ RAND indicates this could be because of the fundamental
    conflict that exists between what military officers need to do to be
    promoted and their tenure as program managers. Unless these two things
    are aligned, such that experience and tenure in an acquisition program
    can be advantageous for promotion, then it appears unlikely that tenure
    policies will consistently yield positive results. The tenure for
    acquisition executives is a more challenging prospect in that they
    arguably are at the top of their profession and already expert. What
    can be done to keep good people in these jobs longer?
    ---------------------------------------------------------------------------
        \15\ RAND, Management Perspectives Pertaining to Root Cause
    Analyses of Nunn-McCurdy Breaches, Vol 4. (2013)
    ---------------------------------------------------------------------------
        I am not sure of the answer, but I believe part of the problem is
    that the contentious environment of acquisition grinds good people down
    at all levels. In top commercial firms, a new product development is
    launched with a strong team, corporate funding support, and a timeframe
    of 5 to 6 years or less. In DOD, new weapon system development can take
    twice as long, have turnover in key positions, and every year must
    contend for funding. This does not necessarily make for an attractive
    career. Several years ago, the Defense Acquisition Performance
    Assessment Panel recommended establishing the military department's
    service acquisition executives as a 5-year, fixed-term position to add
    leadership continuity and stability to the acquisition process.\16\ I
    believe something like this recommendation is worth considering.
    Perhaps the Military Services should examine the current career track
    for acquisition officers to ensure it provides appropriate training,
    rewards, and opportunities for advancement.
    ---------------------------------------------------------------------------
        \16\ Defense Acquisition Performance Assessment Report, 2006
    ---------------------------------------------------------------------------
        Reinforce desirable principles at the start of new programs: The
    principles and practices programs embrace are determined not by policy,
    but by decisions. These decisions involve more than the program at
    hand: they send signals as to what is acceptable. If programs that do
    not abide by sound acquisition principles win funding, then seeds of
    poor outcomes are planted. The highest point of leverage is at the
    start of a new program. Decisionmakers must ensure that new programs
    exhibit desirable principles before they are approved and funded.
    Programs that present well informed acquisition strategies with
    reasonable and incremental requirements and reasonable assumptions
    about available funding should be given credit for a good business
    case. As an example, the Presidential Helicopter, Armored Multi-Purpose
    Vehicle, and Enhanced Polar System are all acquisitions slated to start
    in 2014, with development estimates currently ranging from nearly $1
    billion to over $2.5 billion. These and other programs expected to
    begin system development in 2014 could be viewed as a ``freshman''
    class of acquisitions. It would be beneficial for DOD and Congress to
    assess them as a group to ensure that they embody the right principles
    and practices. Recent action by DOD to terminate the Army's Ground
    Combat Vehicle program, which was slated to start this year, and
    instead focus efforts on selected science and technology activities
    reinforces sound principles. On the other hand, approving the Unmanned
    Carrier-Launched Airborne Surveillance and Strike program despite its
    running counter to sound principles sends a conflicting message.
        Identify significant program risks upfront and resource them:
    Weapon acquisition programs by their nature involve risks, some much
    more than others. The desired state is not zero risk or elimination of
    all cost growth. But we can do better than we do now. The primary
    consequences of risk are often the need for additional time and money.
    Yet, when significant risks are taken, they are often taken under the
    guise that they are manageable and that risk mitigation plans are in
    place. In my experience, such plans do not set aside time and money to
    account for the risks taken. Yet in today's climate, it is
    understandable--any sign of weakness in a program can doom its funding.
    This needs to change. If programs are to take significant risks,
    whether they be technical in nature or related to an accelerated
    schedule, these risks should be declared and the resource consequences
    acknowledged. Less risky options and potential off ramps should be
    presented as alternatives. Decisions can then be made with full
    information, including decisions to accept the risks identified. If the
    risks are acknowledged and accepted by DOD and Congress, the program
    should be supported.
        A potential way to reduce the risks taken in acquisition programs
    is to address the way in which DOD leverages its science and technology
    enterprise. Leading commercial companies save time and money by
    separating technology development from product development and fully
    developing technologies before introducing them into the design of a
    system. These companies develop technology to a high level of maturity
    in a science and technology environment which is more conducive to the
    ups and downs normally associated with the discovery process. This
    affords the opportunity to gain significant knowledge before committing
    to product development and has helped companies reduce costs and time
    from product launch to fielding. Although DOD's science and technology
    enterprise is engaged in developing technology, there are
    organizational, funding, and process impediments which make it
    difficult to bring technologies into acquisition programs. For example,
    it is easier to move immature technologies into weapon system programs
    because they tend to attract bigger budgets than science and technology
    projects. Creating stronger and more uniform incentives that encourage
    the development of technologies in the right environment to reduce the
    cost of later changes, and encourage the technology and acquisition
    communities to work more closely together to deliver the right
    technologies at the right time would be beneficial.
        More closely align budget decisions and program decisions: Because
    budget decisions are often made years ahead of program decisions, they
    depend on the promises and projections of program sponsors. Contentious
    budget battles create incentives for sponsors to be optimistic and make
    it hard to change course as projections fade in the face of
    information. This is not about bad actors; rather, optimism is a
    rational response to the way money flows to programs. Aside from these
    consequences, planning ahead to make sure money is available in the
    future is a sound practice. I am not sure there is an obvious remedy
    for this. But, I believe ways to have budget decisions follow program
    decisions should be explored, without sacrificing the discipline of
    establishing long-term affordability.
        Investigate other tools to improve program outcomes: There are ways
    to structure an acquisition program that would create opportunities for
    better outcomes. Key among these are: limits on development time (time
    certain development of 5 years), which limits the scope of the
    development task; evolutionary or incremental product development,
    wherein the initial increment of a new weapon system adds value for the
    warfighter, is delivered to the field faster, and can be followed with
    block upgrades as technologies and funding present themselves; and
    strategies that focus more on incentivizing overall cost reduction over
    profit limitation. DOD should investigate the potential of these
    concepts as it structures and manages programs moving forward. Central
    to opening an environment for these tools is the need to focus on
    requirements that are well understood and manageable. This would allow
    the department to offer contracts that place more cost risk on the
    contractor and less on the government. A prime example of this is the
    KC-46 Tanker program that is being developed under a fixed-price
    development contract with incentives for holding cost down. The
    government and industry felt comfortable with that arrangement
    specifically because it was an incremental program based on a
    commercial airframe. The first development program is to militarize a
    commercial aircraft to replace a portion of the existing KC-135 fleet.
    Future increments may be approved to replace the rest of the KC-135
    fleet and the KC-10 fleet and provides DOD an opportunity to include
    the new technologies. Also, the contractor had significant systems
    engineering knowledge about the design and the ability to meet the
    requirements. A word of caution: if time certain development (e.g., 5
    years), incremental acquisition strategies, and contracts that
    incentivize cost reduction over profit limitations are to be explored,
    the government will need to examine whether they have the contract
    management and negotiation expertise to do this. DOD has begun to
    examine ways to strengthen contract incentives and restructure profit
    regulations through its Better Buying Power initiatives; however, it is
    too soon to tell whether these efforts will lead to needed
    improvements.
        Mr. Chairman, this concludes my statement and I would be happy to
    answer any questions.
        Chairman Levin. Thank you.
        Since I think we have the time to do it, how about an 8-
    minute round just for the first round. There very well could be
    second rounds today.
        I think we are all familiar with the acquisition history
    that has shown huge cost overruns, huge amounts of waste, and
    cancellation of systems. The Army's FCS was approved for
    engineering and manufacturing development based on little more
    than a set of viewgraphs. The JSF was put into production years
    before it was scheduled for its first flight test. That was a
    decision which Mr. Kendall has, I believe, accurately
    characterized as ``acquisition malpractice.'' The FCS has since
    been canceled. The JSF has gone on to become the most expensive
    acquisition program in history.
        We enacted WSARA in large part to try to do everything we
    could to ensure that future acquisition decisions would be
    based on sound knowledge rather than guesswork.
        Mr. Sullivan, I think in your opening statement you
    indicated that WSARA has had some success and that DOD has
    achieved higher levels of knowledge at key decision points and
    achieved reduced cost on a significant number of MDAPs as a
    result. I think that is the good news part of the story.
        But the second part of the story is still what we need to
    do because we obviously face continuing problems, and I think
    both of you acknowledge that and recognize that we need to do
    whatever we can do.
        Mr. Sullivan, you indicated that you do not think we need
    more legislation at this point. That is important for us to
    understand because our instinct as legislators is not only to
    hold oversight hearings such as this, and we do not hold enough
    of these hearings, but nonetheless, where legislation is
    useful, to promote that legislation. You have, I think, already
    spoken on the fact that we do not need additional legislation
    in your judgment.
        I would just ask Secretary Kendall what legislation would
    you believe we could use to improve this acquisition system.
        Mr. Kendall. Senator, I do think we need some legislation,
    but I think in a different sense than Mr. Sullivan was
    referring to.
        I have a team working now, and it is working with the staff
    of this committee, and with the staff of the House Armed
    Services Committee as well, on a legislative proposal that
    would simplify the existing body of law that governs defense
    acquisition and make it more comprehensible and coherent. What
    has happened is that, I go back to Goldwater-Nichols with this,
    laws have been added incrementally over time. Senator, when I
    was redoing the DOD instruction that governs acquisition, I
    looked at the tables that we had to put into that document that
    showed all the things that are essentially compliance
    requirements for program managers, which is an extraordinarily
    complex body of rules that have to be followed. Senator, the
    idea is to take that body of rules, keep the good intentions
    behind all of it, but to simplify it so we have something that
    is easier for people to understand and easier to implement.
        There are a few things in that context that I think in
    retrospect and in practice have not turned out to be as
    effective as they were intended to be, and some of those things
    I think need to be changed. They are not major changes, but
    they are adjustments on the margins the way I see it.
        Chairman Levin. Would you give us any recommendations that
    you have in that regard?
        Mr. Kendall. We are working some near-term recommendations
    to try to get into this year's cycle, and we will have a more
    comprehensive proposal for next year's cycle.
        There are a couple examples of things that I do not think
    are particularly helpful in the business systems area, with
    which, I agree, we have struggled. There is a requirement that
    we certify at the Department level every million-dollar
    business system program where the $1 million is the threshold
    over the 5-year program, not just in a given year. That is an
    extraordinarily small number in DOD terms. What it leads to is
    essentially a rubber stamp certification process for a lot of
    those very small projects.
        I disagree with my colleague from GAO on this, perhaps. The
    idea of time constraints on programs, I think, leads to some
    unintended consequences that can be problematic. There is a
    time constraint on business systems of 5 years from initiation
    of the program to full deployment decision, which causes
    programs in some cases to distort their plans in an
    inefficient, non-pragmatic way. We need to be, I think, careful
    about time constraints as the variable we try to control the
    most on a program.
        Chairman Levin. As I understand it, DOD has implemented a
    more knowledge-based acquisition approach in compliance with
    the requirements of WSARA, but GAO, I understand, does not
    believe that DOD has gone far enough and argues that to conform
    with commercial sector best practices, DOD should require an
    even greater level of information in advance of major
    acquisition decisions. Can you tell us, Mr. Sullivan--and
    perhaps give us examples--how much more knowledge GAO believes
    should be required and at what points specifically in the
    process?
        Mr. Sullivan. Yes, sir. We have three points of knowledge
    that we think are the essential waypoints. The first one is at
    the beginning of a program, and we want mature technologies.
    DOD has done a lot better over the years in getting to the
    levels of mature technologies that we have asked for. It is not
    perfect yet, but the trend is way up. We would say there is a
    good effort going on there.
        The second one is at the critical design review. Ideally
    what we would like to see is reliability being worked on,
    prototypes that have been engineered so that you know when you
    move from design to manufacturing, that you have a very stable
    design that you are going to begin to replicate. Then that
    pushes forward. We have a metric for that on completed
    engineering drawings, and DOD is doing very well with that as
    well, not perfect, but way up from where they were 5 years ago.
        We would like to see more prototyping. I think if you
    continue to work on requirements that are more reasonable and
    with the systems engineering that is being done upfront now and
    understanding the designs more, they should be having more
    prototypes at critical design review. That really shows a
    stable design, basically an engineering prototype that you now
    work into a production-type prototype.
        The third knowledge point is production. That is where we
    ask for process controls. We think that is very important and
    that is where DOD and industry, quite frankly, do not do very
    well. This has a lot to do with concurrent testing too. As they
    move into production, there are key manufacturing processes
    that you want to have repeatable so that you have quality, as
    well as efficiency. They really do not have a lot of control
    over those critical processes. That last knowledge point that
    we talk about is where they need to improve. That is
    essentially a production-oriented knowledge point.
        Chairman Levin. Mr. Kendall, do you want to just comment on
    that third point then?
        Mr. Kendall. Yes. Let me just take that. First of all, I
    completely agree with the idea of knowledge-based decisions,
    that we have to have adequate understanding of where we are
    before we make major commitments. It varies very much program
    to program. You have to look at the actual risk profile for a
    given program, really understand what the elements of risk are,
    and what can be done to mitigate them at different phases.
        At my level, I tend to look at the major commitment of
    resources as a key decision point. There is an early stage
    where you are doing analysis and you are trying to refine
    requirements and decide what is affordable, feasible, and
    practical. At that point, things are fairly in flux.
        Chairman Levin. But as you go through here, tell us where
    you think DOD can do better or is falling short.
        Mr. Kendall. I can just tell you what I am trying to do and
    what I have been doing. One of the two critical decisions for
    me is entry into full-scale development for production. That is
    a major commitment of resources. An enormous amount of activity
    is initiated at that point. Generally, we are doing that after
    a preliminary design review now. Usually we can take
    competition up to that point. At that point in time, I want to,
    as Mr. Sullivan said, really understand that we have done what
    we need to do to reduce the risks of building that product so
    that we do not commit all those resources and the marching army
    that is necessary to do full-scale development without those
    risks well under control.
        The second key decision point is the initiation of
    production because it is always hard to reverse that decision.
    Once you have committed to manufacturing components and start
    spending the project money, it is very hard to stop. At that
    point, we need to have from prototypes and developmental
    testing a thorough understanding that the design is stable.
    This is where the issue of concurrency comes up. There is
    almost always going to be some development that occurs after
    that point, software being finished or some additional testing
    that has to be done. The amount of concurrency that makes
    sense, that is rational for a given program, depends upon how
    confident you are that the design is stable and that you are
    not going to have to make major changes later on. That is very
    much a knowledge-based decision.
        Those are the two key commitments as far as I am concerned
    and those are where I am focused when I make decisions.
        Chairman Levin. Do you agree there should be more
    prototyping than there is now?
        Mr. Kendall. I think you have to look at it on a case-by-
    case basis. In some cases, prototyping does not really reduce
    the risk. For the Presidential Helicopter Replacement, the VXX,
    which we are about to award, we are not doing prototypes. I
    waived prototypes for that because we are taking an off-the-
    shelf helicopter. We are taking a suite of equipment which we
    have already pulled together and tested to integrate into that
    aircraft. What we need to do is that detailed integration
    effort. We have assessed that carefully enough to know that can
    be done with reasonable risk. We did not need to do prototypes
    ahead of time. It would have been a waste of money, frankly. We
    do the business case analysis on a case-by-case basis.
        Sometimes it is blatantly obvious whether prototyping makes
    sense or not. Other times, it is a closer call and you have to
    go look at the cost/benefits much more carefully.
        Chairman Levin. Thank you.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        Mr. Chairman, I know you covered this, but I would like to
    go a little bit further. In my opening statement, I commented
    about the $1.2 billion in the Ground Combat Vehicle, and then,
    of course, after that money is spent, it is canceled. This is
    the one thing that has bothered me more than anything else in
    the whole acquisition process, something that you see in
    government that you do not see in the private sector.
        I lived through this thing. I was actually in the House of
    Representatives when they first came along and initiated the
    Crusader. We had the Crusader. That was going to be. Then they
    said it has to be heavier. It has to be lighter. They actually
    had $2 billion put in that thing when they terminated the
    program. I think that was Secretary Rumsfeld that did that. I
    think there were, as I understand it, over 100 programs that
    were canceled with that. We do not have a total on that, but $2
    billion is enough.
        But then if you shift over and see the amount of money that
    we had invested in FCS, you are talking about $19 billion.
        I remember when General Shinseki, who was in charge at that
    time, was upset with the cancellation of the Crusader, and he
    wanted to build in what he called irreversible momentum so that
    this could not happen again. Do you remember that? $19 billion
    later, it is done. Of course, this was done by President Obama
    in the first budget he came out with.
        Tell me what irreversible momentum is and why it does not
    work.
        Mr. Kendall. I think it is a bad concept. It is a political
    concept.
        Senator Inhofe. Do you think the problem here is that in
    government you have the power of one person just to terminate a
    program? I blame Secretary Rumsfeld for that program on the
    Crusader. There were some Members that were so upset with that,
    one very prominent House Member that retired as a result of it
    because you just cannot sit back and let things like that
    happen.
        Then, of course, the FCS.
        Is it because our system allows one person, whether that
    person is the President of the United States or the Secretary
    of Defense, to make these decisions that are so irresponsible?
    You do not find that in the private sector.
        Mr. Kendall. Senator Inhofe, let me make a couple of
    comments on that because I have looked at those cancellations.
    We have canceled a number of programs without taking them into
    production or we produced very small quantities and then
    canceled them. Often that is for affordability reasons. We
    discover late in the process that a program is really not
    affordable in the budgets we can expect. The most recent
    example of that is the Marine Corps Expeditionary Fighting
    Vehicle (EFV) which was canceled last year.
        What I have been requiring for the last 4 years now is an
    affordability analysis of our programs before they are
    initiated and then firm affordability caps before we commit to
    full-scale development so that we do not get into situations
    like we did in that case.
        Crusader was a Cold War weapon system that was continued
    into development after the Cold War ended, and it was canceled
    for a variety of reasons, I think. Part of it was, though, that
    the requirements for the Army had changed. It came along at a
    time when the Army wanted to initiate the FCS, which was
    designed around the idea of lightweight, very air-deployable
    forces that could move to a contingency very quickly. The
    Crusader was not consistent with that concept. There were a
    number of things that I think came together to lead to the
    Crusader cancellation.
        I am focused on affordability, making sure we do not start
    things we cannot afford. I am focused on making sure the risk
    and the requirements are reasonable when we start a program so
    that we do not do things that are not going to be feasible. We
    cannot foresee unforeseen major budget changes, which sometimes
    do occur. Sometimes that is a factor. But trying to get
    realistic planning from the point of view of the technology,
    the requirements, and the funding, not just the near-term 5-
    year program, but out for the life of that program is a very
    important factor in this.
        Senator Inhofe. The part I have a hard time with is when
    you were talking about the change in design, the change in the
    weight, and all these things. That is something that can be
    looked at in advance. I think that is primarily the cause of
    the cancellation of certainly the Crusader program because I
    remember the discussion at that time if we can get it in a C-
    130, or does it have to be in a C-17. But we know that going
    in. I have a hard time believing that the times changed to
    change the mission of a vehicle. In that case, the weight of
    the Crusader seemed to be the primary thing. That is the thing
    I think that can be precluded from happening again.
        Mr. Kendall. The Crusader original design was intended for
    the plains of Europe fighting Soviet tank armies, and it was a
    high rate of fire, high volume, and high capacity system. What
    happened subsequent to the end of the Cold War was the Army had
    an incredibly difficult time moving forces into Kosovo when the
    Kosovo crisis occurred. As a result of that and under General
    Shinseki's leadership, I think at the time probably
    appropriately he was moving towards a much lighter scale force,
    a force that could be deployed essentially by C-130s, there was
    a fundamental disconnect between those programs.
        Senator Inhofe. I understand that, but on the other hand,
    that was initially built to replace the M-109. We can talk
    about an antiquated system anyway. It is almost like it was in
    World War I.
        I mentioned in my opening statement about the recent
    program that spent 80,000 man-hours to produce the documents
    required to pass Milestone A. An additional 100,000 was
    required to create the paperwork necessary on Milestone B.
        Are you working on something right now that is going to
    preclude the cost of the paperwork from continuing? We are
    paying for all that.
        Mr. Kendall. I completely agree with the thrust of your
    comments. There is a cottage industry out there of contractors
    who build these documents for programs so that they can be
    reviewed and then approved in order to get decisions made. It
    is an overhead burden on our programs, and I have been on both
    sides of it. It has been a struggle, and it is a continuing
    struggle to push back on that.
        We have tried to simplify the content of those documents to
    make them more focused on the substantive information that we
    really need as opposed to a lot of boilerplate that people tend
    to generate which really does not have much value added.
        There is also an initiative that is included in the latest
    round of BBPIs to go to something I am calling a ``skunk
    works'' approach, which is historically a Lockheed Martin
    approach that other companies have emulated. Basically that is
    to have as lean as possible both a government and a contractor
    workforce and as lean as possible an oversight mechanism. My
    concept for that, which we are just starting, and we are still
    trying to find a program to pilot this with, is that in lieu of
    all these long documents that people have to generate, we do
    something that is much more like a traditional design review.
    We would do on scenes, hands on, a week or 2-week review of all
    the technical material, the scheduling documents, and so on
    that the program is actually using as opposed to these
    documents which are submitted a couple of months ahead of time
    and then go through staff review. I would like to pilot that
    approach to see if we can make it work. It will be more time-
    intensive for some senior leadership than the current process
    is, but I think it will be much more efficient, and I think, in
    addition, may be much more effective for the program offices to
    do it that way.
        Senator Inhofe. Mr. Sullivan, you had listed some things. I
    asked my staff to find out the specifics of that, and that was
    not in your written statement. You talked about the
    relationship with contractors' forces. Can you expand on that?
    That was not in your written statement.
        Mr. Sullivan. Those are ideas that I do not have fully
    developed but I thought we should be interested in looking at.
    A lot of that just has to do with time-certain development----
        Senator Inhofe. Is it a preview of what you are doing right
    now in the GAO analysis?
        Mr. Sullivan. The GAO analysis we are doing, I think, is
    going to be a very important analysis, and it almost parallels
    what the Under Secretary just went through. We are trying to
    look for efficiencies, and we are looking at best practices in
    the commercial world. We are looking at case studies where they
    operated in ``skunk works'' with a streamlined oversight
    mechanism. We are trying to find good examples.
        I think the key thing is at those three knowledge points
    when you make the critical decisions, you want to have good
    data. That is really all you should be focused on. All of the
    integrated product teams and the layers between the program
    manager and the Under Secretary or the Chief are things that we
    are looking at. Do we really need these things? There are a lot
    of rice balls out there.
        Senator Inhofe. Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Inhofe.
        Senator Hirono.
        Senator Hirono. Thank you.
        Secretary Kendall, you mentioned that fixing the
    acquisition process is not as easy as some think. We have only
    been trying to do this for over 100 years. I think this
    committee fully appreciates how hard it is.
        You mentioned some areas where you say that decisions that
    are made in these two critical areas should be done with as
    much knowledge as possible. Are you already applying that way
    of proceeding with acquisitions that we are currently engaged
    in?
        Mr. Kendall. Yes, we are. It starts at the very beginning
    phase when you assess the feasibility of requirements that the
    operators put on the table and the likelihood that you will be
    able to afford to build something that meets those
    requirements. That is very early on. Then there is a decision
    about the risk mitigation that has to be done before you are
    ready to commit to development. Then there is an examination of
    whether that has actually been accomplished or not and whether
    there is a sound plan to go into development. Then there is a
    question of whether prototypes demonstrated through
    developmental tests of your design are stable and your
    manufacturing processes are stable so we can go into
    production. Those are the key decisions and the key criteria.
        Senator Hirono. It is human beings who are going through
    the assessment and making these recommendations to you. Do you
    have those people? Do you have the people who are trained who
    have the knowledge, who can provide you with the analysis that
    you need to make decisions at these critical points?
        Mr. Kendall. At my level I think that I do. We have been
    building the staff ever since I came back into government. The
    WSARA provisions have encouraged us to do that. They directed
    us to do that. In some cases in developmental test, for
    example, and system engineering, in particular, we have been
    building up our capabilities over time, also building up our
    program management expertise and our contracting expertise, all
    the things that have to be looked at to evaluate a program, I
    think, at the Office of the Secretary of Defense side. We still
    have work to do, but I am in reasonably good shape there. I am
    always trying to strengthen the workforce.
        If I look throughout the workforce, I do not think I can
    say that as much. I think it is not as uniform and it is not as
    deep as I need it to be.
        What we have been doing to our workforce, frankly, really
    pushes us in the opposite direction. Salary freezes, shutdowns,
    furloughs, uncertainty about budgets, and uncertainty about
    people's jobs is making government service today very different
    than it has been traditionally, and, I think, we have a real
    problem with our workforce.
        We also have a demographic problem. The workforce is like a
    two-humped camel shape, and we have a lot of people who are
    either at retirement age or very close to it. They are going to
    be exiting our workforce. They are our most experienced people.
    Then we have a big valley before a lot of the people we brought
    in, many of them under the DAWDF, Mr. Chairman, who need to
    mature and gain experience. We are trying to manage our way
    through that, but it is a fundamental problem for DOD.
        Senator Hirono. Since that is a fundamental problem, then I
    think that if you really wanted to make appropriate changes,
    where we are going to get through our acquisition process the
    kind of products that we actually need, we should be paying a
    lot more attention to the workforce issues. Would you say?
        Mr. Kendall. I agree, and we are paying attention to the
    workforce. It is the critical feature I think beyond everything
    else that we can do. The capability of our government people,
    our professionals, to oversee contracts, to get the business
    deal right, to understand the risk, and to ensure the
    contractors are complying are all central to our success.
        Senator Hirono. I agree with you.
        Speaking of the workforce, I know that the NDAA for Fiscal
    Year 2008 required that DOD would take action and identify at-
    risk contracts. Are you familiar with what I am referring to?
        Mr. Kendall. Generally, yes.
        Senator Hirono. Can you give the committee an update on
    fulfilling the requirements of this law, of the 2008 law that
    required you to identify these at-risk contracts?
        Mr. Kendall. Let me take that one for the record. I believe
    we are in compliance, but I would have to double check and make
    sure what exactly we are doing to comply with that provision.
        [The information referred to follows:]

        Yes, the Department of Defense (DOD) does submit to Congress a
    report on the Inventory of Contracts for Services consistent with P.L.
    110-181, section 807, codified in title 10, U.S.C., section 2330a.
    Contained in the report is a listing of contracts authorized by statute
    as personal services contracts in accordance with Federal Acquisition
    Regulation Part 37. The Department makes the report available to the
    public on the Defense Procurement and Acquisition Policy website:
    http://www.acq.osd.mil/dpap/cpic/cp/
    acquisition_of_services_policy.html. Currently reports are posted for
    fiscal years 2009 to 2013. By law, DOD is required to submit the report
    not later than the end of the third quarter of each fiscal year.
    Therefore, DOD expects to submit the report by June 30, 2015.
        Per the guidance my office has jointly issued with the Under
    Secretary of Defense for Personnel and Readiness, each component
    completes a review of its service contracts reported in the inventory
    in accordance with title 10, U.S.C., section 2330a, subsection (e).
    Each component head submits a letter to the Under Secretary of Defense
    for Personnel and Readiness, certifying completion of the review,
    delineating the results in accordance with all applicable title 10
    provisions and DOD guidance. The review includes identification of any
    inherently governmental functions, or unauthorized personal service
    contracts, requiring a plan of action to divest, correct, or realign
    such functions to government performance.
        Additionally, consistent with Office of Federal Procurement Policy
    guidance, DOD began reporting into the Federal Procurement Data System
    on March 2013, inherently governmental function indicators associated
    with the description of the service contract requirement. These
    indicators identify the service contract description as either a
    closely associated function, a critical function, or other function.
    This data is available to the public at USASpending.gov.

        Senator Hirono. For Mr. Sullivan, we have been talking
    about these critical points at which information and knowledge
    is really important. Secretary Kendall mentioned two areas that
    were different from what you acknowledged. Do the points you
    raised come at an earlier phase of the acquisition
    decisionmaking process?
        Mr. Sullivan. I am not sure if we were in sync or not on
    that. I thought I heard the Under Secretary at the start talk
    about when you want to have good systems engineering knowledge.
    We think that at Milestone B, usually when you sign a big
    development contract for one of our major contractors to
    develop this weapon system, you need to have, at the very
    least, mature technologies. You should not take technology
    development into product development.
        Senator Hirono. Would you say that it would be a good
    thing, since GAO said that there are different decisionmakers
    involved in the process, if you and the Secretary were on the
    same page regarding what the critical points are where
    knowledge is really important?
        Mr. Sullivan. I think the Under Secretary would agree, and
    I think he has been working on this, along with the
    requirements community. The three communities that have to work
    in concert and do not very often are the requirements
    generation community, which is the Joint Requirements Oversight
    Council; Mr. Kendall's office, the acquisition community, and
    then the Comptroller. WSARA brought all the systems engineering
    in up front to make sure you understand your requirements. If
    you start a program without that really solid understanding of
    what you are going to build, you wind up with a lot of cost
    growth and schedule delay.
        Senator Hirono. Are you doing those things that bring these
    three components that you acknowledge have not been working as
    well together as they could be? Are you moving to make sure
    that these processes and the communication is occurring now?
        Mr. Sullivan. We keep an eye on that and we report on that.
    I would say in the past 3 to 5 years, they have been doing a
    lot better. Most of the programs that are going to that
    Milestone B have requirements I think that are not as lofty,
    and they have done good systems engineering on them and they
    are more incremental in nature. I think there is a good trend.
        Senator Hirono. Secretary Kendall, I do not know if you can
    respond to this at this hearing, but based on the process that
    you are engaging in to make sure that we are able to afford the
    acquisition, are there any acquisition programs that are
    arising to a questionable status with you where we may need to
    pull the plug?
        Mr. Kendall. I cannot name the specific program, but I am
    very concerned about our posture when we get into the 2020
    decade timeframe. We have a number of things that we need to do
    in that timeframe. A lot of our strategic deterrence systems
    need to be refreshed or recapitalized, the submarine Ohio
    replacement, Minuteman III replacement, and the new bomber all
    come at the same time. The Ohio replacement by itself makes the
    Navy shipbuilding program very difficult to execute. We are
    going to need some budgetary relief in the 2020s or we are
    going to have to make some very hard decisions in that
    timeframe.
        Senator Hirono. Thank you.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Hirono.
        Senator McCain.
        Senator McCain. Thank you, Mr. Chairman.
        I thank the witnesses for their testimony.
        Mr. Chairman, you went over some of the examples of the
    really unacceptable cost overruns we have seen in the past and
    apparently a failure to get a lot of it still under control.
    $20 billion spent for FCS and $1 billion for the Expeditionary
    Combat Support System (ECSS). The Marine Corps spent 15 years
    and $3 billion on the EFV. The lists goes on and on. We have
    had hearings just on the JSF itself. The littoral combat ship
    continues to ignore the basic principle of ``fly-before-you-
    buy.'' Billions of dollars into ships intended to carry the
    mission modules have yet to be fully developed for testing, and
    now we are talking about 20 new presidential helicopters. The
    same people that were in charge before, and we spent $3.2
    billion with nothing to show, failing to field a single
    helicopter.
        I appreciate, Mr. Sullivan, your report, including the fact
    that cost and schedule growth remains significant. 42 percent
    of programs have had unit cost growth of 25 percent or more.
        Mr. Kendall, do you disagree with Mr. Sullivan's conclusion
    in his report that there have been 42 percent of the programs
    in DOD that have had unit cost growth of 25 percent or more?
        Mr. Kendall. I do not disagree with that as a factual
    point. No, sir.
        Senator McCain. You do not agree with that.
        Mr. Kendall. I do not disagree with that. I believe that is
    factual data.
        Senator McCain. Thank you.
        On the presidential helicopter, I understand from media
    reports that there was no competition for it. Is that right?
        Mr. Kendall. We undertook a competitive source selection,
    but we only received one bid on that source selection.
        Senator McCain. Is that the same corporation that was
    involved in the $3.2 billion failure the last time around?
        Mr. Kendall. I am not sure. We have not announced the award
    yet, Senator. I am not sure how much I can say about that at
    this point.
        Senator McCain. The media reports it.
        Mr. Kendall. Why do we not proceed on that assumption?
        Senator McCain. You do not want to build a prototype given
    the previous experience, and you do not want to build a
    prototype?
        Mr. Kendall. We have taken the last few years since VH-71
    was canceled to make sure we did as careful a job on this
    acquisition as we could. I just published an op-ed on this
    yesterday actually. The requirements are firm in this case. One
    of the major problems the VH-71 had was the requirements
    changed once the contract was awarded. They were not well-
    defined. We are using a fixed price vehicle this time as
    opposed to a cost-plus vehicle. We have done a lot of the
    integration risk reduction in the Navy to ensure that the comm
    sweep that goes on the aircraft is well understood and defined,
    and we do not have risk there. We are taking a much lower risk
    approach this time, which does not, in my view, require
    prototyping prior to going into development for production.
        Senator McCain. I guess we will see again, but I do not
    quite understand that some huge cost would be involved in
    developing a prototype given the previous example of $3.2
    billion completely wasted. I do not get that, but I will be
    eager to listen to the arguments for it.
        Mr. Sullivan, of all the cost growth programs, it is my
    understanding that the Evolved Expendable Launch Vehicle (EELV)
    has had the highest inflation costs associated with it. Is that
    correct?
        Mr. Sullivan. I believe that is. In the annual assessment
    we did this year, it represented almost all of the cost growth
    in the portfolio. I think one of the reasons for that is it was
    its second time into the portfolio. I believe they had
    terminated the program and it had a Nunn-McCurdy breach. I
    think they went in and did the analysis of that, decided that
    we needed it for national security reasons, and more or less
    rebaselined the program and have a new cost estimate. That came
    back into the portfolio with significantly more cost as a new
    baseline.
        Senator McCain. I think you will find that since the merger
    between Lockheed Martin and Boeing, that those costs have
    dramatically escalated again because of lack of competition.
        On that subject, which is significant amounts of money, the
    Air Force has decided to cut in half those launches that would
    be competitive. The Air Force cited three reasons why it is
    proposing to cut competitive launches in half: one, extended
    life of its GPS satellites; two, the payload requirement for
    one of the launches became unliftable because of weight growth
    by any prospective new entrant company; and, three ``the need
    to fulfill its longstanding commitment to United Launch
    Alliance (ULA),'' the incumbent contractor.
        That last one staggers the imagination. The company that is
    in charge of the program has the highest cost overruns of any
    program. You have a commitment to this corporation that there
    not be more competitive launches. I do not understand that, Mr.
    Secretary. I want to say to you this smacks of the cronyism
    that we saw in the first tanker contract that ended up in a
    major scandal. I am not saying that it is, but it does not make
    any fiscal sense, the decisions that you have just made, by
    cutting down on competitive launches for the EELV.
        Mr. Kendall. Senator McCain, let me just try to clarify a
    couple of things about the program, but let me caveat my
    comments by saying that, first of all, we have a lawsuit about
    this program and we also have the Inspector General
    investigation that you asked for. I would like to let those
    things proceed in the proper forum and not get ahead of that.
        But let me just talk a little bit about my background with
    this. It had been delegated previously to the Air Force, but I
    brought the EELV back under my direct control because I wanted
    to ensure adequate competition, as much competition as we could
    get. Competition is the single best tool that we have in DOD to
    get cost out of our programs.
        Working with the Air Force, we looked at all the launches
    that we thought a competitor could possibly do, and that was
    the basis for the decision. That was my intention when we did
    the 36 Contracting Officer's Representatives (COR) commitment
    to ULA. The commitment is in the form of a contract which we
    have negotiated. That contract is at a much better price than
    we had anticipated in our previous budgeting. We have saved on
    the order of $3 billion in the negotiation. It was a very
    successful negotiation from my perspective.
        During the timeframe when all this was happening, our
    budgets were being cut dramatically, and the Air Force had to
    slip some space launches to the right. We did not want to break
    the contract and have to open that contract back up and
    renegotiate that price. I think that is part of the equation
    here.
        But we are not trying to take competition away from
    anybody. We want to have as much competition as we can possibly
    get as soon as we can get it.
        The other thing that I want to clarify on this is my
    direction in the acquisition decision memorandum that I signed.
    In order to get competition as early as possible, basically the
    intent was that in order to allow a new entrant to compete, a
    new entrant would not have to finish the certification process
    at the time he submitted a proposal because there is about a 6-
    month period of a proposal evaluation before an award, and a
    certification process could be completed during that interval.
    I allowed people to bid without having completed the
    certification process. They could compete before the
    certification was completely done, all the documentation was
    reviewed, et cetera. That gave us a larger window in which to
    consider competition. That was the intent behind that guidance,
    and that is what the Air Force has been trying to execute.
        Senator McCain. Facts are stubborn things. You have reduced
    the competitive launches by half, down to three, and that is
    just the reality of it. Using a rationale of a ``commitment''
    to a contractor that has been guilty of the largest cost
    overruns of any program, I think they had some commitment,
    which obviously they did not keep.
        This is a very serious issue, and we are talking about
    billions of dollars here, Mr. Kendall. I intend to do what I
    can to make sure that there is competition. Apparently,
    whatever the rationale, the decision has been made to reduce,
    if not nearly eliminate, competitive launches. Also, the motor
    made by the consortium is made in Russia. That alone, that
    Vladimir Putin is responsible for our rocket motors, should be
    a reason why we should be looking desperately for competition
    rather than narrowing it.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator McCain.
        Senator McCaskill.
        Senator McCaskill. Thank you.
        First, let me associate myself with all the remarks and
    line of questioning of my colleague, Senator McCain. I agree
    that we have a real crisis. If you were talking about only one
    competitive in 2015, I know I do not have to explain to you,
    Secretary Kendall, that you have to get critical mass of work
    in the pipeline or you have no competition. I will be trying to
    work with Senator McCain to figure out if there is something we
    can do to change what I think was a very shortsighted decision
    on the part of the military.
        First, I want to tell you that you do not have to convince
    me how hard it is to do acquisition reform in the military. I
    am completely on your side in terms of that statement. It is
    incredibly hard. I do think you are well-positioned to continue
    a path that is positive, and I hope you stay committed. I hope
    you stay a while.
        Mr. Kendall. Thank you.
        Senator McCaskill. That is one of the things I want to talk
    about first. Mr. Sullivan has talked about it. It has been a
    constant problem going all the way down to CORs in the units.
    When I first began working in this area, you were handing a
    clipboard to somebody and saying, guess what, you are the COR
    in a unit in Iraq, and they had no idea what being a
    contracting officer had meant in that unit. They had no
    training. We have made some progress in that regard. But it was
    like you got the clipboard and you wanted to get rid of it as
    quickly as you possibly could because there is no way you were
    on a rocket to anywhere if you were a COR. This notion that we
    are trying to do acquisition in a business-like way within the
    culture of the military that requires that you move every 10
    minutes is ludicrous. It is just ludicrous. There is no way you
    can have this many program managers and actually get at what
    you are trying to do.
        How seriously have we thought about changing the military
    way of doing business? I get the value of lots of assignments
    in terms of developing leaders, but it does not work in
    acquisition. You need continuity and you need expertise. You do
    not need a new guy every 18 months or a new woman every 18
    months.
        Why can we not set aside this area of responsibility for a
    goal of continuity and require longer stays of people who are
    managing these programs or who are handling contract and
    acquisition duties?
        Mr. Kendall. I completely agree with you on the importance
    of tenure. One of the problems of the last decade-plus has been
    the wars and the fact that people are rotating in and out of
    theater. That has changed the normal rotation patterns, and
    hopefully that is coming to an end.
        I look at the tenures of our program managers, for example,
    and they average between 3 and 4 years. Our policy is to try to
    keep them for 4 years. I think they should stay longer.
        I am concerned about a number of things in this area. I
    changed the approach to this. In many cases, the program
    managers will come in. They will have a few years with a
    program, and their culminating event is a decision point, one
    of the Milestone approvals. Then the definition of success is
    to get the decision made. I am trying to turn that around so
    that people come in shortly before the decision. They have to
    have some responsibility for the plan that is proposed, but
    their real job is to execute that plan, to go out and make that
    plan a reality, which I think is a much harder job than
    actually getting a decision made by somebody.
        The other thing is, of course, we have a fairly steep
    promotion pyramid at the colonel level, the captain level in
    the Navy. People that are our number one program managers are
    often forced out of the Service because they are not promoted
    to that level. I am working with the Services and we are trying
    to keep those people around. I hate to see some of our very
    best program managers, people who have over a career built up
    the capability to do that very difficult job extremely well,
    because they do not make it to O6 because the curve is too
    tight, be forced to retire. They go out to industry and they do
    similar jobs in industry. We would like to be able to keep
    those people around longer.
        The other thing we can do is use more career civilians.
    Career civilians do not move as often. The problem we have
    there is giving them developmental opportunities because career
    civilians often do not like to move, and many times you need to
    move them to another location so they can get the experience
    they need to develop the skills that they need.
        We are very actively interested in improving this area. I
    think people matter. I have said that a thousand times, and
    strengthening our people and the sort of things that you talked
    about are exactly what we need to do.
        Senator McCaskill. If we could pay them more. Frankly, talk
    about saving money, talk about value. Paying people more money
    that are good at what they do--and this notion that we are
    losing somebody because of some kind of artificial O6 deal. Let
    us know what we can do, and I guarantee you we can get that
    passed, that would change that. I think you are going to
    continue to hammer bricks here if you do not really get at this
    continuity issue and stability issue. I think it is crucial.
        Let me talk about IT for a minute. I would use an
    unladylike term about how bad DOD is at acquiring IT, but I do
    not want to do that as a U.S. Senator. But you are terrible at
    it, just terrible at it. Part of that is that your acquisitions
    process has so many steps, is not flexible, and it is not
    nimble. By the time you get to the end of it, it is obsolete.
    There is this horrible habit about requirements. The military's
    bad habit about requirements has bled over into IT acquisition
    where these guys think we will have somebody build us a system
    and it will do it. Of course, somebody is more than willing to
    come in for billions of dollars and build you a system that
    will do it, whereas you can buy it off-the-shelf for 85 percent
    of what of they want and save billions of dollars.
        Why can we not apply Nunn-McCurdy to IT?
        Mr. Kendall. We apply the rules that govern Major Automated
    Information System (MAIS) programs often to IT which are
    similar. They are not exactly the same thresholds as Nunn-
    McCurdy, but they are similar, the critical change
    requirements.
        Let me talk a little bit about IT. When we talk about IT,
    it is a term that is not always precise. We are really, I
    think, talking about business systems, the types of systems
    that do pay and personnel, do logistics management, and do the
    accounting functions, for example, that there are commercial
    counterparts to. These are not pure military systems. I have
    recently brought these back under my control too. They were
    delegated for a long time. I spent a lot of time with our
    Program Executive Officers (PEO) and our program managers for
    these kinds of systems, trying to understand the problems that
    they are seeing.
        One of them is what you just described. It is the
    complexity of the approval process and the way we are forcing
    people to structure their programs. I think we are imposing too
    much burden on people and we are micromanaging from a place
    where we should not be doing that. I am looking at that process
    and trying to be practical about how we structure these
    programs and try to learn from industry.
        We need to develop our expertise in this area. That is
    another fundamental concern. I do not think we have enough
    qualified professionals in business systems. Business systems
    are not like weapon systems. They are very different. They are
    different because, first of all, you are taking an off-the-
    shelf product and you are modifying it for use by the military
    organization. Also the transition from an existing system to a
    new system is very different. If you are in a unit and your
    tanker or your fighter plane is being replaced, that system
    goes away and the new one arrives, you train on it and you go
    operate it. For a business system, you have to keep the old
    system operating until the new system is up and proven. You
    have to run them in parallel and make a much more difficult
    transition. There is a huge burden on the acquiring
    organization to be trained to be ready to move over to that new
    system. This is often where we really get into trouble.
        Your mentioned requirements. That is another key point. We
    have a tendency in DOD, I think, to try to force the business
    systems that we acquire to do things the way we have
    historically done business.
        Senator McCaskill. Right.
        Mr. Kendall. The right thing to do is to reengineer our
    processes to be more consistent with the product that we are
    trying to buy.
        Senator McCaskill. Right.
        Mr. Kendall. That is something that we probably have a lot
    more work to do on as well.
        The last thing I am going to mention is compliance
    requirements. I talked to one contractor a few years ago about
    this, and I asked him the same question: Why are we having such
    trouble? He said one of the differences is that in the
    government there are 100,000 compliance requirements that I
    have to put into my software for you to make it meet all of
    your regulatory and statutory requirements. In a business, I do
    not have any of that to worry about. Maybe some, but not nearly
    the same volume. That is another factor, that we impose some
    things that we have to require. We have to comply with law and
    regulation.
        Senator McCaskill. Let us see if we can fix some of that.
        Let me just say it is not just business systems too because
    we got the Distributed Common Ground System. I have had
    difficult conversations with some of your colleagues at DOD
    about this notion that we are doing these IT systems to
    identify equipment in theater. We had two systems built by two
    different branches, and they were using the same equipment and
    they built different systems. Then you came wanting money for
    DOD so they could talk to each other. It is just like a V8
    moment. How does it happen?
        I want you to continue to strategize with this committee
    and our staffs on how we can help you do a much better job on
    IT.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator McCaskill.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        Thank you to both our witnesses for being here today.
        Secretary Kendall, I want to focus on an issue that has
    perplexed and vexed me, and I think, other members of this
    committee, and I know, bewildered the American people who know
    about it: the purchase of Russian helicopters for use in
    Afghanistan with American taxpayers' dollars. I know I do not
    have to go into the details for you. But I would like to know
    what has to be done today to stop any additional transfers of
    any American dollars to Rosoboronexport in connection with
    these helicopter purchases for Afghanistan.
        Mr. Kendall. Senator Blumenthal, I understand that we have
    had numerous conversations about this. We are nearing the end
    of our acquisition of Mi-17s for the Afghan Air Force. We have
    about 20 helicopters to take delivery under an existing
    contract, and I think that will be the end of our business as
    far as acquiring helicopters is concerned.
        There will be a continuing need for air support and
    technical support for those helicopters for the Afghan forces.
        The situation in the Ukraine, obviously, and the discussion
    of sanctions, which is definitely not my area, are complicating
    the situation right now. So far, we have not sanctioned
    Rosoboronexport, and the Russians, I think, probably for
    economic reasons, have not done anything to cut off our supply.
    We understand that there are things at work here that are much
    bigger than our requirements in DOD for this, but we would like
    to take delivery of those remaining helicopters if that is at
    all possible.
        Senator Blumenthal. Why have there been no sanctions
    against Rosoboronexport?
        Mr. Kendall. I am not the person to speak to that, Senator.
        Senator Blumenthal. You mentioned that there are still 20
    helicopters to be delivered.
        Mr. Kendall. That is an approximate number. It is very
    close to that number.
        Senator Blumenthal. Have we paid for those helicopters?
        Mr. Kendall. We are in the progress of paying for them. We
    pay incremental payments as the helicopters are delivered.
        Senator Blumenthal. We have not yet paid for the 20 still
    to be delivered?
        Mr. Kendall. We have not completed paying for the
    helicopters, no.
        Senator Blumenthal. We have not paid for them. When you say
    we have not completed----
        Mr. Kendall. I am not sure whether the payments are one for
    one for a helicopter. I am not sure exactly how the payments
    are structured. I think it is roughly equivalent to that.
        Senator Blumenthal. What is necessary to stop payment and
    delivery? What would have to be done? Is it a letter that has
    to be written? Is it an Executive order from the President?
    What would have to be done physically to stop delivery and
    payment?
        Mr. Kendall. If we were statutorily ordered to or if there
    was an order in the chain of command that told us to stop, then
    we would stop. But we hope that does not happen.
        Senator Blumenthal. Why do you hope that does not happen?
        Mr. Kendall. Because we need those helicopters for the
    Afghan Air Force.
        Senator Blumenthal. American helicopters will not do?
        Mr. Kendall. We have looked at that. We did an assessment
    of alternatives several years ago actually, and for the
    combination of circumstances for the Afghans, the Mi-17 is the
    right answer for them.
        Senator Blumenthal. I would like a commitment that you will
    provide me, I cannot speak for the rest of the committee, an
    explanation for what would have to be done by the President of
    the United States to stop delivery and, most important, payment
    for those helicopters.
        I find it absolutely abhorrent and incomprehensible that
    this Nation is providing taxpayers' dollars to a Russian export
    agency that not only provides arms to President Assad in Syria
    but also is, in turn, bolstering the Russian aggression in
    Ukraine. We are sanctioning people around the leader of the
    Russian Government President Vladimir Putin. We are rattling
    and engaging in rhetoric about additional sanctions, but we are
    not using the dollars within our direct control to stop fueling
    Russian aggression in Ukraine and elsewhere. Whatever the
    sacrifices that may be entailed in Afghanistan, and I believe
    they will be very few because American helicopters are
    available to perform the same mission, we should take action
    now.
        I would like to know from you in detail what has to be done
    immediately before there are additional deliveries and before
    additional liability is incurred for additional payments. Can
    you commit that you will provide that explanation?
        Mr. Kendall. I can take that for the record, Senator.
        [The information referred to follows:]

        Stopping delivery of additional Mi-17 military use helicopters
    under contract W58RGZ-11-C-0072 would require direction from an
    official in the chain of command of the Non-Standard Rotary Wing
    Program Office to take action under the contract to negotiate with the
    Russian joint stock company, Rosoboronexport, to stop delivery of the
    Mi-17 helicopters. The negotiations could be initiated if so directed,
    but may or may not be completed before additional deliveries of Mi-17
    helicopters occur. Liability for additional payments would be
    determined under the terms of the contract or as the result of
    negotiation. In addition, the United States has the ability to suspend
    work under the contract for a maximum period of 90 days; however, under
    that authority, the United States would likely be liable for delay and/
    or other costs incurred as a result of the stop work order.

        Mr. Kendall. Let me just say that the other side of the
    equation is that the Afghan forces are dependent on this
    capability. It is not just about the dollars. It is about their
    capabilities.
        Senator Blumenthal. They are dependent on those helicopters
    until they are not. Right? Until they have to make do with
    American helicopters, God forbid, which are far superior. The
    military itself not only concedes, but with good justification
    takes pride in that fact. The reason they are dependent on them
    is because we have not trained them to use American
    helicopters. If they cannot use American helicopters, I hate to
    be over-dramatic, they are not going to be able to defend
    themselves anyway.
        Mr. Kendall. I think we had this discussion before. I am a
    big fan of American helicopters. But the training necessary,
    the complexity of the systems, and their appropriateness for
    the environment are all factors at play here as well.
        Senator Blumenthal. Let me move on because we have
    discussed this issue before, and I recognize that you are
    limited in what you can say. But I would appreciate a further
    explanation, as I have requested.
        Mr. Secretary, I understand that the Navy is considering
    ending its buy of the highly praised MH-60R helicopters after
    this year's buy, which would leave the Navy 29 aircraft short
    of its requirement, and break the contract for the current H-60
    multiyear procurement shared by both the Army and the Navy. If
    you could tell me, please, what is the termination liability of
    such a move and what are the effects that will be on the Army's
    UH-60M aircraft for next year if that multiyear contract is
    broken.
        Mr. Kendall. I will have to take that for the record. I do
    not have a number to give you today.
        [The information referred to follows:]

        A final decision on maintaining or terminating the MH-60R multi-
    year procurement contract has been deferred to fiscal year 2016. Any
    potential modifications to the Navy's MH-60R procurement plan will be
    aligned with other Navy force structure adjustments. Actual costs
    associated with a potential early termination or cancellation of the
    two multi-year contracts have not yet been determined. Costs will be
    calculated in accordance with the Federal Acquisition Regulation and
    through negotiations of a termination settlement with the prime
    contractor when and if official notification of termination or
    cancellation occurs. Provided the level of Advance Procurement funding
    requested in the President's fiscal year 2015 budget request is
    approved and appropriated by Congress, potential termination or
    cancellation would not occur until the fiscal year 2016 Appropriations
    and Authorizations Acts becomes law.

        Mr. Kendall. I do want to thank the committee for its
    support for a multiyear request, though. We have been doing
    very well getting costs down through those requests, and I
    appreciate the support.
        The H-60 problem is a fiscal year 2016 problem, and with
    the current estimates and current plans, we would break the
    multiyear. We are going to revisit that this summer and see if
    we can do something about that.
        Senator Blumenthal. My information is that the cost of
    breaking the multiyear contract would be close to the amount of
    the deleted 29 helicopters. Is that true?
        Mr. Kendall. I have to take that for the record. I think it
    would be a substantial cost and we would like to avoid it, if
    possible.
        [The information referred to follows:]

        A final decision on maintaining or terminating the MH-60R multi-
    year procurement contract has been deferred to fiscal year 2016. Actual
    costs associated with a potential early termination or cancellation of
    the two multi-year contracts have not yet been determined. Costs will
    be calculated in accordance with the Federal Acquisition Regulation and
    through negotiations of a termination settlement proposal with the
    prime contractor when and if official notification of cancellation
    occurs. Provided the level of Advance Procurement funding requested in
    the President's fiscal year 2015 budget request is approved and
    appropriated by Congress, potential termination or cancellation would
    not occur until the fiscal year 2016 Appropriations and Authorizations
    Acts becomes law.

        Senator Blumenthal. When do you think you would be able to
    give your answer?
        Mr. Kendall. I can probably give you an estimate within a
    matter of a week or 2, probably.
        Senator Blumenthal. Thank you.
        When do you think you will be able to get back to us on the
    explanation for the Russian helicopter purchase?
        Mr. Kendall. I am not sure how long that will take. Some of
    it is very obvious. The President would merely order us to
    stop, and we would stop. That is a way it could happen. That is
    the fairly obvious answer. If I could give you anything beyond
    that, I will see what I can do.
        Senator Blumenthal. What would be the cost? I think that
    would be----
        Mr. Kendall. That part I would have to go take a look at.
        Senator Blumenthal. For the record, and I say this again
    not to be over-dramatic, my view is if there is a cost, let the
    Russians sue us. Let them sue us in American courts, and they
    can have a taste of what American justice is and maybe they can
    collect here. I am sure that American courts will do a lot
    greater justice for them than Russian courts could. I would
    welcome the chance to defend that contract liability.
        Thank you, Mr. Chairman.
        Chairman Levin. Thank you, Senator Blumenthal.
        I raised this issue when I was in Afghanistan recently. In
    addition to letting us know what the cost of breaking the
    contract is to the American taxpayer, let us have statements
    from the commanders as to why they support completion of the
    contract. It is important that we look at the entire picture.
    Senator Blumenthal obviously raises an important point, but we
    have to see why it is that commanders feel that it is essential
    that they be delivered in terms of Afghan support. If we could
    get all that in the next couple weeks, it would be appreciated.
        Mr. Kendall. I am happy to do so, sir.
        [The information referred to follows:]

        [Deleted.]

        Chairman Levin. Thank you.
        Senator Ayotte.
        Senator Ayotte. Thank you, Mr. Chairman.
        Let me just say that I agree with Senator Blumenthal. I too
    would enjoy the Russians coming before the U.S. courts for our
    justice. I appreciate his work on this important issue.
        I wanted to follow up. Thank you both for what you are
    doing. I know you are serving during very challenging times and
    trying to work on this acquisition issue, which has been a
    continuous challenge long before I got in the Senate, and
    something, though, given the resource scarcity we face right
    now that has become even more important. Thank you both for
    your leadership on that.
        As I think about the choices that we make and why this is
    so important, I could poll each Service and come up with a
    number of examples. I know my colleagues have already raised
    them. I am going to focus a minute on the Air Force, but I have
    a list that I could also share with the Army and the other
    branches. I am in no way at this moment picking on the Air
    Force.
        As I look at the recent Air Force acquisition programs,
    from 2007 to 2013, the Air Force terminated 12 major
    acquisition programs, as I understand it, and the cost of those
    was at $6.8 billion on weapon systems and programs that our
    airmen are not going to see. Some of the examples of that are:
    $2.8 billion wasted on the National Polar Orbiting Operational
    Environmental Satellite System, which was ended in 2012; $2.5
    billion wasted on the Transformational Satellite Communications
    System, terminated in 2009; and $900 million wasted on the
    ECSS. That is billions of dollars that will never have a direct
    benefit for our warfighters.
        I realize that we could do a postmortem on each of these
    programs, and for each program, there is a variety of reasons
    of terminations. Yet, we find ourselves in the same place;
    money that was spent is not going to get the outcome that we
    need for the defense of the Nation.
        I want to put this in perspective because this matters when
    DOD and the Service Chiefs are coming to us and asking us to
    divest of a program like the A-10 for budget reasons because
    the cost of maintaining the A-10 in fiscal year 2015 is about
    $635 million. If the Air Force had cut their acquisition
    failures on MDAPs by just 10 percent between 2007 and 2013,
    there would be the equivalent to more than enough savings to
    afford keeping the entire A-10 fleet.
        The reason I want to put it in those perspectives is
    because the importance of this issue cannot be underestimated.
    We have the acquisition process right. We do not go down roads
    where we have put so many requirements on something that no one
    can possibly produce, so that we can use it in time for our men
    and women in uniform.
        I am going to ask both of you if you would agree with me
    that this obviously is incredibly important that we get it
    right, not just the Air Force, but every single Service.
        I know you have made some changes with the BBPI. How are we
    dealing with the requirements creep issue? How do we make sure
    that when we are looking at taxpayers, we are not saying here
    is the Air Force proposal to eliminate an airframe that our men
    and women in uniform on the ground truly love when we have all
    these other failed acquisition programs that did not get us a
    result? I think we owe that explanation to people.
        Mr. Kendall. Thank you, Senator.
        I regard the cancellation of a program, after we have spent
    a few years and a few billion dollars on it, as almost pure
    waste and one of the greatest tragedies DOD faces. I worked as
    a consultant on FCS, which was for the Army. An enormous
    fraction of their development account essentially produced
    nothing for the Army at the end of the day.
        Senator Ayotte. Right. I had that on my Army list.
        Mr. Kendall. The Army's list is longer than some of the
    others, but each Service has its own list. I published
    information on this in the volume I published last summer on
    the performance of the acquisition system because I am tracking
    historically what we are doing here.
        One of the principal things I put in place to try to
    prevent this is the affordability caps. It is a requirement to
    people supporting that and the budget people. Mr. Sullivan
    mentioned the three systems. One way to bring them together is
    to insist that the requirements people and the budget people
    evaluate the cost of their programs that they propose over the
    long term, over the lifecycle of that program, not just for the
    next few years, but as long as you are going to have it in the
    inventory and determine whether or not you can really fit that
    into your capital structure.
        We have been doing this for about 4 years now. I am
    enforcing those caps. There is one on the presidential
    helicopter we talked about earlier. The idea of these caps is
    to discipline the requirements people and the budget people to
    not try to do more than they can actually do and to figure that
    out early instead of after you have spent several years and
    several billion dollars.
        Senator Ayotte. Thank you.
        Mr. Sullivan?
        Mr. Sullivan. Yes, I would agree. First of all, I agree
    with you that it is a significant issue and it needs to be
    solved. It is a waste of money. The taxpayers and the
    warfighter are the ones that suffer as a result.
        I started out in my oral statement stating that the three
    big processes we are talking about, the Under Secretary just
    went through them, requirements, budgeting, and acquisition,
    have to work together and they do not. We have done best
    practices work on that trying to find ways. Big enterprises,
    far flung industries, and things are able to do that. There is
    a way to do that. A lot of it is a cultural issue. But
    requirements are at the basis of all of that.
        Portfolio management is important. I think DOD should treat
    its major weapon system acquisitions more like a portfolio
    where they understand what years these programs are coming in
    and leaving, where they understand exactly how much they are
    going to cost because they are doing systems engineering
    upfront, and the requirements people and the acquisition
    workforce are working together to get proper requirements. They
    need to use incremental designs and acquisition programs so
    they do not bite off more than they can chew.
        But typically what you have is too many programs chasing
    too few dollars, and there is no real good budget controls
    because they have a 5-year defense plan. Most of these programs
    are supposed to be fully funded, but when you have a 5-year
    defense plan and a 10-year development program, it is hard to
    fully fund it. The estimates are not any good.
        WSARA and the BBPI are addressing a lot of this when we
    started out, I said that since 2009 and 2010, the programs that
    we have seen coming through Milestone B seem to have more
    systems engineering done and requirements in better shape.
        But just to conclude, for those three processes there has
    to be a way to break down the cultural barriers that exist and
    get those three processes to work together at the start.
        Senator Ayotte. I know that my time is up.
        Also, I understood, Secretary Kendall, what you said about
    the workforce challenges and why that, in terms of oversight,
    presents a real problem in terms of transition, people leaving,
    some political appointees, some not, is challenging. Any
    recommendations you have--one thought that I had is, is there a
    way to incentivize this? I do not know whether it is financial
    or otherwise, but to think through how we incentivize the
    things that you are both trying to accomplish as more engrained
    in the culture.
        Mr. Kendall. I would like a way to keep my best people
    longer, the best program managers, and I would like a way to
    reward people who do an exceptional job. We give people
    recognition today. We try to increase the amount of
    professional recognition which is career enhancing for people.
    It is very difficult within the military culture in particular,
    and even in the civil service system. I have not thought about
    this thoroughly in terms of a legislative proposal that would
    give people additional compensation or more cash bonuses, which
    is what industry does. Industry uses bonuses to reward people.
        Senator Ayotte. Correct. When they over-perform, then they
    have an incentive. I think this is so important to us because
    of the cost savings we could achieve, that it would make sense
    for us to think about how we are treating the personnel in
    terms of priority on this issue.
        Mr. Kendall. One of the things that was mentioned earlier
    is the ``should cost'' estimates. I am now requiring all of our
    managers to understand their cost structures, look for
    opportunities to reduce cost, set rules for themselves, and
    then try to achieve those goals. That is what the ``should
    cost'' is that we have been talking about.
        I would like to find a way to financially reward people for
    saving us money. That would be a dramatic improvement. If
    somebody can come in and show that they have made a significant
    savings to DOD and to the Nation by the way they have gone in
    and controlled their cost, we ought to give them something in
    return for doing that, but we do not have any way in our system
    to do that right now.
        Senator Ayotte. Thank you.
        Chairman Levin. Thank you, Senator Ayotte.
        Senator Manchin.
        Senator Manchin. Thank you so much, Mr. Chairman, for
    holding this hearing. It is very important.
        I thank both of you for your service to the country and
    what you bring with your expertise.
        Mr. Kendall, I know you made a remark that the mind-set and
    culture is this ``use it or lose it'' mentality. I am a small
    business person, but I was Governor of the State of West
    Virginia. I tried my hardest to try to get a cultural change in
    State government in how we did it. I tried to use an incentive
    plan and the hard thing that we had was evaluating what the
    needed amount of money is to run that department. I found out
    that most budgets are based off 10 percent more than what you
    asked for last year. Nobody has any rhyme or reason, or sit
    down and do anything different; it's just kind of cookie
    cutter.
        I said if we could evaluate what the needs were and with a
    real-time budget request, then if you over-performed to where
    you did it less than what we thought it would take, you kept 50
    percent of the savings within that department and 50 percent
    was returned back to the treasury. Taxpayers benefited and you
    benefited. You could disperse that as needed.
        There is something that we can do and we have to break
    this.
        Mr. Kendall. With the ``should cost'' that I talked about
    earlier, we are allowing the Service or the program that saves
    the money to keep the money in the year for the budget and use
    it for things that they need. We are letting the Services keep
    it from my level. Within the military departments, the Services
    are doing it differently in different Services. But essentially
    the general bias is to keep the money in the program.
        There are always things that you need if you have extra
    money that you can spend on that are worthwhile. Sometimes
    priorities in the Service are such that they need to take that
    money to a higher level and use it for something else.
    Sometimes it stays in the portfolio of products that are being
    managed together by a PEO, for example. Sometimes the program
    manager keeps it to do other risk mitigation to buy more
    product and whatever is appropriate.
        Senator Manchin. What we might think about is changing the
    law and, carte blanche across all the agencies of the Federal
    Government, pick a selected pilot project through DOD or
    Department of Transportation, whatever it might be, and let
    them pick and choose. The Secretaries can pick and choose where
    they think the most efficiency may be incurred. That might be a
    way that would give the lawmakers, those of us who sit up here
    and make policy, a little bit of a comfort, that it is not a
    runaway train or out of control, and see if we can get some
    efficiencies.
        Let me go to something very quickly. Specifications have
    always been my problem. The military and DOD is the only agency
    that I know of where people get rewarded for adding on and
    charging more all the time because they do not do what they are
    supposed to do from the get-go. The F-35 is a perfect example.
    We just kept adding on and adding on.
        When they are awarded a contract in the private sector,
    even the individual who is building a home, if the home is
    specified out properly and you get a bid on that home, you can
    pretty much stay within budget. If you do not and the unknown
    comes up, then you are going to pay add-ons. We understand
    that. I do not know if anyone is being held accountable at that
    level. Where the money really can be saved is on how you spec
    the process and the project.
        Mr. Kendall. This goes back to having solid requirements
    that are well defined. One of the things that plagued the FCS,
    which we were talking about earlier, is very vague requirements
    at the outset so that the cost could not be estimated
    accurately. The engineering job that had to be done could not
    be understood thoroughly, and there was a lot of risk in the
    program as a result of that. It led to a lot of disputes down
    the road.
        Getting the specs right upfront is important, but I would
    ask you to keep in mind that we have competitors. We have
    people who were developing systems that are designed to counter
    ours. If you look at the F-35 as an example, over the life of
    the development of the F-35, air defense systems, for example,
    have moved forward that we are going to have to face, and we
    need to deal with those systems.
        We are looking at starting some development work to deal
    with those systems that have come along since we started the F-
    35 program, and we really need to get that work started. I know
    there has been a reluctance to fund that by some people up here
    in Congress, but it is very important to the program.
        Senator Manchin. I have two more questions.
        There is a lot of concern about the procurement of the
    Russian rocket engine, and it certainly it concerns me as well
    as every Senator and Representative here. I do recognize,
    however, that these engines are not something that a large
    number of companies are making in the United States, and they
    take years to build.
        Where does the U.S. defense industry stand with respect to
    permitting a permanent shift away from Russian rocket
    procurement? We have not developed that within our own country.
        Mr. Kendall. I asked Assistant Secretary of the Air Force
    Bill LaPlante to take a look at this and conduct a study on it.
    He has completed that study.
        We have some options. One of them is that we have a license
    from the Russians to duplicate, to build ourselves basically
    the same design. We need to do some technical work before we
    are in a position where we can actually do that. There is some
    problem with that. Also, that license is limited. It only goes
    through 2022, I believe. That is one option.
        Another option is to develop a new rocket engine of our
    own. That would take a few years and would be a significant
    cost.
        There are a couple of other things beyond that that we can
    do to mitigate the possible loss of the RD-180.
        I have never been entirely comfortable with that
    dependency, and we have looked at in the budget process options
    a couple of times to try to do something to remove that
    dependency. But it has not been affordable, and we have
    accepted the risk and now that risk seems to becoming much more
    real at this time.
        Senator Manchin. Finally, China's control of precious
    metals. You can see them accumulating the stockpile or
    inventory for resources around the world. What concern does
    that give you or should it give all of us? I will use one
    example, chromite, where they have been very aggressive in
    Afghanistan, and also copper. We use it commercially. What
    concern does that give you with our ability to access these
    precious metals that we depend upon for the defense of our
    country?
        Mr. Kendall. In particular, rare earth metals, I think, are
    what you are referring to.
        Senator Manchin. Rare earth metals, yes.
        Mr. Kendall. China had for some time a near monopoly on the
    production of those metals, which is both the mining of them
    and the processing.
        Senator Manchin. Acquisition of them also.
        Mr. Kendall. Exactly.
        We took a very hard look at this a few years ago. I have
    not looked at it recently, but I believe that alternative
    sources have been and are being developed, both U.S. domestic
    sources and I think Australia is another potential source that
    is being developed. We are, I think, moving to an era where we
    do not need to be as dependent on Chinese sources for those
    metals.
        Senator Manchin. Can we get a briefing on that? Would that
    be a secured briefing that might be needed for us?
        Mr. Kendall. I would be happy to do that. I would like to
    get one myself because it has been a while since I looked at
    it.
        Senator Manchin. If you could do that, I would appreciate
    it very much.
        Finally, according to a March 31, 2014, GAO report, the
    total cost for all DOD acquisitions have risen $448 billion
    from initial estimates. Additionally, programs on average are
    28 months behind schedule. Mr. Sullivan, could you please
    explain the background of these figures and why DOD remains on
    the high risk list?
        Mr. Sullivan. It is on the high risk list because of that
    kind of cost growth and schedule delay, but also the very
    nature of defense acquisition is a risky thing anyway.
        The portfolio of programs we look at are every MDAP that
    falls under the selected acquisition reporting system. There
    are programs that may have started 20 years ago. There are
    programs that may have started 2 or 3 years ago. Some programs
    enter every year as new programs. Some programs leave with a
    bunch of costs that go with them.
        If you take all of those programs and add up all of the
    money for development and procurement, the entire acquisition
    program over perhaps a 20-year period, the entire portfolio, I
    believe, is 80 programs. I think if you add all that money up,
    it represents about a $1.5 trillion investment. Yes, since
    their original baselines, if you add up all the cost growth on
    all of those programs, it is over $400 billion.
        The tricky thing is that it has a lot of very aged programs
    in it. There are some programs where we have already been
    through the cost growth and that cost growth is still in the
    portfolio. It will not leave until that program leaves.
        We look at 1 year, year over year performance, and then we
    take a 5-year look, and then we do all the way to original
    baseline. That is still a huge problem, obviously. But when you
    look at year over year and 5 years, there has been some
    performance stability in the last couple of years. But still,
    obviously, when you are talking about those kinds of numbers--
    --
        Senator Manchin. These figures here do not show stability,
    sir.
        Mr. Sullivan. Pardon me?
        Senator Manchin. These figures do not really show
    stability. It would be hard to explain stability.
        Mr. Sullivan. I understand that, but when you get
    underneath the numbers, we have seen some good things, but it
    is a lot of money.
        Senator Manchin. My time is up. Let me thank both of you
    for your service.
        Secretary Kendall, maybe with your weight of your office
    and the weight of our chairman here on this committee, we can
    get a briefing on the rare earth metals and the security of our
    country or our lack of security that we face.
        Mr. Kendall. We will commit to that.
        [The information referred to follows:]

        The rare earth industry subject matter expert within the Office of
    Manufacturing and Industrial Base Policy, Acquisition, Technology, and
    Logistics will work with the Office of Legislative Affairs to determine
    a mutually convenient date for a briefing on the rare earth metals
    sector per the request of Senator Manchin.

        Senator Manchin. Thank you.
        Chairman Levin. We look forward to your providing that, Mr.
    Secretary.
        Thank you, Senator Manchin.
        Senator Donnelly.
        Senator Donnelly. Thank you, Mr. Chairman, and thank you to
    both of you.
        Weapon systems are subject to the Nunn-McCurdy Act, and
    this requires congressional notification and potentially
    program termination based on per-unit costs increasing more
    than 15 or 25 percent above original estimate. DOD-built IT
    systems are not subject to the same requirement, so we have had
    some struggles. We have had some problems with IT systems. I
    was wondering what your thoughts are on establishing Nunn-
    McCurdy-like protections against failing DOD-built IT programs.
        Mr. Kendall. Sir, I have no objection to that. We do use
    the critical change process for our IT systems, our MAIS. It is
    a little different process. It is done by the Services and then
    it is reviewed by me and passed on. It is basically at Service
    as opposed to a DOD level review.
        In general, I am trying to, when we have a program that has
    cost growth, really ask the questions that Nunn-McCurdy
    requires us to ask. Should you terminate or not? Do you still
    need this? Is it soundly managed?
        When I first came back into government 4 years ago, I was
    finding that we would submit a budget to Congress, which
    included funding for the program that had breached Nunn-
    McCurdy, and then we would do the analysis. We had already
    effectively made a decision to continue the program, and it was
    closing the door after the horse had gotten away.
        As much as possible now, I am trying to initiate Nunn-
    McCurdy reviews when we see the cost growth coming as opposed
    until after we have submitted the budget and it is formally
    recognized.
        In many cases, the Nunn-McCurdy reviews are triggered by
    quantity changes where we reduce the number of things we
    decided to buy, and that lists the unit costs because of the
    smaller production runs. Those are a different matter. The two
    that we have this year, the two critical changes that we have
    this year, are largely because of quantity changes in the
    amount of systems that we are going to buy. That is a little
    different matter. In that case, it is more of a formality,
    frankly, for us to go through the Nunn-McCurdy review.
        But I have no problem with the Nunn-McCurdy-type review for
    business systems that exceed their cost growth.
        Senator Donnelly. Mr. Sullivan?
        Mr. Sullivan. Actually I do not have much to say on that. I
    do not work IT programs, but we do have a team back in GAO that
    does that.
        Senator Donnelly. My concern is that when you see something
    failing, do we have the people in place to ask. We have seen
    this not just in DOD but across the spectrum. You see an IT
    solution that is not a solution but a boat anchor. Here is a
    government-built IT solution that is just becoming more and
    more of a quagmire, that we have some way or some road map or
    metric that you are using to make sure that we do not continue
    down that path until all of a sudden you look up and we are
    completely in the swamp.
        Mr. Kendall. I agree with that. The one business system
    that I have been most involved with was the Air Force's ECSS,
    which has been mentioned a couple times. We did do a critical
    change review on that and decided to keep the program going for
    another several months before we decided that the contractor
    simply could not execute. That was a case where we did not have
    the right professionalism or expertise on either the government
    side or the contractor side to successfully deliver that
    product. We probably should have recognized that earlier.
        Senator Donnelly. As we come home from Afghanistan--and you
    have heard from other members of the committee about the
    critical need for competition. How do we balance that while we
    look at maximizing savings and, at the same time, try to make
    sure that we do not hollow out the industrial base or the
    industrial capacity? Because this is a pretty delicate balance
    that we have coming up, and I was wondering your thoughts on
    this.
        Mr. Kendall. In general, we are trying to be as efficient
    as we can be with whatever resources we are provided with. The
    transition that industry is going through from essentially a
    growth market to a flatter, declining market is a pretty big
    impact on them. You are starting to see revenues decreasing. I
    think industry in many cases is trying to get costs out fast
    enough. The profits are not coming down as fast yet, but that
    will come over time.
        We are watching the industrial base very carefully as we go
    through this. We do not think this is the kind of shock that
    occurred at the end of the Cold War when we had a very dramatic
    decrease in their production runs. But it is still a
    significant change in the market, and we expect industry to
    react appropriately to that change. We are watching it very
    carefully.
        Our biggest concerns are twofold.
        One is small niche suppliers who do critical small volume
    things for us that we cannot afford to have them go out of
    business. We really need those capabilities somewhere.
        The other is a longer-term concern with our design teams.
    As we gap new development for major products of different
    commodity types, we are at risk of losing design teams that
    have that suite of capabilities to gather a team to develop a
    new product, test it, and put it into production. I am
    concerned that in some cases we may be at risk there as well.
        Senator Donnelly. One of the facilities in my State is
    Naval Surface Warfare Center Crane, and they do a lot of work
    in advising DOD in trusted electronics. I know you do a
    tremendous amount of work on cost management, contract
    management, and all of those things. Could you fill us in on
    the work that is being done in regards to making sure that the
    product you are buying is actually the product you are buying,
    in effect mitigating the risk of counterfeit electronic parts
    and other parts?
        Mr. Kendall. We are concerned about the counterfeit parts.
    Senator Levin mentioned that earlier. We are concerned about
    malware, the possibility that some adversary will insert
    something into some electronics that we buy that will be
    essentially something that could be used against us at some
    point or could prevent our system from functioning. Senator, we
    have put some things in place.
        The bottom line on both of those is that we have to hold
    our primes responsible for the provenance of the parts that
    they put into the systems they deliver to us. Through
    contractual vehicles, we are trying to do that. That is true
    for the counterfeit parts. It is also true for the malware. In
    some cases, we go to trusted sources, government-owned
    facilities and U.S. facilities.
        What this works against, unfortunately, is the desire to
    use commercial products. Commercial parts are much cheaper.
    There are some things we can do there to limit our risk, but
    there is some risk when we buy commercial components whose
    source we cannot completely verify.
        Senator Donnelly. When we look at the practices being used
    and the processes moving forward, I was wondering what your, in
    effect, metric or spectrum is for best practices information.
    Who do you also look at to say here is how they do purchasing?
    Here is how they verify product quality. I was wondering the
    orbit that you use to try to make sure that when we look, we
    are as good as the best in the private sector.
        Mr. Kendall. That is a good question. A lot of our
    practices were developed by the Missile Defense Agency (MDA),
    which led the way in this area. I think about 2 years ago, this
    committee had a hearing with the Director of the MDA on this
    subject. We have adopted some of the practices, and I think
    some of those actually have been put into legislation.
        We are constantly looking for ways to verify the provenance
    or the validity of the things that we buy and we are working
    with industry to do that. The commercial industry has a similar
    problem. It takes an approach of risk management. To some
    degree, that is what we have to do too, otherwise our costs
    would go through the roof. We are working with industry on
    this. We are working with different government agencies who
    tackled it to try to identify the best practices that you just
    mentioned and promulgate them across DOD.
        Senator Donnelly. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Donnelly.
        I just have one question for the record, and that has to do
    with the cost growth of the F-35 engine. In the Selected
    Acquisition Report (SAR), the current one, the cost of the F-
    135 engine for the F-35 program rose by $4.3 billion. In
    response to a question from the press about this, General
    Bogdan, the F-135 PEO said, ``We had a price curve for the
    engine. We thought we knew how much it was going to cost to
    build each engine. Pratt is not meeting their commitment. It is
    as simple as that.''
        My question for the record would be to you, Secretary
    Kendall, whether or not in your judgment now where the costs
    have gone up by this much, should we have a second engine so
    that there could be competition. If you could give us a review
    of that for the record, I would appreciate it.
        Mr. Kendall. I will do so, sir.
        [The information referred to follows:]

        The current estimate for total acquisition costs for the F-35
    engine reflected in the December 2013 Selected Acquisition Report (SAR)
    is $4.3 billion (then year dollars) more than the estimate reflected in
    the December 2012 SAR. The increase in the current estimate is
    primarily driven by three factors: (1) the actual costs seen in earlier
    production lots have not come down the learning curve as much as
    projected; (2) increases in the projected inflation rate for material
    and changes in the exchange rate assumptions; and (3) a decrease in the
    quantity of engines purchased in the early production lots. Of those
    three factors, only the first one might be affected by competition.

        (1)  The F-35, and F135 engine, are planned to be in production
    until 2038. There is an assumed learning curve for all years of
    production. Small changes in the learning curve assumptions can have
    large impacts to the cost projections due to the long production run.
    Because the actual reduction in cost seen on the early production lots
    was not as fast as planned, the learning curve assumption was changed
    to reflect a slower rate of learning in the later production lots. This
    increased the cost projections for the later production lots.
        (2)  Material costs for specialty metals used to manufacture the
    engine have increased faster than assumed in the previous SAR. The
    inflation factor used to project future material costs was increased to
    reflect the current rate of inflation seen on the early production
    lots. Exchange rate assumptions for the Rolls Royce lift fan were
    updated with the latest projections which drove up cost. The lift fan
    is not relevant to the competition question as this system is unique to
    the F-35B and would be common to whatever core engine is procured.
        (3)  Sixty F-35 aircraft, and associated engines, were slipped from
    the planned buy from SAR12 to SAR13 in the years, fiscal years 2015-
    2019, to be procured in later years. This reduction causes costs to
    increase in those production years due to economies of scale and loss
    of learning. Additionally, the remaining 20-plus projected years of
    production are at higher cost due to the shift in the cost curve.

        Material inflation increases, changes in exchange rates, and
    quantity decreases would not be aided by competition. The only cost
    driver that could have been impacted by competition is cost not coming
    down the learning curve from one lot to the next as fast as assumed in
    the previous SAR. Learning curve efficiency is driven by many factors.
    Competition is one of the factors. It is reasonable to assume that
    competition may have driven the current contractor to reduce costs
    faster than they have achieved to date. However, it is difficult to
    quantify by how much.
        In addition, it is uncertain if the loss of economies of scale by
    splitting the buy between the current contractor and a competitor would
    have offset the benefits of competition. Finally, the costs associated
    with developing a competitive engine would have to be factored into the
    analysis. The Department of Defense's business case analysis took these
    considerations into account.

        Chairman Levin. Senator Inhofe.
        Senator Inhofe. My question, I guess could be for the
    record. Of the different problems that you have both talked
    about, one is the changing of the large number of program
    managers that are involved. I know we are working on some
    language that would disallow changing them between milestones,
    something like that. Would something like that help?
        Mr. Kendall. It may be too constraining because some of our
    milestones are very far apart, several years in some cases.
        I would like to have within the personnel system, this is
    an area where the Service Chiefs can be very helpful to me, a
    way to keep people in those jobs longer and have it not be a
    negative impact on their careers. That, I think, is at the
    heart of this, frankly.
        Senator Inhofe. You could have it that way but have a
    limitation of time somehow in there.
        Thank you. Thank you, Mr. Chairman.
        Chairman Levin. Thank you very much, Senator Inhofe, and
    thanks to our witnesses. It has been a very helpful
    presentation by both of you, and it is a subject which
    sometimes is dry but it is always important that we take the
    time to do this oversight. Your testimony this morning has, I
    thought, been very helpful to us. Thank you. You are excused.
        Mr. Kendall. Thank you, Mr. Chairman. [Pause.]
        Chairman Levin. We would now like to welcome our second
    panel which includes Jonathan L. Etherton, Senior Fellow for
    Acquisition Reform of the National Defense Industrial
    Association (NDIA); Moshe Schwartz, Specialist in Defense
    Acquisition Policy of the Congressional Research Service (CRS);
    and David J. Berteau, Senior Vice President of the Center for
    Strategic and International Studies (CSIS). Our witnesses have
    between them dozens of years of experience in defense
    acquisition.
        Mr. Etherton was an acquisition policy expert that I
    believe was with this committee for 15 years, or am I
    exaggerating here a bit? We remember your service well, and
    again thank you for that service. We welcome all of our
    witnesses.
        I think we will first call on the panelists in the order
    that they are listed in our notice, and that would be Jonathan
    Etherton first.

         STATEMENT OF JONATHAN L. ETHERTON, SENIOR FELLOW FOR
      ACQUISITION REFORM, NATIONAL DEFENSE INDUSTRIAL ASSOCIATION

        Mr. Etherton. Mr. Chairman, thank you for that kind
    introduction.
        Mr. Chairman, Ranking Member Inhofe, and members of the
    committee, thank you for the opportunity to appear before you
    this morning to share my perspective on the 2009 WSARA and the
    coming years' efforts to reform the defense acquisition system.
        As my statement indicates, I have been involved over the
    last 3 decades with several efforts to improve the defense
    acquisition system and I appear before the committee today as a
    Senior Fellow of the NDIA with responsibility for leading that
    association's contribution to acquisition reform.
        To maintain the world's finest military, we need three
    things: high quality people, realistic and constant training,
    and sufficient cutting-edge technology and support from
    industry. If we have the first two but not the last, we put at
    risk our ability to defend our national security interests
    around the world. Rapidly falling defense budgets are making
    the costs of the current acquisition process and its outcomes
    unsustainable and make achieving major reductions in costs
    imperative. Yet, considering all the time and energy invested
    in past reform efforts and the persistence of many of the same
    problems that have been identified for decades, it is
    reasonable to ask what will be different this time.
        I believe that emerging capabilities, as well as the
    lessons from recent reform efforts, could help us achieve
    better results in the next several years. For starters, we have
    access to new analytic tools and big data capabilities to track
    and understand the real cost and savings drivers in the
    acquisition systems. These tools can measure the value across
    the acquisition enterprise of different policy and management
    approaches based on data we already gather. We no longer need
    to guess at solutions for defense acquisition system problems
    but can measure the outputs of our practices to promote success
    and to learn from failure.
        I commend Secretary Kendall for his 2013 annual report on
    the performance in the defense acquisition system, which I
    personally think is one of the best documents that they
    prepared in DOD in many years, which strongly affirms the
    potential of evidence-based approaches to acquisition policy
    and management.
        Congress also fostered this evidence-based approach in
    WSARA. WSARA strengthened DOD's ability to learn from successes
    and failures through the establishment of the Office of
    Performance Assessment and Root Cause Analysis. This initiative
    could produce a lasting positive change in applying lessons
    learned to improve management of major programs. We have
    already seen some of the results of their efforts today.
        Likewise, recent analyses of the data by GAO and DOD
    suggest that WSARA has made real improvements to controlling
    cost growth in major programs.
        The committee and you, Mr. Chairman and Senator McCain
    especially, are to be commended for recognizing the value of
    more robust, independent cost estimating earlier in the
    acquisition cycle, which Secretary Kendall's report stressed,
    as a demonstrated factor in better acquisition outcomes in
    major programs.
        WSARA created the Director of Systems Engineering, systems
    engineering being another shortfall identified by the Kendall
    report.
        I would also note that the open and orderly process that
    the committee and Congress used to consider and pass WSARA is a
    good model for future legislative efforts in acquisition
    improvement. The collaborative process allowed not only inputs
    from all stakeholders and interested parties but also for a
    reasonable alignment among both houses of Congress and DOD that
    has been essential for successful implementation of the
    legislation.
        As I mentioned earlier, we have the benefit of experience
    with the successes and failures of recent acquisition reform
    efforts which merit careful study as we move into this current
    effort. The acquisition reform effort of the 1990s that I
    describe in more detail in my written statement may be the
    richest in terms of the process and the results. It seems clear
    from our experience during that period that meaningful reform
    will likely require several years of sustained and focused
    legislative and management action, followed by dedicated and
    sustained oversight after the legislation is passed.
        Perhaps the greatest lesson from our past experience is
    that each stakeholder and decisionmaker can affect only a
    relatively narrow piece of the larger enterprise and often must
    deal with institutional conditions or behaviors that, while out
    of direct reach, may still dictate the success or failure of
    any new acquisition policy initiative. These so-called boundary
    conditions on the acquisition process, some of which were
    talked about this morning already, include the Federal,
    military, and civilian personnel systems and process, the
    budgeting process, program planning process, industry behaviors
    driven by capital markets and the commercial marketplace, the
    audit and oversight structure and process, and the manner in
    which the news media look at and evaluate the performance of
    the acquisition process in any new initiative. These factors
    are intended to keep the acquisition system in a state of
    equilibrium despite vigorous efforts to change it. Future
    acquisition reform must take into account and, if possible,
    influence the impact of these factors to have any hope of
    success.
        I thank the committee for soliciting NDIA's suggestions and
    proposals for acquisition reform. Three principles will guide
    our response to your request: cultivating accountability in the
    system for individuals and organizations, increasing the use of
    evidence-based decisionmaking, and realistically matching
    likely available resources to the scope of any requirements for
    the acquisition process.
        Since no one can provide industry's view better than
    industry, NDIA will seek to involve as many of our nearly 1,600
    corporate members and 90,000 individual members as may wish to
    be involved. We are very mindful of the committee's July 10
    deadline for our response, and we will do everything in our
    power to meet it. But circumstances may dictate that we provide
    the committee an interim response, followed by a more
    meaningful and perhaps more actionable response within a
    reasonable period after that date.
        With that, I will conclude my opening statement and thank
    the committee for the opportunity to appear. I welcome your
    questions.
        [The prepared statement of Mr. Etherton follows:]
                   Prepared Statement by Jonathan L. Etherton
        Mr. Chairman, Ranking Member Inhofe, and members of the committee,
    thank you for the opportunity to appear before you this morning to
    share my perspective on the 2009 Weapons System Acquisition Reform Act
    and the coming years' efforts to reform the Defense Acquisition System.
    From 1985 to 1999, I had the privilege of serving on the professional
    staff of this Committee with responsibility for acquisition and
    contract policy issues. In that capacity I was involved in the
    formation and passage of the Goldwater-Nichols Act in 1986, the so-
    called Section 800 panel legislation in 1990, the Federal Acquisition
    Streamlining Act of 1994, the Federal Acquisition Reform Act and the
    Information Technology Management Reform Act of 1996, and most of the
    acquisition policy provisions in titles IX, VIII and elsewhere in each
    of the annual National Defense Authorization bills during my period of
    service. In 2005, I served as an external reviewer of the Defense
    Acquisition Performance Assessment Report. From 2005 to 2007, I served
    as a member of the Acquisition Advisory Panel established by section
    1423 of the National Defense Authorization Act for Fiscal Year 2004. I
    have spent the last three decades working on improvements to and reform
    of the Defense Acquisition System, and I appear before the committee
    today as a Senior Fellow of the National Defense Industrial Association
    (NDIA) with responsibility for leading the Association's contribution
    to the current acquisition reform effort.
        To maintain the world's finest military we need three things: high
    quality people, realistic and constant training, and sufficient
    cutting-edge technology and support from industry. If we have the first
    two but not the last, we risk losing our ability to protect our
    national security interests around the world. Rapidly falling defense
    budgets underscore the need to achieve major reductions in the costs of
    what we acquire as well as the costs of acquisition processes and
    organizations. Neither the current acquisition process nor its outcomes
    appear affordable. Yet given all of the time and energy put into the
    prior reform efforts and the persistence of many of the same problems
    in Federal acquisition that were identified decades ago, it is
    reasonable to ask, ``What will be different this time?'' I believe that
    new capabilities and a careful assessment of our past experience could
    lead us to a more successful result today. These are:
      emerging capabilities for evidence-based acquisition decisionmaking
        We have access to analytical tools and ``Big Data'' capabilities to
    track and understand the real cost and savings drivers in the
    acquisition system on a systemic rather than a transaction-by-
    transaction basis that were unimaginable 20 or even 10 years ago. If
    fully implemented, analytical tools can measure the value of different
    acquisition approaches across the Federal enterprise based on data we
    already gather. We no longer need to guess at solutions to the problems
    we identify in the Defense Acquisition System, we can measure the total
    costs of particular practices compared to acquisition outcomes in order
    to promote success and learn from failure. Because these emerging tools
    can track, record, and analyze data continuously, we do not need to
    rely on single-shot reforms. We can and should foster continuous
    process improvement as the acquisition system itself reacts to our
    changed behaviors.
        Under Secretary Kendall has demonstrated great commitment to this
    new data-driven approach to acquisition reform and improvement. I
    commend Mr. Kendall for his 2013 Annual Report on the Performance of
    the Defense Acquisition System. The Report strongly affirms and
    demonstrates the value of an evidence-based approach to evaluating
    acquisition practices, and while not conclusive in many areas, it does
    draw conclusions where the data are clear, such as ``Programs with bad
    starts often continue to have problems.'' I very much admire the
    Report's clarity about what we can derive from its analysis and what
    requires further study. It is my hope that the findings in this report
    will drive conforming acquisition policy changes from all the
    stakeholders in the process, and further that this approach will be
    expanded to analyze the performance of non-major program and non-
    hardware acquisitions.
        Congress also strengthened this evidence-based approach in the
    reforms it implemented in the 2009 Weapon System Acquisition Reform Act
    (WSARA). While WSARA has its detractors, the recent analyses of the
    data by the Department of Defense and the Government Accountability
    Office suggest that it has made real improvements to defense
    acquisition with respect to major defense acquisition programs. The
    committee is to be commended for recognizing the value of more robust
    independent cost estimating earlier in the acquisition cycle, which
    Under Secretary Kendall's Report stressed as a demonstrated factor in
    better acquisition outcomes. WSARA created the Director of Systems
    Engineering, systems engineering being another shortfall area
    identified by the Kendall Report. Last, WSARA significantly
    strengthened the Department's ability to learn from its successes and
    failures through the office of Performance Assessment and Root Cause
    Analysis, or PARCA. That change alone, if it succeeds in bolstering the
    defense acquisition system's use of data to guide performance
    improvement, will mean lasting positive changes for our military
    strength and our national security. While these changes are highly
    beneficial, one area of continuing concern is whether these offices
    created or bolstered by WSARA are adequately resourced for the purposes
    envisioned by Congress in 2009.
        I would also note here that the process Congress used to consider
    and pass WSARA is a model for future efforts. WSARA was introduced as
    free-standing bill in February 2009 and was the subject of hearings,
    and the committee considered input from all interested stakeholders
    before and after the markup and during the conference. The process was
    very collaborative and allowed for a reasonable alignment among both
    houses of Congress and the Department of Defense before final passage.
    That alignment was essential for successful implementation.
        the experience and lessons from prior acquisition reform efforts
        We have the benefit of experience with the successes and failures
    of recent acquisition reform efforts which merit careful study as we
    move into this current effort. As an example, I would like to focus on
    the reform effort of the 1990s with which some of you are very
    familiar. We can derive lessons from both the process and its results.
        The process Congress and the Executive Branch followed for
    acquisition reform in the 1990s was highly ordered, took place over
    many years, and yet was able to accommodate the impacts of the great
    changes happening during that period. The process that led to the
    passage of the Federal Acquisition Streamlining Act and the Federal
    Acquisition Reform Act and the Information Technology Management Reform
    Act was, at each stage, able to absorb and integrate the implications
    of unforeseen events and the rapid and fundamental changes taking place
    while the process was ongoing, involve the essential staff and Members
    of both parties and multiple committees, accommodate political
    realities, and produce sets of well-grounded, relevant, and meaningful
    reform ideas to reflect the intent of Congress in a timely fashion.
    Furthermore, Congress effectively tapped the expertise and experience
    of acquisition professionals from all stakeholder perspectives in
    government, industry, and academia.
        Based on past experiences like this one, it seems clear that
    meaningful reform will likely take several years of sustained and
    focused legislative process followed by continued dedicated oversight
    after legislation is passed. Any process of this magnitude will
    encounter new and unexpected problems, issues, and opportunities, and
    everyone must be prepared to accept criticism and to reconsider and
    revise policy approaches.
        The outcomes of our acquisition reform efforts in the 1990s are a
    mixed bag but very instructive for our current review. Among the
    biggest successes of the legislation, opening up the Federal market to
    commercial items has likely saved the government tens of billions of
    dollars at least and allowed the Department of Defense and the civilian
    agencies to access commercial technologies they could not afford to
    research and develop in-house. The simplified acquisition procedures
    for low-dollar procurements significantly reduced paperwork and
    manpower. Many redundant, costly statutory requirements were
    eliminated. For a time at least, the DOD and the civilian agencies were
    operating under very similar statutory requirements and policies.
        Other reforms were less successful. As DOD tried to buy larger,
    more complex, more high-tech commercial items in lieu of military
    specification items, a good intent was overcome by the sluggish
    government planning, programming, budgeting, and execution cycle. DOD
    found itself at times saddled with aging products bypassed in the
    commercial marketplace and consequent problems with getting commercial
    vendors to support an obsolete product line. The Multiple Award Task or
    Delivery Order Contract process established in the Federal Acquisition
    Streamlining Act, intended to provide an alternative to full and open
    competitive procedures on repetitive task or delivery orders, has been
    altered over the years by Congress, because of perceived abuses, to
    look more like the process it was intended to supplement.
        Congress was least successful in changing the acquisition culture.
    Laws passed in the 1990s sought to encourage and reward organizations
    and acquisition professionals for using innovative as opposed to rule-
    based approaches to acquisition. For example, the various pilot program
    authorities that were created to allow agencies to experiment with
    innovative acquisition approaches in larger programs either did not
    produce successful models for broader agency use, as in the case of the
    Defense Enterprise Programs that were intended to streamline the
    management of major defense acquisition programs, or were never used at
    all. Most of these pilot authorities were later repealed.
        A number of factors hindered the success of the effort. As Congress
    was in the process of passing acquisition reform legislation, the
    Department of Defense cut the acquisition workforce quickly and
    drastically. For example, the acquisition workforce in the Department
    dropped from 460,516 in fiscal year 1990 to 230,556 in fiscal year
    1999. While some reduction was certainly warranted by changes to the
    acquisition process and the reduction of defense spending, I believe we
    went too far and lost too many of our seasoned professionals. We also
    did not take the time to determine how best to reconfigure the
    workforce to manage reforms. Last, our reforms focused on streamlining
    contract formation and administration; we should have recognized how
    much we needed to strengthen the requirements determination process to
    ensure the maximum use of competition and effective contract
    management.
        In the 1990s, the theory behind much of the reform was that by
    simply removing rules, good judgment and appropriate discretion would
    naturally fill the void. That theory did not play out in practice.
    Despite passionate cheerleading from the top, agencies did not develop
    or fund the education programs and opportunities needed to equip the
    workforce for the new acquisition model. Most of the oversight
    community still assessed performance in terms of compliance with rules
    and procedures, countermanding our emphasis on innovation. In my
    opinion, Congress did not exercise the close and continuing oversight
    needed to ensure these changes were fully implemented after we passed
    the legislation.
        For the future, Congress and the Pentagon must fully fund the
    effective implementation of acquisition reform, including training and
    other workforce initiatives. The success of our policy will always
    depend on the ability of a limited number of people inside and outside
    government whose resources of time and attention are finite. Increased
    skill, relevant experiences, and cultural adjustment of the workforce
    happen only gradually no matter how much funding and other resources we
    direct to the issue. Last, and most importantly, this workforce and the
    acquisition system it supports are embedded in a larger set of
    processes and conditions that acquisition legislation, funding, and
    congressional oversight can often impact only indirectly.
                              boundary conditions
        One lesson from the past is that perhaps the greatest challenge of
    acquisition reform is that each stakeholder or decisionmaker can only
    affect a relatively narrow piece of the larger enterprise and often
    must deal with institutional conditions or behaviors that, while out of
    their reach, may still dictate the success or failure of any new
    initiative. Further, some of these conditions result from aspects of
    our political system and human nature that are either inexorable or
    highly resistant to change. Such boundary conditions are sufficiently
    important to this Committee's efforts that I would like to describe
    them briefly.
    The Federal military and civilian personnel systems
        The Federal personnel hiring and promotion systems for civilian
    employees and military servicemembers impact the education and
    experience of acquisition personnel and, in the case of the military,
    the amount of an officer's career that is devoted to acquisition versus
    operational assignments.
    The budgeting and program planning processes
        The budget, planning, and programming processes in the Federal
    Government dictate decisions about schedules and the availability of
    resources and have to reconcile a number of competing public policy
    imperatives, of which cost-effective acquisition is only one. The
    incentives embedded in these processes can have a decisive effect on
    the structure, size, and pace of technology maturation of Federal
    acquisition programs.
    Industry action
        While industry faces a number of barriers to entry into and exit
    from the Federal market, companies' behavior in the buyer-seller
    relationship is not dictated solely by changes to Federal acquisition
    policy. Other considerations also influence a company's response to a
    policy change, such as the need to demonstrate sustained shareholder
    value to institutional investors. Also, the Federal sales of a
    commercial company may be quite small as a proportion of its total
    sales in the global marketplace, reducing its willingness to
    participate in a highly regulated Federal marketplace.
    The audit and oversight structure and process
        The Federal oversight and audit community sometimes judges
    acquisition decisions based upon a narrow set of data on a single
    transaction basis when other factors such as the use of individual
    judgment, innovative approaches, and prudent risk-taking in support an
    agency's mission may in fact be more relevant to the overall success of
    the Defense Acquisition System.
    The news media and outside organizations
        The independent media and outside organizations' judgments of the
    performance of a Federal program or agency have a major impact on
    perceptions and the support of the public and Congress for a given set
    of policies over time.
         ndia approach to developing acquisition reform recommendations
        The Armed Services Committees of Congress have solicited NDIA's
    suggestions and proposals for acquisition reform in the coming years,
    and NDIA's broad goal for our response is to help the Committees design
    an affordable and efficient acquisition process that produces cost-
    effective and timely outcomes to support the warfighter and national
    security. Three principles guide us in this effort: cultivating
    accountability for individuals and organizations for acquisition
    performance, evidence-based decisionmaking, and realistically matching
    resources to the scale and scope of any requirements we establish for
    the acquisition process.
        To accomplish our goal, NDIA will use an ordered and collaborative
    analytical process of the type this committee has used so successfully
    in the past. First, we need to learn from past efforts and studies into
    the working of the Defense Acquisition System. In terms of source
    material, we are looking at the Packard Commission Report, the Section
    800 Panel Report, the Defense Acquisition Performance Assessment Report
    of 2006, the Report of the Acquisition Advisory Panel (SARA Panel) of
    2007, the 2012 Defense Business Board Report on Linking and
    Streamlining the Defense Requirements, Acquisition, and Budget
    Processes, and the 2013 Report on the Performance of the Defense
    Acquisition System, among others. The proverbial wheel already exists:
    these reports and studies have identified the problems, now we need to
    decide which we should focus on and how we would fix them. History
    suggests that we may want to consider making changes in phases.
        Let me make a brief parenthetical comment on a comprehensive
    statutory and regulatory review. In his 2012 Report for the Defense
    Business Board, NDIA's Chairman, Arnold Punaro, recommended that we
    ``zero-base'' the rules governing the Defense Acquisition System and
    start over. I understand and share his deep frustration with how rule-
    following has become a substitute for good judgment and outcomes.
    Having spent the better part of my career working to improve the
    Defense Acquisition System, I have seen each new rule arise in response
    to an understandable set of boundary condition pressures. Instead of
    zero-basing the system in one fell swoop, we may consider proposing a
    concept of cascading sunset clauses to laws and regulations governing
    the Defense Acquisition System to force Congress and the Federal
    departments and agencies to systematically review and affirmatively
    renew acquisition rules and authorities on a reasonably periodic basis.
    Cascading sunset clauses would do away with generational deregulatory
    efforts in favor of annual, bite-sized reviews that invite improvements
    for the sake of efficiency or to leverage technological advances.
        Back to our process. NDIA will seek to involve as many of our
    nearly 1,600 corporate members and 90,000 individual members as may
    wish to be involved. We see NDIA's role as providing the views of
    industry on this matter because no one can provide industry's view
    better than industry. That will require seeking out and incorporating
    the views of our members. In addition to specific events where our
    members can offer their views, we may set up an online member
    questionnaire, and we already have an email drop box where comments can
    be received all year: acquisitionreform@ndia.org. Last, we will
    coordinate with the other defense associations to avoid unhelpful
    overlaps and to give each association an opportunity to speak to its
    particular areas of expertise.
        We will aim for the clear, specific, actionable recommendations
    sought by the committee. The basic questions we will undertake to
    answer are: Of the problems identified by prior studies, which will we
    seek to address? What is the specific change of law, regulation, or
    policy that we recommend to fix that problem? How will our proposal fix
    the problem? How will we measure the success or failure of our proposed
    solution, once implemented? Who has the authority to make the change we
    recommend? We will work to produce actionable outputs in the spirit of
    the Section 800 Panel, even if in a shorter and simpler fashion, and we
    will take pains to recognize and try to address some of the boundary
    conditions described above. We are very mindful of the July 10 deadline
    for our response, and we will do everything in our power to meet it.
    Circumstances may dictate that we provide the committees an interim
    response by the deadline and then a fully peer-reviewed, complete
    response within a reasonable period of time after July 10. We will
    endeavor to communicate our progress to your staff as we go forward
    with our process.
                      current issues in acquisition policy
        In addition to serving as NDIA's Senior Fellow, I also collaborate
    with the Acquisition Reform Working Group (ARWG). ARWG has submitted
    recommended changes to the law for this Committee's consideration and
    has met with your staff to review them. I would like to recapitulate
    some of the major themes.
    Commercial items
        One area where past reform efforts have enjoyed success is keeping
    the Federal marketplace open to commercial items. But the more that
    regulators insist on having specially-generated cost data, the more
    often commercial companies will pass on opportunities to sell to
    government buyers. The taxpayer pays for certified cost data, and Cost
    Accounting Standards-compliant business systems, and other legal and
    regulatory mandates that come along with government contracting, so
    avoiding these costs through commercial or even commercial-of-a-type
    acquisitions can mean more products with the most up-to-date
    technology.
    Technical data rights
        Further, the committee should give its attention to protecting the
    intellectual property and technical data of commercial vendors. Recent
    changes to the law and the pressure on DOD agencies to provide for
    competition at all costs are forcing companies to defend their
    assertions that an item or process was developed solely at private
    expense, sometimes over very long periods of time. These changes mean
    that commercial companies must maintain and produce engineering and
    cost accounting records they did not previously need and had no reason
    to develop or keep. This policy is costly and may have the effect of
    driving commercial vendors out of the Federal marketplace for fear of
    losing their intellectual property. In some instances it may require
    them to relinquish intellectual property rights they would otherwise
    retain in the commercial marketplace.
    Supply chain security
        This committee has admirably committed to rooting out counterfeit
    electronic parts from the defense supply chain, an absolutely necessary
    goal. In our view, government and industry will achieve this common
    outcome by working together to create a risk-based approach to supply
    chain management. Developing a joint model for evaluating supply chain
    risks would enable all stakeholders to reach common agreement about the
    sourcing behaviors that are riskiest and how to mitigate those risks if
    certain sources of supply are unavoidable.
                                   conclusion
        As we look for ways to positively change defense acquisition to
    achieve good outcomes for less cost, we must recognize that the system
    today is in a strong state of equilibrium that is held in place by the
    boundary conditions I have discussed. Without some disruption of those
    boundary conditions, water will seek its own level and, despite
    reforms, the acquisition system is likely to return to something very
    similar to what we have today. Our recent experience has shown that
    true acquisition reform is a very great challenge.
        Nevertheless I remain hopeful about the potential to develop
    meaningful proposals based on the apparent consensus of most
    stakeholders that, in the current austere budget environment, some
    significant reform is imperative. The last time we had such a
    consensus, a significant body of changes resulted, even if they were
    only partially successful in achieving the hoped-for results. I thank
    Chairman Levin and the members of this committee for your decades-long
    thoughtful engagement with this issue and for the opportunity to
    testify this morning. The present challenges and emerging opportunities
    warrant comprehensive acquisition reform, and I am glad to offer my
    help and the help of NDIA to that end.

        Chairman Levin. Thank you very much, Mr. Etherton.
        Mr. Schwartz.

    STATEMENT OF MOSHE SCHWARTZ, SPECIALIST IN DEFENSE ACQUISITION
                 POLICY, CONGRESSIONAL RESEARCH SERVICE

        Mr. Schwartz. Thank you, Chairman Levin, Ranking Member
    Inhofe, distinguished members of the committee. Thank you for
    the opportunity to discuss the defense acquisition system.
        In this testimony, I would like to make three points.
    First, for a variety of reasons, now is a good opportunity to
    pursue acquisition reform. Second, what DOD can do on its own
    to improve acquisitions can only go so far. To make reforms go
    further, DOD needs help from Congress. Third, past reform
    efforts have not sufficiently focused on improving the culture
    of the acquisition workforce and changing the perverse
    incentives that drive poor decisionmaking.
        On one level, the defense acquisition system works well.
    Our military has the most advanced weapons in the world, and no
    other military could execute contract support on the scale
    necessary for the operations we conducted in Iraq and
    Afghanistan. But on another level, the system is not working.
    It takes longer to buy fewer weapons and often with less
    capability than promised. The acquisition of services, which
    accounts for more than half of DOD contract obligations, has
    also experienced wasteful spending, schedule delays, and
    capability shortfalls.
        In recent years, there have been significant changes in the
    national security and industrial landscapes. Many analysts
    believe the current acquisition system is not efficient and
    nimble enough to meet the challenges of an ever-changing world.
    Consider the following points. Weapon and IT systems are
    increasingly complex. The defense industrial base has
    consolidated significantly in the last 25 years. DOD is a less
    influential buyer in the marketplace, prompting some companies
    to diversify their businesses and others to forgo government
    contract opportunities. DOD is playing a less important role in
    innovation and development, and U.S. defense spending is
    declining.
        If the changing landscape argues for acquisition reform,
    now may be a good time to try it. Historically, eras of
    budgetary restraint have been associated with the pursuit and
    implementation of acquisition reform. In the 1980s, the deficit
    targets enacted as part of the Gramm-Rudman-Hollings Act
    contributed to development of the Packard Report and changes in
    defense acquisition. The Budget Enforcement Act of 1990 and
    limits on defense spending at that time contributed to the
    Perry Report of 1994 and to another round of far-reaching
    acquisition reform. Against the current backdrop of the Budget
    Control Act of 2011 and declines in defense spending, the stage
    may be set for a renewed effort to significantly improve
    defense acquisitions.
        Other factors contributing to a sense among analysts that
    the time is ripe for reform include changes in the strategic
    and industrial landscape that I mentioned, recent experiences
    in Iraq and Afghanistan that highlight the importance of
    contracting, and increasing availability of data to drive
    decisions.
        Historically, Congress has been critical to advancing
    acquisition reform. Such efforts as establishing the Federal
    Acquisition Regulation, creating Defense Acquisition
    University, streamlining acquisition regulations, and enacting
    the Goldwater-Nichols Act were all the result of congressional
    action. Many analysts believe that despite the current efforts
    underway at DOD, significant, effective, and lasting
    acquisition reform will only occur with the active
    participation of Congress.
        Where do we go from here? Most reports have concluded that
    the key to good acquisitions is having a sufficiently sized and
    talented acquisition workforce and giving them the resources,
    incentives, and authority to do their job. Yet, most of the
    reform efforts of the past decades have not sought to
    fundamentally and systematically address these workforce-
    related issues.
        The current acquisition system often incentivizes people to
    make poor choices. But even with the right incentives, the most
    skilled and incentivized professionals cannot effectively
    manage a program if they do not have the authority to make
    binding decisions or are not in their position long enough to
    make those decisions stick.
        The current management structure is often described as too
    bureaucratic. Too many people can say no or influence a
    program. As one program manager quipped, even program managers
    are not really sure who controls their programs.
        Former Secretary of Defense Robert Gates lamented that in
    recent years DOD has lost its ability to prioritize, to make
    hard decisions, and to do tough analysis. Similarly, Secretary
    Kendall wrote in his guidance on implementing BBPI that the
    first responsibility of the acquisition workforce is to think.
        The problems with our acquisition system are longstanding
    and multiple reform efforts have made only a certain amount of
    cumulative progress, but improvement is possible and certain
    changes, such as empowering good people to make good decisions,
    could help our military meet the security challenges of the
    future.
        Thank you for the opportunity to appear before you. I will
    be pleased to respond to any questions.
        [The prepared statement of Mr. Schwartz follows:]
                      Prepared Statement by Moshe Schwartz
        Chairman Levin, Ranking Member Inhofe, distinguished members of the
    committee, thank you for the opportunity to appear before you today on
    behalf of the Congressional Research Service (CRS) to discuss efforts
    to improve defense acquisitions.
        Historically, Congress has played a critical, and at times primary,
    role in reforming the acquisition process. Such efforts as the
    Goldwater-Nichols Act, establishment of the Federal Acquisition
    Regulation, creation of Defense Acquisition University, and
    streamlining acquisition rules and regulations, were all accomplished
    as a result of congressional action. More recently, many analysts and
    senior DOD officials have stated that without the efforts of Congress,
    DOD would not have been as successful at improving operational contract
    support.\1\
    ---------------------------------------------------------------------------
        \1\ See CRS Report R43074, Department of Defense's Use of
    Contractors to Support Military Operations: Background, Analysis, and
    Issues for Congress, by Moshe Schwartz.
    ---------------------------------------------------------------------------
        Most analysts believe that despite the current efforts underway at
    DOD, significant, effective, and lasting acquisition reform will only
    occur with the active participation on Congress.\2\ A 2009 report by
    the Business Executives for National Security argued Congress ``sets
    the expectations and tone for the entire [defense] enterprise--and must
    be at the forefront of any change.'' \3\ The role of Congress may be
    particularly important in the area of workforce and culture. As GAO
    stated as far back as 1992 ``ultimately, change will occur only through
    the collective action of acquisition participants, particularly within
    the Department of Defense and Congress, for it is their actions that
    dictate the incentives that drive the process.'' \4\
    ---------------------------------------------------------------------------
        \2\ Packard Report, p. 52.
        \3\ Business Executives for National Security, Getting to Best:
    Reforming the Defense Acquisition Enterprise, A Business Imperative for
    Change from the Task Force on Defense Acquisition Law and Oversight,
    July, 2009, p. 12.
        \4\ U.S. General Accounting Office, Weapons Acquisition: A Rare
    Opportunity for Lasting Change, NSIAD 93-15, December 1992, p. 3.
    ---------------------------------------------------------------------------
                        the quest for acquisition reform
        Congress and the executive branch have long been frustrated with
    waste, mismanagement, and fraud in defense acquisitions, and they have
    spent significant resources seeking to reform and improve the process.
    Efforts to address cost overruns, schedule slips, and performance
    shortfalls have continued unabated, with more than 150 major studies on
    acquisition reform since the end of World War II. Every administration
    and virtually every Secretary of Defense has embarked on an acquisition
    reform effort.\5\
    ---------------------------------------------------------------------------
        \5\ Robert F. Hale, Promoting Efficiency in the Department of
    Defense: Keep Trying, Be Realistic, Center for Strategic and Budgetary
    Assessments, January 2002, p. 7.
    ---------------------------------------------------------------------------
        In the early 1980s, a number of major weapon system programs were
    experiencing dramatic cost overruns--overruns that increased the
    defense budget by billions of dollars but resulted in the same number,
    or in some cases fewer, weapons. In 1985, President Ronald Reagan
    established the President's Blue Ribbon Commission on Defense
    Management, chaired by former Deputy Secretary of Defense David
    Packard, which issued a final report (known as the Packard Commission
    Report) that contained far-reaching recommendations ``intended to
    assist the Executive and Legislative Branches as well as industry in
    implementing a broad range of needed reforms.'' Many of DOD's current
    initiatives to improve acquisitions can be traced back to the ideas and
    recommendations in the Packard Report.
        Congress has also been active in pursuing reform efforts, by
    legislating changes through the annual National Defense Authorization
    Acts as well as through stand-alone legislation, such as the Defense
    Acquisition Workforce Improvement Act of 1990,\6\ Federal Acquisition
    Streamlining Act of 1994,\7\ Clinger-Cohen Act of 1996,\8\ and Weapon
    System Acquisition Reform Act of 2009.\9\ A number of these efforts
    were aimed at implementing recommendations of the Packard Report.
    ---------------------------------------------------------------------------
        \6\ P.L. 101-510.
        \7\ P.L. 103-355.
        \8\ P.L. 104-106.
        \9\ P.L. 111-23.
    ---------------------------------------------------------------------------
        The various studies and reform efforts have dramatically altered
    the process by which DOD procures goods and services. Major changes
    include:

             creating the Federal Acquisition Regulation (FAR) to
            develop uniform acquisition regulations across DOD and the
            Federal Government,
             establishing the Defense Acquisition University to
            better train and improve the performance of the acquisition
            workforce,
             instituting a streamlined management chain (Program
            Manager, Program Executive Office, Service Acquisition
            Executive, Under Secretary of Defense) to foster accountability
            and authority,
             implementing a milestone decision process to improve
            oversight,
             requiring independent cost estimates to improve
            budgeting forecasting,\10\
    ---------------------------------------------------------------------------
        \10\ The Cost Analysis and Improvement Group was established within
    the Office of the Secretary of Defense in 1972 to develop these
    independent cost estimates. Today, independent cost estimates are
    generated by the Office of the Director of Cost Assessment and Program
    Evaluation, which supplanted the Cost Analysis and Improvement Group.
    ---------------------------------------------------------------------------
             establishing a joint requirements board to improve
            requirements development and eliminate duplicative programs,
             moving away from the use of customized military
            standards and specifications to promoting the use of commercial
            technologies, and
             using multi-year procurement (with congressional
            approval) to promote cost efficiency.
    Cost, Schedule, and Performance Problems Still Persist
        Acquisition programs initiated since the 1970s continue to
    experience significant cost increases and other problems. Consider the
    following:

             Since 1993, development contracts have experienced a
            median of 32 percent cost growth (not adjusted for
            inflation).\11\
    ---------------------------------------------------------------------------
        \11\ Office of the Under Secretary of Defense Acquisition,
    Technology, and Logistics, Performance of the Defense Acquisition
    System, 2013 Annual Report, June 28, 2013, p. 28.
    ---------------------------------------------------------------------------
             Since 1997, 31 percent of all Major Defense
            Acquisition Programs have had cost growth of at least 15
            percent.\12\
    ---------------------------------------------------------------------------
        \12\ Based on percentage of programs experiencing Nunn-McCurdy
    breach. Office of the Under Secretary of Defense Acquisition,
    Technology and Logistics, Performance of the Defense Acquisition
    System, 2013 Annual Report, June 28, 2013, p. 20.
    ---------------------------------------------------------------------------
             During the period 1990-2010, the Army terminated 22
            Major Defense Acquisition Programs; every year between 1996 and
            2010, the Army spent more than $1 billion on programs that were
            ultimately cancelled.\13\
    ---------------------------------------------------------------------------
        \13\ U.S. Army, Army Strong: Equipped, Trained and Ready, Final
    Report of the 2010 Army Acquisition Review, January 11, 2011, p. ix.
    ---------------------------------------------------------------------------
             Procurement costs for the aircraft carrier CVN-78 have
            grown more than 20 percent since the submission of the fiscal
            year 2008 budget, and 4 percent since the submission of the
            fiscal year 2013 budget, prompting the Navy to program more
            than $1.3 billion in additional procurement funding for the
            ship in fiscal year 2014 and fiscal year 2015.\14\
    ---------------------------------------------------------------------------
        \14\ CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier
    Program: Background and Issues for Congress, by Ronald O'Rourke, p. 9.
    ---------------------------------------------------------------------------
             Part of the acquisition plan for the F-35 Joint Strike
            Fighter was referred to as ``acquisition malpractice'' by then
            acting Pentagon acquisition chief Frank Kendall.\15\
    ---------------------------------------------------------------------------
        \15\ CRS Report RL30563, F-35 Joint Strike Fighter (JSF) Program,
    by Jeremiah Gertler, p. 7.

        A number of analysts have argued that the successive waves of
    acquisition reform have yielded limited results, due in part to poor
    workforce management. A recent analysis stated, ``There is little doubt
    that acquisition reforms produce limited positive effects because they
    have not changed the basic incentives or pressures that drive the
    behavior of the participants in the acquisition process.'' \16\
    ---------------------------------------------------------------------------
        \16\ J. Ronald Fox, Defense Acquisition Reform 1960-2009: An
    Elusive Goal (Center of Military History, 2011), p. 190.
    ---------------------------------------------------------------------------
    Recent DOD Efforts to Improve Acquisitions
        In recent years, DOD has taken a number of steps to improve the
    process by which it buys goods and services. In a press conference in
    May 2009, then-Secretary of Defense Robert Gates announced steps to
    tackle the issue of cost and schedule growth in weapon system
    acquisitions.\17\ Specifically, he called for cancelling programs that
    significantly exceed budget, do not meet current military needs, or do
    not have sufficiently mature technology. Addressing programs with
    significant cost growth, he called for the cancellation of a number of
    programs, including the VH-71 presidential helicopter. He also called
    for the cancellation of programs for which a strong requirement no
    longer existed or for which needed technology had not matured--such as
    the ground components of the Future Combat System and missile defense's
    Multiple Kill Vehicle (MKV). Other programs, such as the F-22 and Air
    Force Combat Search and Rescue X (CSAR-X), were also cancelled or
    curtailed. These actions can be viewed as generally consistent with his
    prior statements, in which he argued that weapon systems have added
    unnecessary requirements and proceeded with immature technology--
    resulting in higher costs, longer acquisition schedules, and fewer
    quantities.
    ---------------------------------------------------------------------------
        \17\ For the full text of the press conference, see http://
    www.defense.gov/transcripts/transcript.aspx?transcriptid=4396.
    ---------------------------------------------------------------------------
        That same year, then-Secretary Gates also sought to improve the use
    of contractors during military operations. In January 2009, he
    acknowledged DOD's failure to adequately prepare for the use of
    contractors when he testified that the use of contractors occurred

            without any supervision or without any coherent strategy on how
            we were going to do it and without conscious decisions about
            what we will allow contractors to do and what we won't allow
            contractors to do. . . . We have not thought holistically or
            coherently about our use of contractors, particularly when it
            comes to combat environments or combat training.\18\
    ---------------------------------------------------------------------------
        \18\ U.S. Congress, Senate Committee on Armed Services, To Receive
    Testimony on the Challenges Facing the Department of Defense, 110th
    Cong., 2nd sess., January 27, 2009.

        Subsequently, DOD has taken a number of steps to improve how it
    uses contractors during operations,\19\ such as establishing a
    Functional Capabilities Integration Board, co-chaired by the Deputy
    Assistant Secretary of Defense for Program Support and the Joint Staff
    Vice Director of Logistics. This board is a forum for senior leaders to
    come together to address critical operational contract support
    issues.\20\ DOD has also significantly expanded regulation, policy,
    doctrine, and training related to operational contract support,
    including the following examples:
    ---------------------------------------------------------------------------
        \19\ U.S. Government Accountability Office, Warfighter Support: DOD
    Needs Additional Steps to Fully Integrate Operational Contract Support
    into Contingency Planning, GAO-13-212, February 8, 2013, p. 3.
        \20\ The Operational Contract Support Functional Capabilities
    Integration Board was chartered based on the authority set forth in
    section 854 of the John Warner National Defense Authorization Act for
    2007 (Public Law 109-364). See http://www.acq.osd.mil/log/PS/fcib.html.

             In 2009, DOD released a directive entitled,
            Orchestrating, Synchronizing, and Integrating Program
            Management of Contingency Acquisition Planning and its
            Operational Execution.\21\
    ---------------------------------------------------------------------------
        \21\ DOD Directive 3020.49 Orchestrating, Synchronizing, and
    Integrating Program Management of Contingency Acquisition Planning and
    its Operational Execution, March 2009.
    ---------------------------------------------------------------------------
             In 2010, DOD updated its Policy and Procedures for
            Determining Workforce Mix, which addressed contractor personnel
            as part of the total force.\22\
    ---------------------------------------------------------------------------
        \22\ DOD Instruction 1100.22, Policy and Procedures for Determining
    Workforce Mix, April 2010. DOD is in the process of updating DOD
    Instruction 1100.22 as well as DOD Directive 1100.4, Guidance for
    Manpower Management.
    ---------------------------------------------------------------------------
             In 2011, a major update to the DOD Instruction for
            operational contract support was released, which established
            roles and responsibilities for managing operational contract
            support.\23\
    ---------------------------------------------------------------------------
        \23\ DOD Instruction 3020.41, Operational Contract Support,
    December 2011. In 2012, this Instruction was codified in 32 Code of
    Federal Regulations Part 158.
    ---------------------------------------------------------------------------
             In 2012, DOD updated its joint planning and execution
            policy to include operational contract support in many non-
            logistical functional areas, such as intelligence, personnel,
            and engineering.\24\
    ---------------------------------------------------------------------------
        \24\ Chairman of the Joint Chiefs of Staff Manual 3130.03, Adaptive
    Planning and Execution (APEX) Planning Formats and Guidance, October
    2012.
    ---------------------------------------------------------------------------
             In 2013, DOD developed standards for using private
            security contractors.\25\
    ---------------------------------------------------------------------------
        \25\ Private Security Contractor standards were required by section
    833 of the NDAA for Fiscal Year 2011. The American National Standards
    Institute validated these standards in March 2013.
    ---------------------------------------------------------------------------
             In 2014, DOD conducted a joint exercise for
            operational contract support.\26\
    ---------------------------------------------------------------------------
        \26\ The exercise has been held annually for the past 4 years. The
    2014 exercise, the first to be sponsored by the Joint Chiefs of Staff,
    was attended by some 500 individuals drawn from across Military
    Services and components.

        In addition to steps taken to improve discrete areas of defense
    acquisitions such as weapon systems and contingency contracting, DOD
    has also embarked on a comprehensive effort to improve the operation of
    the overall defense acquisition system. This effort generally focuses
    ---------------------------------------------------------------------------
    on:

        1.  improving the overall performance of the acquisition workforce,
        2.  rewriting rules and regulations to create a more efficient and
    effective acquisition process, and
        3.  improving the culture of the acquisition workforce.

        On September 14, 2010, then-Under Secretary of Defense for
    Acquisition, Technology and Logistics Ashton Carter issued the
    memorandum Better Buying Power: Guidance for Obtaining Greater
    Efficiency and Productivity in Defense Spending. The memorandum
    outlined 23 principal actions to improve efficiency, including making
    affordability a requirement, increasing competition, and decreasing the
    time it takes to acquire a system. In November 2012, Secretary Carter's
    successor, Frank Kendall, launched the Better Buying Power 2.0
    initiative, an update to the original Better Buying Power effort, aimed
    at ``implementing practices and policies designed to improve the
    productivity of the Department of Defense and of the industrial base
    that provides the products and services'' to the warfighters.\27\
    Better Buying Power 2.0 contained 34 separate initiatives, including
    reducing the frequency of the Office of the Secretary of Defense (OSD)-
    level reviews and improving requirements and market research.\28\
    According to officials, Better Buying Power 3.0 is currently in
    development.
    ---------------------------------------------------------------------------
        \27\ While much of the original effort remains intact, the new
    version does contain some changes. For example, the original effort
    called for increased use of fixed-price contracts whereas the newer
    version emphasizes the use of an appropriate contract type, depending
    on the circumstances. Quote taken from document provided to CRS by DOD
    entitled Better Buying Power (BBP) 2.0 Summary.
        \28\ The full text of the Better Buying Power 2.0 memorandum can be
    downloaded at http://bbp.dau.mil/doc/USD-ATL%20Memo%2024Apr13%20-
    %20BBP%202.0%20Implementation%20 Directive.pdf.
    ---------------------------------------------------------------------------
        DOD has also undertaken a comprehensive effort to overhaul the
    regulatory structure that governs defense acquisitions.\29\ For
    example:
    ---------------------------------------------------------------------------
        \29\ See memo accompanying issuance of interim DOD Instruction
    5000.02, Deputy Secretary of Defense Ashton Carter, Defense
    Acquisition, Department of Defense, November 26, 2013.

             On January 10, 2012, DOD issued updated versions of
            the instructions Charter of the Joint Requirements Oversight
            Council and Joint Capabilities Integration and Development
            System.
             On January 19, 2012, DOD issued an updated version of
            the Manual for the Operation of the Joint Capabilities
            Integration and Development System.\30\
    ---------------------------------------------------------------------------
        \30\ The manual can be found at https://dap.dau.mil/policy/
    Documents/2012/JCIDS%20 Manual%2019%20Jan%202012.pdf. A four page
    errata sheet was issued on September 20, 2012 (see: https://
    dap.dau.mil/policy/Documents/2012/
    JCIDS%20Manual%20Errata%20%2020%20Sept %202012.pdf).
    ---------------------------------------------------------------------------
             On January 25, 2013, DOD issued an updated version of
            the directive The Planning, Programming, and Budgeting System
            (PPBS).
             On November 26, 2013, DOD issued an updated `interim'
            instruction Operation of the Defense Acquisition System
            (5000.02).
             On December 2, 2013, Secretary Kendall announced the
            establishment of a team whose goal is to develop a legislative
            proposal that would attempt to ``simplify the existing body of
            law and replace it with a more coherent and `user friendly' set
            of requirements, without sacrificing the intention behind
            existing statutes.'' \31\
    ---------------------------------------------------------------------------
        \31\ Under Secretary of Defense Frank Kendall, The New Department
    of Defense Instruction 5000.02, Department of Defense, Memorandum for
    the Acquisition Workforce, December 2, 2013, p. 1.

        An analysis of the updated regulations indicates an intended focus
    on fostering a culture that promotes providing more autonomy to the
    workforce and better decisionmaking over managing by compliance. For
    example, the new DOD Instruction 5000.02 (Operation of the Defense
    ---------------------------------------------------------------------------
    Acquisition System) emphasizes that:

              the structure of a DOD acquisition program and the procedures
            used should be tailored as much as possible to the
            characteristics of the product being acquired, and to the
            totality of circumstances associated with the program . . .
            \32\
    ---------------------------------------------------------------------------
        \32\ Department of Defense, Instruction 5000.02, Operation of the
    Defense Acquisition System, p. 3, November 25, 2013.

        In promoting a more tailored approach, the instruction goes on to
    outline four different models (and two additional hybrid models) for
    acquisitions, depending on the type of program being pursued. This
    theme of promoting a culture of good decisionmaking is a recurring
    ---------------------------------------------------------------------------
    theme in numerous documents, speeches, and policy decisions. Consider:

        1.  In the memo issued to implement the Better Buying Power (BBP)
    2.0 initiative, Secretary Kendall wrote ``the first responsibility of
    the acquisition workforce is to think. We need to be true professionals
    who apply our education, training, and experience through analysis and
    creative, informed thought to address our daily decisions. Our
    workforce should be encouraged by leaders to think and not to
    automatically default to a perceived `school solution' just because it
    is expected to be approved more easily. BBP 2.0, like BBP 1.0, is not
    rigid dogma--it is guidance subject to professional judgment.'' \33\
    ---------------------------------------------------------------------------
        \33\ Under Secretary of Defense Frank Kendall, Implementation
    Directive for Better Buying Power 2.0--Achieving Greater Efficiency and
    Productivity in Defense Spending, Department of Defense, April 24,
    2013, p. 1.
    ---------------------------------------------------------------------------
        2.  A memo jointly issued by Under Secretaries of Defense Robert
    Hale (comptroller) and Kendall stated ``the threat that funding will be
    taken away or that future budgets can be reduced unless funds are
    obligated on schedule is a strong and perverse motivator. We risk
    creating incentives to enter into quick but poor business deals or to
    expend funds primarily to avoid reductions in future budget years. We
    need to rethink how we approach managing mid-year and end-of-year
    obligations and to change the types of behavior we reward or punish.''
    \34\
    ---------------------------------------------------------------------------
        \34\ Under Secretary of Defense Robert Hale and Under Secretary of
    Defense Frank Kendall, Department of Defense Management of Unobligated
    Funds; Obligation Rate Tenets, Office of the Secretary of Defense,
    September 10, 2012, p. 1.
    ---------------------------------------------------------------------------
        3.  There has been a significant focus on using data to drive
    decisions. This has been made manifest in numerous ways, from the sign
    hanging by the door of Secretary Kendall's office which states ``In God
    We Trust. All Others Must Bring Data'' \35\ to the release of the first
    annual report Performance of the Defense Acquisitions System, a 110-
    page report that relies extensively on data gathered over a 30-year
    period to analyze and measure the effectiveness of weapon system
    acquisitions.\36\ The annual report is one of, if not the most,
    comprehensive, data-driven analyses on defense acquisitions issued by
    this office in many years.\37\
    ---------------------------------------------------------------------------
        \35\ Quote attributed to W. Edwards Deming.
        \36\ Office of the Under Secretary of Defense, Acquisition,
    Technology and Logistics, Performance of the Defense Acquisition
    System, 2013 Annual Report, June 28, 2013. The concluding comments of
    the report states ``measuring the performance of defense acquisition
    provides objective, quantitative information on our current
    performance. The following insights provide some broader perspectives
    and considerations. These should inform and enable stable improvement
    in our overall acquisition performance.'' p. 109.
        \37\ The report acknowledges that more work and more data analysis
    needs to be done; the report seeks to provide initial results in what
    is expected to be a long-range effort to use data to inform efforts to
    improve acquisitions.

        Many members of the acquisition workforce have argued that while
    laudable, these efforts have generally not had a significant impact on
    defense acquisitions. These individuals point out that the fundamental
    incentives in the acquisition system remain unaltered.\38\ For example,
    they say, there is a culture within DOD (and other agencies) that
    encourages the obligation of funds before they expire out of fear that
    if money is not spent, future budgets will be cut. This belief, which
    may be reinforced by certain congressional oversight practices,\39\
    encourages managers to prioritize spending money based on an arbitrary
    calendar deadline instead of on sound business decisions.\40\ According
    to this argument, reform efforts will have only limited impact until
    incentives are changed to better align with desired outcomes. Others
    have argued that implementing such far-reaching change takes years of
    sustained effort to implement; that the groundwork is being set for
    long-term change that may not produce visible gains for years to come.
    ---------------------------------------------------------------------------
        \38\ Based on dozens of CRS interviews with acquisition personnel
    from June 2013-February 2014.
        \39\ DOD briefings on acquisition programs, apparently at the
    request of some Congressional recipients, routinely conclude with
    slides providing data on percentages of prior-year funding that have
    been obligated and expended to date.
        \40\ Robert F. Hale and Frank Kendall, Department of Defense
    Management of Unobligated Funds; Obligations Tenets, Office of the
    Secretary of Defense, Memorandum, September 10, 2012.
    ---------------------------------------------------------------------------
        Most analysts suggest that DOD does not have the authority or
    ability to substantially improve the acquisition process on its own;
    that substantial reform requires close, consistent, and long-term
    collaboration between DOD, Congress, and industry. For example, a
    comprehensive effort to streamline and improve the efficiency of the
    acquisition regulations will in some instances require Congress to
    amend existing legislation, DOD to amend internal practices, and
    industry to play a constructive role.
        A number of analysts, industry officials, and DOD officials argue
    that constrained budgets are the key to fostering a culture of better
    decisionmaking. This argument is similar to a comment made by former
    Secretary of Defense Gates, who noted that as a result of defense
    spending more than doubling between fiscal year 2001 and fiscal year
    2010, ``we've lost our ability to prioritize, to make hard decisions,
    to do tough analysis, to make trades.'' \41\ Some analysts argue that
    declines in defense acquisition spending since fiscal year 2008 have
    resulted in efforts to prioritize programs, reign in the expansion of
    requirements, improve efficiency, and increase the focus on costs.\42\
    ---------------------------------------------------------------------------
        \41\ Department of Defense, ``DOD News Briefing with Secretary
    Gates and Adm. Mullen from the Pentagon,'' press release, June 6, 2011,
    at http://www.defense.gov/transcripts/
    transcript.aspx?transcriptid=4747.
        \42\ See Yamil Berard, ``Former Pentagon leader says defense cuts
    are necessary,'' Fort Worth Star-Telegram, October 16, 2013; Barry D.
    Watts, Sustaining the U.S. Defense Industrial base as a Strategic
    Asset, Center for Strategic and Budgetary Assessments, Backgrounder,
    September 2013, p. 15.
    ---------------------------------------------------------------------------
    Successful Acquisition Reform Efforts
        Given the results of past efforts, some analysts have argued that
    acquisition reform is a fruitless effort; that the fundamental problems
    with DOD acquisitions lie not in policy but in execution and
    expectations. In an article entitled Let's Skip Acquisition Reform This
    Time, MIT professor Harvey Sapolsky writes

              The limited number of available reforms have all been
            recycled. You can centralize or decentralize. You can create a
            specialist acquisition corps or you can outsource their tasks.
            You can fly before you buy or buy before you fly. Another blue-
            ribbon study, more legislation, and a new slogan will not make
            it happen.\43\
    ---------------------------------------------------------------------------
        \43\ Harvey Sapolsky, ``Let's Skip Acquisition Reform This Time,''
    DefenseNews, February 9, 2009, p. 29.

        Other analysts point out that some past reform efforts have had
    modest success, generating savings in certain areas and keeping pace
    with a changing world. These analysts argue that learning from past
    reform efforts--understanding what worked, what didn't work, and why--
    is critical to successful acquisition reform.\44\ A number of analysts
    have argued that Congress is critical to significantly improving DOD
    acquisitions.\45\
    ---------------------------------------------------------------------------
        \44\ See: Robert F. Hale, Promoting Efficiency in the Department of
    Defense: Keep Trying, Be Realistic, Center for Strategic and Budgetary
    Assessments, January 2002, 7.
        \45\ See: Business Executives for National Security, Getting to
    Best: Reforming the Defense Acquisition Enterprise, A Business
    Imperative for Change from the Task Force on Defense Acquisition Law
    and Oversight, July, 2009, p. 3.
    ---------------------------------------------------------------------------
        Some reforms have been judged successful. For example, most
    analysts view the original consolidation of disparate acquisition rules
    into a single, uniform Federal Acquisition Regulation as an improvement
    to the system. More recently, Congress has embarked on select
    acquisition reform efforts through legislation that analysts believe
    have contributed to improving defense acquisitions, including the
    Weapon Systems Reform Act of 2009.
        In developing the Weapon Systems Acquisition Reform Act of 2009,
    Congress considered reports by government and other analysts that
    focused on the early stages of weapon system development, prior
    congressional hearings and investigations, and extensive consultations
    with DOD, industry, and outside experts. The act did not seek to
    rectify all of the problems related to the acquisition process. Rather,
    it focused primarily on improving the early stages of weapon system
    development. Key provisions in the act included:

             appointment of a Director of Cost Assessment and
            Program Evaluation (CAPE),
             appointment of a Director of Developmental Test and
            Evaluation,
             appointment of a Director of Systems Engineering,
             a requirement that the Director of Defense Research
            and Engineering periodically assess technological maturity of
            MDAPs and annually report finding to Congress, and
             A requirement that combatant commanders have more
            influence in the requirements generation process.

        Given how recently the Weapon System Acquisition Reform Act was
    enacted, the full effect of the act may not be felt until the next
    generation of weapon systems are in production. However, a number of
    analysts believe that the act is having a positive effect.\46\ Senior
    officials within the offices of the CAPE, Developmental Test and
    Evaluation, and Systems Engineering, believe that their offices are
    being empowered to positively impact weapon system acquisitions.\47\
    These offices have been given access to senior leaders within the
    department, opportunities to provide input at key points in the
    acquisition system, and resources to carry out their responsibilities.
    For example, the CAPE has contributed to a better understanding of
    potential costs for a number of major programs, such as the F-35 Joint
    Strike Fighter program.\48\ The act's focus on the early stage of the
    acquisition process and on using data to inform decisions complements
    and reinforces a number of the internal DOD initiatives to improve
    acquisitions.
    ---------------------------------------------------------------------------
        \46\ U.S. Government Accountability Office, Defense Acquisition
    Reform: Reform Act is Helping DOD Acquisition Programs Reduce Risk, but
    Implementation Challenges Remain, GAO-13-103, December 14, 2012.
        \47\ Based on meetings these senior officials had with CRS in early
    2011.
        \48\ Based on discussions with senior officials from the Joint
    Staff, J-8 (Force Structure, Resources, and Assessment Directorate) and
    Joint Operations Support (Acquisition, Technology & Logistics),
    December 2011.
    ---------------------------------------------------------------------------
                 the changing landscape of defense acquisitions
        Much of the organization of the defense acquisition system was
    developed during the early years of the Cold War. In recent years, the
    defense acquisition landscape has changed significantly and a number of
    analysts believe that the acquisition system is not sufficiently
    responsive to an ever changing world.\49\ A 2009 study by the Defense
    Science Board argued that current DOD acquisition practices are
    inadequate in a changing industrial environment.\50\ Significant
    changes often cited by analysts include the following:
    ---------------------------------------------------------------------------
        \49\ Department of Defense, Defense Acquisition Performance
    Assessment Report, January 2006, p. 7.
        \50\ Office of the Under Secretary of Defense for Acquisition,
    Technology, and Logistics, Buying Commercial: Gaining the Cost/Schedule
    Benefits for Defense Systems, Defense Science Board Task Force on
    Integrating Commercial Systems into the DOD, Effectively and
    Efficiently, February 2009, p. xvii.

             The defense industrial base has consolidated
            significantly over the last 25 years. According to a study by
            the Defense Science Board, over the last 25 years, the number
            of major defense contractors decreased from 50 to 6.\51\ Such
            consolidation, which was partly due to the reduction in defense
            procurement following the end of the cold war, can have
            benefits but can also hurt competition and innovation.
    ---------------------------------------------------------------------------
        \51\ Office of the Under Secretary of Defense For Acquisition,
    Technology, and Logistics, Creating an Effective National Security
    Industrial Base for the 21st Century: An Action Plan to Address the
    Coming Crisis, Defense Science Board Task Force on Defense Industrial
    Structure for Transformation, July 2008, p. 15. See also: Kenneth
    Flamm, ``Post-Cold War Policy and the U.S. Defense Industrial Base,''
    National Academy of Engineering of the National Academies, vol. 35, no.
    1 (Spring 2005); Barry D. Watts, Sustaining the U.S. Defense Industrial
    base as a Strategic Asset, Center for Strategic and Budgetary
    Assessments, Backgrounder, September 2013, p. 15.
    ---------------------------------------------------------------------------
             DOD is becoming a less influential buyer. Fewer and
            fewer U.S. industries are dominated by defense spending.\52\
            For example, in 1965, DOD accounted for over 75 percent of all
            U.S. semiconductor purchases. By 1990, government-wide
            purchases represented less than 10 percent of the market. By
            2012, government represented less than 2 percent of the semi-
            conductor market.\53\
    ---------------------------------------------------------------------------
        \52\ Kenneth Flamm, ``Post-Cold War Policy and the U.S. Defense
    Industrial Base,'' National Academy of Engineering of the National
    Academies, vol. 35, no. 1 (Spring 2005); See: Business Executives for
    National Security, Getting to Best: Reforming the Defense Acquisition
    Enterprise, A Business Imperative for Change from the Task Force on
    Defense Acquisition Law and Oversight, July, 2009, p. 4.
        \53\ Data provided to CRS by Semiconductor Industry, October, 2013.
    ---------------------------------------------------------------------------
              As DOD becomes a less important customer, an increasing
            number of companies are diversifying their revenue streams. In
            2012, the top 100 defense companies received 28 percent of
            their revenue from defense contracts, down from 38 percent of
            revenue in 2007.\54\ Other companies are choosing not to
            compete for defense contracts because of extensive and ever-
            changing regulations, increased costs, auditing requirements,
            and instability of funding caused by sequestration, continuing
            resolutions, and lapses in appropriations.
    ---------------------------------------------------------------------------
        \54\ Zachary Fryer-Biggs, ``Looking Beyond Defense: Firms Grow
    Revenue--By Diversifying,'' DefenseNews, July 22, 2013, p. 11.
    ---------------------------------------------------------------------------
             Weapon and information technology systems are more
            complex and sophisticated. Some analysts believe that the
            acquisition system is not nimble enough for acquisition
            programs that rely heavily on rapidly changing technologies.
            These technologies are posing new challenges to acquisitions.
            For example, according to U.S. Air Force Lt. Gen. Christopher
            Bogdan, the biggest risk to the F-35 program is software
            development.\55\ Some analysts believe that the increasing
            complexity of systems is the principle reason that aircraft
            development times have increased significantly since 1980.\56\
    ---------------------------------------------------------------------------
        \55\ Andrea Shalal-Esa, ``Pentagon Sees Some Risk of Delay in F-35
    Software,'' NBCnews.com, April 24, 2013, at http://www.nbcnews.com/id/
    51649848/ns/technology--and--science-tech--and--gadgets/t/pentagon-
    sees-some-risk-delay-f--software/#.UlWMmm3zByU.
        \56\ Office of the Under Secretary of Defense Acquisition,
    Technology and Logistics, Performance of the Defense Acquisition
    System, 2013 Annual Report, June 28, 2013, p. 57. Aircraft development
    times have also markedly increased in the commercial aerospace market.
    ---------------------------------------------------------------------------
             U.S. military Spending is declining, squeezing
            acquisition accounts. Constraints on U.S. defense spending,
            combined with real growth in per-capita expenditure for
            military personnel and pay benefits, limit the funding
            available for acquisitions, and bring about reductions in force
            structure.\57\ These effects also reduce potential economies of
            scale in defense production and can make it more challenging to
            pursue acquisitions associated with specialized or niche
            capabilities.
    ---------------------------------------------------------------------------
        \57\ Department of Defense, Defense Budget Priorities and Choices,
    fiscal year 2014, April 2013, p. 5.
    ---------------------------------------------------------------------------
             At the same time U.S. military spending is declining, other
            countries are investing more in their military. Some analysts
            have argued that the United States may not dominate defense
            spending in the future as much as it has in recent years. These
            analysts point to countries such as Russian and China. China's
            military modernization has been fueled by two decades of
            steadily increasing military spending. According to a DOD
            report to Congress, China's officially disclosed military
            budget increased an average of 9.7 percent annually in
            inflation-adjusted terms over the decade from 2003 to 2012.\58\
    ---------------------------------------------------------------------------
        \58\ See CRS Report R41108, U.S.-China Relations: An Overview of
    Policy Issues, by Susan V. Lawrence, p. 16.
    ---------------------------------------------------------------------------
             DOD-financed research and development is playing a
            less important role in innovation and development.\59\ DOD is
            spending an ever-smaller share of its contracting dollars on
            research and development (R&D) contracts. In fiscal year 1998,
            18 percent of DOD contract obligations were dedicated to R&D
            contracts compared to just 10 percent in fiscal year 2013 (see
            Figure 1). One analyst pointed out that even though the
            military is still an important funder of specific, leading-edge
            technologies such as supercomputers and microelectromechanical
            systems devices, ``commercial demand for these products has far
            outstripped the requirements of the military.'' \60\ At the
            same time, technologies developed for the commercial market are
            commonly adapted for military use. As one general officer
            stated, whereas the military used to go to industry and tell
            them to create a technology to meet a requirement, increasingly
            the military is going to industry and asking them to adapt an
            existing commercial technology to military requirements.\61\
    ---------------------------------------------------------------------------
        \59\ See Business Executives for National Security, Getting to
    Best: Reforming the Defense Acquisition Enterprise, A Business
    Imperative for Change from the Task Force on Defense Acquisition Law
    and Oversight, July, 2009, p. 4.
        \60\ Kenneth Flamm, ``Post-Cold War Policy and the U.S. Defense
    Industrial Base,'' National Academy of Engineering of the National
    Academies, vol. 35, no. 1 (Spring 2005).
        \61\ Based on discussion with CRS analyst, May 8, 2013.
    ---------------------------------------------------------------------------

        Many analysts believe that an acquisition system designed to meet
    the challenges of the Cold War is not well suited to this changing
    landscape.\62\ Some of these analysts argue that comprehensive
    acquisition reform is urgently needed.\63\ In 2009, Norman Augustine
    (former CEO of Lockheed Martin) and former Senators Gary Hart and
    Warren Rudman wrote that the defense acquisition system operates
    ---------------------------------------------------------------------------
        \62\ Department of Defense, Defense Acquisition Performance
    Assessment Report, January 2006, p. 6; Business Executives for National
    Security, A Business Imperative for Change from the Task Force on
    Defense Acquisition Law and Oversight, July 2009, p. 4. Then Secretary
    of Defense William Perry used the same logic to implement acquisition
    reforms in the 1990s. He stated ``Because the world in which DOD now
    must operate has changed beyond the limits of the existing acquisition
    system's ability to adjust or evolve--the system must be totally re-
    engineered. If DOD is going to be capable of responding to the demands
    of the next decade, there must be a carefully planned, fundamental re-
    engineering or re-invention of each segment of the acquisition
    process.'' See Honorable William J. Perry, Acquisition Reform: A
    Mandate for Change, Department of Defense, February 9, 1994, p. 9.
        \63\ See Department of Defense, Defense Acquisition Performance
    Assessment Report, January 2006, p. Introductory Letter by Chairman
    Ronald Kadish.

             too slowly and at vastly greater cost than necessary. In
            earlier times we could arguably afford such flaws in
            efficiency, but we can afford them no longer. . . . We must
            examine the status quo systemically, in all its aspects, in
            order to make necessary and long overdue changes. If we do not,
            we will be in an increasingly sclerotic defense acquisition
            process that may one day no longer be able to supply American
            war fighters with the means to assure this Nation's freedom and
            security.\64\
    ---------------------------------------------------------------------------
        \64\ Business Executives for National Security, A Business
    Imperative for Change from the Task Force on Defense Acquisition Law
    and Oversight, July, 2009, p. iii.

        Many analysts and DOD officials argue that DOD in recent years has
    also undergone changes that may make significant reform possible. Some
    DOD officials and analysts detect a culture shift underway within the
    Department--a shift that reflects a better understanding of the
    importance of defense acquisitions, and a fuller commitment on the part
    of senior leadership, uniform personnel and civilian personnel, to
    support efforts to improve defense acquisitions. Changes contributing
    to the culture shift include the following:
        Operations in Iraq and Afghanistan have highlighted the importance
    of acquisitions. In the early years of the conflicts, contracting in
    Iraq and Afghanistan was done on an ad-hoc basis, without significant
    consideration of implications for foreign policy and without putting in
    place necessary oversight systems. Insufficient resources were
    dedicated to oversight, resulting in poor performance, billions of
    dollars of waste, and failure to achieve mission goals.\65\ However,
    the experiences of the operational force underscored the importance of
    acquisitions to senior leaders and prompted numerous internal efforts
    to examine contractor support, such as the report of the Commission on
    Army Acquisition and Program Management in Expeditionary Operations
    (known as the Gansler report).
    ---------------------------------------------------------------------------
        \65\ CRS Report R43074, Department of Defense's Use of Contractors
    to Support Military Operations: Background, Analysis, and Issues for
    Congress, by Moshe Schwartz.
    ---------------------------------------------------------------------------
        Constrained budgets are fostering a culture of better
    decisionmaking. Former Secretary of Defense Robert Gates stated that as
    a result of defense spending more than doubling between fiscal year
    2001 and fiscal year 2010, ``we've lost our ability to prioritize, to
    make hard decisions, to do tough analysis, to make trades.'' \66\ As
    mentioned earlier, declines in defense acquisition spending since
    fiscal year 2008 have resulted in efforts to prioritize programs, reign
    in the `gold-plating' of requirements, and increase the focus on
    costs.\67\ Historically, eras of budgetary restraint have been
    associated with the pursuit and implementation of acquisition reform.
    In the 1980s, the deficit targets enacted as part of the Gramm-Rudman-
    Hollings Act (The Balanced Budget and Emergency Deficit Control Act of
    1985; P.L. 99-17) are seen by analysts as having contributed to
    development of the Packard Report and changes in defense acquisitions.
    Later, the Budget Enforcement Act of 1990 (Title X of The Omnibus
    Budget Reconciliation Act of 1990; P.L. 101-508) and related limits on
    defense spending are seen as having led to the Perry Report of 1994 and
    another round of far-reaching acquisition reform. Against the current
    backdrop of the Budget Control Act of 2011 (P.L. 112-25) and declines
    in defense spending, many analysts argue that the stage is set for a
    renewed effort to embark on a significant effort to improve defense
    acquisitions.''
    ---------------------------------------------------------------------------
        \66\ Department of Defense, ``DOD News Briefing with Secretary
    Gates and Adm. Mullen from the Pentagon,'' press release, June 6, 2011,
    http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4747.
        \67\ See Yamil Berard, ``Former Pentagon leader says defense cuts
    are necessary,'' Fort Worth Star-Telegram, October 16, 2013.; Barry D.
    Watts, Sustaining the U.S. Defense Industrial base as a Strategic
    Asset, Center for Strategic and Budgetary Assessments, Backgrounder,
    September 2013, p. 15.
    ---------------------------------------------------------------------------
        Data is improving.\68\ Advances in information technology are
    making it possible to better track and analyze larger amounts of data.
    DOD is improving its IT systems and has embarked on a number of wide-
    ranging efforts to gather and analyze data to inform policy decisions,
    often at the behest of Congress. For example, the Weapon System
    Acquisition Reform Act of 2009 required DOD to conduct a root cause
    analysis of the cost, schedule, and performance of Major Defense
    Acquisition Programs that experience cost growth that surpasses the
    thresholds set forth in the Nunn-McCurdy Act.\69\ Over the years, these
    analyses have provided insight into what drives cost growth. Despite
    the progress being made, there continue to be significant gaps in the
    data available and reliability of some existing data.\70\
    ---------------------------------------------------------------------------
        \68\ Office of the Under Secretary of Defense Acquisition,
    Technology and Logistics, Performance of the Defense Acquisition
    System, 2013 Annual Report, June 28, 2013, p. 106.
        \69\ P.L. 111-23, section 103.
        \70\ Office of the Under Secretary of Defense Acquisition,
    Technology and Logistics, Performance of the Defense Acquisition
    System, 2013 Annual Report, June 28, 2013, p. 105; U.S. Army, Army
    Strong: Equipped, Trained, and Ready, Final Report of the 2010 Army
    Acquisition Review, January 11, 2011, p. iv. The report found that
    ``The Army lacks a sufficiently robust and trustworthy database on
    acquisition programs, workforce and lessons learned,'' p. 42.
    ---------------------------------------------------------------------------
        In sum, the unique combination of constrained budgets, a changing
    strategic and industrial landscape, recent experiences in Iraq and
    Afghanistan, and the increased availability of data have led many
    analysts and officials to conclude that there may be a unique
    opportunity to embark on another effort to improve defense
    acquisitions.\71\
    ---------------------------------------------------------------------------
        \71\ Bill Greenwalt, ``Once More Unto The Breach, This Time For
    Acquisition Reform,'' Breaking Defense, April 23, 2014. At http://
    breakingdefense.com/2014/04/once-more-unto-the-breach-this-time-for-
    acquisition-reform/.
    ---------------------------------------------------------------------------
                            improving the workforce
        Despite the hundreds of disparate recommendations to improve
    defense acquisitions, most reports seeking to address the fundamental
    weaknesses of the system arrive at the same conclusion: the key to good
    acquisitions is having a good workforce and giving them the resources,
    incentives, and authority to do their job.\72\ As David Packard wrote
    in a 1986 report to President Reagan,
    ---------------------------------------------------------------------------
        \72\ See below. For additional discussions, see Thomas Christie,
    ``Sound Policy, Awful Execution,'' DefenseNews, December 15, 2008, p.
    53. Thomas Miller, ``Rearranging Deck Chairs on the Titanic: Why Does
    Acquisition Reform Never Work?'' Defense Acquisition, Technology, and
    Logistics, November-December 2010, p. 27; Scott Reynolds, ``Let's Fix
    It: A Five-Step Plan for Improving Acquisitions,'' Defense AT&L,
    November-December 2009, p. 18.

              Excellence in defense management cannot be achieved by the
            numerous management layers, large staffs, and countless
            regulations in place today. It depends . . . on reducing all of
            these by adhering closely to basic, common sense principles:
            giving a few capable people the authority and responsibility to
            do their job, maintaining short lines of communication, and
            holding people accountable for results.\73\
    ---------------------------------------------------------------------------
        \73\ A Quest for Excellence, Final Report to the President by the
    Blue Ribbon Commission of Defense Management, June 30, 1986.

        The workforce is not the only area that analysts believe needs to
    be improved--numerous recommendations are aimed at budgeting,
    requirements development, cost estimating, and other structural
    problems. However, without a culture that promotes good acquisition
    decisions, analysts believe that reform efforts will not achieve their
    fullest potential. This is seen as true not only for the acquisition
    workforce but also for other people involved in the process, such as
    those involved in developing requirements and budgets. As then-defense
    ---------------------------------------------------------------------------
    analyst Robert Hale wrote in 2002

              Efficiency requires change, and change is difficult to
            implement in any organization--public or private. To have any
            chance of success, there must be an incentive to change.
            Incentives start with the climate created by top leaders. . . .
            But commitment must extend beyond the senior leadership to the
            Defense Department's field commanders and managers.
            Efficiencies achieved at the base or installation level could
            add up to substantial savings, and the individuals running
            these bases will be more likely to implement changes if they
            have incentives to do so.\74\
    ---------------------------------------------------------------------------
        \74\ Robert F. Hale, Promoting Efficiency in the Department of
    Defense: Keep Trying, Be Realistic, Center for Strategic and Budgetary
    Assessments, January 2002, p. 20.

        It is this belief that appears to have prompted Secretary Kendall
    to introduce guidance on implementing the Better Buying Power
    ---------------------------------------------------------------------------
    initiatives with the following overarching principle:

              Policies and processes are of little use without acquisition
            professionals who are experienced, trained, and empowered to
            apply them effectively. At the end of the day, qualified people
            are essential to successful outcomes and professionalism,
            particularly in acquisition leaders, drives results more than
            any policy change.\75\
    ---------------------------------------------------------------------------
        \75\ Frank Kendall, Implementation Directive for Better Buying
    Power 2.0--Achieving Greater Efficiency and Productivity in Defense
    Spending, Office of the Under Secretary of Defense Acquisition,
    Technology and Logistics, Memorandum, April 24, 2013.
    ---------------------------------------------------------------------------
    The Importance of People and Proper Incentives
        Numerous reports have highlighted the importance of people in
    successful acquisitions. Below are conclusions from some of the most
    influential reports on defense acquisitions from 1970 to the present.

             ``Regardless of how effective the overall system of
            Department procurement regulations may be judged to be, the key
            determinants of the ultimate effectiveness and efficiency of
            the Defense Procurement process are the procurement personnel.
            . . . The importance of this truism has not been appropriately
            reflected in the recruitment, career development, training, and
            management of the procurement workforce.'' \76\ Fitzhugh Report
            (1970)
    ---------------------------------------------------------------------------
        \76\ Department of Defense, Report to the President and the
    Secretary of Defense on the Department of Defense by the Blue Ribbon
    Panel, July 1, 1970, p. 94.
    ---------------------------------------------------------------------------
             ``DOD must be able to attract, retain, and motivate
            well-qualified acquisition personnel.'' \77\ Packard Report
            (1986)
    ---------------------------------------------------------------------------
        \77\ A Quest for Excellence, Final Report to the President by the
    Blue Ribbon Commission of Defense Management, June 30, 1986, p. xxv.
    ---------------------------------------------------------------------------
             ``Making fundamental improvements in acquisitions will
            require attacking the cultural dimension of the problem.
            Changes of the type needed will not come easily. They must be
            directed at the system of incentives.'' \78\ GAO (1992)
    ---------------------------------------------------------------------------
        \78\ U.S. General Accounting Office, Weapons Acquisition: A Rare
    Opportunity for Lasting Change, NSIAD 93-15, December 1992, pp. 2-3.
    ---------------------------------------------------------------------------
             ``Give line managers more authority and accountability
            (reward results, not just compliance with rules; focus on the
            customer).'' \79\ Perry Report (1994)
    ---------------------------------------------------------------------------
        \79\ Honorable William J. Perry, Acquisition Reform: A Mandate for
    Change, Department of Defense, February 9, 1994, p. 9.
    ---------------------------------------------------------------------------
             ``The department should focus on creating incentives
            so that commanders and managers seek efficiencies.'' \80\
            Robert Hale (2002)
    ---------------------------------------------------------------------------
        \80\ Robert F. Hale, Promoting Efficiency in the Department of
    Defense: Keep Trying, Be Realistic, Center for Strategic and Budgetary
    Assessments, January 2002, p. iii.
    ---------------------------------------------------------------------------
             ``To repeat: the emphasis must be on the individuals
            in line management . . . the key to effective execution of any
            contract is not the quality of the contract, it is the quality
            of the program management responding to clear assignment of
            authority and accountability for each program.'' \81\ QDR
            Independent Panel (2010)
    ---------------------------------------------------------------------------
        \81\ U.S. Institute for Peace, The QDR in Perspective: Meeting
    America's National Security Needs in the 21st Century, Final Report of
    the Quadrennial Defense Review Independent Panel, July 28, 2010, p. 86.
    ---------------------------------------------------------------------------
             ``There is little doubt that acquisition reforms
            produce limited, positive effects because they have not changed
            the basic incentives or pressures that drive the behavior of
            the participants in the acquisition process.'' \82\ Defense
            Acquisition Reform: 1960-2009 (2011)
    ---------------------------------------------------------------------------
        \82\ J. Ronald Fox, Defense Acquisition Reform 1960-2009: An
    Elusive Goal (Center of Military History, 2011), p. 190.
    ---------------------------------------------------------------------------
    Building a Capable, Trained, and Sufficiently Sized Workforce
        Analysts have concluded that insufficient resources or shortages in
    the number of properly trained acquisition personnel increase the risk
    of poor contract performance, which in turn can lead to waste, fraud,
    and abuse.\83\ The issue is not just the number, but also the quality
    and capability of the workforce.\84\
    ---------------------------------------------------------------------------
        \83\ J. Ronald Fox, Defense Acquisition Reform 1960-2009: An
    Elusive Goal (Center of Military History, 2011), p. 195, 199.See also,
    Commission on Wartime Contracting in Iraq and Afghanistan, At What
    Risk? Correcting over-reliance on contractors in contingency
    operations, Second Interim Report to Congress, February 24, 2011, p.
    17; United States Institute of Peace, The QDR in Perspective: Meeting
    America's National Security Needs in the 21st Century, 2010, p. 39;
    U.S. Government Accountability Office, Military Operations: High-Level
    DOD Action Needed to Address Longstanding Problems with Management and
    Oversight of Contractors Supporting Deployed Forces, GAO-07-145,
    December 18, 2006; Commission on Wartime Contracting In Iraq and
    Afghanistan, Transforming Wartime Contracting: Controlling costs,
    reducing risk, Final Report to Congress, August, 2011, p. 83-84.
        \84\ See: Business Executives for National Security, Getting to
    Best: Reforming the Defense Acquisition Enterprise, A Business
    Imperative for Change from the Task Force on Defense Acquisition Law
    and Oversight, July, 2009, p. 3.
    ---------------------------------------------------------------------------
        In an effort to improve the size and quality of the acquisition
    workforce, the NDAA for Fiscal Year 2008 mandated the establishment of
    the Department of Defense Acquisition Workforce Fund to enable the
    ``recruitment, training, and retention of acquisition personnel.'' \85\
    From fiscal year 2008 through fiscal year 2012, DOD obligated $2.3
    billion through the fund. According to DOD, this funding was used to
    augment training and hire an additional 8,300 people in contracting,
    cost estimating, systems engineering, auditing, and other related
    fields. Many analysts believe that while DOD and congressional efforts
    are starting to have a positive impact on the acquisition workforce,
    additional support and focus is needed.\86\
    ---------------------------------------------------------------------------
        \85\ P.L. 110-181, section 852.
        \86\ Data provided by DOD. See also Department of Defense, Defense
    Acquisition Workforce Development Fund (DAWDF) fiscal year 2012 Report
    to Congress, Department of Defense, April 2013, p. 4.
    ---------------------------------------------------------------------------
        DOD has recognized the need to dedicate sufficient resources to
    develop a more professional and skilled workforce. The 2010 Quadrennial
    Defense Review states that ``to operate effectively, the acquisition
    system must be supported by an appropriately sized cadre of acquisition
    professionals with the right skills and training to successfully
    perform their jobs. . . . We will continue to significantly enhance
    training and retention programs in order to bolster the capability and
    size of the acquisition workforce.'' \87\
    ---------------------------------------------------------------------------
        \87\ QDR, p. 77-78
    ---------------------------------------------------------------------------
    Creating the Right Incentives
        Many analysts argue that even with a sufficiently robust, highly
    trained and capable workforce, the right incentives must be in place.
    Yet often the incentives in the acquisition process, they argue,
    encourage people to make poor decisions.\88\ One example, discussed
    above, is the incentive to obligate funds before the end of the fiscal
    year. Another example of incentives driving poor acquisition decisions
    relates to cost estimating. Senior Defense officials, both past and
    current, acknowledge that program advocates have strong incentives to
    underestimate program acquisition costs. Contractors use low cost
    estimates to win the contract; program representatives use low
    estimates to argue for approval of the system against competing
    systems.\89\ In 1981, then-Deputy Secretary of Defense Frank C.
    Carlucci testified that low cost estimates ``are fueled by optimistic
    contractor proposals to win competitions and program managers who want
    to see their programs funded.'' \90\ Almost 30 years later, then-Under
    Secretary of Defense for Acquisition, Technology, and Logistics John
    Young echoed this sentiment, stating ``the enterprise will often
    pressure acquisition teams and industry to provide low, optimistic
    estimates to help start programs.'' \91\
    ---------------------------------------------------------------------------
        \88\ J. Ronald Fox, Defense Acquisition Reform 1960-2009: An
    Elusive Goal (Center of Military History, 2011), p. 197-199; Department
    of Defense, Defense Acquisition Performance Assessment Report, January
    2006, p. 5; See: Business Executives for National Security, Getting to
    Best: Reforming the Defense Acquisition Enterprise, A Business
    Imperative for Change from the Task Force on Defense Acquisition Law
    and Oversight, July, 2009, p. 3.
        \89\ House Armed Services Hearings, 97th Cong., 1st Sess., Volume
    11, 1981. Op. Cit. p. 883.
        \90\ House Armed Services Hearings, 97th Cong., 1st Sess., Volume
    11, 1981. Op. Cit. p. 1086.
        \91\ John J. Young, Jr., Reasons for Cost Changes for Selected
    Major Defense Acquisition Programs (MDAP), Memorandum, January 30,
    2009.
    ---------------------------------------------------------------------------
        The absence of more reliable cost estimates denies Congress the
    ability to decide on competing strategic and budget priorities based on
    realistic cost assumptions and denies DOD the opportunity to develop a
    well-conceived acquisition plan. The 2010 Quadrennial Defense Review
    stated, ``our system of defining requirements and developing capability
    too often encourages reliance on overly optimistic cost estimates. In
    order for the Pentagon to produce weapons systems efficiently, it is
    critical to have budget stability--but it is impossible to attain such
    stability in DOD's modernization budgets if we continue to
    underestimate the cost of such systems from the start.'' \92\
    ---------------------------------------------------------------------------
        \92\ Department of Defense, Quadrennial Defense Review Report,
    February 2010, p. 76.
    ---------------------------------------------------------------------------
    Establishing Authority and Accountability
        Authority and accountability are viewed as critical elements in
    building an effective workforce.\93\ Without authority, even the most
    skilled and incentivized professionals cannot effectively run and
    manage a program. Yet many analysts believe that the management
    structure is too bureaucratic; that too many people can say ``no'' or
    influence a program. As one program manager recently quipped, the
    inside joke among program managers is that ``We are not really sure who
    runs the program.'' \94\ Without anyone having practical authority to
    manage a program, there is no one to effectively hold accountable. The
    Quadrennial Defense Review Independent Panel concluded that ``the
    fundamental reason for the continued underperformance in acquisition
    activities is fragmentation of authority and accountability for
    performance.'' \95\
    ---------------------------------------------------------------------------
        \93\ The Packard, for example, stated ``We must give acquisition
    personnel more authority to do their jobs. If we make it possible for
    people to do the right thing the first time and allow them to use their
    common sense, then we believe that the Department can get by with far
    fewer people.'' See p. xxiv.
        \94\ Based on conversations with program managers and other
    acquisition personnel, September 14, 2013.
        \95\ U.S. Institute for Peace, The QDR in Perspective: Meeting
    America's National Security Needs in the 21st Century, Final Report of
    the Quadrennial Defense Review Independent Panel, July 28, 2010, p. 85.
    Italics as in original.
    ---------------------------------------------------------------------------
        Chairman Levin, Ranking Member Inhofe, this concludes my statement.
    I will be pleased to respond to any questions the Committee may have.
                       appendix. dod contract obligations
        In fiscal year 2013, the U.S. Government obligated $460 billion for
    contracts for the acquisition of goods, services, and research and
    development. The $460 billion obligated on contracts was equal to
    approximately 13 percent of the fiscal year 2013 U.S. budget of $3.5
    trillion (Figure 2).\96\ DOD obligated $310 billion on Federal
    contracts--more than two-thirds of the value of all Federal contracts
    and more than all other government agencies combined. DOD's contract
    obligations were equivalent to approximately 9 percent of the entire
    U.S. budget.\97\
    ---------------------------------------------------------------------------
        \96\ Calculations are based on total contract obligations data as
    recorded in the Federal Procurement Data System--Next Generation,
    February, 2014. FPDS-NG does not include data from judicial branch
    agencies, the legislative branch, certain DOD components, or select
    executive branch agencies, such as the Central Intelligence Agency and
    National Security Agency. See also: U.S. Department of the Treasury,
    ``Joint Statement of Secretary Lew and OMB Director Burwell on Budget
    Results for fiscal year 2013 ,'' press release, October 30, 2013,
    http://www.treasury.gov/press-center/press-releases/Pages/jl2197.aspx.
        \97\ For purposes of this statement, total obligations are defined
    as total direct obligations. Deflators for converting into constant
    dollars derived from Office of the Under Secretary of Defense
    (Comptroller), National Defense Budget Estimates for fiscal year 3013,
    Department of Defense, ``Department of Defense Deflators--TOA by
    Category `Total Non-Pay,' '' Table 5-5, p. 59-60, March, 2012.
    ---------------------------------------------------------------------------

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        From fiscal year 1999 to fiscal year 2013, adjusted for inflation
    (fiscal year 2013 dollars), DOD contract obligations increased from
    $175 billion to $310 billion (see Figure 3). Over the first part of
    this period--fiscal year 1999-fiscal year 2008--DOD contract
    obligations increased 150 percent, from $175 billion to $435 billion.
    This trend reversed itself in fiscal year 2008: from fiscal year 2008-
    fiscal year 2013, DOD contract obligations decreased by 30 percent,
    dropping from $435 billion in fiscal year 2008 to $310 billion in
    fiscal year 2013.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Levin. Thank you very much, Mr. Schwartz.
        Mr. Berteau.

     STATEMENT OF DAVID J. BERTEAU, SENIOR VICE PRESIDENT, CENTER
                FOR STRATEGIC AND INTERNATIONAL STUDIES

        Mr. Berteau. Thank you, Mr. Chairman and Ranking Member
    Inhofe, for the opportunity to be here today. I would ask that
    my written statement be included in the record.
        I have a few oral comments. I will try not to duplicate
    that which was said before, but I want to emphasize a couple of
    points.
        The earlier panel talked a lot about the need of programs
    in the acquisition system to also have requirements and the
    budget resources, and all those three elements have to line up
    together. We tend to look at that from the point of view of the
    executive branch and say it is its job to do that. But I think
    in talking about the role of Congress, which is really one of
    the reasons we are having this hearing today, the place where
    those three things come together is, in fact, in Congress and
    in particular, in this committee.
        In that, I want to go back to a comment you made. I think
    it was in your first question for Secretary Kendall, the role
    of oversight, in addition to the role of legislation. I want to
    really endorse, I think, your comment that we do not often do
    enough of it. This is the place where that oversight and that
    oversight hearing responsibility can not only expand the
    visibility into those interconnections between requirements,
    budgets, and programs, but also help educate the Members of
    Congress, educate the media, and educate the public.
        One of the things I would ask you to look at, though, is
    places where, in fact, you can hold oversight on something that
    is actually working pretty well, as opposed to focusing so much
    of our attention on just the places where things are a
    disaster. Lord knows there is enough of those. It would be
    useful, I think, to look for places where, in fact, something
    is working pretty well.
        In that, I think one of the other elements is the role of
    competition. We talked about that a lot today. I mentioned in
    my statement for my first hearing when I first came to DOD in
    1981, Frank Carlucci, the Deputy Secretary, was testifying
    before this committee about his 31 initiatives. He came in the
    room with 31 initiatives. He walked out with 32 because you
    added competition to that list of initiatives, and it survived
    that hearing and became an inevitable part of it.
        But I think there is an important analytical question and
    an important policy question. If we are not buying enough of
    something to sustain competition, and Frank Kendall talked a
    little bit about this in his statement, how do we create the
    benefits of competition even though we do not have the buying
    power to force and create that? I think that is worthy of
    considerable effort and attention particularly as the budgets
    continue to come down.
        There are three areas that we did not talk about much at
    all this morning. One is essentially 50 percent of procurement
    and contracting is in services as opposed to major end items.
    One of the things that we look at a lot at CSIS is both the
    content and the distribution of those services' dollars. We
    have a report coming out in just a couple of weeks with a lot
    of detail, and I would like to provide some summaries of that
    to the committee at the time that we release those because I
    think they will be in time for your schedules.
        Chairman Levin. They would be very welcome.
        Mr. Berteau. In particular, I think that we need to be
    careful that we do not try to manage services contracting the
    same way we manage major defense end items through a DOD 5000
    directive that has milestones. I think it needs a different
    approach, one that needs to be worked on.
        The second is the question of innovation. Our lives have
    been spent with DOD having huge technology advantages over all
    our potential opponents. DOD, Secretary Kendall, and this
    committee have all talked about the need to maintain that
    technological advantage going forward. But increasingly,
    innovation is occurring not inside the defense world, not
    funded by DOD, not being developed necessarily by defense
    contractors, but out of the global marketplace. Whether it is
    materials, communications, data management, or sensors, there
    is a lot of development in the global commercial market. I
    think we need to spend a good bit of time figuring out how our
    defense world can take advantage of global innovation because I
    think globalization is no longer a policy choice, it is
    actually a characteristic of the defense environment in which
    we find ourselves. We are not really all that good at figuring
    out what our policy framework ought to be in that regard.
        Then finally, I would recommend that we look at what has
    perhaps been the most effective, if not necessarily useful,
    legislation with respect to some of the issues we talked about
    this morning. There has been a lot of time spent on the
    question of the tenure of a program manager and how long they
    could stay in place. I was in DOD, after the Packard Commission
    report was released, I think it is 28 years ago this week. I am
    pretty sure your staff probably can still pull that report
    right off the shelf. I meant to bring a copy with me, but the
    rain kept me from getting it.
        When we looked at early implementation of that, we looked
    at reform of the Defense Officer Personnel Management Act of
    1980. That is the upper out that drives that tenure, if you
    will. I would strongly endorse this committee taking another
    look at that. I think it is very useful to try to tackle that
    question. I would caution you that my experience is that as
    important as acquisition is, it is very hard to use it as the
    counter to the overall promotion dynamics that go on in the
    military today. I think it is worthy of another look.
        With that, I will end my initial remarks, thank you for the
    opportunity, and open up for questions.
        [The prepared statement of Mr. Berteau follows:]
                     Prepared Statement by David J. Berteau
                                  introduction
        Mr. Chairman, Senator Inhofe, and distinguished members of the
    committee, thank you for the invitation to appear before you this
    morning on such an important topic and in the company of my
    distinguished fellow panel members.
        For the past 6 years, I have been honored to work at the Center for
    Strategic and International Studies (CSIS) here in Washington DC, where
    I am a senior vice president and the director of the National Security
    Program on Industry and Resources.
        It is important to note that, as a bipartisan think tank, CSIS as
    an institution does not take positions on issues. As a result, the
    views in my statement and in my comments today are entirely my own.
        In the invitation letter, you asked for my ``assessment of the
    Weapon Systems Acquisition Reform Act (WSARA) and other acquisition
    reform measures adopted over the last decade.'' You also asked that my
    testimony ``consider the need for further improvements to the defense
    acquisition system.'' My statement below responds to each of these
    areas.
                                   background
        From 1981 through 1993, I worked at the Department of Defense. One
    of my first responsibilities as a Defense Department employee was to
    support the 1981 acquisition reform initiatives. Mr. Chairman, those
    initiatives were called the ``Carlucci Initiatives'', led by the Deputy
    Secretary of Defense, Frank Carlucci. When he came to this committee in
    1981, he had 31 initiatives. When he left, he had 32--you added the
    32nd initiative, on better use of competition. That addition led
    eventually to the Competition in Contracting Act of 1984, a statute
    that remains at the core of key contracting and acquisition decisions
    throughout DOD.
        In 1985 and 1986, I was privileged to serve as the Executive
    Secretary of the President's Blue Ribbon Commission on Defense
    Management, known as the Packard Commission. Many of that commission's
    recommendations were incorporated into statute in the Goldwater-Nichols
    Defense Reorganization Act of 1986, including the creation of the Under
    Secretary of Defense for Acquisition, a position that remains the
    primary focal point for defense acquisition today (although the name
    has been expanded to include Acquisition, Technology, and Logistics).
        Subsequently, I spent 6 additional years in DOD, helping to
    implement many of the Packard Commission and Goldwater-Nichols reforms.
        For the past 6 years, I have been privileged to lead the research
    efforts on defense acquisition, programs, and contracting at CSIS. My
    comments this morning are partly informed by our CSIS research as well
    as by my direct experience and interactions with our colleagues.
                        the goals of defense acquisition
        The DOD Acquisition System is a set of means to help reach the ends
    of providing for the Nation's common defense. Many government agencies
    use procurement to help enable them to reach their outside customers,
    clients, and target audiences. With the Defense Department, acquisition
    and procurement provides the core of DOD's own capabilities. In other
    words, DOD has to apply and use what it develops and acquires. To me,
    this creates an inherently strong need to get a number of processes
    right, from requirements through programs and budgets into the
    solicitation, award, and execution of contracts. It demands a capable
    and responsive industrial base with a global technology reach. It
    relies on a capable and resilient defense acquisition workforce,
    including military and civilian personnel with technical and analytical
    support. Finally, it depends on a strategy and policy framework on
    which the Nation, not just DOD, agrees, as well as the necessary
    programmatic and budgetary support from the U.S. Congress.
        Because of the characteristics I just described, it is important to
    look at the DOD Acquisition System as a key element of a larger set of
    activities and functions. These include the following four key
    elements:

             Requirements;
             The DOD Planning, Programming, Budgeting, and
            Execution System (PPBES);
             The Acquisition System itself, from acquisition
            baselines and plans through contract execution;
             Recruiting, training, mentoring, retaining, and
            promoting an acquisition workforce of military and civilian
            personnel and the necessary technical, analytical, and
            administrative support.

        I will touch briefly on each of these before addressing the Weapon
    Systems Acquisition Reform Act (WSARA) and other acquisition reform
    legislation.
                                  requirements
        The Packard Commission placed great emphasis on the need to include
    requirements determination as part of the Acquisition System, and the
    Under Secretary for Acquisition, Technology, and Logistics has a role
    in the requirements process. There is a statutory structure of the
    requirements process as well as a legitimate debate over whether cost
    considerations should be part of the front end of the requirement
    process. However, ongoing program and budget cuts can drive real
    requirements changes during the execution of programs, changes that may
    not be made with adequate regard to the priority tradeoffs and impacts
    on other programs.
         the dod planning, programming, budgeting, and execution system
        One of the great strengths of DOD is the fiscally-disciplined
    programming process, The DOD Planning, Programming, Budgeting, and
    Execution System (PPBES). By producing an integrated Future Years
    Defense Program (FYDP), it is possible for the Military Departments and
    other DOD components to predict and management time, money, and other
    resources to develop, acquire, and field goods and services throughout
    DOD. The DOD Acquisition System relies on a solid FYDP.
                           the dod acquisition system
        An update to DOD Instruction 5000.02, titled ``Operation of the
    Defense Acquisition System'' (http://www.dtic.mil/whs/directives/
    corres/pdf/500002--interim.pdf) was issued last November as ``Interim''
    guidance, and it is currently being finalized by DOD. The opening
    sections of the Interim Instruction provide detailed guidance, with
    examples, of ways in which program officials can tailor the application
    of acquisition processes and procedures to fit the needs and
    requirements of their particular program. This shows the flexibility
    that is built into statutory authority, as the Packard Commission
    recommended more than 25 years ago. Of equal interest, however, is
    Enclosure 1, Tables 2-9, beginning on page 44 of the document. For 28
    pages, these tables lay out the statutory and regulatory requirements
    for programs. Taken together, the information in these tables
    illustrate both the breadth of past legislation and the opportunities
    for future improvements. I will return to this point below.
                           the acquisition workforce
        Over the past 5 or 6 years, DOD has worked hard to rebuild its
    acquisition workforce, to hire and retain skilled civilian workers and
    to prepare for the eventual retirement of many in today's workforce.
    The Military Services have increased their focus on better preparing
    and using military acquisition professionals, and if the Senate
    concurs, the Defense Contract Management Agency will soon have its
    first general officer as commander in a decade, a recommendation
    endorsed by this committee following the recommendations of the Gansler
    Commission (the Commission on Army Acquisition and Program Management
    in Expeditionary Operations). These workforce gains need to be
    protected, however, in the face of declining budgets, furloughs and
    government shutdowns, and hiring freezes.
                          the defense industrial base
        There is no DOD Acquisition System without a defense industrial
    base to deliver the goods and services DOD requires. That industrial
    base is supported primarily by DOD contract spending. In a report from
    CSIS that will be released next month, we will show that contract
    spending by the Defense Department has declined by 25 percent since the
    peak of 2008 and 2009, while non-contract spending by DOD has actually
    increased by more than 10 percent. In fact, a smaller number of
    military and civilian personnel is costing DOD more today, in constant
    dollars, than they were 5 years ago. If these trends continue,
    increases in defense spending for military pay and benefits and for
    Operation and Maintenance will eventually crowd out spending for
    modernization, including procurement and research & development, and
    for services contracts. DOD's proposals for curbing the rate of growth
    in personnel and health care costs are a modest step in the direction
    of preserving funds for acquisition programs.
                     innovation and technology superiority
        There is a second critical part of the U.S. industrial base, one
    that does not show up in the budget and therefore somewhat undervalued.
    For decades, U.S technological superiority has depended on investments
    by DOD directly or by defense firms themselves, whether reimbursed by
    the government or investing from their own funds. Those expenditures
    will remain import for the foreseeable future. Increasingly, however,
    CSIS experts are finding that it's also important to do a better job of
    incorporating innovation from the global commercial markets, not just
    from defense arenas and not just from within the United States. It is
    hard for the government to be fully aware of these innovations. Even
    harder, however, is that Federal Government cycle times for defining
    requirements, assembling and defending and appropriating budgets, and
    executing contracts can be far longer than the cycle times for new
    technology to be developed and deployed in the commercial sector. The
    future may require this cycle-time disconnect to be addressed. We need
    action to reconcile these cycle-time disconnects so that DOD can take
    better advantage of technology innovation in the global commercial
    markets.
               the weapon systems acquisition reform act of 2009
        It is nearly the fifth anniversary of the passage of the Weapon
    Systems Acquisition Reform Act (WSARA) on May 22, 2009. That is
    sufficient time to make some judgments as to how well it is doing. From
    our analysis and observations, I draw a few key conclusions.
        First, the creation of and reports from the office of Program
    Assessment and Root Cause Analysis (PARCA) has illuminated root cause
    connections and correlations that were not apparent to even the keenest
    of observers. The 2013 DOD report ``Performance of the Defense
    Acquisition System'' draws in part from these PARCA analyses. (The
    report may be found at http://www.acq.osd.mil/docs/
    Performance%20of%20the%20Def%20Acq%20System%202013%20-
    %20FINAL%2028June2013.pdf)
        Second, WSARA created the office of Cost Analysis and Program
    Evaluation (CAPE) along with a director required by statute. The
    increased focus on and use of independent cost estimating from CAPE for
    DOD major programs seems to helping. Even when acquisition executives
    decide to use a different estimate for program baselines, the
    additional attention and scrutiny driven by the independent cost
    estimate probably provides value.
                                   conclusion
        Mr. Chairman, Senator Inhofe, members of the committee, the time is
    coming for congressional action that will help improve the DOD
    Acquisition System. I expect to see good input from the responses to
    the recent letters to industry from the chairman and ranking member of
    this committee, along with your House counterparts. A good first step
    could be to examine those 28 pages of statutory and regulatory
    requirements that I mentioned above, to harmonize reporting cycles and
    thresholds and to rationalize data requirements. It would be my hope
    that along the way, we might even find some requirements that no longer
    return enough value for them to be continued.
        The history of past reforms suggest that the ones with the most
    lasting value are not rushed to decision. Rather, reforms like those of
    the Packard Commission have several key elements of success, including
    sound and deep analysis by professional staff, a close alliance between
    the executive and legislative branches at the leadership level, and a
    recognition of the potential value of stand-alone legislation. I hope
    that some of what we discuss here today will help you on that path, and
    I thank you for the opportunity to appear here. I await your questions.

        Chairman Levin. Thank you very much, and we will move to
    questions.
        I think you just said something about if we can retain the
    benefits of competition when we do not have the resources. Is
    that what you said? Do you have any ideas how that is possible,
    or what did you mean by when we do not have the resources?
        Mr. Berteau. If we are not buying enough of something to
    maintain two competitive sources.
        Chairman Levin. In that circumstance, do you have any ideas
    as to how we could maintain competition?
        Mr. Berteau. I think there are two ways. One is that the
    competition could be, in fact, structured so that it is
    competition for accomplishment of the mission as opposed to a
    competition for one particular end item inside that. That is an
    internal competition that would essentially force the Military
    Services to say the mission objectives. I have multiple ways I
    can achieve this mission. Expeditionary operations over the
    shore is a good example of that. There are several different
    ways in which the marines can come ashore. They do not all
    necessarily require a replacement for the expeditionary
    amphibious vehicle. You would have a competition of mission
    accomplishment.
        The second is internally in the company, especially once
    you have actually awarded the contract, with a competition
    against a performance standard and that would essentially
    include monetary benefits if you actually produce below the
    targeted budget and ahead of the targeted schedule. You are
    essentially competing against a set of performance standards
    within a contract. That can be structured in both the program
    and the contract itself.
        We have seen some evidence of this. You have a couple of
    shipyards that are operating where they are actually delivering
    ahead of schedule and under budget, and obviously, they reap
    some profit benefits from that. But it requires a government
    workforce and an ability to find requirements in that program
    and in that contract in such a way that there are not a lot of
    loopholes built in that the contractor can take advantage of.
        Both of those I think would be useful to look at.
        Chairman Levin. Any of you have any suggestions on changes
    in law? If you could make one change in the law or two changes
    in the law, including regulations which govern DOD acquisition,
    what would you change or repeal for that matter?
        Mr. Berteau. May I take a first crack at that?
        Chairman Levin. We will ask all of you. Take a first crack,
    we will go around.
        Mr. Berteau. Mr. Etherton will have a better idea.
        Chairman Levin. You will give him more time to think about
    it. Do you want to start?
        Mr. Berteau. I took a look, in preparing for today, at the
    interim DOD instruction 5000.02 that was issued last November
    by DOD. If you read through the document, it is about 150 pages
    when you lay the whole thing out, the front end is full of very
    good language about how program managers could tailor their
    application of all the requirements to meet the needs of the
    program.
        Then you get in about the middle of the document, where
    there are 25 or 30 pages worth of charts of all the regulatory
    and statutory requirements that you have to meet to go through
    this. I think Senator Inhofe mentioned the 80,000 work-hours to
    put into Milestone B documentation.
        You are right, this is rather dry. It is either very dry or
    very scary, depending on how much attention you are paying to
    it. These things are not harmonized or rationalized in any way,
    shape, or form. There are wildly different schedules and wildly
    different variations in terms of thresholds, in terms of the
    requirements of when you have to report and to whom. I think
    even rationalizing all those so you essentially have a
    harmonization is not something you can do between now and
    markup. That is really a year-long process, and, I think, it
    requires a good bit of support and integration with the
    executive branch in order to do that. I think that is what is
    underway already, but I want to endorse that. If you only do
    one thing, that is not a bad thing to do.
        Chairman Levin. Thank you. I think Mr. Kendall indicated
    that is underway.
        Mr. Schwartz?
        Mr. Schwartz. I will put forth three ideas that a number of
    people have been throwing around there. One, of course, is to
    reiterate the idea of streamlining rules and regulations which
    clearly will take a legislative requirement, along what was
    done 20 years ago, literally to the year, in the Section 800
    Panel as part of the Federal Acquisition Regulations.
        A second one is workforce. I am not putting forth a
    specific legislative change. Obviously, we do not do that at
    CRS. But to the extent that the culture of workforce and the
    incentives that drive workforce promotion and decisionmaking
    will likely require some sort of legislative input, be it, as
    some of the members raised some questions, changes to
    compensation or be it requirements of how long program managers
    should stay in locations and in jobs, that may require
    legislation.
        Then, the third one that a number of people have mentioned
    is that Nunn-McCurdy has proven to be a fairly effective method
    of gathering data and information on programs. There are two
    areas that it could be extended to if Congress wished to do so.
    One which has been mentioned is IT and other business systems.
    Another one is operation and support costs. To the extent that
    operation and support costs tend to represent in the realm of
    70 percent, sometimes 80 percent, of the lifecycle cost of a
    program and there is not really sufficient and reliable data,
    according to even a number of people in DOD, to make those
    decisions, such an approach could help Congress and DOD gain
    more data now for better long-term decisions later.
        Chairman Levin. Thank you.
        Mr. Etherton?
        Mr. Etherton. First, let me mention the DAWDF. If it were
    within my power, I would significantly increase the amount of
    money that would be available in that fund. I think it was one
    of the great accomplishments of this committee in creating that
    fund and figuring out a way to fund it out of funds that would
    otherwise be spent for services contracts. I would also point
    out that industry was more or less unanimously in favor of that
    legislation when it was proposed, notwithstanding the source of
    funding. There were great hopes, I think, when that fund was
    created for a fairly robust amount of money that would be
    available for recruiting, retention, and education in the
    acquisition workforce.
        In the appropriations bill for fiscal year 2014, that money
    now has been limited to $50 million, which is much lower than
    where you all had originally hoped to be at this point. I think
    that is an area that needs to be revisited, and any additional
    resources that could be put into that fund, I think, would be
    something that would be a good thing to do.
        I also think it would be useful to try to look at the
    relationship between the investments that you make within that
    fund and the long-term funding that you would need to continue
    the funding for the new people that you bring in through the
    normal Program Objective Memorandum process and maybe have
    better integration with that. That is another area that I would
    look at.
        I also think, and this is really in the weeds, that we
    probably need to review the current laws with respect to
    intellectual property, technical data rights, as well as
    commercial item acquisition, because I see some disconnects
    there that are emerging that are going to potentially make it
    more difficult to access technology development coming in from
    the commercial sector through various ways. I think that needs
    to be reviewed and looked at more carefully.
        Chairman Levin. Thank you all.
        Senator Inhofe.
        Senator Inhofe. Thank you, Mr. Chairman.
        I understand from my staff, Mr. Schwartz, you might have a
    prop that might demonstrate the volume of stuff you guys have
    to go through in your acquisition process.
        Mr. Schwartz. Sure. It might be instructive to see what
    exactly the rules and regulations that the acquisition
    workforce is supposed to master in making their decisions.
        This is a stack that includes the DOD 5000 series, which is
    the memo that Secretary Kendall mentioned was rewritten in
    November for acquisitions. It includes the Defense Federal
    Acquisition Regulation System (DFARS) and then, of course, the
    DFARS Supplement, and the Defense Acquisition Guidelines, which
    are supposed to explain all of that. In fact, Senator, if you
    ever attempt to break Senator Strom Thurmond's record for
    continuously holding the floor for the longest period, I am
    happy to lend this reading material to you. [Laughter.]
        Senator Inhofe. It sounds like it would just be very
    captivating. [Laughter.]
        Chairman Levin. It is weighty.
        Senator Inhofe. It is.
        Let me ask you a question. I think I know what your answer
    is going to be. It was fun hearing you talk about Frank
    Carlucci, Mr. Berteau. I remember him. In fact, I remember also
    that back then during the Reagan administration, they talked a
    lot about zero-based budgeting, not zero-based acquisition, as
    some recommendations have come out. There is always opposition
    to that.
        But I want to ask you that because the panel that you guys
    have, DOD Defense Business Board, came out and their number one
    recommendation was to zero base the entire defense acquisition
    system. I would like to hear a comment from each one of you as
    to what you think about that. Since you were my appointment
    there, Jon, why do you not start?
        Mr. Etherton. Okay, sure. I address this issue a bit in my
    written statement.
        I think the challenge that the committee and DOD has is how
    do you get an orderly review of what is already in these types
    of things, as well as the statutes in title 10 that govern the
    acquisition process. Back in the 1990s, we specifically formed
    through this committee through the NDAA for Fiscal Year 1991,
    the so-called Section 800 Panel. We told them to go off and
    look at all the existing statutes governing acquisition and to
    come back with a report on changes in a very specific
    actionable format. There does not seem to be a lot of appetite
    to do that again, at least from what I can perceive.
        That is one idea you might want to consider. I think that
    you need to keep things in place rather than do a wholesale
    elimination overnight and make people put things back. I think
    that would really throw the system in somewhat of a chaos since
    it does seem to be a very rule-based approach that prevails in
    the culture right now.
        But what you might want to consider is a series of phased
    reviews where you have a mandatory sunset after a certain
    period of time, which would force everyone in the process to
    review the statutes, the regulations, or whatever, and also
    allow outside groups to provide inputs and bring in outside
    expertise so that you had a date certain where you had to make
    decisions on whether to continue something or not. I have not
    formulated exactly how that would work, but that may be one
    approach that should be considered.
        Senator Inhofe. Mr. Schwartz?
        Mr. Schwartz. In these regulations, there actually are some
    good things, and when looking at the regulations, sometimes it
    might be useful to consider what impact those regulations have
    had and why they may or may not have succeeded as originally
    intended. One particular example, which dates back to David
    Packard in the 1980s, is the chain of command of program
    manager, PEO, service acquisition executive, and under
    secretary of defense. The idea was to put somebody in charge of
    every step along the way of a streamlined process.
        But a couple of years after that, David Packard stated
    publicly that he did not expect some of the things that did not
    occur to occur. When he articulated the idea of streamlined
    structure, he said it could only work if the incentives are
    there to make the people make the right decisions, if the
    authority is there for the program managers and others in that
    chain to make the right decisions, and if they are held
    accountable for those decisions.
        As Mr. Sullivan testified on the F-35 in the last 11 years,
    he said there have been, I believe it was, six program
    managers, five or six program managers. In that circumstance,
    the problem may not necessarily be with the structure that is
    in here. It may be with the fact that the people in those
    positions are not there long enough, are not necessarily held
    accountable, and sometimes may have the incentives to make the
    wrong decisions. When reviewing this effort, which is a
    laudable effort and is very likely to have some positive steps,
    I would caution that it be considered what is the root cause
    issues that are sometimes not giving us the effects that we
    want.
        Mr. Berteau. Senator Inhofe, that question about the value
    of a zero-based approach, I think, is one worthy of
    considerable thought and analysis. I have three examples that I
    would offer for your consideration of where we might have tried
    this in the past.
        The first is after the fall of the Berlin Wall and the
    collapse of the Warsaw Pact. DOD was invited into a number of
    the emerging countries in Eastern Europe to help them figure
    out how to create a defense and a Federal acquisition process.
    We brought them the Federal Acquisition Regulation and said why
    do you not copy this. I am extemporizing and collapsing a
    considerable amount of effort into one sentence, but the
    reality is that one could almost not think of a better revenge
    against the former Soviet states than to have them comply with
    the Federal Acquisition Regulations right from the get-go. I
    think we missed an opportunity to help them essentially do
    their own in that regard.
        The second is to look at examples where this Congress has
    provided elements of the Federal Government with the
    opportunity to start from scratch and write their own both
    acquisition regulations and personnel management regulations.
    The one that I am most familiar with was the Federal Aviation
    Administration back in the mid-1990s, where Congress gave them
    the authority to create their own new acquisition process,
    their own new procurement regulations, and their own version of
    civilian personnel management. If you look at the history,
    essentially they went back to what we were doing before and
    just made it their own instead. But in essence, they did not
    take advantage of that opportunity. There was no incentive, if
    you will, for them to create something new because we knew how
    to operate under that.
        The third is the one example where, I think, it is very
    worth going back and looking at. When Secretary-designate Mel
    Laird invited David Packard to be considered as his deputy
    secretary in the winter of 1968-1969, Packard agreed to come.
    He only stayed for 16 months. He actually took that approach,
    if you will. If you go back and look at the original DOD
    directive 5000.1 that he wrote, I believe it is about six or
    seven pages long and it is essentially the zero-based approach
    to what you would want a real acquisition system to do. Its
    residue sits to Mr. Schwartz's right here, but it shows, I
    think, the possibility, if you will, of at least
    conceptualizing what it ought to do.
        I think, though, if you really want to tackle this, what
    you need is some kind of a pilot. You cannot really put the
    whole DOD, if you will, into that kind of a situation. I think
    you need a place where you would test it out, see if it can
    work, and see if it comes into place.
        You look, for instance, at the U.S. Special Operations
    Command (SOCOM) today and the way it does acquisition, in part
    because of the statutory structure from Nunn-Cohen. I think it
    depends on who is talking about it, if you will. But the
    original 1986 act created SOCOM and the creation of its own
    acquisition executive, its own major force program inside the
    DOD programming process, and its ability to create its
    requirements. There you have the integration of requirements
    and acquisition and budgets all together. I am not saying you
    can replicate that across DOD, but there are some lessons
    learned from that from a zero-based acquisition point of view
    that I think would be very instructive to the committee.
        Senator Inhofe. Yes, and I appreciate that. When I look at
    it and having gone through this before, we actually did this in
    the State of Oklahoma too, zero-based budgeting, not
    acquisition. We have that group that is there, the Defense
    Business Board, and it is to provide the Secretary of Defense
    with trusted, independent, and objective advice which reflects
    on outside private sector perspective. You are talking about 17
    guys and gals that are there that have the background and have
    been recognized as experts. I am sure they considered
    everything that each of the three of you were talking about. I
    have to look at that and think, what I am overlooking or what
    are they overlooking. It might not hurt to call them up and
    find out.
        I do not have anything else, Mr. Chairman.
        Chairman Levin. Thank you.
        It will be interesting for all of us, I think, to take a
    look at that. What was it? Five pages, David Packard's five or
    six pages? How many was that?
        Mr. Berteau. I think it is about six or seven. I read it
    periodically, but I do not have the pages memorized. It is
    quite an illumination.
        Chairman Levin. I am sure we will ask our staff to dig that
    out and to share it with us.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Levin. Thank you all. This is a very useful
    hearing and it is a very important hearing because oversight is
    something we do not do enough of around here, as I mentioned.
    We are thankful for your contribution.
        We will stand adjourned.

        [Whereupon, at 12:05 p.m., the committee adjourned.]

        [Questions for the record with answers supplied follow:]
               Questions Submitted by Senator Richard Blumenthal
                                     mh-60r
        1. Senator Blumenthal. Secretary Kendall, the Navy cut 29 MH-60R
    helicopters from the planned procurement, which would leave the Navy 29
    aircraft short of its requirement and would break the current H-60
    multi-year procurement contract. What is the termination liability of
    such a move and what are the effects this will have on the price of the
    Army UH-60M aircraft for next year if the multi-year is broken?
        Mr. Kendall. A final decision on maintaining or terminating the MH-
    60R multi-year procurement contract has been deferred to fiscal year
    2016. Any potential modifications to the Navy's MH-60R procurement plan
    will be aligned with other Navy force structure adjustments. Actual
    costs associated with a potential early termination or cancellation of
    the two multi-year contracts have not yet been determined. Costs will
    be calculated in accordance with the Federal Acquisition Regulations
    (FAR) and through negotiations of a termination settlement proposal
    with the prime contractor when and if official notification of
    termination or cancellation occurs. Provided that the level of Advance
    Procurement funding requested in the President's fiscal year 2015
    budget request is approved and appropriated by Congress, potential
    termination or cancellation would not occur until the fiscal year 2016
    Appropriations and Authorizations Acts become law.

                           rosoboronexport helicopter
        2. Senator Blumenthal. Secretary Kendall, the United States
    continues to purchase Rosoboronexport helicopters, even as sanctions
    are imposed on Russian leadership. What must we do to cease the
    delivery and payment for the 20 remaining Mi-17 helicopters?
        Mr. Kendall. An official in the chain of command of the Non-
    Standard Rotary Wing (NSRW) Program Office would have to direct the
    NSRW Program Office to take action, under the terms of the contract, to
    negotiate with the Russian joint stock company Rosoboronexport to cease
    delivery of the Mi-17 helicopters and to negotiate cessation of
    payments. The United States has the ability to suspend work under the
    contract for a maximum period of 90 days; however, under that
    authority, the United States would likely be liable for delay and/or
    other costs incurred as a result of the stop work order.

        3. Senator Blumenthal. Secretary Kendall, what would be the
    termination costs of such a move?
        Mr. Kendall. The termination costs would be subject to negotiation
    and would likely change significantly based on the date of the
    termination. However, the primary consideration for the Department of
    Defense (DOD) would not be the financial cost of termination but the
    enormous impact that contract cancellation would have on our mission in
    Afghanistan. General Dunford has described the loss of the Mi-17s as
    catastrophic.

        4. Senator Blumenthal. Secretary Kendall, I am aware that DOD has a
    current requirement that the primary manufacturer certify the air
    worthiness of an airframe before U.S. troops are allowed to board or be
    transported by the aircraft. Does an alternative method exist for
    certifying the air worthiness of various Mi-17 helicopters that would
    avoid engagement with or dependence upon the Russian manufacturer?
        Mr. Kendall. DOD's policy has been to allow U.S. personnel to fly
    only on Mi-17s certified as airworthy by the U.S. Army as a means of
    managing safety risk. Airworthiness is a U.S. Government determination
    but it depends critically on technical information and certifications
    from the manufacturer.
        Without access to certified suppliers (for parts, technical
    information, air worthiness bulletins, etc.), the number of Afghan Mi-
    17s able to be certified as airworthy under our current airworthiness
    approach would steadily decline over time. The resulting impact to the
    Afghan National Security Forces (ANSF) Mi-17 fleet would substantially
    reduce the success of ANSF operations and the ANSF's ability to provide
    an outer perimeter of force protection for U.S. forces.
        Accepting the loss of access to certified suppliers and
    transitioning to a higher airworthiness risk is possible but it will
    increase operational risk and the safety of flight risks to personnel,
    including U.S. personnel, on the aircraft. To mitigate or lower the
    risk, service life reductions could be implemented. This will result in
    increased cost due to the need for more maintenance and buying
    additional parts to ensure safety of flight, and is likely to further
    degrade Afghan Mi-17 mission readiness rates.
        It should be noted that flight safety risk to U.S. personnel would
    include risk to both U.S. military personnel, as well as civilians from
    other Federal Agencies, (e.g. civilians supporting counter-narcotics
    operations). These risks would inhibit U.S. personnel flying with
    Afghans and further degrade Afghan training and operational capability.
    The additional risk may preclude operations, e.g., counter-narcotics
    operations, by other Federal Agencies.
                                     ______

                 Questions Submitted by Senator James M. Inhofe
                   additional testing requirements and costs
        5. Senator Inhofe. Secretary Kendall, the current Director of
    Operational Test and Evaluation (DOT&E) is not testing equipment to the
    standards set by the Services and validated by the Joint Requirements
    Oversight Council (JROC). Rather, DOT&E has decided to test equipment
    to standards which the DOT&E believes represent future threats. Though
    such tests could assist in mitigating operational risks, many believe
    this advantage is offset by encouraging gold-plated solutions which
    undermine the movement toward spiral or incremental acquisition
    strategies. Additional concerns have been raised since it appears these
    new testing requirements add additional costs and create delays to
    acquisition programs. What are your thoughts on this matter?
        Mr. Kendall. My understanding is that DOT&E attempts to test
    systems under as realistic operational conditions as possible. I
    believe this is the right approach and provides DOD with the best
    information on the performance of its weapons systems in stressing
    operational conditions. While I appreciate the concerns about adding
    costs to programs, I note that past reviews conducted by DOD have not
    found any significant evidence that the testing community typically
    drives unplanned requirements, cost, or schedule into programs. Most of
    our systems are fielded with initial capabilities that are improved
    over time, through later increments of software or through insertion of
    technology. Threats also change over time, and in many cases the
    initial design threat will have evolved by the time the system is
    fielded. Resource constraints and technical risk also affect the
    capabilities we can field at any given point in time. DOD has to
    balance all of these concerns as it structures acquisition programs and
    test programs. DOT&E provides valuable contributions to the debates
    about the best balance to strike. Sometimes those debates are heated,
    but I do not believe DOT&E significantly or inappropriately constrains
    DOD's decisions on acquisition strategies, priorities, requirements, or
    resource allocation.

        6. Senator Inhofe. Secretary Kendall, how can we reform the
    acquisition system so DOT&E still makes an important contribution while
    addressing these cost and delay issues?
        Mr. Kendall. The data that I have seen does not support the view
    that DOT&E is causing significant or inappropriate cost and schedule
    delays. I do not believe legislative changes or major reforms in this
    area are needed at this time.
        DOT&E is rightfully concerned about whether programs are
    operationally effective and suitable and that programs are tested under
    realistic combat conditions. We have to balance these concerns with
    resource constraints, urgency of need, and other considerations. I
    believe that DOD can achieve an appropriate balance without additional
    policy or legislative change.

                  streamlining the defense acquisition process
        7. Senator Inhofe. Secretary Kendall, recently, DOD reissued DOD
    Instruction 5000.02. Under this new interim instruction, most of the
    previous acquisition procedures remain, but are conducted earlier in
    the process. There are advantages to this approach but it does not
    reduce the amount of paperwork required. For example, I have recently
    been informed a major defense acquisition program spent 80,000 man-
    hours to produce the documents required to pass Milestone A. In
    addition, a further 100,000 manhours were required to create the
    paperwork necessary to pass Milestone B. This is insane. Accordingly, I
    have tasked the Government Accountability Office (GAO) to come up with
    recommendations to streamline the process. I also understand you are
    working on a similar initiative. What goals do you believe should be
    set to reduce this excessive documentation?
        Mr. Kendall. It is too early in the process to enumerate specific
    goals beyond my initiative's overarching one: ease the burden imposed
    by statute and related regulations in a substantial way. As an effort
    complementary to Better Buying Power, I have a team comprised of
    acquisition, technology, and logistics, Service Acquisition Executive,
    and other subject matter experts engaging in a deliberate and
    comprehensive review of acquisition statutes. Based on data collected
    from this review and from Service program deep dives, the team will
    develop legislative proposals to simplify the existing body of law that
    governs defense acquisition processes while maintaining the statutes'
    overarching intent. Two of the team's key focus areas are milestone
    certification requirements and reduction of unnecessary or duplicative
    documentation and reports, and I anticipate submitting several
    proposals that will address complexity, quantity, and necessity of
    documentation and related processes at the milestones and throughout
    the acquisition process. The main body of proposals should be finalized
    in time to be included in the National Defense Authorization Act (NDAA)
    for Fiscal Year 2016.

                           single leader responsible
        8. Senator Inhofe. Secretary Kendall and Mr. Sullivan, as I
    mentioned in my written remarks, the Air Force publicly released the
    conclusions of its Acquisition Incident Review Team Final Report which
    examined the reasons for the failure of the Expeditionary Combat
    Support System (ECSS). The report noted ECSS had six program manager
    (PM) changes in 8 years and five program executive officer changes in 6
    years. The report concluded that this ``personnel churn'' led to
    ``significant instability, uncertainty, and churn, which served as a
    major distracting influence over the execution of the program.'' What
    are your thoughts on how to structure our acquisition personnel system
    so PMs have more stability in their assignments?
        Mr. Kendall. While the frequency of personnel changes for the ECSS
    program was excessively high, it does not represent normal practices or
    guidance. Since 2005, tenure lengths for major programs (Acquisition
    Category I/IA) were to run to the program milestone closest to 4 years
    or as tailored by the Component Acquisition Executive based on unique
    program requirements. While many factors impact program success, I
    believe that a measure of a PM's performance should be the successful
    execution of a phase of the program he or she planned and that the
    Milestone Decision Authority has approved. Therefore, in November 2013,
    I issued updated policy that re-emphasizes tenure expectations for PMs
    of ACAT I or IA programs. PMs should be assigned to the position to
    develop plans that lead to a milestone or decision that initiates a
    phase of the acquisition process, lead the effort to have that phase
    approved, and manage the execution of that phase. The updated policy
    states that PMs should begin approximately 6 months prior to a major
    milestone and be assigned for 4 years or until completion of the phase
    of the program that occurs closest in time to the date on which the
    person has served in the position for 4 years. Tenure length for non-
    major programs is 3 years.
        I believe that stability and tenure length matters. DOD continues
    to look at data on tenure and program results, although we do not
    currently see a high correlation. We are pursuing new data to link
    existing workforce databases to programs so we can examine various
    correlations, such as how leadership team tenure, experience, and
    background relate to program outcomes and how this can be balanced with
    workforce management needs.
        Mr. Sullivan. As I noted in my statement, we have reported on the
    lack of continuity in the tenure of key acquisition leaders across the
    timeframes of individual programs. A major acquisition can have
    multiple PMs during product development. I also noted that DOD
    acquisition executives do not necessarily stay in their positions long
    enough to develop the needed long-term perspective or to effectively
    change traditional incentives and their decisions can be overruled. In
    this environment, the effectiveness of management can rise and fall on
    the strength of individuals; accountability for long-term results is,
    at best, elusive. Several years ago, the Defense Acquisition
    Performance Assessment Panel recommended establishing the military
    department's service acquisition executives as a 5-year, fixed-term
    position to add leadership continuity and stability to the acquisition
    process. Similarly, in 2006, we recommended that at a minimum, DOD
    should match PM tenure with delivery of a product or for system design
    and demonstration. I believe these recommendations are still worth
    considering.

        9. Senator Inhofe. Secretary Kendall and Mr. Sullivan, will this
    not increase accountability?
        Mr. Kendall. I believe PM performance and accountability is
    impacted both by when and how long he or she is assigned relative to
    the phase of the program. Both performance and accountability can be
    measured by the successful execution of a phase of the program he or
    she planned and that the Milestone Decision Authority has approved.
    Therefore, in November 2013, I issued updated policy that re-emphasizes
    tenure expectations for PMs of ACAT I or IA programs. PMs should be
    assigned to the position to develop plans that lead to a milestone or
    decision that initiates a phase of the acquisition process, lead the
    effort to have that phase approved, and manage the execution of that
    phase. The updated policy states that PMs should begin approximately 6
    months prior to a major milestone, and be assigned for 4 years or until
    completion of the phase of the program that occurs closest in time to
    the date on which the person has served in the position for 4 years. My
    fundamental reasons for doing this are to ensure that PMs are
    responsible and accountable for both planning and executing a program
    phase.
        Mr. Sullivan. I believe increasing PM tenure would, in fact,
    increase accountability. We have reported in the past that PM turnover
    during a program's development makes it difficult to hold them
    accountable for the business cases that they are entrusted to manage
    and deliver. Specifically, we have previously reported that one reason
    that it is difficult to hold PMs accountable is that their tenure is
    relatively short so the problems being encountered today may well be
    the result of a poor decision made years ago by another PM. In
    addition, we have found that commercial companies we visited to
    determine commercial best practices all required that PMs stay on until
    the end of the program which was a primary means of assuring
    accountability.

         increasing the role of the services in the acquisition process
        10. Senator Inhofe. Mr. Sullivan, the Independent Panel charged
    with reviewing the 2010 Quadrennial Defense Review (QDR) specifically
    spoke to the issue of acquisition reform. Specifically, the Independent
    Panel argued the ``fragmentation of authority and accountability for
    performance'' in the defense acquisition system was a ``fundamental
    reason for continued under-performance in acquisition activities.'' The
    solution proffered by the Independent Panel was to implement a system
    of accountability ``through a line management process.'' This has been
    interpreted to mean that Service Chiefs should have a much larger role
    in the acquisition process. What are the advantages and disadvantages
    of having the Service Chiefs be more involved in the acquisition
    process?
        Mr. Sullivan. GAO recently issued a report assessing Service Chief
    involvement in the acquisition process (Defense Acquisitions:
    Observations on Whether the Military Service Chiefs' Role in Managing
    and Overseeing Major Weapon Programs Should Be Expanded, GAO-14-520).
    As part of the review, we assessed six recent studies that dealt with
    the issue of the Service Chiefs' involvement in the acquisition
    process, including the report of the Independent Panel, and found that
    while five of the reports recommended an expanded role for the Service
    Chiefs, they provided little evidence that this would improve program
    outcomes. We also examined existing DOD policies and processes for
    planning and executing acquisition programs and found that there are
    multiple opportunities for the Service Chiefs to be involved in the
    management and oversight of acquisition programs. For example, the
    Service Chiefs' offices can participate in senior-level reviews at key
    program milestones and in annual configuration steering board meetings
    where tradeoff discussions between program requirements and cost and
    schedule delays are supposed to take place. The study authors we
    interviewed as part of our review pointed out that the Service Chiefs
    had significant influence on certain programs in the past, but their
    involvement did not always result in successful cost, schedule, or
    performance outcomes. The authors agreed that strong leadership is
    essential to acquisition success, but pointed out that changes to the
    chain of command alone will not be sufficient to address all of the
    challenges faced by acquisition programs. As GAO and other acquisition
    experts have previously found, there are many inter-related factors
    that contribute to poor acquisition outcomes such as unrealistic
    requirements, lack of disciplined systems engineering, optimistic cost
    and schedule estimates, and acquisition workforce issues. While
    organizational changes can be an important part of the solution to
    achieving better outcomes, they should not take precedence over efforts
    to improve the acquisition process itself, build a more robust
    acquisition workforce, and foster a culture in which incentives are
    better aligned with good acquisition practices.

        11. Senator Inhofe. Mr. Sullivan, if there is benefit to having
    additional involvement of the Service Secretaries and Service Chiefs
    what might that be?
        Mr. Sullivan. As stated above in my response to question 10,
    existing policies and processes in DOD provide multiple opportunities
    for acquisition and requirements leaders to be involved in the
    management and oversight of weapon system programs. However, additional
    involvement of the Service Secretaries and Service Chiefs could lead to
    improved integration of the acquisition and requirements processes and
    facilitate greater knowledge that could assist in cost/performance
    tradeoffs during acquisition program planning and execution.

                          sole-source contract awards
        12. Senator Inhofe. Secretary Kendall, recently, GAO issued a
    report that stated, ``In 2013, the Department of Defense awarded
    contracts for about $308 billion for products and services, of which 43
    percent was awarded without competition.'' I understand sole-source
    awards must be accompanied by a written justification that addresses
    the specific exception to full and open competition. Do you review
    these justifications?
        Mr. Kendall. I do not normally review justifications for sole
    source contract awards. Consistent with the policies, procedures, and
    authorities in DFARS 206.3--Other Than Full and Open Competition,
    authority to review and approve justifications for other than full and
    open competition has been established with the military departments or
    delegated to the senior procurement executives of the defense agencies.
    As I review Major Defense Acquisition Programs (MDAP) and Major
    Automated Information Systems (MAIS) programs for major milestones or
    to approve acquisition strategies, I do review any decision not to use
    competition.

        13. Senator Inhofe. Secretary Kendall, have you ever disapproved a
    sole-source justification request?
        Mr. Kendall. I do not normally read justification and approval
    documents, but I do approve acquisition strategies and milestones which
    include sole source versus competitive strategies. There have been at
    least two cases recently in which I have directed a Service to open a
    limited competition or switch from sole source to competitive
    strategies.

        14. Senator Inhofe. Secretary Kendall and Mr. Sullivan, what are
    the barriers to opening up service contracts to competition?
        Mr. Kendall. Some barriers which have been identified in the past
    include: not having the necessary data rights to enable competition, in
    Foreign Military Sales (FMS) direction from the buying country to use a
    specific source, and delays in an ongoing competition that result in
    the use of sole-source bridge contracts. DOD continues to work to
    break-down these barriers and increase competition across all
    acquisitions.
        DOD achieved a 73 percent competition rate for all Services
    contracts in fiscal year 2013, with one portfolio group, construction,
    reaching 90 percent. Increasing competition in service acquisitions
    will continue to be a priority. DOD is working on a new ``Acquisition
    of Services'' Instruction, which establishes and implements a formal
    management and oversight structure for the procurement of contract
    services. The Instruction will also establish policy, assign
    responsibilities, and provide direction on all aspects of services
    acquisition, including competition.
        Competition is a cornerstone of our acquisition system and the
    benefits of competition are well established.
        Mr. Sullivan. Several key factors influence competition for service
    contracts. For support services related to DOD weapons programs, we
    have found that the lack of access to proprietary technical data and a
    heavy reliance on specific contractors for expertise can limit, or even
    preclude the possibility of, competition. Even when technical data are
    not an issue, the government may have little choice other than to rely
    on the contractors that were the original equipment manufacturers, and
    that, in some cases, designed and developed the weapon system. In
    addition, program officials play a significant role in the contracting
    process, particularly in developing requirements and interfacing with
    contractors. According to contracting officials we have spoken with,
    program officials may have a preference for the incumbent contractors
    and are often insufficiently aware of the amount of time needed to
    complete acquisition planning, which may hinder opportunities to
    increase competition. Further, program officials may not conduct
    sufficient market research or overly specify requirements which can
    also impact competition.

                               contract bundling
        15. Senator Inhofe. Secretary Kendall, over the past several years,
    a number of small- and mid-size defense contractors have raised
    concerns regarding contract bundling. Specifically, contract bundling
    occurs when an agency takes two or more disparate requirements and
    combines them into one acquisition. Small- and mid-size defense
    contractors with specific specialties believe bundling unfairly
    advantages larger contractors since it is less likely smaller
    corporations would be qualified to bid for a contract with disparate
    requirements. What are your thoughts on contract bundling?
        Mr. Kendall. I strongly support the objectives of the Small
    Business Act, as implemented in the FAR, concerning contract bundling.
        A bundled contract consolidates two or more requirements for
    supplies or services previously performed under separate, smaller
    contracts into a solicitation for a single contract likely to be
    unsuitable for award to small business due to the diversity, size, or
    nature of the performance specified; the aggregate dollar value of the
    anticipated award; the geographical dispersion of performance sites; or
    any combination of these factors.
        DOD considers the benefits of contract bundling on a case-by-case
    basis during acquisition planning, in accordance with FAR 7.107. While
    there may be benefits to contract bundling under certain conditions,
    DOD remains committed to providing opportunities for small business and
    creating an environment that recognizes the value of and engages small
    businesses as critical suppliers of required warfighting capabilities.
    I believe contract bundling is infrequent in DOD (only four reported in
    fiscal year 2013).
        The scrutiny undertaken as part of the planning process is
    important and worthwhile because it enables DOD to maximize
    participation of small businesses in DOD acquisitions while achieving
    cost savings, quality improvements, enhanced performance efficiency,
    reduction in acquisition cycle times, or other measurable benefits.
        Specifically, in accordance with the Small Business Act, 15 U.S.C.
    644(e), a procuring activity must reasonably determine that bundling is
    necessary and justified and conduct market research to identify the
    benefits to be realized from bundling the requirements. To justify the
    bundling, these benefits must be ``measurably substantial'' in relation
    to the dollar value of the procurements to be bundled as compared to
    the benefits to be realized if separate procurements are conducted.

        16. Senator Inhofe. Secretary Kendall, is it in the best interests
    of DOD and our warfighters to discourage contract bundling?
        Mr. Kendall. DOD neither encourages nor discourages contract
    bundling. It is our responsibility to the taxpayers and the warfighter
    to bundle contracts where there is determined to be ``measurably
    substantial benefits'' to the government. We conduct market research to
    determine whether bundling is necessary and justified. ``Measurably
    substantial benefits'' are assessed in relation to the dollar value of
    the procurements to be bundled as compared to the benefits to be
    realized if separate procurements are conducted. DOD considers the
    benefits of contract bundling on a case-by-case basis during
    acquisition planning.
        While there may be benefits to contract bundling under certain
    conditions, DOD remains committed to providing opportunities for small
    business concerns and to creating an environment that recognizes the
    value of small businesses, and engages small businesses as critical
    suppliers of required warfighting capabilities. Contract bundling is
    infrequent in DOD; only four instances of bundling were reported in
    fiscal year 2013.

                               rapid acquisition
        17. Senator Inhofe. Mr. Etherton, Mr. Schwartz, and Mr. Berteau,
    the noted defense analyst, Mr. William C. Greenwalt,* recently wrote,
    ``Rapid acquisition authorities that were enacted after September 11,
    2001, led to the creation of a number of rapid acquisition entities and
    processes. Many of these emulated the acquisition buying practices of
    U.S. Special Operations Command (SOCOM), which has had its own
    longstanding special acquisition authority.'' As our role is being
    reduced, ``these ad-hoc organizations and processes are in danger of
    winding down. Immediate steps should be taken to ensure that these
    organizations and processes are not dismantled and become absorbed into
    the traditional acquisition system. As a way of maintaining these
    capabilities, current rapid acquisition authorities should be expanded
    to apply beyond wartime requirements and be targeted at supporting
    combatant commanders' needs that can be deployed in less than 2
    years.'' What are your thoughts about Mr. Greenwalt's proposal?
    ---------------------------------------------------------------------------
        * Mr. William C. Greenwalt was formally employed by the Senate
    Armed Services Committee as a professional staff memeber starting on
    March 5, 1999, and ending on April 15, 2006.
    ---------------------------------------------------------------------------
        Mr. Etherton. Maintaining rapid acquisition authorities will be
    critical in the future as Mr. Greenwalt argues. The longer they remain
    ``ad hoc'' authorities, the more vulnerable they will be to
    elimination. The challenge is to align the various authorities and
    ensure that lessons learned from them are used to transform the
    traditional process rather than having the traditional process slowly
    stifle the use of rapid acquisition approaches.
        Mr. Schwartz. Analysts overwhelmingly agree that the traditional
    acquisition system is too cumbersome and time consuming, and that a
    concerted effort must be made to streamline the acquisition process.\1\
    As Norman Augustine (former Chief Executive Officer of Lockheed Martin)
    and former Senators Gary Hart and Warren Rudman wrote in 2009, the
    traditional defense acquisition system operates:
    ---------------------------------------------------------------------------
        \1\ See CRS Report R43566, Defense Acquisition Reform: Background,
    Analysis, and Issues for Congress, by Moshe Schwartz.

              ``too slowly and at vastly greater cost than necessary. In
            earlier times we could arguably afford such flaws in
            efficiency, but we can afford them no longer. . . . We must
            examine the status quo systemically, in all its aspects, in
            order to make necessary and long overdue changes. If we do not,
            we will be in an increasingly sclerotic defense acquisition
            process that may one day no longer be able to supply American
            warfighters with the means to assure this Nation's freedom and
            security.'' \2\
    ---------------------------------------------------------------------------
        \2\ Business Executives for National Security, A Business
    Imperative for Change from the Task Force on Defense Acquisition Law
    and Oversight, July 2009, p. iii.

        The experiences of the operational force in Iraq and Afghanistan
    have underscored the importance of having a more responsive and rapid
    acquisition process. In response, Congress enacted legislation to
    support rapid acquisitions, including sections 806 and 807 of the Bob
    Stump NDAA for Fiscal Year 2003 (P.L. 107-314) and section 811 of the
    Ronald W. Reagan NDAA for Fiscal Year 2005 (P.L. 108-375).
        DOD Instruction 5000.2, Operation of the Defense Acquisition
    System, contains a section on ``Rapid Acquisition of Urgent Needs''
    that details the policy and procedures for acquisition programs that
    provide capabilities to fulfill urgent needs that can be fielded in
    less than 2 years.\3\ According to the instruction:
    ---------------------------------------------------------------------------
        \3\ See Enclosure 13 of DOD Instruction 5000.02.

              ``DOD's highest priority is to provide warfighters involved
            in conflict or preparing for imminent contingency operations
            with the capabilities urgently needed to overcome unforeseen
            threats, achieve mission success, and reduce risk of
            casualties. . . . The objective for the rapid acquisition of
            urgent needs is to deliver capability quickly, within days or
    ---------------------------------------------------------------------------
            months.''

        Mr. Greenwalt suggests that ``current rapid acquisition authorities
    should be expanded to apply beyond wartime requirements and be targeted
    at supporting combatant commanders' needs that can be deployed in less
    than 2 years.''
        Contracting in wartime is different from contracting in
    peacetime.\4\ In peacetime, the measures of success are generally
    getting the right good or service, on schedule, and at a fair price. In
    such circumstances, cost savings, additional testing, or other public
    policy objectives may justify some delay in fielding systems. In
    wartime, however, cost, schedule, and performance are often secondary
    to larger strategic goals of executing mission, protecting the lives of
    military personnel, promoting security, or denying popular support to
    an insurgency. Despite these differences, lessons learned using rapid
    acquisitions in Iraq and Afghanistan could help in developing a more
    rapid peacetime acquisition process.
    ---------------------------------------------------------------------------
        \4\ CRS Report R42084, Wartime Contracting in Afghanistan: Analysis
    and Issues for Congress, by Moshe Schwartz.
    ---------------------------------------------------------------------------
        A number of analysts would strongly support incorporating lessons
    learned from the use of rapid acquisitions in Iraq and Afghanistan into
    the traditional acquisition process. Expanding rapid acquisition
    authorities to apply beyond wartime requirements could also provide
    significant benefits to combatant commands, including getting new
    equipment into the theater faster. The challenge is to balance the need
    for a more rapid acquisition process with other priorities, such as
    cost savings or other public policy objectives.
        Mr. Berteau. Mr. Greenwalt raises an important issue, because the
    structure and processes for rapid acquisition are still needed. DOD
    appears to have recognized that need by establishing the Joint Rapid
    Acquisition Cell (JRAC) to maintain continuity of organization and to
    provide a process for warfighters to continue to request and receive
    approval for rapid acquisition decisions on joint urgent needs and
    emerging urgent needs. In addition, Mr. Greenwalt suggests that
    ``current rapid acquisition authorities should be expanded to apply
    beyond wartime requirements and be targeted at supporting combatant
    commanders' needs that can be deployed in less than 2 years.'' My
    research on processes to support innovation needs for combatant
    commanders supports Mr. Greenwalt's suggested expansion (some of this
    research has been undertaken since the conclusion of the hearing). I
    believe that Congress in general, and the Senate Armed Services
    Committee in particular, should support legislative language for both
    the continuation and the expansion of these rapid acquisition
    processes.

               indefinite delivery, indefinite quantity contracts
        18. Senator Inhofe. Mr. Etherton, Mr. Schwartz, and Mr. Berteau, in
    Mr. Etherton's written testimony, he highlights the Multiple Award Task
    or Delivery Order Contract process as ``a good intent . . . overcome by
    the sluggish government planning, programming, budgeting, and execution
    cycle.'' Another area of concern I have is with single award Indefinite
    Delivery, Indefinite Quantity (IDIQ) contracts. I understand these
    awards are based on competition but once awarded, the government is at
    the mercy of the contractor when task orders are issued as part of the
    contract. Would the government be better served with multiple award
    IDIQs?
        Mr. Etherton. Congress has enacted a number of provisions to make
    IDIQ contract awards and the award of task or delivery orders under
    them more competitive. Section 803 of the NDAA for Fiscal Year 2002
    provides that all individual task or delivery purchase orders above
    $100,000 be awarded using a competitive process unless a contracting
    officer follows certain waiver procedures. The competitive process
    required by section 803 includes notifying all relevant contractors of
    the government's intent to make the purchase and to consider any offers
    received. In general, an award cannot be made unless offers are
    received from at least three qualified contractors. Awards of task or
    delivery orders above $5 million require the use of a detailed
    solicitation process, and a contractor has the right to lodge a protest
    with GAO over the award of a task or delivery order above that
    threshold. In addition, section 843 of the NDAA for Fiscal Year 2008
    provides that for aggregate IDIQ task orders expected to exceed $100
    million, IDIQ contracts must have at least two sources to ensure
    competition for the item or service.
        Mr. Schwartz. Indefinite delivery contracts are generally awarded
    to lock in the acquisition of goods or services ``at stated prices for
    given periods of time.'' \5\ There are three types of indefinite
    delivery contracts:
    ---------------------------------------------------------------------------
        \5\ Federal Acquisition Regulation, 8.402.

        1.  definite-quantity contracts,
        2.  requirements contracts, and
        3.  indefinite-quantity contracts.

        According to FAR, IDIQ contracts are appropriate when ``the
    government cannot predetermine, above a specified minimum, the precise
    quantities of supplies or services that the government will require
    during the contract period, and it is inadvisable for the government to
    commit itself for more than a minimum quantity. The contracting officer
    should use an indefinite-quantity contract only when a recurring need
    is anticipated.'' \6\
    ---------------------------------------------------------------------------
        \6\ FAR 16.504(b).
    ---------------------------------------------------------------------------
        The FAR clearly states that when planning an IDIQ contract, the
    contracting office ``must, to the maximum extent practicable, give
    preference to making multiple awards of indefinite-quantity contracts
    under a single solicitation for the same or similar supplies or
    services to two or more sources.'' \7\
    ---------------------------------------------------------------------------
        \7\ FAR 16.504(c). The stated exception is for advisory and
    assistance services as discussed in paragraph (c)(2) of the same
    section.
    ---------------------------------------------------------------------------
        There are circumstances when a single award IDIQ is appropriate,
    such as when better terms and conditions (including costs) can be
    achieved through a single award.\8\ For example, an IDIQ contract for
    helmets could be structured to set firm prices for each item, and have
    a decreasing cost scale as the total quantity of items purchased
    increases. In such a situation, a multiple award contract may not
    result in lower cost to the government and could result in higher
    costs.
    ---------------------------------------------------------------------------
        \8\ FAR 16.504(c)(ii)(B).
    ---------------------------------------------------------------------------
        In some cases, IDIQ contracts result in a single award because DOD
    has determined that there is only one qualified contractor.\9\
    According to GAO:
    ---------------------------------------------------------------------------
        \9\ FAR 16.504(c)(ii)(B).

              ``During the past 5 fiscal years, DOD used the ``only one
            responsible source'' exception for about 64 percent of all
            awards for new noncompetitive contracts and task orders on
            single award IDIQ contracts.'' \10\
    ---------------------------------------------------------------------------
        \10\ U.S. GAO, Defense Contracting: Early Attention in the
    Acquisition Process Needed to Enhance Competition, GAO-14-395, May 5,
    2014, p. 16.

        Some analysts have questioned whether single award IDIQs are being
    executed when a multiple award would be more appropriate. To the extent
    that single IDIQ contracts are inappropriately used or poorly executed,
    the government would generally be better served with a multiple award
    IDIQ.
        Mr. Berteau. The recent CSIS report titled U.S. Department of
    Defense Contract Spending and the Industrial Base, 2000-2013, provides
    an update of our analysis of this question. (The report may be found at
    http://csis.org/publication/us-department-defense-contract-spending-
    and-industrial-base-2000-2013.) The use by DOD of Single Award
    Indefinite Delivery Contracts has been steadily declining, from 39
    percent of all contract dollars obligated in 2008 to 28 percent in
    2013. The use of Multiple Award Indefinite Delivery Contracts has risen
    from 11 percent to 14 percent in the same time period. Thus, the
    results of actual contract obligation award data indicate that Mr.
    Etherton's concerns are already being addressed.

        19. Senator Inhofe. Mr. Etherton, Mr. Schwartz, Mr. Berteau, what
    can be done to improve multiple award task or delivery order
    competition and contracting?
        Mr. Etherton. The purpose behind the IDIQ contracting authority was
    to provide a competitive process upfront, followed by a more
    streamlined process for using task or delivery orders for goods or
    services purchased on a repetitive basis. This process was established
    as an alternative to having a full and open competition in each
    instance. The IDIQ process has now become less streamlined and more
    costly for companies. Companies spend significant sums on bid and
    proposal costs to get an IDIQ contract award and then continue to spend
    significant sums on bid and proposal costs to receive a task order
    award. The government ultimately bears much of these costs under cost
    reimbursable contracts. In some instances, IDIQ contracts have been an
    unjustified default approach within Federal agencies. Federal agencies
    should question the use of IDIQ approaches when use of full and open
    competitive procedures for each single award would be less costly and
    more streamlined for all parties. The overuse of IDIQ contracts
    unfortunately represents the same bureaucratic approach to contracting
    that Under Secretary Kendall has sought to address through his Better
    Buying Power initiatives.
        Mr. Schwartz. ``Governments, like clocks, go from the motion men
    give them.'' \11\ The effectiveness of IDIQ contracts hinges partly
    upon the ability of the workforce to clearly define requirements,
    determine the most appropriate contract type, conduct effective market
    research, and manage the contract. A number of analysts have concluded
    that insufficient resources or shortages in the number of properly
    trained, sufficiently talented acquisition personnel increase the risk
    of poor contract performance, which in turn can lead to waste, fraud,
    and abuse.\12\ One way to improve multiple award task or delivery order
    competition and contracting may be to improve the training, experience,
    and knowledge of the workforce.
    ---------------------------------------------------------------------------
        \11\ William Penn, ``Frame of Government for Pennsylvania,'' April
    25, 1682, p. Preface.
        \12\ CRS Report R43566, Defense Acquisition Reform: Background,
    Analysis, and Issues for Congress, by Moshe Schwartz.
    ---------------------------------------------------------------------------
        Some analysts point to the current application of multiple award
    contracts as an area ripe for review. In his testimony, Mr. Etherton
    stated: ``The Multiple Award Task or Delivery Order Contract process
    established in the Federal Acquisition Streamlining Act, intended to
    provide an alternative to full and open competitive procedures on
    repetitive task or delivery orders, has been altered over the years by
    Congress, because of perceived abuses, to look more like the process it
    was intended to supplement.'' \13\ To the extent that the statutory
    authority for multiple award task or delivery contracts has been
    modified over the years, Congress could choose to reexamine the current
    statutory language and consider amending the authorities to mirror more
    closely the original intent of the Federal Acquisition Streamlining
    Act.
    ---------------------------------------------------------------------------
        \13\ U.S. Congress, Senate Committee on Armed Services, Reform of
    the Defense Acquisition System, Written Statement of Jonathan Etherton,
    113th Cong., 2nd sess., April 30, 2014, at http://www.armed-
    services.senate.gov/imo/media/doc/Etherton_04-30-14.pdf.
    ---------------------------------------------------------------------------
        Mr. Berteau. The recent CSIS report titled U.S. Department of
    Defense Contract Spending and the Industrial Base, 2000-2013, provides
    an update of our analysis of this question. (The report may be found at
    http://csis.org/publication/us-department-defense-contract-spending-
    and-industrial-base-2000-2013.) Current practice appears to be
    improving the use of Multiple Award IDCs in DOD. In the Army, for
    example, overall contract obligation have declined by 45 percent since
    2008, but the amount obligated under Multiple Award Indefinite Delivery
    Contracts has stayed relatively constant.
        CSIS is currently researching competition under these contract
    types and expects to publish the results of that research in the summer
    of 2015. Preliminary results should be available in the spring of 2015
    and could be shared with the committee, if desired.

                               requirements creep
        20. Senator Inhofe. Mr. Schwartz, the 2010 QDR stated, ``new
    systems are too often set at the far limit of current technological
    boundaries. Such ambition can sometimes help produce breakthrough
    developments that can significantly extend America's technological
    edge. But, far too often the result is disappointing initial
    performance followed by chronic cost and schedule overruns. DOD and the
    Nation can no longer afford the quixotic pursuit of high-technology
    perfection that incurs unacceptable cost and risk. Nor can DOD afford
    to chase requirements that shift or continue to increase throughout a
    program's lifecycle.'' Have we begun to make progress in this area?
        Mr. Schwartz. Former Secretary of Defense Robert Gates stated that,
    as a result of defense spending more than doubling between fiscal year
    2001 and fiscal year 2010, ``we've lost our ability to prioritize, to
    make hard decisions, to do tough analysis, to make trades.'' \14\ A
    number of analysts, industry officials, and DOD officials believe that
    this increase in spending contributed to a `quixotic pursuit of high-
    technology perfection' and the chasing of `requirements that shift or
    continue to increase throughout a program's life.'
    ---------------------------------------------------------------------------
        \14\ Department of Defense, ``DOD News Briefing with Secretary
    Gates and Adm. Mullen from the Pentagon,'' press release, June 6, 2011,
    http://www.defense.gov/transcripts/transcript.aspx?transcriptid=4747.
    ---------------------------------------------------------------------------
        Just as many analysts believe that these problems were fueled in
    part by increasing budgets, many analysts also believe that constrained
    budgets are fostering a culture of better decisionmaking and more
    stable requirements. According to these analysts, declines in defense
    acquisition obligations since fiscal year 2008 have resulted in efforts
    to prioritize programs, rein in the expansion of requirements, improve
    efficiency, and increase the focus on costs.\15\
    ---------------------------------------------------------------------------
        \15\ See CRS Report R43566, Defense Acquisition Reform: Background,
    Analysis, and Issues for Congress, by Moshe Schwartz.
    ---------------------------------------------------------------------------
        The shift to reining in costs and requirements was most visible at
    a press conference in May 2009, when then Secretary Gates announced
    steps to rein in cost and schedule growth in weapon system
    acquisitions.\16\ He called for cancelling programs that significantly
    exceed budget, do not meet current military needs, or do not have
    sufficiently mature technology. Addressing programs with significant
    cost growth, he called for the cancellation of a number of programs,
    including the VH-71 presidential helicopter. He also called for the
    cancellation of programs for which a strong requirement no longer
    existed or for which needed technology had not matured--such as the
    ground components of the Future Combat System and missile defense's
    Multiple Kill Vehicle. Other programs, such as the F-22 and Air Force
    Combat Search and Rescue X, were also cancelled or curtailed.
    ---------------------------------------------------------------------------
        \16\ For the full text of the press conference, see http://
    www.defense.gov/transcripts/transcript.aspx?transcriptid=4396.
    ---------------------------------------------------------------------------
        Program cancellations or changes have continued to occur, most
    recently with the Army's decision to cancel the Ground Combat Vehicle.
    In addition, analysts could point to the Joint Strike Fighter and the
    KC-46 tanker as examples of programs that have had little requirements
    creep.
        Some analysts and officials believe that recent efforts within DOD
    and the impact of the Weapon Systems Acquisition Reform Act have
    contributed to reining in costs, curtailing the pursuit of requirements
    that are difficult to achieve, and preventing requirements creep.\17\
    ---------------------------------------------------------------------------
        \17\ Ibid. See also Tony Capaccio, ``Lockheed F-35's Cost Declines
    by $4.3 Billion, Pentagon Says,'' Bloomberg, May 23, 2013.
    ---------------------------------------------------------------------------
        To the extent that there has been improvement in these areas, one
    question for Congress could be whether the progress made to date is a
    function of temporary budget pressures, the personalities of current/
    recent leadership, or institutional change in the acquisition culture
    and process. To the extent that recent progress is a result of budget
    pressures or current leadership, such progress may be temporary. The
    answer to this question may not be apparent until more new programs get
    underway, such as the next generation bomber, the Ohio-class submarine
    replacement program, or possibly the Army Multi-Purpose Vehicle (M113
    armored personnel carrier replacement).

        21. Senator Inhofe. Mr. Schwartz, what about requirements creep?
        Mr. Schwartz. See response to question #20, above.

        22. Senator Inhofe. Mr. Schwartz, are we doing a better job of
    preventing additional requirements being added throughout the
    acquisition process?
        Mr. Schwartz. A number of countries have undertaken efforts to
    reform or improve their defense acquisition systems, resulting in novel
    and innovative approaches to acquisitions. Some analysts have suggested
    that the United States can benefit from looking at the defense
    acquisition practices of other countries.
        While there may be lessons to be drawn from the acquisition
    practices of other countries, it is worth noting the vast difference in
    scale between DOD and other militaries, including the:

        1.  comparative size of the defense acquisition workforce,
        2.  number of complex and challenging acquisitions undertaken by
    DOD, and
        3.  significantly larger acquisition budget of DOD.

        Put in context, DOD obligated more money on just contracts in
    fiscal year 2012 ($360 billion) than the combined value of the five
    largest non-U.S. total defense budgets in the world ($335 billion).\18\
    Some policies that appear effective in smaller acquisition
    organizations or in less complex procurements may not prove to be as
    effective when pursued on the scale of DOD.
    ---------------------------------------------------------------------------
        \18\ The five largest 2012 defense budgets were China ($102.4
    billion), United Kingdom ($60.8 billion), Russia ($59.9 billion), Japan
    ($59.4 billion), and Saudi Arabia ($52.5 billion). Source: The
    International Institute for Strategic Studies, The Military Balance
    2013, the annual assessment of global military capabilities and defense
    economics, London, 20113, p. 41.
    ---------------------------------------------------------------------------
        Another challenge in adopting foreign practices is the difference
    in the organizational structure of DOD compared to that of most other
    countries. Title 10 of the U.S.C. endows the Military Services with a
    substantial role in the acquisition process. This is in marked contrast
    to the structure established in many other countries, including most
    European countries, where there is a centralized defense acquisition
    organization. Policies that work in a centralized acquisition
    organization may not be transferable to or as effective in the service-
    oriented structure of DOD.
        Some analysts have suggested that DOD should emulate the approach
    taken by such countries as United Kingdom, France, Sweden, Australia,
    Israel, and Germany, and create a centralized (joint) acquisition
    organization. Some of these analysts argue that just as Goldwater-
    Nichols created a jointness in the operational forces, it is time to
    extend the principles of Goldwater-Nichols to the acquisition sphere
    and create a joint acquisition organization. Such an approach was
    outlined in H.R. 965, Independent Defense Procurement Corps Act of
    1989.\19\
    ---------------------------------------------------------------------------
        \19\ Section 101 of the bill read as follows:
        Congress finds the following:

        (1)   It is essential that Congress act to establish an independent
    procurement system for DOD that will minimize abuses and provide high
    quality, competitively priced, and effectively designed defense
    products.
        (2)   The frequent movement of individuals from the private sector
    to DOD, and from DOD to the private sector, fosters real and perceived
    conflicts of interest in defense acquisition.
        (3)   The parochial interests of each military department often
    lead to duplication of effort and higher costs.
        (4)   There should be an independent, well-trained, and well-paid
    team of professionals who have chosen the Independent Procurement Corps
    as a stable career path and who represent the public interest and the
    legitimate needs of DOD in all negotiations with defense contractors in
    all matters related to the procurement of property and services
    required by DOD, including research, development, production, and
    management.
    ---------------------------------------------------------------------------
        Others have taken the opposite view, arguing that the Military
    Services should be endowed with more acquisition authority, at the
    expense of the Office of the Under Secretary of Defense for
    Acquisition, Technology, and Logistics. This position is consistent
    with those analysts and officials from other countries who are not
    persuaded that a centralized acquisition organization is inherently
    more efficient or effective.
        Below is a list of selected countries that some analysts or
    officials have suggested provide examples of approaches to defense
    acquisitions that can be emulated by DOD.
    Israel \20\

        \20\ Information provided to CRS by an official at the Embassy of
    Israel in Washington, December 12, 2013. Information also based on
    discussions with Israeli officials throughout 2012.
    ---------------------------------------------------------------------------
        The acquisition of goods and services for the Israeli military is
    generally executed by the Ministry of Defense's Directorate of
    Procurement and Production. The directorate is organized into five main
    divisions:

        1.  Air,
        2.  Land,
        3.  Sea,
        4.  Information and Telecommunication, and
        5.  Maintenance and Services.

        Each of these divisions corresponds to and works closely with its
    operational counterpart. Requirements are developed by the relevant
    service, not by the Directorate of Procurement and Production. A
    separate organization, the Directorate for Research and Development
    (R&D), focuses on R&D programs and can set its own operational
    requirements.
        Some analysts and officials have suggested that the Israeli
    requirements and acquisition process allows for more rapid development
    and fielding of systems, when warranted.\21\
    ---------------------------------------------------------------------------
        \21\ One example is Israel's Iron Dome system, which was developed
    and deployed within a timeframe that was faster than generally possible
    in the current DOD acquisition process.
    ---------------------------------------------------------------------------
    Sweden \22\
    ---------------------------------------------------------------------------
        \22\ Based on information and documentation provided to CRS by an
    official of the Defense Materiel Administration, November 29, 2013
    (unless otherwise cited). Documents available upon request.
    ---------------------------------------------------------------------------
        The Defense Materiel Administration (FMV) is the centralized
    organization that procures goods and services for the Swedish military.
    The FMV consist of six divisions.

        1.  Systems and Production,
        2.  Logistics and Procurement,
        3.  Storage, Service, and Workshops,
        4.  Tests and Evaluation,
        5.  GRIPEN (Strategic Projects), and
        6.  Commercial Operations.

        Some analysts have suggested that the United States should emulate
    the pay structure used by the FMV to attract and retain its acquisition
    workforce. According to defense analyst Ronald Fox, Sweden addresses
    the challenge of:

              Attracting and retaining senior people--military and
            civilian--by a special law that allows an added salary increase
            for crucial acquisition positions. Thus, a Swedish colonel
            serving as a PM can receive a significantly higher salary than
            other colonels and even the director general of the agency.
            This incentive provides prestige and draws highly-qualified,
            experienced people to senior acquisition positions.\23\
    ---------------------------------------------------------------------------
        \23\ J. Ronald Fox, Defense Acquisition Reform, 1960-2009: An
    Elusive Goal (2011), p. 204.

        The same policy applies to all FMV personnel in the acquisition
    workforce, including technical experts and PMs. Pay and benefits, which
    are influenced by the complexity of the task and the performance of the
    individual, are more flexible than DOD's GS or uniform pay structures.
    ---------------------------------------------------------------------------
    According to the Swedish Government:

              Pay determination shall be individual, differentiated, and
            adjusted to market conditions for all categories of personnel.
            It is the responsibility of each manager to ensure that his/her
            employees are evaluated and awarded based on performance. . . .
            In the pay review the individual evaluation shall be based on
            whether the employee has achieved the expected result and
            fulfills the competency requirements for his/her position.\24\
    ---------------------------------------------------------------------------
        \24\ Documentation provided by the Defense Materiel Organization.
    ---------------------------------------------------------------------------
    France
        In 1961, France became one of the first nations to consolidate all
    defense acquisition under one bureau, the Direction Geeneerate de
    l'Armement (DGA-General Directorate for Armament), which is responsible
    for virtually all aspects of weapon system development (including
    exports). Some analysts have argued that the French approach to defense
    acquisition can provide lessons in improved acquisition performance.
    One report found that cost overruns in French weapon acquisitions:

              Tend to be relatively minor in scope; on the order of 5 to 10
            percent per weapons platform, versus an average overrun of 26
            percent per platform in the United States.\25\
    ---------------------------------------------------------------------------
        \25\ Ethan B. Kapstein and Jean-Michel Oudot, ``Reforming Defense
    Procurement: Lessons from France,'' De Gruyter Business and Politics,
    vol. 11, no. 2 (August 2009). A policy brief written summarizing the
    full abstract was written by the author and issued by the Center for
    News New American Security. The polity brief can be found at: see
    http://www.cnas.org/files/documents/publications/
    CNAS%20Policy%20Brief%20-%20defense%20acquisition_l.pdf.
          CRS has not determined the extent to which this comparative
    analysis adjusts, as appropriate, for size, complexity, or
    technological advances in weapon programs. The report points out that
    the methodology used by GAO to determine `average' cost growth of 26
    percent is unknown. As a result, the authors ``look at both the
    arithmetic and geometric averages in our account of the French case,
    and thus the spread in averages from 5 to 10 percent.''

        The report argues that three related factors are substantially
    ---------------------------------------------------------------------------
    responsible for cost control:

        1.  hard budget constraints;
        2.  technical knowledge and experience of the acquisition
    workforce, coupled with a more collaborative relationship between the
    military department and industry; and
        3.  empowering PMs.

        Another difference between the U.S. and French system is the role
    of the legislative branch. The French legislature does not exert as
    much influence on individual weapon system budgets as does the U.S.
    Congress.
    Australia \26\
    ---------------------------------------------------------------------------
        \26\ Based on discussions with officials from the Australian Senate
    and Embassy of Australia, December 2013, and documentation provided to
    CRS December 13, 2013. Documents available upon request.
    ---------------------------------------------------------------------------
        The Defense Materiel Organization (DMO), established in 2000, is
    the centralized organization responsible for the acquisition of goods
    and services for the Australian military. In 2012 to 2013, the DMO was
    responsible for 40 percent of the Australian military's budget.
    According to the Australian Government, since the establishment of a
    centralized acquisition organization:

              on average, projects are delivered under budget
            (using 98 percent of available funds); and
              average schedule slips have decreased from 50 percent
            to 30 percent in 2007; the number of projects delivered on time
            has doubled.

        One unique feature of the DMO is that it provides independent cost,
    schedule, and risk analysis to the military and civilian government,
    providing independent analysis from those executing the acquisition
    programs (the DMO does not weigh in on capability requirements).
    According to government documentation,

              DMO is responsible for delivering military equipment to the
            Australian Defense Forces according to the cost, schedule, and
            specifications agreed by the government. To be properly held to
            account for doing so, DMO needs to be able to provide
            independent advice to government on matters which it remits.

        Another unique feature of the Australian system is the role of Gate
    Review Boards. Gate Reviews are the rough equivalent to DOD milestones.
    Gate Reviews are conducted by Gate Review Boards. Each board is made up
    of:

        1.  Senior DMO management;
        2.  DMO officials independent of the program in questions; and
        3.  Independent non-DMO officials.

        The board conducts in-depth analysis of the program and the chair
    of the board provides guidance to the PM and the senior executive
    responsible for approving the program's readiness to advance to the
    next acquisition phase. Australian officials have indicated that this
    process has been very successful in improving the performance of the
    acquisition process.

                          intellectual property rights
        23. Senator Inhofe. Mr. Etherton, Mr. Schwartz, and Mr. Berteau, is
    DOD doing enough to intellectual property (IP) rights of commercial
    industry when acquiring their products?
        Mr. Etherton. DOD relies on the commercial sector to research and
    develop goods and services at private expense. At the same time, DOD is
    under great pressure to compete as many of its procurement actions as
    possible. In my view, pressures to increase the potential for
    competition have led DOD to pressure contractors to provide rights in
    IP with little or no limitation on DOD's right to use the IP in follow-
    on procurements. In some cases, DOD policies on IP delivery are
    changing mid-program with respect to commercial products that were
    developed 100 percent at private expense.
        In addition, section 815 of the NDAA for Fiscal Year 2012 will
    allow DOD the right to use commercially-developed IP utilized (but not
    necessarily developed) in the performance of a contract in order to
    facilitate greater competition. The aggressiveness of current DOD
    policy on the delivery of IP rights to the government combined with
    uncertainty about the ability of a contractor to protect its IP in the
    future are leading some in industry to reconsider continued investment
    in technology applications for defense and to exit from the defense
    market altogether. In my view, Congress and DOD need to address these
    issues in a more balanced fashion that weighs the short-term need for
    competition against the long-term need for access to affordable,
    cutting-edge innovation from a diverse industrial base.
        Mr. Schwartz. \27\ An inherent tension exists in the Federal
    acquisition process between DOD's operational needs and its fiduciary
    responsibilities to ensure that it can properly field, support,
    maintain, upgrade, replace, and dispose of products (and parts) over
    the life of a product that it acquires, on the one hand, and a
    company's need to protect the IP that forms the foundation for the
    product and which often accounts for a substantial share of the value
    of the company. It is hard to overstate the importance of IP to most
    companies. For example, according to Ocean Tomo, LLC, a financial
    services company, intangible assets (such as IP and trade secrets)
    accounted for 81 percent of the total value of S&P 500 companies in
    2009, up from approximately 17 percent in 1975. Accordingly, a company
    may be reluctant to disclose such data to the Federal Government which,
    in turn, might disclose the data to one or more of the company's
    competitors.
    ---------------------------------------------------------------------------
        \27\ This response was authored by John F. Sargent, Jr. and Frank
    Gottron.
    ---------------------------------------------------------------------------
        Congress has sought to address IP issues for many years. In order
    to incentivize the commercialization of federally-funded R&D, for
    example, Congress enacted the Stevenson-Wydler Technology Innovation
    Act of 1980 and the Bayh-Dole Act of 1980. These acts, and subsequent
    amendments over the years, have sought to bring greater clarity and
    effectiveness of ownership, licensing, and use of IP developed, in part
    or in whole, through Federal funding.
        Companies often create IP while conducting R&D and commercializing
    products. Depending on a variety of factors, including the role of
    Federal R&D funding, the Federal Government maintains certain rights
    over some types of IP, such as patents, that companies create.\28\ The
    rights to other types of IP, such as technical data, may be subject to
    negotiation during the Federal acquisition process.\29\
    ---------------------------------------------------------------------------
        \28\ For additional information on Federal patent rights, see CRS
    Report R41114, The Hatch-Waxman Act: Over a Quarter Century Later, by
    Wendy H. Schacht and John R. Thomas.
        \29\ See DFARS Subpart 227.7102-2.
    ---------------------------------------------------------------------------
        Federal agencies, such as DOD, may seek to ensure access to all of
    the IP (including patents and technical data) related to a specific
    acquisition to ensure it can continue production of a product or
    component regardless of the original provider's ability or willingness
    to produce the product. Some assert that having access to the technical
    data--such as design drawings, specifications, and standards--may help
    to increase competition, ensure availability, and lower costs for
    follow-on contracts for maintenance, operations, and upgrades. In DOD,
    lack of sufficient data rights was identified as a contributing factor
    to receipt of only one potential supplier for many contract
    solicitations.\30\ DOD has been implementing new policies and
    procedures to increase the number of contracts that receive multiple
    offers, including improving access to technical data. GAO found such
    efforts likely to be helpful, but recommended that DOD focus on
    acquiring technical data rights earlier in the acquisition process.\31\
    ---------------------------------------------------------------------------
        \30\ U.S. GAO, Defense Contracting: Early Attention in the
    Acquisition Process Needed to Enhance Competition, GAO-14-395, May
    2014.
        \31\ U.S. GAO, Defense Contracting: Early Attention in the
    Acquisition Process Needed to Enhance Competition, GAO-14-395, May
    2014.
    ---------------------------------------------------------------------------
        From the perspective of the contractors, DOD's increased efforts to
    secure technical data rights can lead to tension, especially in
    existing contracts for ambiguous or limited rights. According to one
    stakeholder, some DOD agencies have ``begun demanding IP rights without
    properly compensating the contractor.'' \32\ To companies, this IP
    represents a valuable investment, which may help them secure future
    contracts with the government and to compete in commercial markets.
    ---------------------------------------------------------------------------
        \32\ Sandra I. Erwin, ``DOD Clashes with Suppliers Over Data
    Rights,'' National Defense Magazine, January 2014, http://
    www.nationaldefensemagazine.org/archive/2014/January/Pages/
    DODClashesWithSuppliersOverDataRights.aspx.
    ---------------------------------------------------------------------------
        Mr. Berteau. CSIS currently has a research project that is
    identifying barriers to the use by DOD of innovation from commercial
    industry. The issue of access to and protection of IP rights has often
    been cited as a barrier to access for commercial products, technology,
    and processes. At present, CSIS is still assembling data and developing
    findings and recommendations for this research project. However,
    initial findings show that there are issues that may discourage
    commercial firms from pursuing government contracts, including IP
    issues, export controls, cost accounting standards, and a culture that
    sometimes views commercial firms as not part of the national security
    enterprise. That indicates that DOD needs more attention to this issue.
    I note that, subsequent to the hearing, DOD has added efforts to
    address these concerns to the draft version of Better Buying Power 3.0.
    As for the CSIS report, upon completion of the research and publication
    of the final report, we will be happy to provide the results to the
    committee.
                                     ______

                 Question Submitted by Senator Roger F. Wicker
                     technology domain awareness initiative
        24. Senator Wicker. Secretary Kendall, the DOD Information Analysis
    Centers' Technology Domain Awareness Initiative (TDAI) is a very
    important acquisition reform effort that seeks to capture lessons
    learned and rapid innovative practices. As DOD will have to make
    financially tough choices and continue to scrutinize its finite
    resources, will DOD commit to funding the TDAI and ensure that the
    investments made in innovation will continue to be available for future
    acquisition decisions?
        Mr. Kendall. The TDAI is funded under DOD's Information Analysis
    Centers (IAC), within the Defense Technical Information Center (DTIC)--
    PE0605801KA/002. The President's budget submission for fiscal year 2015
    provides sufficient funds for DTIC and its IACs to pursue the TDAI. I
    am committed to ensuring lessons learned/knowledge are available to
    help with future acquisition decisions.
                                     ______

                  Questions Submitted by Senator Kelly Ayotte
                      fragmentation in acquisition process
        25. Senator Ayotte. Mr. Sullivan, GAO cites several explanations
    for defense acquisition program delays and cost growth. One of them is
    fragmentation in DOD's three key acquisition decisionmaking processes:
    requirements determination, resource allocation, and the acquisition
    management system. Can you describe this fragmentation problem, as you
    see it?
        Mr. Sullivan. Previously, GAO has found that DOD defines
    warfighting needs on a service-by-service and individual platform basis
    and through fragmented acquisition processes. This fragmentation
    undermines DOD's ability to adequately address joint warfighting needs
    and contributes to DOD's commitment to more programs than it has
    resources to support. In turn, unhealthy competition for funding within
    DOD has developed and works against the creation of balanced portfolio
    of weapon system development programs that are affordable, feasible,
    and of value to the warfighter. Requirements are reviewed and validated
    by the Joint Staff on a continuous basis, and unsynchronized with DOD's
    budgeting processes which are aligned by military department, rather
    than joint capability areas. Budget decisions are often made years
    ahead of acquisition programs obtaining requisite knowledge, such as
    that gained from testing, and reflect overly optimistic cost estimates
    and capabilities. This is in contrast to the private sector where an
    integrated portfolio management approach is used to ensure customer
    needs, available resources, and strategic objectives are aligned to
    better support the development programs they undertake.

        26. Senator Ayotte. Secretary Kendall, what are you specifically
    doing to address the fragmentation problem in the acquisition process?
        Mr. Kendall. I believe the fragmentation problem refers to the
    separation of acquisition, requirements, and budgetary processes. I
    have worked very closely with the Vice Chairman of the Joint Chiefs and
    the Services to align the requirements and acquisition processes, which
    must work closely together. Either I or a senior member of my staff
    attends all JROC meetings to represent the acquisition perspective on
    program requirements. We articulate any technical, cost, or schedule
    risk concerns at those meetings. As I conduct Defense Acquisition Board
    reviews for programs for acquisition decisions, a Joint Staff
    representative sits beside me. The Better Buying Power acquisition
    improvement initiatives we have been implementing for the last 4 years
    include initiatives to improve the cooperation of the requirements and
    acquisition communities at senior service levels through Configuration
    Steering Boards and provider forums. Continuous interactions between
    these two communities lead to informed acquisition and requirements
    decisions and it is something that I will continue to emphasize. I
    think we have made excellent progress at improving these relationships,
    but I also believe there is still some room for additional progress.
    With regard to the budgeting process, acquisition has a strong role in
    the budgeting process at the DOD level. I sit on the Deputy's
    Management Action Group which conducts program and budget reviews for
    DOD. I have the full support of the Deputy Secretary to bring any
    issues before this body, including program executability, compliance
    with acquisition decisions, or affordability concerns. I am concerned
    that in some cases the Service Acquisition Executives in the military
    departments may not have as strong a role in their Services' budget
    processes. I am in the process of discussing this matter with the
    leadership of the military departments. Data I have seen only recently
    shows a strong correlation between program cost increases and tight
    budget environments. I believe this correlation is due at least in part
    to the temptation to take chances and be optimistic during the
    budgeting process in order to preserve marginally affordable programs
    in our budgets. We are in a very tight budget environment today. As I
    review programs for acquisition, requirements, and budget decisions, I
    will be especially attentive to the possibility of excessive risk
    taking in our program plans and budgets.

        27. Senator Ayotte. Secretary Kendall, how can we better shape
    incentives to encourage better acquisition outcomes?
        Mr. Kendall. Incentives are an important way to motivate and reward
    our acquisition workforce. The three incentive types we have are
    professional recognition, career advancement through assignments or
    promotions, and monetary awards. These can be used to encourage better
    acquisition outcomes by recognizing our best acquisition personnel and
    providing continued development through additional assignments. In
    general, I would like to have more of all of these incentives utilized
    and more flexibility in how we employ them.

        28. Senator Ayotte. Secretary Kendall, what are the current
    incentives that are used or could be used to retain talented civilian
    and uniform acquisition officials and officers?
        Mr. Kendall. We use the tools that we have. Acquisition officials
    are covered by DOD's military and civilian awards and incentives.
    Annual ratings-based monetary awards subject to Office of Management
    and Budget/Office of Personnel Management caps and DOD guidance are
    available. Components may also provide appropriate retention incentives
    and have used the Defense Acquisition Workforce Development Fund for
    incentives such as recruitment bonuses, student loan repayment, and
    tuition assistance on a limited basis. Our flexibility to reward and
    motivate our best performers is a far cry from the tools available to
    industry. Nevertheless, I'm proud of the dedication, commitment, and
    performance of our workforce.

        29. Senator Ayotte. Secretary Kendall, are monetary awards given as
    incentives?
        Mr. Kendall. Limited monetary awards are used to recognize
    employees who comprise DOD's Acquisition Workforce. Acquisition
    officials are covered by DOD's standard awards and incentives. We use
    annual ratings-based monetary awards subject to Office of Management
    and Budget/Office of Personnel Management caps and DOD guidance.
    Components also may provide appropriate retention incentives and have
    used the Defense Acquisition Workforce Development Fund for incentives
    such as recruitment bonuses, student loan repayment, and tuition
    assistance, on a limited basis.

        30. Senator Ayotte. Secretary Kendall, if monetary awards are
    given, how often are they given?
        Mr. Kendall. Standard awards and incentives are given annually
    subject to Office of Management and Budget/Office of Personnel
    Management caps and DOD guidance.

        31. Senator Ayotte. Secretary Kendall, if monetary awards are
    given, how much is given?
        Mr. Kendall. As an example, in fiscal year 2012, 74,528 individual
    cash awards were made within the 136,714 civilian members, totaling
    $88,470,874. In fiscal year 2013, 37,566 individual cash awards were
    made within the 135,513 civilian members, totaling $42,639,649. That
    averages out to $1,187 per person in fiscal year 2012 and $1,135 per
    person in fiscal year 2013. It should be noted that awards are highly
    skewed toward our best, and not the average performer.

        32. Senator Ayotte. Secretary Kendall, if monetary awards are not
    currently given, why not?
        Mr. Kendall. Members of the acquisition workforce can and do
    receive monetary awards to recognize their contributions to DOD's
    mission where appropriate and when funds are available. Acquisition
    officials are covered by DOD's standard awards and incentives. We use
    annual ratings-based monetary awards subject to Office of Management
    and Budget/Office of Personnel Management caps and DOD guidance.

        33. Senator Ayotte. Secretary Kendall, are additional authorities
    needed to be able to offer incentives?
        Mr. Kendall. DOD currently has the necessary authority to provide
    incentives to members of its acquisition workforce. In general, I would
    like to have more flexibility in using the available incentives.

        34. Senator Ayotte. Secretary Kendall, what other incentives could
    be used?
        Mr. Kendall. The three incentive types we have are professional
    recognition, career advancement through assignments or promotion, and
    monetary awards. In general, I would like to have more of all of these
    and more flexibility in how we employ them.

        35. Senator Ayotte. Secretary Kendall, how can Congress help with
    this?
        Mr. Kendall. Remove the threat of sequestration. The uncertainty
    about future budgets, job security, furloughs, and advancement is a
    major disincentive to our workforce.

                                 accountability
        36. Senator Ayotte. Secretary Kendall, what consequences are there
    for PMs when acquisition programs fall short due to poor program
    management?
        Mr. Kendall. In appropriate situations, a full range of
    consequences are administered by senior acquisition leadership to
    correct problems. This includes relieving PMs who are not performing
    adequately.

           acquisition work-arounds such as the rapid equipping force
        37. Senator Ayotte. Secretary Kendall, over the last 13 years of
    war, the Services have developed various acquisition work-arounds to
    field equipment to our warfighters more quickly. The Army developed the
    Rapid Equipping Force (REF) on the Army staff to bypass normal Army
    acquisition processes to get lifesaving weapons systems to our troops
    more quickly. The other Services have developed similar organizations
    and processes. How would you assess the performance of organizations
    like the REF over the last decade?
        Mr. Kendall. Over the last 10 years, DOD created a number of Quick
    Reaction Capability (QRC) organizations with new processes and funding
    mechanisms to address the challenges inherent with more standard
    processes and to integrate DOD action to address urgent needs. These
    organizations were required because existing mechanisms in the Military
    Services were not able to meet urgent joint warfighting requirements in
    a timely manner. For example, the Army's REF is able to meet urgent
    requirements rapidly using a highly tailored Defense Acquisition System
    process to equip limited quantities of systems to allow Army units to
    adapt to specific operating environments or conditions. Much of the
    REF's speed of action relies on providing ``good enough'' solutions--
    REF equipment does not have to pass the more stringent worldwide
    environmental and sustainability requirements as those for fielded
    items as their intent is for short-term use.
        In addition to the Army's REFs, organizations created included the
    Warfighter Senior Integration Group (WSIG), JRAC,\33\ Joint Improvised
    Explosives Device Defeat Organization (JIEDDO), the Intelligence,
    Surveillance, and Reconnaissance Task Force (ISR TF), and the Mine
    Resistant Ambush Protected Vehicle Task Force (MRAP TF). More recently,
    DOD established Department-wide expectations for Urgent Operational
    Needs (UON) of all DOD components and created common definitions for
    UONs, Joint Urgent Operational Needs (JUON), and Joint Emergent
    Operational Needs (JEON). JEONs are capability gaps with the potential
    to result in loss of life or critical mission failure where operations
    are not yet currently underway, but are anticipated or pending. A
    recent example was the Field Deployable Hydrolysis System, developed as
    a JEON in 2013, before any agreement to destroy Syrian chemicals was in
    place, and recently deployed aboard the Cape Ray. DOD, working with
    Congress, requested several flexible funds (the Iraqi Freedom Fund, the
    Overseas Contingency Operations Transfer Fund, the Joint IED Defeat
    Fund, the MRAP Fund, and the JUON Fund), and when these funds were not
    available or insufficient for DOD purposes, DOD used reprogramming
    authority to provide the resources needed. Additionally, Secretary of
    Defense ``Rapid Acquisition Authority'' was established by Congress to
    enable the Secretary of Defense to address appropriation funding
    imbalances, up to $200 million annually, to allow the Services to
    attack any capability gap likely to result in combat casualties.
    ---------------------------------------------------------------------------
        \33\ Originally established as the ``C-SIG'' in Secretary of
    Defense Memorandum, ``Establishment of the Counter-Improvised Explosive
    Device Senior Integration Group (C-SIG),'' November 25, 2009, which was
    superseded by Secretary of Defense Directive-Type Memorandum (DTM) 11-
    006, ``Establishment of the Senior Integration Group (SIG) for the
    Resolution of Joint Urgent Operational Needs (JUON),'' June 14, 2011,
    and more recently established as the WSIG in DOD Directive 5000.71,
    ``Rapid Fulfillment of Combatant Commander Urgent Operational Needs,''
    August 24, 2012.
        Originally established in 2004 to address Immediate Warfighter
    Needs and recertified as the Executive Secretariat and Joint Rapid
    Acquisition Cell, in DOD Directive 5000.71, August 24, 2012.
        JIEDDO was established in Deputy Secretary of Defense Memorandum,
    ``Establishment of the Joint Improvised Explosive Device Defeat
    Organization (JIEDDO),'' January 18, 2006, and DOD Directive 2000.19E,
    ``Joint Improvised Explosive Device Defeat Organization (JIEDDO),''
    February 14, 2006.
        Operational ISR Task Force (ISR TF) established in Secretary of
    Defense Memorandum, ``Operational Intelligence, Surveillance, and
    Reconnaissance Task Force,'' April 18, 2008. In accordance with Deputy
    Secretary of Defense Memorandum, ``Organizing the Department of Defense
    to Provide Quick Reaction Capability,'' September 6, 2013, the ISR TF
    was aligned within the Office of the Under Secretary of Defense for
    Intelligence. This alignment was completed on March 31, 2014.
    ---------------------------------------------------------------------------
        These QRC organizations, using the inherent authorities with the
    Defense Acquisition System, with strong leadership support (e.g., Vice
    Chief of Staff of the Army for the REF, Secretary of Defense and Deputy
    Secretary of Defense for the JIEDDO, the MRAP TF, the ISR TF, and the
    WSIG, etc.), and ample funding, met near-term critical warfighter
    needs, preventing casualties and mission failure.

        38. Senator Ayotte. Secretary Kendall and Mr. Sullivan, what are
    some of the successes of organizations like the REF?
        Mr. Kendall. QRC organizations, such as the REF, have been
    successful in two important ways.
        First, within the Defense Acquisition System, they have repeatedly
    demonstrated the ability to utilize the authorities they have available
    to expedite action and provide capabilities requested by our
    warfighters. The QRC organizations have brought together teams that
    have been able to successfully execute acquisition actions using the
    many waiver, deviation, and other authorities needed to rapidly acquire
    and equip capabilities. These teams have learned to manage the risk of
    not delivering the perfect capability, delivering a capability which is
    not tested for all possible operational environments, and initiating
    and completing action often with very limited statements of
    requirements. These QRCs have accepted risk in efforts to reduce the
    risk of mission failure or more casualties for our warfighters.
        Second, capabilities that were not previously available, or
    available in insufficient quantities, were acquired (including, when
    required, necessary development) and fielded to our warfighters. The
    QRC organizations have had many successes, too numerous to go into in a
    short answer. The JIEDDO has delivered a wide range of capabilities to
    our warfighters to address the Improvised Explosive Device (IED)
    threat. The MRAP TF delivered over 20,000 MRAP vehicles that
    demonstrably saved lives and reduced casualties. The ISR TF, shortly
    after being chartered by Secretary of Defense Gates, was the driving
    force for providing significantly more ISR capabilities for our
    warfighters, improving the ability to conduct military operations. Each
    of these organizations facilitated our surge in Iraq and later in
    Afghanistan.
        Other QRC organizations, such as the REF, have also had significant
    successes in supporting our warfighters. One such example deals with
    pelvic protection. On February 28, 2011, an Army Battalion Task Force
    in Afghanistan submitted a REF 10-liner requesting pelvic ballistic
    protection. The REF acquired available United Kingdom Tier 1 pelvic
    protection--silk boxer shorts designed to prevent debris from blast
    events to become embedded in soft tissues, thus mitigating infection.
    At approximately the same time, the Marine Corps requested, in an
    Urgent Universal Needs Statement, similar capabilities. From April 25
    to May 5, 2011, the Army conducted various assessments to identify both
    Tier 1 and Tier 2 ballistic pelvic protection. Recognizing the Joint
    nature of this requirement, U.S. Forces-Afghanistan initiated on May
    30, 2011, a JUON for the Tier 1 and Tier 2 capabilities. The Joint
    Staff validated this requirement and on June 21, 2011, the JRAC
    assigned the JUON for action. JIEDDO funded the initial procurement in
    response to the JUON and thousands of the Tier 1 and Tier 2 pelvic
    protection capabilities were delivered beginning in September 2011.
    Reports were later received in February 2012 and in the summer of 2012,
    indicating that the pelvic protection saved lives and, even in the case
    of multiple amputees, protected the ability to become a parent. Each of
    these QRCs, individually as well as working closely together, have had
    innumerable successes such as this, saving lives, preventing
    casualties, and enabling military missions to be accomplished.
        Mr. Sullivan. We have conducted some work in the past on various
    DOD programs and activities which are intended to rapidly respond to
    urgent warfighters' needs. Over the course of the wars in Iraq and
    Afghanistan, DOD was challenged to quickly develop and provide new
    equipment and capabilities to address evolving threats. To meet urgent
    operational needs identified by the warfighter, DOD had to look beyond
    traditional acquisition procedures, expand the use of existing
    processes, and develop new processes and entities designed to be as
    responsive as possible to urgent warfighters' requests. Through these
    efforts, which evolved over time, DOD was able to field needed
    capabilities to help counter IEDs, improve intelligence and
    surveillance activities, and enhance command and control on the
    battlefield. In 2010, however, we reported that there were several
    challenges impacting DOD's ability to rapidly respond to urgent needs.
    For example, we found that funding was not always available when needed
    to acquire and field solutions, and some attempts to meet urgent needs
    involved immature technologies or technologically complex solutions
    which could lead to longer timeframes for fielding solutions to urgent
    needs. In addition, in 2011, we identified cases of fragmentation,
    overlap, and potential duplication of efforts among DOD's urgent need
    processes and entities. We made several recommendations to DOD to
    promote a more comprehensive approach to planning, management, and
    oversight of its efforts to fulfill urgent needs, and DOD concurred
    with these recommendations. For example, in 2012, DOD revised guidance
    to formally establish the roles and responsibilities of the WSIG as a
    standing DOD-wide forum that would serve as DOD's authority to oversee,
    prioritize, and direct actions to facilitate the rapid response and
    resolution of urgent needs. Further, in November 2013, DOD revised its
    policy and procedures for the Defense Acquisition System (DODI
    5000.02), which, among other things, incorporates procedures for
    accelerated acquisition programs and responding to urgent needs when
    warranted.

        39. Senator Ayotte. Secretary Kendall, what is the future for these
    organizations as we transition in Afghanistan?
        Mr. Kendall. Decisions have been made with respect to QRC
    organizations. In order to continue to fulfill urgent needs, DOD must
    retain many of the capabilities developed to address rapidly evolving
    threats during the wars in Iraq and Afghanistan. DOD must also evolve
    its authorities for financial flexibility for future contingency
    operations, even as flexible funding accounts associated with the
    present war in Afghanistan decrease or are eliminated. DOD has made the
    decision to retain or transition, at significantly reduced manning
    levels, key joint organizations created to enable the fielding of quick
    reaction capabilities. This decision impacts the WSIG, the JRAC, the
    JIEDDO, and the ISR TF.
        DOD has realigned, reduced, remissioned, and streamlined its QRCs
    to provide a coherent, comprehensive, and effective capability for
    anticipating and quickly reacting to operational surprise. The JRAC has
    been realigned and streamlined to directly support the WSIG, its
    Executive Secretariat, to assist in maintaining senior leader
    visibility on DOD's progress in fulfilling urgent combatant command
    requirements. JIEDDO has been significantly reduced and remissioned to
    defeat threat network use of network-enabling improvised weapons. The
    ISR TF has been reduced in size and transitioned into the Office of the
    Under Secretary of Intelligence, where it will continue to focus on
    rapid response and rapid fielding of ISR assets. These QRCs form an
    integrated, fully-coordinated effort for rapidly responding to DOD's
    support of urgent combatant commander requirements. The MRAP TF was
    previously disestablished and its functions transitioned to the
    Military Services. The Military Services have unique operational needs
    of their own and each will retain a Service capability to meet those
    needs. While significantly reduced in size, these organizations will
    continue to provide the essential capabilities required for rapid
    response.
        With respect to the REF, the Army carefully considered the Senate
    Armed Services Committee Report on the 2013 NDAA advising that DOD
    consider maintaining key wartime elements used to improve and compress
    the Defense Acquisition System process to enable agile response to
    future threats. As a result of this advice and the 20-month Army
    Headquarters Transformation Focused Target Review Area (AHT FTRA) on
    REF realignment, the Army decided that the capabilities of the REF must
    be rendered enduring. On January 30, 2014, the Under Secretary of the
    Army approved the implementation plan for the stabilization of the REF,
    which transfers its operations under the authority of the Commander of
    the Training and Doctrine Command and its acquisition functions under
    Program Executive Office-Soldier, while maintaining both in one unique
    Army organization. This maintains a wartime capability for rapid
    response by providing resources for unique or emerging requirements
    through REF 10-Liner requests. The REF would be positioned to support
    any residual force in Afghanistan or new small contingency operations.
    Absent any small contingency, the REF would maintain its wartime
    capabilities by equipping, in a similar manner, advanced or emerging
    technology, in limited quantities, to the Army's deployed, regionally-
    aligned forces or other deployed or contingency units. The AHT FTRA
    recommended target or critical-level of funding for the REF would keep
    this wartime capability available.

        40. Senator Ayotte. Secretary Kendall, how are we going to
    incorporate their best practices into the traditional acquisition
    processes?
        Mr. Kendall. Yes, fundamentally, DOD has one acquisition system.
    That system strongly encourages ``tailoring'' to achieve optimal
    results for a specific program. The various QRC organizations have, in
    most instances, highly tailored the programs to optimize action for
    speed and to accept risk. In addition, the QRC processes have
    abbreviated requirements validation processes and ready access to
    funding.
        The Deputy Secretary of Defense issued an interim DOD Instruction
    5000.02, ``Operation of the Defense Acquisition System,'' on November
    26, 2013. The interim instruction emphasizes that the programs should
    be tailored to the needs of the acquisition. Several models are
    provided for the common situations associated with a particular
    acquisition. One model, based in part on our lessons learned from best
    practices of the various QRC organizations, is an Accelerated
    Acquisition Program model. It applies for acquisition programs where
    fielding will require no more than 2 years and schedule considerations
    dominate over cost and technical risk considerations. To ensure that it
    is well understood that rapid acquisition associated with an urgent
    need can be accomplished, the Interim Instruction incorporates a very
    highly tailored acquisition model that is optimized for rapid fielding
    of capabilities (Enclosure 13 of the Interim Instruction).
        In the case of the Army's REF, on March 7, 2014, the Army
    Acquisition Executive (AAE) approved an Acquisition Decision Memorandum
    assigning program executive office, soldier as the Milestone Decision
    Authority and provided the concept to support the REF which ensures:
    (1) flexibility and speed focusing on the needs of soldiers; and (2)
    separate base funding firewalled from any other use than REF efforts.
    Additionally, the AAE provided clarification of the Milestone Decision
    Authority's responsibilities designed to maintain speed of action for
    the REF using the tailored DAS while ensuring appropriate oversight and
    visibility of REF efforts to identify those that should transition to
    enduring capabilities.

        41. Senator Ayotte. Secretary Kendall and Mr. Sullivan, I often
    hear that it is much easier to contract with SOCOM than it is with the
    Services. What can the Services learn about acquisition from SOCOM
    contracting?
        Mr. Kendall. SOCOM's relative ease to contract stems from SOCOM's
    lean command and acquisition authority chain, and less complex
    acquisitions. First, many of SOCOM's major acquisitions are limited to
    ACAT III and non-developmental items. SOCOM often seeks Special
    Operations Forces (SOF)-peculiar solutions that are fulfilled by a
    specialized and focused industry, thereby facilitating clear
    communication of requirements and rapid appreciation of the operational
    context. The stakeholders in the acquisition process (J8 for
    requirements and testing, J4 for sustainment, and Comptroller for
    funding) all fall under the direction of the SOCOM Commander, allowing
    for greater unity of purpose for the scope of SOF-peculiar acquisitions
    pursued by the command. This unity of purpose extends to the command's
    ability to clearly articulate requirements and expectations to industry
    partners. While SOCOM follows all the same laws and regulations as the
    Services, SOCOM is small by comparison with a very flat acquisition
    structure. Title 10, U.S.C., section 167, assigns acquisition authority
    to the Commander of SOCOM, who in-turn delegates this authority to
    SOCOM's Acquisition Executive, then to the Director of Procurement, who
    warrants the respective Contracting Officer. This streamlined structure
    allows for coordination and timely approvals at all levels.
        Mr. Sullivan. SOCOM's approach to acquisition management has
    several features that may contribute to the efficiency and
    effectiveness of its acquisition function. First, in acquiring weapon
    systems, SOCOM has emphasized the need for ``80 percent'' solutions
    that provide improved capabilities incrementally to the warfighter in
    reasonable timeframes, rather than major development efforts that
    require advanced technologies and years of R&D. The vast majority of
    SOCOM's acquisition programs are smaller Acquisition Category III level
    in size (less than $185 million for research, development, test, and
    evaluation, and less than $835 million for procurement), have short
    acquisition cycles, and use modified commercial off-the-shelf and
    nondevelopmental items or modify existing service equipment and assets.
    Second, SOCOM officials have told us that they focus on careful
    tailoring of program documentation and oversight requirements in order
    to improve the efficiency of its acquisition processes. Finally, SOCOM
    plans, funds, acquires, and sustains weapon systems all under one roof.
    Specifically, all the key entities involved in the acquisition life-
    cycle process--requirements developers, comptroller, contracting
    personnel, logistics planners, and program offices--are colocated and
    report to a single four-star SOCOM commander. Our prior work has shown
    that one cause of poor acquisition outcomes is the fragmentation of
    DOD's key decisionmaking processes for acquiring weapon systems. The
    key processes--requirements determination, resource allocation, and the
    acquisition management system--are often led by different
    organizations, making it difficult to hold any one person or
    organization accountable for saying ``no'' to an unrealistic
    requirement or for tempering optimistic cost and schedule estimates.
    SOCOM's centralized structure and decisionmaking authority may help it
    to avoid the problems associated with DOD's fragmented decisionmaking
    processes for major weapon system acquisitions. While SOCOM's approach
    can provide useful lessons learned, their approach may not scale up to
    address the breadth and complexity of weapon system acquisitions
    conducted across DOD.

                         armored multi-purpose vehicle
        42. Senator Ayotte. Secretary Kendall, I understand that the Army
    has stated that the Armored Multi-Purpose Vehicle (AMPV) is one of its
    top five priorities. Have you reviewed the request for proposals (RFP)
    for this program?
        Mr. Kendall. I have reviewed the RFP for APMV program and approved
    its release to industry in November 2013.

        43. Senator Ayotte. Secretary Kendall, are you confident that the
    RFP supports full and open competition?
        Mr. Kendall. The RFP is consistent with the AMPV acquisition
    strategy, and supports a full and open competition for an engineering
    and manufacturing development contract award.

        44. Senator Ayotte. Secretary Kendall, do you believe the RFP
    should move forward on the current schedule?
        Mr. Kendall. Yes. Source selection activities are ongoing and are
    expected to support a Milestone B decision in December of this year.

        45. Senator Ayotte. Secretary Kendall, why do you believe the AMPV
    is important for the Army's Armored Brigade Combat Teams going forward?
        Mr. Kendall. The AMPV will replace the legacy M113 family of
    vehicles, which account for 32 percent of Armored Brigade Combat Team's
    combat vehicle fleet. The AMPV will provide the necessary force
    protection and mobility improvements, as well as space, weight, power,
    and cooling capabilities necessary to accept the Army's inbound
    network, features the M113 lacks and which are essential to the
    mission. These improvements will allow the AMPV to operate effectively
    as part of the Armored Brigade Combat Team formation and will provide
    commanders with vital capabilities to maneuver and command across the
    full battlefield. The AMPV vehicle variants will support five mission
    roles, including: General Purpose, Mortar Carrier, Mission Command,
    Medical Evacuation, and Medical Treatment.

                                small businesses
        46. Senator Ayotte. Secretary Kendall, in your prepared statement,
    you say that small businesses provide an excellent source of
    competition in part because they do not have the overhead burdens of
    some larger prime contractors. From a national security perspective, in
    terms of ensuring we have the technological and industrial capacity in
    the United States to provide our troops the best and most advanced
    weapons in the world and in terms of promoting competition and saving
    tax dollars, what is the value of having a vibrant and growing
    population of small defense contractors?
        Mr. Kendall. A vibrant and growing population of small defense
    contractors provides DOD with innovation, flexibility, agility, and
    high value. A healthy small business industrial base of suppliers also
    increases competition, which leads to cost savings for DOD and the
    taxpayers. All of these elements contribute to our national security.

        47. Senator Ayotte. Secretary Kendall, how does DOD define a small
    business?
        Mr. Kendall. FAR Part 2 defines small business as follows: ``Small
    Business Concern means a concern, including its affiliates, that is
    independently owned and operated, not dominant in the field of
    operation in which it is bidding on government contracts, and qualified
    as a small business under the criteria and size standards in 13 CFR
    Part 121 (see 19.102). Such a concern is `not dominant in its field of
    operation' when it does not exercise a controlling or major influence
    on a national basis in a kind of business activity in which a number of
    business concerns are primarily engaged. In determining whether
    dominance exists, consideration must be given to all appropriate
    factors, including volume of business, number of employees, financial
    resources, competitive status or position, ownership or control of
    materials, processes, patents, license agreements, facilities, sales
    territory, and nature of business activity. (See 15 U.S.C. 632.)'' This
    definition governs with respect to DOD acquisition.

        48. Senator Ayotte. Secretary Kendall, what percentage of DOD prime
    contracts is with small businesses?
        Mr. Kendall. The percentage of DOD prime contracts awarded to small
    businesses is calculated each fiscal year. The chart below shows the
    past decade up through fiscal year 2013, the most recent year for which
    data has been released by the Small Business Administration.

                                       SMALL BUSINESS PROGRAM PERFORMANCE HISTORY
                                                  Prime Contract Awards
                                                [In billions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                      Small Business     Percent  of
                            Fiscal Year                            Total Awards           Awards            Total
    ----------------------------------------------------------------------------------------------------------------
    2013......................................................            $229.20              $48.40          21.1
    2012......................................................             275.00               56.10          20.4
    2011......................................................             289.80               57.40          19.8
    2010......................................................             291.90               61.10          20.9
    2009......................................................             302.40               63.90          21.1
    2008......................................................             314.60               62.50          19.9
    2007......................................................             269.30               55.00          20.4
    2006......................................................             235.00               51.30          21.8
    2005......................................................             219.30               53.90          24.6
    2004......................................................             194.10               44.80          23.1
    2003......................................................             187.50               42.00          22.4
    ----------------------------------------------------------------------------------------------------------------

        49. Senator Ayotte. Secretary Kendall, how has the percentage of
    DOD prime contracts with small businesses changed over time?
        Mr. Kendall. The percentage of DOD prime contracts awarded to small
    businesses has fluctuated over the last decade between a high of 24.6
    percent in fiscal year 2005 and a low of 19.8 in fiscal year 2011.
    Since then, it has trended upward to 21.1 percent in fiscal year 2013,
    the most recent year for which data has been released by the Small
    Business Administration.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        50. Senator Ayotte. Secretary Kendall, what are you specifically
    doing to increase the percentage of prime contracts with small
    businesses?
        Mr. Kendall. DOD, through its Office of Small Business Programs
    (OSBP), continuously reinforces DOD's commitment to small businesses
    through a supportive and proactive approach. We provide leadership and
    guidance to the military departments and defense agencies, emphasizing
    the importance of small business utilization in our efforts to meet the
    needs of the Nation's warfighters.
    Leadership
        The Secretary of Defense and I have established policies and issued
    memoranda emphasizing the importance of achieving our small business
    goals and including small businesses as a key part of our industrial
    base. In addition, I implemented the DOD Better Buying Power 2.0
    Initiatives that will drive improvements in small business focus areas.
    These improvements include promoting effective competition through
    increasing small business roles and opportunities, increasing small
    business participation by more effective use of market research, and
    improving the professionalism of the total acquisition workforce
    through stronger qualification requirements. I conduct monthly meetings
    with DOD Component Acquisition Executives, heads of contracting
    activities, and the Director, DOD OSBP to monitor and address the
    impacts of significant internal changes and initiatives on small
    business utilization. I implemented the Prompt Payment initiative for
    DOD, which accelerates billions of dollars in payments to small
    business prime contractors.
    Workforce
        I designated the Director, DOD OSBP, as functional leader of the
    small business Defense Acquisition Workforce.
    Peer Reviews
        I instituted DOD OSBP reviews of acquisition strategies and
    participation in peer reviews for acquisitions of services exceeding $1
    billion. This is intended to ensure that the Better Buying Power
    initiatives are implemented, and small businesses are utilized, to the
    maximum extent practicable.
    Accountability
        We are in the forefront with a performance requirement addressing
    support for and attainment of small business contracting goals for
    senior executives and personnel responsible for formulating and
    approving acquisition strategies and plans.

        51. Senator Ayotte. Secretary Kendall and Mr. Sullivan, can we do
    more to increase the percentage of prime contracts with small
    businesses?
        Mr. Kendall. DOD, through its OSBP, continually reinforces DOD's
    commitment to small businesses through a supportive and proactive
    approach. We constantly strive to do more to increase the percentage of
    prime contracts with small businesses through an array of methods:
    Programs
             The Small Business Innovation Research/Small Business
            Technology Transfer (SBIR/STTR) programs offer potential to
            serve a wider array of DOD needs and support commercialization
            into the broader marketplace. SBIR/STTR awards equate to prime
            contracts to small businesses, which help to meet DOD needs
            while developing small businesses in our industrial base.
             The Rapid Innovation Program (RIP) reduces barriers
            for small businesses and non-traditional suppliers. More than
            90 percent of RIP awards are made to small businesses to meet
            the most urgent needs of DOD, helping to increase prime
            contracts to small businesses while supporting our forces.
             The Mentor-Proteegee Program incentivizes eligible
            mentors to support and develop new proteegees, thereby adding
            more qualified small businesses to our industrial base.
             The Indian Incentive Program provides incentives to
            prime contractors that use Indian-owned subcontractors, acting
            as an economic multiplier for Native American communities while
            adding more qualified small businesses to our industrial base.
    Policy, Guidance, and Compliance
        We continue to ensure that acquisition personnel have the most up-
    to-date policies and guidance, and we monitor compliance with the
    Federal Acquisition Regulation and Small Business Act requirements.
    Market Research
        We can undertake to increase the prime contract awards to small
    businesses by utilizing the DOD MaxPrac methodology to identify
    potential small business opportunities for specific supplies/services.
    Standardized Forecast
        We can develop comprehensive forecasts that will cultivate
    communication between DOD and industry, and enable small businesses to
    have advanced knowledge of potential DOD requirements for planning
    purposes.
    Training
        We can continue to develop and improve acquisition workforce
    training.
        Mr. Sullivan. Maximizing contracting opportunities for small
    businesses has been a longstanding policy of the Federal Government. To
    help ensure that small businesses receive a share of Federal
    procurement contract dollars, Congress has set an annual government-
    wide goal of awarding not less than 23 percent of prime contract
    dollars to small businesses. In practice, the experience of small
    businesses in receiving prime contracts has varied. Federal agencies
    have achieved the goal of 23 percent in some years, but have fallen
    short in other years. In some cases, such as the government's strategic
    sourcing contract for office supplies, small businesses have received
    the majority of the contracts awarded. Contract bundling is an area of
    concern for many small businesses, but we have found that the accuracy
    of the data on contract bundling may be limited. In addition, under the
    Small Business Act, all Federal agencies with procurement powers are
    required to establish an Office of Small and Disadvantaged Business
    Utilization (OSDBU) to advocate for small businesses. In 2011, we made
    a recommendation directing procuring agencies that were not in
    compliance to meet the Small Business Act requirement that OSDBU
    directors report to agency heads or deputy heads to help ensure that
    small business contracting receives attention from top management at
    Federal agencies. A number of agencies we found not to be in compliance
    have yet to take action on this recommendation. Going forward, GAO
    staff would be glad to brief committee staff on recommendations we have
    made to SBA for strengthening its impact in this area.

        52. Senator Ayotte. Secretary Kendall and Mr. Sullivan, how can
    Congress help increase the percentage of prime contracts with small
    businesses?
        Mr. Kendall. The most important step that Congress can take to
    increase the percentage of prime contracts with small businesses is to
    ensure stability and confidence in the marketplace by establishing and
    adhering to a budget and passing appropriate funding measures in a
    timely fashion. Factors such as sequestration negatively impact small
    businesses because they are challenged by limited capital structures
    and available liquidity. Small businesses are more dependent than large
    ones on government programs and consistent cash flow. It is critical to
    create an environment where small businesses can participate without
    the risk of potential reductions in requirements and even possible
    termination of contracts due to conditions caused by legislative delays
    and extreme budget shortfalls.
        Mr. Sullivan. See response to question #51.

                          sole-source contract awards
        53. Senator Ayotte. Secretary Kendall and Mr. Sullivan, recently,
    GAO issued a report that stated: ``In 2013, the Department of Defense
    awarded contracts for about $308 billion for products and services, of
    which 43 percent was awarded without competition.'' I understand sole-
    source awards must be accompanied by a written justification that
    addresses the specific exception to full and open competition. Do you
    review these justifications?
        Mr. Kendall. As I review MDAP and MAIS programs for major
    milestones or to approve acquisition strategies, I do review any
    recommendation to use sole-source contracting. I do not normally review
    formal justifications for sole-source contract awards. Consistent with
    the policies, procedures, and authorities in DFARS 206.3--Other Than
    Full and Open Competition, authority to review and approve
    justifications for other than full and open competition has been
    established with the military departments or delegated to the senior
    procurement executives of the defense agencies.
        Mr. Sullivan. GAO does not play a role in approving justifications
    for noncompetitive awards. Approval of justifications within DOD varies
    based on the total expected dollar value of the award. Specifically,
    under the FAR, awards valued below $650,000 are approved by the
    contracting officer and awards valued between $650,000 and $12.5
    million must be approved by the competition advocate for the procuring
    activity. Awards valued between $12.5 million and $85.5 million are
    reviewed by the head of the procuring activity, while awards valued
    above $85.5 million are approved by the DOD senior procurement
    executive. GAO has analyzed selected contract files, including the
    written justifications for sole-source awards, to better understand the
    reasons for noncompetitive awards. We relied on this analysis in
    producing the following reports:

             GAO, Defense Contracting: Early Attention in the
            Acquisition Process Needed to Enhance Competition, GAO-14-395
            (Washington, DC, May 5, 2014).
             GAO, Defense Contracting: DOD's Use of Class
            Justifications for Sole-Source Contracts, GAO-14-427R
            (Washington, DC, Apr. 16, 2014).
             GAO, Federal Contracting: Noncompetitive Contracts
            Based on Urgency Need Additional Oversight, GAO-14-304
            (Washington, DC, Mar. 26, 2014).
             GAO, Defense Contracting: Actions Needed to Increase
            Competition, GAO-13-325 (Washington, DC, Mar. 28, 2013).
             GAO, National Defense: DOD's Implementation of
            Justifications for 8(a) Sole-Source Contracts, GAO-13-308R
            (Washington, DC, Feb. 8, 2013).
             GAO, Defense Contracting: Competition for Services and
            Recent Initiatives to Increase Competitive Procurements, GAO-
            12-384 (Washington, DC, Mar. 15, 2012).
             GAO, Defense Contracting: Improved Policies and Tools
            Could Help Increase Competition on DOD's National Security
            Exception Procurements, GAO-12-263 (Washington, DC, Jan. 13,
            2012).
             GAO, Federal Contracting: Opportunities Exist to
            Increase Competition and Assess Reasons When Only One Offer is
            Received, GAO-10-833, (Washington, DC, Jul. 26, 2010).

        54. Senator Ayotte. Secretary Kendall, what percentage of sole-
    source justifications do you reject?
        Mr. Kendall. Recently, I have rejected two cases of limited
    competition or sole-source approaches in Service programs. As I review
    program acquisition strategies, I look for every opportunity to include
    competition. Competition is our most effective way to control costs.
    When direct competition isn't possible or cost effective, I still
    require programs to find ways to introduce competition through open
    systems and modular designs. I do not keep records of these decisions.

        55. Senator Ayotte. Secretary Kendall and Mr. Sullivan, what are
    the barriers to opening up service contracts to competition?
        Mr. Kendall. Some barriers which have been identified in the past
    include: not having the necessary data rights to enable competition, in
    FMS direction from the buying country to use a specific source, and
    delays in an ongoing competition that result in the use of sole-source
    bridge contracts. DOD continues to work to break-down these barriers
    and increase competition across all acquisitions.
        DOD achieved a 73 percent competition rate for all service
    contracts in fiscal year 2013, with one portfolio group, construction,
    reaching 90 percent. Increasing competition in service acquisitions
    will continue to be a priority. DOD is working on a new ``Acquisition
    of Services'' Instruction, which establishes and implements a formal
    management and oversight structure for the procurement of contract
    services. The Instruction will also establish policy, assign
    responsibilities, and provide direction on all aspects of services
    acquisition, including competition.
        Competition is a cornerstone of our acquisition system and the
    benefits of competition are well-established.
        Mr. Sullivan. Several key factors influence competition for service
    contracts. For support services related to DOD weapons programs, we
    have found that the lack of access to proprietary technical data and a
    heavy reliance on specific contractors for expertise can limit, or even
    preclude the possibility of, competition. Even when technical data are
    not an issue, the government may have little choice other than to rely
    on the contractors that were the original equipment manufacturers, and
    that, in some cases, designed and developed the weapon system. In
    addition, program officials play a significant role in the contracting
    process, particularly in developing requirements and interfacing with
    contractors. According to contracting officials we have spoken with,
    program officials may have a preference for the incumbent contractors
    and are often insufficiently aware of the amount of time needed to
    complete acquisition planning, which may hinder opportunities to
    increase competition.

                          u.s. defense industrial base
        56. Senator Ayotte. Secretary Kendall and Mr. Sullivan, from a
    national security perspective, how would you characterize the health of
    the U.S. defense industrial base?
        Mr. Kendall. As DOD continues to decrease R&D and production
    spending, there is growing stress on our industrial base. In addition,
    insufficient near-term demand for certain products will keep some
    companies below their minimum economic sustaining rates, making it
    financially challenging to keep workers with unique, technical
    expertise in advanced skills. In addition, sequestration and prolonged
    uncertainty could limit capital market confidence in the defense
    industry, undermining companies' willingness or ability to continue to
    invest in their defense portfolios. Continued uncertainty will hit
    smaller, innovative, and niche product companies particularly hard due
    to a lack of capital resources to withstand the turmoil and
    uncertainty. The impact is significant because 60 to 70 percent of
    defense dollars provided to prime contractors is subcontracted, often
    to small innovative firms.
        While only a fraction of our industrial base capabilities are truly
    at risk, the United States is in danger of losing all sources or going
    down to a single qualified source in some key industrial capabilities
    vital for our future national security.
        I am also concerned that the long times between new program starts
    on some product types will cause us to lose the experienced design
    teams in those product types. Reconstituting these teams after years
    without a new development program will be costly and difficult.
        Mr. Sullivan. Several key factors influence competition for service
    contracts. For support services related to DOD weapons programs, we
    have found that the lack of access to proprietary technical data and a
    heavy reliance on specific contractors for expertise can limit, or even
    preclude the possibility of, competition. Even when technical data are
    not an issue, the government may have little choice other than to rely
    on the contractors that were the original equipment manufacturers, and
    that, in some cases, designed and developed the weapon system. In
    addition, program officials play a significant role in the contracting
    process, particularly in developing requirements and interfacing with
    contractors. According to contracting officials we have spoken with,
    program officials may have a preference for the incumbent contractors
    and are often insufficiently aware of the amount of time needed to
    complete acquisition planning, which may hinder opportunities to
    increase competition.

        57. Senator Ayotte. Secretary Kendall and Mr. Sullivan, what are
    key gaps, vulnerabilities, or shortcomings in the U.S. defense
    industrial base?
        Mr. Kendall. Industrial base impact (at all levels of the supply
    chain) is an important consideration factored into DOD's investment
    planning and budget preparation. In 2013, DOD implemented its first
    widespread application of sector-by-sector, tier-by-tier (S2T2)
    Fragility and Criticality (FaC) assessments with the Military Services
    and defense agencies. These assessments systematically evaluate the
    need for program adjustments or investments to sustain specific
    capabilities in the defense industrial base. The framework allows DOD
    leadership to better consider industrial capabilities spanning multiple
    sectors, tiers, Services, and programs as part of DOD's normal budget
    process. FaC assessments measure the fragility of a capability, the
    likelihood of losing a capability, and the criticality of a
    capability--the difficulty of restoring a capability once lost.
        The results of the S2T2 fragility and criticality assessment
    results were critical inputs to the fiscal year 2015 budget request.
    Some of the industrial base decisions reflected in the fiscal year 2015
    President's budget request include investments for Air Force and Navy
    high-performance jet engine technology development, Army next
    generation ground combat vehicle design teams, and missile industrial
    base for production process improvements/automation and material/
    technology upgrades for enhanced performance.
        In addition, DOD initiated a new program in fiscal year 2014,
    Industrial Base Analysis and Sustainment Support, which will fund
    projects that preserve critical defense industrial base capabilities
    through a break in production that would otherwise have to be recreated
    later at a higher cost to the taxpayers. These projects are rated by
    the S2T2 FaC criteria. Fiscal year 2014 will fund focused projects for
    Butanetriol, a solid rocket fuel precursor chemical; Infrared Focal
    Plane Arrays; Advanced Thrusters for Solid Rocket Propulsion; and Test
    Facilities for Radiation Hardened Electronics.
        DOD has also worked with other government rocket propulsion
    stakeholders (Services, the National Aeronautics and Space
    Administration (NASA), and the Office of Science and Technology Policy
    in the White House) to establish a collaborative body within the joint
    Army, Navy, NASA, and Air Force construct to address rocket propulsion
    industrial base issues. We are leading activities associated with
    implementing the government's course of action for sustaining the solid
    and liquid propulsion industrial capability.
        Through the Space Industrial Base Council and the Critical
    Technologies Working Group, DOD is assessing and identifying actions to
    preserve and sustain essential capabilities, and critical sub-tier
    vendors, within the broader space industrial base. Risks are identified
    through annual S2T2 analysis efforts and then coordinated and ranked
    with interagency space partners for resourcing and action.
        DOD is working with the Defense Ordnance Technology Council to
    address industrial base concerns associated with developing and
    executing missile fuze and thermal battery risk mitigation activities.
    We are also developing a strategy to address ammonium perchlorate
    industrial base issues.
        DOD cannot afford to fix all of our industrial base
    vulnerabilities. In general, we are concerned about maintaining
    engineering design capabilities and critical item producers.
        Mr. Sullivan. See response to question #56.

        58. Senator Ayotte. Secretary Kendall and Mr. Sullivan, how has the
    U.S. defense industrial base changed in the last few years?
        Mr. Kendall. It's no secret what a tough environment our defense
    industrial base faces today--uncertain budgets put significant
    pressures on industry. Defense firms are competing with the private
    sector for science, technology, engineering, and management talent.
    With fewer programs per sector, and hence less opportunity to work on a
    variety of new and exciting projects, it is difficult for our defense
    firms to attract and retain young talent. In addition, the industry
    faces an ever increasing number of employees at or near retirement age.
        Although the fiscal year 2015 President's budget exacerbates
    defense industrial base fragility, it started when R&D and Overseas
    Contingency Operations (OCO) began to diminish in 2008 to 2009. Science
    and technology accounts (6.1, 6.2, and 6.3), which are about 15 percent
    of the total R&D budget, have been very well-protected, thanks to
    administration and congressional support, but that puts even more
    pressure on the rest of the R&D accounts as budgets shrink. In fact,
    from 2008 to 2015, the non-science and technology R&D accounts
    (specifically 6.4, 6.5, and 6.7) dropped 36 percent (in constant year
    dollars) while over the same period, procurement dropped 42 percent.
        The impact of these cuts is intensified by a less competitive base
    due to the consolidation of the 1990s--i.e., fewer companies translate
    to increased criticality of each firm. The procurement increases that
    DOD experienced in fiscal year 2004 to 2008 did not fund future
    development. They were heavily weighted in global war on terrorism/OCO
    distributions toward sustainment, not on the next generation of
    platforms. Because future spending levels are still unclear, DOD is
    reluctant to draw down its force structure any further than is already
    planned. As such, personnel costs cannot be cut, and operations and
    maintenance accounts can only be trimmed slightly without hurting the
    readiness levels of troops preparing to deploy. That means that in the
    short-term, the bulk of the cuts have fallen disproportionately on R&D
    and procurement accounts, or in other words, on our industrial base.
        The defense industrial structure has changed, in that many key
    capabilities, to include critical design work, now reside in lower
    tiers with prime contractors more focused on integration. Primes face
    additional cost and schedule risk when they integrate supplier-designed
    and supplier-manufactured subsystems and assemblies because they lack
    detailed understanding of the relevant technology. In addition,
    industry in general is becoming more integrated with global commercial
    markets. Effective global supply chain integration and management are
    even more critical to program success than in the past. Although
    globalization brings many benefits to both defense firms and DOD, such
    as leveraging the R&D efforts of commercial industry that would be
    impossible to replicate on a defense-unique basis, it also brings
    increased cross-border flows of information and technology, reducing
    our technological advantage. Global supply chains and network-based
    maintenance processes, both with embedded commercial off-the-shelf
    electronics and software, may also expose DOD to cyber-attack,
    counterfeiting, malware, et cetera. DOD is working with industry to
    confront these challenges.
        Mr. Sullivan. In DOD's most recent annual assessment of industrial
    capabilities, it stated that the industrial base upon which DOD relies
    has steadily become more global and diverse, and DOD does not control
    the supply chain that supports production. GAO has not conducted an
    assessment of the U.S. defense industrial base or its key sectors, but
    GAO has conducted audits of certain aspects of the U.S. defense
    industrial base, including DOD's efforts to monitor the health of its
    supplier base, counterfeit parts in the supply chain, and the impact of
    foreign boycotts on the supplier base (see GAO-09-5; GAO-10-389; GAO-
    13-159SU). Over the past decade, it appears that prime contractors are
    doing less development and manufacturing of weapon systems and relying
    more on subcontractors. As more work is being done at lower tiers, DOD
    has less visibility and oversight. We also have done work on DOD's
    supply chain for titanium and rare earths (see GAO-13-539 and GAO-10-
    617R) and have an ongoing work reviewing DOD's planning and use of
    waivers for specialty metals and a mandate to review the Army's Bradley
    Fighting Vehicle industrial base.

        59. Senator Ayotte. Secretary Kendall and Mr. Sullivan, has DOD's
    reliance on foreign suppliers increased or decreased since 2011? Please
    provide details.
        Mr. Kendall. Pursuant to title 41, U.S.C., section 8305, DOD
    annually provides a Report to Congress on purchases from foreign
    entities. Since fiscal year 2011, DOD has spent less from foreign
    entities consistent with the overall reduction in all contract
    spending. The fraction of spending has remained fairly stable. In
    fiscal year 2011, DOD purchased on contract a total of $374 billion; of
    that amount, $24 billion was purchased from foreign entities. This
    equals approximately 6.4 percent of DOD's total spending. In fiscal
    year 2012, DOD purchased on contract a total of $360 billion; of that
    amount, $22 billion was purchased from foreign entities. This equals
    approximately 6.1 percent of DOD's total spending. In fiscal year 2013,
    DOD purchased on contract a total of $308 billion; of that amount,
    $19.7 billion was purchased from foreign entities. This equals
    approximately 6.4 percent of DOD's total spending. In all years, the
    majority of purchases from foreign entities were for fuel, contracted
    services, construction, and subsistence in direct support of operations
    overseas.
        Mr. Sullivan. DOD relies on foreign suppliers to play a major role
    in many weapon systems acquisitions. GAO has not conducted an
    assessment of DOD's reliance on foreign suppliers.
                                     ______

                    Questions Submitted by Senator Roy Blunt
                   new technologies and patent infringements
        60. Senator Blunt. Secretary Kendall, it has come to my attention
    that when new technologies appear and receive patents, Federal
    agencies, such as the Defense Advanced Research Projects Agency, may
    award contracts to companies other than the patent holder. While a
    complainant has a right to sue in the Court of Claims regarding patent
    infringement to obtain relief under FAR, these types of suits typically
    fall beyond the reach of small businesses. What is the appropriate
    balance between the need to produce new technologies, with the need to
    properly incentivize small businesses to develop new technologies
    without fearing its original idea will be outsourced by DOD to a
    company other than the patent holder?
        Mr. Kendall. FAR 27.102(b) sets forth the general rule that
    agencies are not authorized to refuse to award a contract on the
    grounds that a contractor may infringe a U.S. patent. This approach
    represents a balance of well-established public policies regarding the
    government's use of U.S. patents (section 1498(a) of title 28, U.S.C.),
    and full and open competition in procurement contracting (the
    Competition in Contracting Act (CICA), 10 U.S.C. 2304). More
    specifically, although a patent owner's allegation of patent
    infringement by other competing sources does not justify the use of
    other than full and open competition pursuant to CICA, the patent owner
    is entitled to ``reasonable and entire compensation'' for any
    infringement of that patent by or on behalf of the government (28
    U.S.C. 1498(a)). The patent owner may choose from a variety of
    mechanisms to seek such compensation, including entering into a royalty
    bearing license agreement with the infringer (with royalties being
    chargeable to government contracts pursuant to FAR 31.205-37), filing a
    lawsuit in the Court of Federal Claims, and filing an administrative
    claim for patent infringement with the relevant Federal agency (e.g.,
    for DOD, pursuant to DFARS 227.70, for which there are no filing fees).
    These remedies are available to all patent owners. To the extent that a
    patent owner encounters obstacles in pursuing any of these remedies,
    those challenges will most likely result from the inherent limitations
    and complexities associated with owning and enforcing a patent (e.g.,
    proving infringement, defending the validity of the patent, and
    negotiating for appropriate royalties or damages), rather than arising
    from any DOD or Federal acquisition policies or practices. This
    approach balances important public policies and privately held
    interests.

        61. Senator Blunt. Secretary Kendall, are you concerned that
    scientists and engineers are compelled to conceal important discoveries
    and inventions that could make a difference to the economy and national
    security out of fear that their discoveries will be outsourced by DOD
    to a company other than the patent holder?
        Mr. Kendall. DOD does not engage in any activity in which a private
    party's patented technology is ``outsourced to a company other than the
    patent holder.'' A patent is a public document, and thus open public
    disclosure of the invention is an inherent element of the nature of
    patent protection. However, the patent owner is granted legal rights
    and remedies against any person that infringes the patent, including
    any unauthorized use or manufacture by or on behalf of the U.S.
    Government. More specifically, pursuant to 28 U.S.C. 1498(a), a patent
    owner is entitled to ``reasonable and entire compensation'' for patent
    infringement by the government, or by a third party (e.g., a
    contractor) acting on behalf of the government. In such cases, the
    patent owner may choose from a variety of mechanisms for compensation,
    including entering into a royalty bearing license agreement with the
    infringer (with royalties being chargeable to government contracts
    pursuant to FAR 31.205-37), filing a lawsuit in the Court of Federal
    Claims, and filing an administrative claim for patent infringement
    (e.g., for DOD, pursuant to DFARS 227.70, for which there are no filing
    fees). These remedies are available to all patent owners. If a private
    party is unsatisfied with the public disclosure requirements or legal
    remedies inherent in patent protection, then he or she may elect to
    pursue some other form of IP protection (e.g., copyright, trade
    secret). The choice of the form of IP protection is entirely up to the
    inventor/author, but in all cases, there is opportunity for the public
    to benefit from products or services making use of the private party's
    invention or discovery, while preserving the legal rights and remedies
    for the IP owner against any infringement or unauthorized uses by
    others.

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