[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

[H.A.S.C. No. 112-100]

HEARING

NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 2013
AND
OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

BEFORE THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

FULL COMMITTEE HEARING

BUDGET REQUEST FROM THE

DEPARTMENT OF DEFENSE

__________

HEARING HELD

FEBRUARY 15, 2012

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HOUSE COMMITTEE ON ARMED SERVICES
One Hundred Twelfth Congress

HOWARD P. ``BUCK'' McKEON, California, Chairman
ROSCOE G. BARTLETT, Maryland ADAM SMITH, Washington
MAC THORNBERRY, Texas SILVESTRE REYES, Texas
WALTER B. JONES, North Carolina LORETTA SANCHEZ, California
W. TODD AKIN, Missouri MIKE McINTYRE, North Carolina
J. RANDY FORBES, Virginia ROBERT A. BRADY, Pennsylvania
JEFF MILLER, Florida ROBERT ANDREWS, New Jersey
JOE WILSON, South Carolina SUSAN A. DAVIS, California
FRANK A. LoBIONDO, New Jersey JAMES R. LANGEVIN, Rhode Island
MICHAEL TURNER, Ohio RICK LARSEN, Washington
JOHN KLINE, Minnesota JIM COOPER, Tennessee
MIKE ROGERS, Alabama MADELEINE Z. BORDALLO, Guam
TRENT FRANKS, Arizona JOE COURTNEY, Connecticut
BILL SHUSTER, Pennsylvania DAVE LOEBSACK, Iowa
K. MICHAEL CONAWAY, Texas NIKI TSONGAS, Massachusetts
DOUG LAMBORN, Colorado CHELLIE PINGREE, Maine
ROB WITTMAN, Virginia LARRY KISSELL, North Carolina
DUNCAN HUNTER, California MARTIN HEINRICH, New Mexico
JOHN C. FLEMING, M.D., Louisiana BILL OWENS, New York
MIKE COFFMAN, Colorado JOHN R. GARAMENDI, California
TOM ROONEY, Florida MARK S. CRITZ, Pennsylvania
TODD RUSSELL PLATTS, Pennsylvania TIM RYAN, Ohio
SCOTT RIGELL, Virginia C.A. DUTCH RUPPERSBERGER, Maryland
CHRIS GIBSON, New York HANK JOHNSON, Georgia
VICKY HARTZLER, Missouri BETTY SUTTON, Ohio
JOE HECK, Nevada COLLEEN HANABUSA, Hawaii
BOBBY SCHILLING, Illinois KATHLEEN C. HOCHUL, New York
JON RUNYAN, New Jersey
AUSTIN SCOTT, Georgia
TIM GRIFFIN, Arkansas
STEVEN PALAZZO, Mississippi
ALLEN B. WEST, Florida
MARTHA ROBY, Alabama
MO BROOKS, Alabama
TODD YOUNG, Indiana
Robert L. Simmons II, Staff Director
Jenness Simler, Professional Staff Member
Michael Casey, Professional Staff Member
Lauren Hauhn, Research Assistant

C O N T E N T S

----------

CHRONOLOGICAL LIST OF HEARINGS
2012

Page

Hearing:

Wednesday, February 15, 2012, Fiscal Year 2013 National Defense
Authorization Budget Request from the Department of Defense.... 1

Appendix:

Wednesday, February 15, 2012..................................... 59
----------

WEDNESDAY, FEBRUARY 15, 2012
FISCAL YEAR 2013 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FROM THE
DEPARTMENT OF DEFENSE
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McKeon, Hon. Howard P. ``Buck,'' a Representative from
California, Chairman, Committee on Armed Services.............. 1
Smith, Hon. Adam, a Representative from Washington, Ranking
Member, Committee on Armed Services............................ 2

WITNESSES

Dempsey, GEN Martin E., USA, Chairman, Joint Chiefs of Staff..... 11
Panetta, Hon. Leon E., Secretary of Defense...................... 5

APPENDIX

Prepared Statements:

Dempsey, GEN Martin E........................................ 76
McKeon, Hon. Howard P. ``Buck''.............................. 63
Panetta, Hon. Leon E......................................... 66
Smith, Hon. Adam............................................. 65

Documents Submitted for the Record:

Letter to Chairman McKeon from Secretary Panetta, Dated
November 2, 2011 (Submitted by Mr. Turner)................. 91
Letter to Secretary Panetta from Chairman McKeon and Mr.
Turner, Dated September 13, 2011 (Submitted by Mr. Turner). 89
Memorandum of Agreement between the Department of Defense and
the Department of Energy (Submitted by Mr. Turner)......... 92

Witness Responses to Questions Asked During the Hearing:

Mr. Bartlett................................................. 99
Ms. Bordallo................................................. 100
Mr. Hunter................................................... 101
Mr. Johnson.................................................. 101
Mr. Kline.................................................... 100
Mr. Turner................................................... 99
Mr. Wilson................................................... 99
Mr. Wittman.................................................. 101

Questions Submitted by Members Post Hearing:

Ms. Bordallo................................................. 107
Mr. Conaway.................................................. 116
Mr. Heinrich................................................. 120
Mr. Langevin................................................. 106
Mr. Loebsack................................................. 115
Mr. Owens.................................................... 121
Mrs. Roby.................................................... 126
Mr. Ruppersberger............................................ 122
Mr. Schilling................................................ 124
Mr. Scott.................................................... 126
Mr. Smith.................................................... 105
Mr. Turner................................................... 107
Mr. Wilson................................................... 105
Mr. Wittman.................................................. 118
FISCAL YEAR 2013 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FROM THE
DEPARTMENT OF DEFENSE

----------

House of Representatives,
Committee on Armed Services,
Washington, DC, Wednesday, February 15, 2012.
The committee met, pursuant to call, at 10:05 a.m. in room
2118, Rayburn House Office Building, Hon. Howard P. ``Buck''
McKeon (chairman of the committee) presiding.

OPENING STATEMENT OF HON. HOWARD P. ``BUCK'' MCKEON, A
REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, COMMITTEE ON ARMED
SERVICES

The Chairman. The hearing will come to order.
Good morning, ladies and gentlemen. Thank you for joining
us today as we consider the President's fiscal year 2013 budget
request for the Department of Defense. To put this budget in
context, it is critical to examine the strategy that has
informed its submission.
At the outset, I want our witnesses to know that I
appreciate the hard work that went into the development of the
strategy. It is no small effort to completely revise a strategy
1 year after the submission of the Quadrennial Defense Review
and less than 3 months after the submission of a budget
request.
However, I do have serious concerns about the trajectory
that this new strategy puts us on. Although this strategy is
framed as making the military more nimble and flexible, it is
not clear how slashing the Armed Forces by over 100,000 during
a time of war, shedding force structure and postponing the
modernization makes that so. The President must understand that
the world has always had and will always have a leader. As
America steps back, someone else will step forward.
We have now heard multiple times that the strategy drove
the budget and not the other way around. I suppose this starts
with the President's call to slash at least $400 billion from
defense last April in advance of any strategic review. An
honest and valid strategy for national defense can't be founded
on the premise that we must do more with less or even less with
less. Rather, you proceed from a clear articulation of the full
scope of the threats you face and the commitments you have. You
then resource the strategy required to defeat those threats
decisively. One does not mask insufficient resources with a
strategy founded on hope.
Furthermore, the President's new defense strategy
``supports the national security imperative of deficit
reduction through a lower level of defense spending.'' The
Administration appears committed to ensuring the military is
the only sector of the Federal Government to meaningfully
contribute to deficit reduction.
Simultaneously, the budget proposes additional spending by
diverting savings from declining war funding to domestic
infrastructure spending. How can you save by not spending money
that wasn't in the budget to begin with? This is a cynical
gimmick that once more ensures our military, and only our
military, is held responsible for what little deficit reduction
this budget represents.
White House Chief of Staff Jack Lew said, the time for
austerity is not today. Ask the 124,000 service members who
will have to leave the military how they feel about that.
The President's budget is a clear articulation of his
priorities. The President's budget asks the men and women in
uniform, who have given so much already, to give that much more
so that the President might fund more domestic programs.
The President claimed that the budget would rise every year
but ignores the fact that this request is $46 billion less than
what he said he needed last year and more than $5 billion less
than what was appropriated for fiscal year 2012. Furthermore,
despite the new strategy's goal of pivoting to Asia, a theater
where naval assets and airlift are decisive, the budget calls
for retiring 9 ships, removes 16 more from the new construction
plan, and cuts our airlift fleet by hundreds.
This isn't the only place where the President's public
statements and missions seem to diverge. We cannot neglect the
war. The President was committed to counterinsurgency strategy
in 2009, yet inexplicably, and certainly not based on the
advice of his commanders, announced our withdrawal date and to
pull out the surge forces before the end of the next fighting
season.
Mr. Secretary and Chairman Dempsey, before the President
makes another announcement about troop withdrawals, I implore
you to heed our commanders' advice. We are seeing success.
Let's not make a decision to pull some of the remaining 68,000
troops before we see what happens this fighting season. Let's
wait to reassess any more force level decisions until the end
of the year.
I have more questions, but with that, I will conclude.
Thank you again for being here. I look forward to your
testimony and call now on Ranking Member Smith for his opening
statement.
[The prepared statement of Mr. McKeon can be found in the
Appendix on page 63.]

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON,
RANKING MEMBER, COMMITTEE ON ARMED SERVICES

Mr. Smith. Thank you, Mr. Chairman.
Thank you, Mr. Secretary and General Dempsey for being
here. And I applaud you for the effort that you've put in, of
course, over the last year. This did start quite some time ago
with a major strategic review of our military and our national
security needs that was, as has been documented, a very
holistic transparent process, in which you brought in all of
the military leaders and really sat down and thought about what
our national security needs are going to be for the next 10
years.
The strategy, without question, was where this whole
process started, and I applaud you for that. And you have laid
out a very clear and coherent strategy. Now when it comes to
the budget numbers, I think it is important to take a step back
and have a little perspective on exactly what they are.
The defense budget has doubled over the course of the last
10 years. The budget that has been put before us, as the
chairman points out, will be increasing the defense budget
every year from this year forward. We hear about these cuts.
These cuts are from what was projected to be needed to be spent
a year or two ago. They are not actual cuts, with the sole
exception of this year.
Yes, after doubling the defense budget over the course of
the last 10 years, not even counting the overseas contingency
operations money, this one year, we go from $530 billion last
year to $525 billion, and then it goes up every single year for
the next ten. It is part, I guess, of sort of ``Washington-
think'' that when you increase the budget, you can call it a
cut. You know, it is a decrease in the increase, perhaps, but
it is an increase nonetheless. So we have to keep those numbers
in perspective.
I think it is also worth pointing out that over the course
of the last 10 years, I don't think there is a single person on
this committee who would argue that we have done an outstanding
job of efficiently and effectively spending those dollars on
the defense budget. Anybody who would argue that we can't go
back and look at our acquisition and procurement process and do
it much better, do it in a way that is actually going to
deliver more capable pieces of equipment at less money, and
that is what these gentlemen have done if they have taken a
look at those last 10 years and figured it out how to do it
better.
Now I am not going to be overly critical of those last 10
years; 9/11 happened, and we had to respond. We had to fund the
military. And when you have to act that fast, mistakes will be
made. And I know the people who were making those decisions
back then did their level best in a very difficult time.
But to not learn from that experience 10 years later and
figure out a way to spend that money, that would be a betrayal
of our job and of the job of the people in the Pentagon, so I
applaud you for doing that. I think we have a budget that did
put the strategy first that puts us in the right direction. And
then also I will point out that this is the law.
The budget numbers that we have projected for the next 10
years and that Secretary Panetta and General Dempsey had to
live under were passed by this Congress. Now I know some
Members of the committee voted for it and some Members didn't,
but it is the law of the land, passed by the House and the
Senate. The $487 billion reduction in the projected increases
is the law that these people had to follow and that we passed
and gave to them.
So as we hear today about various different programs and
areas where we think that this budget is cutting too much, it
would be most helpful--and I doubt this will happen, but I will
ask for it anyway--that if, as people are making those
criticisms, they point out where they would like to find the
money, either within the defense budget, you can say, okay,
your strategy is all right, but you should have spent more
money here and less money there.
Or if you don't think that is possible within the defense
budget, then by all means, let us know what taxes you want to
raise to produce more money, or if you don't want to do that,
what other programs, preferably with some specificity, instead
of just generally saying we would like to spend less money on
government, that you are going to cut. Otherwise, this is just
an exercise in imagining that we have more money than we
actually do.
These gentlemen didn't have that luxury. They had to put
together a budget based on the law that we gave them. And
again, I will emphasize I think they did a very good job of it.
They put out a strategy that understands how the world is
changing. The main threats that we are going to face are going
to be asymmetric nonstate terrorist threats, and then also
Iran, North Korea, their missile technology--we need a
different sort of military to confront that than the one that
fought two major land wars in the last 10 years.
This strategy reflects those changes. To give one example,
the Special Operations Command will keep going up because we
know how critical they are to precisely the fight that we face.
They are going to increase that ISR [intelligence,
surveillance, and reconnaissance] capability, through unmanned
aerial vehicles and other sources, also going up to make sure
that we meet the needs that are in front of us.
Now there are a lot of other things that aren't going up,
but that is because things have changed. We need a new strategy
to confront the threats that we did, and in a difficult budget
environment, you guys did that and put together a very good
strategy.
So I hope we will have a realistic conversation. And if
more money wants to be spent here, tell us where we should find
it and tell us how to balance that out. You never forget that
it is also in our national security interest to have a strong
economy and a fiscally responsible Government. And if we don't
have those things, the strongest military in the world will not
be able to protect us.
So this is a very interesting debate that we are going to
have over the course of the next several months. I look forward
to the comments from the Members of this committee and from the
Secretary and the General. We have a lot of difficult work to
do, but I think we are off to a good start, and I look forward
to working with everybody on the committee and at the Pentagon
to get the job done for the American people. Thank you.
[The prepared statement of Mr. Smith can be found in the
Appendix on page 65.]
The Chairman. Thank you.
We are fortunate to have us today our Secretary of Defense,
the Honorable Leon E. Panetta, from the U.S. Department of
Defense; General Martin E, Dempsey, United States Army,
Chairman, Joint Chiefs of Staff; the Honorable Robert F. Hale,
the Under Secretary of Defense (Comptroller) of the Department.
Thank you, gentlemen, for being here.
Mr. Secretary, the time is yours.

STATEMENT OF HON. LEON E. PANETTA, SECRETARY OF DEFENSE

Secretary Panetta. Thank you, Chairman McKeon, Congressman
Smith, Members of this committee.
It is always nice to be able to return to the House. It was
my home in the past, and I still consider it one of the good
moments of my history in public service.
If I could ask that my statement be made part of the
record, and I will try to summarize it as briefly as I can.
The Chairman. No objection, so ordered.
Secretary Panetta. I appreciate the opportunity to appear
before you to discuss the President's budget request for the
fiscal year 2013 for the Department of Defense.
Let be begin, first of all, by thanking all of you for the
support that you provide to our service members and to their
families. These brave men and women--and they are, for anybody
who has gone to the battlefield or talked to those in uniform,
they are without question the next greatest generation of
individuals--along with the Department's civilian professionals
who support them, they have done everything that has been asked
of them and more during more than a decade of war. And again, I
thank you for the support that you have provided to them.
The fiscal year 2013 budget request for the Department of
Defense was, indeed, a product of very--of a very intensive
strategy review that was conducted by the senior military and
civilian leaders of the Department. All the service chiefs, all
of the combatant commanders participated in this effort. We
also had the advice and guidance from the national security
team and the President as well.
The total request represents a $614 billion investment in
national defense. It includes $525.4 billion requested for the
Department's base budget and $88.5 billion in spending in
support of our troops in combat.
The reasons for this review are clear. First, the United
States is at a strategic turning point after a decade of war
and obviously a very substantial growth in defense budgets.
But, second, with the Nation confronting very large debts and
very large deficits, Congress passed the Budget Control Act of
2011, imposing by law on us, by law, a reduction in the defense
budget of $487 billion over the next decade.
We at the Department decided to step up to the plate to
abide by the law and to use this crisis as an opportunity to
try to establish a new strategy for the force of the future,
and that strategy has guided us in making the budget choices
that are contained in the President's budget. The fact is that
we are at a turning point that would probably have required us
to make a strategic shift under any circumstances.
The U.S. military's mission in Iraq has ended, but we still
have a tough fight on our hands in Afghanistan, but 2011 marked
significant progress in reducing violence and transitioning to
Afghan-led responsibility for security. And we are on track to
complete that transition by the end of 2014. The NATO [North
Atlantic Treaty Organization] ministers, ISAF [International
Security Assistance Force], all of the NATO countries are
unified in this strategy, and we are abiding by our Lisbon
commitments.
Last year, the NATO effort in Libya also concluded with the
fall of Gadhafi, and successful counterterrorism efforts have
significantly weakened Al Qaeda and decimated its leadership.
But despite what we have able to achieve, unlike past
drawdowns, where threats have receded, the United States still
faces a complex array of security challenges across the globe.
We are still a nation at war in Afghanistan. We still face
threats to our homeland from terrorism. There is a dangerous
proliferation of lethal weapons and materials.
The behavior of Iran and North Korea continues to threaten
global stability. There is continuing turmoil and unrest in the
Middle East from Syria to Egypt to Yemen and elsewhere. Rising
powers in Asia are testing international rules and
international relationships, and there are growing concerns
about cyber intrusions and cyber attacks.
Our challenge must be to meet these threats; to meet these
threats, protect our Nation and our people, and at the same
time meet our responsibility to fiscal discipline. This is not
an easy task. It is a tough challenge.
To build the force we need for the future, what we decided
to do is develop a new strategic guidance that consists of the
following five key elements: Number one, the military will be
smaller, and it will be leaner, but it should be agile. It
should be flexible, ready to deploy quickly and technologically
advanced.
Second, we have to rebalance our global posture and
presence to emphasize Asia-Pacific and the Middle East. These
are the areas of greatest concern in the future.
Third, for the rest of the world we need to build
innovative partnerships and strengthen key alliances and key
partnerships from Europe to Latin America to Africa.
Fourth, we will ensure that we have the capability to
quickly confront and defeat aggression from any adversary,
anytime, anywhere.
And, fifth, this can't just be about cuts, it has to be
about investments. What do we protect and prioritize in terms
of investments, in technology and new capabilities, as well as
our capacity to grow, adapt and mobilize as needed.
While sharing this strategy and shaping the strategy, we
didn't want to make the mistakes of the past. And every time we
have gone through these drawdowns there have been serious
mistakes that have been made. Our goal was to maintain the
strongest military in the world, to not hollow out the Force.
That is extremely important: To not hollow out the Force, which
means to maintain a large force structure and then cut training
and equipment and all the other things that are essential to
make that a first-rate force. Thirdly, to take a balanced
approach to budget cuts, put everything on the table and look
at every area in the Defense Department budget. And, lastly, to
not break faith with the troops and their families, people that
have been deployed time and time again to the battlefield.
Throughout the review, we also made sure that this was an
inclusive process. General Dempsey, as Chairman, and I worked
closely with the leadership of the Services, combatant
commanders and consulted regularly with Members of Congress as
well as the President and members of the Administration. As a
result of these efforts, the Department is strongly unified
behind the recommendations that we are presenting today.
Consistent with the Budget Control Act, this budget
reflects $259 billion in savings in the first 5 years. We
obviously project meeting our $487 billion number over 10
years, but in the budget we present to you, it is the 5-year
cycle, and that includes $259 billion in savings.
It is a balanced and complete package, and as I said, it
follows the key elements that we laid out in our strategy. The
savings come from three areas. First, efficiencies; second,
force structure and procurement reforms and adjustments; and,
finally, compensation. Compensation is an area that has grown
by 90 percent, and we felt that we had to achieve some cost
controls in the future there as well.
Let me just quickly go through each of those areas. If we
tighten up the force, then I think we have a responsibility to
tighten up the operations of the Department by reducing excess
overhead, eliminating waste and improving business practices
across the Department. As you know, the fiscal year 2012 budget
proposed about $150 billion in efficiencies over 5 years, and
we are in the process of implementing those changes.
But we felt we could do more, so we have identified another
$60 billion in additional savings over the next 5 years through
measures such as streamlining support functions, consolidating
IT [information technology] enterprise services, rephrasing
military construction projects, consolidating inventories and
reducing service support contractors. As we reduce force
structure, we also have a responsibility to try to provide the
most cost-efficient support for the force. And that is the
reason the President will request Congress to authorize the
Base Realignment and Closure process for 2013 and 2015.
Look, as somebody who has gone through BRAC [Base
Realignment and Closure], and I went through it in my district
and know what it means and know the impact that it can have, it
is a controversial process that impacts on Members and impacts
on their constituencies. I understand that. And, yet, it is the
only effective way to try to achieve the needed infrastructure
savings that we have to achieve in the long run.
Lastly, to provide better financial information, we are
also increasing our emphasis on audit readiness and
accelerating key timelines. In October of 2011, I directed the
Department to accelerate the efforts to achieve fully auditable
financial statements. Originally, under a mandate, we were
supposed to do that by 2017; I asked that it be done by 2014.
But efficiencies alone are not enough to achieve the
required savings and that is obviously why we had to make
significant adjustments to force structure and procurement
investments. But we did it in line as, again, with the
strategies that we put in place. And let me quickly walk
through those. First, we knew that coming out of the wars, the
military would be smaller.
Our approach to accommodating these reductions was to use
this as an opportunity, as tough as it is, to fashion an agile
and flexible military that we will need in the future. We have
got to have an adaptable and battle-tested army that is there
for decisive action and capable of defeating an adversary on
land and also at the same time be innovative.
We need a Navy that maintains forward presence and is able
to penetrate enemy defenses; a Marine Corps that is a middle-
weight expeditionary force with reinvigorated amphibious
capabilities; an Air Force that dominates air and space and
provides rapid mobility in global strike and persistent ISR;
and a National Guard and Reserve that can continue to be ready
and prepare for operations when needed.
To ensure an agile force, we made a conscious choice--that
we have decided not to maintain more force structure than we
could afford to properly train and equip. That was the point I
made about not doing something that hollows out the Force.
We are implementing force structure reductions that are
consistent with this strategic guidance for a total savings of
about $50 billion over the next 5 years. The biggest pieces of
that include resizing the Active Army, where at 562,000, we
will be going down to about 490,000 by 2017. This will be
gradual, and at that point, it will be a level that will still
be higher than pre-9/11.
Same thing is true for the Marine Corps. We will go from
202,000 to 182,000 marines. We will also reduce and streamline
the Air Force's airlift fleet, basically going after aging C-
5As and C-130s but will still remain a fleet of 275 strategic
airlifters and 318 C-130s.
The Navy will protect a fleet of 285 ships and protect our
highest priority and most flexible ships, but we will be
retiring 7 lower priority Navy cruisers that, frankly, need to
be upgraded with ballistic missile defense capability. That
hasn't happened, and it would require significant repairs in
order to do that.
Second, the strategic guidance made clear that we have got
to protect our capabilities and project our power to Asia-
Pacific and the Middle East. To this end, we have maintained
the current bomber fleet. We maintained the aircraft carrier
fleet, 11 ships and 10 air wings. We maintained the big deck
amphibious fleet. We restore Army and Marine Corps forces
structure in the Pacific. After the drawdown from Iraq and the
drawdown in Afghanistan, we are going to maintain a strong
presence not only in the Pacific but in the Middle East as
well.
This budget also makes selected new investments to ensure
that we develop new capabilities, $300 million to fund the
next-generation Air Force bomber; $1.8 billion to develop the
new Air Force tanker; $18.2 billion for the procurement of 10
new warships.
Third, this strategy makes clear that even though Asia-
Pacific and the Middle East are the areas of greatest concern
and priority, the United States will work to strengthen our key
alliances, build partnerships and develop innovative ways, such
as rotational deployments, to sustain U.S. presence elsewhere
in the world.
With regard to NATO, we will be investing almost $200
million in the NATO Alliance Ground Surveillance System and
$9.7 billion to develop and deploy missile defense capabilities
that protect the U.S. homeland and strengthen regional missile
defenses.
Fourthly, the United States must have the capability to
fight more than one conflict at a time. This is essential. But
we are in the 21st century, and 21st century combat is a lot
different. And we need to have the capabilities to deal with
threats in the 21st century. That means we need to invest in
space, in cyberspace and long-range precision strikes and the
continued growth of Special Operations Forces to ensure that we
can still confront and defeat multiple adversaries, even with
the force structure reductions that we have outlined. Even with
some of the adjustments to force structure, this budget
sustains a military that we believe is the strongest and will
remain the strongest in the world.
We will have an Army of more than 1 million Active and
Reserve soldiers, 18 divisions, 65 brigade combat teams, 21
combat aviation brigades. We will have well a Navy battle force
of 285 ships that will remain the most powerful and flexible
naval force on Earth. We will have a Marine Corps with 31
infantry battalions, 10 artillery battalions, and 20 air
tactical squadrons; and an Air Force that will continue to
ensure air dominance with 54 combat coded fighter squadrons in
the current bomber fleet.
Lastly, we have to invest. If we are going to leap ahead of
our adversaries technologically, we have got to be able to have
some key investments in new technologies. We provide $11.9
billion for science and technology research; $2.1 billion for
basic research; $10.4 billion to sustain continued growth in
Special Operations Forces; $3.8 billion for unmanned air
systems; and $3.4 billion for cyber activities.
Let me also mention a key element that we absolutely have
to maintain, which is a strong, capable and ready National
Guard and Reserve. To that end, we are going to retain--we have
asked the Army to retain mid-level officers and NCOs
[noncommissioned officers], so that the structure and
experienced leaders will be there if we have to mobilize and
regrow the Force quickly.
Another important element is to preserve our ability to
quickly adapt and mobilize a strong and flexible industrial
base. We have got to have an industrial base for the future.
This budget recognizes that industry is our partner in the
defense acquisition enterprise.
And, finally, to the most fundamental element of our
strategy and our decisionmaking process, our people, far more
than any weapons system or technology, the greatest strength of
the United States is our military, the men and women in
uniform.
One of the guiding principles in our decisionmaking process
was to keep faith with them and their families. So we are
protecting family assistance programs. We are protecting basic
benefits. We are sustaining important investments in the budget
to try to assist our troops with their needs and the needs of
their families. Yet, in order to build the force needed to
defend the country under existing budget constraints, the
growth in costs in military pay and benefits has to be on a
sustainable course. As I said, this is an area of the budget
that has grown by 90 percent. We have got to implement some
efforts to try to control those costs in the future.
The budget contains a roadmap to address the costs of
military pay and health care and retirement in ways that we
believe are fair, transparent, and consistent with our
fundamental commitment to our people.
Let me conclude by saying this, Members of the committee:
This, as I said, has not been an easy task. Putting together
this kind of balanced package has been a difficult undertaking
for everyone, but at the same time, we have viewed it as a very
important opportunity to try to shape the force we need for the
future. I believe that all of us, the Service chiefs and the
combatant commanders have developed a complete package here
aligned to achieve our strategic aims and at the same time meet
our responsibility to fiscal discipline.
As you look at the individual parts this plan--and I urge
you to do that, look at every element of the plan that we have
submitted--I encourage you to bear in mind the strategic
tradeoffs that are inherent in any particular budget decision.
This is a zero-sum game, and as far as I know, there is no
free money around, and the need to balance competing strategic
objectives has to take place in a resource-constrained
environment. We need your support and partnership. We look
forward to that.
I understand these are tough issues, and I also understand
that this is the beginning, not the end, of this process.
But this is what Congress mandated. The majority of this
committee voted for the Budget Control Act. We are mandated
under law to meet these requirements of almost a half a
trillion dollars in savings over the next 10 years. We have
taken that responsibility seriously. We need your partnership
to do this in a manner that preserves the strongest military in
the world. This will be a test for all of us, whether reducing
the deficit is about talk or about action.
And, let me finally be very clear. When you take a half a
trillion dollars out of the defense budget, it comes with risk.
We think they are acceptable risks. But, nevertheless, there
are risks here. We are dealing with a smaller force. We are
going to have to depend on the speedy mobilization. We are
going to have to depend on new technologies. We are going to
have to take care of troops coming home to make sure that they
have jobs and have the support that they need.
There is very little margin for error in this budget.
This is why Congress must do everything possible to make
certain that we avoid sequestration. That would subject the
Department to roughly another $500 billion in additional cuts
that would take place through a meat-axe approach and that we
are convinced would hollow out the Force and inflict serious
damage to the national defense.
So the leadership of this Department, both military and
civilian, is united behind this strategy that we presented and
the budget that we are presenting, but we look closely to
working with you in the months ahead to do what the American
people expect of their leaders, to follow the law, to do our
part in reducing the deficit, to be fiscally responsible but
also to develop a force that can defend this country, a force
that supports our men and women in uniform and a force that is
and always will be the strongest military in the world.
Thank you, Mr. Chairman.
[The prepared statement of Secretary Panetta can be found
in the Appendix on page 66.]
The Chairman. Thank you very much.
General Dempsey.

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

General Dempsey. Chairman McKeon, Congressman Smith
distinguished Members of this committee, thank you for the
opportunity to discuss the President's defense proposed budget
for fiscal year 2013.
I would like to begin by saying this budget represents a
responsible investment in our Nation's security. At its core,
it is an investment in our people, the sons and daughters of
America who serve this Nation in uniform.
Allow me to open with a few words about them and what they
have accomplished. The last 10 years of war have been among the
most challenging in our history.
Through it all, the Joint Force has persevered, and it has
prevailed. Our families have stood with us deployment after
deployment after deployment, and so have you. Together, we have
fulfilled our solemn vow to protect and defend America, her
citizens and her interests.
As I sit with you today, our service men and women remain
globally engaged. They are deterring aggression, developing
partners, delivering aid, and defeating our enemies. They stand
strong, swift, and ready in every domain every day. I had the
privilege to be with a few of them while traveling to
Afghanistan and Egypt earlier last week.
As always, I witnessed extraordinary courage and skill in
the young soldiers just off patrol in the deep snows of the
Hindu Kush, and the men and women of the NATO training mission
managing the development of the Afghan National Security Forces
and the brave and vigilant Marine security detachment in our
embassy in Cairo, and in the superb junior airmen who flew us
to the right place at the right time. They exemplify a
professional military with a remarkable and reliable record of
performance.
In just the past year, for example, we further crippled Al
Qaeda. We helped protect the Libyan people from near certain
slaughter, while affirming NATO's important role beyond the
borders of Europe. We brought to a close more than 20 years of
military operations in and over Iraq. And like we did in Iraq,
we are steadily transitioning responsibility for security onto
Afghan shoulders. And, of course, as you recall, we helped
Japan recover from a perfect storm of tragedy and destruction.
And, of course, these were just the most visible
accomplishments. Behind the scenes and beneath the surface, we
defended against cyber threats. We have sustained our Nation's
nuclear deterrent posture, and we worked with allies and
partners to build capacity and to prevent conflict across the
globe. We continue to provide this Nation with a wide range of
options for dealing with the security challenges that confront
us. And in an increasingly competitive, dangerous and uncertain
security environment, we must remain alert, responsive,
adaptive, and dominant.
This budget helps us to do that. It is informed by a real
strategy that makes real choices. It maintains our military's
decisive edge, and it sustains our global leadership.
Moreover, it ensures we keep faith with the true source of
our strength, and that is our people.
With this in mind, allow me to add just a few additional
comments to those of the Secretary. First, this budget should
be considered holistically. It is really a joint budget for a
Joint Force rather than individual Service budgets formed
parochially. It presents a comprehensive, carefully devised set
of decisions. It achieves balance among force structure,
modernization, pay, and benefits. Changes that aren't informed
by that context, the context of jointness, risk upending the
balance that I have just described and potentially compromising
the Force.
Second, this budget represents a way point, not an end
point, in the development of the Joint Force we will need for
2020 and beyond. It puts us on a path to restore versatility at
an affordable cost. Specialized capabilities that were once on
the margins become more central, even while we retain and must
retain our conventional overmatch. It builds a global and
networked Joint Force that is ably led and always ready.
And, third, this budget does honor our commitments made to
our military family. It keeps faith with them. There are no
freezes or reductions in pay. There is no lessening in the
quality of health care received by our Active Duty service
members and our medically retired wounded warriors. Now that
said, we simply can't ignore the increasing cost of paying
benefits. To manage costs, we need pragmatic reform. All of
this can be done in a way that preserves our ability to recruit
and then retain the best of America's talented youth.
Finally, all strategies and the budgets that support them
carry risk. This is no different. In my judgment, the risk in
this strategy and budget lies not in what we can do but in how
much we can do and how often we can do it. This budget helps us
buy down this risk by investing in our people and in the joint
capabilities they most need.
To close, thank you. Thank you for keeping our military
strong, thank you for taking care of our military family, for
supporting those who serve, who have served and importantly who
will serve.
I know you share my pride in them, and I look forward to
your questions.
[The prepared statement of General Dempsey can be found in
the Appendix on page 76.]
The Chairman. Thank you very much.
Thank you for your testimony. Thank you for your service.
Thank you for doing a great job in a very difficult situation.
You have mentioned the Deficit Reduction Act, and Mr. Smith
mentioned it. And again, many of us voted for it; some didn't.
The Deficit Reduction Act called for serious reductions in our
spending.
I understand the results of the last election and people
said you have got to go to Washington and get our financial
spending in order. Everything needs to be on the table, defense
included. And I don't think anybody would argue with a budget
as large as we have in the Defense Department that we can't
find savings. And this is a huge, a huge cut.
Defense accounts for 20 percent of our overall budget. And
the first tranche of the savings that we voted on in the
Deficit Reduction Act, 50 percent of the savings come out of
defense. So I would say that we have given and given a lot out
of defense.
And then the sequestration, I mean, when we voted for the
deficit reduction, we were told that the ``super committee''
[Joint Select Committee on Deficit Reduction], that the
sequestration was so bad that it would force the super
committee to do its work to find other savings in the
entitlement programs, which is where the real problem is
anyway. Because if we eliminated all defense spending, if we
eliminated all education spending, if we eliminated all
transportation spending, if we eliminate the total
discretionary budget, we would still be running a deficit of
over half a trillion dollars.
So, all of this talk, all of this agony of going through
all of these cuts, which are very significant, don't really
address the real deficit problem. It is not the Defense
Department that is putting us into a very precarious situation
in spending.
Having said that, you have stepped up to the plate. You
have found the cuts over the next 5 years that are very
serious, and you have devised the strategy the best way you can
to meet the threats that we can meet given the cuts.
Just a couple years ago, before you got here, Mr.
Secretary, before you got here, Mr. Chairman, Secretary Gates
in that same seat was saying that we had to, over the next 5
years, have a 2-percent growth over inflation, or we would have
to reduce the size of the Force.
Well, that has come to pass because we not only are not
having a 2-percent growth over inflation; we are actually
having a reduction when you consider inflation. And your report
from the Department points that we are going to have negative
real growth over the next 5 years based on this budget when you
take into account inflation.
So we understand that, and we are going to work through
that, and you have stepped up and said that the military can
live with this. But the sequestration we cannot live with. I
think we are all in total agreement on that.
So I have a question. The way we are moving forward right
now, there is nothing in this budget to deal with sequestration
except a possible tax increase if that is needed at the end of
the day.
This budget that we will be dealing with kicks in, starts
with the new fiscal year on October 1. Being realists, I think
all of us understand that we are probably not going to have
that budget. The Senate says that they are not going to pass
one, and we will do ours on the House side. But being an
election year, I think we probably understand we are not going
to have a normal year.
We haven't had a normal year for years, so maybe we are
going to have a normal year, and we will be with a CR
[Continuing Resolution] from October 1, at least through the
election. And, you know, I don't know how we will come back and
deal with this in January.
But in January, the sequestration kicks in. Now you have
had 6, 7, 8 months to really work on this budget, to go through
a strategy and budget, and you have done exhaustive work to
come up with this budget. A week or so ago, we had Dr. Carter
and Admiral Winnefeld, the secretaries of the Services and the
chiefs. And one of the Members of this committee asked Dr.
Carter what he had done, what was being done to plan for
sequestration. His answer was basically we don't have to do any
planning for it. All we have to do is pull out the budget and
take 8 percent off of every line item.
I think everybody in here probably understands the chaos
that would create. I don't know how many contracts the
Department has; I know it is hundreds. Those would all have to
go back and be renegotiated. Pensions, retirement plans, health
insurance, all of the things that would have to be dealt with,
further force reduction immediately. And given that we have got
the CR hanging over us and then sequestration kicking in--I,
Mr. Secretary, talked to you about this.
I put in a bill--this is going to be serious, dealing with
everything that we are talking about here today, the
sequestration just takes it right over the top. And we are
looking at all the news reports that we are hearing, the saber-
rattling going on over in Iran, the new leadership in Korea, I
mean, I think the world is in a very, very serious situation.
And I know, General, you have told us in a meeting a couple
weeks ago that in your 37 years, this is the most serious you
have ever seen it.
So I think these are serious questions.
My bill would move, would pay for the first year of
sequestration, which moves it back a year. It does it with as
little pain as possible through attrition, decreases the size
of the Federal workforce.
But I am asking you, Mr. Secretary, if this is something
you could support, trying to fix sequestration now instead of
having all of the people that will be laid off this year in
preparation for next January, if it wouldn't be better to move
ahead and fix that now, deal with it now, not wait for the
December 31 deadline and that would still give us then next
year to work on next year's problems and sequestration.
Secretary Panetta. Mr. Chairman, as I have said time and
time and time again, sequestration is a crazy process that
would do untold damage to our national defense. It is a
mechanism that would do, you know, just kind of blindsided cuts
across the board and would really hollow out the Force. So I am
prepared to work with you in every way possible to try to work
on both sides to try and develop an approach that would de-
trigger sequestration. My hope was frankly that the super
committee would take that responsibility and do that. I think
that is what everybody's hope was.
That didn't happen and that really concerned me. And so
whatever, whatever we can do on both sides to try to develop an
approach that would de-trigger sequester and avoid that kind of
horrific result, I am certainly prepared to work with you on
that.
The Chairman. Thank you. Thank you very much.
Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
I will point out that the overall budget that the President
submitted contained $3 trillion in 10-year savings so that if
that budget were passed, that more than meets the $1.2
[trillion] that was required to avoid sequestration. So there
was a plan put on the table, and I share the chairman's remarks
that the sooner we resolve that overall issue, the better for
all concerned, whatever that plan may wind up looking like.
And I wanted to just get a couple more comments from you
about BRAC, because you have seen since that discussion
started, it has not been greeted warmly on the Hill, to put it
mildly, except by me. I think I might be the only one I think
who has had a single positive thing to say about it. And I just
sort of looked at it logically and said, you know, if we are
shrinking the force by the size that we are in reaction to the
fact that Iraq is done, Afghanistan is winding down, we are
moving two brigades out of Europe. We are making substantial
changes within the strategy.
I mean, regardless of the debate about the budget, we are
going to be moving things around. I mean, logically, there is
no way we can do that without doing some closures and
realignments; I just don't see where it is possible. I
certainly have a large number of bases in my State and various
degrees of vulnerability. And I understand that, but it has to
be done as far as I can see. So I will maybe give you just a
minute or two to make another pitch for why we at least need to
be at least a little bit more open to what, in my mind, is an
absolutely necessary step.
Secretary Panetta. Well, I mean, it goes to the point that
as we make the reductions that I think will take place under
any circumstances as a result of some of the drawdowns in the
wars that we are engaged in, we are going to have units
returning or coming back that will be drawn down.
That means that the force that we maintain will need less
infrastructure to support it. That is just a reality.
How do you make the decision as to what parts of that
infrastructure ought to be reduced or changed or eliminated?
That has been--frankly, that has been a challenge as long as I
have been in this town to try to make those decisions. And
ultimately what happened was that someone developed the BRAC
process as a way to effectively do that by putting all of these
decisions in one package and having an up-or-down vote.
I was a part of going through three BRAC processes. I had
installations in my district and one of those BRACs eliminated
Fort Ord in my district, which represented 25 percent of my
local economy. So I know the impact that the BRAC process has.
At the same time, we were able to establish a campus of the
California State university system there and reuse that area
and, frankly, came out on the better end of the deal.
But, nevertheless, it is a tough process to go through. And
yet, you know, standing back, I can't see a better way to do
this other than BRAC, because if you try to do this on a
piecemeal basis, you know, we know what is going to happen: It
is not going to go anywhere. The only effective way to deal
with it is to put it in this kind of package.
But, by the way, I also understand the costs involved. You
know, BRAC costs a hell of a lot of money to do cleanup and all
the other things need to be done.
Mr. Smith. That should be done. This is not about, you
know, this is a way we can save money. We know it is not in our
previous five experiences. Now, in the long term, it does save
money. You better keep that in mind.
Secretary Panetta. Yes.
Mr. Smith. Yes, for the 5-, 10-year numbers, the long term
matters. It is more about making sure you have the force
structure and basing system that you need to support your
National Security Strategy.
Secretary Panetta. That is right.
Mr. Smith. Thank you. I just want to make one quick
editorial comment on Guam and just, you know, for you to be
clear. I know we are doing the realignment in the Pacific.
There are still some details to work out, just primarily of our
negotiations with Japan, what to do about Okinawa and
elsewhere, and I know there has been a significant reduction in
what is going to go, the number of marines that are going to go
to Guam from the previous plan.
Mr. Smith. I would just like, as you are still trying to
figure out what exactly to do in Okinawa, if you could consider
perhaps more marines going to Guam and also not just rotational
but on a permanent basis.
And, believe me, I understand. We rolled this plan out I
think 6 years ago. It was going to cost $10 billion, and then
there were all kinds of demands, and it wound up being $23
billion to move into Guam, which was completely unacceptable.
And the people in Guam are going to have to work with you to
get those costs under control, but I just hope you will
consider the fact that there is still more capability there to
move some of those marines to Guam if we can perhaps get a more
cooperative reception about how to make the finances work. So I
hope you will consider that as you go forward with the Pacific
plan.
Secretary Panetta. Thank you very much for that.
We are--you know, we very much view this as an opportunity
to try to really give us a chance to reposture our force in the
Pacific. Guam is a very important part of that. Believe me, it
is something we are seriously looking at, and we are trying to
work with the Japanese to try to get this done. This thing has
been around for 15 years, and nothing has happened, and the
time has come to try to get this resolved, and that is what we
are trying to do.
Mr. Smith. Thank you, Mr. Secretary.
Thank you, Mr. Chairman.
The Chairman. Thank you.
And we haven't had a chance to talk about this, but my
thinking is really evolving on this whole Guam issue. And we
are talking about reducing the marines by 20,000. Maybe one way
to do that would be to just bring the marines that we take out
of Okinawa, bring them to Camp Pendleton or some--bring them
home and maybe leave some prepositioned equipment in place or
something.
I think when we are talking about the tremendous cuts that
we have to make then we are going to have to really look at
that seriously, because this is just escalating, and we may be
able to solve two problems instead of one.
Mr. Bartlett.
Mr. Bartlett. There is obviously no wild enthusiasm in
Congress for additional BRAC rounds for two reasons. Every one
of those facilities is in somebody's district. It might be
yours that gets gored. And, secondly, we really do not save any
money in the short term because of the cleanup.
You know, we have been on some of these bases for a hundred
years. Our families have lived there. Our kids have played
there. And we are making the statement that these are second-
class citizens, because they can live and play in a place that
really isn't even good enough to give away.
I know the law may require us to do this environmental
cleanup, but I think we make the laws here in Congress, and we
could change that law. If the local community doesn't want the
facility, we will plant some trees and lock the gate and come
back in a hundred years and cut the trees; and by that time,
whatever the environmental problem was, it will undoubtedly be
much less.
If we force you to keep open infrastructure that you don't
need, clearly, this impacts what you can do in personnel, in
modernization, and in R&D [Research and Development]. Would you
tell us for the record how much more you could do in personnel,
modernization, and R&D if we could close these facilities
without the obligatory cleanup?
[The information referred to can be found in the Appendix
on page 99.]
Mr. Bartlett. I have a question, General Dempsey. If you
ask our combatant commanders what they would like more, it is
always ISR. So it is appropriate that the new defense strategy
cites intelligence, surveillance, and reconnaissance as one of
the capabilities ``critical to our future success.''
Yet the DOD [Department of Defense] budget request for
fiscal year 2013 is approximately $1 billion, or 25 percent,
less than fiscal year 2012 for ISR programs. Each of the
Services is terminating a major ISR program in the fiscal year
2013 budget request: the Army's enhanced medium-altitude
reconnaissance and surveillance system, the Navy's medium-range
maritime unmanned aerial system, and the Air Force's Block 30
Global Hawk unmanned aerial system.
In the case of the Global Hawk, 18 aircraft will be placed
in storage. Nine of these are currently deployed and supporting
combat command operations. Would you please explain what
appears to be a real conflict between the new strategy and
fiscal year 2013 budget investment decisions?
General Dempsey. I will, sir. Thanks for asking.
First of all, you are right that combatant commanders--and
I was one--have an insatiable--literally, that word by that
definition--an insatiable appetite for ISR. What we have
learned over the course of the last 10 years is that certain of
those platforms--I mean, once you procure them, you begin to
recognize both the limit of their--the expansiveness or
limitations of their capabilities. And what you see reflected
in our budget is a look across all of the various components of
this thing called ISR to determine which ones are actually
delivering the best value--meaning the best possible
intelligence, surveillance, and reconnaissance capabilities at
the best value. At the best business case, if you will.
And so, for example, the Block 30 Global Hawk has
fundamentally priced itself out of our ability to afford it
when the U-2 [Dragon Lady high-altitude reconnaissance
aircraft] gives, in some cases, a better capability and, in
some cases, just a slightly less capable platform. So what you
are seeing there is our ability to eliminate redundancy, to
continue to invest in the best value, and to avoid at every
possibility redundancy that fundamentally is too expensive.
Mr. Bartlett. Secretary Panetta, with the delay in the F-35
[Lightning II fifth-generation multirole fighter] aircraft
program, what steps have you directed the Air Force, the Army,
and the Marines to take to maintain the necessary fighter
inventory until the F-35 can be procured in numbers to replace
legacy fighter fleets?
Secretary Panetta. We have ensured, obviously, that we
maintain our full fighter force in place--and obviously it
continues to require upgrades. We are prepared to make those
upgrades as necessary.
Our goal here is to develop the fifth-generation fighter.
We think that is absolutely essential. And F-35s are coming off
the production line. They continue to be tested. Frankly, the
tests are going pretty well. We have got to do some software
tests on all three models.
I just took the STOVL [short take-off vertical landing] off
of probation because it had five problems that Secretary Gates
had identified that put it on probation. It has been able to
deal with all five problems, and now we are looking at the
software aspects. So this plane is on path to hopefully coming
into full production within the next few years.
Mr. Bartlett. Thank you very much.
The Chairman. Thank you.
Mr. Reyes.
Mr. Reyes. Thank you, Mr. Chairman.
First and foremost, Mr. Secretary, thank you for coming to
El Paso and covering a few of the issues that you have covered
with the committee here this morning.
I have got two areas that I would like for both you and
General Dempsey to focus on.
The first one deals with the reaction to the request for
another possible BRAC from our allies abroad. And I know you
have had a chance, since first asking for that authority, to go
out and talk to at least some of our allies; and so I am
curious if you could share that with the committee.
And then the other issue--and then I will give you the rest
of my time--the other issue is the Administration is fixing to
launch yet another effort of troops in New Mexico and Arizona.
And I am concerned that not only is that very expensive but it
puts our troops in a questionable position. Because they are
not trained for law enforcement. They are trained for combat.
And I would appreciate it if you would comment on this latest
effort to deploy troops in New Mexico and Arizona.
As I understand it from the information that I have, it is
against the ultra light vehicles that the cartels are using.
But there are certainly better ways to do that than a full
force presence in those--in those two areas.
So if you would cover that, I would yield the rest of my
time to both of you.
Secretary Panetta. Congressman, let me address the first
part of your question; and then I will have General Dempsey
comment on the second part.
On the first part of the question, we are--and we have
been--looking at infrastructure abroad very carefully. Because,
obviously, if we are going to look at infrastructure in this
country, we are obligated to look at infrastructure abroad.
We are going to be taking down two brigades in Europe. That
will impact on infrastructure there. We have already closed in
the period of the last I guess 6 to 7 years 100 bases in
Europe. We are probably looking at probably 23 additional bases
that we will be looking at as well. So that we are, as a result
of drawing down our forces there, looking at what savings we
can make in infrastructure in that arena.
General Dempsey. Congressman, on the issue of use of troops
on the border, you know, we went down that path to meet an
immediate need several years ago; and every year we review our
posture in that regard. And we have seen it all along as an
interim strategy, a transitional strategy, and one that could
ultimately be replaced by technical means, whether it is ISR in
the military sense or other surveillance capabilities available
on the commercial market.
So we understood when we began this, our role filling that
immediate need. We are eager, actually, to partner and are
partnered with Department of Homeland Security, with the FBI
[Federal Bureau of Investigation], with State and local
governments. We do exercise it periodically, but I am not eager
to have that become a core competency of the uniformed
military.
Mr. Reyes. And it is important to note that this is a very
expensive proposition when you deploy troops and especially
when we have already built up the border patrol to over 21,000
agents.
I was just last week in Nogales, Arizona--Tucson and
Nogales, Arizona. And speaking to the people there, they
comment on the fact that everywhere that they are we have
border patrol agents.
So I am really at a loss to understand why we would want to
deploy troops at a time when we are trying to save money. That
is a very expensive proposition.
The border is a safe environment in spite of all the
rhetoric that we hear politically. So I would hope that we
could rethink that if at all possible at a time when we are
trying to save money.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Thornberry.
Mr. Thornberry. Thank you, Mr. Chairman.
Mr. Secretary, let me just add a couple of brief facts to
some conversation that you have already had this morning.
One is that the President instructed the Pentagon in the
spring of 2011 to look for $400 billion in savings in the
Defense budget. Now that was before your time, and it was
before General Dempsey's time. But any notion that the $487
[billion] sprung out of Congress just from the Budget Control
Act spontaneously in some way is obviously not true. It was
under way long before we ever got that that point.
The second point I wanted to throw out is a little more
specificity on BRAC. By the way, I have supported every round
of BRAC since I have been in Congress. But the 2005 round of
BRAC will not even break even until 2018, according to GAO
[Government Accountability Office]. That means for 13 years it
is going to cost more money to have BRAC than it would if you
didn't have BRAC.
And so having the Pentagon suggest two more rounds when it
will aggravate the budget situation for 13 years, or at least a
decade, leaves me scratching my head a little bit. And I think
it is important to put a little more specificity. It doesn't
even break even for a decade, which I think is problematic.
But, General Dempsey, another thing that leaves me
scratching my head these days is the reports that the military
and the Administration are looking at substantial cuts to our
nuclear deterrent. Under START [Strategic Arms Reduction
Treaty], we are going to end up with about 1,500 weapons. If
the reports are right, there is consideration of cutting that
80 percent down to, say, 500, just for rounding, and that is
being generous.
It seems to me if we end up with 500 nuclear weapons and
country A has a couple hundred, that all the incentive in the
world is for them to catch us, because it is not that far and
not that hard for them to do. So I would appreciate your best
professional military judgment on whether cuts of 80 percent in
our nuclear stockpile really are good for the national security
of the United States.
General Dempsey. I won't comment on the 80 percent figure,
Congressman. What I will say is that what has been reported is
the CliffsNotes version--not that you would ever understand
what CliffsNotes are from your personal education--but it is
the CliffsNotes version of what is a very comprehensive set of
discussions internal to the military with the national security
staff on what is our next negotiating strategy notably with
Russia. And the status quo, by the way, is always an option and
one that is in play.
So at this point, sir, I would just--I would encourage you
not to become too concerned with the media reports of what is a
very comprehensive process.
Mr. Thornberry. Well, I do become very concerned, partly
because it does nothing but encourage other countries to
advance their nuclear program. If they see that we are going to
come down from 1,500 to some number in the low to middle
hundreds, it does nothing but encourage our enemies and
discourage our friends. And the result of that is more nuclear
weapons programs all across the world, which would seem to me
to be something that we would not want to have happen.
So I get very concerned if our military takes seriously any
notion that we can--can even begin to approach reductions on
that scale. I am worried about where we are with the last round
of START, but much less something that goes to that level
concerns me very much.
Mr. Secretary, let me ask one last thing. Vice President
Biden has said that the Taliban is not our enemy, and I have a
quote here says--that supports that.
Do you agree--do you believe that the Taliban is our enemy
in Afghanistan? And if they are not our enemy, can we leave a
secure and stable Afghanistan without addressing the Taliban
and their safe havens in Pakistan?
Secretary Panetta. The Taliban, as you know, Congressman,
is a very broad group. Our primary enemy in that part of the
world is Al Qaeda. And the Taliban elements, the terrorist
elements that support Al Qaeda are also our enemy. And there
are some elements, obviously, of the Taliban that support Al
Qaeda; and those are the ones that we have been targeting.
Mr. Thornberry. Can we leave a safe and secure Afghanistan
without dealing with those elements of the Taliban that support
Al Qaeda?
Secretary Panetta. I think--our goal is to make sure that
they never again can establish a safe haven in Afghanistan from
which to conduct attacks on this country, and that remains our
primary goal.
The Chairman. Mr. Reyes--I mean, Mr. Andrews. Excuse me.
Mr. Andrews. Thank you, very much, Mr. Chairman. I would
like to hear Mr. Reyes ask more questions.
But I want to thank General and Mr. Secretary, Secretary
Hale for your service to our country and particularly,
Secretary Panetta and Mr. Hale, your accessibility to members
of this committee and the Congress. It is refreshing, and you
have been the most accessible leaders of the Defense Department
I have ever encountered, and I am very grateful for that.
I also wanted to thank you, Mr. Secretary, for your comment
on page 3 of your written testimony about the very personal
priority you put on achieving audit readiness for the
Department. My friend and colleague, Mr. Conaway, has taken a
lead on this issue. He wrote it into law in an effort he and I
worked on together, and he has very diligently led a panel of
this committee to try to achieve that reality.
All the discussions we are having this morning and are
going to have in the next couple of months may be based on
false data if we don't have good financial statements. So I
think--you know, this is a boring topic that doesn't make
headlines, but it is absolutely critical to an intelligent
discussion of the hard financial choices we have in front of
us. So I thank you for your very personal investment in that
issue.
And I did want to get to a more controversial question now.
Despite some of the rhetoric, which I think corresponds to
the year on the calendar, the budget proposal that you have
submitted, if I understand it, for every $100 that we spent in
the core Defense budget last year we are going to spend $99 in
fiscal year 2013; and for every hundred people we had in
uniform, at least authorized to be in uniform, we are going to
have $99. So I think before we get too excited about what the
1-year budget means we have got to understand that.
I do share with Mr. Smith and I think with you an
understanding of the difficult political realities of the BRAC
process but the necessary decisions that must be made, and I
wonder if you could outline for us what some of the strategic
tradeoffs would be if we don't do the BRAC process. You know,
you have been through it. I have been through it. I think
everybody on the committee has, one way or another. Tell us
what happens if we bend to the easy decision and not do BRAC.
What do we give up in that trade-off?
Secretary Panetta. I mean, look, you all know this. The
Defense Department budget is made up of only so many parts. I
have identified the areas that involve savings that we can
focus on, and we put everything on the table. Those parts are
efficiencies, whatever we can do to try to eliminate waste and
cut down on bureaucratic overhead, and there is a lot of that.
But, you know, we have added about $60 billion in savings in
that area.
The second area, obviously, is force structure. And that
means that--you know, that involves cutting personnel out of
the force; and we have already targeted about a hundred
thousand reduction in both the Army and the Marine Corps.
Thirdly, modernization, weapons, procurement areas, and
there we have gone after significant savings. We still have to,
obviously, maintain technology and weapons systems that are
key, but we have put on hold some of the areas that we think we
can achieve some savings. We have gone after cost
effectiveness. We have gone after affordability and tried to
deal with some of those areas as well in terms of savings. And
then the last area is compensation, which involves the pay and
benefits for our military.
Okay. So if infrastructure is part of the force structure
reduction savings, and let's assume we don't do any
infrastructure savings and yet we still have to come up with
additional savings, where are you going to go?
Mr. Andrews. Right. I think it is fair to say that if we
don't do infrastructure then there is only three places to
look----
Secretary Panetta. That is right.
Mr. Andrews [continuing]. The compensation for the troops
and their families and the civilian employees, tools and
weapons that we need to defend the country, or other strategic
priorities about what we can do around the world.
I mean, I was involved in a piece of litigation against
BRAC that went to the United States Supreme Court. I have been
through this one. But I also understand that we won't cut that
infrastructure without the BRAC; and, as difficult as it is, I
frankly would encourage you to ask for that new authorization
and would like to work with you to support it. Not because I
like BRAC, but because I even greater dislike the alternatives
to it.
I thank you for your time and testimony this morning.
The Chairman. Thank you.
Mr. Jones.
Mr. Jones. Mr. Chairman, thank you very much.
And, Mr. Secretary, I might be the only Republican on the
committee to say thank you for your recent decision about
bringing our troops out in 2013. This has been a great interest
and concern to me.
I have Camp Lejeune Marine Base in my district, Cherry
Point Marine Air Station. That is what my question will deal
with. You, being an elected official, served in the House I
think with my father a few years ago, Walter Jones senior. You
know better than any of us here, or as good as any of us, that
politics is local. There is no question about it.
I have Cherry Point Marine Air Station in my district. I
also have the depot in my district. And so it brings the
question that Mr. Bartlett was asking you about, the F-35, and
of course at Cherry Point, because of the depot, the interest
in the F-35B. And knowing that at one point in a discussion I
had a few months ago there was a thought that maybe at some
point in time as this F-35 becomes on line and becomes a
reality that there might be eight squadrons going down to
Cherry Point.
Well, I realize in this very difficult budget year and none
of us know what we would like to see today might not be a
possibility tomorrow. So if you would expand a little bit more
on how you feel that the progress has been made on the F-35 and
knowing that you believe that we do need a strong fighter
system in our country, if you would elaborate just a little bit
more on that, I would appreciate it.
Secretary Panetta. Thank you, Congressman.
You know, the only way the United States remains the
strongest military power in the world is to keep developing new
generation fighters that have the technologies and capabilities
that we are going to need in the future. And I had the
opportunity to go to Pax River and see the development that is
behind the F-35 and actually sit in there and look at the
technology that is involved. I mean, we are talking about
spectacular technology that would be part of this plane in
terms of stealth capabilities and also targeting capabilities.
And it is the next-generation fighter. It is what we are going
to need.
And, very frankly, the countries are all lined up waiting
for this plane because they know how good it is going to be;
and that is why we have got to keep it on track.
We can have three variants. I cannot go into defending all
the decisions that were made before I became Secretary, but
three variants is not an easy process. It means you have to
look at a lot of different questions that arise depending on
the capabilities that you are trying to design in each area.
But, nevertheless, each of those is important. We need a Navy
plane, we need a Marine plane that can lift, as the STOVL will,
and, obviously, we need an Air Force plane. So those are the
key ingredients.
My view is, you know, based on what--because I came into
this pretty skeptical about where this thing was. I looked at
the facts. I looked at the testing that is going on. I looked
at the production rates that are out there. I am convinced that
we can deal with the final problems that are there, largely
software issues that we have got to face.
We are producing these planes even as we speak, but they
are continuing to be tested. My goal is, working with the
industry, to make sure that any changes here now can be as cost
efficient as possible. That is what I worry about. I don't want
big changes in these planes, because that will ramp up the cost
real fast. So the real challenge right now is to keep these
costs under control as we resolve the final issues involved
with this plane. But I am convinced we are going to be able to
put that in place.
Mr. Jones. Mr. Secretary, thank you for that answer.
I have spent almost 10 years trying to clear the names of
two marine pilots, John Brow and Brooks Gruber, who crashed the
V-22 in Arizona on April the 8th. Nineteen marines were burned
to death. And I appreciate what you said when you said you
wanted to make sure that the manufacturer of this plane have it
ready and no hidden problems like they found with the vortex
ring state that brought that plane down.
And I am hopeful that the Marine Corps will give the two
wives who have requested a paragraph to make it clear that
their husbands were not at fault, and I hope that I won't have
to come to you at some point in time and show you the evidence
that we have accumulated over 10 years that the pilots knew
nothing about how to react to vortex ring state that night.
So I do appreciate your answer and thank you again for your
leadership of our country; and, General Dempsey, thank you as
well. And may God continue to bless our men and women in
uniform.
And with that, Mr. Chairman, I will yield back, because I
had a little bit of extra time before they started the clock.
The Chairman. Thank you.
Mrs. Davis.
Mrs. Davis. Thank you.
And thank you, Mr. Secretary and General Dempsey, for going
out of your way and really talking about the fundamental
element of this new strategy, which I think is our people; and
ensuring that keeping faith with our soldiers, our sailors, our
airmen, and marines and their families particularly remains a
top priority.
Mr. Secretary, as we think of this process and move forward
of changing our force structure and reducing personnel end
strength over the next few years, what are we doing to ensure
that we retain a spectrum of experience and knowledge across
the Services and specialties? And, within that package, what is
your greatest concern?
Secretary Panetta. Let me yield to General Dempsey on that,
because he has been very involved in how we approach the
retention of some of these mid-level officers.
General Dempsey. I will hearken back to my time as the
Chief of Staff of the Army, because that is the issue that the
service chiefs are grappling with the Secretary's guidance.
But one of the things we did back in the 1990's is, when we
separated soldiers we did so--and I said soldiers but
servicemen in general--when we separated them, we were
separating them too quickly. We actually had reduction in force
boards that sat specifically to tell people to go. But we could
do that, because we were passing them into a pretty good
economy. Maybe one would even argue a booming economy back in
those years. And we were no longer in conflict.
The big difference about what we are doing right now is
that those other assumptions I just mentioned are not any
longer valid. We are passing people into a struggling economy.
We are still in conflict and likely to remain in conflict. So
what we are doing as service chiefs is taking a look at how do
we, first of all, pace this.
And to the question, by the way, that is related to BRAC,
if you fix too many variables on us--if you, for example--there
is some physics involved--if you fix the variable called
infrastructure and if we are kind of maxed out in terms of
literally physical ability to pass people out of the service in
a dignified way, it doesn't leave us many levers to pull in the
middle. It is operations maintenance, training, and equipment.
That is why we are concerned about BRAC, and it is also why
we are concerned about the pace at which we separate people.
Now once we settle in on the pace--and we have--then we look
internal to our systems. We have any number of personnel
policies, promotion rates, accession rates; we have evaluation
reports, board processes. But to the extent that we can use the
existing processes to identify the highest performing
personnel, keep them, encourage them, continue to develop them,
we will be in good shape. To the extent that this is
accelerated on us, if it is accelerated, then we get into a
position where we are forcing people out; and at that point I
won't be able to sit here and guarantee you that we are going
to be keeping the right people.
Mrs. Davis. Do you see--is part of that discussion really
formalizing longer periods of time between the eligibility for
promotion and the promotion among noncommissioned and
commissioned officers?
General Dempsey. It is a great point and one which we--it
is a Rubik's cube, to tell you the truth. We twist it and turn
it. In some ways, you want to accelerate promotions, because it
is an incentive for especially the highest performing personnel
to see that they have a great deal of potential and that that
potential is being fulfilled. On the other hand, it has the
other effect that you just described.
So, you know, I would use a somewhat overused word
probably, but I think it is a matter of finding the balance
between--let's call it talent management and then managing the
personnel system to treat people with dignity and respect but
also reshape the Force.
Mrs. Davis. I really appreciate that. I think there are
concerns. There should be concerns that, for many of the men
and women who are serving, that the fact that they would be
leaving the Services faster perhaps than they had ever imagined
means that we have to put a lot more resources into that
transition period and really ensuring that they have the skills
and talents necessary. And are we looking at that in terms of a
whole different kind of preparation as they leave? It is almost
a preparation as they come in so that they are leaving in a
different manner.
Secretary Panetta. You asked what worries me the most--and,
frankly, that is one of the issues I worry about the most.
As we draw down over these next 5 years, we are going to be
putting another 12,000 or more out, you know, bringing them
back. And, right now, the system is clogged. It doesn't work as
efficiently, frankly, as it should. And we have got to do a
better job of being able to take these young men and women that
come out and give them the counseling, give them the education
benefits, give them the jobs, give them the support systems
that they absolutely have to have in order to be able to
reestablish themselves in the communities. Otherwise, we are
going to be dumping them in these communities, no jobs, no
support; and that is why we have high unemployment now among
our veterans, is that that is exactly what is happening. We
have got to change that.
Mrs. Davis. Thank you.
The Chairman. Thank you.
Mr. Forbes.
Mr. Forbes. Thank you.
Mr. Secretary, your schedule only allows me 5 minutes for
questions, so I am going to try to be concise and help you be
concise in your answers.
But you made a statement that this will be a test of
whether reducing the deficit is about talk or action. I just
want to be clear. We welcome a conversation with you or the
President about serious deficit reduction. We wish we could
have had it before the President pushed through an $800 billion
stimulus package that many of us believed was ill advised or a
health care bill that is putting a lot of our employers out of
business.
But be that as it may, we want to reduce the deficit; we
just don't want to do it on the backs of the men and women who
are fighting for this country every day.
And to answer the ranking member's question he put before
us: What wouldn't you have voted for? I wouldn't have voted for
that $800 billion stimulus package which contains almost twice
what these cuts were, and I would repeal the health care bill
tomorrow.
But let's look at the approach of how we got here. And
wouldn't you agree that if we had been more responsible in
handling our budget as a Federal Government that the better
approach would have been for us to have developed a national
strategy--Department of Defense to develop a national strategy
to defend the country, to be able to discuss exactly what we
needed for that strategy, to determine what the resources would
be in order to meet that strategy, and then come to Congress
and say this is what we need to do in order to do that job to
defend the country? Wouldn't you have agreed that that would
have been a better approach?
Secretary Panetta. Congressman, a better approach--and I
say this not so much as Secretary of Defense but as a former
OMB [Office of Management and Budget] Director and chairman of
the House Budget Committee--the better approach would have been
for Congress, both Republicans and Democrats and the President,
to sit down and develop a comprehensive deficit reduction
package.
Mr. Forbes. Mr. Secretary, I understand that. But I am
talking about, as far as the strategy, wouldn't it have been a
better approach to have done it in the manner that I just
delineated?
Secretary Panetta. That would have been nice, but we were
mandated to up come up with a $487 billion reduction.
Mr. Forbes. I understand that. But wouldn't that have been
the better approach?
Secretary Panetta. Of course.
Mr. Forbes. Okay. And then point in fact, as you mentioned,
that is not the approach that we took. What we did was to give
you $487 billion of cuts, and then you were forced to create a
strategy that worked within the parameters of those cuts; is
that correct?
Secretary Panetta. That is right.
Mr. Forbes. And then, based on that, Mr. Secretary, isn't
it true that it would be virtually impossible for you or
anybody else testifying on behalf of this budget to delineate
for us the portion of that strategy that was driven by these
budget cuts versus the portion of the strategy that was driven
by security changes around the world?
Secretary Panetta. I don't think you have to make a choice
between fiscal discipline and national security. I really
don't.
Mr. Forbes. Mr. Secretary, I am just trying, because of my
5 minutes--isn't it true, though, that, as you said, you were
forced to have $487 billion of cuts. You worked a strategy that
worked within those parameters. But isn't it virtually
impossible for you or anyone else to tell us what portion of
that strategy was driven by that $487 billion of cuts versus
just security changes that took place around the world?
Secretary Panetta. As I said, we would have been required
to look at a change in strategy under any circumstances because
of the drawdowns that were taking place. This is not just a
deficit reduction.
Mr. Forbes. I understand that. I understand that. And we
have two different components. We have security changes that
would have had strategy change and we have budget cuts that
would have caused it. But isn't it true that you cannot
delineate between those two?
Secretary Panetta. Well, they were both involved in
determining our strategy.
Mr. Forbes. Exactly. Now, you also mentioned that this was
imposed on you by law. I know I have heard you state before
this would not have been the figure you would have picked, the
$487 billion. Is that true?
Secretary Panetta. That is for sure.
Mr. Forbes. I wouldn't have picked that, and I didn't vote
for that figure.
But you have had a lot of discussions with the President.
You heard Mr. Thornberry say the President came out and said he
wanted $487 billion of cuts before the strategic cut was taking
place. In your discussions with the President in looking at the
strategy, at any time has the President ever voiced to you the
fact that he thought this $487 billion of cuts was too much?
Secretary Panetta. I think the President understood that
this was not going to be easy and that there would be risk
involved in doing it.
Mr. Forbes. I understand. That is not my question. Did the
President ever voice to you the fact that he felt this $487
billion in cuts was too much?
Secretary Panetta. He felt, as I did, that Congress and the
President had gone forward with this Budget Control Act and we
were obligated to fulfill it.
Mr. Forbes. And had he--you disagree with that figure. I
disagree with that figure. Had the President disagreed with
that figure, could he not have put any of those cuts back in
the budget that he had just presented to Congress?
Secretary Panetta. I think the President shared your
concern, which is what do we do about reducing the deficit.
That was the only thing that was worked out by Congress on a
bipartisan basis.
Mr. Forbes. Did he put any of those cuts back into this
budget? Any of the cuts made, did he roll them back and say
that was too much, I am going to put them back in the budget?
My time is up. Thank you, Mr. Chairman.
Secretary Panetta. I don't think he could have done that
without the support of Congress.
The Chairman. Thank you.
Mr. Langevin.
Mr. Langevin. Thank you, Mr. Chairman.
Mr. Secretary, General, thank you for being here today and
your testimony, your tireless service to our Nation. We are all
grateful.
I want to focus on two important areas in the budget and
priorities for me: Virginia Class submarine and I also want to
talk about cybersecurity. Mr. Secretary, as you know, the
Virginia Class submarine is a model procurement program; and we
are only now beginning to reap the rewards of an aggressive
cost-management effort and a consistent two-boat-per-year
funding level.
The proposed delay of one of these subs from fiscal year
2014 to outside the FYDP [Future Years Defense Program] I
believe could disrupt these gains and incur significant extra
costs. How did the Department come to this decision and how
does the Department propose to mitigate the military risks, the
monetary costs, and the workforce challenges generated by the
shift?
Obviously, the Virginia Class submarine is a program that
has come in on time and under budget because of the
efficiencies that we gain from bloc buys and bringing stability
to the supply chain; and I am concerned this delay is going to
cost us in these areas.
Second, as you know, I have been a long and staunch
supporter and advocate for increased investments in
cybersecurity; and I am pleased to see the continued escalation
of the attention being paid to cybersecurity and the projected
$18 billion in funding from fiscal year 2013 to fiscal year
2017.
Mr. Secretary and General, how does the proposed budget
address these threats and the vulnerabilities that we face in
the cyber arena? And I know you talked a bit about this today,
but I would like to expound on that. And in the event of a
large-scale cyber attack, how resilient are our power grids and
military bases?
Obviously, our military bases in many ways are dependent on
the critical infrastructure of our electric grids that is owned
and operated by the private sector; and if they go down our
military bases and their ability to function are vulnerable.
What efforts are we doing to make them resilient and have some
of their own power to provide backup, if necessary?
General Dempsey. If I could, Congressman, I will talk
cyber; and then I will ask Mr. Hale to talk about submarines;
is that right?
We are very concerned about cyber. You know, we talk about
what is new in the world in terms of threats over the last 10
years or emerging. For us, it is emerging capabilities. It is
special operating forces, it is cyber, and it is ISR. Those
same capabilities are also becoming available to our
adversaries. And in the case of cyber in particular we have
been acting to prepare ourselves in terms of our vigilance on
our systems and our defensive mechanisms, and we have got--as
you know, we stood up CYBERCOM [U.S. Cyber Command]. We have
got a cyber strategy.
But we remain vulnerable; and we are trying, through a
series of tabletop exercises and conversations with the
national security staff as well on the Senate side now notably,
we are trying to determine the next steps. And there is
legislation pending sponsored by Senators Lieberman, Collins,
Rockefeller, and then a Feinstein amendment to that that is a
very good and important first step in providing the kind of
information-sharing and expanding--for potentially the first
step in expanding protections beyond the dot-mil domain for all
the reasons you suggest.
But make no mistake about it. There is controversy--and
plenty of it--around this issue because of the Department--we
are the Department of Defense. There is the Department of
Homeland Security, FBI. So there are authorities to be
considered. And we are working through all of that. What I am
suggesting to you is that the current legislation pending is a
good first step.
Secretary Hale. In terms of the Virginia Class submarine,
which is I think what you are referring to, we are planning to
buy nine in this FYDP. A year ago, we were planning to buy 10;
and we will buy 2 a year in this FYDP, except for fiscal year
2014 we will buy 1. So it is an affordability decision,
frankly. The submarine fits into our strategy, and we will
certainly continue to buy. But we were looking, frankly, to
ways to comply and be consistent with the Budget Control Act.
Secretary Panetta. I was asked this question yesterday.
And, you know, if there are cost efficiencies that can be
achieved here that allow us to do this with savings and in a
more cost-effective way, we are prepared to look at that.
Mr. Langevin. I have additional questions, but my time is
coming to an end. I would just reiterate the importance,
obviously, of the Virginia Class submarine program. I am
concerned about its delay, and it is going to wind up costing
us I believe in both our workforce if we are not careful and
also the efficiencies----
The Chairman. The gentleman's time has expired.
Mr. Langevin. With that, I yield back.
The Chairman. Mr. Wilson.
Mr. Wilson. Thank you, Mr. Chairman.
Thank you all for being here today.
And I share the concern of Chairman Buck McKeon. The
American people need to know this, that what is being proposed
is a reduction of 80,000 personnel in the Army, 20,000 marines,
10,000 personnel of the Air Force. I am truly concerned at a
time of war that we would have these reductions which I think
is going to put American families at risk, those serving in the
military and the American public at large. And it just--I just
find it inconceivable. Every day we read about another threat
to our country of instability around the world.
Additionally, Mr. Secretary, I know that you are having to
make tough choices and in particular, though, I identify with
veterans. I served 31 years in the Army, and I am just grateful
for my service and the commitment and dedication and
commitments to veterans, too, from and to. But I am very
concerned that the Administration is proposing cost increases
on health care for military retirees, and these are
extraordinary. For TRICARE Prime that a proposal for fiscal
year 2013 increases enrollment fees between 30 and 78 percent.
Over 5 years, the enrollment fees would increase between 94 and
345 percent.
How can we justify such increases when really commitments
were made to the people who have made such a difference in
protecting our freedoms?
General Dempsey. Let me answer that, if I could,
Congressman.
You know, when we said that in order to rebalance this
military of ours--and, by the way, you know, I don't want to
let it pass entirely that I don't share your concern. But I
will tell you that I am responsible to this Nation to do a risk
assessment on the size of the force against the strategy, and
my assessment is that the budget we have proposed and the force
structure we are building toward is adequate to meet the needs
of the Nation. If I didn't, I would tell you.
In terms of compensation, the TRICARE enrollment fees of
which you speak haven't been adjusted since the mid-'90s. They
are an anachronism in terms of any other health care program.
And I don't ever accept, by the way, the comparison of military
benefits to civilian because of what we ask our uniformed
military to do.
On the other hand, we cannot any longer allow our paid
compensation health care--and, as you know, we are going to
look at retirement at some point in the out-years--we simply
can't allow that to keep growing. As the Chief of Staff of the
Army I knew that if my manpower costs exceeded 45 percent, I
would break the Army because I wouldn't have the money to
invest in the other things I have to invest in. We are close,
and now is the time to act, and that is why we have taken this
action.
Mr. Wilson. And my concern would be that we should be
providing more--that this is not the burden.
Additionally, Mr. Secretary, last year, the former governor
of Maine, John Baldacci, was hired to review military health
care. I understand that he has completed his report. Could you
provide the committee a copy?
Secretary Panetta. I will be happy to.
Mr. Wilson. Has his report in any way influenced the
Defense budget reforms?
Secretary Panetta. I am sure--I believe it has, but,
frankly, I have not reviewed it myself. But let me get back to
you on that and provide you a copy of that.
Mr. Wilson. And, additionally, I would like to know the
salary paid and then the supporting costs for his services.
Secretary Panetta. Sure.
[The information referred to can be found in the Appendix
on page 99.]
Mr. Wilson. And, in conclusion, I want to thank both of
you. You have raised a great concern about sequestration, the
risk to the American people. What do you recommend that we do?
And in particular I am very hopeful that of course you would
support the very progressive and very positive legislation of
Chairman Buck McKeon.
Secretary Panetta. I have indicated my concerns about
sequestration. I would just urge you to work on a bipartisan
basis to develop an approach that can pass the Congress that
would de-trigger sequestration.
Mr. Wilson. And the consequence of sequestration?
Secretary Panetta. It would be devastating. You take
another $500 billion out of this Defense budget, the strategy I
just presented you I would have to throw out the window.
Mr. Wilson. And indeed, Mr. Secretary, I have been very
positive about your service, because I know sincerely you
believe this. But we have got the get the message out. Just the
word ``sequestration'' puts people to sleep. So please be the
Paul Revere I know.
Thank you very much.
General Dempsey. Congressman, I forgot to thank you for
your 31 years of service. Thank you.
The Chairman. Ms. Bordallo.
Ms. Bordallo. Thank you, Mr. Chairman; and I would like to
welcome Secretary Panetta and General Dempsey. I appreciate the
Administration's continued focus on the Asia-Pacific region and
that DOD intends to press forward with the buildup of Guam.
Thank you, gentlemen.
The DOD recently announced a changed realignment plan for
Guam. What is the rationale for changing the implementation
plan with Japan? What prompted these decisions? What is the
benefit of the proposed realignment? To what extent did the
passage of the Budget Control Act play in these changes? And
can you also elaborate on the strategic importance of keeping
marines forward-deployed? How is this necessary to keep our
treaty agreement with Japan?
Mr. Secretary.
Secretary Panetta. Congresswoman, first and foremost, let
me indicate that no decisions have been made with regards to
what exactly that realignment will be. We are in discussions
with Japan.
Ms. Bordallo. I understand.
Secretary Panetta. We are trying to make decisions. This is
an issue, as you know, that has been out there for a long time;
and we just think it is time to try to get it done and to try
to resolve it. And Japan has been very helpful and cooperative
in trying to work with us in that effort, and we will continue
to keep you informed. Because, obviously, it affects your home
area; and we want to make sure that you know what we are
thinking about before we actually make any final decisions
here.
It is important to try to try to keep that presence
forward. My view is that we need a Marine presence that is
forward. I do not want to draw that Marine presence back to
this country. I think it has to be forward in the Pacific. We
are trying to be innovative in the way we are doing that. The
approach that we are taking in Australia is an example of the
kind of rotational presence that we think can make sense. We
are talking to the Philippines about doing the same thing.
But the bottom line is that we want to maintain the Marine
force forward presence in the Pacific. That is an essential
element of our strategy.
Ms. Bordallo. Thank you.
Another question I have: When the Japanese see the updated
plans from DOD and identify the reduced number of marines
coming, will they reduce the overall funding that they were
going to supply for the buildup? Will this lead to reduction in
support for civilian infrastructure that is needed to support
the military population on Guam? If the Japanese do reduce
their funding commitment, how will the Department ensure that
the infrastructure needs continue to be addressed?
Secretary Panetta. That is also one of the things we are
discussing.
As you know, one of the elements here is the development of
a new Futenma air facility; and it is an expensive process
because it involves environmental permits that have to be
obtained. It is a very expensive project. But, at the same
time, they have been very generous in saying that whatever
moves have to be made they will support--they will give us a
lot of the funds to try to support that.
That continues to be a part of our conversation; and, as I
said, I am very pleased with the attitude that the Japanese are
taking.
Ms. Bordallo. So you don't think there will be any
reduction at this point?
Secretary Panetta. No.
Ms. Bordallo. Mr. Secretary, Deputy Secretary Carter
certified in writing--and I know this question has been asked
before I arrived by Congressman Bartlett--he certified in
writing to Congress that the Global Hawk system was essential
to national security. Global Hawk was $220 million cheaper per
year to operate than the U-2. The decision to pull 18 Global
Hawk Block 30 aircraft out is shortsighted, in my opinion.
Your recommendation to terminate Block 30 is a complete
reversal of your decision. Can you explain how an asset can be
critical to national security and then less than 1 year later
be terminated? And can you answer how the Air Force will
compensate for the loss of this capability?
Secretary Panetta. I am going to have General Dempsey speak
to that.
But, look, we are very committed to unmanned systems. We
think that is the future. But, at the same time, we have to
make judgments about which ones are most cost-effective; and I
think that was behind the decision here.
General Dempsey. Yes, ma'am. And we are flying four other
variants of Global Hawk. This is not about Global Hawk. It is
about Global Hawk Block 30, and it has become too expensive
relative to other capabilities we have.
Ms. Bordallo. All right. And I have one final question, if
I could.
The fiscal year 2012 NDAA [National Defense Authorization
Act] requires that DOD meet five requirements in order to spend
Government of Japan funding that is currently sitting
unobligated to the U.S. Treasury. Now this is a matter of great
concern in our community. What steps is DOD taking to meet
these five requirements?
Secretary Hale. It is part of the overall discussions. We
need to arrive at--we need to arrive at an agreement with
Japan, and we need some----
The Chairman. Mr. Hale, the gentlelady's time has expired.
Could you take that one for the record for her please? Thank
you.
[The information referred to can be found in the Appendix
on page 100.]
The Chairman. Mr. Turner.
Mr. Turner. Thank you, Mr. Chairman; and, gentlemen, thank
you for being here.
Secretary Panetta, I want to thank you for our meeting last
week with Congressman Andrews where we discussed the issue of
national standards for custody rights for our service members.
We asked you to affirm Secretary Gates' and DOD's policies
supporting a national standard.
As you know, unbelievably, across the country there are
Federal law court judges that will take custody away from our
servicemen based upon their time away serving their country.
This committee has been very active on this issue, every member
of the committee having endorsed the national standard, the
House having passed five times a national standard. We would
appreciate your support and advocacy to assist us in making
that law.
Secondly, I appreciate your statement on the Budget Control
Act and the issues of sequestration. It is a thing--you know,
as we look to sequestration I think the American public does
not know the great risk that could be imperiling our military.
Your statements on it are important. That is one of the reasons
I voted against the Budget Control Act, so we would not have
this gambling with our military security.
Mr. Secretary, as you know, I am the chairman of the
Strategic Forces Subcommittee. Nuclear weapons fall under my
category. I have three questions, two for you and one for the
General concerning that.
Mr. Secretary, as you know, your predecessor, Secretary
Gates, agreed to transfer some $5.7 billion to the National
Nuclear Security Administration for specific purposes that were
articulated in this document, which I ask to be included in the
record, that was to govern the transfer of these billions to
the National Nuclear Security Administration.
[The information referred to can be found in the Appendix
on page 92.]
Mr. Turner. I would ask if you would characterize the
Department of Defense level of comfort with how the initial $5
billion tranche has been spent. For example, where did DOD's
$1.2 billion go that it gave to the NNSA [National Nuclear
Security Administration] to begin construction on the plutonium
replacement facility known as CMRR [Chemistry and Metallurgy
Research Replacement Facility]? And how about the funding for
the W-76 warhead which is again delayed in the NNSA budget this
year, seemingly without regard to the Navy's need for this
warhead?
And, secondly, Mr. Secretary, you kindly, in a
correspondence in November, responded to the chairman and
myself requesting that we receive briefings on the nuclear war
plan; and you had indicated that you would agree to reinstitute
those briefings with our committee.
[The information referred to can be found in the Appendix
on pages 89-91.]
Mr. Turner. They have not commenced, and we are afraid it
might be stuck in the bureaucracy of DOD. We would appreciate
your assistance there.
General, with respect to Congressman Thornberry's question
on the proposed 80-percent cut to our nuclear arsenal, you
indicated that these were just proposals or plans that were
being reviewed and it might be premature for discussing them.
But I would like your input on the initiation of where these
are coming from.
Because it is our understanding that the President has
asked to consider an 80-percent cut going to a warhead
inventory of somewhere around 300. If you could confirm that
the Administration is in fact the one that is initiating, that
this is not just coming from somewhere arbitrary within the
bureaucracy, that would be helpful, also.
Mr. Secretary.
Secretary Panetta. If I could comment on your last
question, this was all part of a nuclear posture review that
was mandated by law and that the Administration began that
process of going through the review. And the second step was
basically, you know, how do we now implement the review that
was taking place?
So it kind of followed that procedure, and there are a
number of options that are being discussed. And, as the General
has pointed out, one of those options is maintaining the status
quo; and no decisions have been made. This has been something
that has been part of a process for discussion within the
national security team and remains there at this point.
As you know, reductions that have been made, at least in
this Administration, have only been made as part of the START
process and not outside of that process; and I would expect
that that would be the same in the future.
With regards to your question on the funding issue, let me
ask Bob Hale to respond to that. That is the $5.7 [billion].
Secretary Hale. We are working closely with NNSA. I think
there are concerns on our part, theirs, too. There has been
some cost growth that it sounds like you are aware of. But they
are fully committed to meeting our needs, and we are trying to
work with them. These are important programs, and we need to
carry forward with them.
I think I will try to provide you more detail for the
record.
[The information referred to can be found in the Appendix
on page 99.]
Secretary Hale. But I can tell you that we have a nuclear
weapons council that meets regularly with NNSA representatives
as well as ours, and they are deeply engaged in these issues.
Mr. Turner. But you do have concerns; correct?
Secretary Hale. Yes.
Secretary Panetta. Finally, let me commend your leadership
on the adoption issue. We did have a chance to discuss it. I
share the concern that you raised. I think it does need to be
addressed. You have been successful at passing it in the House
side. It doesn't seem to come out of the Senate. And I think
the one thing I indicated to you is I want to work with you to
see if we can actually try to get something done on this issue
this year.
The Chairman. Thank you.
Mr. Courtney.
Mr. Courtney. Thank you, Mr. Chairman, and thank you to the
witnesses.
Secretary Panetta, again, I want to thank you for visiting
the Groton shipyard. Back in November, you had a chance to
climb on board the Mississippi and the North Dakota, which is
under construction, as well as really a pretty extraordinary
town hall with the workers on the pier there where you very
eloquently described the value of the industrial base to our
national security.
In light of that, I just--to follow up on Mr. Langevin's
questions, the Mississippi, which was christened just a few
weeks later, had come in $64 million under budget, 12 months
ahead of schedule; and there is no question that the momentum
of two subs a year, which took 20 years to get us up to that
pace, is achieving savings.
That block for contract shift--which, by the way, that is
the third time it has been changed, not the second time, Mr.
Hale--there is no question that, in terms of materials
management, in terms of workforce management, in terms of
layoffs, which is inevitably going to flow from that shift, is
going to result in costs. And I guess the question is, you
know, did you include that in your FYDP in terms of the costs
of that dip in production which, again, we are seeing real
results now in terms of savings because of the higher
production rate.
Secretary Hale. So far as I know, the FYDP is fully funded.
I hear your point, if they take $487 billion out of the budget,
and we tried to do it in a way consistent with our strategy,
but we had to do it. And this is one of the issues raised with
the Navy to discuss with them. And they would have preferred
not to do it, so would we, but it is where it is. It is a
fiscal '14 decision. We will get another chance to look at it
in light of current fiscal realities.
Mr. Courtney. Well, the strategy, of course, which was
articulated at the outset today, clearly focuses on Asia-
Pacific, and you can't have an effective strategy without a
strong undersea fleet.
Thank you for saying that you are willing to continue to
work on this.
Secretary Hale. We will take a look at it as the
Secretary----
Mr. Courtney. The long-term effect in terms of the fleet
size will be decades.
Secretary Panetta. Now, you know, I was very impressed with
what I saw in Groton. I don't want to lose those skills. I
don't want to lose those abilities. I want to maintain that
kind of industrial base. So we will continue to do whatever we
can to work with you to see what we can do to try to reduce
those costs in the future.
Mr. Courtney. Thank you, Mr. Secretary.
I would also want to go back to Mr. Thornberry's point
about the 2005 BRAC, which, again, I respect the fact that you
have deep, profound personal experience in terms of what you
went through in your time in Congress. But some of us have our
own experience as well. I served on the Readiness Subcommittee
for the last 5 years. We have been following the 2005 BRAC like
a box score in terms of its results. It cost about twice as
much as was predicted; and, as Mr. Thornberry said, the net
savings are still years away.
And, you know, obviously, we all get sort of pinned as
being sort of looking at our own backyard when this issue gets
discussed, but I think there is a legitimate question here,
particularly with the fact that we have got to deal with the
Budget Control Act caps. You know, how you do this in terms of
not costing money in the short term?
I mean, the answer we have gotten so far from Dr. Carter
and yourself is that it is zero in terms of projected savings
for the plan that was submitted there. So, you know, zero minus
zero equals zero.
I mean, if we don't do it--I mean, it just doesn't--it is a
nullity in terms of trying to achieve the Budget Control Act
targets; and, frankly, I think that is a very big threshold
question which the Department has to answer before I think
there is going to be any willingness to look at this thing at
all.
Secretary Panetta. You know, I mean, I hear what you are
saying; and the 2005 costs are--frankly, you know, it is just
unacceptable the way that process ultimately worked out in
terms of how much it cost us. On the other hand, obviously, in
the long run it will produce some savings.
I guess what I would suggest to you is that, you know, we
have been through three BRAC rounds. There are some lessons to
be learned here. If we are going to do another BRAC round, as
we have recommended, perhaps we need to do it in a way that
tries to acknowledge some of the lessons learned here to make
sure that we achieve the savings that we have to achieve as
part of the BRAC process. Maybe that is a better way to
approach this issue.
Mr. Courtney. Well, it is my understanding that we are
going to see language sometime in March in terms of the
proposal. And, again, there is going to be a high degree of
skepticism for those of us who, again, have been tracking the
overall results of the last round. And certainly I know you
have gotten mixed comments here today, but I just want to at
least share, certainly for some of us, this is a real problem.
And I yield back.
The Chairman. The committee will take a 5-minute break and
reconvene at 5 minutes after, and Mr. Kline will be next.
[Recess.]
The Chairman. The committee will come to order.
The chair recognizes Mr. Kline.
Mr. Kline. Thank you, Mr. Chairman.
Thank you, gentlemen, for being here, for your testimony,
for your extraordinary service to our country.
I very much appreciated, General Dempsey, your testimony.
You mentioned that the families have stood with us, talking
about our men and women in uniform and stressing the importance
of keeping faith with the true source of our strength, that is
our people.
And it is in that line, in that vein, Mr. Secretary, that I
want to raise a subject that I have raised in the past in this
committee. And that is the subject with the sort of convoluted
name of the Post-Deployment Mobilization Respite Absence
program, PDMRA; and although the name is a little convoluted,
it is pretty straightforward.
DOD enacted this program back in January of 2007 with the
express purpose of taking care of our troops, recognizing that
we have men and women deployed for extraordinarily long periods
of time and rewarding them with this program so that they could
spend more time with those families, the families that have
stood with us and so that we could keep faith with our men and
women in uniform and their families.
This program has been in effect and running, doing what it
is supposed to do, easing stress on our men and women in
uniform, rewarding the families. And then on October 1st of
2011, the Department came out with a new policy. And it came
out with this policy--of course, it affects the soldiers who
are deployed today to Kuwait or Afghanistan, changing the
number of days that you can get as a reward for extended
periods of service; and you could have a negative impact of
over 3 or 4 weeks, in some cases, because of this new policy.
And so I am--I understand the Department is perfectly
allowed to make policy changes, but I am very concerned that it
looks like there is no provision for grandfathering those that
are overseas now. We have a part of a brigade combat team of
the famous Red Bulls out of Minnesota and surrounding states
that are over in Kuwait right now, and there is a lot of
confusion about what the policy is going to be.
I think it is important that we keep faith, that we not
change things around during the middle of a deployment and so
we don't have our soldiers sitting over there wondering, and
their families wondering, what this policy is going to be.
So I have a question for you, Mr. Secretary, is will you
grandfather this new policy so that the soldiers that are
deployed now get what they thought they were going to get when
they deployed? It applies to all, but I am particularly talking
about members of the Guard and Reserve who are making decisions
based on these sorts of policies.
So if you know that answer, I would take it now. If you
don't, I would take it for the record.
[The information referred to can be found in the Appendix
on page 100.]
Mr. Kline. I actually sent you a letter a month ago,
January 18th, to be exact, requesting the answer to this. And I
understand from talking to staff that that is in the works, and
I am going to get an answer.
But I just think it is really, really important that we
keep that faith and that we not change policy and we not have
that kind of an impact on our men and women in uniform.
So that is my first question.
Secretary Panetta. Congressman, if I could just respond to
that.
We are looking at that program. It is an important program,
and I am looking at the implications of what happened with the
policy change to determine whether or not we should make any
adjustments. I am not going to make any promises to you, but I
will assure you that I will take a hard look at that before we
get you the answer.
Mr. Kline. Please do. And I would just reiterate that, in
my opinion, from where I am sitting looking at my own
experience and talking to many of my constituents and many
people in Minnesota, who have been really impacted by these
deployments, the Red Bulls had the longest combat deployment of
any unit, Active, Reserve, National Guard, any Service; and so
I just think it is really, really important that we keep faith
with those men and women.
Now I have another really quick question. I know you have
answered this before, but I see that we are talking--and I
think, General Dempsey, you mentioned that we are looking at--
or the Secretary--both of you talked about modifying the
retirement system for our men and women in uniform. And I just
want to underscore again that any such changes will not affect
those already serving; is that correct?
Secretary Panetta. Our position, strong position here is
that all those that are currently serving would be
grandfathered in under the present system. As the Commission
reviews future changes, they are not going to be affected.
Mr. Kline. Thank you.
My time has expired, Mr. Chairman.
The Chairman. Thank you, Mr. Loebsack.
Mr. Loebsack. Thank you, Mr. Chair.
Before I say anything else, I do want to, I guess, concur
with Mr. Kline. We have Iowans who are in that Red Bull group
as well, and we have many of the very same concerns in Iowa
when it comes to the Guard and Reserve.
And I do want to thank both of you--or all three of you--
for your service.
At the outset, I just want to quote from the defense
strategy when it states that ``the concept of reversibility,
including the vectors on which we place our industrial base,
our people, our Active-Reserve Component balance, our posture,
and our partnership emphasis is a key part of our decision
calculus.''
The strategic guidance also states that DOD will ``make
every effort to maintain an adequate industrial base.''
I strongly believe that a critical part of our industrial
base is, in fact, organic based, our arsenals, certainly our
ammunition plants and our depots. They provide, I believe, a
critical function of our readiness and our ability to supply
our troops in the event that we have another conflict. We are
drawing down now but in the event that we have future
conflicts.
We have got to maintain, I think, the capabilities of the
organic industrial base to respond to future contingencies--
there is no doubt about it--and allow for reversibility
highlighted in the strategy. And I strongly believe that the
Department must ensure that this organic manufacturing base be
preserved but that it be actively supported.
Secretary Panetta, Chairman Dempsey, has the Department
actively engaged the military services to develop a plan to
sustain our organic industrial base, including our organic
manufacturing capabilities? And, if so, what is that plan?
Secretary Panetta. Well, that is part and parcel of the
whole strategy here, which is to maintain that industrial base
that you talked about. And the industrial base, I think, does
include the areas you have just defined. We need to have that
as part of our ability to be able to mobilize and to be able to
reverse any steps we have taken in order to be prepared for the
future.
We are looking at a broad strategy here as to how best do
we do this to make sure that, as we fund the industrial base,
we do it in ways that obviously are cost savings but at the
same time maintain those areas in place. It is sometimes not an
easy balance. But my goal is, I do not want to put anybody out
of business in that area. I think we need to have it, and we
are going to do everything we can to ensure that they are
around.
Mr. Loebsack. Thank you.
General Dempsey.
General Dempsey. I can assure you, Congressman, that as the
service chiefs have briefed me on their plans they have also
briefed the Secretary, and it is always part of the
conversation.
Mr. Loebsack. Thank you.
The strategic guidance also states that ``the challenges
facing the United States today and in the future will require
that we continue to employ National Guard and Reserve forces.''
I guess I have a couple of questions related to that.
Both Secretary Panetta and Chairman Dempsey, can you
explain what role DOD's total force policy will play in
implementing the new strategic policy across each of the
Services? And can you explain further how the total force
policy will be implemented in light of the proposed force
reductions among the Services? And, within that, how will the
experience and readiness of the Operational Reserve be
maintained?
That is a big question, I understand, and kind of a series
of questions.
General Dempsey. Yes, sir, it is a very big question and
one that is a work in progress.
What we are taking a look at is--it is fundamentally how we
balance Active, Guard, and Reserve. And then within that a
subset is, as you balance the Force, how much is of it is
operational, that is to say, ready to go today and how much is
strategic, ready to go in 30 days, 6 months, or a year.
And as the service chiefs come and appear before you, they
are doing that work within their rotational schemes. Every
Service has a rotational scheme; and they will be able to
articulate what portions of each of those components need to be
available in those bins now, 30 days, 60 days, a year. May not
be able to give you the details, but that is what we are
working toward.
Mr. Loebsack. All right.
Mr. Secretary.
Secretary Panetta. It is really essential here. We have
learned a great deal over the last few years in our ability to
make the fullest use of the Reserve and the Guard. I mean, if
you go out to the battlefield you can't tell the difference
between National Guard units and Active Duty. They are out
there doing exactly the same thing, and they are getting
tremendous experience, they are getting tremendous
capabilities. I want to be able to continue that capability so
that they are ready to go. And, you know, the Services are
working on plans to make sure that we have that kind of
rotational ability.
Mr. Loebsack. I just want to echo that. Our Guard and
Reserve have been absolutely fantastic, not just in Iowa and
Minnesota but throughout the country; and they have done a
great job in their operational roles, not just strategic.
Thank you very much to all of you.
Thank you, Mr. Chairman. I yield back.
The Chairman. I appreciate the gentleman's concern for the
workforce, and I would encourage you to look at my bill.
Because they are going to be making layoffs, you know, planning
for next January's sequestration, that could be avoided if we
could fix that problem now.
Mr. Rogers.
Mr. Rogers. Thank you, Mr. Chairman. I am on your bill, by
the way; and I share the gentleman from Iowa's concerns. I have
spoken repeatedly in recent months with General Stein and
General Dunwoody about this very issue.
And I am sad to see General Dunwoody retire, by the way.
She is a class act.
But one of the thing she has assured me is that you all are
determined to not get caught like we were caught off guard
going into Iraq and Afghanistan and Iraq when it came to our
depots' capabilities. And I believe we have heard General Stein
when they say that.
Then I look at the budget that has just been proposed and I
look at depot funding for 2013 and it's 82 percent of last
year, and last year the majority of the funding was in OCO
[Overseas Contingency Operations]. This year, none of it. Reset
was a little better. Ninety-three percent of last year all of
this funding last year and this year is OCO. The numbers for
depot maintenance for the Army Reserve is 57 percent of last
year, for the National Guard is 64 percent of last year.
And my question is, if we want to make sure we are ready
for the next--and, by the way, obviously, we are still in a war
and we have other theaters threatening. Why has depot
maintenance been cut so much and why is there no funding in the
traditional reset accounts?
General Dempsey.
General Dempsey. Yes, sir, I mean, the demand is going
down. Yes, we remain in conflict, but in Iraq we went from
50,000 a year ago down to roughly 300 uniform personnel now. I
mean, when that demand goes down, so, too, does the demand
signal back into the depots. Although, as you correctly point
out, there will be a period of residual recapitalization and
retrofit and so forth.
But some of what you see reflected there, this wasn't done
as a budget drill. It was based upon the demand signal and how
we have to take action immediate--but let me ask Mr. Hale to
comment.
Secretary Hale. I think some of what you are seeing is, as
we shift funding from OCO to the base, as the Iraq war ended,
some of those units, some went to Afghanistan but some are
coming home, and we need to get their funding back in the base
budget. That is some of what is driving those trends.
And then, as General Dempsey said, we are seeing lower
requirements in some cases because the tempo of operations will
be lower when we are out of Iraq.
Mr. Rogers. Yes. Those are just much larger percentages of
reduction. Just quickly, you know, we still have some real
significant reset demands that I understand in maybe '14 and
'15 we may see some larger reductions, but those are awfully
sharp hills to go off this again.
Secretary Hale. Again, to my knowledge, reset is a
difficult issue, and it is hard to predict, and it is hard to
know exactly when their equipment will be available. We are
very mindful that we need to fix or repair this equipment that
is coming out of Iraq and that will come out of Afghanistan,
and we will do everything we can to work with you. I think we
have $9.3 billion, if my memory serves me right, for reset in
fiscal '13 budget. There is a lot of money in there, and we are
trying to do our best to make sure it works.
Mr. Rogers. Is it your plan to do the reset in our depots,
all of it?
Secretary Hale. Well, it is a combination. In some cases,
equipment is so bad we have to replace it. But where it is
fixable, yes, we will be in the depots.
Mr. Rogers. All of the reset will be done in our depots.
Secretary Hale. Yes.
Mr. Rogers. Great.
While the Army is downsizing, this decrease in depot
maintenance seems to be a little severe, given that we are
still in Afghanistan. Do you envision a flattening off of this?
Again, I go back to when I was first here right when we
went into Afghanistan and Iraq, and it was 18 months before we
were really up and running like we should have been. I am
concerned that this downsizing you all plan to continue it,
rather than reach a plateau and make sure that we are ready
with this depot infrastructure. Give me some reassurance that
we are not going to keep the----
Secretary Panetta. Well, my whole point here is that we
have to be ready to mobilize and surge quickly, and I want to
be able to have the facilities I need in order to do that. That
is one of the requirements I basically made to the service
chiefs and all of them to make sure that we have the base on
which, if we have to go, we have got them and they are in
place. Closing those facilities is going to hurt us. And so my
point is, let's try to do what we can to maintain what we need
in order to mobilize quickly.
Mr. Rogers. And that is what I am looking for, reassurance.
These numbers, you are confident that with these cuts you are
still going to be able to maintain that core capability----
Secretary Panetta. That is correct.
Mr. Rogers [continuing]. If we need--in the event we are in
North Korea or Iran 6 months from now.
Secretary Panetta. Yes, absolutely.
General Dempsey. And with these numbers I share the
Secretary's confidence and commitment he just made to you.
Sequestration cannot make that commitment.
Mr. Rogers. I agree. It can never happen.
I have got some more questions. My time is up, and I will
just submit those for the record.
Thank you, gentlemen, for your service.
The Chairman. Thank you very much.
Ms. Tsongas.
Ms. Tsongas. Thank you, Mr. Chairman; and thank you all for
your testimony. It is quite an array of issues you have to deal
with, so I give you great credit for being so responsive to all
our questions.
I just wanted to note that past testimony before this
committee has rightly noted that our Nation's fiscal crisis
represents a threat to our national security. As Secretary of
State Hillary Clinton and former Secretary of Defense Bob Gates
have both noted, our rising debt has implications for both our
influence around the world and our ability to project strength.
To that end, I commend the diligence with which you have
prepared the Department's strategic guidance, along with the
fiscal year 2013 budget, which was shaped by that guidance. In
the initial round of cuts that has been required by the Budget
Control Act, a ranking member noted--Ranking Member Smith
rightly noted that it is a decrease in the increase. And we
actually had a witness last week--sorry, I can't remember his
name but--who said that a strategy without fiscal constraint is
not a strategy. So I think that forces have combined to create
a strategy that acknowledges the constraints we deal with but
also the world in which we live.
You also noted that--as you are doing this, you noted the
fundamental importance of keeping faith with our military
personnel. So I am going to go to an issue that we have
discussed before.
In your last appearance before the committee, Secretary
Panetta, we talked about the fact that the military's rate of
sexual assault among service members is much too high. In 2010,
there were 2,670 reported sexual assaults in the military. By
the Pentagon's own estimate, 13 percent of sexual assaults are
reported. And in your last testimony you committed, despite
budget austerity measures, to absolutely work to confront
sexual assault, to encourage survivors to come forward, and to
continue to fund programs that prevent it.
As we restructure the Force in the coming year, this is a
problem we must continue to work to address. As we all know, a
climate of trust is fundamentally important to how our military
operates; and failure to address it truly does erode that
climate.
In January of this year, you publicized policy, some
mandated by the fiscal year 2010 NDAA, giving victims who
report a sexual assault an option to quickly transfer from
their unit in order to remove them from the proximity of an
alleged perpetrator. You stated that the DOD would require the
retention of written records of sexual assault for a period of
50 years to make it easier for service members to claim
veterans benefits.
You also announced that $9.3 million would be spent on
training to give rape investigations and prosecutions more
teeth to provide service members with the protections they
deserve.
I want to thank you for all your efforts and your
commitment to sexual assault prevention and response, and I am
particularly encouraged by the near doubling of the
Department's budget request for the Sexual Assault Prevention
and Response Office for fiscal year 2012.
You have many, many tools now in your tool chest that
didn't exist in prior years, but these policies will only prove
effective if we make sure that military commanders and leaders
at every level are aware of these policies and are able to
appropriately respond to it. We must make sure that every
person that a rape survivor could turn to is ready to
appropriately respond to protect that service member. And we
have been learning, as people have been coming to our office,
that some of these changes are not making themselves known on
the ground.
Lower level leadership is the key to changing the culture
in the military that has allowed this problem to exist for far
too long, and that is why I am encouraged to hear that you have
acknowledged that you are conducting an assessment on how the
military trains commanders and leaders. Still, we have much
work to do.
So my question, Secretary Panetta, is, going forward, how
do you see this coming together to continue to create a
continued strategic approach, institutionalizing prevention of
and response to sexual assault, making sure that all levels of
the military are aware of the tools in the toolbox and how--and
guidance in their response?
And I left you very with little time. If I have to take an
answer for the record, I will.
Secretary Panetta. Thank you, Congresswoman. Thank you for
your leadership on this issue. This is very important to me.
I think we have to take steps to make sure that we have a
zero tolerance with regard to sexual assault. And you know the
problems. All of the steps you outlined, that I presented, we
are pushing on every one of those fronts to make sure that we
do everything possible to try to limit sexual assaults.
I have got--the final thing is really what you mentioned,
which is we have got to get our command structure to be a lot
more sensitive about these issues, to recognize sexual assault
when it takes place, and to act on it, not to simply ignore it.
That is one of the important things.
Ms. Tsongas. Thank you, and we will follow up in future
hearings. Thank you.
The Chairman. Mr. Franks.
Mr. Franks. Well, thank you, Mr. Chairman.
Gentlemen, thank you for being here, General Dempsey,
Secretary Panetta, Mr. Hale.
Secretary Panetta, I guess, first of all, I would like to
echo the concerns of Mr. Thornberry regarding the
Administration's consideration or potential proposal of
reducing our nuclear--our strategic nuclear inventory by as
much as 80 percent. I mean, I have to suggest to you I consider
that reckless lunacy. And your response, in all deference to
you, sir, was really a nonresponse; and it did little to
assuage my concerns.
And I just have to tell you for the record, given the need
for a broad umbrella that America represents to the world in
terms of our nuclear deterrent, given the importance of being
able to demonstrate in the mind of any enemy, even those that
are not altogether sound, of our overwhelming capability to
respond and overwhelm any aggression on the part of someone
with nuclear capability, I just want to go on record as saying
that there are many of us that are going to do everything we
possibly can to make sure that this preposterous notion does
not gain any real traction.
So, with that said, let me shift gears and ask you a
question related to missile defense.
As you know, homeland defense is listed as the first policy
priority in the Ballistic Missile Defense Review; and,
furthermore, the ground-based midcourse defense system is
currently the only proven missile defense system that protects
the U.S. homeland from long-range ballistic missile attacks.
And yet, with that said, the fiscal year '13 budget request is
$250 million less than was enacted in fiscal year '12, which is
a follow-on to a decrease of $180 million in fiscal year '11.
Now, the budget cuts to these systems makes it very clear
to me that the Administration is willing to diminish our only
system that protects--our only prudent system that protects our
homeland from long-range ballistic missiles. And, furthermore,
the budget request increases funds for several of the European
Phased Adaptive Approach systems which, to the casual observer,
might indicate that the Administration has actually
subordinated protecting the continental U.S. from ballistic
missiles to that of protecting Europe.
Now, unless you or your Department or this Administration
has assessed that the threat to our homeland from long-range
ballistic missiles has declined such that GMD [Ground-Based
Midcourse Defense] is no longer the critical system we all
thought it was or unless somehow the Administration's
commitment to protecting the homeland has in some way declined,
I guess I am in the middle of a conundrum here, Mr. Secretary.
And so my question is this: Would you explain, in your
mind, in the policy of the Department, whether GMD is indeed a
critical system to protect our national security? And, if so,
how does this rather specific and direct cut to these systems
reflect that commitment?
Secretary Panetta. First and foremost, Congressman, I
obviously share your concern that we have to do everything
possible to protect our homeland; and, for that reason, we
maintain the full nuclear deterrent here and in the triad.
Every aspect of the triad is maintained, because I believe that
is extremely important to our ability to protect our homeland.
With regard to the specific decision on the funds there,
even though it is less than what we have provided, the fact is
that it meets our needs in terms of upgrading the missile
system that we have. You know, our missile system is in place,
it is ready to go, it is effective. We are not going to reduce
that effectiveness in any way here.
The sole point here is to try to do what we can to,
obviously, achieve some savings but at the same time make sure
that it doesn't impact on our readiness. And I can assure you
that nothing in this budget impacts on our ability to respond
and protect this country under the nuclear deterrent.
Mr. Franks. Well, Mr. Secretary, I don't doubt for a moment
your commitment to this country. I would just suggest to you
that the policies that we are hearing here should alarm us all.
And with that, Mr. Chairman, I yield back.
The Chairman. Thank you.
Ms. Pingree.
Ms. Pingree. Thank you very much, Mr. Chair.
Thank you all for your time today, your testimony, and for
your service to this country.
Secretary Panetta, I truly appreciate hearing the steps
that the DOD has taken towards a sustainable defense budget and
how it correlates to the President's new strategic guidance.
With emphasis placed on the need to keep the agile and flexible
military force, I will be interested to hear in the future how
the force structure will serve those needs. Specifically, the
Navy already has agility built into its force, which would help
support strategic targeted operations.
In addition to reevaluating our strategy after 10 years of
war, I do believe that we must continue to provide our service
members and their families the support that they need, and I am
pleased to hear you speaking about that today. We truly need to
keep our promise to the honorable men and women who have earned
their benefits. I am also pleased to hear that it is a priority
of yours.
And I was very pleased with the testimony of my colleague,
Ms. Tsongas, that it is a priority of yours and General Dempsey
to take care of our military as well as addressing military
sexual trauma; and I agree with her that there is still a great
deal that needs to be done in regards to that.
I want to talk a little bit about Afghanistan. The deaths
of bin Laden, Anwar al-Awlaki, and the elimination of much of
Al Qaeda's leadership, are testament to the success and
effectiveness of the small, rapid missions instead of the
nation-building missions of the past. The emphasis, based on a
lily pad strategy, will help us continue to address our
national security priorities as well as draw down unnecessary
troop levels in Europe, for example.
Secretary Panetta, I was pleased to hear you announce a few
weeks ago that the drawdown from Afghanistan would begin as
early as mid-2013. Although I appreciate accelerating the
drawdown slightly, I would like to hear more about the number
of troops that will be withdrawn in 2013, as well as the
schedule set for the pace of withdrawal of the 68,000 troops
who will remain.
As a long-standing opponent of the war, I also have serious
concerns that the lessons learned from Iraq are not being
implemented fully in Afghanistan. As the DOD attempts to rein
in costs, I am puzzled why contracting in Afghanistan has not
been more closely scrutinized, especially since many of the
contractors overlap in both Iraq and Afghanistan.
The Special Inspector General for Iraq Reconstruction has
highlighted over half a billion dollars, $640 million to be
exact, that could be used more effectively elsewhere and almost
a third, $217 million, of which were payments to contractors
for reimbursements that were not supported by any
documentation.
For example, Inspector General Stuart Bowen specified that
an audit of Anham LLC, which has contracts in both Afghanistan
and Iraq totaling almost $4 billion, revealed they overbilled
DOD by at least $4.4 million for spare parts, including $900
for a switch valued at $7.05.
Now I know I have asked a lot here today and there is a
limited amount of time available, but let me ask a couple of
questions; and if you are able to discuss it, that would be
great. If not, I will take the answers for the record.
My questions are: What steps have been taken to implement
the lessons learned from Iraq in the case of Afghanistan? Has
it been successful and what more can we do at this time of the
important budget-cutting that is currently going on?
Secretary Panetta. Congresswoman, there is no question that
a lot of lessons were learned in Iraq; and many of those
lessons are being applied in Afghanistan.
I think the good news is that 2011 was really kind of a
turning point. In 2011, the level of violence went down. We
weakened the Taliban significantly. More importantly, the
Afghan Army really came into its own operationally. It started
really being effective in terms of providing security.
We have gone through several tranches of areas where we are
transitioning to Afghan security and governance. The second
tranche, which we just have gone through and announced, when we
complete that over 50 percent of the population will be under
Afghan security and Afghan control. We are going to continue
those tranches through 2012 as well as into 2013.
In 2013, our goal is that, when the final tranche is
completed, that the Afghans will take the lead with regards to
combat operations and we will be in a support mode. Although we
will be combat ready, we will basically be operating in support
through the remainder of 2014.
We are on track now, according to Lisbon, to be able to
draw down with our ISAF forces by the end of 2014; and then the
discussion will be what kind of enduring presence we have
there.
But bottom line is I think we are on the right track with
regard to completing our mission in Afghanistan.
Ms. Pingree. Thank you.
The Chairman. Thank you, Mr. Secretary.
Mr. Conaway.
Mr. Conaway. Thank you, Mr. Chairman; and, gentlemen, thank
you for your long service and your demonstrated patience this
morning with being here.
Leon, I want to add my comments to what Rob Andrews said.
Thank you for your forward lean on the audit issue and
sustaining an audit, property resourcing that. You and Bob Hale
and your team, the ripples that your comments have made and the
efforts that have gone forward since October I have seen them
felt all down through the organization, which is where it has
got to get done. So thank you for that, and I appreciate it.
We still don't know yet from General Allen--you said
yesterday to the Senate--how we are going to bring home the
23,000 that are scheduled this year. I am just worried that
your comments of the last few weeks were a little premature. I
don't think anybody says it has gotten a whole lot safer in the
east of Afghanistan.
And I understand the glowing comments you were just making
about the Afghan Army. Concern that fighting season in 2013 is
split by Ramadan and that we would have our folks in a position
to allow something to go on in the second half right after
Ramadan, the last half of that fighting season in 2013, is
counterproductive to what we are trying to get done.
Can you help me understand--I am in a position to have some
information on intelligence as to what is going on, and it did
not--I was a bit shocked with your comments, because it is not
marrying up with the evidence I had at that point in time from
things improving on the ground that rapidly to--and since then
that questions of certain folks you should know just makes
your--maybe you were misquoted or maybe overstated with respect
to that, but I am concerned that we----
And then one final question.
Secretary Panetta. Sure.
Mr. Conaway. Rumors more recently that even more
accelerated drawdowns are going on, and the question yesterday
in the Senate was that no decision was made. Does that imply
that those conversations are, in fact, going on within the
Administration separate and apart from what General Allen is
telling you and the commanders on the ground are telling you?
That would be of great concern to us if these are political
decisions being driven within the White House for whatever
reason, that they would start having those conversations. Can
you help me understand what is going on there?
Secretary Panetta. Yes, first and foremost, after 40 years,
I am never responsible for any headlines on any article that
involves comments that you make.
My comments were perfectly in line with our commitments
under Lisbon. And to prove it, all of the defense ministers in
the last meeting I attended, all of them concur in the same
strategy, which is we are in together and out together by 2014,
and we are all following exactly the same process here. We are
doing the tranches. We are doing the transition to Afghan
authorities.
Obviously, we are watching it closely to make sure that it
is working. So far, it is working. The Afghan Army is doing a
great job. We have got to continue to put them in place. We
have got to make sure that they are able to achieve security.
Everything is conditions-based when you are in war. That is
a bottom line here. So we are going to be tracking this very
carefully as we go through that process.
With regards to the decisions, obviously, we are in the
process of how do we draw down to 23,000 the surge, and General
Allen will present a plan to General Dempsey within a few
months to be able to show how that will be accomplished.
And then, beyond that, frankly, no decisions have been
made, because we are looking at the situation on the ground,
what we are going to need in order to achieve the mission that
we are all interested in achieving.
Mr. Conaway. So we are still set on what the mission is and
no instructions to change the battle plan to reflect lower
levels of American troops beyond the 68,000. None of that is in
the works or pushing forward at all.
Well, thank you for that.
One minor--one issue with respect to the budget, I think it
was also a $600 million decrease in defense funding because of
the switch--or adding $600 million for green energy or
renewable energy efforts, that is a cut to defense spending. It
is not your core mission. You know, we are going to pay--and
Secretary Mabus is bragging on the--paying $15 a gallon for jet
fuel to fly F-18s as a demonstration project, I guess; and it
just makes no sense in these kinds of budgetary constraints
that we would pay $15 a gallon.
And even if you ramp that industry up as good as it is
going to get, you are going to be paying twice for that blend
of algae and fossil fuels over just what straight fossil fuel
is. So I am not real keen on spending that $600 million. I
think you could find a better place to spend $600 million in
defending this country, as opposed to demonstration projects
that might not yield the benefits that we want.
So, again, I appreciate your long service to our country.
I yield back.
The Chairman. The gentleman's time has expired.
Mr. Critz.
Mr. Critz. Thank you, Mr. Chairman.
Secretary Panetta, General Dempsey, Secretary Hale, thanks
so much for being here. Thank you for your service to this
country.
Secretary Panetta, the Air Force recently announced force
structure changes in light of the new national defense
strategy. These changes include major aircraft reductions above
combat and mobility forces and announced the closing of an Air
Reserve station in Pittsburgh, Pennsylvania, outside of BRAC
process.
The base serves 1,400 Active Reserve and Guard units of
both Navy and Air Force and has tens of millions of dollars
appropriated for improvements. Can you tell me if the decision
to close the base was made in coordination with your office or
with other stakeholders and how many other bases are being
identified for unilateral Department of Defense closure outside
of the BRAC process?
Secretary Panetta. Congressman, I really recommend that you
ask the chief of the Air Force that question. Because the
decision to make that decision was in his hands as part of the
strategy here that was being implemented to kind of fulfill the
strategic goals that we were after. So on that specific
decision I would recommend you ask him that question.
Mr. Critz. Okay, thank you. And it plays actually into a
larger role. Because, as you know and are aware, that the Air
Force's restructuring plan proposes a reduction of 65 C-130
tactical airlifters, getting us to a total fleet projection of
318 aircraft. Part of that is because we are going to be
lowering the Army to a structure of about 490,000 members. My
concern is that pre-9/11 the Army was at about 480,000, so very
similarly sized, and we had 530 C-130 tactical airlifters. And
I am just curious as to the Air Force's new restructuring plan
isn't realistic, given previous demands for tactical airlift
and future demands in this new strategy. Can you elaborate on
any of this, the Secretary or General Dempsey?
General Dempsey. I cannot elaborate on that specific issue
except to say that the collaboration between the Air Force and
the Army on their lift requirements, that has been
accomplished, and you will have both of them here at some point
in the future.
Mr. Critz. Right. Yes.
General Dempsey. But, you know, this is about accounting
rules. So if you have X number of airborne brigades, how much
lift do you need; X number of ground combat brigades, how much
lift do you need? And those accounting rules have been adjusted
over time based on lessons learned.
Do you want to add anything.
Secretary Hale. Well, I would add that C-130s are important
to us, but all our studies show we have too many, frankly. And
so what you are seeing is adjusting in tough budget times to go
down to what we believe are the minimum requirements that meet
our wartime needs.
Mr. Critz. Yes, well, and part of my concern is that we are
actually adding, I guess, duties to the Air Force's C-130,
because they are going to be doing the C-27J lift as well.
And just as a sort of general idea, I look at the C-27J, it
was going to be sort of a pickup truck, and a C-130 might be
more like a tractor trailer truck. And I am just curious if the
C-130 going to be able to get into the same airports as the C-
27 and is it really a cost savings? Or are we going to start
saying, well, we can't get into these places, so we are going
to up the tempo for the Chinooks to do what the C-130s can't
do?
I guess my question is long-term. This is a short-term
savings. Is it also a long-term savings? Have we looked at the
20-, 30-year life cycle of these aircraft?
Secretary Panetta. I think they have looked at the long-
term savings that would be achieved here. I mean, part of the
goal in developing our strategy was obviously to ensure that we
had not only agility and ability to deploy quickly but that
what we were using was multimission and designed to accomplish
a series of missions, not just one. And the problem with that
one aircraft was that it was kind of single-mission oriented.
Mr. Critz. Right.
Secretary Panetta. And that is why I think the Air Force
recommended that we move towards that choice of the C-130s.
Mr. Critz. Okay, I am a little suspicious. I have just
heard from some of my Army friends that they like the greens,
they like the same uniform in the aircraft above them, and it
makes them a little more comfortable.
General Dempsey. That shocks me, Congressman, for the
record.
Mr. Critz. My last question, in a very short amount of
time, is we have used the National Guard at a level in the last
10 years in OIF [Operation Iraqi Freedom] and OEF [Operation
Enduring Freedom] that we have never seen in the past. The
future defense plan, does it maintain that same tempo of use of
National Guards, or are we going to see--and I don't want to
say diminishing, but much less use of National Guard in forward
operations?
General Dempsey. What we do, sir, is we respond to the
demand. So as the combatant commanders put a demand on the
system, the service chiefs meet it. The answer to your question
is we will have Active Component and notably Guard and Reserve
in an ARFORGEN [Army Force Generation] cycle that meets the
demand. If the demand goes down, there will be fewer demanded.
Mr. Critz. Thank you, Mr. Chairman. I yield back.
The Chairman. Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman.
And Secretary Panetta, General Dempsey, Secretary Hale,
thank you so much for joining us today and thank you for your
service.
Secretary Panetta, I want to begin with you and go back to
some of the statements you made about this effort of budget
reductions being driven by strategy and ask you this: I know
that part of that strategy is an increased operational
capability and presence in both the Middle East and the Asia-
Pacific. Within that context, we are looking now about an
additional SSN [nuclear-powered attack submarine] being moved
outside of FYDP; and we know that in that particular theater,
especially the Asia-Pacific, the SSN is a very frequently
utilized asset.
Also, we are going to be pushing the SSBN(X) [Ohio
replacement ballistic missile submarine] 2 years further down
the road, so it is not going to be operational or deployable
until at least the 2020s. And we are going to have a
significant period of time where we have a reduced number of
ballistic missile submarines in a time where we know that is a
very critical element to our nuclear triad. Looking at those
things strategically and where we are reemphasizing our
efforts, that seems to be counter to that.
And I would ask this: With that in mind, have we looked at
and can you tell me--from the perspective of China, can you
tell me how many subs they are building per year and how many
submarines they will have in fiscal year '17 and beyond, just
to have a comparison as to where we are going to be
strategically?
General Dempsey. If I could, Congressman, we should take
that one for the record and make it in a classified setting.
[The information referred to can be found in the Appendix
on page 101.]
Mr. Wittman. Okay, very good.
Secretary Panetta. Clearly, our goal here was to not only
maintain but to strengthen our presence in the Pacific. That is
the reason, frankly, we maintained 11 carriers. The Navy
assures me that we have more than adequate submarine fleet to
be able to accompany our forces there. We have delayed the Ohio
class based on costs and trying to make sure that we could
control those cost overruns as we went through the process, but
I can assure you are we are still committed to getting that
online.
Mr. Wittman. Another issue, too, there with our fleet as we
are looking at the reduction in the size of the fleet, you talk
about the seven cruisers that are going to be brought out
because of the cost of modernizing them to a BMD [Ballistic
Missile Defense] platform. But you are also looking, too, at a
fleet that has been really pushed. We are talking about
maintenance that has been put off. So many ships, as far as
their Ao, their operational availability, is really
being pushed.
If we are looking at that in a strategy that denotes more
challenges there in the future, especially with our naval
capability--and just having been to an exercise, a Bold
Alligator, and looking at our operational capability within the
Marine Corps that is necessitated by ships, and looking also at
our amphibious ship decline in numbers, I would ask, too, how
are we going to reconcile that with operational availability,
with ship availability based on backlog of maintenance and our
L class ships essentially going down, yet we are going to be
emphasizing that capability as part of our strategy? How do we
fix or how do we address that--what I see as a conflict?
General Dempsey. If I could take a shot at that one,
Congressman, you are talking about a specific single Service.
In this case, you are talking about the Navy.
I mentioned in my opening comment we really need to think
about this as a joint force; and what we are doing as service
chiefs and as joint chiefs is looking at our war plans and
determining how we meet the demands of the war plans
innovatively, differently, creatively, and integrate those
capabilities that we did not have 10 years ago.
So while it might seem that the Navy, actually, as part of
this Joint Force has actually benefited from this new strategy
as it has shifted to the Pacific, but it hasn't been without
cost to them at all. And the entire Joint Force has to be
appreciated to understand how we meet the needs of the Nation
in terms of the new strategy.
Mr. Wittman. Sure. I certainly appreciate that.
I guess my concern is, is that with that reemphasis in
those areas and looking at this new strategy, while I
understand the cross capability that is there, it still appears
to me, though, as where we are going to be calling on our Navy.
In many instances, the capacity and capability there is going
to be pushed to the absolute maximum.
We look at the number of MEBs [Marine Expeditionary
Brigades] that can be deployed and the things that we are
asking our folks in the Marine Corps and the Navy to do in a
joint atmosphere. It seems to me that they are going to be
pushed in a situation where it may not be the most challenging
of situations, where we say, wow, we can't do all the things
that we need to do.
So my concern is that if this is indeed being driven by
strategy--and, Mr. Secretary, you spoke of increased risk--my
question is, is are these scenarios, is it an acceptable risk?
In your mind, is it an acceptable risk?
Secretary Panetta. Well, I think it is an acceptable risk.
We are going to be maintaining 285 ships. We have got 285 ships
now. We will have 285 ships in 2017. In that next 5-year period
our hope is to increase the fleet to 300 ships. So our goal is
to try to make sure that we have a flexible, deployable, and
capable Navy that is out there.
The Chairman. Thank you.
Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman; and thank you, Mr.
Secretary and General Dempsey, for being here today.
I know that the development of a new strategy and related
changes in the budget requests were very difficult
undertakings, and some of the responses that I have heard from
some on the committee to your work has been unfounded
criticism. There is no way a 1-percent reduction of the
Pentagon's base budget from 2012 to 2013 could mean the
difference between the world's greatest military and a
hollowed-out force; and under the Administration's proposal,
the DOD base budget will remain essentially constant between
2013 and 2017, after adjusting for inflation.
I believe there is room for additional savings in the
Department's budget, and those may very well come when we can
get some clean accounting statements. And I am glad to know
that that time period, Mr. Secretary, you have moved up to
2014, I believe, right? And I share your concern about and your
opposition to across-the-board cuts that would be mandated by
sequestration.
But before I ask any questions, I would like to ask a
couple of things. Last October, there were records that I
requested, and those records were not submitted until last
week. Can you be more prompt after this hearing with supplying
any records or answers that are requested?
Secretary Panetta. Congressman, I was not aware of that.
But, in the future, if you make a request for documents and you
don't get them in an expedited way, I wish you would call me
and let me know; and we will make sure you get them in time.
Mr. Johnson. All right. Thank you.
And also in that regard, Mr. Secretary, a DOD report on
rare earth elements was due in June of 2011; and it has not
been completed as of yet. And we were also promised an interim
report in December, but we have received no interim report. Can
this be gotten to us quickly?
Secretary Hale. That one is an interagency coordination. I
know it is late. I am told it will be very soon.
Mr. Johnson. Thank you. Any timeframe?
Secretary Hale. I don't have a specific time. Let's get
back to you with more specifics.
[The information referred to can be found in the Appendix
on page 101.]
Mr. Johnson. All right. Thank you.
Secretary Panetta. My legislative aide is saying a couple
of weeks. We hope that will be in that period.
Mr. Johnson. All right. Thank you. That is great.
Mr. Secretary, I am concerned that the pivot to the Asia-
Pacific increases the risk of an increasingly adversarial
military competition with China, and that is not in either
country's best interests. How do we execute this new strategy
without beginning a new Cold War? And I might add that I
definitely see a need for us to reposition our thinking in
terms of the Asia-Pacific region.
Secretary Panetta. I just had this discussion with the vice
president of China yesterday. We are--you know, we are a
Pacific power. They are a Pacific power. And while we have had
our differences, the fact is we have some common concerns that
we need to confront.
One is nuclear proliferation in that area, and it is as
much a concern to China as it is to us.
Secondly, it is the whole issue of ensuring that trade
routes and commerce flows freely in that area. That is another
area that we have a joint concern.
Thirdly, we have humanitarian needs in that area that we
need to respond to, and they are as much concerned about that
as we are. Area after area, there are some common areas that we
have concerns that will help us improve the regional
cooperation in that area. That is the kind of relationship we
would like to have with China, and that is what we hope to
develop. But in order to do that we have to do that from a
position of strength, and that is why we have to maintain our
presence in the Pacific.
Mr. Johnson. Thank you, Mr. Secretary.
The Chairman. Thank you.
Mr. Hunter.
Mr. Hunter. Thank you, Mr. Chairman.
Thank you all for your service and your time.
Let me start with this. This is a quote from Secretary
Perry and General Shalikashvili, Chairmen of the Joint Chiefs
of Staff under President Clinton:
``A dramatic reduction in the threat allowed for a
significant reduction in the size of our military forces. The
most obvious benefit of reductions in force and support
structure was a reduction in the defense budget. This peace
dividend--I am quoting--this peace dividend, amounting to about
$100 billion a year, has been a major contributor to the
balanced budget that our country now enjoys. The question, of
course, is did the Nation pay too high a price for this
benefit? In particular, was the capability of the military
forces reduced to the extent that they cannot adequately
protect American national interests? Our answer to that
question is an emphatic no.''
A year and a half later, terrorists murdered about 3,000
Americans and off we went to war. And, as Secretary Rumsfeld
said, we went with the Army we have, not the one that we wanted
or wished for.
I would like to know in general, how do you differentiate
yourself from these two leaders in that time who were presiding
over what they would not call--but we look back and see--was a
hollowing out of the military?
General Dempsey. Well, I differentiate from them because I
think we each face our own different circumstances.
I mean, you know, I mentioned earlier in response to
another question that the fiscal reality of the '90s is
different than the fiscal reality of this decade. And it seems
to me that, as others have testified, that we can only remain a
global power if we have got that balance, the aggregate of
diplomatic, economic, and military power. And what you are
seeing us do is try to reconcile a different set of
circumstances from any--from any of our predecessors and to
ensure that we do form a strategy and map the budget to it, as
opposed to just reacting to budget cuts. And I can only assure
you we did that and that this will have to be seen as having
been effective or not over time.
Mr. Hunter. Thank you, General.
Okay, moving on then, let me hit on to a few other things
in no particular order here.
One of the main points of the budget is calling for more
capability in the Guard and Reserve. Yet the NGREA, that is
National Guard Reserve Equipment Account, is zeroed out in this
budget. There is no request for NGREA at all when we are going
to put more on the backs of our Guard and Reserve.
The National Guard Reserve Modernization account, reduced
by 44 percent.
Navy Reserve over the next 5 years goes down by 9,000
sailors based on current capability, even though in 5 years we
will have LCS [Littoral Combat Ship] and a lot of different
programs, more UAVs [unmanned aerial vehicles], Fire Scouts,
which we will then need to get them back for and that will be
more expensive, shortsighted.
Air Force is reducing, it looks like, two Active and five
Reserve squadrons. It should be the other way around, just from
our point of view, kind of common sense. If you are there to
save money, you look at these Reserve and National Guard air
squadrons. They are the ones that pulled a lot of weight in
Iraq and Afghanistan.
I think Chairman Kline had a statement on that matter. It
just doesn't make sense, two Active, five Reserve, when you
could support a lot more Reserve for the cost of one Active.
Drones and technologies, we are to ask for half as many
Reapers. Even though we say the strategy is so that we could
rely more on technology, we are reducing Reapers in half. We
are reducing the number of Global Hawks. We cancelled the
Navy's next generation of UAV because the Fire Scout can do the
job. That is all fine if your argument wasn't that we are going
to rely more on this type of technology, but then you cut it at
the same time. That doesn't make sense to me.
Third, Asia-Pacific. We fund ship repair at 100 percent,
which we all know is about 80 percent of what it really needs.
You still have ships going out that are not even close to being
capable to do their job.
You cut seven cruisers--it looks to me like we cut seven
cruisers so that we could fund 100 percent of 80 percent of the
Navy's needs, if that makes sense, meaning you cut seven
cruisers so that you can--we don't want to have to fix the
things that are expensive to fix, so we just let them go. That
is what is happening here.
Navy refuses to down select on the LCS. That is Congress'
problem as well as DOD's, in my opinion. We should be able to
at least down-select on an LCS. I don't care which one it is.
You can't train for the same class. You are training different
sailors to work on two different ships, different logistical
tails, different modules--or same modules but different command
decks inside. You are going to have to have sailors get trained
for two totally different things.
And, lastly, something that I noticed, the joint light
tactical vehicle, you are going to have contracts going out in
June of this year. Ford came to us and said, hey, if you
prolong this a year, Ford will get involved and save you
hundreds of millions of dollars; and we said no.
There are some major problems with this budget. My main
point is this: The strategy and the budget contradict each
other. They do not go hand in hand, they don't fit, and it
looks to me like the things that we are trying to accomplish
are not going to be paid for.
Anyway, that is my opinion; and I am sticking to it.
Thank you, Mr. Chairman. Thank you, gentlemen, again for
your service. I appreciate it. Thanks for what you are doing
and for coming in here with it.
General Dempsey. Thanks for reading the thing. Obviously,
you studied it quite a bit.
The Chairman. The gentleman's time has expired. Will you
please answer those questions for the record?
General Dempsey. We would be happy to.
[The information referred to can be found in the Appendix
on page 101.]
The Chairman. Ms. Hochul.
Ms. Hochul. Thank you, Mr. Chairman. Thank you for joining
us today and for your service to our country.
Certainly I echo some of these sentiments, because we are
concerned about the need to cut costs. That is the great
challenge that faces you, and we appreciate the stress that you
are under to accomplish this. However, it does seem that the
more cost-effective way to approach it is to continue standing
Reserve and Guard units in a stronger capacity than has been
announced thus far.
So we are asking for your consideration. As a
representative of the Niagara Falls Air Reserve Station, we are
expected to, if all goes according to, as projected, to lose 16
percent of the Nation's Guard. That is a big hit for an area
like ours.
And as you were talking I took to heart what you said, Mr.
Secretary, about the need to have jobs when our veterans come
home. My part of the country sends a lot of people to war, and
they come back to our area and the jobs are just not there. So
we treasure these jobs as well as the proximity we have to the
border of Canada.
We believe that you will certainly understand the need to
ensure that we have a continued mission, if not the C-130s that
the Guard currently has but another mission to fall in its
place; and that is very important for a variety of reasons.
But, again, what you have said about our military security
being linked to our economic security and our industrial base
and our manufacturing, do you envision a policy or what are
your thoughts on a policy whereby, using our limited Department
of Defense procurement dollars, do we actually give preferences
to domestically produced materials? Is that something under
consideration? Is that something that you think would help our
jobs situation back home, to shore up our economy and our
industrial base as well, sir?
Secretary Panetta. Well, let me begin by saying you can't
view the Defense Department budget as a jobs program. I know
there are jobs that are dependent on it. I know we care an
awful lot about the people that work under our Department. But
the bottom line is, what do we need in order to get the best
defense for this country and where can we get it?
And, frankly, we do look at the U.S. industrial base as
supplying, frankly, the biggest part of that. Why? Because I
can't rely on--I don't want to rely on foreign suppliers for
that. I have got to rely on U.S. suppliers in the event that we
have a crisis and we have got to respond.
Ms. Hochul. I agree with you 100 percent.
And I would like your comments added, sir.
General Dempsey. Yes, thanks. Thank you, ma'am.
Just on this Active, Guard, and Reserve issue, we have
really got to be clear--I mean, the Active is Active because
they are full-time, 24/7/365; and we fund them to be full-time
so that they can be the most responsive for us. The Guard and
Reserve, if they were full-time, if they were ready on the same
timeline, would cost exactly the same thing.
But yet, you know, on occasion we will be told the Guard
and Reserve are cheaper. They are, because we only employ them
for X number of days a year. Once you bring them in and you
want them to serve for 365, the fully encumbered costs are
identical. The question for the Nation that we are trying to
answer is how much Active, because you need them right now, how
much Guard and Reserve, and then, within that, how many of them
do you need within 30 days, 180 days, or a year?
So, believe me, we want to do what is best for the Nation,
but this is not a--you know, the Active, Guard, Reserve, it is
not a dichotomy, it is a trichotomy, has to be handled very
carefully, or we will talk ourselves into something that won't
deliver when we need it to deliver.
Ms. Hochul. And I take that to heart. But I want to get
back to the Secretary's comments. Is there anything that this
Congress can do to assist in your stated goal, which I share,
that we can do for more our industrial base, our local
manufacturing, and, again, our national security, as opposed to
relying on manufactured items from countries that may turn on
us and may not end up being our friends. Is that something we
can work on together? Because I think that is important.
Secretary Panetta. Yes, absolutely. I would have no problem
working with you on that aspect, because I want to be able to
turn to our base in this country when we have to respond and
mobilize.
Ms. Hochul. Thank you very much.
Mr. Chairman, I yield back the balance of my time.
The Chairman. Thank you.
Mr. Scott.
Mr. Scott. Thank you, Mr. Chairman.
Gentlemen, I appreciate you hanging around just for my
questions.
General, you spoke about the ISR capabilities. I represent
Robins Air Force Base, and we have the JASORS [Joint Advanced
Special Operations Radio System] there. And it is not
appropriate here, but I would like to get some information to
you. There is a very efficient way to increase the capabilities
of that unit and those planes that would, I think, be a
significant cost savings, so I will provide that information
for all of you. I will work my staff to your staff.
I will tell you I did not vote for sequestration. I
represent Robins Air Force Base. As I said, I am from Georgia.
We have Fort Benning. We have Fort Gordon. We have Fort
Stewart. We have Moody Air Force Base. We have King's Bay.
I also, as the chairman would tell you, that I am one of
the ones that did not sign the letter saying no cuts to the
military. I recognize that we are going to have to have some
reductions.
What I see happening, though, through the communities that
have such a large military industrial base, is the fear between
sequestration and the talk of BRAC. It is disrupting
businesses, whether it is an entrepreneur that wants to build a
restaurant or a city who is trying to determine what sewer
capacity they need or water capacity or other types of
infrastructure they need. It is I think in the end causing us
more unemployment because of that uncertainty.
Zell Miller was one of Georgia's governors and was a U.S.
Senator. And one of the things that he did--and he received
some criticism for it when he did it, but in the end it
worked--he went through a process called redirection where he
asked every agency to deliver--the agency head was to deliver
the 5 percent that they would cut. It wasn't up to any of the
elected officials. The agency heads delivered the 5 percent
that they would cut.
So your base commander could deliver the 5 percent that
they would take out, and then they were allowed to present back
to a command where they would put 2\1/2\ percent of that. The
net result of that was a 2\1/2\ percent reduction and spending
and, quite honestly, a more efficient agency.
And so, as somebody who has come from a State
appropriations committee--and Secretary Panetta and General and
Comptroller, I know that you all have more experience than I do
with these issues--but that is something that we did see that
worked.
I would also like to say, Mr. Secretary, there are 89 of us
that are freshmen Republicans. We would very much enjoy a
discussion with the President. That is something that we are
not allowed. I wish we could. I wish that that was said about
us working together could happen, and obviously that means that
you have those meetings.
But I would ask, as we talk about these cuts, you know,
there is no discussion of cutting food stamps. We are talking
about cutting veterans' benefits. You know, there is not talk
of cutting housing programs or other things. I mean, the things
that have been outlined to us are cuts to the military. And we
need your help.
I mean, when Fox News and CNN are on--and I watch Fox, I
will tell you--but CNN is a Georgia company and--I mean, we
need you out there talking about the damage that sequestration
is going to do to national security, to our economy, the
military industrial complex.
Those people work. My people at Robins want to get up in
the morning and go to work and have a job. They want to build
an airplane.
So I would just ask that we are going to do everything we
can to have your back, and we need you out there outlining the
damage that can be done for us.
Secretary Panetta. Congressman, thank you for those
comments; and, obviously, I will continue to talk about the
impact that sequester would have. And I agree with you. Just
having the shadow of that out there is of tremendous concern to
communities across the country, to industries across the
country, and is something that we really have to try to get rid
of.
But just to--bottom line here is we were handed a number
for defense reductions. We stepped up to the plate. We met our
obligations to try to do this in a way that would still
preserve for us an effective force to deal with the threats.
But you can't balance the budget on the backs of defense,
either.
Mr. Scott. Absolutely.
Secretary Panetta. You have got to look at every other area
in the budget in order to deal with the deficits that we are
confronting; and I just hope Congress ultimately makes the
decision, along with the President, to do that.
Mr. Scott. And, Mr. Secretary that is the statement that we
need to hear over and over and over from those of you at the
DOD and our military leaders. You can't balance the military
budget on the backs of the military.
Thank you so much.
The Chairman. Thank you for waiting to get your question
out there.
Thank you very much, Mr. Secretary, General, Mr. Hale. We
appreciate your being here, appreciate the work you are doing.
This hearing is now at an end.
[Whereupon, at 1:15 p.m., the committee was adjourned.]
?

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A P P E N D I X

February 15, 2012

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PREPARED STATEMENTS SUBMITTED FOR THE RECORD

February 15, 2012

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Statement of Hon. Howard P. ``Buck'' McKeon

Chairman, House Committee on Armed Services

Hearing on

Fiscal Year 2013 National Defense Authorization

Budget Request from the Department of Defense

February 15, 2012

Thank you for joining us today as we consider the
President's fiscal year 2013 budget request for the Department
of Defense.
To put this budget in context, it is critical to examine
the strategy that has informed its submission. At the outset, I
want our witnesses to know that I appreciate the hard work that
went into the development of the strategy. It is no small
effort to completely revise a strategy one year after the
submission of the Quadrennial Defense Review and less than 3
months after the submission of a budget request.
However, I do have serious concerns about the trajectory
that the new strategy puts us on. Although this strategy is
framed as making the military more ``nimble'' and ``flexible,''
it is not clear how slashing the armed forces by over 100,000
during a time of war, shedding force structure, and postponing
modernization makes that so. The President must understand that
the world has always had, and will always have a leader. As
America steps back, someone else will step forward.
We have now heard multiple times that the strategy drove
the budget--and not the other way around. I suppose this starts
with the President's call to slash at least $400 billion from
defense last April, in advance of any strategic review.
An honest and valid strategy for national defense can't be
founded on the premise that we must do more with less, or even
less with less. Rather you proceed from a clear articulation of
the full scope of the threats you face and the commitments you
have. You then resource a strategy required to defeat those
threats decisively. One does not mask insufficient resources
with a strategy founded on hope.
Furthermore, the President's new defense strategy
``supports the national security imperative of deficit
reduction through a lower level of defense spending.'' The
Administration appears committed to ensuring the military is
the only sector of the Federal Government to meaningfully
contribute to deficit reduction. Simultaneously, the budget
proposes additional spending by diverting ``savings'' from
declining war funding to domestic infrastructure spending.
How can you ``save'' by not spending money that wasn't in
the budget to begin with? This is a cynical gimmick that once
more ensures our military--and only our military--is held
responsible for what little deficit reduction this budget
represents.
White House Chief of Staff Jack Lew said ``the time for
austerity is not today.'' Ask the 124,000 service members who
will have to leave the military how they feel about that.
The President's budget is a clear articulation of his
priorities. The President's budget asks the men and women in
uniform who have given so much already to give that much more,
so that the President might fund more domestic programs. The
President claimed that the budget would rise every year, but
ignores the fact that this request is $46 billion less than
what he said he needed last year and more than $5 billion less
than what was appropriated for fiscal year 2012. Furthermore,
despite the new strategy's goal of pivoting to Asia, a theater
where naval assets and airlift are decisive, the budget calls
for retiring 9 ships, removes 16 more from the new construction
plan, and cuts our airlift fleet by hundreds.
This isn't the only place where the President's public
statements and missions seem to diverge. We cannot neglect the
war. The President was committed to a counterinsurgency
strategy in 2009, yet inexplicably--and certainly not based on
the advice of his commanders--announced our withdrawal date and
to pull out the surge forces before the end of the next
fighting season. Mr. Secretary and Chairman Dempsey, before the
President makes another announcement about troop withdrawals, I
implore you to heed our commanders' advice. We are seeing
success. Let's not make a decision to pull some of the
remaining 68,000 troops, before we see what happens this
fighting season. Let's wait to reassess any more force-level
decisions until the end of the year.

Statement of Hon. Adam Smith

Ranking Member, House Committee on Armed Services

Hearing on

Fiscal Year 2013 National Defense Authorization

Budget Request from the Department of Defense

February 15, 2012

Mr. Chairman, thank you for holding this hearing. I would
like to thank our witnesses, the Secretary of Defense, Leon
Panetta, and the Chairman of the Joint Chiefs of Staff, General
Martin Dempsey, for appearing here today. Both of them have
long and distinguished careers on behalf of our Nation.
Earlier this year, the President released the findings of a
strategic review, which clearly articulated the global threat
environment, and presented a broad strategy to address those
threats moving forward. The budget released earlier this week
supports that strategy by ensuring that our military has the
tools and resources necessary to deter, confront, and defeat
threats wherever they may emerge. This is the right way to
develop a defense budget--generate a coherent strategy, and
then provide resources to fund that strategy.
I have consistently said that we can rationally evaluate
our national security strategy, our defense expenditures, and
the current set of missions we ask the military to undertake
and come up with a strategy that enhances national security by
spending taxpayer dollars more wisely and effectively. I
believe the fiscal year 2013 defense budget meets that goal.
This budget is also fully consistent with the funding
levels set by the Budget Control Act passed by Congress.
Although I did not support this act, many members of the House
Armed Services Committee did, Congress passed it, and the
Department of Defense has submitted a budget that complies with
the congressionally mandated funding levels.
Over the last few years, our military has put together a
significant string of foreign policy successes, including the
death of bin Laden, Anwar al-Awlaki, the elimination of much of
Al Qaeda's leadership, the end of the war in Iraq, and
supporting the uprising in Libya. The budget lays out a
strategy that will enable the United States to build on those
successes and confront the threats of today as well as in the
future.

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DOCUMENTS SUBMITTED FOR THE RECORD

February 15, 2012

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WITNESS RESPONSES TO QUESTIONS ASKED DURING

THE HEARING

February 15, 2012

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RESPONSE TO QUESTION SUBMITTED BY MR. BARTLETT

General Dempsey. The cost of cleanup has gone down significantly
from the BRAC rounds of 1990s to the latest round because we have been
conducting ongoing remediation of environmental hazards on the
installations. We are obligated to remediate the property regardless of
whether the base is closed or not. Therefore, these costs are not
offsets to the savings generated by BRAC closures.
Additional detail: BRAC is a process that does not have a
predetermined outcome. Using statutory selection criteria that
emphasize military value and a force structure plan looking out 20
years, DOD must complete a comprehensive review before it can determine
which installations should be realigned or closed. The list of closures
is then reviewed by an independent Commission that can (and has in the
past) altered the list. Its review includes holding public hearings and
visiting various sites. The commission's review results in a list of
closures and realignments that are sent to the President and are
subject to review by Congress. It is this thorough process that
produces the list of installations that DOD will close. [See page 17.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. WILSON

Secretary Panetta. Relative to Dr. Baldacci, he was tasked to
review the military health system for opportunities to improve care and
reduce costs. He was also asked to lead one of the site review teams
evaluating the processes inherent in the Disability Evaluation System
(DES) for our wounded warriors. Dr. Baldacci completed a confidential
summary of his observations prior to his departure in March 2012. USD
(P&R) would be happy to meet with you and discuss his observations.
In this position, Mr. Baldacci received an annual salary of
$165,300. [See page 30.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. TURNER

Secretary Hale. Of the $5.7 billion transferred in FY 2011 for the
National Nuclear Security Administration (NNSA) Future Years National
Security Programs for FY 2011-2016, only funds provided in FY 2011 and
FY 2012 (approximately $1.5 billion prior to enactment adjustments)
were applied to the NNSA defense weapons programs. The Department of
Defense (DOD) cannot now clearly identify the application of this
funding in FY 2013 and beyond.
You asked specifically about the Chemistry and Metallurgy Research
Replacement (CMRR) construction project and the W76 life extension
program (LEP). Modernizing the U.S. strategic nuclear enterprise as a
whole is a key national security priority. The decision to defer the
CMRR was a difficult one, but was made to permit critical warhead life
extension programs to move forward in the newly constrained fiscal
environment. This tradeoff was approved by the Nuclear Weapons Council
after careful review. Moreover, the DOD's independent Uranium
Processing Facility (UPF)/CMRR study concluded that if funding limits
constrained parallel construction of the two facilities, then phased
construction would be a prudent alternative approach, with UPF
construction beginning first.
The DOE's FY 2013 budget proposes to defer construction of the CMRR
for at least 5 years while meeting the plutonium requirements by using
existing facilities in the nuclear complex which avoids $1.8 billion of
costs from FY 2013 to FY 2017.
The W76 LEP was fully supported in the FY 2012 and FY 2013 budget
years. However, the FY 2013 budget out-year profile stretches out the
W76 LEP completion by 3 years still meeting the DOD requirements.
We are currently working with NNSA to restructure the entire
portfolio of work driven by the DOD requirements to match the out-year
funding available in the NNSA FY 2013 President's budget. It is hoped
that the resulting plan will alleviate all of our concerns. [See page
34.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. KLINE

Secretary Panetta. The Department does not plan to grandfather
currently mobilized/deployed units. The revised PDMRA accrual rates
continue to provide members required to deploy/mobilize beyond
established thresholds with an adequate number of administrative days
for respite upon return home. Members also accrue 30 days of leave per
year, and each Service also provides members with a reintegration
period upon the unit's return home prior to full demobilization.
Changes to the PDMRA program resulted from a comprehensive review
of the program requested by the former Chief of Staff of the Army. The
program revisions: simplified a difficult to understand and administer
program by replacing graduated accrual rates with set accrual rates
based on deployment/mobilization location; eliminated the 4-day per
month accrual rate, which resulted in some members receiving excessive
administrative absence days off for respite; and, enhanced equity in
the PDMRA benefit between Active Component and Reserve Component
members by focusing the benefit on deployment/mobilization locations.
The program changes were fully vetted and supported by the Military
Departments, each of which continues to support the changes. I mention
this to let you know that the decision to change the program was not
taken lightly.
The revised PDMRA accrual rates continue to provide Reserve
Component (RC) members required to deploy/mobilize beyond established
thresholds with a reasonable number (up to 24 days per year) of
administrative absence days for respite. Members deployed to Iraq or
Afghanistan may accrue up to 24 PDMRA days per year. Members deployed
to Combat Zone Tax Exclusion (CZTE) areas may accrue up to 24 PDMRA
days per year, provided the Military Department Secretary has
designated the area as a 2-day per month PDMRA accrual location. Most
RC members deployed to a CZTE areas also receive: Government-funded
transportation to their leave destination under the Rest and
Recuperation (R&R) Leave Program (members deployed to Iraq or
Afghanistan also receive 15 administrative absence days under the Non-
chargeable R&R Leave Program); $680 in monthly compensation (Family
Separation Allowance- $250, Hazard Duty Pay- $225, Hostile Fire Pay-
$100, Per Diem- $105); tax free military pay under the CZTE benefit; 30
days of leave per year; and a reintegration period upon the unit's
return home prior to full demobilization. When viewed with regard to
all benefits and compensation provided, RC members continue to be
adequately compensated under the revised PDMRA program. Accordingly,
the Department does not plan to exempt Reserve Component members
deployed or mobilized prior to October 1, 2001 from the PDRA program
changes.
As a point of clarification, the revised PDMRA accrual rates only
apply to that portion of an ongoing deployment/mobilization that occurs
on or after October 1, 2011. Previous PDMRA accrual rates apply to that
portion of an ongoing deployment or mobilization that occurred prior to
October 1, 2011. The Department's implementation of the PDMRA change on
October 1, 2011, ensures members serving side-by-side receive the same
benefit, and provides equity between Service members with regard to
PDMRA. Grandfathering the benefit would perpetuate the disparate
treatment of Service members with regard to PDMRA. [See page 37.]
______

RESPONSE TO QUESTION SUBMITTED BY MS. BORDALLO

Secretary Hale. We have begun discussions with the Government of
Japan focused on adjustment to the number of marines relocating to Guam
as part of our effort to achieve a more geographically distributed,
operationally resilient and politically sustainable force structure in
the region. The Department continues to study the requirements for a
smaller force on Guam which meets the PACOM Commander's operational
requirements, and the Commandant of the Marine Corps requirements for
training and quality of life in the Pacific Region. These efforts will
delink the movement of marines to Guam and resulting land returns south
of Kadena from progress on the Futenma Replacement Facility.
Additionally, we expect to provide the independent assessment of the
U.S. force posture in East Asia and the Pacific region by late June, in
accordance with Section 346 of the FY 2012 National Defense
Authorization Act. Master planning efforts and assessments of the
impacts to Guam's civilian infrastructure will take place once the size
and type of Marine units are finalized and will require the following:
detailed facility planning; base master planning; a bilateral agreement
on cost sharing; and appropriate environmental impact analysis. [See
page 33.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. WITTMAN

General Dempsey. [The information referred to is classified and
retained in the committee files.] [See page 50.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. HUNTER

General Dempsey. Based on the new strategy, we prepared a budget
that strikes an appropriate and necessary balance between succeeding in
today's conflicts and preparing for tomorrow's. The hard choices we
made to develop this balance were directly informed by the new
strategic guidance, and account for real risks and real fiscal
constraints. Although the budget represents responsible investment in
our national security, the trade-offs were tough and the choices were
complex.
I am an advocate of looking beyond this particular budget
submission, out to 2020. The merits of our choices should be viewed in
the context of an evolving security environment and a longer-term plan
for the joint force. [See page 54.]
______

RESPONSE TO QUESTION SUBMITTED BY MR. JOHNSON

Secretary Hale. An interim report on rare earth was provided to
Congress on August 18, 2011 and a final report was provided March 9,
2012. Together, they address the issue of assessing the rare earth
material supply chain and the availability of material versus demand
from the defense industrial base. [See page 52.]
?

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QUESTIONS SUBMITTED BY MEMBERS POST HEARING

February 15, 2012

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

QUESTION SUBMITTED BY MR. SMITH

Mr. Smith. The FY2012 National Defense Authorization Act included a
requirement for the Department to report on the cost-benefit, return on
investment, and long-term payback of LEED and other green building
rating systems. It also included a prohibition on using funds for LEED
Gold or Platinum certification unless the Secretary of Defense provided
Congress with a notification stating the cost-benefit and demonstrated
payback for such a decision. Following passage of the FY2012 NDAA, a
Navy statement, cited by the Federal Times claims ``the Navy is moving
ahead with its plan to certify all of its buildings as LEED Gold by the
end of fiscal 2013.'' Please provide the committee with an update on
the Department's plans to meet the reporting requirement included in
the FY2012 NDAA, including a general framework and scope of the study,
whether the Department is planning on meeting with interested outside
parties to solicit input, and whether the Department intends to perform
this report internally or whether it will be contracted out. In
addition, is the Department or any of the Services, moving forward with
a LEED-only policy or are other green building rating systems or
alternative approaches being considered?
Secretary Panetta. The report on cost-benefit, return on
investment, and long-term payback of LEED and other green building
rating systems affects all the Services. Office of the Deputy Under
Secretary of Defense for Installations and Environment (DUSD I&E) has
been provided recommendations on the path forward and outside party
assistance.
Navy's policy is that ``All applicable/certifiable types of
building projects (vertical construction) must be registered with USGBC
(or equivalent) and have the required submittal documentation to meet
the required LEED silver level rating (or equivalent).'' NAVFAC has
maintained a commitment to meeting the Guiding Principles for High
Performance and Sustainable Buildings established through Executive
Order (EO) 13423 and the expanded requirements in EO 13514. Navy is
developing a High Performance Building Standard which incorporates cost
effective features of ASHRAE 189.1. ASHRAE 189.1 is a commercially
recognized whole building design consensus standard for high performing
buildings which provides performance and prescriptive requirements in
site sustainability, water use, energy efficiency, renewable energy,
indoor environmental quality, building impact on the atmosphere,
materials, and resources. The High Performance Building Standard will
automatically make all new construction and major renovation projects
achieve the equivalent of LEED Silver certification.
______

QUESTIONS SUBMITTED BY MR. WILSON

Mr. Wilson. The Afghan National Security Force budget request has
been cut by 50% and has been justified by a reduction in the need for
front-loaded costs, such as equipment and facilities. That is
understandable, but a reading of the budget request also shows a 55%
reduction in funds from $1.1B to $500M for ``training and operations''
allocated to the Ministry of Interior forces which includes the Afghan
National Police. How can such a significant cut not have a serious
impact on the critical police training effort as it only increases in
importance to both U.S. plans and to the Afghan people's security?
Secretary Panetta. The Afghan National Security Forces (ANSF),
including the Afghan National Police (ANP), are growing in capability.
It is this growth in capability which in fact is reducing the costs to
develop the ANP. Growth in capability is covered by two distinct
phases: ``Build ANP'' capabilities and ``Sustain ANP'' capabilities.
During fiscal year 2012, the ANP is on track to achieve their planned
end strength of 157,000 personnel. Once they achieve their target end
strength, the ANP enters into the ``Sustain'' phase in fiscal year 2013
and subsequently would reduce their requirement for initial entry
training to focus on sustaining the force level. Another projected
savings is based upon the Afghans assuming a greater role in the
overall training mission in fiscal year 2013 and thus significantly
reducing DOD's reliance upon mentor and trainer contracts to meet these
needs. The ANP is growing in overall strength and in capability,
including the capability to train new recruits. This process will be
reflected in both their operating and generating forces. For
clarification, the funding decrease for training and operations for the
ANP is from $l.l billion in fiscal year 2012 to $570 million in fiscal
year 2013 for a reduction of 48 percent.

Mr. Wilson. The Afghan National Security Force budget request has
been cut by 50% and has been justified by a reduction in the need for
front-loaded costs, such as equipment and facilities. That is
understandable, but a reading of the budget request also shows a 55%
reduction in funds from $1.1B to $500M for ``training and operations''
allocated to the Ministry of Interior forces which includes the Afghan
National Police. How can such a significant cut not have a serious
impact on the critical police training effort as it only increases in
importance to both U.S. plans and to the Afghan people's security?
General Dempsey. The Afghan National Security Forces (ANSF) fund
was designed to quickly develop Afghan infrastructure, satisfy
equipment requirements, and accelerate training, with most significant
investments made in previous years. We now have the infrastructure,
equipment, and police force in place and the reduced ANSF funding
request is a reflection of that fact.
The training and operations budget reductions reflect the ongoing
transition of training workload from the Combined Security Transition
Command--Afghanistan (CSTC-A) to the Ministry of Interior (MoI). As the
MoI begins taking on more of the training workload, a variety of
training savings will be realized, including a reduced contracted
trainer requirement, consolidated specialized training, and literacy
training requirements.
______

QUESTION SUBMITTED BY MR. LANGEVIN

Mr. Langevin. In a time of unprecedented deficit reduction, I am
concerned we are not making progress towards improving energy
efficiency of DOD facilities and incorporating new technologies into
these efforts. How is the Department leveraging current and previous
investments in science and technology to maximize returns on
investment?
Secretary Panetta. The Department of Defense (DOD) facility energy
strategy is designed to reduce costs and improve the energy security of
our fixed installations. It has four elements: reduce the demand for
traditional energy through conservation and improved energy efficiency;
expand the supply of renewable and other distributed (on-site)
generation sources; enhance the energy security of our installations
directly (as well as indirectly, through the first two elements); and
leverage advanced technology.
As you noted, one of the ways DOD can lower its energy costs and
improve its energy security is by leveraging advanced technology.
Technology has been DOD's comparative advantage for 200 years, as
evidenced by the military's leadership in the development of everything
from interchangeable machine made parts for musket production to the
Internet. This advantage is no less important when it comes to facility
energy.
To leverage advanced technology relevant to facility energy, three
years ago, the Department created the Installation Energy Test Bed, as
part of the existing Environmental Security Technology Certification
Program. The rationale is straightforward. Emerging technologies offer
a way to cost effectively reduce DOD's facility energy demand by a
dramatic amount (50 percent in existing buildings and 70 percent in new
construction) and provide distributed generation to improve energy
security. Absent outside validation, however, these new technologies
will not be widely deployed in time for us to meet our energy
requirements. Among other problems, the first user bears significant
costs but gets the same return as followers. These barriers are
particularly problematic for new technologies intended to improve
energy efficiency in the retrofit market, which is where DOD has the
greatest interest.
As the owner of 300,000 buildings, it is in DOD's direct self-
interest to help firms overcome the barriers that inhibit innovative
technologies from being commercialized and/or deployed on DOD
installations. We do this by using our installations as a distributed
test bed to demonstrate and validate the technologies in a real-world,
integrated building environment. Projects conduct operational testing
and assessment of the lifecycle costs of new technology while
addressing DOD-unique security issues. For example, the Test Bed is
doing a demonstration of an advanced control system that could increase
boiler efficiency by five percent; if the technology proves out, DOD
can deploy it on thousands of boilers and see a meaningful energy
savings. More generally, by centralizing the risk and distributing the
benefits of new technology to all DOD installations, the Test Bed can
provide a significant return on DOD's investment.
The Test Bed has about 70 projects underway in five broad areas:
advanced microgrid and storage technologies; advanced component
technologies to improve building energy efficiency, such as advanced
lighting controls, high-performance cooling systems and technologies
for waste heat recovery; advanced building energy management and
control technologies; tools and processes for design, assessment, and
decision making on energy use and management; and on site energy
generation, including waste-to-energy and building integrated systems.
______

QUESTION SUBMITTED BY MR. TURNER

Mr. Turner. Secretary Panetta, during our Oct 13 hearing last year,
you said: ``With regards to reducing our nuclear arena, I think that is
an area where I don't think we ought to do that unilaterally, we ought
to do that on the basis of negotiations with the Russians and others to
make sure we are all walking the same path.''
Do you still believe, as you stated to this committee
last year, that U.S. nuclear force reductions should not be unilateral?
Can you tell us anything about press reports that the
nuclear guidance review currently under way in the Administration, in
response to President Obama's direction contained in PPD-11, compelled
the Administration to review only three scenarios for future U.S.
nuclear force postures: (1) 1100 to 1000 deployed warheads; (2) 800 to
700 deployed warheads; and (3) 400 to 300 deployed warheads?
Secretary Panetta. I will reiterate that we have gone through a
nuclear review and presented options to the President, but these
options are in no way unilateral.
As stated in the Nuclear Posture Review (NPR), the United States
intends to pursue further reductions in nuclear weapons with Russia.
The Department's NPR follow-on analysis of deterrence requirements and
force postures will help identify the force levels needed to support
these objectives and any potential risks. The completion of this
analysis is necessary to inform the formulation of any future arms
control objectives involving our strategic nuclear stockpile.
______

QUESTIONS SUBMITTED BY MS. BORDALLO

Ms. Bordallo. Please explain how DOD's budget, with respect to the
civilian workforce, is not a continuation of Secretary Gates' arbitrary
constraints on civilian direct hire full-time equivalents?
Secretary Panetta. While the DOD's FY 2013 budget request reflects
a continuation of the direction to hold civilian full-time equivalents
to FY 2010 levels, DOD Components requested and received exceptions to
those levels for recognized workload increases. In the aggregate, U.S
Direct Hires are declining by 7,367 from FY 2012 to FY 2013. The
reduction is in the reimbursable program (12,194) which is partially
offset by an increase in the direct program. The direct program
increases by 4,827 for critical workload requirements supporting the
National Guard and Reserves; the acquisition, audit and contract
management communities; and medical readiness programs.
Ms. Bordallo. How does the DOD's budget request reconcile with
legislative language set forth in Division A, Section 8012 of
Consolidated Appropriations Act of 2012 (P.L. 112-74), which states
that `` . . . during fiscal year 2012, the civilian personnel of the
Department of Defense may not be managed on the basis of any end-
strength, and the management of such personnel during that fiscal year
shall not be subject to any constraint or limitation (known as an end-
strength),'' and more specifically, that the fiscal year 2013 budget
request be prepared and submitted to the Congress as if this provision
were effective with regard to fiscal year 2013?
Secretary Panetta. The DOD budget request complies with section
8012 of the Consolidated Appropriations Act of 2012 (P.L. 112-74).
Defense civilian personnel are not managed on the basis of end
strength. The Defense budget is managed based on executive and
legislative guidance, strategic plans, resource levels, workload, and
mission requirements. As required by the Congress, the DOD documents
the civilian personnel levels supported in the budget request in the
OP-8 exhibit. The OP-8 reflects the specific funding for civilian
personnel, as well as the number of full-time equivalents (FTEs) and
end strength.
Ms. Bordallo. President Obama has made reducing reliance on
contractors and rebalancing the workforce a major management initiative
of his Administration. Does the Department's FY13 budget request and
reductions in the civilian workforce reflect an opinion that the
Department has achieved an appropriately balanced workforce?
Secretary Panetta. The Department's ``sourcing'' of functions and
work between military, civilian, and contracted services must be
consistent with workload requirements, funding availability, readiness
and management needs, as well as applicable laws and statute. The
fiscal year 2013 budget request, and associated civilian workforce
reductions, reflects our best judgment today and represents a carefully
coordinated approach based on the Department's strategy and policy that
balances operational needs and fiscal reality. The Department remains
committed to meeting its statutory obligations to annually review
missions, functions, and workforce composition, including reliance on
contracted services, and to ensure the workforce is appropriately
balanced and aligned to our most critical priorities.
Ms. Bordallo. In FY10, the Department added 17,000 new positions as
a result of insourcing contracted services. Can you tell us what that
number was in FY2011? And to what extent will insourcing continue to be
a workforce shaping tool?
Secretary Panetta. In fiscal year 2011, DOD organizations reported
that they established nearly 11,000 civilian positions as a result of
insourcing contracted services. The Department remains committed to
meeting its statutory obligations to annually inventory and review
contracted services and identifying those that are no longer required
or are inappropriately aligned to the private sector. Insourcing
remains a very effective and critical tool for the Department to
rebalance its workforce, realign inherently governmental and other
critical work to Government performance (from contract support), and,
in many instances, to generate resource efficiencies.
Ms. Bordallo. The Department's budget request overview included
discussion of improved buying power and how acquisitions are managed.
To what extent does the Inventory of Contracts for Services impact
these improvements and management of the Total Force?
Secretary Panetta. The Department began its Better Buying Power
initiative in 2010 to improve the way the Department acquires defense
goods and services. The Inventory of Contracts for Services is one data
source used to help the Department improve the stewardship of our
resources allocated to contracted services and helps ensure efficiency
through better management. This includes improving accountability and
visibility into the level of effort associated with contracted
services, maximizing competition, conducting spend analyses, and
rationalizing the Department's supplier base. With regards to Total
Force management, the post submission review of the annual Inventory of
Contracts for Services is used to inform workforce planning through
assessing economies of scale or scope, identify potential areas of risk
and overreliance on contracted services, and identify opportunities for
efficiencies. This includes reviewing the nature or way the contract is
administered as well as the organizational environment within which it
is being performed. Additionally, the Inventory of Contracts for
Services will identify areas to strengthen contract oversight and
assist in the preparation of budget justification materials and
spending analyses.
Ms. Bordallo. The Department requested emergency relief from the
Paperwork Reduction Act in order to move forward, after 4+ years of
non-compliance, with the Inventory of Contracts for Services. However,
OMB has failed to act on that request. What is the impact to the
Department's progress, and the fiscal implications, of not getting the
emergency filing approved?
Secretary Panetta. As of early April, the Department has not
received the emergency waiver to the Paperwork Reduction Act (PRA) as
requested from OMB in December 2011 and is proceeding with the full PRA
filing process that will take an additional 2-3 months. While the
Department continues to press forward and will submit the annual
Inventory of Contracts for Services (ICS) in June as required by
statute, this submission will include contractor full time equivalents
(CFTE) calculated from obligated dollar amounts and an Army factor
derived from data reported by their contractors, as opposed to on
actual direct labor hours as required by statute. Without the emergency
waiver to the PRA as requested, the Department is delayed by at least 1
more year to demonstrably improve the ICS, and at least 2 years from
full compliance with the fiscal year 2011 NDAA changes to section 2330a
of title 10 requiring that CFTE be calculated based on direct labor
hours and other data collected from private sector providers.
Until the PRA waiver is granted, the Department cannot take steps
to modify statements of work to collect the required data. Most DOD
Components had planned to begin modifying statements of work this
fiscal year. As a result of the delay, contracts will likely not begin
being modified until fiscal year 2013, resulting in a delay until
fiscal year 2014 of the first real data collection.
While the fiscal implications are challenging to quantify, they do
exist and are related to Components' ability to improve planning for
increasingly scarce resources. Delays in collecting direct labor hours
prevent the Department from getting an accurate accounting of the level
of effort for contracted services, which would facilitate assessing
those services using a common unit of measure, full-time equivalents.
Without this level of fidelity, making value-based decisions and trade-
offs by distinguishing between direct labor hours supporting the
mission and indirect costs, overhead, and other costs is adversely
impacted. For example, the Army, which has had the necessary PRA waiver
in place for over 5 years, has found that approximately half of all
Army contract dollars in the base budget go to non-labor costs, such as
overhead and profit, rather than direct execution of mission and
workload. Such increased fidelity has enabled the Army to more
appropriately realign limited resources to its more pressing
priorities.
Ms. Bordallo. The Department says it is still looking at where it
is most cost-effective to insource. However, if the Department is
holding to FY10 civilian levels and in fact, if this budget further
reduces the civilian workforce, how can DOD organizations insource if
it is more cost-effective?
Secretary Panetta. The Department remains committed to its
statutory obligations under title 10 to annually review contracted
services and ensure that they are being performed in the most cost-
effective manner possible. While the overall civilian workforce is
reduced in the FY13 budget request, insourcing remains a viable tool to
realign workload from the private sector and deliver services using
Government civilians while providing the best value to taxpayers. While
the Department has directed organizations to maintain civilian
authorizations, with certain exceptions at FY10 levels, DOD
organizations may insource contracted services that meet the necessary
criteria by absorbing work into existing Government positions by
refining duties or requirements; establishing new positions to perform
contracted services by eliminating or shifting equivalent existing
manpower resources (personnel) from lower priority activities; or on a
case-by-case basis, requesting an exception.
Ms. Bordallo. What if the work is found to be inherently
governmental or otherwise should be performed by civilians, instead of
contractors? What flexibility is there to immediately convert that work
to civilian performance without having to ask permission to add
civilians or reduce staffing in other equally important missions?
Secretary Panetta. The Department remains committed to its
statutory obligations under title 10 to annually review contracted
services and ensure appropriate performance of functions that are
inherently governmental, closely associated, or otherwise exempted from
private sector performance (to mitigate risk, ensure continuity of
operations, build internal capability, meet and maintain readiness
requirements, etc). Contracted services that meet the necessary
criteria should be immediately divested, if of low priority, or
insourced to Government performance. Where appropriate, DOD
organizations may immediately insource by absorbing work into existing
Government positions by refining duties or requirements; establishing
new positions to perform contracted services by eliminating or shifting
equivalent existing manpower resources (personnel) from lower priority
activities; or on a case-by-case basis, requesting an exception. In
order to ensure increasingly constrained resources are allocated
appropriately and with consideration for organizational mission
priorities, the Department is currently assessing the process by which
the civilian workforce is administered in order to increase management
flexibilities at the mission level.
Ms. Bordallo. The FY12 NDAA capped contract spending for FYs 12 and
13 at FY10 levels. And the Congress directly linked that cap to the
civilian personnel cap. In FY10, the Department requested just over $60
billion for contract services. In this budget, you requested around $70
billion. But you've reported to the Congress that your spending in FY10
was actually upwards of $100 billion, and by some estimates nearly $200
billion. Since you cannot obligate more than approximately $60 billion
this fiscal year, what is the Department going to stop doing? What work
is going to cease? Or will you increase civilian personnel--which may
be more cost-effective since you're seeking the most cost-effective
mix?
Secretary Panetta. The FY 2012 NDAA cap applies to the base budget
for contract services for all appropriations except Military
Construction (MILCON); Research, Development, Test and Evaluation
(RDT&E); and medical care entitlements provided by private care
providers. The Department's base budget request in FY 2010 that
establishes the cap is $67 billion. Actual execution for FY 2010 for
the accounts included in the cap was $113 billion, but includes
contract services funded in the Overseas Contingency Operations (OCO).
The Department does not distinguish base obligations from OCO
obligations in the accounting systems. The FY 2012 enacted base budget
for contract services is below the cap by $1.7 billion after adjusting
for civilian personnel growth and shifts from the OCO to base budget
(both adjustments are allowed in the FY 2012 NDAA). The FY 2013 base
budget request is below the cap by $0.5 billion.
Ms. Bordallo. The GAO recently reported that DOD contributes nearly
$3.3 billion to defense contractor pension plans, hidden as overhead
charges in contracts. Surely this is a more ripe area for savings than
considering retirement reform for military personnel or asking our
dedicated civilian workforce to continue to bear the brunt of budgetary
reductions?
Secretary Panetta. Pensions are a major cost for Department of
Defense (DOD) contractors and a significant factor in attracting and
retaining the caliber of workers we need them to have to be able to
perform on DOD contracts. The Department is significantly increasing
its audit, contract pricing, cost accounting, and contract oversight
capability by increasing the capacity and capability of the Defense
Contract Audit Agency and the Defense Contract Management Agency. DOD
is challenging all costs throughout the Department to include
contractor costs of our acquisition programs. We have specialized audit
and actuarial teams monitoring and evaluating pension costs for
reasonableness and accuracy.
Generally, DOD contractors are following the lead of commercial
contractors by reducing and controlling pension costs using defined
contribution plans in place of the more expensive and volatile defined
benefit plans. However, contractor pension costs for older defined
benefit plans will increase over the next 5 to 7 years, even if the
plans have been scaled back or are not allowing new entrants. This is
due to the Pension Protection Act, which increased the annual minimum
funding requirement to ensure pension plans are funded sufficiently.
Ms. Bordallo. What assurances can you give the Committee that as
widespread civilian reductions are occurring across the military
departments work is not shifting illegally to contract performance?
Secretary Panetta. Reductions in the civilian workforce are
correlated to workload and mission prioritization. The Department is
committed to ensuring that workload associated with civilian reductions
does not shift to contract but is eliminated or realigned to other
civilians. On December 1, 2011, the Under Secretary of Defense for
Personnel & Readiness issued guidance to the Department reiterating the
statutory prohibition on conversion of work to contracts. This
guidance-directed vigilance in preventing the inappropriate conversion
of work to contract performance, particularly as the Department adapted
to declining budgets and operating in a constrained fiscal environment.
Specifically, managers and Commanders were reminded of their
obligations to preclude such illegal shifting of work as they
implemented the results of organizational assessments, continued to
assess missions and functions in terms of priority, and revisited both
their civilian and military force structures. Through the use of our
ongoing communications with national labor leadership, the Department
has been able to look into allegations of improper workload shifts and,
if justified, take corrective actions.
In addition, the DOD has established an internal, multilevel
governance process for monitoring implementation of all efficiencies,
to include those resulting in civilian workforce reductions. Any issue,
such as illegal shifting of work, can be addressed via this governance
process for adjudication. If circumstances warrant, an exception
request to increase the civilian workforce to meet workload
requirements can be made.
Long-term, as the Department makes improvements to its Inventory of
Contracts for Services, as required by title 10, we will have increased
visibility and accountability into such contracts. Specifically,
improvements currently under way will enable the Department to more
accurately identify contracted level of effort based on direct labor
hours and associated data. This increased fidelity into contracted
services will serve as another critical tool for the Department to
monitor and preclude possible workload realignment.
Ms. Bordallo. There was a lot of discussion last year about the
``exceptions'' to the FY10 civilian levels Secretary Gates mandated.
Please provide a detailed list of all exceptions across the Department
approved to date and the reason for those exceptions, as well as those
exceptions across the Department that have been requested but not
approved, and the justification for such.
Secretary Panetta. The list of exceptions approved by the Deputy
Secretary of Defense and the adjustments approved by the Deputy
Secretary of Defense in the FY 2013 budget request are provided below.

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Ms. Bordallo. The Department identified over $60 billion in
additional savings being generated during next 5 years through measures
such as streamlining of support functions, consolidating I.T.
enterprise services, rephasing military construction projects,
consolidating inventories, and reducing service support contractors. Of
that $60 billion, how much is associated with civilian personnel and
how much is associated with service support contractors?
Secretary Panetta. Many of the initiatives comprising the $60
billion in additional savings encompass reductions to civilian
personnel and/or service support contractor requirements. For example,
savings of $10 billion resulted from reducing the civilian pay raise,
and approximately $1 billion was saved by the Army adjusting the
civilian workforce to reflect the military end strength reduction. The
Department also has a specific initiative to reduce service support
contractors by $1 billion across the next 5 years.
Ms. Bordallo. Based on your answer above, is that ratio appropriate
given the large scale reductions in the civilian workforce that
resulted from last year's budget and considering that contracted
services have grown at a rate of 150% over the past decade while the
civilian workforce increased at a much more moderate rate?
Secretary Panetta. Over the past decade (FY 2003 to FY 2013), our
budget for civilian payroll costs has grown by approximately 60 percent
whereas budgeted contract services have only grown by approximately 40
percent. The Department employs a total workforce management concept
whereby we strive to maintain the proper balance of military, civilian
and contractor workforces. DOD sourcing of functions and work among
military, civilian, and contracted services must be consistent with
workload requirements, funding availability, readiness and management
needs, as well as applicable laws and regulations.
Ms. Bordallo. Do you believe that workforce sourcing decisions
involving non-appropriated fund employees, where work is being
outsourced, should be subject to the same stringent cost analysis
requirements that are applicable under title 10 provisions to
appropriated fund employees?
Secretary Panetta. Across the Department, non-appropriated fund
(NAF) resources that support operations such as exchanges and morale,
welfare, & recreation programs are administered in an economical,
efficient, and business-like manner. To that end, contracts using NAF
must be executed in a manner that best serves the NAF instrumentality
in a fair, equitable, and impartial manner. DOD Components are required
to establish and maintain systems necessary to ensure individual
fiduciary responsibility for properly using NAF resources and
preventing waste, loss, or unauthorized use of such funds. While the
provisions requiring cost analyses for outsourcing of work delineated
in title 10 do not specifically apply to NAF employees, the Department
is committed to making sure, consistent with its policies regarding NAF
instrumentalities, that any sourcing decisions related to NAF
activities are fiscally advantageous to the Department and the
commands/installations they support. Our efficient and business-like
NAF system enables the Department to continue to deliver the services
and fiscal outcomes necessary to sustain our NAF programs which
directly support our entire military community.
Ms. Bordallo. The Air Force recently briefed members of the House
about large-scale reductions in the civilian workforce. How is the
Department, specifically your staff, ensuring that those reductions are
well-reasoned and based on workload and necessity, factoring in risk
and cost, as opposed to simply implementing a mandated civilian
personnel level?
Secretary Panetta. The Air Force conducted a focused strategic
review of the entire Air Force civilian workforce to evaluate the high-
priority mission areas and determine where positions needed
realignment. The Air Force examined the full spectrum of operations--
from base-level to headquarters--to develop a wide range of efficiency
initiatives to streamline and right-size the organization and
management staffs, ultimately to forge a leaner, more effective Air
Force. The Air Force followed Secretary of Defense guidance from
Resource Management Directive 703, focusing reductions in overhead and
support areas while minimizing the impact to functions and to aircraft
operations and maintenance, acquisition excellence, and the nuclear
enterprise. As part of that review, the Air Force had to make tough
decisions on which areas to resource in order to provide the Nation
with the capabilities that it requires.
Specific missions that are identified by the Air Force for growth
include intelligence, surveillance, and reconnaissance (ISR); the
nuclear enterprise; and acquisition excellence. The effect on the
civilian workforce at individual installations depends to a large
degree on which missions are located at a particular location. Other
factors in the decisionmaking process included the number of encumbered
positions versus vacancies, the funding source for the civilian
positions (operations and maintenance, depot maintenance activity
group, and acquisition demonstration), and the impact of lost
intellectual capital at the installation level.
Ms. Bordallo. What processes are in place to ensure the workload
associated with reductions being made in the civilian workforce is in
fact ceasing, as opposed to being absorbed by other labor sources such
as contractors or military personnel?
Secretary Panetta. Reductions in the civilian workforce are
correlated to workload and mission prioritization. The Department is
committed to ensuring that workload associated with civilian reductions
does not shift to other sectors of the Total Force, such as military or
contract performance.
To that end, on December 1, 2011, the Under Secretary of Defense
for Personnel & Readiness issued guidance to the Department reiterating
the statutory prohibition on conversion of work to contracts. This
guidance directed vigilance in preventing the inappropriate conversion
of work to contract performance, particularly as the Department adapted
to declining budgets and operating in a constrained fiscal environment.
Specifically, managers and Commanders were reminded of their
obligations to preclude such illegal shifting of work as they
implemented the results of organizational assessments, continued to
assess missions and functions in terms of priority, and revisited both
their civilian and military force structures.
Additionally, on March, 2, 2012, the Under Secretary of Defense for
Personnel & Readiness issued guidance to the Department regarding the
use of ``borrowed'' or ``repurposed'' military manpower. This guidance
is intended to ensure that amidst declining operational tempos for our
military personnel and, as civilian reductions associated with
efficiencies are implemented, military personnel are not
inappropriately utilized, particularly in a manner that may degrade
unit readiness.
Through the use of our ongoing communications with national labor
leadership, the Department has been able to look into allegations of
improper workload shifts resulting from civilian workforce reductions
and, if justified, take corrective actions. In addition, the DOD has
established an internal, multilevel governance process for monitoring
implementation of all efficiencies, to include those resulting in
civilian workforce reductions. Any issue, such as inappropriate
shifting of work, can be addressed via this governance process for
adjudication. If circumstances warrant, an exception request to
increase the civilian workforce to meet workload requirements can be
made.
Ms. Bordallo. Recently this committee heard of an instance in
which, because of budget reductions, a janitorial services contract had
been eliminated. As a result, professional civilian personnel have been
advised by management that they are now responsible for trash removal
and bathroom cleaning--services previously provided by contract. Surely
the quest for efficiency is not intended to divert people from their
core missions or result in them working in filthy conditions. Yet, this
is how the reductions which DOD claims are so well-reasoned are being
executed in the field. Was any workforce analysis conducted to inform
these reductions or were they the result of a ``salami slice'' approach
across all elements of the Department?
Secretary Panetta. The reductions in the Department's workforce,
both civilian and contract support, are correlated to workload and
based on mission/function prioritization, reflecting the changes in the
Department's strategy and force structure. The Department has
established an internal, multilevel governance process for monitoring
implementation of all efficiencies and associated budget reductions.
Occurrences such as the above, if accurately described, are the
exception, not the norm, and the Department is committed to using its
established governance processes to prevent such adverse impacts.

Ms. Bordallo. What recourse, in a particular year of execution,
does a manager or Commander have if he or she wishes to insource a
contract in order to achieve fiscal savings?
Secretary Hale. The Department remains committed to its statutory
obligations under title 10 to annually review contracted services and
ensure that they are being performed in the most cost-effective manner
possible. Where appropriate, DOD organizations may immediately insource
by absorbing work into existing Government positions by refining duties
or requirements; establishing new positions to perform contracted
services by eliminating or shifting equivalent existing manpower
resources (personnel) from lower priority activities; or on a case-by-
case basis, requesting a Deputy Secretary of Defense (DSD) exception to
their existing civilian levels. Several exceptions have been granted by
the DSD for recognized workload that is appropriately performed by
Government civilians. To ensure increasingly constrained resources are
allocated appropriately and with consideration for organizational
mission priorities, the Department is currently assessing the process
by which the civilian workforce is administered in the year of
execution.
Ms. Bordallo. To what extent was the decision to hold across-the-
board civilian levels, without commensurate across-the-board
constraints on contracts, informed by cost and risk assessments?
Secretary Hale. The FY 2013 budget request extended two initiatives
that were initiated in the FY 2012 budget request to balance the
workforce with mission priorities. The initiative to hold civilian FTE
levels at the FY 2010 level and the direction to reduce service support
contractors that provide staff support by 10 percent. Both initiatives
are associated with ongoing organization assessments and mission
prioritization in an effort to streamline business process and reduce
administrative workload. Overall, funding for contract support services
is reduced in FY 2013 by almost 3 percent. The FY 2013 base budget
reflects a total of $131.9 billion for contract support services for
all appropriations (excluding Military Construction), which is $3.9
billion (3 percent) below the FY 2012 enacted budget of $135.8 billion.
The amount of funding for civilian direct hires (both U.S. and Foreign
Nationals) declines $70 million from $76.560 billion in FY 2012 to
$76.490 billion in FY 2013. The reduction in civilian funding is less
than 0.1 percent. The Department will continue to monitor the
implementation of both initiatives to ensure actions are taken to
minimize program risk.
Ms. Bordallo. We've heard a lot about decreases and reductions in
contracted services, yet when we look at the figures and talk to the
field, what is evident is that reductions in contracts are very
narrowly defined and limited to only a miniscule subset of what the
Department actually purchases in terms of services. Why has the
Department chosen to levy across-the-board reductions to only military
E/S and civilian personnel without considering wholesale reductions to
more expensive contractors?
Secretary Hale. The FY 2013 budget reflects a balanced workforce
that decreases spending on military end strength, civilian personnel,
and spending for contract services. It reflects our best judgment today
and represents a carefully coordinated approach based on the
Department's strategy and policy that balances operational needs and
fiscal reality. Proposed reductions in military end strength are linked
to declines in our current overseas commitments; revised strategy,
posture and operational planning; and changes to our force structure.
Similarly, the proposed reductions in civilian personnel and contracted
services are predominantly associated with ongoing organizational
assessments and mission prioritization in an effort to reduce
administrative workload. The funding for contract support services
declines by a higher rate (3 percent) from FY 2012 to FY 2013 than the
funding for civilians (less than 0.1%). Contracted services are a key
enabler of the warfighter and a source of overall infrastructure
operations, and in many instances provide cost-effective support. The
Department remains committed to meeting its statutory obligations to
annually review services provided by contract, ensuring that they are
aligned to our most pressing priorities and continue to be the most
cost-effective means of delivering such support.
______

QUESTION SUBMITTED BY MR. LOEBSACK

Mr. Loebsack. I am concerned about changes to the community
pharmacy program under TRICARE proposed in the FY13 budget request.
When TRICARE beneficiaries have a child who is sick and needs a
prescription immediately, they should not have to pay even more than
they already do to go to their local pharmacy, especially because using
mail order in that case isn't an option. Interaction with a pharmacist
has many benefits, including cost savings given that poor medication
adherence results in $290 billion in waste annually. I think the
ongoing use of local pharmacies by TRICARE beneficiaries bears out the
importance of direct access to a pharmacist. How is DOD preserving this
relationship between the patient and their local pharmacist and
ensuring that TRICARE beneficiaries are able to receive prescriptions
they need immediately without being forced to pay more when mail order
isn't an option?
Secretary Panetta. Under the FY13 budget proposal TRICARE
beneficiaries will continue to have the option of filling prescriptions
at a military treatment facility pharmacy, a retail network pharmacy,
through TRICARE Pharmacy Home Delivery or a non-network retail
pharmacy. We fully recognize the role of community pharmacies in many
aspects of healthcare, however the mail order option is less expensive
than retail for both TRICARE beneficiaries and the Government, and
provides 24/7 access to a registered pharmacist. Compared to other
national and Federal health plans, the DOD pharmacy benefit remains the
most generous and robust in coverage. Even with the recent copay
increase and proposed FY13 copay changes, the DOD beneficiaries have
minimal out-of-pocket costs for all medications, including acute
medications obtained through retail pharmacies.
Over the last few years, Department of Defense (DOD) has made
significant efforts to control rising pharmacy benefit costs. The
strategies and efforts pursued have been drawn from private sector best
business practices, national trends, Congressional mandates,
professional consultants, and independent studies. Each effort has had
an effect in controlling the rise in pharmacy costs. Based on recent
analysis of prescriptions maintenance medications filled for DOD, the
data show mail order drugs are more cost-effective than purchasing them
from a drugstore, the brand name standardized market basket cost per
90-day supply was 19% lower at either mail order or military
pharmacies, compared to the retail pharmacy network.
Under the budget proposal, the vast majority of drugs will continue
to be available from retail pharmacies. Only non-formulary drugs, which
are relatively few, will no longer be generally available at retail.
However, there is always an alternative drug in the same drug class on
the uniform formulary and available at retail.
A broad range of Medication Management Therapy (MTM) services are
provided through DOD. MTM is a component of the Patient Center Medical
Home (PCMH) model which is being implemented throughout the Military
Services Treatment Facilities. The PCMH model enables clinical
pharmacists to contribute to the healthcare team through services
focused on medication management in improving patient clinical outcomes
while lowering total healthcare costs. In addition, the Managed Care
Support Contractors, through their Case Managers and disease management
programs, are also engaged in improving beneficiary outcomes for
conditions that account for high cost drug expenditures.
______

QUESTIONS SUBMITTED BY MR. CONAWAY

Mr. Conaway. How will your ability to become audit-ready be
affected by the current strategy or manpower changes and do you
anticipate the need for additional resources once the FIAR plan has
been revised to meet your expedited goals?
Secretary Panetta. An appropriate level of personnel, training,
tools, and support is being targeted to achieve auditable financial
statements, and the Department plans to spend $300 million to $400
million a year (excluding resources to implement Enterprise Resource
Planning Systems) over the next 6 years on improving business
operations and achieving auditable financial statements. The Department
has reported that the resources and plans were in place to meet the
previous 2017 goal.
The Department of Defense is committed to achieving audit readiness
for the Statement of Budgetary Resources (SBR) in 2014. Today we face
very tight budgetary limits and the Department has carefully
scrutinized requests from Components for additional funding to meet the
accelerated SBR goal. Where appropriate, the Department has included
those requirements in out Fiscal Year 2013 budget requests.
Mr. Conaway. The Department should include objective and measurable
criteria regarding FIAR-related goals in its senior personnel
performance plans and evaluations. Performance evaluated on the basis
of such criteria should be appropriately rewarded or held accountable.
Evaluated performances should be documented and tracked to measure
progress over time. How will senior leadership across the DOD be held
accountable for audit preparedness in their specific departments?
Secretary Panetta. In October 2011, I directed that achieving
auditable financial statements will be an ``all hands'' effort across
the Department. Leadership commitment from the highest level is setting
the tone and priority for audit readiness. Auditability is a goal that
every commander, every manager, and every functional specialist must
understand and embrace to improve efficiency and accountability within
the Department.
The Service Secretary and Chief of Staff for each Military Service
have committed to achieving specific near-term goals in support of
their plans for achieving auditable financial statements. I have
reviewed these commitments and plans and am holding civilian and
military senior leaders from across the Department accountable for
progress against those plans. Senior executives, both financial and
functional, now have audit goals in their individual performance plans
and we are working to include them in General and Flag Officer
performance plans as well. Their performance against their plans will
be assessed each year during their annual appraisal. This helps ensure
those under their leadership are getting the message that better
control over financial assets has a big effect on mission success, and
everyone has a part to play.
Mr. Conaway. Last year, I was very impressed with your leadership
in moving the audit-ready SBR deadline up to 2014. In that same vein,
do you believe we can find more efficiencies/better business practices
to alleviate the burden of budget-reduction on our troops? How do you
plan to continue this strategy?
Secretary Panetta. Our streamlined approach to achieve improved
financial information and audit readiness focuses efforts on first
improving information that DOD uses to manage: budgetary information
and count and location of mission-critical assets. Improving budgetary
information provides more visibility of budgetary transactions,
resulting in more effective use of resources; provides for operational
efficiencies through more readily available and accurate cost and
financial information; and improves fiscal stewardship by ensuring
funds appropriated, expended, and recorded are reported accurately,
reliably, and timely. Improving mission-critical asset information
provides more reliable and accurate logistics supply chain and
inventory systems; improves our ability to timely acquire, maintain,
and retire assets; allows for more effective utilization of assets;
provides better control over assets preventing their misuse, theft, or
loss; and reduces unnecessary reordering. The acceleration of both of
these goals should result in efficiencies that allow resources to be
reallocated to mission requirements. The strategy complements our
ongoing emphasis on increased resource stewardship and cost
consciousness.
Mr. Conaway. During several of your press statements and speaking
engagements, you have said that we cannot break faith with those who
serve but the President is asking for an independent commission to
study military retirement. What type of research has the DOD conducted
regarding the effects of changing the retirement system would have on
recruiting and retention of quality service members?
Secretary Panetta. As part of its vigorous, internal review, the
Department has contracted with RAND-NDRI, a recognized expert, to use
its Active and Reserve dynamic retention and cost model, to model and
analyze the impact on recruiting and retention of various military
retirement system alternatives. While many in the private sector, and
elsewhere, have suggested alternatives to the current military
retirement system, few of these alternatives have undergone rigorous
modeling or analysis. The Department is committed to ensure any
proposal it develops is sound and does not harm the Department's
ability to recruit and retain the future force. Secretary Panetta has
also made clear that current members will be grandfathered; for those
who serve today, there will be no changes in retirement benefits.
In addition to this ongoing review, the Administration and the
Department recommended Congress establish an independent commission to
review military retirement, and if enacted, the Department will provide
the Commission significant input.

Mr. Conaway. The Department should include objective and measurable
criteria regarding FIAR-related goals in its senior personnel
performance plans and evaluations. Performance evaluated on the basis
of such criteria should be appropriately rewarded or held accountable.
Evaluated performances should be documented and tracked to measure
progress over time. How will senior leadership across the DOD be held
accountable for audit preparedness in their specific departments?
General Dempsey. In October 2011, Secretary Panetta directed that
achieving auditable financial statements will be an ``all hands''
effort across the Department. The highest levels of leadership are
setting the tone and priority for audit readiness. Auditability is a
goal that every commander, every manager, and every functional
specialist must understand and embrace to improve efficiency and
accountability within the Department.
The Service Secretaries and Chiefs have committed to achieving
specific near term goals in support of their plans for achieving
auditable financial statements. Both Secretary Panetta and Deputy
Secretary Carter have reviewed these commitments and plans and are
holding senior leaders across the Department, both civilian and
military, accountable for progress against those plans. Financial and
functional senior executives now have audit goals in their individual
performance plans and annual evaluations and we are working to include
them in General and Flag Officer performance plans.
______

QUESTIONS SUBMITTED BY MR. WITTMAN

Mr. Wittman. As we move to enable the ANSF and ALP to take the lead
on combat operations in Afghanistan, how are we calculating the risk
that the plan could fail and we will once again have to retake the lead
in combat operations planning and execution? Last March we were briefed
by General Petraeus that progress in Afghanistan was ``fragile and
reversible.''
What has changed in the last 11 months that makes us so sure that
the ANSF and the Afghan government are capable of countering the
Taliban and the terrorist networks along the border region with
Pakistan? Last year the Chairman of the JCS testified before us that,
``We cannot allow the Taliban to reorganize and reconstitute as they
did in 2004 and 2005, regain their oppressive influence over the Afghan
people, and once again provide safe haven to Al Qaeda.'' What is the
chance that the Taliban regains their foothold and provides a safe
haven to Al Qaeda? This safe haven and enabling provided by the Taliban
is the environment that allowed 9/11 to be planned and executed. Would
you classify our progress in Afghanistan as stable and irreversible?
Secretary Panetta. Over the past 11 months, we have significantly
reduced the Taliban's capabilities, while increasing the size and
ability of the Afghan National Security Forces (ANSF) as they begin the
transition process. ANSF and Coalition operations focused on the south
and southwest of Afghanistan have decreased the Taliban's ability to
support the insurgency. The process of transitioning the security lead
to the ANSF is progressing, with more than half of the population in
Afghanistan living in areas that have begun the transition process.
Over the last 12 months, the ANSF have not only increased their ranks
by more than 55,000 personnel, but they have also greatly increased
their capabilities. Although risk has decreased, risk still exists,
particularly due to Pakistan sanctuaries and the slow pace of improved
governance and development in Afghanistan. DOD continues to review
these risks through our quarterly assessment processes. We expect the
ANSF, in partnership with their U.S. and Coalition partner forces, to
continue to make gains over the next year that will ensure the
transition of lead for security to the ANSF by the end of 2014 in
accordance with the NATO Lisbon Summit goal.
Mr. Wittman. Secretary Panetta, in this budget plan we are
purchasing 2 Virginia Class SSNs and we are moving one SSN out of the
FYDP. We are delaying the start of SSBN(X) by 2 years. SSBN(X) will not
realistically be operational and deployable until the 2020s. Do you
know how many submarines the Chinese are putting to sea this year and
the total they have planned between now and FY17?
Secretary Panetta. We expect the People's Liberation Army Navy will
have 63 submarines by the end of 2012, and 75 submarines in their order
of battle by 2017. Additional details may be available by separate
cover.
Mr. Wittman. Secretary Panetta, we are shifting our focus and
strategy to increased operations and increased presence in the Asia-
Pacific and the Middle East. This increase in presence is already
resulting in an increase in deployment lengths and an increase in the
frequency of deployments for our Navy. Our surface combatants,
carriers, and submarines have routinely deployed to support cyclic
combat operations and contingency operations around the globe for 10
straight years.
Basic maintenance has been pushed to the right over the past 10
years and our fleet is in desperate need of routine shipyard
availabilities and maintenance work. Couple this problem with the fact
that among other early decommissioning plans, we are decommissioning 7
Aegis cruisers that are between 20-25 years old.
The fact is this new strategy is juxtaposed against a fleet that is
decreasing in size, while the fleet's tasking is being increased. How
do we expect to increase our presence and project power effectively in
the Pacific and Indian Oceans with a fleet that is currently at 284
ships with no realistic plan of growing to 313 ships? Is a 313-ship
fleet still the goal? If we accept the risk of a smaller fleet with
increased responsibilities, how do we ensure that fleet is built to
last and capable of an increased workload without compromising
operations and maintenance standards?
Secretary Panetta. The Navy has long played a pivotal role in
providing presence and reassurance to our allies and partners in the
Asia-Pacific (AP) region. It has also provided deterrence against those
who seek to threaten U.S. and allied security interests. To build upon
the approximately 50 ships that currently operate daily in the AP
region, the Department of the Navy will rebalance its fleet resources
towards the Pacific. The Navy will look to homeport a greater number of
ships on the Pacific coast in coming years as well as forward-deploy
Littoral Combat Ships in Singapore on a rotational basis. Marines and
their associated lift will rotate through Australia on a regular basis.
The presence provided by the Navy's forward deployed ships will be
augmented by the routine deployment of U.S.-based Pacific ships to the
AP region. The Navy's presence in the AP region will complement and be
complemented by the array of exercises, operations and forward presence
provided by the other Services.
The Department of Defense seeks to build the fleet to 300 ships but
a number of factors will affect that calculus, including cost,
readiness, and risk. For the present, the current ship inventory is
judged to be sufficient to provide the requisite capability and
capacity to achieve the direction of the Department's new strategic
guidance. The Department is also committed to ensuring the Nation has a
ready fleet that is prepared to fight and win at sea. To aggressively
grow a fleet that is not properly resourced to maintain the highest
state of training and readiness has the strong potential to create a
hollow force. The Department is committed to ensuring that does not
occur.
To achieve the expected end of service life for the fleet's
vessels, the Department of the Navy has undertaken specific
initiatives. Large surface combatants, the Aegis cruisers and
destroyers, are having their cyclic response plan adjusted from a 27-
month cycle to a 32-month cycle. This will align the maintenance cycle
of the large surface combatants with the aircraft carrier with which
they are associated and will protect planned shipyard maintenance. The
Department of the Navy will also continue its fleet modernization
program to upgrade combat systems, communications, and engineering
capabilities. These investments will provide the fleet with more ready
and capable warships. The Department is also closely working with the
Department of the Navy to fund ship and aircraft maintenance to ensure
that all necessary maintenance is funded within the baseline budget
request.
Mr. Wittman. Mr. Secretary, what are the U.S. strategic objectives
in Afghanistan? What level of capability will the Afghan National
Security Forces need to possess in order to achieve these objective as
they take the lead in security operations in 2014? Specifically, how
many Afghan National Army kandaks and equivalent units of the Afghan
National Police will need to be independent or effective with advisors
in order for U.S. forces to move to a primarily advisory role?
Secretary Panetta. Our core goals are to disrupt, dismantle, and
defeat Al Qaeda, and prevent Afghanistan from ever again becoming a
safe haven that could threaten the United States or our Allies and
partners, and to deny the Taliban the ability to overthrow the Afghan
Government. The Afghan National Security Forces (ANSF) are critical to
achieving and sustaining our core goals in Afghanistan. The ANSF are on
track to take the security lead in Afghanistan by the end of2014. The
degree to which kandaks can operate independently is one measure of
effectiveness of the ANSF; however, our ability to adjust roles and
achieve our goals is also based on other factors, such as the enemy
threat situation, the degree of governance and development, and
progress against corruption. As such, we have not designated a specific
number of independently operating kandaks as a metric for determining
when our forces can transition from combat to advisory operations in
Afghanistan.

QUESTIONS SUBMITTED BY MR. HEINRICH

Mr. Heinrich. Secretary Panetta, I am deeply concerned, and I know
a number of my colleagues are as well, about the budget cuts to small
satellite programs such as Operationally Responsive Space (ORS) and the
Space Development and Test Directorate in fiscal year 2013.
The FY13 budget seeks to repeal the establishment of the ORS
program office and eliminate already marginal investments in small
satellite programs. Given the increasingly competitive environment in
space and the high cost of procuring traditional, multibillion dollar
satellites, I fear these cuts are penny-wise and pound-foolish.
Specifically, the FY13 Defense Budget Overview proposes a ``restructure
of the Operationally Responsive Space (ORS) program in order to provide
more responsive and timely space capabilities to the warfighter,'' yet
the funding request in the ORS budget line was $0.
How is the elimination of the ORS office that is responsible for
spearheading this effort consistent with providing ``more responsive
and timely space capabilities to the warfighter''?
How does DOD intend to continue its support of the concept and
mission without any resources dedicated to this effort?
Secretary Panetta. The fiscal year 2013 budget request terminates
the Operationally Responsive Space (ORS) Program Office, but not our
commitment to achieving the goals of ORS. Responsive and resilient
space capabilities are still critical to protecting our ability to
operate effectively in space. As the National Security Space Strategy
notes, ensuring U.S. capabilities are developed and fielded in a
timely, reliable, and responsive manner is critical for national
decisionmakers to be able to act on time-sensitive and accurate
information and for military forces to be able to plan and execute
effective operations. To that end, we will incorporate the ORS efforts,
principles, and activities into the Air Force Space and Missile Systems
Center (SMC) Program Offices and fund integration of ORS concepts into
the SMC through existing programs. This will ensure resilient,
survivable, flexible, and responsive capabilities are considered in all
future space programs, not merely in one discrete program office.

Mr. Heinrich. As you know, the ORS-1 imaging satellite was launched
in June 2011 in response to an urgent requirement from the Commander of
USSTRATCOM in support of CENTCOM.
It is my understanding that ORS-1 has met and exceeded CENTCOM's
expectations.
Can you speak a little more on what the warfighter's response has
been to this reconnaissance asset?
If the ORS mission has been realigned into other programs, how much
funding is being allocated for this mission? How does DOD plan to use
commercial capabilities, including hosted payloads in FY13?
General Dempsey. Yes, CENTCOM has been satisfied with the
performance of ORS-1 to date. The capabilities of ORS-1 and associated
applications continue to grow. The operational program is fully funded
through the design life of the satellite.
The ultimate goal for ORS is to incorporate the ORS concepts into
the broader space mission. As part of the transition, the Air Force
Space Command's Space and Missile Systems Center (SMC) will be the
direct recipient of ORS residual activities. While the Air Force is
still working the specific details, the intent is to explore
alternatives including partnerships with other nations, commercial
firms, and international organizations; as well as alternative U.S.
Government approaches such as cross-domain solutions, hosted payloads,
responsive options, and other innovative solutions. To support these
efforts, $10.0 million has been transferred from ORS to the following
programs: Advanced EHF Milsatcom, Global Positioning System III--
Operational Control Segment, Space Based IR System--High, Space Control
Technology, and Technology Transition.
______

QUESTIONS SUBMITTED BY MR. OWENS

Mr. Owens. Secretary Panetta, you propose with this budget to
reduce the number of Army Brigade Combat Teams (BCTs) by eight, with
two coming from Europe. How far along is the Department in determining
which U.S.-based BCTs will be drawn down, and when might your analysis
of these decisions be made available to Members of Congress, Commanders
at U.S.-based installations and the general public? Will Members or
home installations have the opportunity to weigh in before these
decisions go into effect?
Secretary Panetta. The Army is considering a number of potential
options, but no final decisions have been made as to which U.S.-based
BCTs will be drawn down. An announcement on specific force structure
actions is expected sometime before, or in conjunction with, submission
of the FY14 President's Budget in early February 2013. The Army will
develop a plan that will provide detailed information regarding the
draw down and address notification of affected congressional districts
and Army installations prior to the decision going into effect.
Mr. Owens. Secretary Panetta, it should come as no surprise that
your request for additional BRAC authorizations has been met with some
resistance from Members of Congress, including myself. I do appreciate
General Odierno's recent statements that closures of major
installations are not in the works, and I believe many of us are
willing to work with the Department if there is unused or otherwise
excess real-estate on your books. Giving the Department carte blanche
to begin a process for closing installations, however, is not something
I for one am open to considering. I have concerns not only for major
installations here in the U.S., but also for the costs generally
associated with a BRAC request. Can you give us a range of the
potential costs for a BRAC round, and are there any details available
on where the money to pay for such an effort would come from?
Secretary Panetta. The costs of a potential BRAC round will not be
understood until after the formal review process is complete. The
Department must develop its recommendations, have them reviewed by the
independent BRAC Commission, forwarded by the President to Congress,
and if Congress does not enact a joint resolution disapproving the
recommendations, the Department can develop budget estimates of the
costs.
The Department is committed and legally obligated to follow the
normal internal budget deliberation process to determine the source of
funds for implementation costs. As BRAC is a key priority, the
Department will apply the resources necessary to support both a robust
and thorough BRAC analysis and an efficient and effective
implementation process. BRAC has an upfront cost, but it begins
generating savings almost immediately, and those savings will partially
offset its initial costs. Moreover, BRAC will generate recurring
savings far in excess of the upfront investment.
Mr. Owens. Secretary Panetta, affordability is the underlying
premise of the F-35 program--yet this budget proposes for the 4th year
in a row a flat production rate of 30 aircraft per year; in your
opinion, what can be done in the near term to help drive down costs and
ensure an efficient ramp rate to make certain the F-35 program will be
affordable in the long term?
Secretary Panetta. The Department is reducing costs in the near
term by keeping production low to mitigate the cost risks from
concurrent production and testing. Concurrency is a transitory issue,
and those risks will progressively decline as the program nears the
completion of development and testing. Additionally, the Department is
managing production costs through the transition from cost type to
fixed-price-type contracts, which began with the Low-Rate Initial
Production (LRIP) Lot 4 contract. In LRIP Lot 5, the Government's cost
risk is being mitigated by transferring some responsibility for
concurrency cost to the prime contractor. The LRIP Lot 6 and 7
contracts will implement an event-based contracting strategy that buys
aircraft quantities based upon development and test progress. This
strategy provides a means to control the production rate, which will be
informed by demonstrated development performance against the 2012 plan
and concurrency cost risk reduction. These steps will control near-term
costs while ensuring that aircraft procured will last their required
service life, come with the required mission capability, and have a
reduced need for post-production modifications.
Production efficiencies are not entirely postponed to the future
even when production quantity remains level under this staged
production approach. Beyond cost reduction from improved learning in
touch labor that this approach will generate, quality improvements are
expected to reduce current scrap, rework, and repair costs. Process and
performance improvements across the supplier base in material and
overhead accounts are expected to reduce costs as well. Improved timely
incorporation of test-discovered changes in the production
configuration will deliver jets that require fewer post delivery
modifications. These coupled aspects should result in real
affordability gains each year as production contracts are negotiated on
a basis of expected improvements accordingly.
Mr. Owens. Secretary Panetta, can you speak to the importance of
international participation to controlling costs on the F-35 program?
Secretary Panetta. International participation is very important in
controlling costs because the production of additional aircraft reduces
aircraft unit costs for all the participating nations. The F-35 program
continues to be the Department of Defense's largest cooperative
program, with eight Partner countries participating under Memorandums
of Understanding for System Development and Demonstration and for
Production, Sustainment and Follow-on Development. The eight Partner
countries are Australia, Canada, Denmark, Italy, The Netherlands,
Norway, Turkey, and the United Kingdom. All the Partners recently met,
and each expressed its continued commitment and support for the
program. Currently, Partner and U.S. buys are projected to total 697
and 2,443 aircraft, respectively.
In addition to the cooperative partners, there is strong Foreign
Military Sales interest. In 2010, Israel signed a letter of agreement
to purchase 19 F-35A variants for $2.75 billion, with deliveries
scheduled to begin in 2016. Israel plans to purchase an additional 56
F-35As in the future. In December 2011, Japan selected F-35 using a
competitive process. On February 1, 2012, Japan signed a $6-million
agreement to conduct F-35 studies. Japan is expected to sign an
agreement to purchase the first 4 of a planned acquisition of 42
Conventional Take-Off and Landing F-35A aircraft by June 2012.
Deliveries will begin in 2016.

Mr. Owens. General Dempsey, the F-35 program has been restructured
a number of times--three times in the past three years. I just want to
confirm for the record that the requirement to develop and field an
affordable, 5th-generation multirole strike fighter remains. Is that
correct?
General Dempsey. Yes, the Department is committed to the JSF
program of record that includes all three variants. We have slowed
procurement in order to complete more testing and minimize concurrency
issues before buying significant quantities.
______

QUESTIONS SUBMITTED BY MR. RUPPERSBERGER

Mr. Ruppersberger. As semiconductor manufacturing continues to move
offshore, particularly to China and Taiwan, it can be expected that
there will be a rise in counterfeit chips. This is especially
concerning because they are used in critical information systems and
weapons systems. How does the Department plan to ensure that the U.S.
Government has a reliable source for leading-edge technology and
manufacturing for its military systems? Is there a long-term plan to
deal with this issue?
Secretary Panetta. There is a multitiered effort within the
Department of Defense (DOD) to address Counterfeiting. It starts with
an acquisition program assessing program risk and the consequence to
the system if the system, a subsystem, assembly, or an individual item
is counterfeited or incorporated by a DOD Prime or sub-tier supplier
into a higher level system. Those identified as being at-risk then
require assignment of a level of traceability implemented through
Quality Assurance procedures at the Prime, sub, and any DOD-direct
suppliers for each at-risk item. Depending on the level of risk,
suppliers may be required to document the authenticity of the item on
the low end, perhaps for the use of qualified suppliers, or at the high
end, procure only from a trusted source. The goal is to leverage the
management of critical application items, including critical safety
items and mission-critical components. This management process is
already well defined and applies strong controls for the identified
parts. The risks typically considered fall into the areas of Technical,
Program, and Cost. As part of risk assessment and mitigation, DOD
Program Managers are required to document the risk of counterfeits and
their countermeasures in either their Program Protection Plan or their
Systems Engineering Plan. The Department advocated this approach to the
Office of Management and Budget's Intellectual Property Enforcement
Coordinator's (IPEC) Federal Anti-Counterfeiting Working Group, as the
chair of its Risk and Traceability Teams. With IPEC, DOD will lead the
development of a Federal Acquisition Guide on Identification and
Mitigation of Counterfeit Risk.

Specific DOD steps are:

Anti-Counterfeit policy (DOD Instruction) is in
development
In the interim:

More than 2,000 personnel have been trained in
counterfeit detection and mitigation.
DOD representatives participate in industry groups
that have written anti-counterfeit standards to be approved by
the association membership.
Code has been developed within the Department's
primary system for tracking non-conforming material, the
Product Quality Deficiency Reporting system that enables
Components to tag suspected counterfeit items, for further
investigation.

These initial steps are part of a comprehensive anti-counterfeiting
program that will extend from system development to counterfeit
material disposal over the next 3 years.
Mr. Ruppersberger. The Defense Science Board (DSB) Task Force on
High Performance Microchip Supply Report dated February 2005 included a
recommendation (#5) that stated ``Developing cost-effective technology
for the design and fabrication of low-production-volume, leading-edge
technology ASICs will require the combined efforts of DOD, the
semiconductor industry, and semiconductor fabrication equipment
suppliers'' and ``DDR&E should now take another look at ASIC production
and formulate a program to address barriers to low- to medium-volume
custom IC manufacturing.'' Based on the DSB Report recommendation, has
the DOD developed any plans for an alternative, more flexible approach
to manufacturing trusted, low-volume, leading-edge microelectronics?
Secretary Panetta. Yes. The Department recognizes that leading-edge
Application-Specific Integrated Circuit (ASIC) manufacturing technology
resides in the global commercial sector and that the number of
companies with the right capabilities is decreasing. The DSB Report
supported the Department's need for low-volume access to leading-edge
ICs. Since 2004, the Department partnered with the National Security
Agency to gain economies of scale by aggregating ASIC demands. A
contract was competitively awarded to a commercial firm to serve as a
leading-edge, trusted ASIC foundry for a 10-year period to ensure
access to leading-edge technology over a long term. This program has
resulted in thousands of trusted ICs delivered to defense and national
security programs. A trusted accreditation process was established,
through which more than 50 industrial firms are accredited as trusted
suppliers of IC technologies. The combination of the Trusted Foundry
contract and the trusted supplier network provides DOD and its
contractors with a rich set of technologies and options.
The Department is now in the process of formulating plans for the
next 10 years. Numerous options are under study, including a short-term
extension of the current arrangement and a recompetition for long-term
sources of trusted IC manufacturing. Our plans will depend on the
competitive marketplace to decrease costs and increase the array of
technology options available to DOD. We are working with industry to
outline a plan that will provide the Department with the flexible
access to the widest array of trusted ASIC technologies available. We
anticipate this plan will be complete late FY 2012 for implementation
in FY 2013 and will be incorporated into the Department's Program
Protection Plan.
Mr. Ruppersberger. We understand that DOD and Air Force seek to on-
ramp New Entrant competitors for national security space launch. As you
know, I strongly support competition in space launch which will reduce
costs to the taxpayer, according to an extensive Government
Accountability Office review. How will DOD and the Air Force off-ramp
from a block buy contract with ULA to enable New Entrants to compete?
Secretary Panetta. Since the Government Accounting Office report
was released, several steps have been taken to certify New Entrants.
First, the New Entrant Certification Strategy was signed by the Air
Force, the National Reconnaissance Office, and National Aeronautics and
Space Administration (NASA), and released in October 2011. The document
defines the coordinated certification strategy for commercial New
Entrant launch vehicles. The certification strategy is anchored on
NASA's existing model. Second, the United States Air Force Launch
Services New Entrant Certification Guide was signed and released in
October 2011. The Guide provides a risk-based approach the Air Force
will use to certify the capability of potential New Entrant launch
companies for Evolved Expendable Launch Vehicle (EELV) missions. The
Guide lists the criteria any New Entrant must meet in order to launch a
high-value operational satellite.
To facilitate the certification of potential new entrants, the Air
Force has identified two missions that providers may bid on--the Space
Test Program (STP)--2 and the Deep Space Climate Observatory (DSCOVR)
missions. These non-National Security Space (NSS), EELV-class missions
have a higher risk tolerance and will provide an opportunity for the
potential new entrant to prove their capability for certification. Once
a New Entrant is certified, launch services not covered under the FY13
Block Buy could be competed. When the Phase I Block Buy expires and New
Entrants are certified, we will have a full and open competition for
launch services.
Mr. Ruppersberger. The Air Force has indicated that it has asked
United Launch Alliance to fill out a matrix of what price they would
charge for 6 to 10 boosters per year, across a range of 3 to 5 years,
in order to determine a pricing ``sweet spot'' for ULA booster cores in
a block buy procurement. How does the Department of Defense and the Air
Force intend to independently assess whether the pricing is fair and
reasonable? If the Air Force determines that the ``sweet spot'' is 10
booster cores per year for 5 years because this is the largest quantity
order, how does it intend to allow New Entrants to compete?
Secretary Panetta. The Department of Defense and the Air Force are
committed to fostering competition while ensuring the reliability and
capability of New Entrants desiring to participate in fulfilling
National Security Satellites launch requirements.
Part 1: The Air Force will independently develop price estimates
based upon certified cost and pricing data, as well as independent cost
estimates. The Defense Contract Audit Agency (DCAA) and the Defense
Contract Management Agency (DCMA) have committed to full participation
in the Evolved Expendable Launch Vehicle (EELV) proposal evaluation and
negotiation activities, thereby ensuring the final cost of space launch
services represents the best value to the Government.
Part 2: The Air Force and the Department of Defense see competition
as a critical element of our long-term efforts to reduce launch costs.
The new EELV acquisition strategy, set to begin in FY13, entails an
evaluation of an economic order quantity of EELV booster cores, covers
contract periods ranging from 3 to 5 years, and encompasses a quantity
range of 6 to 10 booster cores per year. By examining a range of
contract options and terms for EELV procurement, and by examining
progress by New Entrants in the coming months, the Air Force will be
well-positioned to balance the rate and commitment decision with our
fundamental priorities: operational requirements, price, budget and
enabling competition. Once a New Entrant is certified, launch services
not covered under the FY13 Block Buy could be competed. When the Phase
I Block Buy expires and New Entrants are certified, we will have a full
and open competition for launch services.
______

QUESTIONS SUBMITTED BY MR. SCHILLING

Mr. Schilling. The strategic guidance states the DOD will have a
key element focused on investments in technology and new capabilities
as well as the capacity to grow, adapt and mobilize as needed. Does
this mean you will be ensuring that our organic base, including
arsenals and depots, will be properly utilized and workloaded to ensure
our capabilities to meet future threats is kept warm?
Secretary Panetta. The Department agrees it is essential for
national defense that we maintain depot maintenance and the arsenal
organic capabilities that enable our forces to respond to mobilization,
national defense contingency situations, and other emergency
requirements. In addition to the formal processes and reporting
requirements required by 10 U.S.C. Sec. 2464, 10 U.S.C. Sec. 2466, and
10 U.S.C. Sec. 2476, the Office of the Assistant Secretary of Defense
for Logistics and Materiel Readiness oversees programs and initiatives
designed to support our Nation's organic industrial base.
Mr. Schilling. How does the DOD view its working capital bases like
Arsenals? These are the most cost-effective part of our Army's flexible
industrial base as they do not cost taxpayers large pots of money, but
instead encourage public-private partnerships that help our economy.
Building on that, I have been aware of a study that has been going
on to address the organic base in the future. When will that plan be
released and what is your plan for the organic base in the future?
Secretary Panetta. As operational requirements are reduced in Iraq
and Afghanistan, workloads in all Army organic industrial base (OIB)
facilities are projected to decline at moderate rates. Throughout this
period and beyond, the Army's Depots and Arsenals will continue to be
designated as Centers of Industrial and Technical Excellence (CITE) for
maintenance and repair; for example, Pine Bluff Arsenal is CITE for
chemical and biological defense equipment and the Army's manufacturer
of white and red phosphorus, incendiary, illumination and color smoke
ammunition rounds.
To mitigate reductions in Overseas Contingency Operations (OCO)
funded work at Army OIB facilities, the Army Materiel Command's TACOM
Life Cycle Management Command worked with its commercial partners, Army
Program Executive Offices (PEOs), Program Management Offices (PMOs),
and the Army's OIB activities to highlight the Army's OIB capabilities
and identify opportunities for the Arsenals to partner with commercial
firms to meet future PEO/PMO requirements. For example Rock Island
Arsenal (RIA) is partnering with Sivyer Steel Corporation, a company
that operates a foundry that has expertise in casting, molding, core
making and machining. RIA and Sivyer anticipate that this partnership
will yield the production of competitively priced, high quality
castings. The partnership will also reduce lead time, and yield an
increased workload for the foundry.
The Army's strategy for ensuring that the Army's OIB remains viable
and relevant include: investment in new technology, training and plant
equipment at the same rate that the Army modernizes its weapon systems;
identifying and aligning core competencies and workloads to support
current and future surge requirements; investment to maintain ``state-
of-the-art'' capabilities and quality of work environment standards;
and prioritizing funding to achieve the desired end state--viable and
relevant OIB facilities.

Mr. Schilling. You brought up the important point that we will have
a large number of veterans entering the system.
What specifically do you plan to do to help them transition back
into the civilian world?
General Dempsey. Currently, all Services provide mandatory Pre-
Separation Counseling and voluntary DOL Transition Assistance Program
Workshops, VA benefits briefings and Individualized Coaching
opportunities to assist Service members as they transition out of the
military. In August 2011, the President called on the Department of
Defense (DOD) and Veterans Affairs (VA) to lead a Task Force with the
White House economic and domestic policy teams and other agencies,
including the Department of Labor (DOL), to develop proposals to
maximize the career readiness of all Service members. This DOD
Employment Initiative Task Force is one element of the President's
comprehensive plan to reduce Veteran unemployment and to ensure all of
America's Veterans have the support they need and deserve when they
leave the military, look for a job, and enter the civilian workforce.
This task force is reviewing transition programs that are currently
being offered within DOD, VA and DOL and expects to implement a new
training and services delivery model to help strengthen the transition
of our Service members from military to civilian life in Spring of
2012. The model will establish the framework for ensuring Service
members (of both Active and Reserve Components) meet a set of career
readiness standards prior to transition to civilian life. These
standards will be sub-divided into employment, technical training, and
education. They will ensure Service members depart the military career-
ready with a meaningful set of ``tools'' that will position them to
achieve desired transition outcomes.
Mr. Schilling. I do not want to see the issues that veterans from
Vietnam who suffered from Agent Orange exposure come back around to our
most recent veterans.
Will you be working with the Department of Veterans Affairs to
ensure that those who are leaving DOD will get the care they need to
address issues like exposure to depleted uranium?
General Dempsey. The Department of Defense (DOD) and Department of
Veterans Affairs (VA) are actively engaged in several important efforts
to ensure exposure-related information is shared between our
departments. Any confirmed exposures which involved clinical care or
assessment are recorded in the Service members' medical records, and
these records are available to the VA. In addition, the post-deployment
health assessment and post-deployment health reassessment are made
available to the VA health care providers. These assessments are filled
out by every Service member following deployment and include self-
reported exposures. To further enhance our collaboration, the
Departments recently signed a data transfer agreement (DTA) allowing
the 2-way sharing of embedded fragment analysis data, including data on
individuals with retained DU fragments.
The Departments are working towards an overarching exposure-related
DTA that will permit the sharing of all occupational and environmental
exposure-related data. Also under way are efforts to create Individual
Longitudinal Exposure Records (ILERs). Once developed, ILERs will
capture a wide variety of exposure-related data from a number of
different sources that will link that information to Service members
over the course of their military careers. This information will be
available to DOD and VA health care providers, and it promises to
improve the quality of health care. It will also ensure more timely and
accurate adjudication of exposure-related claims and access to Service-
connected benefits.
For the past two decades, DOD has been working closely with the VA
on concerns related to depleted uranium (DU) exposures. To date,
neither the DOD nor VA have identified any illnesses in DU-exposed
Service members or Veterans that have been linked with those exposures.
The DOD and VA continue to study DU exposures and ensure any Service
members or Veterans that may be at risk are periodically monitored. The
Military Services continue to identify Service members with documented
exposures and refer them to the VA so they have the opportunity to be
included in the VA's DU Follow-up Program. Only 10 Service members with
DU exposure have been identified resulting from duty in Iraq or
Afghanistan. (See http://www.publichealth.va.gov/exposures/
depleted_uranium/followup_program.asp)
______

QUESTIONS SUBMITTED BY MR. SCOTT

Mr. Scott. Do you support or oppose lifting the ban on U.S. flag
and general officers from visiting Taiwan? Besides Taiwan, what other
countries are U.S. flag and general officers banned from visiting?
Secretary Panetta. As a matter of policy and consistent with the
policy stated in the Taiwan Relations Act, we review and consider, in
coordination with the U.S. Department of State, travel by U.S. flag and
general officers to Taiwan on a case-by-case basis; there is no ban on
such travel. In addition, we will continue to support the practice of
sending retired flag and general officers to Taiwan to serve in a
mentorship capacity as part of our robust program for defense and
security engagement with the armed forces of Taiwan.

Mr. Scott. Do you support or oppose lifting the ban on U.S. flag
and general officers from visiting Taiwan? Besides Taiwan, what other
countries are U.S. flag and general officers banned from visiting?
General Dempsey. Having retired general and flag officers visit
Taiwan assists Taiwan and aids our ability to assess Taiwan's defense
needs accurately. We will, therefore, continue the practice of sending
retired flag officers to Taiwan to facilitate improving Taiwan's
defense capabilities. Visitors have included Admiral (ret) Blair,
Admiral (ret) Natter, Lieutenant General (ret) Gregson, and Lieutenant
General (ret) Leaf. They have all spent weeks mentoring senior Taiwan
flag officers to include attending the Han Kuang exercises. We will
continue to send our best and our brightest to assist Taiwan with its
defense.
______

QUESTIONS SUBMITTED BY MRS. ROBY

Mrs. Roby. In your written testimony you discussed how the
Department of Defense's plan includes reducing our forces that ``we
must help our veterans find education opportunities, meaningful
employment, and first class heath care.'' You also go and say that this
not ``exclusive responsibility of the Services or veterans
organizations.''
What is the plan of the Department both internally and across other
Federal agencies to ensure that military personnel transitioning out of
the military are equipped with the necessary training and education to
obtain employment?
I am particularly concerned since the unemployment rate for young
Iraq and Afghanistan veterans is 22% and for wounded veterans is 41%.
Secretary Panetta. The Department of Defense, in collaboration with
our partners from the Department of Labor, helped develop a TAP
Employment Workshop Redesign to create experiential, effective and
enduring solutions for successful transition from military to civilian
life and employment. In August 2011, the President created a task force
led by the DOD and VA and supported by agencies including the
Department of Labor (DOL), Department of Education (DoEd), Small
Business Administration, and the Office of Personnel Management (OPM)
to develop proposals to maximize the career readiness of all Service
members. In coordination with our partners, DOD's role involves
implementing and sustaining a comprehensive plan to ensure all
transitioning Service members have the support they need and deserve
when they leave the military. The President also directed reforms to
our transition assistance programs to ensure that every Service member
receives the training, education, and credentials needed to
successfully transition into the civilian workforce or to pursue higher
education. We are working with our partners to develop program and
services, fully aligned with the ``VOW to Hire Heroes Act of 2011,'' to
give Service members a comprehensive set of transitioning tools,
skills, and support mechanisms as they complete their service to our
Nation. We will deliver an implementation plan for these programs and
services to the President in spring 2012.

Mrs. Roby. In your written testimony you discussed how the
Department of Defense's plan includes reducing our forces that ``we
must help our veterans find education opportunities, meaningful
employment, and first class heath care.'' You also go and say that this
not ``exclusive responsibility of the Services or veterans
organizations.''
What is the plan of the Department both internally and across other
Federal agencies to ensure that military personnel transitioning out of
the military are equipped with the necessary training and education to
obtain employment?
I am particularly concerned since the unemployment rate for young
Iraq and Afghanistan veterans is 22% and for wounded veterans is 41%.
General Dempsey. In August 2011, the Department of Defense (DOD)/
Veterans Affairs (VA) Employment Initiative Task Force was created,
encompassing DOD, VA, the White House economic and domestic policy
teams and other agencies, including the Department of Labor (DOL), to
develop proposals to streamline current programs and maximize the
career readiness of all Service members. This Task Force is reviewing
transition programs that are currently being offered within DOD, VA and
DOL and expects to implement a new training and services delivery model
to help strengthen the transition of our Service members from military
to civilian life in Spring of 2012.
The model will establish the framework for ensuring Service members
(of both Active and Reserve Components) meet a set of career readiness
standards prior to transition to civilian life. These standards will be
sub-divided into employment, technical training, and education. They
will ensure Service members depart the military career-ready with a
meaningful set of ``tools'' that will position them to achieve desired
transition outcomes.