[Senate Hearing 113-465, Part 4]
[From the U.S. Government Publishing Office]




                                                 S. Hrg. 113-465, Pt. 4

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 4

                                AIRLAND

                               ----------                              

                          APRIL 8 AND 9, 2014


         Printed for the use of the Committee on Armed Services
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
       2015 AND THE FUTURE YEARS DEFENSE PROGRAM--Part 4  AIRLAND


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                                                 S. Hrg. 113-465, Pt. 4

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 4

                                AIRLAND

                               __________

                          APRIL 8 AND 9, 2014

                               __________

         Printed for the use of the Committee on Armed Services


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






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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

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

                    Peter K. Levine, Staff Director

                John A. Bonsell, Minority Staff Director

                                 ______

                        Subcommittee on Airland

               RICHARD BLUMENTHAL, Connecticut, Chairman

BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, MissourI           JOHN McCAIN, Arizona
JOE MANCHIN III, West Virginia       JEFF SESSIONS, Alabama
KIRSTEN E. GILLIBRAND, New York      SAXBY CHAMBLISS, Georgia
JOE DONNELLY, Indiana                ROY BLUNT, Missouri

                                  (ii)


                            C O N T E N T S

                              ----------                              

                             april 8, 2014

                                                                   Page

Tactical Aircraft Programs.......................................     1

Bogdan, Lt. Gen. Christopher C., USAF, Program Executive Officer, 
  F-35 Lightning II Joint Program Office.........................     5
Davis, Lt. Gen. Charles R., USAF, Military Deputy to the 
  Assistant Secretary of the Air Force for Acquisition...........    15
Grosklags, VADM Paul A., USN, Principal Military Deputy to the 
  Assistant Secretary of the Navy for Research, Development, and 
  Acquisition; Accompanied by LtGen Robert E. Schmidle, Jr., 
  USMC, Deputy Commandant for Aviation...........................    24
Questions for the Record.........................................    52

                             april 9, 2014

Army Modernization...............................................    55

Campbell, GEN John F., USA, Vice Chief of Staff, U.S. Army; 
  Accompanied by LTG James O. Barclay III, USA, Deputy Chief of 
  Staff, G-8, U.S. Army; and LTG Michael E. Williamson, USA, 
  Military Deputy and Director, Army Acquisition Corps, Office of 
  the Assistant Secretary of the Army for Acquisition, Logistics, 
  and Technology.................................................    60
Questions for the Record.........................................    88

                                 (iii)

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

                              ----------                              


                         TUESDAY, APRIL 8, 2014

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

                       TACTICAL AIRCRAFT PROGRAMS

    The subcommittee met, pursuant to notice, at 3:36 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Richard 
Blumenthal (chairman of the subcommittee) presiding.
    Committee members present: Senators Blumenthal, Donnelly, 
McCain, Sessions, and Wicker.

   OPENING STATEMENT OF SENATOR RICHARD BLUMENTHAL, CHAIRMAN

    Senator Blumenthal. The subcommittee will come to order.
    As you can tell, this is my first subcommittee meeting. I 
am very pleased to be joined by my colleague, Senator McCain, 
who is pinch hitting temporarily for Senator Wicker.
    I want to extend a welcome to each of our witnesses. Thank 
you very much for your service. Thank you for being here today.
    We are joined by Lieutenant General Christopher C. Bogdan 
of the U.S. Air Force, Lieutenant General Charles R. Davis of 
the U.S. Air Force, Vice Admiral Paul A. Grosklags of the U.S. 
Navy, and Lieutenant General Robert E. Schmidle, Jr., of the 
U.S. Marine Corps.
    I want to thank each of you again for representing the men 
and women of our Armed Forces so ably and for the great job 
they do around the globe, in the continuing war in Afghanistan, 
and elsewhere. We keep them in our thoughts and prayers, as I 
know you do.
    Our witnesses this afternoon face really 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 is so critical to our military success. 
These challenges, as you well know, have been made particularly 
difficult by the spending caps imposed by the Budget Control 
Act (BCA). Those caps which bedevil us all were modestly 
relieved for fiscal year 2015 in the Bipartisan Budget Act 
(BBA) that we enacted earlier this year, but they are scheduled 
to resume in full blast in 2016 and beyond. These caps 
seriously challenge our ability to meet our national security 
needs and they have already forced military departments to make 
painful tradeoffs. Unless they are modified after fiscal year 
2015, they will threaten our long-term national security 
interests, and no one knows those facts better than the 
military leaders who are with us today.
    Every year we are challenged to make decisions balancing a 
number of competing demands for resources, including resources 
for current operations, and investment in future modernization. 
In this case, we will be assessing plans and programs regarding 
the current status and future prospects for tactical aviation 
programs.
    We meet today to talk about the F-35 Joint Strike Fighter 
(JSF) and the other aviation programs. We all know that the JSF 
program is important since it has been central to the long-term 
modernization plans for all the relevant Services--Air Force, 
Navy, Marine Corps--for more than 15 years now. Given that 
fact, any change in the cost, schedule, performance of that JSF 
program sends shock waves literally through the Departmentof 
Defense (DOD) and raises many questions of achieving that 
balance between the demands of maintaining readiness in the 
near future and those of modernizing for tomorrow. For 
instance, the Government Accountability Office (GAO) has 
estimated that extending the service lives of existing F-16 and 
F-18 aircraft would cost about $5 billion.
    So today we are going to seek a better understanding of 
implementation of the corrective actions DOD identified in the 
JSF program after Nunn-McCurdy certification 4 years ago and 
what levels of risk remain in the development and fielding 
program.
    I know that a number of you have seen problems in testing 
since last year, and while we are always concerned anytime we 
hear about problems during research and development, I 
understand that you have identified the problems and have 
mapped a way ahead, a path to deal with these problems to 
minimize the effect of the problems on testing and development 
programs. I hope you will discuss these problems very 
specifically and fully during your testimony. There have also 
been some other problems. I hope you will discuss those as 
well. I know you will be very frank and forthcoming with the 
subcommittee, as you have been customarily.
    The subcommittee has been following the Department of the 
Navy's attempts to reduce the JSF shortfall to manageable 
levels. Five years ago, the Department of the Navy was 
estimating that we would be facing a shortfall in 2017 that 
optimistically would amount of 125 tactical fighters needed to 
outfit our 10 aircraft carrier air wings and 3 Marine Corps air 
wings. Then 3 years ago, based on further analysis, the Navy 
was estimating the maximum shortfall could be nearly twice that 
large, or roughly 250 aircraft. But in the past several years, 
the Navy and the Marine Corps have taken action, such as 
reducing the squadron size, conducting service life extensions 
on some aircraft, and reducing the time aircraft spend in 
depots. That could reduce the gap to as small as 35 aircraft, I 
understand. That level is an increase from the level of 18 
aircraft last year. It was only marginally, as I understand, 
from delaying F-35 purchases for the Navy.
    Unfortunately, there has been a similar story in the Air 
Force. Previous Air Force witnesses at our aviation hearings 
have also projected a potential shortfall of Air Force tactical 
fighters in excess of 800 aircraft by about 2025. If any of 
these numbers are wrong or if I am misstating them, I hope you 
will correct me.
    Two years ago, the Air Force, as part of the new defense 
strategy, reduced the fighter force structure. This year the 
Air Force is proposing further reductions, including 
eliminating the entire A-10 aircraft fleet to generate savings 
of about $3.7 billion. I am not clear as to what extent this 
change in demand for tactical fighters has ameliorated the 
shortfall that the Air Force projected, but we hope to hear 
more about that issue as well this afternoon.
    There are a lot of other issues, or at least a number, that 
I hope you will discuss. I know my colleagues will have 
questions on those other issues.
    Again, I just want to thank our witnesses for being here 
today. I yield to Senator Wicker.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Senator Blumenthal, and 
congratulations on your first hearing as chair of this 
distinguished subcommittee. Thank you for holding the hearing 
and I thank the witnesses for their attendance today.
    Also, on behalf of the Southeastern Conference, I want to 
congratulate the State of Connecticut and Senator Blumenthal on 
winning the NCAA basketball championship.
    Senator Donnelly. Senator, there will be no congratulations 
to them tonight, I will tell you that, as the Notre Dame women 
take on the Connecticut women.
    Senator Blumenthal. In the interest of avoiding an 
altercation at this august subcommittee meeting, I am going to 
refrain from reacting. [Laughter.]
    But I do thank Senator Wicker for his congratulations.
    Senator Wicker. I would say both women's programs are to be 
commended for getting to the finals undefeated.
    But back to the business at hand. We have immense 
responsibilities on this subcommittee. They include 
programmatic and budget oversight of most Army and Air Force 
programs, as well as an oversight of our Navy and Marine Corps 
tactical aviation activities.
    I look forward to working with you, Mr. Chairman, to ensure 
that our Armed Forces remain the best-trained, best-equipped, 
and most professional fighting force in the world.
    I would like to begin by saying that I continue to be 
concerned about the Air Force total force plan. I remain 
convinced that some elements of the total force plan, such as 
its proposal to relocate C-130J aircraft from Kiesler Air Force 
Base to Little Rock, are shortsighted and may adversely impact 
our intra-theater airlift capability at a time when our 
Services are evolving toward a more rotational deployment 
model.
    Similar to our subcommittee's bipartisan efforts last year, 
Mr. Chairman, I look forward to working with you on initiatives 
to help ensure the Air Force makes force structure decisions 
based on long-term global force requirements, as well as 
concrete and defensible data. These decisions should not be 
based solely on self-imposed constraints.
    Mr. Chairman, our military has fought four major regional 
conflicts over the last 23 years: Kuwait, the former 
Yugoslavia, Afghanistan, and Iraq. America's security 
challenges continue to persist across the globe. I would note 
that just last month on multiple occasions, Russian nuclear-
capable bombers circled our Pacific Island of Guam and were 
intercepted by our F-15s based at Kadina Air Base on Okinawa. 
Air power will no doubt continue to play a central role in our 
national security.
    Since 1953, no U.S. ground personnel have been killed in an 
attack by enemy aircraft. America's superiority and dominance 
in the air protects our Homeland, deters potential adversaries, 
and ensures that our joint and coalition forces never have to 
question if the aircraft flying above them is friend or foe.
    However, our air dominance is being challenged. Both Russia 
and China are currently fielding fifth generation fighters. 
Like our ground forces, America's combat air assets are worn 
out and spread thin after 2 decades of deferred modernization 
programs and curtailed purchases of key platforms. The service 
lives of many of these aircraft now extend beyond 30 years. 
These extensions come at a price. Extending the lives of legacy 
aircraft means increased operation and maintenance cost, as 
well as decreased technical superiority.
    America must continue to be able to deter and defeat any 
threat, be it an asymmetric threat from a terrorist 
organization or a conventional challenge from a near peer 
competitor. To do so, we must be able to modernize and sustain 
our military, including our tactical aircraft. We cannot 
continue to kick the modernization can down the road. 
Successfully modernizing means we must be cognizant of the 
negative impact of the overly expensive and slow acquisition 
process we currently have in place. We must find ways to 
deliver new, innovative systems on time and on budget. Changing 
the system will require the combined efforts of Congress, DOD, 
and industry.
    Specifically, DOD must first get its acquisition process in 
order by defining program risks upfront, setting realistic 
requirements, adequately prioritizing research and development, 
and leveraging the power of competition.
    Second, DOD's industry partners must submit realistic 
contract proposals and be held accountable to their contractual 
obligations.
    Third, Congress must uphold its responsibility to provide 
timely and adequate funding for key acquisition programs to 
help ensure predictability and long-term affordability for DOD 
and our foreign government partners.
    I conclude by observing that national defense is solely a 
Federal responsibility, but it requires assistance from all 
levels of government and civilian industry. We need our States 
to maintain business-friendly policies that will encourage the 
industrial base to grow and add high-tech manufacturing jobs. 
We need defense companies to meet their contractual obligations 
to the taxpayers by delivering products on time and on budget. 
Finally, we need better cooperation and transparency between 
the executive branch, DOD, and Congress in order to ensure all 
parties fully understand our national security challenges and 
the means our military leaders require to meet them.
    So, again, thank you to the witnesses and to the members 
who are here, and thank you, Mr. Chairman.
    Senator Blumenthal. Thank you very much, Senator Wicker. I 
look forward to working with you on this very important 
assignment.
    We will now hear from our witnesses. First, General Bogdan.

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

    General Bogdan. Thank you, sir. Chairman Blumenthal, 
Ranking Member Wicker, and distinguished members of the 
subcommittee, thank you for the opportunity to address this 
subcommittee and discuss the F-35 Lightning II program.
    Over the past few years, we have focused on creating and 
maintaining a realistic program baseline for DOD's largest 
acquisition program, and despite a turbulent past, the program 
is making slow but steady progress on all fronts, to include 
technical improvements and driving costs out of the program.
    I believe the F-35 is headed in the right direction. I am 
confident in our ability to meet the U.S. Marine Corps' initial 
operating capability (IOC) and the Air Force's IOC in the 
summer of 2015 and the summer of 2016, respectively, with all 
the capabilities our warfighters need. We are now seeing the 
benefits of the disciplined systems engineering process that we 
instituted a few years ago in response to technical issues, 
including improvements in our helmet, the C-model hook, fuel 
dump capability, weapons capability, lightning restrictions, 
and night all-weather flying. We are closely managing the F-35 
onboard and offboard software, and software remains the number 
one technical risk on the program. We have also fundamentally 
changed the way we are developing the Autonomic Logistics 
Information System (ALIS). We are also fully committed to 
making the F-35 more affordable in both the cost of buying the 
aircraft and the cost of operating and sustaining the aircraft.
    Finally, I want to thank Congress and DOD for their support 
during the past 2 years of budget instability. The program has 
weathered this storm relatively intact with no changes to the 
development program and our aircraft quantities were preserved 
in fiscal year 2013 and fiscal year 2014, though DOD has 
reduced those quantities in fiscal year 2015.
    I would like to close by saying that my team is focused and 
committed to doing the very best we can for the warfighters, 
taxpayers, and our partners to ensure that the F-35 meets the 
needs of all our Nation's defenses. To that end, my team is 
rising to the challenge of managing this very large, complex 
program with integrity, transparency, accountability, and 
discipline. I ask that you hold me and my team accountable in 
the coming years to ensure that we develop and deliver the 
warfighting capability this country needs and expects.
    I look forward to answering your questions.
    [The prepared statement of General Bogdan follows:]
       Prepared Statement by Lt. Gen. Christopher C. Bogdan, USAF
    Chairman Blumenthal, Ranking Member Wicker, and distinguished 
members of the subcommittee. Thank you for the opportunity to address 
this subcommittee regarding the F-35 Lightning II.
    The F-35 Lightning II is the Department of Defense`s (DOD) largest 
acquisition program, and its importance to our national security is 
immense. The F-35 will form the backbone of U.S. air combat superiority 
for generations to come. It will replace the legacy tactical fighter 
fleets of the Air Force, Navy, and Marine Corps with a dominant, 
multirole, fifth-generation aircraft, capable of projecting U.S. power 
and deterring potential adversaries. For our international partners and 
Foreign Military Sales (FMS) customers who are participating in the 
program, the F-35 will become a linchpin for future coalition 
operations and will help to close a crucial capability gap that will 
enhance the strength of our security alliances. The fiscal year 2015 
budget includes $8.3 billion for continued system development, test and 
procurement of 34 F-35 aircraft.
    It is our duty to produce the next generation fighter jet for the 
United States and our allies, understanding that we live in a resource 
constrained world. The current F-35 program is focused on completing 
system design and development (SDD) within the time and funding 
planned, producing aircraft that are affordable and achieve mission 
needs, and sustaining fielded aircraft in an effective and economical 
fashion. This plan, which has been in place since 2012, is already 
resulting in steady progress; however, I am pressing for faster and 
stronger performance in the upcoming year. There are 59 F-35s now 
deployed in operational and training squadrons at five locations and 
the program has started a slow shift of focus to production and long-
term sustainment without losing the momentum we see in the development 
and flight test programs. Affordability remains my number one priority. 
We must use all of our energy finishing development within the time and 
money we have, we must continue to drive the cost of producing F-35s 
down, and we must start today to attack the long-term life cycle costs 
of the F-35 weapon system.
                program accomplishments in the last year
    The F-35 program team achieved a number of accomplishments in 2013, 
including delivery of 35 aircraft; rolling-out of the 100th jet from 
the production facility in Fort Worth; completion of the Block 3 
critical design review; announcing the decision to cease development of 
an alternate Helmet Mounted Display System (HMDS); and resolving 
lingering technical design shortfalls to include the F-35C arresting 
hook, night/instrument (IMC), fuel dump, and lightning protection.
    F-35s flew 3,917 sorties (including SDD and low rate initial 
production (LRIP)) for a total of 6,255 hours last year, bringing the 
total hours flown by F-35s to 11,873. The program completed the second 
F-35B ship-trial period operations aboard the USS Wasp completing 95 
vertical landings and 94 short takeoffs, with 19 night takeoffs. The 
program stood up new F-35 squadrons at Edwards Air Force Base, Nellis 
Air Force Base, and Eglin Air Force Base, made Marine Corps Air Station 
Beaufort ready for F-35 operations, started up aircraft modification 
lines at Fleet Readiness Center East and at the Ogden Air Logistics 
Center, opened the first overseas F-35 final assembly and checkout 
(FACO) facility in Italy, and qualified 65 pilots and trained 414 
maintainers. From a business perspective, the F-35 program successfully 
closed negotiations and awarded the Lockheed Martin LRIP lots 6 and 7 
contracts and modified the SDD contracts. Additionally, the program 
definitized the Pratt & Whitney LRIP lot 5 contract, and awarded LRIP 
lot 6, and modified the SDD contract during 2013.
    Although sequestration, as well as congressionally directed 
reductions to the SDD program in fiscal year 2013, had the potential to 
either stretch the development program out or reduce the capabilities 
we can deliver to the warfighter, we were able to mitigate the impacts 
to the development program and remain on our program plan. The 
Bipartisan Budget Act of 2013 also allowed us to preserve the number of 
jets we intend to procure in fiscal year 2014.
                       international partnership
    The F-35 program continues to be the Department of Defense's (DOD) 
largest cooperative program, with eight Partner countries participating 
under Memorandums of Understanding for SDD and for production, 
sustainment and follow-on development. The eight partner countries 
include the United Kingdom, Italy, The Netherlands, Turkey, Canada, 
Australia, Denmark, and Norway. The partners' senior acquisition 
leaders met in September 2013 and are meeting again the first week of 
April 2014; all expressed their continued commitment and support for 
the program; however, they are all watching closely how DOD deals with 
our budget cuts and the impact this has on the cost of the program. 
Conversely, we are also watching our partners as nearly 45 percent of 
the next 5 years of production buys are from our partners and FMS 
customers.
    In October 2010, Israel signed a letter of offer and acceptance to 
purchase 19 F-35A aircraft for $2.75 billion, with deliveries scheduled 
to begin in 2016. In June 2012, Japan signed an agreement to purchase 
the first 4 of a planned acquisition of 42 F-35A aircraft for $741 
million with deliveries scheduled to begin in 2016. The F-35 team 
developed a proposal to support the Republic of Korea's competitive 
request for proposal for acquisition of its future fighter. Selection 
is expected by the end of this year and we continue to provide program 
information to the Republic of Singapore.
    There were many ``firsts'' during the year including the delivery 
and acceptance of two Netherlands F-35A aircraft, the first Australian 
and Italian aircraft under contract (LRIP 6), the first Norwegian 
aircraft under contract (LRIP 7) and the first Netherlands pilot in 
training.
                    development program performance
    The F-35 development program continues to execute to the baseline 
approved at the March 2012 Milestone B recertification Defense 
Acquisition Board. My biggest technical concern in development is still 
software. Over the past 2 years, the program has implemented 
significant changes in how system software is developed, lab tested, 
flight tested, measured, and controlled. These changes are showing 
positive effects and I am moderately confident that the program will 
successfully release the Block 2B and 3I capability as planned in 2015 
and 2016, respectively. However, I see more risk to the delivery of 
Block 3F, our full warfighting, capability by 2017. Block 3F is 
dependent upon the timely release of Block 2B and 3I, and at present, 
3F is tracking approximately 4 to 6 months late without taking steps to 
mitigate that delay.
    The F-35 Joint Program Office continues to exercise oversight and 
management of software development, which has resulted in reduced times 
to develop and integrate software, reduced errors in the software code 
developed, and a marked increase in the cooperation and understanding 
between the prime contractor and the program office. I have directed a 
capability block plan that is an integrated roadmap that defines the 
incorporation of capabilities for the F-35 program. Additionally, I 
have instituted a Block Review Board which places the government in 
charge of all configuration, capability, and schedule changes to 
software development. We have also implemented robust systems 
engineering/technical review process for all development work to 
provide greater knowledge and defined decision gates to determine if 
the system configuration under consideration is mature enough to 
proceed to the next phase. This, coupled with improved automated tools 
and processes, has resulted in an almost tenfold reduction in software 
release build time, and we have seen corresponding improvements in 
configuration management, test automation, and error detection and 
resolution. However, we still have challenges and the prime contractor 
and its subs still need to improve both the speed and quality of 
software development to be able to catch up from previous software 
delays.
    In addition to software challenges, the three F-35 variants are 
encountering the types of development problems typically experienced on 
advanced state-of-the-art, high performance aircraft development 
programs at this stage of maturity, such as reliability and 
maintainability shortfalls, and beyond first life durability issues. 
While we still have technical risks on the program, I have confidence 
that the known technical issues we have will be solved and properly 
integrated into the F-35 and we will be capable of dealing with any 
future technical issues.
    Over the past year, the program office successfully characterized 
the expected performance of the Gen II HMDS to support U.S. Marine 
Corps initial operational capability (IOC) and defined the technical 
solutions to be incorporated into the follow-on Gen III HMDS to achieve 
a fully compliant capability for the warfighter. The improved night 
vision camera was evaluated in a series of risk reduction flight tests 
showing significant improvements over the older camera, and we are 
confident it will be able to meet the warfighter's requirements when 
integrated into the Gen III helmet. Based upon a thorough technical 
evaluation, of the Gen II helmet, successful incorporation of technical 
improvements and a better business deal, the Department elected to end 
development of the second, alternative helmet. With respect to the 
better business deal, the program secured a cost guarantee made by the 
Lockheed Martin/Rockwell Collins/Elbit team resulting in a reduction of 
12 percent from the previous cost for the helmet system. Additionally, 
deciding to down select to the Gen II and III helmet will avoid future 
cost of $45 million required to completely mature the alternate helmet. 
The Gen III HMDS is expected to enter formal F-35 flight test in third 
quarter 2014.
    The program also saw improvements with the redesigned F-35C 
arresting hook system on our CF-3 aircraft. In January 2014, the F-35 
team accomplished 36 for 36 successful roll-in arrestment tests at 
Lakehurst, NJ. The aircraft is now at Patuxent River where it is 
continuing its ship suitability testing. Thus far CF-3 accomplished 8 
for 8 fly in arrestments while at Patuxent River; however, testing has 
been delayed for approximately 60 days as we discovered a minor nose 
gear issue. These tests are expected to lead to a certification of the 
F-35C for shipboard flight trials, which are planned to commence fourth 
quarter 2014.
    The program has also made progress on the redesigned fuel dumping 
seal and port. The F-35 employs a unique fuel dumping port on the 
underside of the wings in order to maintain its stealthy signature. 
Early fuel dump testing revealed that fuel was collecting within the 
wing flaperon cove, which led to significant external fuel wetting and 
pooling of fuel at the wing/fuselage root. We redesigned the fuel dump 
port to more efficiently move fuel away from the wing surface and 
designed a new and improved flaperon seal to minimize fuel collecting 
in the cove. Fuel dump testing with the redesigned seal and port has 
been successful and we are incorporating the new design in all three 
variants.
    We have also seen significant progress in our ability to fly at 
night and instrument meteorological conditions (IMC). The Navy granted 
clearance and conducted the first night flights on the F-35B (VMFA-121) 
in December 2013. Subsequently, in January 2014, the Navy granted 
night/IMC clearance for the F-35C. The Air Force also granted night/IMC 
clearance for the F-35A in January 2014, although initially weather 
restricted to a ceiling greater than 600 feet and visibility greater 
than two nautical miles. In March 2014, the Air Force lifted the 
restrictions following additional simulator evaluations, allowing the 
F-35 aircraft to fly to weather minimums posted by the airfields.
    All LRIP lot 6 and later aircraft will be delivered with night/IMC 
capability. LRIP lot 5 aircraft require an improved landing/taxi light 
prior to operating in night/IMC. LRIP lot 4 aircraft require a planned 
aircraft software update as well as improved wingtip and landing/taxi 
lights. All possible software updates have been accomplished, and the 
lighting upgrades are in progress. LRIP lot 3 and earlier aircraft 
require the Block 2B upgrade planned to begin in late 2014 to gain 
night/IMC capability.
    We currently have 11 F-35As, 6 F-35Bs, and 1 F-35C fleet aircraft 
configured and certified for night/IMC. The remaining LRIP lots 4 and 5 
fleet aircraft are either in process or awaiting the wingtip and 
landing/taxi light modifications for night/IMC. The program has also 
made progress on lightning protection. In 2009, fuel system simulator 
testing revealed deficiencies in the on board inert gas generation 
system's (OBIGGS) ability to maintain the necessary tank inerting to 
protect the aircraft from lightning strikes. The program completely 
redesigned the OBIGGS and performed a F-35B ground test that verified 
inerting distribution in the tanks. Ground and flight tests are planned 
for second quarter 2014 where we expect to evaluate fuel system 
performance and prevention of nuisance alerts. A unique opportunity 
occurred with the availability of the Netherlands F-35A aircraft; our 
team took advantage of the aircraft to test for lightning electrical 
transient stress to aircraft subsystems in the fall of 2013. The 
aircraft was subjected to 865 simulated low level ``lightning 
strikes,'' and we are happy to report that the aircraft received no 
damage, all subsystems worked appropriately, and the aircraft's 
reaction to the lightning strikes closely matched engineering models. 
Aircraft that have OBIGGS inerting and subsystems that can function 
with lightning electrical transients are expected to allow the removal 
of the lightning flight restrictions by the beginning of 2015.
    In September 2013, during F-35B full-scale durability testing we 
experienced a significant bulkhead crack at 9,056 equivalent flight 
hours (EFH), which is 1,056 beyond its first lifetime. In August 2013, 
just after completing 9,000 EFH, a planned inspection of the F-35B full 
scale durability test article verified the existence of two small 
cracks along the fuselage section (FS) 496 bulkhead. The decision was 
made to move forward with the testing and to inspect the bulkhead at 
shorter intervals in order to observe if and how the crack would 
propagate. In September 2013, strain gauge data prompted an early 
inspection of the bulkhead which uncovered that the cracks had 
propagated and severed the bulkhead at the lower arch. The durability 
testing was stopped and a root cause investigation was conducted. The 
goal of durability testing is to apply cyclic loads to the airframe to 
simulate fleet usage. Durability testing is conducted early in the 
development of any new aircraft to avoid costly sustainment issues 
later in the life of the aircraft. We require 8,000 EFH of aircraft 
service verified by testing of two lifetimes (16,000 EFH). However, to 
aid in life extension assessment, we plan to test each variant up to 3 
times its expected operational life (24,000 EFH). Our engineering teams 
executed a joint root cause investigation to define the required 
modifications to the bulkhead for incorporation into production and 
retrofit of the fleet. This effort is part of the normal program 
concurrency process to ensure full life capability and we budgeted for 
these types of durability test findings in production via concurrency 
modeling. The full-life design solution for the bulkhead has been 
defined and is scheduled for production line induction not later than 
LRIP lot 9 aircraft deliveries in 2017. We are also working with 
Lockheed Martin to incorporate a speedier retrofit solution to be 
incorporated into 10 LRIP lot 8 B-Model aircraft that are currently on 
the production line.
    There was no immediate airworthiness concern for fielded and test 
aircraft because of the high hours accrued on this test article at the 
time of discovery. It will not impact the U.S. Marine Corps ability to 
meet IOC in 2015. Additionally, due to the differences between the 
bulkhead forging materials of the F-35B (aluminum) and the F-35A/C 
(titanium), we have yet to see the same cracking with the A and C 
models at the equivalent flight hours.
    Reliability and maintainability (R&M) remains an area for needed 
improvement. The fleet has not performed to the R&M levels we expect at 
this point in the program as fielded aircraft are well below our 
projected growth curves. To address these issues I am executing a 
multi-phase R&M improvement process. First, I have stood up a fully 
funded rigorous R&M program that will establish R&M performance goals, 
take specific actions to achieve these goals, and hold the enterprise 
accountable for meeting them. We have a good amount of fleet data at 
this point to include parts systems and procedures that drive up costs, 
maintenance, as well as reduce readiness and aircraft availability. We 
are analyzing this data to make actionable decisions, such as 
redesigning parts, improving repair times, and streamlining and 
improving maintenance procedures. Finally, I am accelerating aircraft 
retrofits and modifications to more rapidly improve readiness and to 
measure these R&M improvements.
    I have also stood up a Cost War Room whose mission is to champion 
affordability initiatives to reduce the operation and sustainment costs 
of the fleet. This Cost War Room is comprised of representatives from 
prime contractors and their suppliers, under the direction of Program 
Office personnel, and is systematically looking at all the cost drivers 
that make up the F-35 operations and sustainment costs with the intent 
of taking specific actions that will reduce long-term costs. We are 
also nearing completion of a second business case analysis and a level 
of repair analysis to assist the leadership in making future 
sustainment decisions as we begin to create the global sustainment 
posture.
    The Autonomic Logistics Information System (ALIS) provides 
maintenance, operations planning, reliability, logistics, and training 
information to support sustainment of F-35 aircraft. We have 
fundamentally changed the manner in which we are developing and 
fielding ALIS. Before, we treated ALIS as a piece of support equipment. 
The enterprise now deals with ALIS as if it is a ``weapons system'' and 
a critical part of the F-35 program. We have added a new systems 
engineering process that includes periodic design reviews, a new 
leadership structure, improved lab infrastructure and testing to 
include warfighter involvement, and a more structured software delivery 
plan to include metrics. We have seen some solid improvements since 
these changes last year as the program has delivered better and faster 
incremental fixes, including our recent software update that was 
fielded in February. I have also put into place a plan for a complete 
end-to-end test that includes information assurance testing to ensure 
the aircraft and ALIS can operate together seamlessly with a great 
level of ``cyber security.''
    We have also started the design of a deployable version of ALIS to 
support the warfighters. The requirements were finalized and a Critical 
Design Review was held in February 2014. The first phase of deployable 
ALIS will be delivered in April 2015 to support the U.S. Marine Corps 
IOC, while a second version, which will include additional Air Force 
requirements, is scheduled by be delivered by fourth quarter 2016.
    From January 2011 to August 2012, the DOD Inspector General (IG) 
conducted an audit of the F-35 ALIS. The DOD IG provided the program 
with a set of recommendations, which we either concurred or partially 
concurred with, and are in various stages of implementation. For 
example, in the information systems security area, the employment of 
U.S. Air Force systems and processes to track the certification and 
accreditation posture, in addition our early engagement strategy with 
Services certifying officials, continues to improve the overall 
certification and accreditation process. Furthermore, the tracking of 
foreign developed software, independent software test actions, and the 
supplement to the System Threat Assessment Report, expected by June 
2014, will help us inform ALIS specific threat actions and decisions. 
Although we have not implemented the recommendation to separate ALIS as 
a major automated information system program, as I previously 
mentioned, the enterprise now deals with ALIS as if it is a ``weapons 
system'' and a critical part of the F-35 program. I believe separating 
ALIS from the air system, 3 years before the end of development 
activities, will introduce significant integration, implementation, and 
management risks with undesirable effects to the program budget, 
schedule, and Air System performance.
    In 2013, the F-35 SDD flight test program exceeded the number of 
planned flights, but fell slightly behind in overall test point 
accomplishments. The Integrated Test Force (ITF) achieved 1,168 test 
flights of 1,153 planned, slightly exceeding the total flights in 2012. 
The ITF also executed 9,032 test points, which was roughly 3.5 percent 
shy of what was planned. Fiscal year 2014 is a very critical and 
challenging year for flight test and we must improve test aircraft 
availability and reduce the amount of refly, regression and ``growth'' 
test points if we are to stay on track.
    Pratt & Whitney SDD F135 engines have completed a total of 29,986 
operating hours, 15,963 hours on flight-test engines, and a total of 
5,565 hours of flying time on all three variants of F-35 aircraft. 
Pratt & Whitney is currently supporting flight test on all three 
variants at three locations. During fiscal year 2013, the engine 
successfully demonstrated stall-free high angle of attack operations 
and successfully completed all engine air start testing.
    The F135 engine did experience a significant test failure on 23 
December 2013. An F-35B ground test engine suffered a failure of its 
first stage fan integrally bladed rotor (IBR, also known as a 
``blisk'') while doing ground accelerated mission durability testing. 
This failure occurred on the highest time test engine in the F135 fleet 
with 2,192 operating hours; roughly 75 percent of the engine's required 
life. (By comparison, the high time SDD flight test engine has 622 
flight hours and the high time operational engine has less than 250 
flight hours). While the root cause of this failure is still under 
investigation, safety assessments have determined that the fleet can be 
safely operated by inspecting the first fan stage rotor at regular 
intervals until a new rotor is installed. A cost reduction redesign of 
this first stage rotor was already in progress before the test 
failures; consequently, lessons learned from the root cause analysis 
will be incorporated into the new redesign. We expect the production 
break in of the redesign in the late 2016 timeframe, with a retrofit of 
engines beginning in 2017. While the fan module that contains this IBR 
can be removed and replaced in the field, replacement of the IBR itself 
within the module is a depot level task.
    The F-35 fleet experienced two fleet-wide groundings in January and 
February 2013 due to issues with the F135 engines. The first incident 
occurred in January 2013. An F-35B was forced to abort a takeoff for 
what would later be understood to be an improperly crimped fueldraulic 
hose in the F135 engine. The F-35B fleet was grounded for 19 days, but 
was returned to flight after confirming the integrity of all similar 
hoses in the engines. The program office put in place activities to 
better monitor and improve the quality of the hoses being provided for 
the engine, and continues to track this closely. The second incident 
grounded all variants of the F-35 for approximately 7 days and resulted 
from a crack discovered in the third stage engine turbine blade. The 
engine in question had been flying at the highest heat and most 
significant stresses of any of the jets in the test and operational 
fleets, which contributed to this crack. After confirming the source of 
the crack, the fleet was inspected and returned to flight. Engineering 
work continues to assess the long-term implications of this turbine 
blade crack on the life of the F-35 engine, and the incident continues 
to be successfully managed in the fleet by monitoring the life usage of 
the turbine. Through incorporation of new quality inspection criteria 
during production all new engines are now being delivered with full 
life third stage turbine blades.
    To ensure Lockheed Martin and their suppliers keep focus on 
improving key areas of risk, the Defense Acquisition Executive has 
approved a plan that links improvement in the areas of software, ALIS, 
and R&M to the delivery of aircraft and the future ramp up of 
production. In particular, additional progress must be demonstrated 
before awarding a contract for higher production rates: (1) Software 
builds for block 2B, 3I, and 3F, which is essential to achieving the 
desired combat capability of the F-35; (2) Reliability, which is not 
growing at an acceptable rate; (3) ALIS, which requires focused 
attention to meet schedule of performance metrics; and (4) Closure of 
previously identified design issues through testing. Further, I have 
worked with the Navy and Air Force Acquisition Executives to ensure 
that the acquisition planning for LRIP lot 9 includes strong, event-
based performance criteria while incentivizing Lockheed Martin and 
Pratt & Whitney to achieve the priorities I have just listed.
    With regards to the dual capable aircraft (DCA), we are continuing 
to execute a risk reduction strategy to prepare for DCA integration 
during Block 4 Follow-on Development. Our risk reduction efforts 
include developing a detailed planning schedule for B61 integration on 
the aircraft, maturing the nuclear architecture design, refining the 
cost estimate, nuclear certification requirements planning, and the 
initial concept of operations documentation. All F-35 DCA Risk 
Reduction benchmarks will be complete by Summer 2015. DCA integration 
begins as part of follow-on development, comprised of Block 4A (2016-
2022) and Block 4B (2018-2024). All software development, flight test, 
and nuclear certification activities will be conducted across Block 4A/
4B development, resulting in an F-35 design certification in 2024. The 
Air Force will lead an operational certification process following 
design certification that is expected to be completed no earlier than 
2025.
                     production program performance
    Costs for production aircraft continue to come down for each 
successive lot put on contract. The average aircraft unit cost for an 
LRIP lot 6 aircraft is 3.8 percent lower than LRIP lot 5 aircraft. An 
LRIP lot 7 aircraft has an average unit cost approximately 4.2 percent 
lower than LRIP lot 6 aircraft. I expect these trends to continue for 
many future production lots. Production efficiencies as well as 
economies of scale are both critical in the overall affordability of 
the F-35 program. In 2013, efforts were taken to improve affordability, 
with more cost sharing between the Government and contractors with 
respect to cost reduction initiatives. This along with other cost 
reduction initiatives and economies of scale should result in the price 
of an F-35A, including an engine and profit, between $80 million and 
$85 million in 2019 in 2019 dollars. The other F-35 models have 
proportionally similar cost reduction goals.
    In 2013, Lockheed Martin delivered 35 aircraft compared to 30 
deliveries in 2012. This was despite the challenges posed by F-35B 
flight operations being shut down for a month due to an issue with the 
fuel-draulics hose as well as not being able to conduct any acceptance 
flight operations in the month of August due to the Fort Worth Joint 
Reserve Base runway being repaved. Deliveries included the last LRIP 
lot 4 aircraft and 10 of 32 LRIP lot 5 aircraft.
    Production has been fairly stable and predictable. As of 2 March 
2014, the overall production factory performance was tracking closely 
to the post Lockheed Martin stake plan with factory assembly 
performance 6 days behind plan. Production flight line performance 
improved from 57 days behind plan to 39 days behind plan. Efforts are 
continuing to further improve production flight line performance to 
ensure stable delivery of F-35s as we ramp up production. The Program 
continues to see improvements in design stability, parts availability, 
workforce stability, and shop floor discipline. The Joint Program 
Office, in partnership with the Defense Contract Management Agency 
(DCMA), continues to closely monitor progress and challenge the 
contractor and supply chain for greater quality improvements.
    In 2013, Lockheed Martin, DCMA and the Joint Program Office jointly 
developed a corrective action plan in response to Lockheed Martin 
disclosures on specialty metals non-compliance. The supplier compliance 
assessment was completed in August 2013 and Lockheed Martin initiated 
ongoing surveillance activities to ensure future compliance.
    Significant international supplier milestones were also achieved in 
2013. Final assembly and check-out (FACO) operations commenced in 
Cameri, Italy at Alenia Aermacchi's co-production site in July. The 
first Italian FACO produced F-35 is now in the final assembly phase. In 
December 2013, Turkish Aerospace Industries, Inc. delivered its first 
co-production F-35 center fuselage, which was successfully mated with a 
forward fuselage component in February 2014 at the prime contractor's 
Forth Worth facility.
    Pratt & Whitney has delivered 134 engines and 46 lift fans to date. 
For 2013, Pratt & Whitney's delivery rate was stable, increasing from 4 
engines per month in 2012 to 4.3 in 2013. LRIP lot 6 engines are 
currently slightly ahead of contract delivery dates. However, far too 
often engine deliveries are interrupted by technical issues and 
manufacturing quality escapes resulting in product holds and material 
deficiencies that increase overall risk to meeting future production 
goals. My production and quality teams continue to work closely with 
Pratt & Whitney to resolve the systemic issues which result in these 
product holds.
    With another year of demonstrated improvements in production, I 
have confidence in the program's ability to produce high quality F-35s 
and our ability to eventually ramp up production.
                              concurrency
    The DOD established the F-35 program in 2001 with a planned amount 
of concurrency that attempted to balance cost, risk, and the need for 
tactical aircraft modernization. That strategy introduced the risk that 
aircraft built in early production lots would require post-delivery 
modifications due to discoveries made during qualification, flight, and 
ground tests, or as a result of engineering analysis. These concurrency 
modifications must also ``cut in'' to the production line which can 
have substantial cost and schedule effects. As we complete more and 
more testing, the risks and impact of concurrency should progressively 
decline. By the end of 2015, mission and vehicle qualification testing 
will be near completion, second-life fatigue testing will be complete 
for all variants, and flight test will have completed 80 percent of the 
design loads envelope. At this future point in the development program 
many of the technical risks that drive concurrency changes and costs 
should be discovered.
    Over the past year, the F-35 concurrency cost estimate has remained 
stable at approximately 3 to 5 percent of recurring flyaway costs. The 
F-35 program will continue to work with Lockheed Martin to refine their 
estimates based on the known technical issues and potential technical 
issues that are forecasted for the remainder of SDD. We will also 
review and update the government concurrency estimate on a periodic 
basis as the program progresses through the remainder of SDD.
    The F-35 Joint Program Office has worked collaboratively with 
Lockheed Martin to implement a joint concurrency management and 
execution system. This system has successfully reduced the length of 
time required to implement a change into the production line (19 months 
to approximately 13 months), thereby reducing the number of aircraft 
needing future modification and corresponding costs. Contract 
strategies are also in place to reduce concurrency costs to the 
Government. The LRIP lots 5, 6, and 7 contracts have a 50/50 cost 
sharing mechanism with no fee for concurrency changes known prior to 
the production contract award that will not be incorporated until after 
aircraft delivery. The F-35 Joint Program Office intends to include 
this same mechanism in the LRIP lot 8 contract currently being 
negotiated. This cost sharing approach is intended to continue to 
motivate Lockheed Martin to incorporate concurrency changes as quickly 
as possible on the aircraft production line and minimize the need for 
conducting retrofit activities. Eventually, the government will move to 
a contracting strategy that places all risks and liability for 
concurrency changes to the contractors.
                 operations and sustainment performance
    The program continues to address the various issues arising from 
operating an aircraft still in development and providing the operators 
improved technical data and solutions to emerging issues. Overall, the 
reliability of the weapon system is still well below our predictions 
but is slowly improving and the prime contractors, Lockheed Martin and 
Pratt & Whitney are gradually resolving issues with spares and repair 
cycle times.
    In 2013, the F-35 program continued pilot and maintenance training 
for F-35A and F-35B aircraft and started pilot and maintainer training 
for the F-35C with the Navy, Air Force and Marine Corps each having 
their own training squadron. As of today, we have completed transition 
training for 92 pilots and 1,059 maintainers. In addition, we initiated 
pilot and maintainer training for another one of our international 
partners, The Netherlands. In cooperation with the Joint Operational 
Test Team and Air Force Air Education and Training Command, the program 
successfully completed the ready for training operational utility 
evaluation which found that the training system is ``sufficient to meet 
the relatively low student training sortie demand of the syllabus'' for 
the training of experienced pilots.
    In 2014, the program will complete the ``stand up'' of Luke Air 
Force Base and Marine Corps Air Station Beaufort to expand pilot 
training capacity and prepare for U.S.-based pilot training for our 
international partners and FMS customers. Additionally, aircraft will 
transfer to Edwards Air force Base to begin preparations for Block 2B 
Operational Test.
    Concurrently we will focus on completing the design, procurement, 
and installation of modifications to allow the U.S. Marine Corps to 
achieve IOC by July 2015. We will also do this for the modifications 
needed for operational testing that starts spin up in January 2015. It 
is these modifications which are now on the critical path to U.S. 
Marine Corps IOC and operational test (OT); any delay in these aircraft 
modification programs will directly delay the start of these two 
important milestones. To accelerate these modifications, the program 
has activated modification lines at Marine Corps Air Stations Cherry 
Point and Yuma as well as Ogden Air Logistics Complex, and has 
developed a comprehensive aircraft modification program that is 
performing a value stream analysis and lean process to ensure the F-35 
modifications are in place for IOCs and OT testing. Additionally, we 
were successful in standing up depot component repair activities at 
Ogden and Warner-Robins Air Logistics Complexes over the past year.
    Reducing F-35 Sustainment costs and beginning the transition to a 
future global support and posture will be a key focus of 2014. We will 
begin to put in place the strategy to stand up our regional sustainment 
capabilities in Europe and the Pacific and continue building our CONUS 
sustainment capabilities. Our phase 2 business case analysis, which is 
nearly completed, will be used to inform us on what the most effective 
and efficient regional sustainment construct should look like. Part of 
this global posture will be the transition to performance based 
contracts to achieve Service, partner, and FMS Customer readiness 
requirements. These early contracts will also allow me to assess the 
performance of the current interim product support integrators 
(Lockheed Martin and Pratt & Whitney) to assume this role on a more 
permanent basis.
    The long-term sustainment costs of the program continue to be a key 
focus. My team and I are committed to providing the best-value support 
solution for all participants. We are undertaking a number of 
integrated efforts to drive down the cost of operating and sustaining 
the F-35 weapons system. In October 2013, the F-35 Joint Program Office 
stood up a Cost War Room whose mission it is to improve affordability 
in all aspects of the F-35 operations and sustainment costs. They are 
currently working on 48 opportunities to drive down or remove costs 
from the program. Linked to this Cost War Room effort is a strategy to 
define the most cost effective repair enterprise for the Services and 
partners. This effort is underway with a level of repair analysis on 
key components to determine what the optimum repair structure should 
look like.
    The program has also instituted a robust R&M program that is 
systematically identifying cost and time drivers while continuing to 
contractually institute tighter repair turnaround times for suppliers 
to drive down repair times. As an integrated element of the R&M 
program, we have also stood up a readiness cell that is focusing on 
analyzing program metrics to improve aircraft availability. The 
readiness cell's mission is to identify opportunities to enable F-35 
availability to greater than 60 percent by 2015 across all three 
variants. Some of the initiatives that the readiness cell is pursuing 
include: improving contracting practices to avoid gaps in line-
replaceable component repair and spares replenishment, and optimizing 
maintainer processes and procedures to reduce the amount of aircraft 
downtime between sorties.
    The combination of our R&M program, our O&S Cost War Room, our 
readiness cell, our level of repair analysis, and our business case 
analysis is to produce a mutually beneficial sustainment enterprise 
that operates, manages and supports the global system with relevant 
metrics and incentives, while meeting warfighter-defined readiness and 
cost objectives. We still have much work to do to achieve this vision 
and it is one of my highest priorities.
                airframe and propulsion contract actions
    The program achieved a major milestone with the concurrent 
definitization/award of the LRIP lot 6 and 7 airframe contracts in 
September 2013. These contracts marked significant improvement in 
negotiation span time when compared to previous LRIP contracts. We need 
this trend to continue to ensure that our budgets, expenditures, 
contracting actions, and program actions are all synchronized. The 
fixed price incentive fee (FPIF) contract with Lockheed Martin for LRIP 
lot 6 is valued at $4.4 billion and procures 36 aircraft (18 F-35A, 6 
F-35B, and 7 F-35C for the U.S. Services plus 5 F-35A for participant 
nations) and ancillary equipment. The FPIF contract with Lockheed 
Martin for LRIP lot 7 is valued at $3.9 billion and procures 35 
aircraft (19 F-35A, 6 F-35B, and 4 F-35C for the U.S. Services plus 5 
F-35A and 1 F-35B for participant nations) and ancillary equipment. The 
parties reached a fair, well-reasoned settlement that caps the 
government's liability. The negotiated price of the contract and all 
cost overruns are the responsibility of Lockheed Martin. In addition, 
we continue to share concurrency risk with Lockheed Martin. The terms 
of the contract include a ``cost-sharing/no fee'' arrangement whereby 
the Government and Lockheed Martin share equally (50/50) in these 
concurrency costs with no fee for the known concurrency change 
retrofits.
    The program definitized the LRIP lot 5 FPIF engine contract in 
April 2013 at a value of $1 billion for 32 engines and spares, as well 
as associated sustainment support/products. The final negotiated 
modification to the LRIP lot 6 FPIF engine contract was awarded in 
October 2013 bringing the total value to $1.1 billion for 36 engines 
and spares. Both contracts reflect a 0/100 overrun shareline with the 
contractor assuming all cost overrun risk and capping the government's 
liability at the negotiated value of the contract, another first for 
the engine program.
    Proposal evaluation is underway for the lot 8 (fiscal year 2014) 
airframe and lot 7 (fiscal year 2013) and lot 8 (fiscal year 2014) 
engine procurements. We believe we can have a final contract award for 
all of these procurements by the end of second quarter of calendar year 
2014. By negotiating the lots 7 and 8 engine procurements together, the 
program is striving to get out of the business of undefinitized 
contract actions and attempting to align contracting actions with our 
budget and the actual production of aircraft and engines. Today we 
effectively have fixed price contracts in terms of cost overruns 
because the government has zero liability for cost overruns above the 
negotiated price of the aircraft and engines.
    In the future, the program intends on moving towards fixed-price, 
multi-year contracts for both the aircraft and the engines. The F-35 
Program will ensure that these future U.S. aircraft and engine 
procurements comply with section 143 of the National Defense 
Authorization Act for Fiscal Year 2012, which provides: `` . . . [t]he 
Secretary of Defense shall ensure each of the following: (1) That the 
contract is a fixed-price contract. (2) That the contract requires the 
contractor to assume full responsibility for costs under the contract 
above the target cost specified in the contract.'' We will also ensure 
that the requirements to enter multi-year procurements are met. In the 
meantime, we are encouraging Lockheed Martin and Pratt & Whitney to 
seek long-term agreements with their suppliers to stabilize the supply 
base and reduce overall procurement costs.
    An effective earned value management system (EVMS) is critical to 
monitoring performance and controlling costs. In 2007, a DCMA review 
found the Lockheed Martin Aeronautics (LM Aero) EVMS to be noncompliant 
with EVM guidelines. Although both DCMA and LM Aero engaged in a 
focused effort to bring the LM Aero EVMS into compliance, appropriate 
corrections were not completed and DCMA decertified the LM Aero EVMS in 
2010. LM Aero created its EVMS corrective action plan during 2012 and 
DCMA re-certified the LM Aero EVMS in November 2013. In accordance with 
DOD Federal Acquisition Regulations, the DCMA had imposed a 5 percent 
withhold against progress payments for new F-35 contracts, starting 
with LRIP lot 5 as a result of the disapproved status of LM Aero's 
EVMS. Following recertification of LM Aero's EVMS, DCMA released the 
withhold, which amounted to $160 million, and authorized LM Aero to 
bill for the previously withheld amounts.
    In October 2013, DCMA disapproved of Pratt & Whitney's EVMS used 
for F135 engines after finding deficiencies in their EVMS system. This 
action was expected based on Pratt & Whitney's incomplete response to 
Corrective Action Requests submitted by DCMA to Pratt & Whitney earlier 
in 2013 on contracts for F135 engines used in F-35 aircraft. DCMA found 
16 significant deficiencies that affect four EVMS guidelines. In 
accordance with the DOD Federal Acquisition Regulations, 5 percent of 
each request for payment is withheld until all significant deficiencies 
are corrected. As of the end of February the withhold amount totaled 
$25.7 million. The F-35 Joint Program Office is working closely with 
DCMA to ensure Pratt & Whitney is in compliance with corrective 
actions.
                           2013 dot&e report
    As you are most likely well aware, the Director, Operational Test 
and Evaluation (DOT&E) performed an independent assessment of the F-35 
Program. This was conducted with the F-35 Program Office's full 
cooperation and unfettered access to information on the F-35 Program. 
Although the report is factually accurate, I do not believe it tells 
the full story as not enough credit is given for progress that has been 
made in reducing risk on this program. There were no surprise findings 
in the report, in fact, we agree and are taking action on eight of the 
nine recommendations in the report. The one recommendation that the F-
35 enterprise has chosen not to pursue has to do with the fuel-draulic 
shut off system. An extensive cost/benefit analysis showed that the 
addition of the polyalphaolefin shut-off valve increases the F-35 
survivability by less than 1 percent while adding additional 
development, production, reliability, and operating costs. The 
combination of stealth, data fusion, advanced sensors, advanced 
countermeasures, and electronic attack greatly reduce the chances of 
the aircraft being hit by enemy fire. Additionally, the F-35 Joint 
Program Office does not agree with DOT&E's assessment that mission 
systems software delays and Block 2B flight test growth will result in 
a 13-month delay in the 2B fleet release date. Block 2B software is 
currently undergoing flight test and security and verification testing 
with little to no schedule delays. The program has established a 
process to track and manage software capability increments and to track 
execution of software builds to plan, including development, 
integration, flight test, and rework.
                               conclusion
    I believe the F-35 is headed in the right direction. The previous 
PEO developed a solid program baseline and it is now my team's job to 
successfully execute that plan. I believe the basic aircraft design is 
sound and we can deliver on our commitments to you, the taxpayers and 
warfighters. While there is still risk in the program, I have 
confidence in that we now have in place a robust management and 
leadership enterprise that can handle any future setbacks or 
discoveries and stay on track, so long as the program remains properly 
resourced.
    Software development still remains our number one technical risk 
and a key focus area. We also must concentrate on standing up the 
global support posture, improve R&M, and drive costs out of the 
program. The changes implemented by the combined government/contractor 
team have improved this outlook, but more work still needs to be done. 
We will need excellent performance and continued support by all 
elements of the enterprise, including industry, Congress, the Services, 
our partners, and my program office.
    As in any complex development program there are challenges, but I 
believe the enhanced capability of the F-35 will provide the backbone 
of the U.S. combat air superiority for generations to come. The 
technological capabilities of the aircraft are sound. The program's 
leadership team is rising to the challenges of managing this complex 
system with integrity, discipline, transparency and accountability. Our 
progress continues at a slow but steady pace. I intend on completing 
this program within the budget, schedule, and resources I have been 
given. I ask that you hold me, my team, our stakeholders, and 
contractors accountable over the coming years to ensure that we develop 
and deliver the warfighting capability this country and our partners 
need and expect.
    Thank you again for this opportunity to discuss the F-35 Lightning 
II Program. I look forward to answering any questions you have.

    Senator Blumenthal. Thanks, General.
    General Davis?

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

    General Davis. Chairman Blumenthal, Ranking Member Wicker, 
and distinguished members, thank you for this opportunity.
    I will try to keep this brief. I know there are questions, 
as you have already mentioned, we would like to get to.
    Let me just mention the fact that I think our Chief and our 
Secretary have been very clear that there are some enduring 
capabilities your U.S. Air Force provides, and these are 
missions they are expected to perform at any time on any given 
day. That translates to what I think that the Nation's citizens 
expect of the Air Force, and that means basically, in simple 
terms, your Air Force has to strike anywhere in the world, at 
any time, and on any target that the President directs.
    We must also be able to observe critical portions of the 
world any time, day or night, around the year, and sustain the 
capability to do so. That also means providing the assured 
launch capabilities to get those assets in orbit to be able to 
do that.
    It also means that the Air Force must transport or return 
critical cargo, personnel, and other things anywhere around the 
world at any time and sustain that capability over long periods 
to be able to do any missions the Joint Force requires. We must 
defend the Homeland.
    We can do these missions today. We can do them tomorrow. We 
can probably do them for the near future. But clearly, as we 
look out into the extended future, there is serious 
modernization the Air Force requires to be able to do that 
based on a threat that is evolving more rapidly than at any 
point I have seen in my 35-year career. What we are seeing is 
it takes very little for a threat to be able to evolve quite 
effectively if all it has to do is defend a coast land or 
defend a fairly unique part of the geographic terrain around a 
certain country. It becomes much more cost effective to defend 
and to be able to project that power I just described with the 
Air Force.
    So that threat and its ability to change and morph quite 
rapidly is what presents us the problem that melds with the 
budget that you have referenced here in all of the opening 
comments. The more we focus on individual systems within the 
budget, the more we risk the potential of neglecting the 
capabilities we are going to need for that long-term future 
that I think is so vital to what the Nation expects of the Air 
Force.
    So while we debate the 2015 budget, I will tell you there 
is some comfort--and Senator Wicker, you mentioned it in terms 
of predictability, the BBA was agreed to. Our program managers 
got some relief in that they had a certainty to plan to in the 
fiscal year 2015 budget.
    But I will tell you those same program managers now worry 
what happens next because if you look at the budget that was 
submitted--and we are going to debate the items here today--as 
you move into 2016, the Air Force budget shows a projection of 
growth of about $8 billion and then another $2 billion in 2017. 
I do not think any of us really expect that will quite happen 
that way. But as our program managers try to plan how they 
modernize all these forces you just mentioned, that creates a 
level of unpredictability that we will certainly have to work 
very closely with you in great partnership to try to figure out 
how we survive that planning process.
    If you consider the fact that certain parts of our budget, 
in addition to the things that we will talk about today, have 
largely been fenced or directed in certain ways to be spent 
because of bills we have to pay, and as you meld that with the 
fact that I mentioned the threats evolving rapidly, then we 
have a very challenging situation as we go forward.
    There are no easy choices and we will debate many of those 
today. There are some choices that are better than others that 
will provide the enduring capabilities I think the United 
States expects the Air Force to provide. We are going to talk 
about those today. We will have to continue to work with you in 
partnership to be able to deliver the best way to get those 
capabilities.
    So with that, I look forward to your questions.
    [The prepared statement of General Davis follows:]
         Prepared Statement by Lt. Gen. Charles R. Davis, USAF
                            i. introduction
    Chairman Manchin, Ranking Member Wicker and distinguished members 
of the subcommittee, thank you for the opportunity to provide you with 
an update on Air Force tactical aviation programs. Today our Air Force 
is engaged globally, supporting the combatant commanders (CCDR) 
requirements and executing our National Military Strategy (NMS).
    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 (C) 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 they are integral 
to the movement of people and lifesaving supplies when disasters, like 
Hurricane Sandy or the California wildfires, strike.
    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. As our world becomes more 
interconnected, Air Force capabilities that allow America to see, 
reach, and affect a situation anywhere on the globe within a matter of 
hours, will become even more critical. 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.
                        ii. current environment
    The magnitude of the cuts generated in fiscal year 2013 by the 
Budget Control Act (BCA), or `sequestration', was difficult to absorb 
in the short term. We stood down 31 Active component squadrons, to 
include 3 combat-coded 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 pre-
sequestration combat ready proficiency levels, which was already much 
less than required, and it will take years to recover from the weapon 
system sustainment backlog.
    Though the Balanced Budget Amendment (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, which includes: 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 ``more ready 
force today'' versus a ``more capable force tomorrow'' dilemma, forcing 
us to sacrifice future modernization for current readiness.
    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 (DSG), as 
updated during deliberations on the 2014 Quadrennial Defense Review 
(QDR). To do this within fiscal guidance, including the Strategic 
Choices and Management Review, we had to make difficult trades among 
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.

    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.

    The fiscal year 2015 budget request attempts to develop and retain 
the most critical force structure and capabilities to maintain the Air 
Force's ability to rapidly respond to global demands in most missions. 
We will become smaller, which will require new approaches to reducing 
the rotational or current commitments in order to sustain it. This 
force structure reduction is budget-driven and not a logical 
consequence of transitioning out of nearly 13 years of war. In fact, 
the Air Force has progressively reduced its size since September 11, 
2001; for example, we had 75 combat fighter squadrons in 2001, and 
today we have 55, with further cuts to 48 projected by the end of the 
future years defense program (FYDP) (fiscal year 2019). In addition, 
history since the 1991 Gulf War suggests the Air Force will not 
experience a significant reduction in operations tempo even when 
Operation Enduring Freedom combat operations end. Fighter, bomber, 
command and control (C2), ISR, personnel recovery, and Special 
Operation Forces (SOF) assets are likely to remain in high demand. To 
compound matters, the Air Force still has not recovered the readiness 
lost due to the BCA in fiscal year 2013, and readiness was unacceptably 
low even before sequestration. Despite these present challenges, 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.
    If we continue to be funded at the fiscal year 2015 budget top line 
level, we can continue a gradual path of recovery to combat readiness 
levels that enable us to meet the full range of operational missions, 
begin to close the gap in 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 
(OGSI) 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 our recapitalization efforts, and improve our installations 
and bases.
    A BCA-level budget would result in a very different Air Force. To 
pay the sequestration-level bill, we will have to decrease F-35 
quantities and sacrifice current tanker and additional 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, as well as reduced levels of investments in preferred 
munitions. A return to BCA-level funding would result in a less ready, 
less capable, less viable Air Force that is unable to fully execute the 
defense strategy.
    The fiscal year 2015 budget request does not enable full recovery 
of warfighting capability, capacity and readiness, but we have made the 
risk-informed decision to re-strike the balance, ultimately trading 
some current capacity and modernization for future readiness and 
recapitalization. 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.
                         iii. operations update
    Today, the Air Force flies and fights in air, space, and 
cyberspace--globally and reliably--as a valued member of our joint and 
coalition teams. Approximately 218,000 Total Force airmen are 
``committed in place'' supporting daily combatant command operations to 
defend the Homeland, provide command and control of our nuclear forces, 
operate remotely piloted aircraft, provide rapid global mobility, and 
many other requirements. Over 28,000 airmen are deployed across the 
globe, including more than 20,000 in the U.S. Central Command Area of 
Responsibility. The Air Force is an active partner in Department of 
Defense planning that will shift our emphasis from today's wars to a 
broader range of challenges and opportunities. The Department of 
Defense is currently reassessing the strategic guidance issued last 
year, but we anticipate continued emphasis on and planning for a 
rebalance to the Asia Pacific region. Our challenge is to provide those 
who deploy in support of our global commitments an Air Force that is 
capable, agile, flexible, ready, and technologically advanced.
    During 2013, Air Force global precision attack aircraft flew over 
21,000 sorties and logged 40,000 hours in support of Overseas 
Contingency Operations. On the home front, Air Force fighter, air 
refueling, and early warning aircraft have flown over 64,000 total 
sorties supporting Operation Noble Eagle since September 11, 2001. As a 
testament to the capability of our Total Force, the Air National Guard 
and Air Force Reserve have flown more than 65 percent of these sorties.
    However, aviation is not without risk. In fiscal year 2013, there 
were 19 Class A aviation flight mishaps, including 14 destroyed 
aircraft and 11 fatalities. This was a decrease in one Class A aviation 
flight mishap from fiscal year 2012, and an increase in destroyed 
aircraft and fatalities from the fiscal year 2012 numbers of 10 
aircraft destroyed, and 9 fatalities respectively. Analysis of these 
events found trends similar to previous years, with the top two mishap 
factors being compliance and decisionmaking errors.
    There were 33 Class B aviation flight mishaps in fiscal year 2013, 
significantly higher than the 23 in fiscal year 2012. Class C aviation 
flight mishaps stayed relatively consistent with 262 in fiscal year 
2013, slightly below the 269 total in fiscal year 2012. Additionally, 
fiscal year 2013 unmanned aerial system mishaps decreased across the 
board in Class A, B, and C mishaps from fiscal year 2012. Class A 
mishaps dropped from 13 to 12, Class B mishaps from 4 to 1, and Class C 
from 16 to 13.
                 iv. force structure and modernization
Fighters
    Air Force fighter force structure is dependent on both fighter 
aircraft and rated manning. Three years ago, the Air Force determined 
through extensive analysis that a force structure of 1,200 primary 
mission aircraft and 2,000 total aircraft was required to execute the 
NMS with increased operational risk. Two years ago, based on the 2012 
DSG and fiscal constraints, the Air Force rebalanced our force 
structure across core functions. Analysis showed the Air Force could 
decrease fighter force structure by approximately 100 aircraft with 
higher risk, resulting in the current fighter requirement of 1,100 
primary mission aircraft and 1,900 total aircraft. The 2014 QDR Report 
also advances an updated national defense strategy that embodies and 
builds on the DSG priorities. The Chairman's assessment of the QDR 
strategy states we will continue to need capabilities that can operate 
effectively in contested environments. During the build of the fiscal 
year 2015 budget, fiscal constraints drove force structure divestments 
of 334 fighters, leaving a fighter force structure significantly below 
the 1,900 total aircraft requirement. Fiscal pressures drove these 
tough choices--balancing today's needs against tomorrow's--and 
accepting near-term risk today to be ready and viable tomorrow.
    The Air Force's fighter fleet is approaching 30 years old on 
average--the oldest in our history. Without service life extensions and 
capability upgrades, it will not be possible to manage risk. The Air 
Force is pursuing programs that will modernize and extend the service 
life of our remaining fleet. The F-35 is a key component in preserving 
future force structure and mitigating risk. Any further delay in the F-
35 program will create a serious shortfall (mid- and far-term) in 
fighter capabilities and force structure. The Air Force is very 
concerned with recent budget reductions and continues to monitor how 
these cuts will affect risk. Air Force modernization of legacy systems 
was traded to pay for readiness and continue to fund our top three 
investments. It is absolutely critical that selected fourth generation 
sustainment and modernization efforts continue, the F-22 continues to 
modernize, and the F-35 matures and begins full rate production (FRP) 
to avoid further increases in risk.
    Manning our current force is a challenge we continually work. Air 
Force mission success depends on efficient management of our rated 
force, the most challenging of which is fighter force structure 
manning. The Air Force is currently 240 fighter pilots short of the 
total manning requirement and our projections indicate this deficit 
growing to approximately 500 by 2022. The shortfall evolved from force 
structure reductions that cut active duty fighter squadrons and fighter 
training squadrons to a number that cannot sustain billet requirements. 
As a result, the Air Force is currently unable to produce and 
experience the required number of fighter pilots across the total 
force. The Air Force is prioritizing overall available rated manpower 
to fill our operational cockpits, at significant risk to institutional 
requirements. Projected impacts include reductions in air-operations 
expertise during the development of war plans and a gradual erosion of 
fighter pilot experience in test and training. Recent programming and 
policy actions raised production and absorption capacities, but current 
fiscal constraints place the implementation of these actions at risk. 
However, even with these changes, the Air Force is only able to slow 
the decline in fighter pilot inventory and will be incapable of meeting 
our overall requirement for fighter pilot expertise for the foreseeable 
future.
A-10
    Beginning in fiscal year 2015, the Air Force will retire the entire 
A-10 fleet of 283 aircraft, resulting in a savings of $3.7 billion 
($4.2 billion including cost avoidance). The A-10 provides our Joint 
Force Commanders with responsive, lethal, precise, and persistent 
firepower for close air support (CAS) and combat search and rescue, and 
has been a steady, stellar performer in all recent conflicts. It was a 
tough decision to retire the fleet, but fiscal pressure drove us to 
divest this platform, which cannot survive or operate effectively in a 
highly contested environment where there are more advanced aircraft or 
air defenses. As ably shown in Iraq and Afghanistan, we will rely on 
other platforms to provide effective CAS, from multi-role fighters to 
B-1 bombers to remotely piloted aircraft; however, these decisions do 
not come without risk or impacts to the mission. One of the impacts to 
using other platforms for CAS is that use of these platforms for CAS 
must be balanced with their other missions, putting stress on the force 
in certain scenarios. Divesting the entire fleet allowed us to harvest 
savings we could then apply to efforts that allow us to be ready and 
viable tomorrow.
    The fiscal year 2015 budget does not fund future modernization 
efforts for A-10 aircraft; however, we will continue to sustain the 
aircraft and keep it operationally viable until 2019.
F-16
    Our primary multi-role fighter aircraft, the F-16 comprises 50 
percent of our fighter fleet. The fiscal year 2015 budget request 
invests $1.04 billion across the FYDP for F-16 modernization and 
service life extension to meet critical warfighter needs to 2025 and 
beyond. The majority of efforts in the FYDP focus on Legacy service 
life extension program (SLEP), operational flight program (OFP) 
enhancement, and a new start program for upgrades to the modular 
mission computer (MMC) and programmable display generator (PDG).
    Legacy SLEP will extend the airframe structural service life for 
300 aircraft by approximately 25 percent from the current 8,000 hours 
to 10,000+ hours, adding about 8 to 10 years. The fiscal year 2015 
budget request continues design and development of structural 
modification kits for the Block 40-52 fleet to be responsive to the Air 
Force's total fighter requirement. The fiscal year 2015 budget request 
for OFP enhancement will continue the integration of new weapons, 
avionics and improved targeting pods. The fiscal year 2015 new start 
for the MMC and PDG upgrade will resolve processor, memory, and 
bandwidth issues that will allow capability growth through future OFP 
development.
    The Combat Avionics Programmed Extension Suite (CAPES) program 
contains four distinct pieces that provide critical new capabilities to 
the F-16, including an active electronically scanned array (AESA) 
radar, a center display unit, an ALQ-213 integrated electronic warfare 
management system, and an integrated broadcast service (IBS) that 
integrates off board threat data and blue force tracking via SATCOM. 
Originally, 300 aircraft were scheduled to be upgraded with these 
capabilities, but the program was unfunded in the fiscal year 2015 
budget request. The modernization of fourth generation aircraft 
continues to be a critical bridge with the fifth generation fleet and, 
although the Air Force is continuing with selected F-16 modernization, 
the lack of these specific avionic upgrades will result in F-16 Block 
40-52 aircraft that will not be nearly as effective in a contested 
environment and will put the Air Force at greater risk from emerging 
threats.
    To partially mitigate the impact of terminating CAPES, we are 
upgrading the F-16's electronic attack pod. This upgrade brings the 
self-protection capabilities of the aircraft in line with current and 
emerging threats, thereby increasing its effectiveness in the contested 
environments we expect it to encounter.
F-15 C/D
    The fiscal year 2015 budget request divests the F-15C/D fleet by 51 
aircraft across the FYDP. The fiscal year 2015 budget request invests 
approximately $1.7 billion across the FYDP on modernization and 
sustainment programs for the remaining F-15C/D fleet. We project the F-
15C/D fleet will remain viable until at least 2035, with potential for 
an airframe service life extension following full-scale fatigue 
testing. This test is underway and will conclude in 2014. The Air Force 
manages the fleet through scheduled field and depot inspections under 
an individual aircraft tracking program.
    We continue to modernize our F-15C/D fleet with AESA radars, a more 
capable aircraft mission computer, and a new electronic warfare self-
protection suite, the Eagle passive/active warning survivability system 
(EPAWSS). This new system will be absolutely crucial to ensuring the F-
15C/D is able to operate into the future, especially in highly 
contested environments. We have had to delay EPAWSS for 1 year to 
remain within budget constraints. We expect these efforts to enable 179 
F-15C aircraft to operate safely and effectively through at least 2035 
as determined by the full-scale fatigue test.
F-15E
    The fiscal year 2015 budget request invests approximately $2.2 
billion across the FYDP for F-15E modernization and sustainment 
programs. This request includes integrating the latest precision 
weapons to hit targets accurately and reduce collateral damage, and 
adding a helmet mounted cueing system for all front seat cockpits that 
will reduce the F-15E's time to engage a target. Finally, we are adding 
a state-of-the-art AESA radar system advancing capabilities to identify 
and engage targets, a more capable aircraft mission computer, and a 
slightly delayed self-protection electronic warfare system (EPAWSS). As 
with the F-15C/D, the EPAWSS system will be absolutely crucial to 
ensuring the F-15E is able to operate into the future in highly 
contested environments. The Air Force expects the F-15E to be an 
integral part of the Nation's force through at least 2035. A full-scale 
fatigue test, due to be complete in 2015, will provide data regarding 
the feasibility of a service life extension.
Fifth Generation Fighters
    Vital elements of our Nation's defense and deterrent capability are 
fifth generation fighters like the F-22A and F-35. These advanced, 
state-of-the-art aircraft are absolutely essential to maintain our 
current global superiority that permit air, sea, and ground forces 
freedom of action. Each aircraft possess exclusive, complimentary, and 
indispensable capabilities that provide synergistic effects across the 
spectrum of conflict. As future adversaries modernize, our legacy 
fourth generation aircraft will have limited capability to operate in a 
highly contested environment. Our Air Force must continue to invest in 
fifth generation weapon systems, and begin looking even further into 
the future, to ensure continued dominance of American Airpower.
F-22
    The F-22 Raptor is the only currently operational U.S. fighter 
currently capable of operating in highly contested environments. F-22 
attributes of stealth, super cruise, integrated avionics and sensors 
combine to deliver the Raptor's unique operational capability. F-22 
modernization is required to counter advancing threats that 
specifically target F-22 capabilities. Accordingly, F-22 modernization 
is consistent with the DSG to ``invest as required to ensure [the] 
ability to operate effectively in [anti-access and area denial] 
environments''. Focused on maintaining operational superiority against 
the evolving threat, the fiscal year 2015 budget request for F-22 
modernization investment includes $330.6 million in RDT&E in addition 
to $331 million in procurement. Increment 3.1 is fielding now and is 
scheduled to be complete in fiscal year 2017, delivering advanced air-
ground capabilities including synthetic aperture radar ground mapping, 
threat geolocation, and Small Diameter Bomb (SDB) carriage. Increments 
3.2A/B remain on track for fielding in 2015/2018 respectively, and will 
deliver advanced electronic protection and combat identification, AIM-
120D and AIM-9X missile capability, and significantly-improved ground 
threat geolocation.
    The F-22 is operating safely worldwide, averaging about 26,000 
flying hours a year since return to flight in September 2011. It has 
been over 24 months since the last unknown-cause hypoxia-like event 
occurred. Notably, the retrofit of the automatic back-up oxygen system 
is on track for completion by 2015. Fielding of this system at 
Elmendorf Air Force Base is complete. The remaining fleet will be 
complete by mid-April 2015.
F-35
    During fiscal year 2015, the Air Force will continue to manage risk 
across the global precision attack portfolio by prioritizing investment 
in fifth-generation aircraft while sustaining legacy platforms as a 
bridge to the F-35 Joint Strike Fighter. The aforementioned legacy 
fighter modifications are intended to keep a viable air superiority 
fleet in operation as the F-35 program works toward initial operational 
capability (IOC) in 2016.
    The multi-role F-35A is the centerpiece of the Air Force's future 
fighter precision attack capability. In addition to complementing the 
F-22's world class air superiority capabilities, the F-35A is designed 
to penetrate air defenses and deliver a wide range of precision 
munitions.
    This modern, fifth-generation aircraft brings the added benefit of 
increased allied interoperability and cost-sharing across Services and 
eight partner nations. The fiscal year 2015 budget request includes 
$4.9 billion for continued development and procurement of 26 F-35A, 
conventional take-off and landing (CTOL) aircraft. The program 
continues to make steady progress in overcoming software development 
delays and technical issues.
    During calendar year 2013, the F-35 program team achieved a number 
of significant milestones, including: award of production contracts for 
aircraft low rate initial production (LRIP) Lots 6 and 7 and engine 
LRIP Lot 6; commencement of flight operations at Nellis Air Force Base; 
and the first live fire launch of an AIM-120 Advanced Medium Range Air-
to-Air Missile (AMRAAM) from an F-35. Additionally, the program team 
completed all planned weapon separation events, the first multi-
function advanced data link 4-ship connectivity test, and successful 
weapons delivery tests for the Joint Direct Attack Munition (JDAM). 
Thirty-five production aircraft were delivered for the Air Force, Navy, 
and Marine Corps, the program reached over 10,000 test and operational 
flight hours, and nearly fifty F-35A pilots have now been trained at 
Eglin Air Force Base. Further, the 61st Fighter Squadron at Luke Air 
Force Base was reactivated as the first of six training squadrons at 
the new pilot training center, and Hill Air Force Base and Burlington 
Air Guard Station were announced as the first operational locations for 
the Air Force.
    In fiscal year 2014, the Air Force plans to procure 19 F-35A CTOL 
aircraft. Sequestration did not affect Air Force procurement quantities 
in 2014.
    Affordability remains a major priority, and the F-35 program made 
great strides on this front in 2013. In the negotiations concluded for 
aircraft LRIP Lot 7 and engine LRIP Lot 6, costs dropped over 4 percent 
and 2 percent per unit, respectively, from previous lot negotiations, 
representing a decrease of approximately $5 million in unit recurring 
flyaway cost for each F-35A. These trends are expected to continue for 
many future production lots. Production efficiencies, as well as 
economies of scale, are critical in the overall affordability of the F-
35 program. In 2013, efforts were taken to improve affordability, with 
more cost sharing between the Government and Contractors with respect 
to cost reduction initiatives. This along with other cost reduction 
initiatives and economies of scale should result in the price of an F-
35A, including an engine and profit, between $80 million and $85 
million by 2019 (TY$). In addition, the Joint Program Office (JPO) is 
pursuing a number of actions to lower the long term sustainment costs 
for the F-35. In partnership with prime contractors Lockheed Martin and 
Pratt & Whitney, the JPO established a Cost War Room to systematically 
examine the cost drivers with the intent to pursue initiatives that 
will reduce the overall operations and sustainment costs of the fleet. 
Linked to the Cost War Room is a strategy to define the most cost 
effective repair enterprise for the Services and partners. This effort 
is underway with a Level of Repair Analysis on key components to 
determine the optimum repair structure. The JPO has also instituted a 
robust reliability and maintainablity (R&M) program that is identifying 
cost and time drivers while continuing to contractually institute 
tighter repair turnaround times. As an integrated element of the R&M 
program, the JPO has stood up a readiness cell that is focusing on 
analyzing program metrics to improve aircraft availability. The 
combination of these efforts is intended to produce a mutually 
beneficial sustainment enterprise that supports the global system with 
relevant metrics and incentives, while meeting warfighter-defined 
readiness and cost objectives.
    The progress made so far and the steps we take today are crucial in 
our efforts for declaring F-35 IOC. After the 2012 program re-baseline 
and Milestone B re-certification, the joint services were tasked to 
provide Congress our updated IOC criteria and timeline estimates by 
June 1, 2013. These IOC criteria and dates were established, and the 
Air Force plans to reach IOC for the F-35A by December 2016 
(threshold).
    Steady progress continues to be made on the development program, 
with over 50 percent of planned testing complete. The JPO has reduced 
risk on the helmet mounted display system, certification of night/IMC 
operations, fuel dump, and lightning protection issues. However, 
software remains the number one technical risk. We expect to reach 
initial warfighting capability, with Block 2B/3i software, and meet Air 
Force IOC as scheduled in 2016, but there is risk in reaching full 
warfighting capability with Block 3F as planned in 2017. Maturity of 
the Autonomic Logistics Information System (ALIS) remains a concern. 
The Air Force understands ALIS is a necessary and integral element of 
the F-35 weapon system, and as such, is a top program priority. As 
designed, ALIS will tie F-35 mission planning, operational flight, ops 
and maintenance training, debrief, tech and flight manuals, prognostic 
health management, and supply chain management into one seamless 
information system. Corrective actions for ALIS deficiencies are in 
work, and a maintenance release in place at Eglin Air Force Base and 
Marine Corps Air Station Yuma are successfully addressing many user 
concerns in an effort to improve aircraft turnaround time. Improvement 
in ALIS is now tied to the projected increase in production ramp rate 
beginning in 2015.
Air-to-Surface Weapons
    All three mission areas (stand-off, direct attack, and penetrator 
munitions) in the air-to-surface munitions inventory are short of 
inventory objectives. The most critical are stand-off and penetrator 
weapons. Joint Air-to-Surface Standoff Missile (JASSM) and SDB weapons 
along with low observable platforms are force multipliers in a highly 
contested environment and their shortage could increase friendly force 
attrition driving a much higher level of effort enabling the attack of 
other critical targets. The shortage of penetrator weapons will result 
in some inability to target adversary critical capabilities and 
increase risk. Direct attack munition shortages drive the use of non-
preferred munitions with decreased effectiveness and resulting in 
increased time and Air Force attrition to accomplish CCDR objectives.
JASSM and JASSM-ER
    JASSM and JASSM-ER (Extended Range) are currently the Nation's only 
stealthy, conventional, precision, launch-and-leave, standoff missiles 
capable of fighter and bomber aircraft employment. They are capable of 
penetrating next generation enemy air defenses to strike high value, 
hardened, fixed, or mobile targets. The JASSM (baseline) has a range 
greater than 200nm while the JASSM-ER has a range greater than 500nm.
    The JASSM (baseline) weapon is in FRP; the 11th and 12th production 
contracts were awarded to Lockheed Martin on December 19, 2013, for a 
total of 340 missiles. About 1,230 missiles have been delivered; of 
these about 1,000 are in the field and about 230 at the Lockheed Martin 
production facility for repair, mostly for the surface wrinkling due to 
exposure to high humidity conditions. The repair is fully covered by 
the warranty with no additional cost to the Air Force. A new coating 
(starting at lot 8) has corrected the surface wrinkling problem. Fiscal 
year 2016 is the last JASSM (baseline) buy for a total procurement of 
2,054 missiles.
    JASSM-ER is currently in LRIP; the third and fourth LRIP contracts 
were awarded to Lockheed Martin on December 19, 2013, for a total of 
100 missiles. A problem with the fuel supply motor initially delayed 
the deliveries of the 30 LRIP lot 1 JASSM-ER missiles; however, the 
problem was resolved and deliveries will complete in April 2014. JASSM-
ER will start FRP in fiscal year 2015. The combined JASSM production 
line transitions to JASSM-ER only at the maximum and most efficient 
rate of 360 missiles per year. The last JASSM-ER procurement is planned 
for fiscal year 2023, for a total JASSM-ER buy of 2,846 missiles.
SDB II
    The SDB II will fill the capability gap of attacking mobile targets 
at standoff ranges through the weather outside of point defenses using 
a multi-mode seeker and dual band weapon data link. SDB II will be a 
force multiplier in the number of targets platforms can attack per 
sortie while inherently limiting collateral damage. Providing a four-
fold increase in load out with its carriage system will allow the 
limited number of initial combat forces to achieve operational 
objectives early in conflicts, paving the way for follow-on forces. SDB 
II is an Acquistion Category (ACAT) ID program with the Air Force as 
the lead service in partnership with the Navy. Initial aircraft 
integration of the SDB II will be on the F-15E (Air Force threshold), 
F-35B & C (DoN threshold), F/A-18E/F and AC-130W.
    Currently, SDB II is in engineering, manufacturing, and development 
with an LRIP decision planned by the end of this fiscal year. In fiscal 
year 2015, SDB II will continue developmental testing, complete live 
fire testing, and conduct government confidence test shots. The fiscal 
year 2015 procurement plans are to buy 246 weapons with deliveries 
starting in fiscal year 2017. SDB II fielding on the F-15E is planned 
for January 2017. The Air Force total planned procurement for SDB II is 
12,000 weapons.
Air-to-Air Weapons
    Air-to-air missile inventories are short of objectives. AIM-120 
AMRAAM and the AIM-9X continue to be in short supply. These weapons 
enable the joint force to achieve air superiority by providing a first-
look first-kill capability. The shortage of air-to-air missiles will 
increase the number of days required to gain Air Superiority, and will 
decrease the amount of time the Joint Force can maintain Air 
Superiority, which may leave the combatant commander short of their 
campaign objectives.
AIM-120D AMRAAM
    The AIM-120 AMRAAM is the Department of Defense's premier beyond-
visual-range missile to counter existing and emerging air vehicle 
threats, operating at high or low altitude with electronic attack 
capabilities. AMRAAM is a key enabler for gaining air superiority and 
air dominance providing F-22, F-16, F-15, F/A-18, and eventually F-35 
aircraft the ability to achieve multiple kills per engagement. The 
latest evolution of AMRAAM is the AIM-120D, which brings increased 
range and kinematics, improved high off-boresight targeting, and an 
enhanced two-way data link for improved accuracy and lethality at 
range. AIM-120D is an ACAT 1C joint program, with the Air Force as lead 
service in partnership with the Navy. The AIM-120D operational test 
readiness review was successfully completed in May 2012 and the program 
is currently in dedicated operational testing.
    Operational testing is expected to be complete in this fiscal year 
and fielded on F/A-18 E/F and F-15 C/D aircraft. Total procurement for 
fiscal year 2015 is 200 units with increases in future procurement 
quantities for both the Air Force and Navy. The program will continue 
to update the AMRAAM technical data package to ensure a viable, 
producible design through the expected production life of the AMRAAM 
program, and to maintain a robust supplier base capable of sustaining 
production for the life of the program.
Industrial Base
    The Air Force has been concerned over the future of the aerospace 
industrial base particularly in the segment supporting engineering 
design and development of tactical aircraft for several years. For the 
first time in over 50 years, there is only one tactical aircraft in 
development, the F-35. When production of the F/A-18 and the F-15 ends, 
there will be only one prime contractor producing tactical aircraft.
    This situation presents a national challenge. Given the current 
fiscal constraints, how do we provide meaningful opportunities to 
develop, sustain, and advance the design, engineering, and technical 
knowledge to preserve our lead in this mission area? The Air Force 
continues to invest in key areas such as advanced turbine engines. 
However, as with all other programs, there are no easy choices left. We 
are accepting the risk that some elements of the current aerospace 
industrial capacity may atrophy. These capabilities, in terms of 
engineering and design teams, production workers, and facilities may 
need to be reconstituted to meet future requirements.
                             iv. conclusion
    The Air Force continues to be the world's finest across the 
spectrum of conflict, but the gap is closing. A return to 
sequestration-level funding would result in a less ready, less capable, 
less viable Air Force that is unable to fully execute the defense 
strategy. At fiscal year 2015 BBA-level funding, the Air Force has some 
ability to manage risk in supporting the strategy, but significant 
challenges will remain. In order to defeat advancing threats, the Air 
Force must continue investments in top recapitalization and key 
modernization programs, and gain and maintain full-spectrum readiness.
    Our sister Services and allies expect the Air Force to provide 
critical warfighting and enabling capabilities. We remain focused on 
delivering global vigilance, reach, and power, through our core 
missions of air and space superiority, global strike, rapid global 
mobility, intelligence, surveillance and reconnaissance and command and 
control. We look forward to working closely together as we address the 
challenges of near-term uncertainty and risk to provide the ability to 
deliver combat air power for America when and where we are needed.

    Senator Blumenthal. Thank you very much, General.
    Admiral Grosklags?

 STATEMENT OF VADM PAUL A. GROSKLAGS, USN, PRINCIPAL MILITARY 
  DEPUTY TO THE ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, 
 DEVELOPMENT, AND ACQUISITION; ACCOMPANIED BY LTGEN ROBERT E. 
      SCHMIDLE, JR., USMC, DEPUTY COMMANDANT FOR AVIATION

    Admiral Grosklags. Chairman Blumenthal, Senator Wicker, 
distinguished members of the subcommittee, thanks for the 
opportunity to appear before you today to discuss our Navy and 
Marine Corps aviation programs.
    I think you are aware we had to make many difficult 
decisions in building our fiscal year 2015 budget submission, 
but what we have submitted for your consideration is a plan 
which ensures sufficient capacity and capability to fight and 
win, if necessary. But it is also a plan that includes 
increased levels of risk.
    In our fiscal year 2015 submission, we are continuing 
development and procurement of fifth generation tactical 
aircraft. We are fully committed to both the F-35B and the F-
35C and believe the program is on a solid path to meeting the 
IOC for both our Marine Corps in 2015 and our Navy in 2019.
    Unmanned aircraft systems also maintain a full measure of 
our attention from already fielded unit-size aircraft such as 
the Marine Corps RQ-21 Blackjack to future carrier strike group 
assets such as the unmanned carrier-launched airborne 
surveillance and strike (UCLASS) program.
    We continue investment in our critical development programs 
such as the CH-53K heavy lift helicopter, the MQ-4C maritime 
surveillance aircraft, and the presidential replacement 
helicopter program.
    We are recapitalizing in other areas as well. Maritime 
patrol with the P-8, our carrier-based early warning aircraft 
with the E-2D, and virtually all of our helicopter and tilt 
rotor aircraft are being replaced with H-60s, new H-1s, and V-
22s.
    Finally, we are making focused investments in our currently 
fielded aircraft and systems to ensure they remain relevant, 
safe, and can counter the threat in the coming decade.
    But as I mentioned earlier, the efforts I just described 
are not without risk. Even with the spending levels supported 
by the BBA, we have been forced to extend development 
timelines. We have reduced procurement rates, and we have 
reduced the rate at which we are modernizing both our 
capability and our capacity. A transition back to the BCA 
levels of spending would have significant negative impacts on 
our readiness, our modernization, and our relevancy, which 
ultimately results in increased risk to our deployed forces.
    Mr. Chairman, we appreciate the opportunity to appear 
before you today. We look forward to your questions.
    [The joint prepared statement of Admiral Grosklags and 
General Schmidle follows:]
  Joint Prepared Statement by VADM Paul A. Grosklags, USN, and LtGen 
                     Robert E. Schmidle, Jr., USMC
                              introduction
    Mr. Chairman, Senator Wicker, and distinguished members of the 
subcommittee, we thank you for the opportunity to appear before you 
today to discuss the Department of the Navy's aviation programs. Our 
testimony will provide background and rationale for the Department's 
fiscal year 2015 budget request for aviation programs aligning to our 
strategic priorities and budgetary goals.
    The United States is a maritime nation with global 
responsibilities. Our Navy and Marine Corps' persistent presence and 
multi-mission capability represent U.S. power projection across the 
global commons. They move at will across the world's oceans, seas, and 
littorals, and they extend the effects of the sea-base deep inland. 
Naval aviation provides our Nation's leaders with ``offshore options'' 
where needed, when needed. We enable global reach and access, 
regardless of changing circumstances, and will continue to be the 
Nation's preeminent option for employing deterrence through global 
presence, sea control, mission flexibility and when necessary, 
interdiction. We are an agile strike and amphibious power projection 
force in readiness, and such agility requires that the aviation arm of 
our naval strike and expeditionary forces remain strong.
    There are several central themes to our 2015 Naval Aviation Budget 
plan: fifth generation fighter/attack capability; persistent multi-role 
intelligence, surveillance, and reconnaissance; supporting capabilities 
such as electronic attack, maritime patrol, and vertical lift; robust 
strike weapons programs; and targeted modernization of the force for 
relevance and sustainability.
    First, we are acquiring F-35 fifth generation fighter/attack 
aircraft while maintaining sufficient TACAIR inventory capacity. Our 
plan will integrate fifth generation technologies into the carrier air 
wing and expeditionary forces while maintaining and modernizing the 
capability of the current TACAIR fleet. The F-35B will replace Marine 
Corps F/A-18 and AV-8B aircraft. The F-35C, F/A-18E/F, and EA-18G 
provide complementary capabilities that enhance the versatility, 
lethality, and survivability of our air wings. We have maintained our 
F-35B procurement profile achieving program procurement stability in 
line with the improvements in program accountability, discipline and 
transparency. However, due to fiscal constraints and Navy priorities, 
we were compelled to reduce F-35C procurement by 33 airframes across 
the future years defense program (FYDP). The overall F-35 development 
program is adequately resourced and has implemented realistic schedule 
planning factors to complete system development and demonstration. The 
Navy and Marine Corps are fully committed to the F-35B and F-35C 
variants as we believe this aircraft is on solid path to delivering 
required capabilities.
    The F/A-18A-F will continue to receive capability enhancements to 
sustain its lethality well into the next decade. Future avionics 
upgrades will enable network-centric operations for situational 
awareness and transfer of data to command-and-control nodes. To meet 
the demand for persistent, multi-role intelligence, surveillance, and 
reconnaissance (ISR) capability, the Navy and Marine Corps are building 
a balanced portfolio of manned and unmanned aircraft focused on 
missions in the maritime environment. The Unmanned Carrier Launched 
Airborne Surveillance and Strike (UCLASS) system will provide a 
persistent aircraft carrier-based ISR and strike capability as an 
integral part of carrier air-wing operations no later than the early 
part of the next decade. MQ-4C Triton will provide persistent land-
based maritime ISR and complement our P-8 Multi-Mission Maritime 
Aircraft; MQ-8 Vertical Takeoff and Landing Tactical Unmanned Aerial 
Vehicle (VTUAV)/Firescout will provide ISR support to our Littoral 
Combat Ships (LCS); and smaller unmanned systems as the RQ-21A Small 
Tactical Unmanned Aircraft System and RQ-7B Marine Corps Tactical UAS 
will provide the shorter duration, line-of-sight reconnaissance 
capability integral at the unit level.
    The fiscal year 2015 budget request enables naval aviation to 
continue recapitalization of our aging fleets of airborne early 
warning, maritime patrol, and vertical lift platforms. The Department 
is recapitalizing our fleet of E-2C airborne early warning aircraft 
with the E-2D. E-2D integrates a new electronically-scanned radar that 
provides a two-generation leap in technology with the capability to 
detect and track existing and emerging air-to-air and cruise missile 
threats in support of integrated air and missile defense. We have 
deployed our first P-8A squadron and are on a path to replace the P-3C 
by the end of the decade. Electronic attack capabilities, both carrier-
based and expeditionary, continue to mature with 11 of 16 EA-18G 
squadrons fielded or in transition, while we also continue development 
of the Next Generation Jammer (NGJ) to replace the legacy ALQ-99 
Tactical Jamming System.
    The Navy and Marine Corps are participating in Joint Future 
Vertical Lift efforts to identify leverage points for future rotorcraft 
investment. In fiscal year 2015, the Department continues to modernize 
vertical lift capability and capacity with procurement of MH-60R/S, AH-
1Z, UH-1Y, and MV-22B, and the continued development of the CH-53K and 
VXX (Presidential Helicopter replacement). The Special Purpose Marine 
Air-Ground Task Force-Crisis Response (SPMAGTF-CR), designed to support 
U.S. and partner security interests throughout the AFRICOM area of 
responsibility (AOR), leverages these vertical lift investments. The 
unparalleled speed and range of the MV-22B, together with the KC-130J, 
provides the SPMAGTF-CR with the operational reach to respond to crises 
throughout the AOR.
    Within our fiscal year 2015 budget request, the Department 
continues investment in strike weapons programs. These include the Air 
Intercept Missile (AIM-9X/BLK II); Small Diameter Bomb II (SDB II); the 
Joint Standoff Weapon (JSOW C-1); Tactical Tomahawk Cruise Missiles 
(TACTOM/BLK IV); the Offensive Anti-Surface Weapon (OASuW); the 
Advanced Anti-Radiation Guided Missile (AARGM); the joint Air-to-ground 
Missile (JAGM); and the Advanced Precision Kill Weapon System (APKWS 
II).
    These capabilities enable our Navy and Marine Corps warfighters to 
deter and dominate potential adversaries in any environment.
                           tactical aviation
F-35B/F-35C Lightning II
    The Department of the Navy remains firmly committed to both the F-
35B short take-off and vertical landing (STOVL) variant and the F-35C 
carrier variant (CV) of the Joint Strike Fighter (JSF) program, as they 
are essential to our Navy and Marine Corps aviation strategy and the 
Nation's security. F-35 will supplant much of the Navy's aging Tactical 
Aviation (TACAIR) fleet by replacing Navy and Marine Corps F/A-18A-D 
Hornets and the Marine Corps AV-8B Harrier. The incorporation of F-35B 
and F-35C aircraft into our naval force will provide the dominant, 
multi-role, fifth-generation capabilities that are essential across the 
full spectrum of combat operations to deter potential adversaries and 
enable future naval aviation power projection. F-35B is scheduled to 
achieve Initial Operational Capability (IOC) between July 2015 and 
December 2015 while the F-35C is scheduled to achieve IOC between 
August 2018 and February 2019.
    The Marine Corps will leverage the F-35B/C capabilities to ensure 
our TACAIR is able to provide fifth-generation capabilities in support 
of our ground warriors and strike missions. The concept is one aircraft 
capable of multiple missions, providing the Marine Air Ground Task 
Force (MAGTF) with flexible expeditionary basing options, either afloat 
or ashore, and superior technology to dominate the fight. Our 
requirement for expeditionary tactical aircraft has been demonstrated 
repeatedly since the inception of Marine aviation over 100 years ago. 
Given the threats we will face in the future, the F-35B is clearly the 
aircraft of choice to meet our expeditionary operating requirements at 
sea and ashore. Similarly, in the carrier strike group (CSG), the F-
35C, F/A-18E/F, and EA-18G, operating together, provide survivable, 
long-range strike capability and persistence in an anti-access/area-
denied environment. F-35C will provide the CSG commanders greater 
tactical agility and strategic flexibility to counter a broad spectrum 
of threats and win in operational scenarios that cannot be addressed by 
currently fielded aircraft.
    The Department of Defense (DOD) established the F-35 program with a 
planned measure of concurrent development and production that balanced 
cost, risk, and need for TACAIR modernization. Concurrency, however, is 
a transient issue in which risks progressively decline through the end 
of SDD. The F-35 program has worked with the prime contractor 
(Lockheed-Martin) to implement a concurrency management structure and 
refine the estimate of concurrency costs based on discrete test and 
qualification events. As more testing is completed, concurrency risks 
are progressively reduced as the design is confirmed or issues 
identified requiring changes are incorporated. Earlier aircraft are 
open to a greater need for changes, and as succeeding low-rate initial 
production (LRIP) lots are built, their cumulative requirements for 
retrofit modifications decline. Furthermore, beginning with LRIP 5, 
Lockheed-Martin is contractually obligated to share in the costs 
associated with concurrency. LRIP 6/7 will further reduce the 
government's exposure to overruns as Lockheed-Martin is required to pay 
for all cost overruns via firm fixed-price contracts.
    F-35 sustainment costs remain a concern. The Navy, working in 
concert with the Joint Program Office (JPO), is analyzing options, both 
inside and outside of the JPOs span of control to reduce operating 
cost. These include, reviewing basing options and sequencing, unit 
level manpower/squadron size, and discrete sustainment requirements. 
Through these combined efforts, the Department believes we will 
converge on an affordable F-35 sustainment strategy that meets both the 
required level of Service/Partner performance and lowers the total 
life-cycle cost of the program.
    The fiscal year 2015 President's budget requests $1.0 billion in 
Research, Development, Test, and Evaluation, Navy (RDT&E,N) to continue 
the F-35 SDD program and $2.4 billion in Aircraft Procurement, Navy 
(APN) for eight F-35 aircraft (six F-35B and two F-35C) with associated 
aircraft hardware, modification requirements, and spares. The request 
includes funding for Block 4 systems engineering and planning to 
achieve follow-on capabilities for emerging and evolving threats and 
additional weapons integration. Additionally, the Marine Corps is 
pursuing the procurement of additional F-35s to replace the six AV-8B 
Harriers that were lost due to enemy action in Afghanistan on 14 
September 2012.
    The Navy is aware of the challenges that remain on the F-35 
program, but we believe the program continues to demonstrate increased 
stability, accountability, and fiscal discipline. The F-35 is essential 
to the future of Navy/Marine Corps aviation and the Department is fully 
committed to the F-35B and F-35C variants of this program. The Navy 
continues to closely monitor all F-35 program aspects (development, 
production, and sustainment) to ensure that this capability is obtained 
at the lowest cost and at the earliest date possible, to meet our 
national security obligations.
F/A-18 Overview
    The F/A-18 Hornet continues to meet readiness and operational 
commitments. There are 26 Navy Super Hornet squadrons with 513 F/A-18E/
Fs; deliveries and squadron transitions will continue through 2016. 
There are 11 Navy and 11 Marine Corps F/A-18 A-D Active component 
squadrons with 618 Hornets. Super Hornets and F/A-18A-D Hornets have 
conducted more than 200,000 combat missions since September 11, 2001.
F/A-18 A/B/C/D Hornet
    The fiscal year 2015 President's budget requests $250.3 million in 
APN to implement aircraft commonality programs to maintain relevant 
capability and improve reliability and ensure structural safety of the 
inventory of 618 F/A-18 Hornets of which $55.7 million is for the 
service life extension program (SLEP).
    The F/A-18A-D was designed for, and has achieved, a service life of 
6,000 flight hours. These aircraft have performed as expected through 
their design life and now service life management of this aircraft is 
intended to extend this platform well beyond its designed 6,000 flight 
hours. Through detailed analysis, inspections, and, as required, 
structural repairs, the Navy has been successful in achieving 8,000 
flight hours per aircraft and is pursuing a strategy to go as high as 
10,000 flight hours on select aircraft. Continued investment in SLEP, 
the high flight hour (HFH) program, program related engineering, and 
program related logistics is critical for our flight hour extension 
strategy and to sustain the combat relevancy of these aircraft.
    In order to maintain warfighting relevancy in a changing threat 
environment, we will continue to procure and install advanced systems 
such as Joint Helmet-Mounted Cueing Systems (JHMCS), High Order 
Language (HOL) Mission Computers, ALR-67v3, ALQ-214v5, Multi-Function 
Information Distribution System (MIDS), APG-73 radar enhancements, 
Advanced Targeting FLIR (ATFLIR) upgrades, and LITENING for the Marine 
Corps on selected F/A-18A-D aircraft.
F/A-18 E/F Super-Hornet
    The fiscal year 2015 President's budget requests $342.7 million in 
APN to implement aircraft commonality programs, maintain relevant 
capabilities, improve reliability, and ensure structural safety of the 
Super-Hornet fleet; and $13.8 million RDT&E,N to support the F/A-18E/F 
service life assessment program (SLAP).
    The F/A-18E/F significantly improves the survivability and strike 
capability of the carrier air wing. The Super-Hornet provides increased 
combat radius and endurance, and a 25 percent increase in weapons 
payload over F/A-18A-D Hornets. The production program continues to 
deliver on-cost and on-schedule.
    The Super-Hornet uses an incremental approach to incorporate new 
technologies and capabilities, to include: digital communication system 
(DCS) radio, Multi-Functional Information Distributed System (MIDS)-
Joint Tactical Radio System (JTRS), JHMCS, ATFLIR with shared real-time 
video, accurate navigation (ANAV), digital memory device (DMD), 
distributing targeting system (DTS), infrared search and track (IRST) 
and continued advancement of the APG-79 AESA radar.
    The $13.8 million RDT&E,N request supports the F/A-18E/F SLAP 
requirement. Currently, the F/A-18 E/F fleet, on average, has flown 
approximately 36 percent of the design life of 6,000 total flight 
hours. The remaining design service-life will not be adequate to meet 
future operational commitments through 2035. In 2008, the Navy 
commenced a three phased F/A-18E/F SLAP to analyze actual usage versus 
structural test data and determine the feasibility of extending F/A-
18E/F service life from 6,000 to 9,000 flight hours via a follow-on 
SLEP. The F/A-18E/F SLAP will identify the necessary inspections and 
modifications required to achieve 9,000 flight hours and increase total 
arrested landings and catapults beyond currently defined life limits. 
This extension is currently assessed as low risk. The service life 
management plan philosophy has been applied to the F/A-18E/F fleet at 
an earlier point in its lifecycle than the F/A-18A-D. This will 
facilitate optimization of Fatigue Life Expended, flight hours, and 
total landings, thereby better aligning aircraft service life with 
fleet requirements.
AV-8B Harrier
    The fiscal year 2015 President's budget requests $65.5 million in 
APN funds to continue the incorporation of obsolescence replacement/
readiness management plan systems; electrical and structural changes; 
upgrades to air-to-air weapon system employment and integration 
components; inventory sustainment and upgrade efforts to offset 
obsolescence and attrition; LITENING Pod upgrades; and F402-RR-408 
engine safety and operational changes.
    The fiscal year 2015 President's budget requests $25.4 million in 
RDT&E,N funds to continue design, development, integration and test of 
various platform improvements, to include: engine life management 
program, escape systems, joint mission planning system, and block 
upgrades to various mission and communication systems, navigation 
equipment, weapons carriage, countermeasures, and the obsolescence 
replacement/readiness management plan.
    The AV-8B continues to be deployed in support of operational 
contingencies. Each Marine Expeditionary Unit (MEU) deploys with 
embarked AV-8Bs. The AV-8B, equipped with LITENING targeting pods and a 
video downlink to remotely operated video enhanced receiver ground 
stations, precision strike weapons, and beyond visual range air-to-air 
radar missiles, has continued to be a proven, invaluable asset for the 
MAGTF and joint commander across the spectrum of operations. During the 
first half of fiscal year 2015 the AV-8B will receive the H6.1 
operational flight program enabling full integration of the Generation 
4 LITENING targeting pod that includes correction of software 
deficiencies to smart weapon employment and targeting. During 2015, the 
program will also continue work on the H6.2 operational flight program 
to integrate Federal Aviation Administration (FAA) compliant RNP/RNAV 
capability and correct additional software deficiencies identified 
through combat operations. As an out-of-production aircraft, the AV-8B 
program will continue its focus on sustainment efforts to mitigate 
significant legacy inventory shortfalls, maintain airframe integrity, 
achieve full FLE, and address reliability and obsolescence issues of 
avionics and subsystems. The airborne variable message formal (VMF) 
terminals will be installed in AV-8B to replace the current digital-
aided close air support (CAS) technology. Additional efforts include 
tactical datalink and sensor improvements in support of operational 
contingencies until transition to the F-35.
    Operation Odyssey Dawn and Enduring Freedom, as well as current 
operations in the Horn of Africa, confirm the expeditionary advantages 
of STOVL capabilities by placing the Harrier as the closest multi-role 
fixed-wing asset to the battlefield. Such dynamic support greatly 
reduces transit times to the battlefield and enables persistent CAS 
aircraft without strategic tanking assets. Airframe sustainment 
initiatives, capability upgrades, and obsolescence mitigation is 
essential and must be funded to ensure the AV-8B remains lethal and 
relevant.
TACAIR Inventory Management
    The strike fighter shortfall (SFS) associated with the fiscal year 
2015 President's budget is manageable. The shortfall is currently 
predicted to peak at approximately 35 aircraft in fiscal year 2023; 20 
of which are Marine Corps aircraft and 15 Navy aircraft.
    The Navy and Marine Corps continue to carefully monitor strike 
fighter inventory requirements and projected availability. The 
Department's inventory forecasting tool (IFT) projects the combined 
effects of deliveries, force structure, aircraft usage rates, 
structural life limits, depot turnaround time, fatigue life expenditure 
(FLE), arrested and field landings, and catapult launches on the total 
strike fighter aircraft inventory. The IFT will be replaced by the 
naval synchronization tool (NST) no later than the end of fiscal year 
2014. This transition will enable increased fidelity of aircraft 
inventory projections and management.
    In addition, through lean-six sigma black belt analysis of the 
entire Navy F/A-18A-D inventory, the Marine Corps has created a TACAIR 
2030 Roadmap that drives the IFT predicted 20 aircraft shortfall to 
zero, while saving (cost avoidance) of $1.14 billion. As F-35B enters 
service, it will initially replace the AV-8B, followed by the Marine 
Corps F/A-18A-Ds. The last active Marine Corps F/A-18 squadron is 
scheduled to transition in 2029 and the current Marine Corps F/A-18 
Reserve squadron will not receive its F-35Bs until fiscal year 2030. 
The Marine Corps also plans to source AV-8Bs as Strike fighters in lieu 
of sourcing for F/A-18s in contingency operations.
    Current IFT and Marine Corps TACAIR 2030 roadmap assumptions: The 
Navy will maintain its current tactical fixed-wing force structure; 
utilization rates will not increase; the delivery rate of F-35B/C 
remains as planned in the fiscal year 2015 FYDP; and FA-18 A-D HFH 
inspections/repair, and SLEP efforts on candidate aircraft allows fleet 
readiness center (depot) inducted aircraft to reach an extended 
authorized life of 9,000 hours, with a subset of those aircraft 
attaining 10,000 flight hours (a by bureau number squadron mapping is 
contained in the TACAIR 2030 Roadmap).
Airborne Electronic Attack/EA-6B Prowler
    The fiscal year 2015 President's budget request includes $15.8 
million in RDT&E,N for electronic warfare (EW) counter response; $7.8 
million RDT&E,N for MAGTF EW; $34.8 million in APN for airborne 
electronic attack (AEA) systems; $11.0 million in APN for all EA-6B 
series aircraft; and $14.8 million APN for MAGTF EW.
    Currently, there are 42 EA-6Bs in the Navy and Marine Corps. Of 
these aircraft, 37 are distributed to 6 active squadrons, 1 Reserve 
squadron, 2 test squadrons, and 1 Fleet Replacement Squadron, and 5 
aircraft are in depot repair. The total includes 10 Navy and Marine 
Corps Improved Capability (ICAP) II aircraft and 32 ICAP III aircraft. 
Following the final Navy EA-6B transition to EA-18G in 2015, all 
remaining ICAP III EA-6Bs will transfer to and be operated by the 
Marine Corps, or be in pipeline for final disposition. Final retirement 
of the EA-6B from the Department's inventory will be in 2019.
    Marine aviation is on a path towards a distributed AEA system of 
systems that is a critical element in achieving the MAGTF EW vision: A 
composite of manned and unmanned surface, air, and space assets on a 
fully collaborative network providing the MAGTF commander control of 
the electromagnetic spectrum when and where desired. Included in this 
plan are the ALQ-231 Intrepid Tiger II communications jammer, UAS EW 
payloads, a software reprogrammable payload and an EW services 
architecture to facilitate collaborative networked electronic warfare 
battle management.
    Intrepid Tiger II development and procurement is in response to 
Marine Corps requirements for increased precision EW capability and 
capacity across the MAGTF and provides EW capability directly to 
tactical commanders without reliance upon the limited availability of 
the low density/high demand EA-6B Prowler. The Intrepid Tiger II is 
currently carried on the AV-8B, has successfully completed six 
deployments in U.S. Central Command's (CENTCOM) AOR, and is currently 
deployed with both the 13th and 22nd MEUs. Integration on Marine Corps 
F/A-18 aircraft is scheduled to be completed in the second quarter of 
fiscal year 2014 and on Marine Corps rotary-wing aircraft by the second 
quarter of fiscal year 2015.
Airborne Electronic Attack/EA-18G Growler
    The fiscal year 2015 President's budget request is $43.5 million in 
APN for procurement of avionics peculiar ground support equipment for 
the EA-18G aircraft; $18.7 million in RDT&E,N for integration of 
jamming techniques optimization improvements and evolutionary software 
development; and $246.9 million RDT&E,N for NGJ.
    In 2009, the Navy began transition from EA-6Bs to EA-18Gs. The 
first EA-18G squadron deployed in an expeditionary role in November 
2010 to Iraq, and subsequently redeployed on short notice to Italy in 
March 2011, in support of Operation New Dawn and Operation Unified 
Protector. The EA-18G is a critical enabler in the joint force, 
bringing to the fight fully netted warfare capabilities that will 
provide electromagnetic spectrum dominance in an electromagnetic 
maneuver warfare environment.
    The first carrier-based EA-18G squadron deployed in May 2011. Three 
Active component Navy expeditionary squadrons, 7 of 10 carrier based 
squadrons, and 1 Reserve squadron are in, or have completed, transition 
to the EA-18G. The 10 carrier based EA-18G squadrons will fulfill Navy 
requirements for AEA; 6 expeditionary EA-18G squadrons will fill the 
joint, high-intensity AEA capability required by the Joint Forces 
Commander previously fulfilled by the Navy and Marine Corps EA-6B. The 
Navy will be divested of EA-6Bs by 2015; the Marine Corps by 2019. The 
inventory objective is for 138 EA-18G aircraft. Since the initial 
deployment, Growlers have flown more than 2,300 combat missions, have 
expended on average a service-life of approximately 6 percent of the 
7,500 total flight hours per aircraft, and are meeting all operational 
commitments.
    The NGJ is new electronic warfare technology that is the 
replacement for the 41-year-old ALQ-99, currently the only Navy and 
Joint airborne tactical jamming system pod. The ALQ-99 has limited 
capability to counter tactically and technically advanced threats, is 
increasingly difficult and costly to maintain, and has a vanishing 
industrial supplier base. Navy/DOD requires NGJ to meet current and 
emerging electronic warfare threats. NGJ will have the necessary power 
and digital techniques to counter increasingly advanced and 
sophisticated adversary electronic warfare search, surveillance, and 
targeting-radars and communications systems. NGJ will be DOD's only 
comprehensive tactical AEA capability, supporting all Services and 
joint/coalition partners, and will be implemented in three increments: 
mid-band (Increment 1), low-band (Increment 2), and high-band 
(Increment 3). NGJ is designed to provide improved capability in 
support of joint and coalition air, land, and sea tactical strike 
missions and is critical to the Navy's vision for the future of strike 
warfare. Fiscal year 2015 funding is vital to maintain schedule, 
allowing the program to transition into the technology maturation and 
risk reduction (TMRR) development phase and ensure timely start of the 
critical EA-18G long lead integration activities. Planned fiscal year 
2015 TMMR activities include: completion of the system functional 
review, development, and release of the Request for Proposal for the 
engineering and manufacturing development phase, maturation of software 
specification requirements, and conduct of the technology readiness 
assessment demonstrations. Fiscal year 2015 constitutes the bulk of a 
25-month effort to achieve technology readiness level (TRL) 6 in 
support of planned Milestone B in fiscal year 2016.
E-2D Advanced Hawkeye
    The fiscal year 2015 President's budget requests $193.2 million in 
RDT&E,N for continuation of added capabilities to include: in-flight 
refueling, tactical targeting network technology, secret internet 
protocol router chat, and the advanced mid-term interoperability 
improvement program; $1,046 million in APN for four full rate 
production (FRP) Lot 3 aircraft (the second year of a 25 aircraft 
multi-year procurement (MYP) contract covering fiscal years 2014-2018), 
advance procurement for fiscal year 2016 FRP Lot 4 aircraft; and 
economic ordering quantity funding for the MYP for fiscal years 2017 
and 2018.
    The E-2D Advanced Hawkeye (AHE) is the Navy's carrier-based 
airborne early warning and battle management command and control 
system. The E-2D AHE provides theater air and missile defense and is 
capable of synthesizing information from multiple onboard and off-board 
sensors, making complex tactical decisions and then disseminating 
actionable information to Joint Forces in a distributed, open-
architecture environment.
    Utilizing the newly developed AN/APY-9 mechanical/electronic scan 
array radar and the cooperative engagement capability system, the E-2D 
AHE works in concert with tactical aircraft and surface-combatants 
equipped with the Aegis combat system to detect, track and defeat air 
and cruise missile threats at extended range and provide strike group 
commanders the necessary required reaction time.
    The first Fleet E-2D squadron (VAW-125) has transitioned and was 
designated ``safe for flight'' in January 2014. IOC is on track for the 
first quarter of fiscal year 2015.
                        assault support aircraft
MV-22
    The fiscal year 2015 President's budget requests $ 61.2 million in 
RDT&E,N for continued product improvements and $1.53 billion in APN for 
procurement and delivery of 19 MV-22s (Lot 19). Fiscal year 2015 will 
be the third year of the follow-on V-22 MYP contract covering fiscal 
years 2013-2017. The funds requested in the fiscal year 2015 
President's budget request fully fund Lot 19 and procures long-lead 
items for fiscal year 2016 Lot 20 MV-22 aircraft. The Marine Corps 
continues to field and transition aircraft on time. The APN request 
includes $135.6 million to support the ongoing operations and safety 
improvement programs (OSIP), including correction of deficiencies and 
readiness.
    MV-22 Osprey vertical flight capabilities coupled with the speed, 
range, endurance of fixed-wing transports, are enabling effective 
execution of current missions that were previously unachievable on 
legacy platforms. This capability is at the core of the Marine Corps' 
recently fielded SPMAGTF-CR. As the MV-22 approaches the 200,000 flight 
hour milestone, it is on pace to be one of the safest of any DOD 
aircraft dating back to the 1960s.
    The follow-on MYP, which began in fiscal year 2013, will procure at 
least 93 MV-22s over 5 years and includes significant savings of 
approximately $1 billion when compared to single year procurements. The 
stability of the MYP supports the Marine Corps' need to retire old 
aircraft and field new and improved capabilities. This stability also 
benefits the supplier base and facilitates cost reductions on the part 
of both the prime contractor and sub-tier suppliers.
    Through introduction of the Osprey tilt-rotor capability into 
combat, the service has gained valuable insight with respect to 
readiness and operating costs. Since 2010, MV-22 mission capability 
rates have increased 14 percent. During the same period, cost per 
flight hour rates decreased 14 percent. To keep these improvements on 
track, a readiness OSIP was introduced in fiscal year 2012. Fiscal year 
2015 OSIP provides a necessary and stable source of crucial 
modification funding as the Ospreys continue to improve readiness and 
reduce operating cost.
CH-53K Heavy Lift Replacement Program
    The fiscal year 2015 President's budget requests $573.2 million 
RDT&E,N to continue engineering and manufacturing development of the 
CH-53K. Since completing its critical design review in July 2010, the 
CH-53K program commenced system capability and manufacturing process 
demonstration, has nearly completed assembly of the first five test 
aircraft; one Ground Test Vehicle (GTV) and four engineering 
development model (EDM) aircraft. In December 2013, the program entered 
developmental test. The GTV has successfully completed numerous ground 
test requirements, to include the ``bare head light-off.'' The program 
is currently on schedule to execute its first flight by the end of 
2014. During fiscal year 2015, the program will continue to execute 
developmental test flights, deliver the final EDM, and start production 
of system demonstration test article aircraft which will be production 
representative aircraft utilized for Operational Test.
    The new-build CH-53K will fulfill land and sea based heavy-lift 
requirements not resident in any of today's platforms, and contribute 
directly to the increased agility, lethality, and presence of joint 
task forces and MAGTFs. The CH-53K will transport 27,000 pounds of 
external cargo out to a range of 110 nautical miles, nearly tripling 
the CH-53E's lift capability under similar environmental conditions, 
while fitting into the same shipboard footprint. The CH-53K will also 
provide unparalleled lift capability under high-altitude and hot 
weather conditions, greatly expanding the commander's operational 
reach.
    Maintainability and reliability enhancements of the CH-53K will 
improve aircraft availability and operational effectiveness over the 
current CH-53E with improved cost effectiveness. Additionally, 
survivability and force protection enhancements will dramatically 
increase protection for both aircrew and passengers, thereby broadening 
the depth and breadth of heavy lift operational support to the joint 
task force and MAGTF commander. Expeditionary heavy-lift capabilities 
will continue to be critical to successful land and sea-based 
operations in future anti-access, area-denial environments, enabling 
sea-basing and the joint operating concepts of force application and 
focused logistics.
    The H-53E aircraft currently in service continue to meet 
unprecedented operational demand but are approaching 30 years of 
service and becoming ever more challenging to maintain. To keep the 
``Echo'' viable until the ``Kilo'' enters service, the fiscal year 2015 
President's budget requests $38.2 million in APN for both near and mid-
term enhancements. These modifications include condition based 
maintenance software upgrades, T-64 engine reliability improvement 
program kit installations, Critical survivability upgrade (CSU) 
installations, smart multi-function color display (SMFCD) and 
sustainment efforts such as Kapton wiring replacement and improved 
Engine Nacelles. With the exception of the CSU and SMFCD, the same 
modifications are also made to the Navy MH-53E helicopters.
                      attack and utility aircraft
UH-1Y//AH-1Z
    The fiscal year 2015 President's budget requests $44.1 million in 
RDT&E,N for continued product improvements and $859.7 million in APN 
for 26 H-1 upgrade aircraft: 15 UH-1Y and 11 AH-1Z. The program is a 
key modernization effort designed to resolve existing safety 
deficiencies and enhance operational effectiveness of the H-1 fleet. 
The 85 percent commonality between the UH-1Y and AH-1Z will 
significantly reduce life-cycle costs and the logistical footprint, 
while increasing the maintainability and deployability of both 
aircraft. The program will provide the Marine Corps with 349 H-1 
aircraft through a combination of new production and a limited quantity 
of remanufactured aircraft.
    The H-1 Upgrades Program is replacing the Marine Corps' UH-1N and 
AH-1W helicopters with state-of-the-art UH-1Y ``Yankee'' and AH-1Z 
``Zulu'' aircraft. The new aircraft are fielded with integrated glass 
cockpits, world-class sensors, and advanced helmet-mounted sight and 
display systems. The future growth plan includes a digitally-aided, 
close air support system designed to integrate these airframes, 
sensors, and weapons systems together with ground combat forces and 
other capable DOD aircraft. Integration of low-cost weapons such as the 
Advanced Precision Kill Weapon System II (APKWS II) has increased 
lethality while reducing collateral damage.
    The UH-1Y aircraft achieved IOC in August 2008 and FRP in September 
2008. The ``Yankee Forward'' procurement strategy prioritized UH-1Y 
production in order to replace the under-powered UH-1N fleet as quickly 
as possible. The AH-1Z completed its operational evaluation (OT-II3C) 
in June 2010, and received approval for FRP in November 2010. The AH-1Z 
achieved IOC in February 2011. As of February 19, 2013, 126 aircraft 
(89 UH-1Ys and 37 AH-1Zs) have been delivered to the Fleet Marine 
Force; an additional 58 aircraft are on contract and in production. The 
last 2 aircraft from Lot 7 will deliver in March/April 2014. Lot 8 
deliveries are progressing on or ahead of schedule.
    In December 2011, to address existing attack helicopter shortfalls, 
the Marine Corps decided to pursue an all AH-1Z build new (ZBN) 
procurement strategy and leave AH-1W airframes in the inventory rather 
than removing them from service to begin the remanufacture process. The 
transition to an all ZBN airframe strategy began with Lot 10 (fiscal 
year 2013) as reflected in the current Marine Corps program of record. 
The aircraft mix is 37 remanufactured AH-1Z and 152 ZBN aircraft. The 
total aircraft procurement numbers remain the same at 160 UH-1Ys and 
189 AH-1Zs for a total of 349 aircraft.
MH-60 (Overview)
    MH-60 Seahawks have consistently met readiness and operational 
commitments. There will be 38 Navy Seahawk squadrons with 275 MH-60Ss 
and 251 MH-60Rs when transitions from the SH-60B, SH-60F, and HH-60H 
are complete. Production and squadron transitions will continue through 
2017. Over the last 12 years of combat operations, deployed ashore and 
aboard our aircraft carriers, amphibious ships, and escort warships at 
sea, Navy helicopters have provided vital over-watch and direct support 
to our troops in combat, on the ground, and in multiple theaters of 
operation and in a variety of missions including support to Special 
Operations Forces, air ambulance, surface warfare, anti-submarine 
warfare, mine warfare, logistics support and humanitarian assistance/
disaster relief.
MH-60R Seahawk
    The fiscal year 2015 President's budget requests $1.04 billion in 
APN for 29 helicopters. The production program continues to deliver on-
cost and on-schedule.
    The MH-60R multi-mission helicopter provides strike group 
protection and adds significant capability in coastal littorals and 
regional conflicts. The MH-60R represents a significant avionics 
improvement to H-60 series helicopters by enhancing primary mission 
areas of undersea warfare and surface warfare which includes the fast 
attack craft/fast in-shore attack craft (FAC/FIAC) threat response 
capabilities. The MH-60R is the sole organic air ASW asset in the CSG 
and critical to its defense. Additionally, it serves as a key 
contributor to theater level ASW. The MH-60R also employs advanced 
sensors and communications to provide real-time battlespace management 
with a significant, passive, over-the-horizon targeting capability. 
Secondary mission areas include search and rescue, vertical 
replenishment, naval surface fire support, logistics support, personnel 
transport and medical evacuation.
    The $11.5 million RDT&E,N request supports the MH-60R Test Program 
consisting of numerous system upgrades and pre-planned product 
improvements, to include the digital rocket launcher with Advanced 
Precision Kill Weapon System (APKWS II) and the helicopter infra-red 
suppression system.
MH-60S Seahawk
    The fiscal year 2015 President's budget requests $210 million in 
APN for 8 helicopters to complete the production program of 275 total 
helicopters. The production program continues to deliver on-cost and 
on-schedule.
    The MH-60S multi-mission helicopter provides strike group 
protection and adds significant capability in coastal littorals and 
regional conflicts. The MH-60S represents a significant avionics 
improvement to H-60 series helicopters by enhancing primary mission 
areas of mine warfare and surface warfare which includes the FAC/FIAC 
threat response capabilities. Secondary mission areas include combat 
search and rescue, support to Special Operations Forces, vertical 
replenishment, logistics support, personnel transport and medical 
evacuation.
    The $25.9 million RDT&E,N request supports the MH-60S test program 
consisting of numerous system upgrades and pre-planned product 
improvements including: airborne mine countermeasures (AMCM); and armed 
helicopter FAC/FIAC Defense.
    Armed helo block 3A OT was completed in June 2007 and block 3B 
(added Link 16 capability) OT was completed in November 2009. Test and 
Evaluation (T&E) of fixed forward firing weapon (FFW) (20mm gun system) 
was completed in fiscal year 2012. T&E of initial FFW unguided rocket 
(UGR) capability was completed in fiscal year 2013. T&E for FFW digital 
rocket launcher (DRL) with Advanced Precision Kill Weapon System and 
expanded UGR capability for the FAC/FIAC threat is in work and planned 
to complete in fiscal year 2015. Planned AMCM initial operational test 
and evaluation (IOT&E) and follow-on operational test and evaluation 
periods were changed to Operational Assessments with the final IOT&E 
aligned with LCS MCM Mission Package IOT&E.
                       executive support aircraft
VH-3D/VH-60N Executive Helicopter Series
    The VH-3D and VH-60N are safely performing the executive lift 
mission worldwide. As these aircraft continue to provide seamless 
vertical lift for the President and Vice President of the United 
States, the Navy is working closely with HMX-1 and industry to sustain 
these aircraft until a Presidential Replacement platform is fielded. 
The fiscal year 2015 President's budget requests an investment of $71.3 
million of APN to continue programs that will ensure the in-service 
Presidential fleet remains a safe and reliable platform. Ongoing VH-60N 
efforts include the cockpit upgrade program, engine upgrade program, 
and a communications suite upgrade (wide band line of sight). The 
continuing structural enhancement program and the obsolescence 
management program applies to both VH-60N and VH-3D. The VH-3D cockpit 
upgrade program, a fiscal year 2012 new start program, addresses a 
number of obsolescence issues. Continued investments in the in-service 
fleet will ensure continued safe and reliable execution of the 
Executive Lift mission. These technology updates for legacy platforms 
will be directly leveraged for the benefit of the ensuing replacement 
program (VXX).
VXX Presidential Helicopter Replacement Aircraft
    The fiscal year 2015 President's budget request includes $388.1 
million of RDT&E,N for continuing efforts on VXX, and primarily funds 
the EMD contract and government activities associated with the EMD 
phase of the program.
    Significant progress has been made in the past year and the program 
requirements and acquisition strategy have now been approved. The 
acquisition approach is based on integration of mature subsystems into 
an air vehicle that is currently in production. This strategy will 
enable the program to proceed directly into the EMD phase. The 
Milestone B review and subsequent contract award are planned to occur 
during fiscal year 2014. The first of the planned inventory of 21 
aircraft could begin fielding as early as 2020.
                          fixed-wing aircraft
KC-130J
    The fiscal year 2015 President's budget requests $92.3 million for 
procurement of one KC-130J included in the second year of the multi-
service MYP request, one fuselage trainer, and continued product 
improvements of $21.6 million. Targeted improvements include aircraft 
survivability through advanced electronic countermeasure modernization, 
and obsolescence upgrades to the Harvest HAWK ISR/weapon mission kit.
    Fielded throughout our Active Force, the Marine Corps declared IOC 
for the KC-130J transition in 2005; bringing increased capability, 
performance and survivability with lower operating and sustainment 
costs to the MAGTF. Forward deployed in support of ongoing operations 
since 2005, the KC-130J continues to deliver marines, fuel and cargo 
whenever and wherever needed. In 2014 the KC-130J remains in high 
demand, providing tactical air-to-air refueling, assault support, close 
air support and multi-sensor imagery reconnaissance (MIR) in support of 
OEF, special purpose MAGTF crisis response, and deployed MEUs.
    Deployed in support of OEF since fielding in 2010, the bolt-on/
bolt-off Harvest HAWK ISR/weapon mission kit for the KC-130J continues 
to provide the extended MIR and CAS required by Marine forces in 
Afghanistan. Five mission kits have been delivered to date, with one 
more kit on contract to deliver in fiscal year 2014. Funding included 
in the fiscal year 2015 budget request will be used to maintain 
operational relevance of this mission system through Hellfire P4 
compatibility and the addition of a full motion video transmit and 
receive capability.
    The Marine Corps has funded 52 of the 79 KC-130J program of record. 
The 3 aircraft included in the fiscal year 2013 budget will complete 
the Active component requirement of 51 aircraft. The Marine Corps will 
use the Active component backup aircraft to accelerate the Reserve 
component transition from the KC-130T aircraft to the more capable, 
more efficient, KC-130J beginning in fiscal year 2014. The aircraft 
requested in the fiscal year 2015 President's budget will continue to 
increase KC-130J inventory as we strive to achieve full operational 
capability (FOC) in the Reserve component. Delays in procurement would 
force the Marine Corps to sustain the KC-130T aircraft longer than 
planned at an increased cost.
P-8A Poseidon
    The fiscal year 2015 President's budget requests $308.0 million in 
RDT&E,N for integrated development and associated testing and $2.05 
billion for procurement of eight FRP P-8A Poseidon aircraft which are 
scheduled to begin delivery in May 2017. APN funding includes advanced 
procurement for the subsequent FRP procurement lot. The P-8A Poseidon 
recapitalizes the maritime patrol anti-submarine warfare (ASW), anti-
surface warfare (ASUW) and armed ISR capability currently resident in 
the P-3C Orion. The P-8A combines the proven reliability of the 
commercial 737 airframe with avionics that enables integration of 
modern sensors and robust communications. P-8A achieved IOC when the 
first fleet squadron (VP-16) deployed to the Western Pacific with six 
aircraft in November 2013. As of February 2014, three Fleet squadrons 
have completed transition to P-8A. All Fleet squadrons are scheduled to 
complete transition by the end of fiscal year 2019. The P-8A program is 
meeting all cost, schedule, and performance parameters in accordance 
with the approved acquisition program baseline.
    Boeing has delivered 13 aircraft (LRIP I/II) to the fleet as of 
February 2014. LRIP III (11 aircraft), LRIP IV (13 aircraft), and FRP 1 
(16 aircraft) are under contract, with the contract for FRP 1 (16 
aircraft) signed on February 25, 2014. The fiscal year 2015 budget 
proposes to procure eight P-8As. This will sustain the P-3C to P-8A 
transition in the Fleet but is a reduction of eight aircraft from the 
fiscal year 2014 request. In the fiscal year 2015 request, we were 
compelled by fiscal constraints to lower the final P-8A inventory 
objective from 117 to 109 aircraft, reducing procurement over the FYDP 
by 8 aircraft. The warfighting requirement remains 117 aircraft; 
however the revised inventory objective for 109 aircraft will provide 
adequate capacity at acceptable levels of risk.
    As fleet deliveries of the Increment 1 configuration accelerate, 
integration and testing of P-8A Increment 2 capability upgrades 
continues. In particular, Phase 1 of P-8A Increment 2 multi-static 
active coherent ASW capability began initial flight testing in January 
2014 and is on-track for IOT&E and fleet introduction in late 2014. The 
2015 request also continues the prototyping and development of the more 
extensive P-8A Increment 3 upgrades, which expand the P-8A evolutionary 
acquisition strategy to deliver the next level of required P-8A 
capability.
P-3C Orion
    In fiscal year 2015, $2.8 million in APN is requested for P-3C 
airframe and mission systems sustainment. Funding is for continued wing 
modifications and mission systems sustainment for P-3C aircraft that 
will remain in service until the end of the decade. The legacy P-3C 
fleet continues to provide ASW, ASUW, and ISR support for joint and 
naval operations worldwide. The P-3C is being sustained to maintain 
warfighting capability and capacity until completion of P-8A transition 
in fiscal year 2019.
    The P-3C aircraft is well beyond the original planned fatigue life 
of 7,500 hours for critical components, with an average airframe usage 
of over 18,000 hours. Since February 2005, the Navy's fatigue life 
management program has identified over 140 P-3 aircraft with fatigue 
damage beyond acceptable risk, resulting in either temporary or 
permanent grounding of each. P-3 groundings due to known material 
fatigue will continue for the remainder of the P-3 program, and unknown 
fatigue issues will continue to present persistent risk until P-8A 
transition is complete. To date, $1.3 billion has been invested in P-3 
wing sustainment, which has improved the overall structural health of 
the P-3 fleet. As of February 2014, there are currently 84 P-3C mission 
aircraft available.
EP-3 Aries Replacement/Sustainment
    In fiscal year 2015, the President's budget request is $32.9 
million in APN for EP-3 Aries replacement/sustainment. The APN request 
supports the installation and sustainment of multi-intelligence 
capabilities and modifications necessary to meet emergent classified 
requirements. These efforts are necessary to keep the platform viable 
until the EP-3 capabilities are recapitalized.
    The EP-3E Aries is the Navy's premier manned maritime intelligence, 
surveillance, reconnaissance, and targeting (MISR&T) platform. The 
joint airborne signals intelligence (SIGINT) common configuration 
includes SIGINT spiral upgrades. These upgrades, in conjunction with 
Secretary of Defense and the ISR Task Force (ISR TF) surge efforts, are 
fielding a robust multi-intelligence (INT) capability inside the FYDP. 
Multi-INT sensors, robust communication, and data links employed by the 
P-3 air vehicle help ensure effective MISR&T support to conventional 
and non-conventional warfare across the current range of military 
operations. Operating around the globe, the EP-3E continues to satisfy 
critical joint, combatant commander, and Service airborne ISR 
priorities and requirements.
    The Navy is in the process of developing the MISR&T family of 
systems construct to recapitalize the EP-3 MISR&T capabilities within 
existing programs of record. The strategy has been further refined to 
focus on modular systems and payloads required for the Navy to conduct 
MISR&T on a variety of vehicles, providing combatant commanders with 
scalable capability and capacity. The inclusive full-spectrum approach 
will 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.
                    unmanned aircraft systems (uas)
MQ-4C Triton UAS
    The fiscal year 2015 President's budget postpones the MQ-4C Triton 
(formerly known as BAMS or Broad Area Maritime Surveillance) LRIP from 
fiscal year 2015 to fiscal year 2016. The fiscal year 2015 President's 
Budget requests $498 million in RDT&E,N to continue Triton SDD and 
$37.4 million APN for procurement of long-lead materials for the first 
lot of LRIP aircraft. Due to software integration delays during initial 
testing, the program experienced a year-long delay to the start of 
flight testing. A program replan has been completed and the program 
remains executable within current funding levels. Triton will start 
establishing five globally-distributed, persistent maritime ISR orbits 
beginning in fiscal year 2017. MQ-4C Triton test vehicles have 
completed 12 test flights as of February 25, 2014 and are on schedule 
to begin developmental testing with sensors later this year. This 
rigorous integrated flight test program will support Milestone C 
planned for fiscal year 2016. The MQ-4C Triton is a key component of 
the Navy maritime patrol reconnaissance force. Its persistent sensor 
dwell, combined with networked sensors, will enable it to effectively 
meet ISR requirements in support of the Navy Maritime Strategy.
    The Navy currently maintains an inventory of four U.S. Air Force 
Global Hawk Block 10 UAS acquired for demonstration purposes and to 
perform risk reduction activities for the Triton UAS Program. These 
aircraft, the Broad Area Maritime Surveillance Demonstrators (BAMS-D) 
have been deployed to CENTCOM's AOR for over 5 years. BAMS-D recently 
achieved over 10,000 flight hours in support of CENTCOM ISR tasking. 
These demonstration assets are adequate to cover all Navy needs through 
fiscal year 2016.
Unmanned Combat Air System Demonstration
    The fiscal year 2015 President's budget requests $36.0 million in 
RDT&E, to be combined with an fiscal year 2014 $39 million 
reprogramming, to continue Navy unmanned combat air system 
demonstration flight testing of this unmanned carrier-suitable air 
vehicle commonly referred to as X-47B. These resources will advance 
technological development and risk mitigation for the UCLASS system and 
continue the autonomous aerial refueling (AAR) demonstration. The X-47B 
has completed carrier qualification detachments consisting of catapult 
testing, arrested landings and envelope expansion, to include testing 
in off-nominal conditions and increased sea states. The latest AAR 
testing period was completed in January 2014 utilizing a manned 
surrogate aircraft. Carrier demonstration and AAR development and 
testing activities are planned to continue throughout 2015. The 
Department is working to reduce risk and align program/CVN operational 
schedules to best accommodate risk mitigation and meet demonstration 
objectives.
Unmanned Carrier Launched Airborne Surveillance and Strike System
    The fiscal year 2015 President's budget requests $403.0 million in 
RDT&E,N for UCLASS system development efforts. The major portion of 
this funding will enable contract award to industry for air system 
development to meet Joint Requirements Oversight Council (JROC) 
direction to expedite fielding of an early operational capability. The 
UCLASS system will enhance carrier air wing capability and versatility 
for the Joint Forces commander through integration of a persistent and 
mission flexible unmanned aircraft into the Carrier Air Wing by fiscal 
year 2021. The JROC issued a new memorandum in February 2014, 
reaffirming the need for rapid fielding of an affordable, adaptable 
carrier-based ISR platform with precision strike capability. The UCLASS 
system will provide persistent ISR with precision strike capabilities 
supporting missions ranging from permissive counter-terrorism 
operations, to missions in contested environments, to providing 
enabling capabilities for high-end area denied operations. It will be 
sustainable onboard an aircraft carrier and designed to be fully 
integrated with the current carrier air wing. The UCLASS system will 
have the ability to pass command and control information along with 
sensor data to other aircraft, naval vessels, and ground forces. Sensor 
data will be transmitted to exploitation nodes afloat and ashore. 
Interfaces will be provided with existing ship and land-based command 
and control systems, as well as processing, exploitation, and 
dissemination systems. The UCLASS system will achieve these 
capabilities through development of a carrier-suitable, semi-
autonomous, unmanned air segment; a control system and connectivity 
segment; and a carrier segment. These segments will be overseen by the 
Government as the lead system integrator, providing government-led 
system-of-systems integration for the UCLASS Program.
MQ-8 Vertical Takeoff and Landing Unmanned Aerial Vehicle and 
        Associated Rapid Deployment Capability Efforts
    The MQ-8 Fire Scout is an autonomous vertical takeoff and landing 
tactical UAV (VTUAV) designed to operate from any suitably-equipped 
air-capable ships, carry modular mission payloads, and operate using 
the tactical control system and line-of-sight tactical common data 
link. The fiscal year 2015 President's budget requests $47.3 million of 
RDT&E,N to continue development of an endurance upgrade (MQ-8C), 
integrate radar and weapons on the MQ-8C, and continue payload and LCS 
integration with the MQ-8B and MQ-8C. The request for $40.7 million in 
APN defers procurement of MQ-8C air vehicles to better align with LCS 
deliveries, while procuring MQ-8 System ground control stations, 
ancillary, training and support equipment, technical support and 
logistics to outfit the ships and train the aviation detachments. 
Commonality of avionics, software, and payloads between the MQ-8B and 
MQ-8C has been maximized. The MQ-8B and MQ-8C air vehicles will utilize 
the same ship-based ground control station and other ship ancillary 
equipment.
    Fire Scout was deployed to Afghanistan from May 2011 until August 
2013, and amassed more than 5,100 dedicated ISR flight hours in support 
of U.S. and coalition forces. Successful deployments aboard USS 
Klakring, USS Simpson, USS Bradley, USS Samuel B. Roberts, USS 
Haylyburton, and USS Elrod have supported Special Operations Forces 
(SOF) and Navy operations since 2012. The MQ-8 Fire Scout has flown 
more than 4,800 hours from frigates, performing hundreds of autonomous 
ship board take-offs and landings. The Fire Scout program will continue 
to support integration and testing for LCS-based mission modules.
Tactical Control System
    The fiscal year 2015 President's budget requested $8.5 million in 
RDT&E,N for the MQ-8 System's Tactical Control System (TCS). TCS 
provides a standards compliant, open architecture, with scalable 
command and control capabilities for the MQ-8 Fire Scout air system. In 
fiscal year 2015, TCS will continue to transition to the Linux 
operating system software to a technology refreshed ground control 
station, enhance the MQ-8 system's ocean surveillance initiative for 
ships automatic identification system and sensor track generation. The 
Linux operating system conversion overcomes hardware obsolescence 
issues with the Solaris based control stations and provides lower cost 
software updates using DOD common application software. In addition, 
the TCS Linux upgrade will enhance collaboration with the Navy's future 
UAS Common Control System (CCS).
Small Tactical Unmanned Aircraft System RQ-21A Blackjack
    The fiscal year 2015 President's budget requests $12.9 million in 
RDT&E ($4.8 million Navy, $8.1 million Marine Corps) and $70.5 million 
in Procurement, Marine Corps for 3 RQ-21A systems which include 15 air 
vehicles that will address Marine Corps ISR capability requirements 
currently supported by service contracts. This Group 3 UAS will provide 
persistent ship and land-based ISR support for expeditionary tactical-
level maneuver decisions and unit level force defense and force 
protection missions. Blackjack entered LRIP in 2013 and is currently 
executing IOT&E.
    The RQ-21's current configuration includes full motion video and 
signals intelligence capability. The Marine Corps is actively pursuing 
technological developments for the RQ-21 system in an effort to provide 
the MAGTF and Marine Corps Forces Special Operations Command (MARSOC) 
with significantly improved capabilities. Initiatives include over-the-
horizon communication and data relay ability to integrate the system 
into future networked digital environments; electronic warfare and 
cyber payloads to increase non-kinetic capabilities; and change 
detection radar and moving target indicators to assist warfighters in 
battlespace awareness and force application.
RQ-7B Shadow Marine Corps Tactical UAS
    The fiscal year 2015 President's budget requests $0.9 million in 
RDT&E,N for the RQ-7B Shadow to continue development efforts and 
government engineering support and $2.5 million in APN to acquire new 
air vehicle data processors and update engines to improve air vehicle 
reliability. The more capable RQ-21 Blackjack is scheduled to perform 
the preponderance of Marine Corps ISR responsibilities as divestment 
from the RQ-7B Shadow continues.
                        strike weapons programs
Tactical Tomahawk BLK IV Cruise Missile Program
    The fiscal year 2015 President's budget requests $194.3 million in 
Weapons Procurement, Navy (WPN) for procurement of an additional 100 
BLK IV TACTOM weapons and associated support, $ 61.5 million in OPN for 
the Tomahawk support equipment, and $27.4 million in RDT&E for 
capability updates of the weapon system. WPN resources will be for the 
continued procurement of this versatile, combat-proven, deep-strike 
weapon system in order to meet ship load-outs and combat requirements. 
OPN resources will address the resolution of TTWCS obsolescence and 
interoperability mandates. RDT&E will be used to initiate engineering 
efforts for A2/AD navigation and communication upgrades.
Tomahawk Theater Mission Planning Center
    Tomahawk Theater Mission Planning Center (TMPC) is the mission 
planning and command and control segment of the Tomahawk weapon system. 
Under the umbrella of TMPC, the Tomahawk command and control system 
(TC2S) develops and distributes strike missions for the Tomahawk 
Missile; provides for precision strike planning, execution, 
coordination, control and reporting; and enables maritime component 
commanders the capability to plan and/or modify conventional Tomahawk 
land-attack missile missions before and in flight. TC2S optimizes all 
aspects of the Tomahawk missile technology to successfully engage a 
target. TC2S is a Mission Assurance Category 1 system vital to 
operational readiness and mission effectiveness of deployed and 
contingency forces for content and timeliness. The fiscal year 2015 
President's budget requests $13.4 million in RDT&E and $40.3 million 
OPN for continued TMPC system upgrades and sustainment. These planned 
upgrades support integration, modernization and interoperability 
efforts necessary to keep pace with missile, imagery and threat 
changes, retain/enable capabilities of the Tomahawk missile and 
includes providing an improved GPS denied navigation system, rewrite/
update of Tomahawk planning system's unsupported legacy software code, 
and technology refreshes to reduce vulnerability to cyber-attacks. 
These resources are critical for the support of over 180 TC2S 
operational sites to include: cruise missile support activities, 
tomahawk strike and mission planning cells (fifth, sixth, seventh 
fleet), CSGs, command and control nodes, surface and subsurface firing 
units and labs/training classrooms.
Offensive Anti-Surface Warfare Weapon
    The fiscal year 2015 President's budget requests $203 million in 
RDT&E for the continued development and technology transition of the 
Defense Advanced Research Program Agency (DARPA) Long Range Anti-Ship 
Missile (LRASM) in support of the air launched offensive anti-surface 
warfare (OASuW)/Increment 1 program. LRASM will provide the combatant 
commanders the ability to conduct anti-surface warfare operations 
against high value surface combatants protected by integrated air 
defense system with long-range surface-to-air-missiles and will deny 
the adversary the sanctuary of maneuver. OASuW/Increment 1 program is a 
Department of the Navy led joint program with a schedule to field LRASM 
on the B-1B by the end of fiscal year 2018 and the F/A-18E/F by the end 
of fiscal year 2019. Funding supports analysis of alternative updates 
to assess fully capable OASuW/Increment 2 material solution(s) geared 
to the advanced 2024 threat. Surface and air-launched material 
solutions will be assessed and study results will inform investment 
options in fiscal year 2016 and beyond.
Sidewinder Air-Intercept Missile
    The fiscal year 2015 President's budget requests $47.3 million in 
RDT&E,N and $73.9 million in WPN for this joint Navy and Air Force 
program. RDT&E,N will be applied toward Sidewinder air-intercept 
missile (AIM-9X) Block II developmental/operational tests and 
requirements definition for Joint Staff directed insensitive munitions 
requirements, redesign critical components facing obsolescence, and 
continue AIM-9X/Block III development activities. WPN will be for 
production of a combined 167 all-up-rounds and captive air training 
missiles and missile-related hardware. The AIM-9X Block II Sidewinder 
missile is the newest in the Sidewinder family and is the only short-
range infrared air-to-air missile integrated on Navy/Marine Corps/Air 
Force strike-fighter aircraft. This fifth-generation weapon 
incorporates high off-boresight acquisition capability and increased 
seeker sensitivity through an imaging infrared focal plane array seeker 
with advanced guidance processing for improved target acquisition; a 
data link; and advanced thrust vectoring capability to achieve superior 
maneuverability and increase the probability of intercept of adversary 
aircraft.
Advanced Medium-Range Air-to-Air Missile (AIM-120)
    The fiscal year 2015 President's budget requests $10.2 million in 
RDT&E for continued software capability enhancements and $32.2 million 
in WPN for missile-related hardware. Advanced Medium-Range Air-to-Air 
Missile (AMRAAM) is a joint Air Force and Navy missile that counters 
existing aircraft and cruise-missile threats. It uses advanced 
electronic attack capabilities at both high and low altitudes, and can 
engage from beyond visual range as well as within visual range. AMRAAM 
provides an air-to-air first look, first shot, first kill capability, 
while working within a networked environment in support of the Navy's 
theater air and missile defense mission area. Prior missile production 
delays caused by rocket-motor anomalies were corrected when the Nordic 
Ammunition Group was brought on-line as an alternate source to Alliant 
Technologies. We now anticipate AIM-120D production will recover for 
both the Air Force and the Navy in 2014.
Small Diameter Bomb II
    The fiscal year 2015 President's budget requests $71.8 million in 
RDT&E for the continued development of this joint Department of the 
Navy and Department of the Air Force (lead) weapon and bomb-rack 
program. Small Diameter Bomb II (SDB II) provides an adverse weather, 
day or night standoff capability against mobile, moving, and fixed 
targets, and enables target prosecution while minimizing collateral 
damage. SDB II will be integrated into the internal carriage of both 
Department of the Navy variants of the Joint Strike Fighter (F-35B and 
F-35C) as well as onto the Navy Super Hornet (F/A-18E/F). The Joint 
Miniature Munitions Bomb Rack Unit (JMM BRU) BRU-61A/A is being 
developed to meet the operational and environmental integration 
requirements for internal bay carriage of the SDB II in the F-35B and 
F-35C. JMM BRU entered technology development in June 2013.
Joint Standoff Weapon
    The fiscal year 2015 President's budget requests $4.4 million in 
RDT&E,N to complete JSOW C-1 operational testing activity and $130.8 
million in WPN for production of 200 all-up rounds. The JSOW C-1 
variant fills a critical gap by adding maritime moving-target 
capability to the highly successful baseline JSOW C program. JSOW C-1 
targeting is achieved via a two-way data-link and guidance software 
improvements. JSOW C-1 is planned to achieve IOC in fiscal year 2015 
after the completion of F/A-18E/F H10E Software Configuration Set 
operational testing.
Advanced Anti-Radiation Guided Missile
    The fiscal year 2015 President's budget requests $16.1 million of 
RDT&E,N for Block 1 follow-on development and test program and $111.7 
million of WPN for production of 108 all-up-rounds and captive training 
missiles. The Advanced Anti-Radiation Guided Missile (AARGM) 
cooperative program with Italy transforms the High-Speed Anti-Radiation 
Missile (HARM) into an affordable, lethal, and flexible time-sensitive 
strike weapon system for conducting destruction of enemy air defense 
missions. AARGM adds multi-spectral targeting capability and targeting 
geospecificity to its supersonic fly-out to destroy sophisticated enemy 
air defenses and expand upon the HARM target set. IOC on the F/A-18C/D 
aircraft was reached in July 2012 and forward deployed to U.S. Pacific 
Command. With release of H-8 SCS, AARGM is integrated on F/A-18E/F and 
EA-18G aircraft.
Advanced Precision Kill Weapon System II
    The fiscal year 2015 President's budget requests $45.9 million in 
PANMC, for procurement of 1,555 Advanced Precision Kill Weapon System 
II (APKWS II) precision guidance kits. APKWS II provides an 
unprecedented precision guidance capability to Navy unguided rocket 
inventories improving accuracy and minimizing collateral damage. 
Program production is on schedule to meet the needs of our warfighters 
in today's theaters of operations. IOC was reached in March 2012 on the 
Marine Corps' AH-1Z. The Navy is finalizing an APKWS II integration 
effort on the MH-60S for an early operational capability by April 2014.
Joint Air-to-Ground Missile
    The fiscal year 2015 President's budget requests $6.3 million in 
RDT&E to begin a 5-year integration effort for Joint Air-to-Ground 
Missile (JAGM) Increment 1 onto the Marine Corps AH-1Z to achieve an 
IOC by fiscal year 2021. JAGM is a Joint Department of the Army and 
Department of the Navy pre-Major Defense Acquisition Program with the 
Army designated as the lead service. JAGM is a direct attack/close-air-
support missile program that will utilize advanced seeker technology 
and be employed against land and maritime stationary and moving targets 
in adverse weather and will replace the Hellfire and TOW II missile 
systems. In November 2012, the Joint Chiefs of Staff authorized the 
JAGM incremental requirements and revalidated the Department of the 
Navy's AH-1Z Cobra aircraft as a threshold platform. JAGM Increment 1 
is expected to achieve Milestone B certification in fiscal year 2015.

    Senator Blumenthal. Thanks very much.
    General Schmidle?
    General Schmidle. Sir, Admiral Grosklags had the statement 
from the Department of the Navy.
    Senator Blumenthal. Thank you.
    Let me begin with a 5-minute round of questioning, and we 
will see how far we can get before the vote. We have a vote at 
4:30 p.m., and then we can try to come back, if possible, 
depending on how many votes we have.
    On the F-35, General Bogdan, I have heard varying estimates 
about how long the software has been delayed. I think you 
perhaps used the number of 6 months. GAO has talked about 13 
months. Could you give us your assessment, your most up-to-date 
assessment, on whether it has been delayed, and if so, by how 
much?
    General Bogdan. Yes, sir. I would like to go through a 
little terminology so I am very clear with what I am saying and 
I am not misinterpreted.
    We have three blocks of software on the F-35 program. The 
first block of software we call the 2B capability. 2 with a B. 
That is the initial capability that the Marine Corps will 
declare IOC with. The date we need that software ready for the 
Marine Corps is July 1, 2015. As of today, the software 
development for the 2B block of airplanes is not delayed at 
all.
    What is more critical to the Marine Corps IOC in July 2015 
is making sure that the 10 airplanes that they need to declare 
IOC are modified with hardware so that they can have what we 
call a production representative and a combat-capable airplane. 
We have fixes on the airplane that we need to put in, changes 
to the engine, changes to pieces and parts on the airplane. 
That, in itself, is on the critical path to July 2015, not the 
software for the initial capability.
    We have a second block of software called the 3I. That 
block of software is basically the same capability as the 2B 
capability, but it is exportable. That will be the software 
that our partners get when they first take airplanes outside of 
the United States. That software also is on a defined path that 
we put in place in 2011, and none of the dates that we need 
that software for, to include Air Force IOC, as well as our 
Italian partners and our Israeli Foreign Military Sales (FMS) 
customers or the first two participants to get that software--
none of the dates for their airplanes have been delayed by the 
software either.
    Now, when you get to the final block of software in the F-
35, what we call the Block 3F, that is the full capability. If 
we do not change anything in the way we are doing business 
today and we do not get smarter or figure out a way to go 
faster or do things better, I project that that software will 
be 4 to 6 months late. But I have until 2018 to try and figure 
out ways to bring that 4 to 6 months late back. That software 
is the software that the Navy will declare IOC with in August 
2018. So I will not tell you today that the Navy IOC is being 
delayed because I have a lot of time to try and catch up that 4 
to 6 months.
    Senator Blumenthal. What do we do to get smarter and do 
better?
    General Bogdan. There are a number of things we have done 
already that we are seeing the fruits of, sir. We have 
fundamentally changed the way we are developing the software on 
this airplane. I can frankly tell you that until 2011, the 
contractor was in charge of all software development, and the 
U.S. Government and the Department of Defense (DOD) was 
watching. We are no longer watching. We are directing. As a 
result of that, we have directed them to have various metrics. 
We have upgraded the laboratories in Fort Worth, TX. We have 
also created governance boards where we know each and every 
increment of software when it gets to the airplane for flight 
test, we know what it is supposed to do. We are starting to see 
the fruits of that change because we are much more predictable 
now. For the last year and a half, each and every increment of 
software we have put in the field has been on time with the 
capability we expected. So that, in and of itself, will help us 
in the future bring that 4 to 6 months back.
    The additional thing that we will be using is we have many 
operational test airplanes that are going to be possessed by 
all three Services. The operational test airplanes can also be 
used to help finish the development program by doing some of 
the extra testing that we need to get through. The combination 
of those things leads me to believe that over time we will 
bring that number back in, the 4 to 6 months.
    Senator Blumenthal. Thank you.
    Senator Wicker.
    Senator Wicker. Thank you. I am going to defer to Senator 
McCain and then Senator Sessions and save my questions for 
last.
    Senator Blumenthal. Senator McCain?
    Senator McCain. I thank you, Mr. Chairman. I thank Senator 
Wicker.
    So, General Bogdan, if I understand your testimony and the 
answer to the chairman's question, there is a 4- to 6-month 
delay in the third block of software. Is that what you are 
saying?
    General Bogdan. That is correct, sir. There is a risk of a 
4- to 6-month delay because we have 3 or 4 years before we 
actually incur that. But yes, sir.
    Senator McCain. If there is a risk of it, I would think you 
would know whether it is going to happen or not.
    General Bogdan. If I do not do anything else, it will 
happen, sir.
    Senator McCain. What else can you do?
    General Bogdan. We can use operational test airplanes to 
help shorten the development span time. We can improve----
    Senator McCain. Did we not try that before in concurrency?
    General Bogdan. The fact that we have operational test 
airplanes out there today, sir, while it was part of the 
problem with concurrency early on, now we can use that to our 
advantage.
    Senator McCain. Does a 4- to 6-month delay mean an increase 
in costs?
    General Bogdan. It does not, sir.
    Senator McCain. It does not.
    General Bogdan. It does not. I have management reserve and 
Lockheed Martin has management reserve and Pratt & Whitney has 
management reserve to cover that delay because when we re-
baselined the program in 2010, we put a much more realistic 
budget and a much more realistic schedule in place.
    Senator McCain. This is the first trillion dollar system 
that we have ever had. What are the lessons learned in this 
imbroglio where we have gone from $233 billion in 2001 to over 
$391 billion this year? What are the lessons learned here, 
General?
    General Bogdan. Sir, we could probably, you and I, get 
together and write a book about this. But I will give you a 
couple of the things from my perspective on some good lessons 
learned.
    The first lesson is we tend to be overly optimistic when we 
start programs in terms of how much they are going to cost, 
what the real risk is, and how long they are going to take. We 
need to do a better job up front of being more realistic and 
more honest with ourselves about how much programs are really 
going to cost and what the real technical and fiscal risks are. 
I do not think we did that on this program. That is one.
    Two, it is very hard to run a program when you start 
production before you have ever tested a single airplane 
because every time you find something new in flight test, you 
now have to not only go back and fix airplanes you have already 
produced, but you have to cut all those fixes into the 
production line. That creates a complexity that is pretty 
significant and it costs some money.
    Senator McCain. Has anybody ever been held responsible for 
that decision that you know of?
    General Bogdan. Sir, I do know one of the previous program 
executive officers on this program was asked to leave the 
program.
    Senator McCain. Certainly Lockheed Martin has not. They 
have just jacked up the cost.
    General Bogdan. Sir, what I can tell you is from my 
perspective, I promise you that I am doing everything I can to 
hold Lockheed Martin and Pratt accountable and balancing the 
risk on this program, because I think the third thing I have 
learned from the program in your lessons learned, is you have 
to have a balancing of risk. When we started this program, all 
the risk was on the Government. Every cost overrun on this 
program was going to be borne by the Government. Today, at 
least, when we build airplanes--
    Senator McCain. At least we ought to know the names of the 
people who made this kind of cockamamie agreement to start with 
because there were many of us that--you forgot the fundamental 
that we adopted during the Reagan years: fly-before-you-buy.
    General Bogdan. I do not disagree with you, sir.
    Senator McCain. If we had adhered to that principle, we 
probably would not find ourselves in the situation we are in.
    I just have a short time left. General Davis, right now I 
understand the A-10s are to be phased out. Is that your 
understanding?
    General Davis. Sir, that is.
    Senator McCain. What is going to replace it?
    General Davis. Sir, if you look at the systems we are using 
today and have used since Iraq, the A-10s have basically failed 
about 20 percent of the call for close air support (CAS) 
missions. So that means we are doing it with F-16s. We are 
doing it with F-15Es. We are doing it with B-1s and B-52s. We 
are doing it with precision weapons that were not part of the 
A-10 suite.
    Senator McCain. So  they  are  better  suited  for  CAS  
than  the  A-10 is. Is that correct?
    General Davis. Sir, I did not say they are better suited. I 
said they can do that mission based on----
    Senator McCain. Depending on what kind of conflict we are 
in. Right?
    General Davis. It does.
    Senator McCain. If we are in a more conventional conflict, 
there is no aircraft or weapons system that does the job of the 
A-10. Is there?
    General Davis. Sir, it does its mission very well. It is 
designed for one mission. It does that mission well.
    Senator McCain. That one mission happens to be CAS.
    General Davis. Yes, sir.
    Senator McCain. I thank the chairman.
    Senator Blumenthal. Thank you very much. Thank you, Senator 
McCain.
    Senator Donnelly.
    Senator Donnelly. Thank you, Mr. Chairman.
    As the Air Force retires its A-10 fleet, there are several 
wings around the country that will be transitioning to a new 
mission, including the 122nd Fighter Wing in my home State. Can 
you explain how the Air Force determined the timeline for these 
conversions?
    General Davis. Sir, I cannot do that, but I can take that 
for you on the record. All I know is that your unit in your 
State is going to be transitioning to F-16s in about the 2019 
timeframe.
    [The information referred to follows:]

    The timeline for the A-10 fleet conversion was primarily based upon 
gaining mission availability. In the case of the 122nd Fighter Wing, 
the unit is scheduled to receive F-16s from Hill Air Force Base in 
fiscal year 2019 as Hill transitions to the F-35.

    Senator Donnelly. Also, if you could get for me what 
factors are taken into account in determining when to 
transition each unit and how the transition goes as to who goes 
first.
    General Davis. Yes, sir.
    [The information referred to follows:]

    There were multiple factors taken into account when determining how 
and when A-10 units transition to their new missions. The primary 
factors the Air Force examined were: the viability of divesting and 
gaining missions; current operations tempo; operational rotational 
requirements; and training availability and timeline.

    Senator Donnelly. Also in regards to that, as we transition 
back to F-16s, making sure we have the frontline fighters until 
JSF comes into full production is critical. I was wondering if 
you have a timeline showing when specific units will undergo 
the Service Life Extension Program (SLEP) enhancements.
    General Davis. Sir, we know basically that we are going to 
upgrade 300 of the future force structure of F-16s with the 
extension that will keep them viable through their lifetime. It 
really depends on where those F-16s will be coming from, what 
unit, and what the structure is. We can see if I can give you 
an answer as to when those 18 F-16s will be going into your 
unit in 2019. We will get the SLEP modifications. But I am 
almost certain by then those airplanes will be SLEPed, but I 
will verify that.
    [The information referred to follows:]

    The Air Force A-10 divestment plan, as submitted in the President's 
fiscal year 2015 budget, plans to transition the 122nd at Fort Wayne, 
IN (ANG) to F-16 Block 40s in 2019. The Air Force intends for these F-
16s to receive Service Life Extension Program (SLEP) modifications. 
SLEP is currently planned to be installed on a total of 300 F-16 
aircraft beginning in fiscal year 2018. The Air Force has not yet 
completed the assessment of which specific tail numbers are the best 
candidates to receive SLEP and when specific aircraft would be 
modified. The install schedule will take into consideration the 
operational tempo of affected units and the number of flying hours on 
each aircraft. This will ensure SLEP is installed at a point in time 
that results in the greatest life extension programmatically possible.

    Senator Donnelly. Obviously, hopefully, the F-35 stays on 
schedule, but are you confident the SLEP, as envisioned in this 
year's budget in the future years defense program (FYDP), is 
sufficient to maintain the F-16 fleet to maintain combat 
effectiveness until the F-35s are procured in sufficient 
numbers?
    General Davis. Sir, I think I am. I think our Chief has 
mentioned that, and I think that the money we have set aside to 
keep that 300 fleet of F-16s viable--some of which will, 
obviously, replace the A-10s--we will certainly keep that very 
well-suited for that combat mission they are going to be 
stepping into that we just discussed with Senator McCain.
    Senator Donnelly. Could you also let us know how you intend 
to distribute the F-35s in regard to the Active, Reserve, and 
Guard? Is it going to be proportional or how will it be done?
    General Davis. Sir, again, I will have to dig that one up. 
We are going mission-by-mission area now. We are going through 
the training bases. We are going through the first operational 
units. We are looking at where the first outside the contiguous 
United States base is going to be. Then we will continue to 
fill out the rest of the units from that point on. I will have 
to see. I imagine those decisions, to be honest with you, sir, 
are yet to be made down the road, but I will see how we are 
looking at balancing Guard and Reserve.
    [The information referred to follows:]

    The specific order and locations will be decided based on a number 
of factors including wartime/combatant commander requirements, 
contiguous United States/outside the contiguous United States mix, 
trained operations and maintenance personnel, infrastructure, and 
costs. From a process standpoint, Air Combat Command (as the Combat Air 
Force lead for F-35), will propose a basing strategy for the next round 
of F-35 beddowns (including Active Duty/Air National Guard/Air Force 
Reserve ownership) to the Secretary of the Air Force for approval later 
this year. In accordance with our Strategic Basing process, this will 
begin the next round of specific basing decisions which we anticipate 
to be made mid to late 2015.

    Senator Donnelly. With the ultimate intention for the F-35 
to take over the CAS role of A-10s, how many F-35s do you 
expect to be fully operational over the next 5 years to replace 
those A-10s on the retirement timeline?
    General Davis. Again, sir, like I was trying to mention 
there, we will go through an interim transition of what is 
going to replace the A-10s. It will not be the F-35s. It will 
be the F-16s. It will be the F-15Es. When the CAS mission is 
called for, those will be the airplanes. As we get to the point 
where we field more F-35s--and our view of when we would 
declare IOC on the F-35 is around 2016--we will have over 100 
airplanes fielded at that point. At that point, we believe 
those airplanes will be fully capable of doing CAS missions. So 
at some point, then they will start to relieve other units of 
F-16s that will move on to other areas. So by the end of the 
FYDP, as you talk about, we will continue to buy airplanes at 
the rate of about 60 a year and gradually fill out all those 
other units. But again, like I mentioned earlier, we will have 
to get you the full schedule on that.
    [The information referred to follows:]

    Over the next 5 years, by the end of calendar year 2019, the Air 
Force will have received 219 fully operational F-35A aircraft.

    Senator Donnelly. One more A-10 question real quick. How 
will you address the engagement time differences between the A-
10s and those aircrafts that will be filling in the interim 
role?
    General Davis. Sir, to be honest with you, I think the 
engagement time would actually be a lot quicker because what we 
have put into place--and this is why CAS is affected today 
between your joint terminal air controller on the ground that 
has data links to an F-16 sitting on a cap that has an advanced 
targeting pod that can then pick up where the troops and 
contact are occurring. They can then relay that quite 
effectively between the individual on the ground and the 
displays on the pilots to the precision weapons that have a lot 
of capability to go in places that other weapons have not to be 
even updated by data link on the way down to that point. So I 
am thinking that your timeline for these troops and contacts is 
probably a lot shorter today----
    Senator Donnelly. You think it will be better. Okay.
    I just got back from Ukraine about 2 weeks ago, and we have 
seen just in the last day what has again happened in Donetsk 
and in other areas. I was wondering if you are or the Air Force 
is making any plans to step up aviation operations with other 
North Atlantic Treaty Organization partners in the Eastern 
European region, what additional plans are being made to show 
some commitment to try to make sure that we show strength in 
that area?
    General Davis. Sir, I am going to have to let our 
operations folks try to give you a better and more detailed 
answer on that one. I do not have any insight on that right 
now, to tell you the truth.
    [The information referred to follows:]

    The Air Force has increased presence in terms of bomber, fighter, 
tanker, and intelligence, surveillance, and reconnaissance assets. In 
addition, the Air Force is currently reviewing and determining the 
feasibility of providing increased and/or persistent presence, which is 
proposed by U.S. European Command as part of the President's recently 
announced $1 billion European Reassurance Initiative.
    A more detailed explanation may be provided in a classified forum.

    Senator Donnelly. Okay. Does anybody on the panel have any 
insight on that? [No response.]
    Thank you, Mr. Chairman.
    Senator Blumenthal. Thanks very much, Senator Donnelly.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    General Bogdan, I would just like to ask a few fundamental 
questions to get my head straight on these programs. If you can 
work with me quickly, that would be good.
    What is the current cost of each one of the aircraft?
    General Bogdan. If you wanted to buy an F-35A today, sir, 
it would cost you about $112 million.
    Senator Sessions. How has the cost increased with reduction 
or decreased and where do you see the trends on that?
    General Bogdan. We have seen the price of the airplane come 
down lot after lot. We believe that will continue well into the 
2020s. The target we have set for ourselves and our industry 
partners have set for us is in 2019, an airplane with an 
engine, with profit on top of that for Lockheed and Pratt & 
Whitney, in fiscal year 2019 dollars will cost between $80 
million and $85 million, sir. We think we can get there. I 
would not call that a stretch goal. I would call that a 
realistic goal. So we think lot after lot over the next 5 
years, we are going to see a continued decrease in the price of 
the airplane. That is my promise to everyone in the enterprise. 
I will negotiate that. We will work to do that. By 2019, we 
should have an airplane that is about $80 million.
    Senator Sessions. It is just not a myth that once the bugs 
are out of an aircraft or ship or any major procurement and you 
are buying in large numbers, the price goes down.
    General Bogdan. That is a fact, sir. That is a physics fact 
of acquisition.
    Senator Sessions. The last 2 budgets showed that planned 
production has fallen from 40 to 50 aircraft per year to 30 
aircraft per year. Is that correct? The last 2 budgets, as I 
have it here, projected our production would be 40 to 50 
aircraft per year. Their last 2 reduced it to 30 aircraft.
    Let me just ask you, what is our production rate per year 
now, and is it at a level that adds cost per copy because it is 
lower than otherwise had been projected?
    General Bogdan. Yes. That is an interesting way to put it. 
The profile over the next 4 years, just to let you know what I 
believe the profile is, is next year we will buy and produce 43 
airplanes. The year after that will be 57. The year after that 
will be 96, and then the year after that will be 121. That is 
the next 4 years.
    Senator Sessions. So 121 would be cruising speed?
    General Bogdan. No. Cruising speed on this program is 
actually going to be in the order of about 180 airplanes a 
year, sir. We will not even get there until about 2023.
    But you made a very interesting point, sir, and I will try 
and explain it very quickly. The price of this airplane 
continues to come down as long as we continue to buy the same 
number or more airplanes as we move out in years. But if you 
move airplanes further out to buy, then the price does not come 
down as rapidly as you would like. It is not that the price 
would ever go up anymore. It just will not go down as fast as 
you would have otherwise had it come down if all those 
airplanes had been bought when you thought. So by pushing 
airplanes to the right and not buying them, the price does not 
come down as fast. It still comes down, sir.
    Senator Sessions. General Davis or Admiral Grosklags, maybe 
you can contribute to this, and I will let you answer. What is 
the need for the F-35? How do we intend to utilize it? What is 
the threat that is driving this production?
    General Davis. Sir, our average fighter is 30-years-old 
today, and so there is no doubt that that has to be replaced. 
If you just look at what we consider to be any region around 
the world, the thing that probably is most concerning is that 
if we ever have to conduct operations in many regions around 
the world, there are advanced integrated air defense systems 
that have been sold by Russia and China to at least 10 to 12 
nations today. It will probably be 20 by the end of the FYDP. 
So in other words, the areas that we would go into are becoming 
increasingly denied if it becomes the President's direction 
that we do so.
    The threat is growing. The threat is growing faster. You 
have seen the Chinese have produced two versions of their own 
stealth fighter in about a 3-year period.
    If we are going to carry out the National Military Strategy 
or the Defense Strategic Guidance, then clearly the fighters 
that we have done well with in the last four wars will continue 
to do well for some period of time, but their usefulness is 
going to gradually degrade and it is going to become 
increasingly degraded over time. We already see that with some 
of our legacy weapons.
    It has been the intent of the Chief, General Michael 
Hostage III, and the folks in the Air Combat Command, that the 
F-35 is the future for tactical air combat in the Air Force. 
Its capabilities not only bring the ability to penetrate those 
threats, but it brings a net enabled linkage that shares data 
with the entire Joint Force. It is that alone that probably 
makes this airplane more valuable than any of its capabilities 
right there because of the information it can collect and 
supply across everybody that is in the battle space. It is for 
that reason that we think it is very important that we try to 
replace as much of our fleet as we can with the F-35s.
    Senator Sessions. My time is up. I will let the chairman 
decide whether he wants more answers on that. He was going to 
contribute to the same question, but I will let you decide 
whether you want to go forward. I am satisfied.
    Senator Blumenthal. Thank you.
    Senator Wicker.
    Senator Wicker. General Bogdan, let me just ask. I think 11 
countries have agreed to purchase the F-35. Is that correct?
    General Bogdan. Yes, sir. We have eight partner countries 
and two for sure FMS customers in Israel and Japan. I believe 
before the end of the year, we will have a signed contract with 
the South Koreans. So 8 plus 3 is 11, plus our 3 Services.
    Senator Wicker. That would be the United Kingdom, Turkey, 
Australia, Italy, Netherlands, Canada, Norway, and Denmark, in 
addition to those three that you mentioned.
    General Bogdan. You have them right, sir.
    Senator Wicker. Now, are you briefing, giving formal 
briefings, to other countries on the F-35?
    General Bogdan. When you say other countries, you mean 
other than the partners?
    Senator Wicker. Other than.
    General Bogdan. Yes, sir. Just in February, I visited 
Singapore, and I spent a week there at their annual 
international air show, and they have shown significant 
interest in the F-35. We sat down with them and had a 
discussion about the F-35. They actually have a very small FMS 
case with us now where they have paid for some information 
about the F-35 so they could decide if it would meet their 
requirements.
    Senator Wicker. Of course, you are keeping them informed 
and engaged on the program status and schedule.
    General Bogdan. That is correct, sir.
    Senator Wicker. However, is it also true that several 
foreign partners have reduced their projected buys, namely 
Canada, Italy, and Netherlands, or they are considering doing 
so?
    General Bogdan. Yes, sir. Let me go on record here and give 
you the latest of what I know.
    Canada has yet to decide if they are going to buy an F-35.
    Senator Wicker. At all?
    General Bogdan. At all. They initially chose the F-35 as 
their replacement for their F/A-18s. Their parliament did not 
believe that that process for selection was up to snuff, I 
guess you would say, and they have what we call a seven-point 
plan we are going through to revalidate or decide to start 
another competition for their replacement for their F/A-18s. 
They are still in the program, but they have yet to commit to 
buying a single airplane.
    Senator Wicker. What aircraft are our toughest competitors 
there?
    General Bogdan. I would tell you that the Super Hornet is a 
great airplane. I would imagine that some of the European 
airplanes, the Eurofighter and the Typhoon, would also be 
potential competitors in that market for Canada.
    Italy is committed to buying airplanes, but they reduced 
their buy from 130 to 90 2 years ago. So they are committed to 
buying 90.
    Senator Wicker. Budgetary constraints there in Italy?
    General Bogdan. Yes, sir.
    Netherlands originally committed to buying 80 airplanes. 
Now they are committed to only buying 37. Budgetary problems.
    Turkey was supposed to buy their first two airplanes this 
year, but have made no commitment whatsoever.
    Senator Wicker. With regard to Italy, Netherlands, and 
Turkey, they are not buying from anyone else.
    General Bogdan. They are not.
    Senator Wicker. But Canada is thinking of doing so.
    General Bogdan. Correct.
    Senator Wicker. Now, this goes to what Senator Sessions was 
talking about. That hurts us in trying to reduce the cost each 
year, does it not?
    General Bogdan. It does. Anytime a partner or anyone on 
this program reduces their total buy or pushes airplanes out to 
buy them later, everyone else will pay the price for that 
because the unit cost of the airplane will go up.
    Now on the flip side of that, sir, is we do have some FMS 
customers like Singapore in the future, South Korea, and 
Israel, who I believe will buy more airplanes than the first 19 
they have committed to. They actually help offset some of the 
partners that are not buying so many airplanes. So it is a give 
and take there.
    Senator Wicker. Could you quantify how much one 
cancellation costs us?
    General Bogdan. It is hard to do it that way, sir. How 
about I do it in a little more general terms, but I will give 
you an answer.
    Senator Wicker. That would be great.
    General Bogdan. I wish I could give it to you by airplane, 
but that is a very small number.
    With all the movement we have seen from last year to this 
year--and that includes the U.S. Services moving 37 airplanes 
out, Turkey moving their buy out a year, Canada moving their 
buy out a year, Netherlands reducing their buy--the price of 
any one of the variants of the airplane goes up 2 percent. So 
everybody else who is buying airplanes next year will pay 2 
percent more because of all those plans to move airplanes out. 
For an A model, that is $2 million to $3 million, if you assume 
it is about a $100 million airplane.
    The partnership is an interesting thing, sir. Folks will 
sink and swim together.
    Senator Wicker. Thank you.
    Mr. Chairman, I may take another round.
    Senator Blumenthal. Do you want to just continue your 
questions now?
    Senator Wicker. I think I will take another round because I 
have to go.
    Senator Blumenthal. Please do. Go ahead.
    I have some additional questions. Your estimates that you 
gave earlier about the reduction in costs are dependent on all 
of those allied purchases going through. Are they not?
    General Bogdan. Sir, what we do in the Program Office is we 
look at the cost of the airplane under a best-case scenario. We 
look at the cost of the airplane under what we call a worst-
case scenario, and we look at the cost of the airplane under a 
most-likely scenario. In all three of those cases, the price of 
the airplane year after year still goes down but does not go 
down as much.
    Senator Blumenthal. But you gave us an estimate earlier, 
going by memory, that it would go from $112 million a copy down 
to about $80 million.
    General Bogdan. $80 million to $85 million. That includes 
all the things we just talked about, sir.
    Senator Blumenthal. The reductions in purchases by our 
allies.
    General Bogdan. Correct. That is the most current estimate 
I have today, including all the movement of the partner 
airplanes and the known FMS buys we have with Japan and Israel.
    Senator Blumenthal. If I may, General, let me ask you about 
a related technology issue, and I think I may know the answer 
but I want to be sure we have it on the record. The Generation 
(Gen) 3 helmet that I understand will not be available until 
the block 3I, as you referred to it, 3I capabilities fielded in 
2016. Is that still on schedule? Whatever the obstacles or 
challenges were, the glitches in that helmet to make it 
suitable--have those been overcome?
    General Bogdan. Yes, sir. The Gen 2 helmet, which will be 
available from now until 2016, is adequate to meet the Marine 
Corps IOC. I defer to General Schmidle because he is the 
gentleman I asked when we went and talked about if it's good 
enough. He is the guy that said it is good enough. Beyond 2016, 
when we get the Gen 3 helmet, I believe that from a technical 
standpoint we will have a fully capable helmet that meets all 
of the requirements at the end of the program for everybody.
    We had a tough time over the last 2 years, but I think we 
have turned the corner on that, sir.
    Senator Blumenthal. General Schmidle, I think you have 
commented on that helmet, the Gen 2 helmet, as being suitable 
for the IOC. Is that correct?
    General Schmidle. Yes, sir, we did, Mr. Chairman. From 
talking to the pilots that are flying in the helmet today and 
putting it through its paces, we believe that that helmet will, 
in fact, be adequate to get us to the IOC.
    What General Bogdan just said is, in 2016 we look forward 
to getting the Gen 3 helmet which will give us the full 
capability prior to the squadron's first deployment in 2017.
    Senator Blumenthal. Thank you.
    Admiral Grosklags, the Navy's unfunded priority list 
includes $2.1 billion to buy 22 more E/A-18G electronic warfare 
aircraft. But I understand that 22 additional Growlers do not 
appear on the Secretary of Defense's Opportunity Growth and 
Security Initiative. When we authorized and appropriated 21 E/
A-18G aircraft in the fiscal year 2014 budget, we were led to 
believe that with delivery of the fiscal year 2014 aircraft, we 
had met the requirement for the airborne electronic attack 
(AEA). Have requirements changed since last year? If so, why?
    Admiral Grosklags. Sir, we are currently looking at the 
total number of aircraft that we require. Our program of 
record--you are correct--is 138 aircraft, which is fulfilled by 
the fiscal year 2014 procurement. As we have continued to look 
at the electronic warfare environment that we see coming in the 
future, growing ever more complex, ever more difficult, we 
believe that an additional 22 aircraft would significantly 
reduce the risk to not only the Navy but the Joint Force in 
that integrated air and defense environment that General Davis 
mentioned earlier.
    Specifically, in 2019 when we retire all of our E/A-6Bs 
across the Department of the Navy, the E/A-18 Growler will 
represent the only, I will call it high-end, full spectrum AEA 
capability within DOD. That provides a standoff jamming 
capability that enables the rest of the Joint Force to use some 
of their equipment in a more stand-in role. We can address 
radars and communication systems from a greater distance with 
the Growler with its combined ALQ-99 and in the follow-on next 
generation jammer pod.
    When we looked at this, we said if we are going to buy any 
additional aircraft, we need to do it now because it is the end 
of the production line if we do not procure those 22 aircraft. 
The Chief of Naval Operations quite honestly said it would be a 
prudent time to look at this option now rather than waiting to 
the future.
    We do have a couple of analyses ongoing. We have one from 
the Naval Air Systems Command that was completed late last year 
which shows that the ability to increase the number of aircraft 
in one of our carrier air wings deployed on a carrier from five 
to seven represents a significant improvement in capability in 
not only defending the carrier but also supporting our strike 
packages as they go forward or go over the beach. That 22 
aircraft would enable us to increase 5 of our carrier air wing 
squadrons from 5 aircraft, which is the current program of 
record, to 7 aircraft and give us that additional capability.
    Now we are going to conduct a fleet battle experiment this 
summer off the east coast with one of our carriers. We are 
actually going to put eight Growlers on board that carrier, fly 
it through a bunch of exercises, and determine whether five or 
seven or eight truly provide what we believe will be that knee 
in the curve for a significant increase in capability.
    Senator Blumenthal. What will you do then in coming to us 
with the results of those more up-to-date analyses and the 
exercises that you have planned?
    Admiral Grosklags. I think after we finish the exercise 
this summer we have an ongoing warfare analysis which will take 
that information, combine it with what I will call the paper 
analysis, and see if the two line up. Ideally they will. Then 
we will have to come back to Congress and have that discussion.
    Senator Blumenthal. Thank you.
    I think we may have time before the vote for another round. 
I do not know whether Senator Sessions might have some 
additional questions. Sorry to interrupt. I just want to give 
you an opportunity if you have additional questions.
    Senator Sessions. Are we voting now?
    Senator Blumenthal. We are voting at 4:30 p.m., and we also 
have a meeting of our full committee afterwards to talk about 
sequestration, which all of you have raised as a very pressing 
issue. So I am not sure we will have time to come back here, 
with apologies to witnesses and to members of this 
subcommittee.
    Senator Sessions. Thank you, Mr. Chairman. I will just 
conclude and say there has never been a program as massive and 
as international, I think, as the JSF. Would you agree, General 
Bogdan?
    General Bogdan. Sir, I would agree that we have built a 
very big, complex program that is global in scope.
    Senator Sessions. We just have to keep it on track. We made 
a mistake.
    Let me just ask you this. The curtailment of a number of F-
22s resulted in a disproportionately high cost per copy of that 
aircraft. Did it not? That is not just a myth.
    General Bogdan. That is an absolute true statement, sir.
    Senator Sessions. I am not saying every single aircraft we 
need to buy we have to reach that number, but we should not be 
backing off that too much. It is your challenge to keep it on 
track, and I believe that maybe you are getting there.
    Mr. Chairman, I hope that we can keep this program on 
track. It is just so massive, such an international commitment 
that if we let it get away from us, we will regret it, I do 
believe. Thank you for having this hearing.
    Senator Blumenthal. Thank you, Senator Sessions. I join 
Senator Sessions in the hope that we can stay on track. I think 
members of the subcommittee--I cannot speak for all of them--
have increasing assurance about both the timing and 
effectiveness of the program as we go on. I have spent a lot of 
time talking to people involved, learning about the JSF, a lot 
of time at Pratt & Whitney learning a lot about the engine, 
which I know has been greatly enhanced as a result of the 
oversight and scrutiny that you and others have given to it.
    I want to thank you for your work, facing great challenges 
posed by sequester and other obstacles. There is no question 
that there are difficult days ahead for our modernization 
objectives as we continue to develop these programs. I look 
forward to working with you and the other military leadership.
    I have some questions that I would like to submit for the 
record. You have been very gracious in suggesting that others 
may as well. We are going to keep the hearing record open until 
5 p.m. on Thursday, April 10, for any additional questions that 
I or other Senators may wish to submit. I am going to ask the 
witnesses to respond for the record as quickly as possible so 
that we can get full consideration by the Senate Armed Services 
Committee as we begin the markup.
    With that, thank you all very much. Thank you to all who 
are attending who serve with you and to everybody under your 
command.
    This hearing is adjourned.
    [Whereupon, at 4:37 p.m., the subcommittee adjourned.]

    [Questions for the record with answers supplied follow:]
           Questions Submitted by Senator Richard Blumenthal
                     mh-60r multi-year procurement
    1. Senator Blumenthal. Admiral Grosklags, the Navy budget request 
continues 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 has suggested that this is in part due to the planned 
retirement of the carrier USS George Washington and reducing the 
planned buy of Littoral Combat Ships (LCS). However, the George 
Washington's air wing only contains three to five MH-60R aircraft. 
Likewise, the Navy is still pursuing a fleet of surface vessels to 
replace LCS that will also, in all likelihood, need helicopters. 
Moreover, the Navy's failure to execute the planned purchase of 29 
aircraft in fiscal year 2016 would break the multi-year procurement 
(MYP) contract for H-60 helicopters, managed by the Army. This action 
would result in the U.S. Government having to pay termination charges 
of at least $250 million and getting nothing in exchange for those 
payments. This action would result in increased cost to the Army as 
well. Can you please explain why the Navy intends to cancel the fiscal 
year 2016 MYP when there are only five MH-60R aircraft in the air wing?
    Admiral Grosklags. A final decision on maintaining or terminating 
the MH-60R MYP contracts has been deferred to fiscal year 2016. The 
proposed fiscal year 2015 budget fully funds the MYP in fiscal year 
2015 with advance procurement for the 29 fiscal year 2016 MH-60R 
aircraft. The MH-60R procurement decision is tied to potential force 
structure reductions, most specifically that associated with the 11th 
Nuclear Aircraft Carrier (CVN) and the associated 10th Carrier Air Wing 
(CVW). There are 11 MH-60R aircraft in a helicopter maritime strike 
(HSM) CVW squadron. Also tied to that 10th HSM CVW squadron are three 
Fleet Replacement Squadron training aircraft and two pipeline (depot 
maintenance) aircraft for a total of 16 aircraft directly tied to the 
decision on the 11th CVN and 10th CVW.

    2. Senator Blumenthal. Admiral Grosklags, how much will this cost 
the Navy in termination fees and how much extra will this cost the Army 
to buy their helicopters?
    Admiral Grosklags. Actual costs associated with a potential early 
termination of the two multi-year contracts have not yet been 
determined. Costs will be calculated in accordance with the Federal 
Acquisition Regulations and through negotiations with industry once 
official notification of cancellation occurs. If the level of advance 
procurement funding requested in the President's fiscal year 2015 
budget request is approved, the official cancellation would occur as a 
result of the fiscal year 2016 Appropriations and Authorizations Acts 
becoming law.

    3. Senator Blumenthal. Admiral Grosklags, how is this aircraft 
reduction related to future or potential surface ship restructuring?
    Admiral Grosklags. Any potential modifications to our MH-60R 
procurement plan will be aligned with other Navy force structure 
adjustments.

    4. Senator Blumenthal. Admiral Grosklags, will this leave the Navy 
with a capability gap either now or in the future?
    Admiral Grosklags. A decision to truncate MH-60R quantities 
following the fiscal year 2015 procurement would be based on matching 
MH-60R quantities to overall Navy force structure requirements and 
therefore would not result in any aircraft shortfalls/gaps.

                 marine corps strike fighter shortfall
    5. Senator Blumenthal. General Schmidle, in September 2012, U.S. 
Forces suffered an attack on Camp Bastion, Afghanistan, where two 
marines lost their lives and six Harrier aircraft were destroyed. What 
is the replacement plan for these lost aircraft?
    Admiral Grosklags. The AV-8B is no longer in production, and the F-
35 Joint Strike Fighter (JSF) is the recognized replacement. The 
replacement price for six F-35 JSFs is more costly when compared to six 
AV-8Bs, however, replacing the six lost AV-8B aircraft with AV-8Bs 
would require re-opening an AV-8B production line--a cost that would 
far exceed the requested funding to procure new F-35 aircraft.
    The AV-8B combat loss aircraft will eventually be replaced under 
the current planned transition from the AV-8B to the F-35 JSF. This 
transition will continue throughout the current future years defense 
program and will be completed in 2030. Additionally, the Marine Corps' 
fiscal year 2015 Unfunded Priorities List (UPL) submission included 
$875.5 million for five F-35C combat replacement aircraft, and $141.6 
million for one F-35B combat replacement aircraft.
    If a plan moves forward to fund the six F-35 replacement aircraft 
in fiscal year 2015, the aircraft will be low rate initial production 
(LRIP) 9 aircraft and delivered from the production line in 2017 with a 
Block 3I configuration--a capability commensurate with the projected 
threat at the time of delivery. These aircraft would then be upgraded 
to Block 3F by the fourth quarter of 2017, just months after delivery.

    6. Senator Blumenthal. General Schmidle, if we authorize a 
Continuing Resolution with regard to Overseas Contingency Operations 
(OCO) funds, what would the effect be upon your ability to backfill 
these combat losses?
    Admiral Grosklags. Continuing Resolutions are short-term temporary 
solutions to provide leaders with decision space to plan and manage a 
budget within a fiscal year. Under the rules of a Continuing 
Resolution, new starts are not permitted and therefore replacement 
aircraft for combat losses not previously appropriated for would not be 
funded.

    7. Senator Blumenthal. General Schmidle, will you request 
replacement aircraft in the OCO request for fiscal year 2015?
    Admiral Grosklags. The Marine Corps OCO submission is developed in 
concert with guidance from the Office of Management and Budget (OMB) 
and the Office of the Secretary of Defense (OSD). Until the fiscal year 
2015 OCO budget is formally submitted to Congress, the Marine Corps is 
unable to confirm a request for combat loss replacement aircraft in the 
fiscal year 2015 OCO submission.
    The Marine Corps did submit a fiscal year 2015 UPL which included 
$875.5 million for five F-35C combat replacement aircraft, and $141.6 
million for one F-35B combat replacement aircraft.

    8. Senator Blumenthal. General Schmidle, when will we get the 
administration's OCO request?
    Admiral Grosklags. The Marine Corps OCO submission is developed in 
concert with guidance from OMB and OSD. The Marine Corps is working 
with OSD on the fiscal year 2015 OCO request and defers to them as to 
when the final product will be submitted to Congress.


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

                              ----------                              


                        WEDNESDAY, APRIL 9, 2014

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

                           ARMY MODERNIZATION

    The subcommittee met, pursuant to notice, at 9:16 a.m. in 
room SR-232A, Russell Senate Office Building, Senator Richard 
Blumenthal (chairman of the subcommittee) presiding.
    Committee members present: Senators Blumenthal, Donnelly, 
Sessions, and Wicker.

   OPENING STATEMENT OF SENATOR RICHARD BLUMENTHAL, CHAIRMAN

    Senator Blumenthal. Good morning, everyone. I'm very 
pleased to call this subcommittee hearing to order. Today we 
are going to be hearing testimony on the Army modernization 
program in review of the fiscal year 2015 budget request and 
Future Years Defense Program. I look forward to a very open and 
productive relationship with the Services under our 
jurisdiction. I especially appreciate your being here today, 
the very distinguished witnesses that we have before us, and we 
certainly want to be helpful and supportive in any way that we 
can be.
    I'm going to put my full remarks in the record and keep 
somewhat short my opening statement, just because we are here 
to hear you, not to hear ourselves talk, and these issues are 
very important to us, hearing you present the facts. But 
clearly we want to first thank you and the remarkable men and 
women under your command who have performed so ably and 
courageously over more than a decade of war in Iraq and 
Afghanistan. I am always awe-struck by the ability and the 
bravery, sacrifice, and dedication of our Army, and we are 
grateful to our leaders, as well as the men and women under 
your command.
    I am looking forward to hearing how Army requirements, 
acquisition, and modernization strategies support the Army we 
have today and will have out to 2019 and beyond; how, given 
uncertainty about availability of resources and necessary 
changes to the Army's size and structure, the Army will ensure 
that equipment, readiness, reset, and modernization programs 
are appropriately prioritized with tradeoffs and risks managed, 
while at the same time are stable, achievable, and affordable.
    I'd like to know from the witnesses in particular how the 
Budget Control Act (BCA), the Bipartisan Budget Act (BBA), 
sequestration, the pending overseas contingency operations 
(OCO) request, all figure into the dangers of an unstable, 
unaffordable, and unachievable modernization program. We want 
to avoid those dangers. We want it to be achievable, stable, 
and affordable.
    Finally, how will the Army identify and manage the 
inevitable and growing strategic risk to the Army's industrial 
base during times of declining budgets? I'm particularly 
familiar with the challenges of maintaining a sound and stable 
industrial base, being from a State that is so committed to 
meeting the needs of our military in production and 
manufacturing.
    Readiness and preparedness are very much at the forefront 
of our mindset today, and I want to welcome each of you. 
General John F. Campbell, USA, is the Vice Chief of Staff of 
the Army and has the responsibility to assist the Secretary and 
Chief of Staff of the Army with sorting through the many needs 
of the Army and making tough choices that prioritize what we're 
developing and producing to meet our soldiers' most important 
equipment needs.
    Lieutenant General James O. Barclay III, USA, is the Deputy 
Chief of Staff, G-8, and the Army's principal staff officer, 
responsible for matching available resources to meet the Army's 
requirements for mission success.
    Lieutenant General Michael E. Williamson, USA, is the 
Military Deputy and Director, Army Acquisition Corps, and the 
Army's principal staff officer, responsible for research, 
development, and acquisition (RDA), and he has policy and 
program oversight of how the Army buys and maintains current 
equipment and how it buys new equipment. I think, General 
Williamson, you've been in your position about 3 weeks or so. 
So you're a veteran right now. You're seasoned.
    Thank you, each of you, for being here today. I look 
forward to a good give-and-take here.
    I want to express my appreciation to Senator Wicker for his 
great work on this subcommittee and being my partner in this 
effort.
    [The prepared statement of Senator Blumenthal follows:]
            Prepared Statement by Senator Richard Blumenthal
    Good morning. The Subcommittee on Airland meets today to receive 
testimony on Army modernization programs in review of the fiscal year 
2015 budget request and Future Years Defense Program.
    After more than a decade of war in Iraq and Afghanistan I am always 
impressed that the soldiers of our Army have performed with remarkable 
professionalism, courage, and no small measure of sacrifice. Today's 
Army is battle-tested, proven, and hardened by years of combat in the 
harshest and most unforgiving conditions against a ruthless enemy.
    I ask all Army leaders here with us today whenever you have a 
chance to please convey our gratitude to all those people who are 
serving for us. Our Nation is deeply grateful.
    The subject of today's hearing, Army modernization, merits 
particular attention because of the exceptionally challenging fiscal 
environment and the many twists and turns taken over the last few years 
to reorient, rationalize, and restructure the Army's acquisition 
policies and programs.
    Despite some of the often painful turmoil and, frankly, the 
heartbreaking loss of time and money, in the Army's modernization 
efforts over the last 15 years, the Army always finds a way to give our 
soldiers the equipment they need to get the job done. This doesn't mean 
we should not insist upon more stability and efficiency in Army 
modernization, but it's quite remarkable how American soldiers always 
accomplish the mission.
    This year's hearing examines an Army modernization program 
complicated by the scope of recent strategic changes, the challenges of 
fiscal realities, and the natural uncertainty as our wars wind down and 
our national priorities shift.
    We look forward to our witnesses' testimony to address the 
underlying questions of how the fiscal year 2015 budget request, linked 
to likely changes to this year's request when the Overseas Contingency 
Operations portion of the budget finally arrives, and, looking forward 
into the near future, keeps our Army the best in the world, ready today 
and tomorrow for whatever the Nation may ask it to do. We look forward 
to hearing:

         How Army requirements, acquisition, and modernization 
        strategies support the Army we have today and will have out to 
        2019 and beyond?
         How, given the uncertainty about the availability of 
        resources and the necessary changes to the Army's size and 
        structure, will the Army ensure that equipment readiness, 
        reset, and modernization programs are appropriately prioritized 
        with tradeoffs and risks managed, while at the same time are 
        stable, achievable, and affordable? In this regard, the 
        witnesses can paint a picture for the subcommittee of how the 
        Budget Control Act, the Bipartisan Budget Act, sequestration, 
        and a pending Overseas Contingency Operations request all 
        figure into the dangers of an unstable, unachievable, and 
        unaffordable modernization program.
         How will the Army identify and manage the inevitable 
        and growing strategic risk to the Army's industrial base during 
        times of declining budgets?

    The Army's fiscal year 2015 modernization objective is to maintain 
the technological advantage no matter where our wars are fought. The 
base request, however, is $1.7 billion (almost 7 percent) less than 
last year's request. The Army is accepting measured risk to accommodate 
a tightening fiscal environment and manage precarious readiness 
shortfalls begun and carried forward from 2 years ago. These reductions 
for fiscal year 2015 are compounded by modernization reductions started 
in prior years and likely further reductions under full sequestration.
    Clearly, the readiness of today's soldiers is Army leadership's 
most important duty. It is not a question of ``balance'' at the ground 
level; units must be manned, trained, and equipped to support 
operations in Afghanistan and other unforeseen contingencies. The 
Nation plans for and resources the Army to be ``ready'' and therefore 
it is a strategic imperative that it should always be so.
    Our witnesses today will argue that the Army remains oriented on 
winning today's fight and trying to prepare for an uncertain future 
that is complicated by the requirements to reduce spending in the 
Budget Control Act. All of this drives the Army to a new modernization 
approach. We look forward to their description of how and why the 
fiscal year 2015 request makes tough choices, for example, cancels the 
Ground Combat Vehicle program and slows or concludes several 
procurement or upgrade programs, yet remains an adequate and affordable 
approach to equipping the force for today and tomorrow at acceptable 
levels of risk. The Army is truly in transition during a period of 
declining funding, yet must continue to equip soldiers for what we ask 
them to do today--frankly the future, as is common in periods of 
declining resources, is less important. But this subcommittee's 
oversight responsibility is to ensure that the tradeoffs, although 
necessary, are reasonable, realistic, and manage risks in an 
appropriate manner relative to our defense strategy and the Army's 
needs.
    We have before us a distinguished panel of soldiers and Army 
leaders:
    General John Campbell is the Vice Chief of Staff of the Army and 
has the responsibility to assist the Secretary and Chief of Staff of 
the Army with sorting through the many needs of the Army and making the 
tough choices that prioritize what we are developing and producing to 
meet our soldiers' most important equipment needs.
    Lieutenant General James Barclay is the Army's principal staff 
officer responsible for matching available resources to meet the Army's 
requirements for mission success and support soldiers by managing 
current force needs and future force capabilities.
    Lieutenant General Michael Williamson is the Army's principal staff 
officer responsible for RDA. As such, he has policy and program 
oversight of how the Army buys new and maintains current equipment. I 
believe General Williamson has been in his position about 3 weeks or so 
and I guess that makes this a bit of a ``training'' hearing for him. 
Although I understand that he has already testified to our counterpart 
House Armed Services subcommittee, therefore this perhaps is a 
validation exercise? Good luck.
    Thank you all for your many years of service to the Nation and the 
Army.

    Senator Blumenthal. Senator Wicker.
    Senator Wicker. Thank you very much. Mr. Chairman, college 
basketball season is over. The State of Connecticut is beaming 
today. I want to congratulate you on the national champions for 
the men's and women's programs.
    Senator Blumenthal. Thank you. Thank you very much.
    Senator Wicker. Amazing.
    Senator Blumenthal. I still have my Huskies tie on. I think 
I may wear it as long as it holds out.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you very much, and thank you to our 
witnesses. Thank you for your years of dedicated service.
    We are here today to discuss Army modernization. Before we 
talk about equipping the force, I want to talk about manning 
the force. The fiscal year 2015 President's budget request 
draws down total Army end strength to 450,000 Active, 335,000 
National Guard, and 195,000 Reserve by the end of fiscal year 
2017. If budget caps 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 Reserve to 
185,000.
    If we've learned anything about assumptions regarding 
national security and ground forces, it's usually that they are 
wrong. That is why it's important for us to get Army 
modernization right in the current fiscal year.
    The Army's fiscal year 2015 budget request for $120.5 
billion represents the fifth straight year the Army has 
budgeted for an amount that was lower than the previous year. 
Given the fact that personnel costs are 46 percent and 
operations and maintenance (O&M) costs are 35 percent of the 
Army's budget, the Army's approach to the 2015 budget is to 
prioritize near-term readiness. Accordingly, the Army's budget 
request for investment accounts, procurement, research, 
development, test, and evaluation is $20.1 billion or 17 
percent of the Army's total budget.
    In short, this means that the Army's modernization efforts 
will continue to be vulnerable as full sequestration reemerges 
in fiscal year 2016.
    This subcommittee appreciates the immense planning 
challenges the Army faces, given the lack of budget certainty 
on Capitol Hill. The subcommittee also notes that the Army 
still does not know what its OCO funding is going to be for 
fiscal year 2015.
    That being said, I'd like to highlight four specific issues 
that are of concern, with the hope that our witnesses will 
elaborate on them during the hearing. First, I have major 
reservations about the Army aviation restructure initiative's 
proposal to remove Apache helicopters from the National Guard. 
Our National Guard Apache units, located in 10 States, have 
performed superbly. I continue to believe that we've made 
significant investments in the National Guard to make the Guard 
a fighting force able to supplement and augment our Active-Duty 
Forces in times of need. Any decision to undo these investments 
must be carefully considered, given the global challenges we 
face today in Europe and in Asia.
    Second, the budget request for Army aircraft is $4.4 
billion, a $432 million increase from 2014 enacted levels. This 
includes funding for AH-64 Apache Block 3s, remanufactured and 
new build CH-47 Chinooks, the utility and medical version of 
the Black Hawk, and the UH-72 light utility helicopter that is 
manufactured in my State of Mississippi.
    While this is welcome news for the helicopter industrial 
base, I can assure you this subcommittee is concerned about 
sequestration's impact on multi-year procurement of the UH-70 
Blackhawk and the Army's acquisition plan for an Armed Aerial 
Scout helicopter. While the Army plans to use Apache 
helicopters teamed with unmanned aircraft, I'm concerned about 
the long-term cost and sustainment issues associated with this 
proposal.
    Third, with the termination of the Ground Combat Vehicle 
(GCV), the Army has few programs to modernize its combat and 
tactical wheeled vehicle fleet. With the exception of the 
procurement of the Joint Light Tactical Wheeled Vehicle, the 
Army does not have a program which provides an entirely new 
platform. The Paladin Integrated Management (PIM), the Armored 
Multi-Purpose Vehicle (AMPV), Stryker hull upgrades, Abrams 
tank, Bradley Fighting Vehicle upgrades, and Stryker Combat 
Vehicle fleets are based on existing platforms that are no 
longer in production. Accordingly, I am interested in learning 
about the Army's plans for vehicle modernization.
    Finally, General Raymond T. Odierno, USA, the current Chief 
of Staff of the Army, has testified on numerous occasions that 
a fully funded Army reset program is critical to ensuring that 
equipment returning from overseas missions is recovered and 
restored for future Army requirements. The Army and Marine 
Corps previously testified they will require OCO funding for 
equipment reset for 3 years after the last piece of equipment 
returns from Afghanistan. The Army must face the reality that 
this may not be achievable in the current fiscal environment.
    Gentlemen and Mr. Chairman, let me conclude by observing 
that our Army continues to perform with remarkable courage, 
professionalism, and effectiveness despite incredibly difficult 
circumstances. I had the opportunity to visit West Point in 
February. I encourage my colleagues to do so. During my visit, 
I had lunch with and spoke with some outstanding cadets from my 
home State of Mississippi. I am so proud of them. It is the 
solemn duty of this subcommittee to ensure that these young 
leaders have the resources to execute their mission in the 
defense of our Nation.
    Thank you, Mr. Chairman.
    Senator Blumenthal. Thank you, Senator Wicker.
    We'd be very pleased to hear any opening statements that 
each of you may have, beginning with General Campbell. Thank 
you, sir.

 STATEMENT OF GEN JOHN F. CAMPBELL, USA, VICE CHIEF OF STAFF, 
U.S. ARMY; ACCOMPANIED BY LTG JAMES O. BARCLAY III, USA, DEPUTY 
CHIEF OF STAFF, G-8, U.S. ARMY; AND LTG MICHAEL E. WILLIAMSON, 
  USA, MILITARY DEPUTY AND DIRECTOR, ARMY ACQUISITION CORPS, 
OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION, 
                   LOGISTICS, AND TECHNOLOGY

    General Campbell. Sir, thanks. I'll make the opening 
statement for all three of us. We'll get through that and go to 
questions and answers (Q&A), as I know you want to go there, 
sir.
    Chairman Blumenthal, Senator Wicker, thank you very much 
for the opportunity to discuss the modernization of your U.S. 
Army. We appreciate your support, your commitment to our 
soldiers, our Army civilians, our families, our wounded 
warriors, and our veterans.
    I'd first like to take a moment to send our regards to our 
brethren in arms at Fort Hood, TX, especially to the families 
who have been affected by the terrible tragedy last week. 
There's a memorial ceremony today. So just a shout-out to all 
those at Fort Hood and our Army family that they're in our 
thoughts and prayers.
    Today, your Army remains globally engaged, with more than 
66,000 soldiers deployed, including nearly 32,000 still in 
Afghanistan, and about 85,000 forward stationed in nearly 150 
different countries. The future, as you talked about, is 
uncertain and recent headlines highlighting Korea, Ukraine, 
Syria, all remind us that we must plan for the world as it is, 
not as we wish it to be.
    Over the past 3 years, the Army has absorbed several 
budgetary reductions in the midst of conducting operations 
overseas and at the same time rebalancing the force for a wider 
array of missions called for by the defense strategy. During 
this period of fiscal and strategic uncertainty, our goal has 
been to maintain the proper balance between end strength, 
readiness, and modernization across the total Army, all three 
of our components.
    We are reducing end strength as rapidly and as responsibly 
as possible, while at the same time doing our best to meet our 
operational requirements. Additionally, we need to concentrate 
funds on rebuilding our readiness. However, to do this we must 
accept greater risks in our modernization programs in the near-
term.
    As a result, RDA investments have declined 39 percent since 
the fiscal year 2012 budget planning cycle. Historically, the 
Army's RDA accounts have averaged about 21.9 percent of our 
obligation authority. For fiscal year 2015, the RDA account is 
about 17.1 percent, as Senator Wicker talked about, or $20.1 
billion of obligation authority.
    Regardless of the austere fiscal conditions, it remains the 
Army's responsibility to ensure that every soldier that is 
deployed is equipped to achieve his decisive overmatch. To do 
this, the Army has developed several initiatives that guide our 
equipment modernization. I'd like to outline those very 
quickly.
    First, we are using incremental improvements to modernize 
our critical systems and will build new systems only by 
exception.
    Second, we are divesting of older systems and niche 
capabilities to decrease sustainment costs and generate 
additional resources we can invest in our modernization and 
readiness priorities.
    Third, we are resetting much of the equipment procured for 
Iraq and Afghanistan since that is what we will fight with in 
the near-term contingency. To accomplish this, we do require 
OCO funding for 3 years after we complete the retrograde 
equipment. I just point out, this is not new. I was the 
Executive Officer to retired General Peter J. Schoomaker, when 
he was the Army Chief of Staff from 2003 to 2007. In about 
2004, we started saying already that we would need OCO to help 
us do reset. That's been a constant thing for your Army over 
the last 13 or 14 years here.
    We are procuring smaller quantities because the Army cannot 
afford to equip and sustain the entire force with the most 
advanced equipment. We are protecting science and technology 
(S&T) efforts, which are the seed corn of our generation of 
capabilities. We are focusing S&T investments where we are 
technology makers and reducing S&T where we are technology 
takers.
    These guiding principles ensure the Army will maximize 
every dollar towards putting the best equipment in the hands of 
our soldiers. First and foremost, the soldier and squad are the 
centerpiece of the Army equipment modernization. From this we 
build outward by enabling them with a network and other key 
equipment.
    Within this year's budget request, we seek to empower and 
unburden the soldier through funding for advanced weapons 
capabilities, next-generation optics and night vision devices, 
and advanced body armor and individual protection equipment. We 
will modernize the network to improve soldiers' decisionmaking 
with information and connectivity to the lowest tactical level.
    Our priorities include Warfighter Information Network 
Tactical (WIN-T) systems. This is a family of networked radios 
and a joint battle command platform. Investments in the 
network, however, are not untouched by the resource 
constraints, and as a result, we will have to delay portions of 
WIN-T Increment 3 and reduce our investments in some of our 
tactical radio systems.
    We are committed to developing and fielding the AMPV to 
replace our obsolete M-113 family of vehicles and augmenting 
our wheeled fleet with the Joint Light Tactical Vehicle (JLTV) 
Family of Vehicles.
    The PIM remains a significant priority and we will continue 
funding a third brigade set of the double-V hull (DVH) Strykers 
as well, while supporting incremental upgrades to existing 
Strykers under DVH power and mobility.
    A new Infantry Fighting Vehicle (IFV) remains a key 
requirement for your Army. However, due to the significant 
fiscal constraints the Army will conclude the GCV program upon 
completion of the technology demonstration phase. We expect 
this in June of this year. Instead, the Army will now focus its 
efforts on refining concepts, requirements, and key 
technologies in support of a future IFV. This will include 
investment in vehicle components, subsystem prototypes, and 
technology demonstrators. In the distant future we anticipate 
initiating a new combat vehicle program informed by these 
efforts as resources become available.
    Fiscal constraints also drove the Army to reevaluate its 
strategy for Army aviation. Analysis of missions, age, costs, 
and available funding led to an aviation plan that restructures 
the formations and balances operational capability across the 
total Army to achieve a leaner, more efficient force that is 
the best use of taxpayers' dollars. You can find more detail on 
the aviation restructure initiative in my written testimony. To 
save time now, I won't say more, but can address this topic 
during the Q&A period.
    In closing, we are adjusting to reduced resources, which 
means we must accept greater risk in Army modernization. The 
Army's ability to modernize equipment relies on sufficient, 
consistent funding. While the BBA of 2013 provides greater 
budget certainty for fiscal year 2014 and fiscal year 2015, 
reductions in modernization accounts continue to challenge your 
Army. Without Congress' intervention, sequestration-level 
budget caps will return in fiscal year 2016 and impose greater 
risk on Army equipment and modernization, leaving our soldiers 
less prepared in an unpredictable world.
    Ultimately, the Army is about people. As we downsize, we 
are committed to taking care of those who have sacrificed for 
our Nation over the last 12-plus years of war. Assisting our 
transitioning veterans, our wounded warriors, and our Gold Star 
families will remain a top priority and we will protect 
programs that support their needs.
    I thank you again for your steadfast and generous support 
of the outstanding men and women of your U.S. Army. Please 
accept my written testimony for the record. Lieutenant General 
James Barclay and Lieutenant General Michael Williamson and I 
look forward to your questions. I would add that Michael was 
just promoted to our newest three-star last Friday. So he's 
been on the job since Friday, sir. All three of us, if we 
weren't before a couple of minutes ago, are great University of 
Connecticut fans. It's a great day there that they can have 
both the men's and women's national championships. [Laughter.]
    Sir, we appreciate the opportunity here and we look forward 
to your questions.
    [The joint prepared statement of General Campbell, General 
Barclay, and General Williamson follows:]
  Joint Prepared Statement by GEN John F. Campbell, USA, LTG James O. 
          Barclay III, USA, and LTG Michael E. Williamson, USA
                              introduction
    Chairman Blumenthal, Ranking Member Wicker, distinguished members 
of the Subcommittee on Airland, thank you for the opportunity to 
discuss the Army's fiscal year 2015 President's budget request as it 
pertains to Army Modernization.
    The world today continues to present our Army and our Nation with 
dynamic and uncertain security challenges. It is imperative that the 
Army clearly assesses the future security environment and prioritizes 
investments and allocates resources accordingly. Potential adversaries 
will develop disruptive technologies and increasingly destructive 
weapons making it imperative that the Army continues to develop and 
field overmatching capabilities. The demand for Army units will 
continue to meet combatant commander requirements for the range of 
military operations to Prevent, Shape, and Win in support of national 
interests. Accordingly, the objective of Army equipment modernization 
is to enable our soldiers to conduct that range of military operations 
by developing and fielding versatile and tailorable equipment; 
equipment that is affordable, sustainable, and cost-effective. We want 
our Total Army to be ready and capable of conducting operations in any 
location and environment while maintaining tactical and operational 
overmatch with our adversaries. On behalf of our Secretary, the 
Honorable John McHugh, and our Chief of Staff, General Ray Odierno, we 
look forward to discussing with you the Army's fiscal year 2015 
modernization budget that takes the next step towards meeting these 
future challenges.
                     resourcing army modernization
    Over the past 3 years, the Army has absorbed several budgetary 
reductions in the midst of conducting operations overseas and 
rebalancing the force for a wider array of missions called for by the 
President's defense strategy. During this period of fiscal and 
strategic uncertainty, 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, to concentrate remaining funds on 
rebuilding readiness. However, to do this we must accept greater risk 
in our modernization programs in the near-term. As a result, Research, 
Development, and Acquisition (RDA) investments planned for fiscal year 
2015 have declined 39 percent since the fiscal year 2012 budget 
planning cycle. Historically, the Army's RDA accounts have averaged 
21.9 percent of its obligation authority. For fiscal year 2015 the RDA 
account is 17.1 percent, or $20.1 billion, of obligation authority.
    Even under these austere fiscal conditions, it is the Army's 
responsibility to ensure every Soldier deployed is equipped to achieve 
decisive overmatch regardless of the situation. To do this, the Army 
has developed several initiatives that guide equipment modernization 
during this period of fiscal constraint. First, we use incremental 
improvements to modernize existing critical systems as our primary 
option, and build new systems to address key capability gaps. Second, 
the Army is divesting older systems and niche capabilities to decrease 
sustainment costs and re-allocate those resources for modernization and 
readiness. Third, we are slowing procurement and limiting quantities 
because the Army cannot afford to equip and sustain the entire force 
with the most advanced equipment. Fourth, we will insert technologies 
and capability improvements only as needed, leveraging commercial 
investment where we are ``technology-takers'' (e.g., information 
technology, fixed wing aviation) and focusing our Science and 
Technology investments where we are ``technology-makers'' (e.g., 
lethality, armor). Finally, each equipment decision is scrutinized to 
ensure it is both affordable within the overall budget and is cost-
effective in addressing capability gaps. The Army has established 
overarching equipment objectives and budget priorities to help guide 
this investment strategy for which I will provide you some specifics.
Equipment Objectives
    Enhance the Soldier for Broad Joint Mission Support
    The centerpiece of Army modernization continues to be the soldier 
and the squad. The Army's objective is to facilitate incremental 
improvements by integrating technologies and applications that empower, 
protect, and unburden the soldier and smaller formations. This provides 
the Soldier with the right equipment, at the right time, to accomplish 
their assigned mission. The fiscal year 2015 budget supports this 
priority by investing in technologies that provide the soldier and 
squad with advanced warfighting capabilities. We are pursuing enhanced 
weapons effects, next generation optics, night vision devices, advanced 
body armor and individual protection equipment.
    Enable Mission Command
    The Army's objective is to facilitate overmatch through better 
decisionmaking of our leaders and soldiers with real-time networked 
data and connectivity across the Joint Force down to the soldier as 
well as across platforms through commodity-like procurement and rapid 
innovation. The fiscal year 2015 request resources enhanced mission 
command capabilities and platform integration of network components 
through Operational Capability Sets, and software applications for the 
Common Operating Environment (COE), in concert with operations and 
intelligence network convergence efforts.
    Remain Prepared for Decisive Action.
    The Army's objective is to facilitate fleet capabilities to 
increase lethality and mobility while optimizing survivability by 
managing the full suite of capabilities to enable the most stressing 
joint warfights. This year's budget request continues to support the 
Armored Multi-Purpose Vehicle (AMPV), Paladin Integrated Management 
(PIM) program, Joint Light Tactical Vehicle (JLTV), and critical 
Aviation programs.
Budget Priorities
    To satisfy our equipment objectives, the Army has identified 
several critical systems, discussed in detail below:
The Network
    Warfighter Information Network-Tactical (WIN-T) is the Army's 
deployed mobile network, providing intranet and telephone service to 
command posts from Theater to Company level. It extends an Internet 
Protocol (IP) based satellite and line-of-sight (LOS) communications 
network throughout the tactical force supporting telephone, data and 
video. Increment 2 provides initial on-the-move capability as well as a 
robust LOS transmission network and greater satellite data down to 
company level for maneuver brigades and division headquarters. Fiscal 
year 2015 funding fields Increment 2 sets to 1 division headquarters, 1 
Brigade Combat Team (BCT), and 11 Battalions. Increment 3 will improve 
throughput for LOS and beyond LOS transmissions through the development 
of the Highband Networking Waveform (HNW). Fiscal realities forced a 
delay of the Increment 3 aerial layer. Fiscal year 2015 funding will 
focus on the development of a common Network Operations tool and 
completion of the HNW.
    Family of Networked Tactical Radios is the Army's future family of 
tactical radio systems. It provides advanced joint tactical end-to-end 
networking data and voice communications to dismounted troops, ground, 
and aircraft platforms. Formally known as the Joint Tactical Radio 
Systems, these multi-band/multi-mode radio capabilities leverage IP-
based technologies. Fiscal year 2015 funding reduces investments in the 
development and limited procurement of Mid-Tier Networking Vehicular 
Radio systems, Manpack and Rifleman radios.
    Joint Battle Command-Platform (JBC-P) is the next generation of 
Force XXI Battle Command Brigade and Below and Blue Force Tracking and 
is the foundation for achieving affordable information interoperability 
and superiority on current and future battlefields. JBC-P is the 
principal command and control/situational awareness system for the Army 
and Marine Corps at the brigade level and below. Fiscal year 2015 
funding procures JBC-P for BCTs and brigades to include replacement of 
Enhanced Position Location and Reporting Systems in BCTs.
    Distributed Common Ground System-Army (DCGS-A) provides integrated 
Intelligence, Surveillance, Reconnaissance (ISR) Processing, 
Exploitation, and Dissemination (PED) of airborne and ground sensor 
platforms providing commanders, at all levels, access to the Defense 
Intelligence Information Enterprise and leverages the entire ISR 
community. The DCGS-A program modernizes and procures components for 
fixed sites and data centers needed for the Army's ISR component of the 
COE. The DCGS-A hardware and software will be integrated into select 
ISR current Programs of Record systems to enable networked PED 
capabilities. Although fiscal challenges have caused a reduction in the 
number of software releases, fiscal year 2015 funding continues the 
development and testing effort for Increment 1 software, to include 
integration into the Command Post Computing Environment.
    Nett Warrior is a dismounted soldier mission command system that 
provides unprecedented command, control, and situational awareness 
capabilities for dismounted leaders down to the squad level. The design 
leverages commercial technology, while incorporating operational unit 
mission needs and provides assured power in austere environments. Nett 
Warrior is the foundational program to converge handheld devices onto 
one technology--the Handheld Computing Environment in the COE. Fiscal 
year 2015 funding procures soldier worn communications sets for 
Capability Set 15 fielding.
Combat Vehicles
    AMPV replaces the M113 family of vehicles at brigade and below. It 
will provide required protection, mobility and networking for the 
Army's critical enablers including mortars, medical evacuation, and 
command and control vehicles. The fiscal year 2015 request provides for 
one Engineering, Manufacturing and Development contract and program 
management support.
    PIM provides readily available, low risk upgrades enhancing the 
responsiveness, force protection, survivability, and mobility of the 
self-propelled howitzer fleet. The PIM replaces the current M109A6 
Paladin and M992A2 Field Artillery Ammunition Supply Vehicle with a 
more robust platform incorporating Bradley common drive train and 
suspension components in a newly designed hull. The fiscal year 2015 
request supports procurement of 18 low-rate initial production (LRIP) 
systems, 18 self-propelled howitzers, and 18 ammunition carriers.
Light Tactical Vehicles
    JLTV is the centerpiece of the Army's Tactical Wheeled Vehicle 
modernization strategy. The Army will procure 49,099 JLTVs by 2041. The 
JLTV family of vehicles is being designed to provide the necessary leap 
in protection, performance, and payload to fill the capability gap 
remaining between the High Mobility Multipurpose Wheeled Vehicle and 
the Mine Resistant Ambush Protected family of vehicles. This multi-
mission vehicle will provide protected, sustained and networked 
mobility for personnel and payloads across the full range of military 
operations. The fiscal year 2015 funding completes limited user testing 
and procures 176 vehicles for LRIP. The Army anticipates down-select to 
one vendor in fiscal year 2015.
Aviation
    Aviation Restructure Initiative. Following a comprehensive review 
of our aviation strategy, the Army will restructure aviation formations 
to achieve a leaner, more efficient and capable force that balances 
operational capability and flexibility across the Total Army. The Army 
National Guard will transfer all AH-64 Apache helicopters to the active 
Army, where they will be teamed with Unmanned systems for Armed 
Reconnaissance or continue their traditional attack role. The Active 
Army will transfer 111 UH-60 Black Hawk helicopters to the Army 
National Guard, which will significantly improve its capabilities for 
support of civil authorities, such as disaster response. The UH-72 
Lakota will replace the TH-67 helicopter fleet as the next generation 
glass cockpit, dual engine training helicopter. We will transfer nearly 
all Active Army UH-72 Lakota helicopters to our training base at Fort 
Rucker, Alabama. With no sequestration, the Army will procure an 
additional 100 UH-72 Lakotas to support the initial entry rotary wing 
training requirement. Also, we will sustain the current fleet of Army 
National Guard UH-72 helicopters, which perform dual-purpose state and 
homeland defense missions. 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 8 percent. This smaller, more efficient 
force will facilitate Aviation readiness when needed.
    AH-64E Apache is the Army's world class heavy attack helicopter for 
the current and future force assigned to Attack Helicopter Battalions. 
The AH-64E provides the capability to simultaneously conduct close 
combat, mobile strike, armed reconnaissance, security and vertical 
maneuver missions across the full spectrum of warfare, when required in 
day, night, obscured battlefield and adverse weather conditions. AH-64E 
enhancements consist of several technical insertions to include Level 
IV Manned-Unmanned Teaming, Cognitive Decision Aiding, improved drive 
system, composite rotor blades, new fuselage, and open system 
architecture. Apache investment is also key to the Army Aviation 
Restructure Initiative. AH-64 aircraft will be assigned to Armed 
Reconnaissance Squadrons as part of the Manned-Unmanned teaming 
capability that will provide a viable option and allows divestment of 
legacy Kiowa Warrior aircraft. The fiscal year 2015 request supports 
the remanufacture of 25 AH-64D aircraft to the AH-64E models, and 
associated modifications to the existing AH-64D fleet.
    H-60 Black Hawk aircraft comprises the Army's largest helicopter 
fleet. The Black Hawk is a vital asset to fulfill lift and medical 
evacuation missions in the current and future force theater operational 
plans. The Black Hawk also serves a key role in the Army Aviation 
Restructure Initiative by supporting maneuver commanders through air 
assault, general support, command and control, and aero-medical 
evacuation missions. The Black Hawk is the mainstay of the homeland 
defense mission. With its day, night and adverse weather capability it 
is a key component of the Army National Guard's forest fire, tornado, 
hurricane, and earthquake relief missions. In addition to supporting 
the Army Aviation Restructure Initiative, the fiscal year 2015 Black 
Hawk funding request procures 55 UH-60M, 24 HH-60M; continues the 
Improved Turbine Engine program and UH-60 Digital L efforts; and 
purchases mission equipment packages.
                other major changes in fiscal year 2015
    The Army has carefully prioritized our efforts to ensure we 
maximize every dollar toward putting the best equipment in the hands of 
our soldiers. The most notable change is the conclusion of the Ground 
Combat Vehicle (GCV) program. GCV will conclude at the end 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 Infantry Fighting Vehicle (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 needed replacement for the Bradley IFV. 
Over the long-term, the Army anticipates initiating a new IFV 
modernization program informed by these efforts as resources become 
available.
    The Army will also re-scope Network Integration Evaluation (NIE). 
NIE continues to provide the mechanism to evaluate and incrementally 
improve the network baseline, incorporating critical Soldier feedback 
into system functionality and training methods. The reduction in 
funding for these biannual events will extend some timelines for 
Programs of Record or divert their tests to alternative events. In 
addition, accepting risk in this program will reduce opportunities to 
evaluate new technologies in an operational network.
    In addition, the Army will accept risk in the Integrated Air and 
Missile Defense-Battle Command System (IBCS). IBCS is a network centric 
system-of-systems that integrates sensors, shooters, and battle 
management, command, control, communications and intelligence systems 
for Army air and missile defense. The program decrements will cause a 
2-year delay in fielding the initial operational capability, from 
fiscal year 2016 to fiscal year 2018.
    The fiscal year 2015 request will also reflect a significant 
acceleration of funding for Patriot Advanced Capability, or PAC-3, 
launcher upgrades for combatant commanders in fiscal year 2016 and 
fiscal year 2017. Additionally, we will also 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.
    Finally, the Army will not pursue the Armed Aerial Scout and will 
halt the Cockpit and Sensor Upgrade Program for the Kiowa Warrior. We 
will divest almost 900 legacy helicopters including the entire single 
engine OH-58D Kiowa Warrior and TH-67 helicopter training fleets. 
Instead, the Army will fund modernization and sustainment of our most 
capable and survivable combat-proven aircraft: the AH-64 Apache, UH-60 
Black Hawk, and CH-47 Chinook helicopters.
                        defense industrial base
    As lower funding levels for the Army continue, we are concerned 
about the health of the Army's commercial and organic industrial bases 
and the subsequent consequences for the Army and our Nation. Shrinking 
demands and corresponding budgets for new combat platforms and smaller 
production rates lead to higher proportional costs. A smaller 
commercial industrial base may reflect a workforce with reduced 
expertise in design, development, and manufacturing. Diminished 
capacity in this industrial base may decrease competitiveness and 
increase response time to future requirements. The likely loss of 
critical skill sets and suppliers at all tiers, and an increase in the 
number of single-points failure in the supply chain is of particular 
concern to the Army.
    The Army continues to assess the commercial industrial base to 
provide leadership with evaluations of current operations, risks, and 
issues in the Army Industrial Base. We intend to address critical 
impacts through planning for ongoing and future modernization efforts 
within our equipment portfolios.
    The Army has also conducted a comprehensive Combat Vehicle 
Portfolio Industrial Base Study through A.T. Kearney, a global 
management consulting firm. In response to the findings of these 
assessments, the Army has:

         Initiated Engineering Change Proposals, to upgrade 
        fielded vehicles, earlier to help fill production gaps at Joint 
        Manufacturing Center for the Abrams vehicle;
         Slowed production deliveries of the Abrams vehicle to 
        distribute workload and prevent workforce furloughs;
         Provided production funding to second-tier suppliers 
        to mitigate critical production breaks;
         Developed second source suppliers for financially 
        fragile suppliers for Abrams and Bradley vehicles; and
         Continued advocacy for Foreign Military Sales (FMS) 
        with defense industry.

    We are equally concerned about the health of the organic industrial 
base containing our depots, arsenals, and ammunition plants. The Army 
is preserving needed capabilities by modernizing facilities through new 
technology, training, and plant equipment. We will maintain our depots 
by workloading them to preserve their core functions and capabilities 
and encouraging depots to partner with commercial firms to meet future 
requirements. The Army also advocates FMS, extended production in 
certain programs, and investment in key suppliers on a case-by-case 
basis. In terms of monitoring the health and management of the 
community, the Army has initiated Joint Acquisition and Sustainment 
Reviews to synchronize efforts to address issues faced by our Program 
Executive Offices and our depots and arsenals. These periodic reviews 
led by the Army Materiel Command and Army Acquisition Executive help 
effectively manage challenges across the materiel enterprise.
                            closing comments
    Our Total Army remains the best in the world today. It has unique 
capabilities to provide regionally aligned, expeditionary, and decisive 
land power, but its capacity and capability overmatch is eroding. 
Adequate resources are essential to meet the President's defense 
strategy and defense budget priorities. Ultimately, the ability to 
modernize Army equipment relies on sufficient, consistent funding. 
While the Bipartisan Budget Act of 2013 provides greater budget 
certainty for fiscal year 2014 and fiscal year 2015, reductions in RDA 
continue to challenge the Army's ability to deliver capabilities to our 
soldiers now and in the future. Without Congress' intervention, 
Sequestration level budget caps will return in fiscal year 2016 and 
impose additional risk on Army equipment modernization. Those risks 
include fewer mitigation options, aging fleets, eroding overmatch, 
higher sustainment costs, longer timelines to re-generate and higher 
costs, leaving our soldiers less prepared for future conflicts.
    Mr. Chairman, members of the subcommittee, I thank you again for 
your steadfast and generous support of the outstanding men and women of 
the U.S. Army, Army civilians, and their families. We look forward to 
your questions.

    Senator Blumenthal. Thank you very much, General Campbell. 
The question is not how long you've been UConn fans, but how 
long you will be UConn fans. But I do appreciate even your 
fleeting support. [Laughter.]
    I would agree with you that the greatest resource that the 
Army or any of our Military Services has is its people. It is, 
as you've said very powerfully, all about people. As we grow 
leaner and more efficient, as you have also said, the risk is a 
hollowing out, as it's often called, of our military, 
particularly in attracting and recruiting and training the most 
able men and women in any military force in the history of the 
world, which we have right now.
    My first question is, how do we avoid that hollowing out 
or, more precisely, what will be the danger signs, do you 
think, to you? What will be the alarm bells of a hollowing out, 
both in terms of modernization of equipment and in the 
recruitment of personnel?
    General Campbell. Sir, thanks. I'll start off, then turn to 
my colleagues here if they want to add.
    But, sir, great question. The best thing that we can do is 
get rid of the uncertainty. The biggest frustration for the 
Chief, for the Secretary, for, I think, all the Services, is 
the uncertainty on the budget. What we don't want to do is make 
decisions today that we would make differently down the road if 
we knew what 2016, 2017, and 2018, and where we were going to 
go.
    2014 and 2015, as we talked about, with your leadership, we 
do appreciate the BBA and what that will bring for us. But as 
you know, 2013 was a very bad year. We're going to dig 
ourselves out of 2013 and part of 2014. We really do have to 
focus on the short-term readiness. That's what we will do.
    In 2015 for us, we actually come down a little bit based on 
where the money will be spread out in 2015. Then in 2016, again 
we drop off the map with sequestration, or the risk, as General 
Odierno has talked about, goes much higher and we would not be 
able to accomplish, we really believe, what is required of the 
Defense Strategic Guidance (DSG).
    Really, the signs, though, are about balance. You talked 
about that, sir. You put your trust and confidence in our 
senior leadership, our Secretary, our Chief, under their title 
10 responsibilities to make sure that we do keep all of our 
components balanced. So there are some very tough decisions 
that we have to make.
    A very tough one: We're all about people, but we have to 
cut people. That's where we get that money to be able to put 
back toward everything else. What we want to be able to do is 
cut them at the right ramp and have the right personnel 
policies in place so that we can take care of these great 
soldiers and these families that have sacrificed so much over 
the last 12 to 13 years.
    We felt very comfortable prior to sequestration we can do 
that. We made a very tough decision. We were going down to 
490,000 by 2017 and the Chief and the Secretary took a look at 
that, the impact that it had on readiness, the impact that 
would drive us more out of balance, and moved that decision to 
fiscal year 2015 to come down to 490,000. So these boards we're 
having, that will take out some lieutenant colonels and 
colonels, will select some majors and captains that have to 
leave the Service involuntarily, that's to get us to 490,000. 
We have to go back now and really look at what it does to us to 
go from 490,000 to 450,000.
    The same thing with equipment modernization. Those 
decisions were based on an Army of 490,000. We're going back 
now to apply all of that to an Army of 450,000 for the Active, 
335,000 for the Guard, as you talked about, and 195,000 for the 
Reserve.
    Some of the signs that we'll see is that we'll lose that 
trust and confidence in our soldiers, in the families. We could 
go to 490,000 by almost natural attrition for the most part. 
There are going to be some very small involuntary separations. 
490,000 to 450,000, the sign there is we're going to have to 
move more of those out early, and we'll just erode that trust. 
We have to do that and keep everything in balance.
    That's why the Chief and the Secretary look across all the 
components and they can't make a decision that looks just at 
the Reserve, looks at just the National Guard, or looks at just 
the Active Duty. They take that horizontal cut across all. 
We've run models, simulations, have really looked at this very 
hard. As you talked about upfront, we can plan, but with the 
uncertainty that we have on the budget, that will really be the 
sign that hurts us as we move forward.
    I'll defer to Jim or to Mike if they want to add to that.
    General Barclay. Sir, as General Campbell has said, again 
is we try to balance. There's three categories, so you can look 
at different signs in those. The readiness aspect of it, you'll 
start to see some of those readiness indicators that your Army 
is not as ready as you're moving forward and taking some of the 
actions you have to take.
    Second is on the manning aspect of it. There are some key 
indicators you start looking at: your reenlistment rates, the 
propensity for young Americans to come into an Army that is 
struggling, that doesn't have the money to train soldiers that 
come in, or to equip soldiers that come in properly. So you'll 
start to see some of those. Those are some indicators that you 
might see.
    Then on the modernization side, we're already seeing it: 
the slowing down of programs, major procurement programs, and 
the termination of some of those programs, for example the GCV. 
Those are some of the key things that you start looking at 
across the three legs as you're trying to maintain an Army 
that's in balance.
    Senator Blumenthal. Yes, sir, General Williamson?
    General Williamson. Sir, I'd just like to add a couple of 
very specific areas in terms of acquisition. One of the things 
that worry me most as you look out across some of these 
indicators are things like our contracting officers, our 
engineers. We're in a situation now where it's almost a split 
distribution. We have some older professional contracting folks 
and we have the younger. The challenge that we have is that as 
the older workforce chooses to retire, because we have younger 
individuals who are concerned about the budget, about the 
likelihood of them having positions, we may not have the 
opportunity to continue to bring in talent and keep that talent 
so that we have the ability to negotiate contracts, to work 
through changes in the environment. So we start to see that in 
terms of personnel.
    On equipment, I think I would add that I grew up in times 
where there were significant budget pressures, where we 
invested more on repair parts and sustainment. It's not unlike 
you and I keeping our 1976 or 1977 car. It's a wonderful thing; 
it did great for us; but now I'm pouring more money into 
keeping that sustained and I'm falling behind in terms of the 
technological advances and the economic efficiencies that we 
get from new platforms.
    Senator Blumenthal. Thank you.
    I have more questions, but I'm going to defer to Senator 
Wicker, and then I'll come back with additional questions.
    Senator Wicker. General Campbell, it's not desirable to go 
to 450,000 by 2017, but we can do it; is that your testimony?
    General Campbell. Yes, sir. The only way that we can get 
back and meet the money that we will be given is take it out of 
people. We have to drop our end strength across the total 
force. The Chief and our Secretary have been very consistent 
about how we should do that: disproportionately with the Active 
Force because we grew the Active over the last 12 years for 
Iraq and Afghanistan; and then take some from our Guard and 
from our Reserve.
    We want to do that and make sure that we take care of those 
soldiers, that we do everything we can to help them transition 
either from the Active to the Guard or the Reserve or back out 
into civilian society. We have programs that will help us do 
that.
    But yes, sir, bottom line, we'll go to 490,000 by 2015 and 
we're working hard to get to 450,000 by 2017. But that's going 
to mean we're going to have to take out more involuntary 
separations as we go forward.
    Senator Wicker. That, according to General Williamson, is 
going to cause recruiting problems when people thinking of 
making the Army a career are looking at that going in. Also, I 
believe you testified it is not good for the trust factor; is 
that correct?
    General Campbell. Sir, absolutely. As General Barclay said 
as well, we're going to go down lower on end strength. What 
American society will hear is: The Army continues to go down, 
they're not going to have modern equipment, they're not going 
to have money to train.
    We've been working for 40-plus years on an All-Volunteer 
Force. I don't see us going away from an All-Volunteer Force, 
but to keep an All-Volunteer Force you have to make sure that 
you provide them the best resources that our Nation can afford. 
I believe our Nation can do anything it wants to do. We have to 
put our mind to it and we have to make sure we prioritize 
correctly.
    Sir, only a couple of years ago, probably 33 percent of the 
American people could even join any of our branches of Military 
Service based on medical issues, obesity, on and on. Today, 
that's about 22.5 percent. The population that we would draw 
from continues to decrease. The propensity to serve----
    Senator Wicker. 22.5 percent of age-eligible Americans?
    General Campbell. Yes, sir, are even eligible to come into 
any branch of Service, based on the requirements to get in, 
whether it's a medical issue, a criminal record, obesity, those 
types of things. Only about 22.5 percent.
    Senator Wicker. In terms of American security, do you feel 
comfortable at 450,000 by fiscal year 2017?
    General Campbell. Sir, I think, again, both our Chief and 
our Secretary and I have testified before that at 490,000 we 
deal in terms of risk, risk to mission, risk to force. We have 
to mitigate that and offset as we continue to come down. People 
is where we have our money invested, as you talked about, 46 
percent. So the only way to get down to the levels that 
Congress wants us to get to based on the budget is to take it 
out in people.
    At 490,000, there is some risk to completing the DSG from 
where we were at 570,000 just a couple years ago. At 450,000 
that risk is significant. Below 450,000, what all the senior 
leadership of your Army has testified is that we will not be 
able to meet the DSG below 450,000. But at 450,000, it is 
significant risk.
    Senator Wicker. Was my statement correct at the beginning 
of this hearing, that if budget caps remain unchanged, we'll be 
down to 420,000 Active, 315,000 in the Guard, and 185,000 in 
the Reserve? Were those figures correct?
    General Campbell. Sir, those figures are correct.
    Senator Wicker. I'm relieved to know they were correct, 
although they're disturbing. Now what are we going to have to 
do without if that doesn't change, sir?
    General Campbell. We'll go back and take a look at what we 
would lose between the 450,000 and 420,000 numbers. Of course, 
30,000, but what you would expect us to do is where we take 
that 30,000 out on the Active side. Do we take it out of 
brigade combat teams? Do we take it out of enablers? Again, 
there's a mix that the Chief and the Secretary provides them 
some different courses of action, how we have to get to that.
    There's a certain amount of your Army that we just can't go 
below. The institutional force that drives the training, that 
drives the day-to-day things that makes your Army run, is about 
92,000. We need that 92,000. Whether you're at 420,000, you're 
at 450,000, you have to keep that 92,000 just to keep your Army 
going.
    We'll take a hard look. We've come down in 2010 from 45 
brigade combat teams and we're going to 32 brigade combat teams 
on the Active side. Now brigade combat teams only make up 30 
percent of your Army, but they're the pacing item. You think of 
the Navy, you look at carriers. You think of the Air Force, you 
think about fighter squadrons. For the Army, it's brigade 
combat teams. Again, only 30 percent.
    But we're going from 45 to 32, and the 32 number is for 
490,000. Below 490,000, we'll probably have to cut back in the 
brigade combat teams. We're continuing to take a look at that 
analysis to see where that will take us, and it's probably 
somewhere in the neighborhood of potentially four, but we have 
some more analysis to do.
    I'll defer to Jim or Mike if they want to add.
    Senator Wicker. Thank you, Mr. Chairman. I do think you and 
I will take a second round.
    Senator Blumenthal. Thank you, Senator Wicker.
    I'm going to now turn to Senator Donnelly, with condolences 
on a great performance by a great team, but just a little short 
last night.
    Senator Donnelly. Thank you, Mr. Chairman. We give you last 
night. We will be back.
    Senator Wicker, yesterday you were giving condolences from 
the Southeastern Conference (SEC)--or congratulations from the 
SEC. Today, I give them from the Atlantic Coast Conference 
(ACC), so you're collecting a lot these days.
    To all of you, thank you so much for being here. When it 
went from 33 percent to 22.5 percent, what were the biggest 
changes that caused even fewer Americans to qualify?
    General Campbell. Sir, I'm not the expert there, but I 
would tell you a lot of it had to do with obesity. Obesity is a 
big factor in the world today in our high school children. That 
medical piece of it has caused a great deal not to be eligible 
to come into any of your Services.
    Senator Donnelly. Okay. We were talking yesterday 
afternoon, a few of us, about the numbers projections in the 
years ahead and sequestration, and were wondering if it was the 
exact same amount at the end of the day, but some of it was 
pulled forward. So instead of no increase now that you had 
approximately a 1.6 percent, 1.7 percent increase, glide path 
for the next 7, 8 years, would that combined with flexibility 
make it easier for you to be in a position where the numbers in 
the earlier years are a little bit higher and at the very back 
end are a little bit lower?
    General Campbell. Are you talking about budget?
    Senator Donnelly. I'm talking about budget. I apologize, 
yes.
    General Campbell. Sir, the number one thing I said up front 
was that any amount of certainty we get will help us plan. If 
we have more flexibility now, it will give us more time to make 
some of the tougher decisions and put some procedures in place. 
I think yes, but again, certainty is what we really need to get 
at. We'll take a look at that and we'll have to come back and 
lay it out in terms of the risk again, as I talked about 
before.
    I don't know if you want to add to that, Jim.
    General Barclay. Sir, I think 2015, 2014 to 2015, of 
course, with the BBA that changed the numbers. Then if you look 
at 2016 going into the BCA, your numbers are a little bit 
different. I know Senator Sessions has talked about the 
inflation rate of about 2.2 percent or 3 percent, as you're 
talking about. You're looking at the 2017, 2018, and 2019. Now 
that growth just keeps us en route from the Army's perspective 
of flat-lined.
    The other side of that is the fact that that's always 
ensuring that the Army gets that percentage share of the 
overall Department of Defense (DOD) budget. Senator Sessions, 
in a couple of the last testimonies, talked about 496,000, 
going to 497,000, 498,000, the numbers. But again, at the end 
of the day, it's how much of a share do we get. Typically, 
we're somewhere between about the 26 percent or 27 percent. I 
will tell you that, depending on where we fall in the fiscal 
guidance, it comes out sometimes we don't necessarily get that 
26 percent or 27 percent, as DOD starts moving, looking across 
all the Services to set their priorities.
    So again, it's a complex environment you're trying to work 
with.
    Senator Donnelly. Let me ask you about one of the pieces of 
equipment that's going to be moving along here in the very near 
future. That is the JLTV. One of the companies, obviously AM 
General LLC, is from my home State. But what I'm trying to find 
out is when do you expect to make a final determination on who 
will produce the JLTV? I know we're down to three right now.
    General Williamson. Sir, the intent is in 2015. One of the 
things I like about this procurement is that they've done a lot 
of work, they understand the requirements, they're well-
defined, the technology is mature. So really what we're doing 
now is working our way through the evaluations, the test 
criteria, to get down to that down select. I think we are on 
track for a 2015.
    Senator Donnelly. What is your highest priority criteria in 
making that selection?
    General Williamson. Our criteria?
    Senator Donnelly. What are some of the critical elements 
that you're looking at in terms of making the selection?
    General Williamson. I think there's a few that would 
obviously jump out, Senator. Obviously, it's the mobility, the 
survivability. But I'd also have to put a lot of emphasis on 
the cost and the sustainability. One of the things that we're 
looking for is how do we maintain a fleet of 49,000, if you 
include the Marine Corps 54,000 initial platforms? How do we 
sustain that over time at a cost that gives us all of those 
things we talked about, the survivability, the mobility, but 
also is cost-effective for us to operate?
    Senator Donnelly. Okay. When we look at our Mine-Resistant 
Ambush Protected (MRAP) vehicles that are coming back, when we 
transfer something like an MRAP through the Excess Defense 
Articles (EDA) program, do you see any benefits to working with 
partners in the Department of State (DOS), the Department of 
Commerce, and industry to foster refurbishment or sustainment 
opportunities to ensure these vehicles perform well for our 
allies?
    They have been, they earned their keep and then some out in 
the theater. I was wondering how you feel about that? I know 
we're looking at keeping maybe 8,500 of them, the most capable, 
the best ones, but for the other ones.
    General Williamson. Absolutely, sir. Having just returned 
from theater, I've engaged with not only a number of Foreign 
Military Sales (FMS) cases, but a number of our allies in terms 
of their desire to receive these platforms. Obviously, our goal 
would be to give them something that's operational. There are 
costs associated with that in terms of FMS cases.
    Partnering with both our partners here in the United States 
and then with our allied nations to deliver that absolutely 
makes sense.
    General Campbell. Sir, if I could just add to that. There's 
a difference here. FMS is one way, but when you declare 
something as EDAs, what that means is we cannot put any more 
money toward it. If you take an MRAP in Afghanistan and say 
this is EDA, then we move it over to the side and we make sure 
we advertise and all these countries can understand that we 
have this available. But we can't do anything to it.
    Senator Donnelly. You're done with it?
    General Campbell. We're done with it. We can't touch it. We 
can't spend money to transport it. They have to come to 
Afghanistan to get it.
    Senator Donnelly. They have to figure out how to get it out 
of there, too.
    General Campbell. Right, the third countries that want to 
come to Afghanistan to get an EDA-type vehicle. We're working 
very hard with DOS and with the Office of the Secretary of 
Defense (OSD) to make sure we have the right policies in place, 
to make sure we do the right things to help out our coalition 
forces to gain this equipment that for us is not economically 
feasible to bring that back to us, or we're only keeping a 
certain amount. But there are some policy things there.
    General Barclay. We can give you some numbers. Really, of 
about the almost 22,000 that we've bought, 8,500 sounds like a 
small number, but that's just for certain portions. There's 
another 1,800 to 2,000 that we're repurposing. We're a little 
over 11,500 that the Active Army's going to use. We've also had 
about 2,000 of those that are coded out battle losses or 
unrepairable.
    As you total all those numbers up, it accounts for about 
16,300 or 16,400 that are accounted for. Then we have about 
5,000 that move into that EDA-type category or FMS or other 
government. There's about 5,000 there to play with depending on 
how they fall.
    Senator Donnelly. I would just like to finish up by 
saying--and I've mentioned this before--I heard once or twice 
folks say: Wow, how could you spend so much on MRAPs? My answer 
is: How could we not? That somewhere in our country there's a 
young man or woman who is back home safe and sound because of 
those vehicles. For every one that is unrepairable because it 
got banged up, we are grateful to that vehicle for what it did.
    With that, sir, Mr. Chairman, thank you.
    Senator Blumenthal. Thanks very much, Senator.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    General Campbell, maybe we ought to change the EDA rules if 
they're not allowing you to use common sense to get the best 
effect for the taxpayers and for the military. Maybe we ought 
to say you can't do anything to them might not be the smartest 
thing. General, that's probably correct, it may not always be 
so.
    Senator Sessions. General Campbell?
    General Campbell. We are working with OSD and we're working 
with DOS to make sure we do everything we can to provide 
coalition partners with equipment. Again, as General Barclay 
talked about, there's FMS, where a country will come and just 
buy that, and put certain specifications on what they want on 
the vehicle or not want on the vehicle, or any other type of 
equipment. That's worked very closely with OSD and DOS.
    But EDA is a whole other category. Again, once you declare 
it EDA, you can't put any money toward it. We're working that 
very hard with OSD and making sure that we can reduce that 
number.
    We potentially could get it some place that might be 
easier. There was a big push in January and February to move 
many of the vehicles to Kuwait. In Iraq we were able to drive 
everything to Kuwait that we were going to get out. We don't 
have that catcher's mitt in Afghanistan. We're dependent upon 
multi-modal, we're dependent upon if the Ground Lines of 
Communications are going to open up through Pakistan, if we're 
going to go up through the Northern Distribution Network, or 
we're going to pay a lot of money to put it on an aircraft to 
fly it back.
    We work all of those and balance that, and I think we have 
the best and the brightest over in Afghanistan and they 
continue to work that for us.
    But again, if we declare it EDA then we can't put Army 
money towards that. That is not an Army policy; that is, I 
believe, by law, by statute. Any relaxation or adjustments to 
that would have to come from Congress.
    Senator Sessions. Just briefly, what's the status of the 
Russian helicopter purchase for Afghanistan that was discussed, 
briefly?
    General Campbell. I'll let General Williamson talk to that. 
I know he's been working that very hard on the Mi-17s. The only 
thing I would say is that my discussions with General Joseph F. 
Dunford, Jr., Commander of the International Security 
Assistance Force and U.S. Forces Afghanistan, over there, this 
is a huge priority for him, to make sure that he can provide 
the Afghans with their aviation capability. People say, why do 
you have to do that, or why do you use this----
    Senator Sessions. I know the argument on it. I don't agree.
    General Campbell. I'll let Mike talk about the specifics on 
where we are, then.
    Senator Sessions. Where are we on that?
    General Williamson. Sir, that procurement action had 
already started. They had taken delivery of six of those 
aircraft. As late as this month, they've taken another three. 
There are still another 20, 23 left to be delivered. We're 
still on path to----
    Senator Sessions. So it's still ongoing as planned?
    General Williamson. It is. Sir, let me just clarify, 
though, that part of that was because we have provided the 
funding for the next increment of aircraft, and so it was still 
on path. It was held up briefly so that we could understand the 
environment. But those funds have already been provided.
    Senator Sessions. If the Russians invade Kiev are we going 
to still buy it?
    General Williamson. Sir----
    Senator Sessions. You don't need to answer. That's, I 
guess, above your pay grade, and mine too maybe. Maybe it's not 
above ours. We're supposed to be responsible. I'm concerned 
about that.
    General Campbell, you mentioned that we have 92,000 that 
you need to keep the Army going strong. I would just say that 
there's no business in the world that's competitive that isn't 
reducing and being more efficient. If you draw down the 
personnel 100,000 troops, we ought to be able to draw down the 
number of people that support, the core staff that are not the 
point of the spear.
    I know you have to have a substantial effective group 
there, but that has to be challenged also.
    General Campbell. Sir, we are. I did say that, but I would 
tell you there is a bottom line that we have to keep. You need 
someone to keep the lights on, somebody to do X. But we are 
looking at it to make sure we're doing everything most 
efficiently. The Secretary of Defense announced a 20 percent 
cut in all the two-star and above headquarters. Our Secretary 
and Chief are going to a 25 percent cut, so we're looking hard 
at headquarters to get rid of a lot of that tail.
    But on the institutional side, whether you have 490,000 or 
whether you have 450,000, there's a certain amount you need to 
train, provide medical care to recruit, on and on. If I said 
we're not downsizing at all, I was wrong. We are downsizing. 
But we will come to a point where we have a bare minimum that 
we have to keep.
    Senator Sessions. We had 220,000 civilians on September 11, 
2001. That surged to 284,000 in 2011. We're taking troop levels 
down to a point below what we had in 2001. In 2001 we had 
481,000 military uniformed personnel. I don't see why the 
civilian personnel can't be reduced in the Army alone by the 
60,000 that were added during that time.
    General Campbell. Sir, we are reducing our civilians at a 
proportional rate. I think that rate's about 14 percent. Today, 
we're about 240,000, so we've come down about 20,000 here in 
the last year or so. We'll continue to work that. Our 
Department of the Army civilians will continue to come down.
    Senator Sessions. I just think it may be a little more 
difficult to terminate a civilian than a uniformed personnel. 
Is that correct?
    General Campbell. Sir, there are policies that we have to 
follow, yes. It is more difficult.
    Senator Sessions. You can tell a soldier goodbye, 
basically. Not always.
    General Campbell. No, sir, we do more than that.
    Senator Sessions. I know you do. But I mean, you have more 
control over the uniformed soldier.
    General Campbell. Sir, we do.
    Senator Sessions. I hope that that doesn't become an 
impediment and that we end up taking down uniformed soldiers 
more than we take down the civilians. I think it ought to be at 
least proportional, and, in fact, I remember former Secretary 
of Defense Donald H. Rumsfeld had some heartburn, but his firm 
view and goal when he took office was to get more people at the 
point of the spear and less back in the headquarters. I think 
that was a movement in the right direction and we have to keep 
that in mind as we go forward.
    I am worried that the Army is going to be hammered more 
than other Services. You're drawing down a lot more in 
personnel than the other Services. You were surged upward to 
deal with the crisis that you faced. I think the Army did a 
fabulous job. People were deployed for long periods of time. 
They served heroically. We know we're going to have a drawdown, 
but it needs to be done in a way that the Army isn't taking 
more than its share of the reductions than other Services.
    I don't know at this point where the right place to draw 
that line is, but I am concerned about it and all of us in 
Congress are going to have to give it their attention.
    Thank you for your service. I thank you for all the work 
you've done for this country.
    Senator Blumenthal. Thank you, Senator Sessions. Thank you 
for raising the issue of the Russian helicopters. I was going 
to raise it, but I wanted to begin on a more global issue 
first.
    What I'm about to say and ask I hope will not be taken 
personally, because I recognize that you're not the 
decisionmakers in this issue. But I think I want to just 
express to you as strongly and respectfully as possible the 
strong sense of outrage, I think, is the word that best 
characterizes my feeling, and, I think, it's a feeling of 
bipartisan outrage because Senator Cornyn and I and others on 
this committee have raised this issue repeatedly. I think it is 
brought into the starkest and most staggering profile by the 
Russians in effect thumbing their nose at us in Ukraine and our 
continuing to purchase these helicopters from Rosoboronexport, 
the Russian arms agency, that at the same time is selling arms 
to President Assad in Syria and bankrolling the troops that are 
on the border of Ukraine, having seized Crimea and now 
threatening the rest of that country.
    I have enormous respect for General Dunford. I have met 
him. I can't say that he's a personal friend, but he is one of 
our finest military leaders, one of our finest national 
leaders. I have great admiration for the work that he's doing 
right now in Afghanistan under the most challenging of 
circumstances. I respect his view that the Afghanistan army is 
accustomed to using those Russian helicopters. They know how to 
fly them. They're much less sophisticated. They are, as was 
once said to me, the equivalent of flying refrigerators, and 
they are much easier to maintain.
    But our helicopters are better, and eventually if the 
Afghans are really going to defend their country, they're going 
to have to use the best military equipment. Moreover, for U.S. 
taxpayers to be funding those helicopters and to buy them from 
the Russians, I think, is just absolutely unacceptable.
    Senator Sessions. Mr. Chairman?
    Senator Blumenthal. Senator Sessions, of course.
    Senator Sessions. Could I just add that when we were there 
maybe a year ago and this was being discussed, I pressed the 
issue and found out there's not that many Afghans that have 
been trained on these helicopters, very few, in fact. They have 
had some training on them, but not a lot, very few.
    Senator Blumenthal. Absolutely correct, Senator. My 
understanding is they don't have enough pilots right now to fly 
them. They don't have enough mechanics to maintain them. The 
latest report, done by the Government Accountability Office, I 
think sheds very serious doubts on the whole program going back 
some years. I hope there will be bipartisan support for a 
letter that I have drafted to be sent to Secretary of State 
Kerry asking that we cease all purchases of military equipment 
from Russia across the board.
    Let me ask you, General Williamson, if Congress were today 
or tomorrow to instruct our DOD to cease all delivery--I 
recognize that there has been perhaps some payment--what would 
be the loss in dollar terms to the United States?
    General Williamson. Sir, I'd have to go back and check the 
specific number. But I believe it would be upwards of about 
$100 million.
    [The information referred to follows:]

    The total contract option value for the purchase of 30 Mi-17 
aircraft from the Russian joint stock company Rosoboronexport is $552.2 
million. The contract option was for the procurement and delivery of 30 
Mi-17 aircraft for the Afghan Special Mission Wing along with initial 
spares and engineering and warranty services. Nine of 30 aircraft have 
been delivered and $353.4 million has been paid to date, leaving $198.8 
million undisbursed.

    Senator Blumenthal. $100 million already paid, or is that 
in costs or fees in connection with breaking a contract?
    General Williamson. I think it's a combination of all of 
those.
    Senator Blumenthal. I'd like to know more precisely, 
because in my view, if it's simply penalties for breaking 
contracts, let the Russians try to collect from us.
    General Williamson. I understand, sir.
    Senator Blumenthal. As much detail as you can provide. I 
recognize you didn't come prepared today to answer these 
detailed questions and I don't want to be unfair to you or any 
of the others, any of your colleagues who are here with you 
today. But this is serious business and I think as you've 
sensed at this table it's a bipartisan feeling. I intend to 
continue to raise it. I appreciate your cooperation.
    I want to ask a few other questions about helicopters. 
Fiscal year 2015 is the fourth year of a 5-year multi-year 
procurement contract for the UH-60M Black Hawk helicopter. It's 
the eighth time that the Army has entered into this multi-year 
procurement to buy Black Hawks, a very successful program I'm 
proud to say, supported by Sikorsky, which happens to be in the 
State of Connecticut. We're very proud of the work done with 
those Black Hawks. I put them in the same category as Senator 
Donnelly did the MRAPs in saving lives and providing service.
    There are indications now that the Navy is going to back 
out of its share of the fiscal year 2016 part of that contract 
due to force structure changes. So my question is: Is there a 
plan for avoiding breaking the UH-60 multi-year procurement, 
and what is the potential impact of the reduction, which I 
understand is in the range of 39 Black Hawks in fiscal year 
2016?
    General Barclay. Sir, you're absolutely correct. Last year 
the issue arose as the Navy's changing its force structure, 
that they were going to back out of the Black Hawk program. 
They were directed to put money in in 2014, so that will come 
back up again as we look to get the last year of the multi-year 
plan.
    But as Senator Wicker noted, we are starting to put more 
money--as we are doing the Aviation Restructure Initiative 
(ARI), we're also changing our quantities and the rate that 
we're buying and we're putting--we added some money into the 
Black Hawk line to move some of those up to try to help as we 
fielded the Black Hawks across all three components, as we move 
airframes around between the three components.
    But as we're going in now building this program--and it'll 
come up again this fall, I'm sure--I have not been able to see 
what the Navy's final plans are. We won't really get that until 
the late summer, going into fall, in the fall review to 
determine how many they think they will end up procuring. Then 
that will drive us then to the decisions we'll have to make to 
keep the multi-year program.
    Multi-year programs are great, not only for the Services; 
they're also great for the American taxpayers as we save a 
large amount. It also gives us some certainty as we move 
forward to drive those programs, which allows us then to do a 
better job of modernizing our equipment. So to us, it's a 
critical aspect and we're very concerned that we continue with 
the multi-year program with the UH-60s.
    Senator Blumenthal. What about the loss of the 39 
helicopters? Will that break apart the multi-year procurement?
    General Barclay. Sir, I think Michael can--I don't know the 
exact numbers. We were trying to look. Waiting on what the Navy 
says, because originally it was up around 58 that they were not 
going to buy. We have traded some trade space in us buying some 
more moving forward. As they look at changing based on the BBA 
and how that timeline moves, that gave a little bit more 
dollars. They have slowed their force structure, but again, we 
won't see that until we go in for the fall review from the 
Navy. That number could be 39, it could be less. Then we'll 
have to make that determination.
    Senator Blumenthal. General Williamson?
    General Williamson. Sir, the only thing I would add is that 
we are looking at those numbers, but as you know the value for 
the multi-year for us is that it gives some planning for 
industry, which allows us to normalize the flow on that line. 
Understanding whether it's 39--I've heard as low as 25--allows 
us to go and figure out how those costs have to be distributed 
and what the workload is. Once we have more definition on that, 
we'll be able to talk about the impacts.
    General Campbell. Sir, a key point, though, on what General 
Barclay said that I just want to highlight, is that the Army's 
ARI helps this problem. It doesn't get rid of it, as you talked 
about, but it helps that problem as we've restructured.
    Senator Blumenthal. Thank you. Thanks, General.
    I'm going to turn again to Senator Wicker. I'll have some 
additional questions.
    Senator Wicker. General Campbell and General Barclay, with 
regard to Army ARI. The Army states it has taken an integrated 
total Army approach to reducing the cost of aviation while 
preserving modern capabilities and meeting the national 
security demands of combatant commanders and the civil support 
missions for the governors.
    The Army also asserts that they included the Reserve 
component throughout the process.
    Walk us through--and we can begin with General Campbell--
the rationale for the ARI, including the savings, and how 
involved was the Reserve component and how involved was the 
Guard in this process?
    General Campbell. Sir, thanks for the question. The bottom 
line is funding constraints drove the Army to reevaluate Army 
aviation. Today we have the very best aviation in the world, 
and what we want to be able to do is continue to have the very 
best aviation in the world. But based on the budget, we 
couldn't do that. If we just went status quo or if we just took 
cuts out of our combat aviation brigades, continued to have 
seven platforms, didn't divest of the old aircraft, kept that, 
we would not have the best aviation.
    You would expect us to be bold and to figure out how we 
could do that, and I really do believe that the aviation 
restructure has done that. I'll let Jim talk more on the 
details here in a second that goes into that, as he's worked 
that very closely.
    I will talk to you about how we discussed this with all 
components. I've personally been involved with the aviation 
restructure probably since last summer, at least last summer, 
maybe even before that. But I know that since last summer we've 
had National Guard, we've had U.S. Army Reserve and Active 
components together talking about this, maybe not every day, 
but several times a week, at colonel level, at one-star level, 
at two-star level. I've personally been in several sessions 
that all of The Adjutants General (TAG) from all the States 
where we talked about it. I've personally talked to General 
Frank J. Grass, ARNG, the Chief of the National Guard Bureau, 
and I can't even count the number of times we've talked about 
aviation restructure since last summer.
    Our plan for aviation restructure is actually better today 
because of the input that we have from our National Guard 
aviators and the folks that were on the planning teams that 
helped us work through this.
    Senator Wicker. Is it fair to say TAGs are not overly 
delighted?
    General Campbell. Probably the 9 or 10 that have Apaches 
are not overdelighted, sir. I would tell you many TAGs have 
come forward and said: ``Hey, I don't use an Apache in my 
State; why do I need an Apache for my State? I need more 
lift,'' and this ARI does that.
    But I think you're right. I think they've come back and 
said, for a lot of different reasons--this is very emotional, 
as the Chief talked about yesterday. We have to take the 
emotion out of it and do what's best for our Nation. I really 
do believe that the ARI does that, and we get rid of three old 
airframes. We divest that. We go down to four.
    It started out years ago where we were looking for a new 
reconnaissance platform, we need an Armed Aerial Scout, there 
is not one out there that will meet the requirements that we 
have. The Apache, when you add the Shadow and the manned and 
unmanned teaming, has proved to be the very best. So we're 
going to move that and make that the reconnaissance platform 
until we can afford an Armed Aerial Scout.
    The light utility helicopters (LUH), sir, we need to change 
how we train our aviators. We need to get them into a more 
modern aircraft. The training helicopter we have at Fort Rucker 
will not do that for our future. The LUH, we have it. We 
already have the requirement. With your help, with Congress' 
help, we'll buy more of those. We don't have to take those from 
the Guard, so we think that's a good thing.
    Total annual just in the operating and support costs that 
we save is just over $1 billion, the cost avoid. This is over 
$12 billion. I would think that our taxpayers, the American 
public, want us to do something like this to make sure we have 
the very best aviation force that we can afford.
    I'll defer to Jim. He's been very tied into it and his 
folks have been leading the discussion. But, sir, make no 
doubt, this has been a consolidated effort, working with all 
the components. We don't always agree and I got that, and we 
will never ever get consensus with all 54 TAGs. But we've been 
working it very hard, open, candid. We appreciate that ability. 
But in the end, the Secretary and the Chief have to make some 
very tough decisions and they have to look at this across all 
the components and do what's best for our Nation.
    Senator Wicker. As we toss it to General Barclay, help us 
with how we get to the $12 billion in savings and what period 
of time?
    General Barclay. Okay, sir. As the Vice Chief has said 
already, in just your operations and sustainment costs it's 
$1.1 billion a year the ARI saves annually. Now, the aviation 
restructure total avoid is $11.9 billion, $12 billion. There's 
$3.35 billion of that for the OH-58 Delta cockpit and essential 
upgrade program that we will no longer do. There's $6.96 
billion for the OH-58 Delta service life extension program 
(SLEP). In other words, we'd have to SLEP those aircraft as you 
move them in to make them last into the 20s. There's about $191 
million for the TH-67 SLEP. There is $1.43 billion for a new 
training aircraft, the TH-67. As you total all that up, that's 
about $11.9 billion as you're looking at those, those different 
things.
    Now, the Guard has come back with several different 
proposals keeping different levels, 6 battalions, 4 battalions, 
18 aircraft, 24 aircraft. There's been, I said, I think three 
or four of those that we have taken a look at the cost 
measures.
    I will tell you that roughly, just if you don't move the 
AH-64s out of the National Guard, the one-time cost if you're 
just going back to equip your Active component, there's about 
$3.65 billion to procure additional AH-64s to be able to man 
and equip and keep those units.
    One of the key things, sir, is we're coming down from 37 
shooting battalions--that includes your Kiowa Warriors and your 
Apaches--to 20 shooting battalions. That's why, as the Chief 
and the Secretary have testified and the Chief yesterday 
testified, it's important that we understand and do the 
complementary roles that we're doing across each of the three 
components, so we can meet the mission sets and operational 
requirements along the timelines that we know we're going to 
have to. So that was always part of the driving factor as we 
look at the ARI.
    Senator Wicker. TAGs get more lift under this proposal?
    General Barclay. No, sir, not every TAG gets more lift 
under these proposals. Again, we have an Active component 
version of how you could spread those aircraft across. Again, 
most of the 50 States total, 54 with the territories, some 
States may lose 1 to 2 Black Hawks. Some States would gain 10 
or 11 Black Hawks. One of the examples is a State that has 16 
Apaches and it would give up 16 Apaches. They would get back 11 
Black Hawks. So they're losing roughly a five-aircraft swing in 
that State.
    But again, the National Guard Bureau would have to work 
those, as they do each of the States, and work those plans 
about where, which States would be impacted greater than other 
ones.
    Senator Wicker. General Barclay, General Campbell said 
we're going to use the Apache teamed with the unmanned aircraft 
for reconnaissance until we can afford a new Scout helicopter. 
I had information that it's more costly from an O&M perspective 
than if we went ahead and acquired the new Scout helicopter. So 
help us with that.
    General Campbell. I'll start, Jim, and then you can add to 
it.
    The cost of the OH-58 is much lower than the cost of the 
AH-64, but we're not going to keep the OH-58 over time. I think 
really for an Armed Aerial Scout of the future as we look at 
the requirement, what we would want that platform to do, what 
we want to do, is continue to invest in the technology to get 
the very best. We don't think there's anything out there right 
now that would take us to spend that money completely on a 
brand new platform when we have the AH-64 that as we've run 
some tests with industry out there, that the AH-64 with the 
unmanned and manned teaming--and that is very complex--that 
provides the best Armed Aerial Scout today.
    It's different, and it's very emotional for the Active guys 
that own OH-58s. There's only one OH-58 squadron in the Guard. 
For all of our OH-58 pilots, it's very emotional for them. 
We'll train them in the other aircraft. But it is different 
from looking out a window, flying 50 feet above, and taking a 
look, versus what you can do with the optics sitting way back 
with the AH-64.
    But I don't think the technology is where we need it. We 
want to invest in the technology, get the very best, and have 
that down the road.
    But I'll let you add to that, Jim.
    General Barclay. Sir, the cost of an OH-58 Delta flying 
hour is $2,373 per hour. The cost of an AH-64 Delta is $6,034 
per hour. But with the ARI, as you take down the number of 
airplanes--for example, we're removing 9 Active component OH-58 
Delta squadrons, for a savings of $479 million. We're removing 
1 Reserve or Guard OH-58 Delta, for a savings of $19 million. 
It removes 6 AH-64 battalions for a savings of $195 million, 
and it adds 3 manned Active component AH-64 squadrons for $198 
million.
    So yes, it's apples and oranges when you talk hour 
comparison, a Kiowa to an AH-64. But when you look at the total 
fleet, which is what we did with the ARI, the total end cost, 
because we're coming down, of our total fleet, if you divest 
yourself of 898 aircraft total either divested or transferred, 
687 of those aircraft are coming out of the Active component. 
212--I mean, and then 111 we're transferring Black Hawks back 
to the National Guard.
    So again, you have to take all these together. You can't 
just compare an AH-64 flight hour to a Kiowa Warrior flight 
hour and tell you it's going to cost you more. Again, it's the 
total cost across the entire fleet and all three components of 
where we're going to end up in the total number of aircraft we 
have.
    Senator Wicker. Okay. Mr. Chairman, it may be that our 
staff will want to get together with these gentlemen and 
understand this issue further.
    Let me ask you this, General Barclay. Was the Apache 
conceived as a Scout helicopter?
    General Barclay. Sir, the Apache was designed as an attack-
reconnaissance. That's why they're in the attack reconnaissance 
battalions. But its main purpose is as a heavy attack aircraft. 
I will tell you that when we did the analysis of alternatives 
back when I was the commanding general at Fort Rucker, trying 
to develop the next armed reconnaissance helicopter, we looked 
at five different variant model types to meet the requirement. 
The Apache came out number one in meeting the capabilities and 
requirements that we wanted, but it was the most expensive. 
That's when we went to make some tradeoffs to go to a lesser 
model.
    As we now restructure because we cannot afford the total 
fleet we have in the Army, much like we can't afford our total 
manpower structure, we started looking back, and so with this 
downsizing and coming down from an 810-Apache--originally the 
acquisition objective was 810 Apaches. We're bringing that down 
to 690.
    So again, it's the combination of all these different 
things we're doing that allows us to afford this and, yes, 
provide us the capability that is greater than what we would 
have.
    Senator Wicker. Mr. Chairman, I'll take another round. I'll 
yield to you for a few moments.
    Senator Blumenthal. Thank you.
    I want to shift gears from aircraft to ground vehicles, if 
I may. Can you explain--and you make reference to it, General 
Campbell, in your testimony the slowed production of the Abrams 
tanks and Bradley Fighting Vehicles. I think in your testimony 
you talk about slowed production deliveries of the Abrams 
Vehicle to distribute workload and prevent workforce furloughs. 
A little bit later you talk about developing a second source 
supplier for--your term--``financially fragile suppliers'' for 
Abrams and Bradley vehicles.
    Could you elaborate a little bit on that point? Is the 
slowed production the cause or the effect of the financial 
fragility of those suppliers? What is the thinking behind the 
slowed production.
    General Campbell. I'll defer to Michael at the end, as he's 
really tied into that. But I think it's a combination of both. 
As the budget comes down we have to look at where we can make 
adjustments. But also, we've been able to reset a lot of our 
Abrams. Over the last several years, the average shelf life of 
an Abrams is only 4 to 5 years now, based on where we've been, 
so that's very good.
    With the help of Congress, we will slow down, but we'll 
also bridge a gap that was going to be out there. We've 
depended upon FMS and some other things to help keep the line 
open, to make sure that we continue to work the workers. It's a 
very select group of engineers and workers that work on this 
particular vehicle. So there was a gap out there in the 2016 
time range, and with some additional monies that Congress has 
provided we'll be able to bridge that gap for about 12 months.
    But it is a combination of the budget plus we feel pretty 
good about the number of tanks and the quality of tanks that we 
have now. We just don't need as much. We're working engineering 
change proposals (ECP) that takes the ones we have and 
continues to make them better with some upgrades.
    I'll let Michael add to that.
    General Williamson. Sir, I'd just like to add that I'm not 
going to characterize it as much as a slowdown as I am a 
smoothing. The challenge for the industrial base is the peaks 
and valleys, where there is not enough workload to keep the 
skilled labor, the design engineers, the integrating engineers, 
all gainfully employed and to distribute the cost of the 
facility, the machinery, all of those things.
    What's really important in sustaining the industrial base 
is to have that workload smoothed out. We've done some things, 
as the Vice Chief indicated. I look at it on three prongs: one, 
there's the investment we're doing in continuing the remaining 
build of Abrams; there's the ECP work that we're doing on 
things like Bradleys, as an example; there's also the FMS 
cases, so there's a large one that we are working with the 
Saudis that will allow us to smooth that load and make sure 
that we don't have production breaks where we lose that talent 
and skilled labor.
    But then there's another piece that talks to the 
efficiencies associated with these facilities. It's both on the 
organic and it's also on the industrial base. The critical 
aspect of this is to make sure that there is a sufficient 
workload to keep folks employed and to bring in the right 
amount of talent and keep it sustained over time.
    What we've done, as was indicated, is make sure that we 
have the workload to support that across all of ours. It's not, 
sir, just on vehicles, but we have to do the same thing on 
things like ammunition. We need to make sure that we steady-
state that.
    Senator Blumenthal. Let me ask you, what was the thinking 
behind the cancellation of the GCV?
    General Campbell. Sir, there's still a requirement for an 
IFV. As I talked about in the opening statement, we can't 
afford one right now, bottom line.
    Senator Blumenthal. Will the technologies be used that were 
developed?
    General Campbell. Sir, absolutely. We will continue to 
learn. We'll continue to take and spiral out technologies from 
what we've already had going. Then we believe probably in the 
2019 to 2020 timeframe, we'll see another IFV requirement come 
up there. The requirement's there. We just have to get the 
budget back up, and it's going to take us a few years to be 
able to do that.
    Senator Blumenthal. So it was really a cost issue more than 
anything?
    General Campbell. Absolutely.
    Senator Blumenthal. We've talked a little bit about the 
Reserve and National Guard. But in terms of going from the 
concept of a strategic reserve to an operational reserve 
component--and I recognize that over the last decade our 
Reserve components have played an increasingly active role and 
there's been increasing reliance on them--will the sacrifices 
in the modernization program for our Reserves be different from 
Active-Duty Forces in terms of equipment, training, and so 
forth, given that we are increasingly reliant on them?
    General Campbell. Let me start it and I'll turn to Jim or 
Mike to add to it.
    Sir, you're absolutely right, and I've served in combat 
both in Iraq and Afghanistan with our National Guard, our U.S. 
Army Reserve, and our Active component, and they've all 
performed very well. We have moved from pre-September 11 from a 
strategic reserve to an operational reserve. The Chief has 
testified over and over that we want to continue with an 
operational reserve.
    But that means you have to be in balance. If we keep the 
same end strength and we don't drop the Guard, we keep the same 
force structure and we don't drop the Guard, then where do you 
take that out of? It comes out of readiness. If they don't have 
readiness and they have all the end strength and force 
structure, you are a strategic reserve.
    You have to reduce that a little bit, and we'll continue to 
work that, and our National Guard will remain an operational 
reserve. But they have to come down a little bit in end 
strength, a little bit in force structure, and keep the 
readiness up there.
    On equipping, our National Guard is equipped better than 
they ever have been. The percentage of their equipment that 
continues to--from 2001 to now, and Jim may have the exact 
numbers--is pretty phenomenal. But our challenge will be to 
continue to maintain that in the environment we live in today. 
But I think all of our National Guard would tell you that the 
equipment they have, based on help from Congress and our 
priority has been to make sure we provide them that.
    Our reliance on our Reserve component is going to be 
greater in the future. We're moving from about a 51 percent 
Guard and U.S. Army Reserve, 49 percent Active, to about a 54 
percent of the total force to about 46 percent with the Active. 
There's no doubt that our reliance on our National Guard and 
our U.S. Army Reserve is going to be more in the future. The 
key is to make sure we have the right balance, and that's what 
the Chief and the Secretary are working very hard to do.
    General Barclay. Sir, the Vice Chief is absolutely correct. 
Over the last 10 years, not only has the Guard, but all three 
components, our equipment on hand levels have risen somewhere 
between about 14 percent all the way up to 17 percent, and the 
modernization levels for all three components have been raised. 
For example, right now the modernization level for the Active 
component is 91 percent. The Army Guard is at 86 percent and 
the U.S. Army Reserve is 76 percent.
    To give you a touchpoint for that, the Reserve was sitting 
at about 54 percent going into this war. Everyone has made 
tremendous gains, not only in the modernization, but also the 
equipment on hand. For example, the equipment on hand now to 
get to that 100 percent, the Active component is at 95 percent, 
the Guard is at 91 percent, and the Reserve is at 87 percent.
    That's one of the critical parts, as we move forward in 
shaping our Army and balancing the manning and the readiness 
and the modernization, is we're going to improve all three 
components as we draw down on the modernization side. For 
example, the ARI, the critical part of that is removing some of 
those older platforms. For example, the National Guard, as we 
move forward with this, we will take all the A model Black 
Hawks out and they will move into Lima (UH-60L) models and Mike 
(UH-60M) models. So again, that's part of our plan as we're 
getting smaller, is to ensure we keep the most modern aircraft 
across all three components.
    Senator Blumenthal. Thank you.
    Senator Wicker, if you have other questions.
    Senator Wicker. I do. We're going to be submitting a number 
of follow-up questions for the record.
    I'm really very impressed with this panel, Mr. Chairman, 
and I want to work with them to get the best result. But if I 
could, I want to pivot to General Williamson. You just got back 
from Afghanistan, is that correct?
    General Williamson. That's correct, sir.
    Senator Wicker. Where were you and how long were you there?
    General Williamson. I was in Kabul, sir. I was there for 
almost 8 months.
    Senator Wicker. Did you spend your time principally in 
Kabul?
    General Williamson. Sir, I went across the region, but most 
of my time was invested with resources, with the coalition. So 
I spent most of my time in Kabul working for General Dunford.
    Senator Wicker. This is a hearing on modernization, but Mr. 
Chairman, if I might just draw on the experience that 
Lieutenant General Williamson brings back from Afghanistan. 
There's a debate in this town about what our presence looks 
like after the end of this year. Let's say the United States 
leaves a force of around 10,000 troops in Afghanistan. If that 
is, in fact, the decision of the Commander in Chief, how many 
total International Security Assistance Forces will remain? Can 
you answer that?
    General Williamson. Sir, I can't really talk to that. I'm 
not trying to avoid an answer. If you'd just bear with me for a 
second.
    Senator Wicker. I'll sure bear with you.
    General Williamson. My role there was in making sure that 
the resources were available for us to support not only the 
coalition fight, but helping to build the Afghan police and the 
Afghan military. The only thing I would offer to you is that I 
can't specifically talk to the size of the force that should 
remain, but I could offer to you, though, that as I spent my 
time there and what I know is that we made a significant 
investment. I think you saw reflected in the last couple of 
days, that there is a tremendous amount of payoff when you look 
at just any metric like the election.
    When you look at the reduced amount of violence, when you 
look at the performance of the security force, all of those 
things happened because of the investment we made. My concern--
and this is personal, sir--would be to walk away and not leave 
enough structure to make sure that that's sustained over time.
    Senator Wicker. That is precisely my concern, sir. The only 
difference is I haven't served there in the military and you 
have recently. But I think you and I both see it from the same 
standpoint. We went into Afghanistan after the terrorist 
attacks of September 11, and I would remind my fellow citizens 
and my colleagues, we went in virtually unanimously. As I 
recall, there was one dissenting vote in the House of 
Representatives, where I served. To my recollection, it was 
unanimous over in this body.
    There seems to be a feeling out there among the American 
people that somewhere along the line we made a tragic mistake 
and that this somehow has become a disaster. I honestly, 
General Williamson, don't feel that way. I think we have an 
opportunity to turn this into a defeat if we make that decision 
collectively as a body politic.
    But as you've stated, we've made a great deal of sacrifice 
and investment, the taxpayers have, the all-volunteer troops 
that have been over there. It seems, based on the election, 
based on the loya jirga being a representative cross-section of 
all the tribes and ethnic groups, speaking virtually 
unanimously that they would like for us to continue as a 
partner and make sure this place is stable, that it just seems 
to me that we have an opportunity to leave this place stable, a 
place that will not be a haven for terrorists, and to walk away 
with some degree of success.
    Can you tell us, this calendar year--you perhaps don't know 
precisely--but how many casualties have we had in the recent 
past in Afghanistan?
    General Williamson. Sir, I can't speak to that precisely, 
but what I can tell you is that our casualty count has gone 
down substantially. In fact----
    Senator Wicker. American casualties?
    General Williamson. American casualties. But I would like 
to broaden that to talk about the coalition and the Afghans. 
Again, because of the training, because of the support that 
we've provided, because of the investment that we've made, the 
Afghans are able to provide even more defense, even more 
security. Even though their casualties are still there, I would 
tell you that those numbers are substantially down from when I 
arrived in the middle of last year, the early part of last 
year.
    So I can't talk specific numbers, but I do know that those 
numbers have gone down.
    Senator Wicker. Down substantially, even for the Afghans?
    General Williamson. I believe so, Senator.
    Senator Wicker. You've been involved in training the 
police. How are we doing there?
    General Williamson. Sir, my involvement in training the 
police is really facilitating the trainers, those types of 
things. So, again, I can't talk to the actual training aspect. 
But on the effects side, there is obviously much more security. 
Again, I would tell you that the metric that I go by today is 
the security that was seen during the elections and leading up 
to the elections.
    Senator Wicker. How are we doing in training the Afghan 
military?
    General Williamson. Sir, I think my answer would be the 
same. During the time that I was there, what I had the 
opportunity to see was the Afghans planning and executing more 
of their missions, and that increased over time and during 
independent operations, with limited support from the 
coalition. So I would offer that I think you're seeing the 
effect of the training and the investment that's been made.
    Senator Wicker. Thank you. I appreciate the fact that 
you're not here speaking for the Department of the Army in that 
respect. You're here to talk about modernization and you're 
certainly not an official of the DOS. I appreciate your letting 
me go a little further afield than the subject matter of this 
hearing.
    Mr. Chairman, thank you for letting me depart a bit from 
our mission today. But I do believe that the testimony of this 
distinguished American who just got back is something that we 
should pay attention to. Thank you, sir.
    Senator Blumenthal. Thank you very much, Senator Wicker.
    I think we're near the close of our hearing today, but I do 
have additional questions that we will submit for the record.
    I just wanted to clarify, General Campbell. You mentioned 
22.5 percent of Americans based on physical, background, and 
other requirements would be eligible and that's a reduction 
from, I think you said----
    General Campbell. It was about 33 percent a couple of years 
ago, sir. That 22.5, it's an approximate that I've seen as 
we've discussed it in personnel channels. So around 3 out of 10 
Americans in the 17 to 24 age group could join and now it's 
less than 3, it's about 2.2. But again, sir, that's a 
combination of probably criminal records, it's a combination of 
obesity, it's a combination of physical issues, it's education, 
on and on.
    That same percentage all the Services are going after, all 
the universities are going after, all the businesses are going 
after. So that population continues to come down.
    The good thing is, I think, is that your Army continues to 
bring in the best and brightest. We have not had the issues of 
recruiting. I think across all of our components here in the 
last several years we've been able to provide for them, provide 
them training, provide them the resources, with Congress' help. 
So that's good.
    But it's going to get tougher as we move forward and the 
fiscal environment we live in is going to make that tougher. 
Just a simple story, 2 or 3 years ago what we would provide in 
incentives or special pays was much greater than we do now. 
We've had to take down that to be able to provide in other 
areas.
    Senator Blumenthal. If I were to follow up on those numbers 
to get the exact years and maybe some more precision, what 
would the best way of doing it be? Should we do it through you, 
your office?
    General Campbell. Yes, sir, absolutely. I just saw a brief 
through our G-1 folks that showed pretty much where the 
percentage is, but also, even more important, I think, looks 
out the next 5 to 10 years on how that's going to continue to 
go down, and then what we can do to help out the American 
population to provide education, whether it's Junior Reserve 
Officers' Training Corps, whether it's--your Army provides more 
money to education than any other organization in the world, 
through Reserve Officers' Training Corps scholarships, through 
Junior Reserve Officers' Training Corps in the high schools, to 
provide young men and women opportunities to become better 
citizens, to help them maybe add to their potential to serve in 
any of our Services.
    Sir, yes, you would get that information from our office.
    Senator Blumenthal. Thank you.
    I might just second the general point that you're making, 
which is our Military Services are probably the most impactful 
or one of the most impactful forces in shaping our civilian 
society well beyond the readiness of defense and other services 
that you provide.
    I might just say, one of the most gratifying and exciting 
parts of my job is to participate in nominating young men and 
women for our Service Academies. That's only a very small slice 
of the recruiting that's done by our military, but I can just 
say that they are extraordinary young men and women. I hope 
that they will continue to be interested, that our young men 
and women of talent and dedication will continue to have that 
sense of motivation, following the example that you three and 
others who serve with you have provided to them through your 
leadership by example.
    I might just close by saying, I know that in your 
testimony, General Campbell, you made reference to the need--
and I'm quoting here--of ``pursuing enhanced weapons effects, 
next generation optics, night vision devices, advanced body 
armor, individual protection equipment.'' When I first came to 
this subcommittee and one of my own sons was deployed, I 
learned personally about some of the deficiencies in body armor 
at the time, and Deputy Secretary of Defense Ashton Carter 
worked with me in seeking to expedite that kind of equipment 
for our military serving in Afghanistan.
    I know that the three of you--and I'm so glad that you made 
reference to this aspect of it--see the job of equipping and 
supporting our military through the eyes of the soldier who is 
out there doing the job of combat, as you three have done in 
your careers. I just want to emphasize that as much as we talk 
about all this sophisticated hardware, the helicopters, and the 
new technology that is developing, our greatest asset, as you 
said at the outset, is our men and women in uniform, and 
anything we can do to provide them with those basic kinds of 
equipment, I think, I'm certainly committed to doing. I know my 
colleagues, I believe my colleagues share that view as well.
    So on that note, let me thank you for being here today, 
each of you, and thank you for your very valuable contribution 
to our consideration. Thanks so much.
    The record here will remain open until 5 p.m. on Friday, 
April 11, for any additional questions that Senators may wish 
to submit, and we will hope for responses to our written 
questions as soon as you're able to do so. Thank you very much.
    The hearing is adjourned.
    [Whereupon, at 10:51 a.m., the subcommittee adjourned.]

    [Questions for the record with answers supplied follow:]
           Questions Submitted by Senator Richard Blumenthal
                    improved turbine engine program
    1. Senator Blumenthal. General Williamson, the Improved Turbine 
Engine Program (ITEP) is intended to provide a new engine for Apache 
and Black Hawk helicopters with significantly greater performance, 
reliability, and fuel efficiency. The fiscal year 2015 request includes 
$39.3 million for an initial Technology Maturation and Risk Reduction 
contract award for initial engine design and aircraft integration trade 
studies. This award, timed to follow a Milestone A decision, will be 
made to a single vendor. Currently, at least two vendors have been 
competing for Army funding and investing their own research money in 
designing, building, and testing prototype engines. What is the status 
of the development of competitive prototyping options?
    General Williamson. The Aviation Applied Technology Directorate 
within the U.S. Army Aviation and Missile Research Development and 
Engineering Center manages the science and technology (S&T) phase of 
the Advanced Affordable Turbine Engine (AATE) program. AATE is a 
program established to demonstrate engine technology that could provide 
sufficient power to our medium rotary wing assets in high and hot 
environments while increasing engine fuel efficiency and operational 
range. Two vendors each developed competitive engine prototypes during 
the AATE program which demonstrated technology maturity and engine 
capabilities sufficient to inform the ITEP's draft Key Performance 
Parameters within the draft Capability Development Document. The 
Program Office will seek competitive prototype waivers for vendors who 
have already developed competitive prototypes demonstrating technology 
maturity for critical technology elements.

    2. Senator Blumenthal. General Williamson, cost is widely reported 
as the main problem with carrying two engines through technology 
development on a competitive basis. What is the incremental increase in 
cost to carry a second engine through a technology development phase?
    General Williamson. Based on program office estimates that included 
industry responses to a series of Request For Information, the 
incremental increase in cost to carry a second engine competitor 
through a technology development phase will vary between competitors 
and could range between $125 million to $300 million per vendor 
dependent upon the vendor's design approach and demonstrated 
technology. An Army cost estimate developed by the Office of the Deputy 
Assistant Secretary of the Army for Cost and Economics in support of 
the ITEP Analysis of Alternatives substantiates the incremental cost of 
approximately $300 million per vendor.

    3. Senator Blumenthal. General Williamson, one of the consistent 
criticisms of the Department of Defense acquisition is the early 
commitment to immature technologies that then do not progress as 
expected or promised. The emphasis on competitive prototyping is 
intended to mitigate this risk for the government. If the Army awards a 
contract to a single vendor as early as Milestone A, upon what will you 
base the decision?
    General Williamson. If the Army awards a contract to a single 
vendor as early as Milestone A, a best value determination will be made 
based upon the proposed design approach and the substantiation of that 
approach including a clear assessment of the vendor's ability to 
manufacture and deliver the system technology to meet the specified 
requirements. The AATE S&T program at its inception was designed to 
help mitigate the risk of introducing immature technology in the ITEP 
and has been successful in this regard by demonstrating technology 
maturity on competitive prototype engines.

    4. Senator Blumenthal. General Williamson, what must competitors 
provide or demonstrate?
    General Williamson. Competitors must provide their proposed design 
which includes a clear assessment of a vendor's ability. Substantiation 
data should include demonstrated technology maturity for attaining the 
stated requirements from either an S&T program or internal research and 
development efforts.

    5. Senator Blumenthal. General Williamson, if the Army awards a 
single contract at Milestone A, will the program provide for clear and 
objective criteria that establishes an off-ramp for the incumbent and 
on-ramps for potential alternatives?
    General Williamson. Yes, the Army will provide for clear and 
objective criteria that establishes off-ramps prior to Milestone B, 
regardless of a single or multiple contract award at Milestone A. The 
Army is exploring the use of a series of contract options following 
significant technical reviews to ensure satisfactory progress is being 
made before continuing forward as well as considering potential on-
ramps during the Technology Maturation and Risk Reduction phase and at 
Milestone B should the single contractor awarded at Milestone A fail to 
perform satisfactorily. By establishing successive options as on/off-
ramps, the government avoids termination costs as well as defined on-
ramp phases. All decisions will be weighed against program cost, 
schedule, performance, and risk to the government.

                                 
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