[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 
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                          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:]
      
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    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.
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    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:]
      
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    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.
      
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    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:]
      
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    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.
       
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                           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.
      
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    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.
      
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    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.
    [The information referred to follows:]
      
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
      
    
      
      
      
    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:]
      
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    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.
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    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.
      
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    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:]
      
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    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:]
      
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 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: [email protected]. 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\
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    \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.
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    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\
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    \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.
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                    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.
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    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.
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    \6\ P.L. 101-510.
    \7\ P.L. 103-355.
    \8\ P.L. 104-106.
    \9\ P.L. 111-23.
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    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\
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    \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.
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         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.
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         Since 1997, 31 percent of all Major Defense 
        Acquisition Programs have had cost growth of at least 15 
        percent.\12\
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    \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.
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         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.
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         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\
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    \14\ CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier 
Program: Background and Issues for Congress, by Ronald O'Rourke, p. 9.
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         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\
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    \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\
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    \16\ J. Ronald Fox, Defense Acquisition Reform 1960-2009: An 
Elusive Goal (Center of Military History, 2011), p. 190.
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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.''
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    \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/.
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                        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,
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    \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\
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    \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\
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    \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\
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    \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.
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         ``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)
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    \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.
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         ``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.
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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\
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    \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\
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    \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\
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    \87\ QDR, p. 77-78
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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.
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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.
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    [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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