[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                                  

                         [H.A.S.C. No. 115-114]

                                HEARING

                                   ON

                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2019

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                   SUBCOMMITTEE ON READINESS HEARING

                                   ON

                         ARMY AND MARINE CORPS

                        DEPOT POLICY ISSUES AND

                        INFRASTRUCTURE CONCERNS

                               __________

                              HEARING HELD
                             JUNE 28, 2018


                                     
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 

                                __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
33-387                     WASHINGTON : 2019                     
          
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                       SUBCOMMITTEE ON READINESS

                  JOE WILSON, South Carolina, Chairman

ROB BISHOP, Utah                     MADELEINE Z. BORDALLO, Guam
AUSTIN SCOTT, Georgia                JOE COURTNEY, Connecticut
STEVE RUSSELL, Oklahoma              TULSI GABBARD, Hawaii
MIKE ROGERS, Alabama                 CAROL SHEA-PORTER, New Hampshire
VICKY HARTZLER, Missouri             A. DONALD McEACHIN, Virginia
ELISE M. STEFANIK, New York          SALUD O. CARBAJAL, California
MARTHA McSALLY, Arizona, Vice Chair  ANTHONY G. BROWN, Maryland
SCOTT DesJARLAIS, Tennessee          STEPHANIE N. MURPHY, Florida
TRENT KELLY, Mississippi             RO KHANNA, California
MIKE GALLAGHER, Wisconsin
                Andrew Warren, Professional Staff Member
                Brian Garrett, Professional Staff Member
                          Megan Handal, Clerk
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bordallo, Hon. Madeleine Z., a Delegate from Guam, Ranking 
  Member, Subcommittee on Readiness..............................     2
Wilson, Hon. Joe, a Representative from South Carolina, Chairman, 
  Subcommittee on Readiness......................................     1

                               WITNESSES

Piggee, LTG Aundre F., USA, Deputy Chief of Staff, G-4, U.S. Army     3
Shrader, BGen Joseph F., USMC, Commanding General, Marine Corps 
  Logistics Command, U.S. Marine Corps...........................     4

                                APPENDIX

Prepared Statements:

    Bordallo, Hon. Madeleine Z...................................    24
    Piggee, LTG Aundre F.........................................    26
    Shrader, BGen Joseph F.......................................    35
    Wilson, Hon. Joe.............................................    23

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    Mr. Carbajal.................................................    43
    Mr. Rogers...................................................    44
    Mr. Scott....................................................    43
    Mr. Wilson...................................................    43

Questions Submitted by Members Post Hearing:

    Mr. Rogers...................................................    47
    Mr. Wilson...................................................    47
    
    
 ARMY AND MARINE CORPS DEPOT POLICY ISSUES AND INFRASTRUCTURE CONCERNS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                                 Subcommittee on Readiness,
                Washington, DC, Wednesday, Thursday, June 28, 2018.
    The subcommittee met, pursuant to call, at 8:30 a.m., in 
Room 2212, Rayburn House Office Building, Hon. Joe Wilson 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. JOE WILSON, A REPRESENTATIVE FROM 
      SOUTH CAROLINA, CHAIRMAN, SUBCOMMITTEE ON READINESS

    Mr. Wilson. Good morning. I call the House Armed Services 
Subcommittee on Readiness to order.
    I want to welcome you to this morning's hearing, and would 
like to thank our witnesses for being here today to discuss the 
defense organic industrial base, and the significant role it 
has in maintaining and restoring readiness back to our armed 
services.
    This hearing will specifically focus on the current state 
of the United States Army and the United States Marine Corps 
depot policy issues and infrastructure concerns. Our depots, 
arsenals, and ammunition production facilities are critical to 
this country's ability to project power and to properly train 
and equip our warfighters. The sustainment industrial base 
provides the backbone for the military to respond to a variety 
of contingencies, surge capacity, and provide unique solutions 
to requirements. Our readiness recovery is fragile, and to me, 
it is important to understand exactly what is in jeopardy.
    During this hearing, I would like you to help us answer 
this basic question: In terms of risk, what does it mean to our 
national security, particularly our sustainment industrial 
base, to have failing depot infrastructure, lagging technology 
to properly repair and refurbish our equipment, combat vehicles 
waiting for depot maintenance, and a workforce that it often 
takes in excess of 180 days to recruit and hire?
    The depots saw diminished workloads when the major combat 
operations ended in Iraq and Afghanistan. This decreased 
workload, coupled with unpredictable budgets and continuing 
resolutions, forced the services to divest a portion of the 
technically skilled workforce and limit reinvestment into depot 
facilities.
    We know these variables have significant effects on the 
people, depot rates, and long-term organic industrial base 
viability. We are particularly interested in your proposed 
solutions relating--related to the carryover infrastructures, 
strategic planning, and civilian hiring. We want to hear what 
the issues are from your perspective and how they are impacting 
on your mission.
    It is our responsibility as members of the subcommittee to 
understand the readiness challenges of our armed services and 
how the resources and authorities provided impact capabilities 
this Nation needs.
    Before I introduce the witnesses, I turn to the 
distinguished ranking member, Madeleine Bordallo, the very 
appreciated gentlelady from Guam, for her opening comments that 
she would like to make.
    [The prepared statement of Mr. Wilson can be found in the 
Appendix on page 23.]

STATEMENT OF HON. MADELEINE Z. BORDALLO, A DELEGATE FROM GUAM, 
           RANKING MEMBER, SUBCOMMITTEE ON READINESS

    Ms. Bordallo. Thank you very much, Mr. Chairman. And thank 
you to our witnesses for being here.
    I think that we all agree that when the American public 
thinks of the terms ``national defense,'' they envision our 
proud service members stationed around the world and the 
equipment, the ships, the tanks, and aircraft, that we supply 
so they can carry out their missions. But what is not often 
thought of are the capabilities needed to maintain these 
assets, especially the depots and shipyards of the organic 
industrial base that play a critical role in the readiness of 
our military forces.
    Without properly maintained ships, vehicles, aircraft, and 
weapon systems, our forces cannot perform necessary training 
required to build readiness or meet the operational 
requirements that are placed upon them.
    I am concerned that in a year where readiness has been 
cited as the Department's [Department of Defense's] top 
priority, the Department's budget request falls well short of 
meeting the total depot maintenance requirement for the Army 
and the Marine Corps. So when questioned about why these 
accounts were not funded to 100 percent of the requirement, the 
Department stated that the accounts were funded to the maximum 
executable rate. Thus far, no analysis has been shared with the 
committee on how the maximum executable rate was calculated, or 
what the limiting factors are to increasing execution rates.
    I have long stated that just as important as it is to 
provide our service members with new, modernized equipment, we 
must fully maintain the assets that we already have. So I hope 
that our witnesses can share their perspectives on this 
particular issue today.
    Your workforce is the backbone of your depot operations. 
This diverse assembly of people possess invaluable skills and 
expertise that must be cultivated, taking years of schooling 
and experience to acquire. Keeping a workforce of such caliber 
requires constant effort to hire, train, and retain. Past NDAA 
[National Defense Authorization Act] provisions have granted 
additional authorities allowing depots to expedite hiring, so I 
look forward to hearing of these provisions, if they are 
sufficient or whether additional changes are necessary.
    Without our depots, our ability to ensure the safety of our 
Nation and pursue our national interests are severely impacted. 
So, gentlemen, your depots must accomplish their missions.
    If we are going to rebuild readiness, we need to ensure 
that the depot maintenance accounts are fully funded to meet 
the requirement. If there are policies, authorities, workforce, 
infrastructure, or other challenges that are impediments to 
increasing the execution rates of the depots, this subcommittee 
needs to hear about them.
    So I look forward to hearing your testimony on the 
challenges that our depots are experiencing in personnel, 
operations, and infrastructure management, and how this 
subcommittee can help you to address them.
    I thank you. And with that, Mr. Chairman, I yield back.
    [The prepared statement of Ms. Bordallo can be found in the 
Appendix on page 24.]
    Mr. Wilson. Thank you, Ranking Member Madeleine Bordallo.
    I am grateful to recognize our witnesses today and I want 
to thank them for their service to our Nation. We have 
Lieutenant General Aundre Piggee, the Deputy Chief of Staff, G-
4, United States Army; and Brigadier General Joseph F. Shrader, 
the Commanding General, Marine Corps Logistics Command.
    I would like to welcome Lieutenant General Piggee back to 
the Readiness Subcommittee and thank you for your continued 
service to the Army and our Nation.
    I would also like to congratulate Brigadier General Shrader 
for his recent assumption of command at Albany, Georgia, of the 
Marine Corps Logistics Command and his first opportunity to 
testify before the subcommittee.
    Before we begin, I would like to remind the witnesses your 
written statement will be submitted for the record and ask you 
summarize your comments to 5 minutes or less. And we will 
immediately begin with General Piggee.

STATEMENT OF LTG AUNDRE F. PIGGEE, USA, DEPUTY CHIEF OF STAFF, 
                         G-4, U.S. ARMY

    General Piggee. Good morning. And, Chairman Wilson, Ranking 
Member Bordallo and distinguished members of the subcommittee, 
thank you for this opportunity to testify on our organic 
industrial base and our ongoing initiatives in support of its 
revitalization. On behalf of Secretary Esper and General 
Milley, I would like to express our gratitude for your 
continued strong support.
    We face a security environment more complex and volatile 
than any we have experienced in recent history. To maintain 
effectiveness we must continue to focus on readiness, 
modernization, and reform. A key component of readiness is the 
Army's OIB [Organic Industrial Base]. This $14 billion 
enterprise consists of 23 ammunition plants, depots, and 
manufacturing arsenals that generate readiness and operational 
capability throughout Army formations. When the force needs 
equipment or parts manufactured, repaired, upgraded, the OIB 
delivers.
    Although the OIB reliably generates readiness, it has 
largely been reactive to emerging threats. The reactive model 
does not allow us to modernize efficiently. In order to 
improve, we are embracing opportunities for change. We are 
implementing new tools and processes for better forecasting 
workload, ensuring our work is aligned with our highest 
readiness priorities through our sustainment readiness model. 
We are collaborating with industry to share our best practices 
and to integrate top-tier technology, and we are developing a 
long-term plan for infrastructure and equipment modernization.
    We won't achieve any of our goals without the highly 
skilled workforce comprised of dedicated tradesmen with 
critical skills, including mechanics, welders, and engineers. 
Fifty percent of our workforce is over the age of 50. We are 
developing a succession plan to make sure we retain critical 
skill sets as these skilled artisans retire. On average it 
takes about 10 years to train an apprentice to be a journeyman. 
The math makes it clear we need the flexibility to quickly hire 
and retain the right talent.
    We have used the recently granted direct and expedited 
hiring authority to hire almost 500 new employees. The 
increased efficiency that we have gained is essential in our 
workforce succession plan. Among the things I will ask for 
today is those hiring authorities to be made permanent.
    We also are focusing on modernizing our facilities, many of 
which are overdue for an upgrade. We plan to increase our 
infrastructure investments, strategically allocating those 
resources available to modernize the most antiquated, 
unreliable, and inefficient machinery and buildings.
    Along with short-term investments, we are developing a plan 
to access the scope and focus of the long-term modernization 
efforts. Improvements like raising the minor MILCON [military 
construction] threshold and allowing us to use operation and 
maintenance funding to convert our facilities will help us 
reach our goals faster. We appreciate any flexibility you can 
provide to help us upgrade in the future.
    The OIB has been effective at generating readiness for 
today's needs. Now, we ensure that it must be adept for 
tomorrow's requirements. We must hire and retain a talented 
workforce, modernize our facilities, and incorporate emerging 
technologies and, above all, have the flexibility to revitalize 
the industrial base as efficiently as possible.
    I thank each of you for allowing me to testify today. Your 
support will enable us to continue to sustain and equip our 
best fighting force in the world. Thank you.
    [The prepared statement of General Piggee can be found in 
the Appendix on page 26.]
    Mr. Wilson. And thank you very much, General Piggee. And it 
was encouraging to hear addressing the hiring issue. Thank you 
very much.
    General Shrader.

STATEMENT OF BGEN JOSEPH F. SHRADER, USMC, COMMANDING GENERAL, 
       MARINE CORPS LOGISTICS COMMAND, U.S. MARINE CORPS

    General Shrader. Good morning. Chairman Wilson, Ranking 
Member Bordallo, and distinguished members of the House Armed 
Services Committee on Readiness, thank you for the opportunity 
to testify on this important topic.
    The Marine Corps is advancing toward becoming a 2025 and 
beyond capable warfighting force. Technologically advanced 
vehicles, weapons, and C-2 [command and control] systems are 
being fielded. The information environment is now a warfighting 
domain with its own unique equipping and sustainment 
challenges. And our adversaries around the globe continue their 
efforts to close capability gaps every day.
    The Marine Corps must have equally advanced organic depot 
capabilities to meet the potential demands of this future 
warfighting environment. To meet these demands, we are focused 
on advancements in the following areas: First, digital 
manufacturing. We are investing in innovative and advanced 
manufacturing capabilities, such as 3D [three-dimensional] 
printing and laser scanning technologies, in an effort to 
augment the repair part supply chain, improve response time, 
and drive down costs.
    The second area we are pursuing is conditions-based 
maintenance processes and practices. The goal of our 
conditions-based maintenance effort is to optimize our 
equipment and inspect and repair as needed, and annual depot 
maintenance cycle processes by improving our ability to predict 
depot-level repairs based on data-driven, real-time diagnostics 
vice using a standards, time-based scheduled maintenance 
process.
    The third area is equipment long-term storage and 
prepositioning. Readiness of the Marine Corps strategic war 
reserves and maritime prepositioning programs rely heavily on 
our organic depot storage and maintenance capability. Along 
with the advanced manufacturing initiatives that I spoke of, we 
are pursuing technologies to fully automate our inventory 
control, storage, and supply chain processes from the strategic 
level down to the individual Marine at the tactical edge on the 
battlefield.
    The fourth area is partnering with industry and other 
service depots. In my commander's guidance, which I issued last 
week when I assumed command, I direct that we must mind other 
service depots in our private sector industrial base partner 
capabilities which are critical to our readiness and our 
ability to provide supplies and surge support. We rely heavily 
on their capability and capacity, and will seek every 
opportunity to ensure our organic capabilities are 
complementary and aligned.
    Last but certainly not least is our workforce, specifically 
recruiting, hiring, and sustaining a highly capable mission-
ready workforce. I would like to take this opportunity to thank 
the Congress for the direct hiring authorities you provided us 
in the recent NDAA. Through these special authorities, we are 
able to recruit and hire on a timeline which is comparable to 
industry, giving us the ability to more efficiently fill our 
most critical positions. We very much appreciate these 
authorities, and would like to encourage the Congress to make 
them permanent.
    In closing, I want to thank you again for the opportunity 
to testify, and I look forward to your questions.
    [The prepared statement of General Shrader can be found in 
the Appendix on page 35.]
    Mr. Wilson. Thank you very much, General.
    And your reference to digital manufacturing--I thought that 
the barcode was revolutionary. You are taking it to another 
step.
    [Laughter.]
    My goodness, what a challenge, but what is being accepted, 
and what opportunity you have.
    As a reminder to all the members, including me, we will 
adhere to the 5-minute rule for questions on the witnesses, 
which is monitored ably by our professional staff member, 
Andrew Warren.
    And we will begin. For each of you, aside from the 
meeting--aside from meeting the 6 percent statutory requirement 
for capital investments for depots, does the Army and the 
Marine Corps have an estimated backlog of the total facility 
and utility maintenance, and repair backlog for all of the 
depots? If so, how much is it, and what is the plan to resource 
the requirement?
    And General Piggee, please.
    General Piggee. Thank you, sir, and thank you for that 
question.
    Sir, we have aging, failed, and--failed, and failing 
facilities. We have invested more than close to a billion 
dollars over the past 10 years to modernize our facilities, as 
well as our equipment. We have a plan for the near term to make 
almost $400 million investment in the future, as we go forward.
    However, we are in the process of a more holistic, long-
term view to ensure that we have the appropriate facilities, 
modernization of our machinery and equipment. We--that long-
term view, we look out toward 2030. That assessment is ongoing. 
We expect to conclude that assessment sometime after the first 
of this calendar year.
    As you know, some of our facilities are World War II 
vintage. And at those locations--Holston and Radford come to 
mind--we have a combination of those World War II facilities, 
which are still in operation and being productive, and we have 
some of the state-of-the-art, new facilities that we have 
recently installed and brought online.
    Our goal is to eliminate that old, failed, or failing 
infrastructure as we modernize across all of our 23 depots 
throughout the OIB. We think we have a sufficient plan in the 
near term, and we are consistent--we are conducting an overall 
holistic assessment to see where we think we would need for, as 
we go forward, to about 2030, sir. Thank you.
    Mr. Wilson. Thank you very much.
    And General Shrader.
    General Shrader. Sir, good morning, and thank you for the 
question.
    So facilities, in terms of a backlog; so the Marine Corps 
has, not necessarily within my portfolio, the Marine Corps 
looks at its facilities under the Marine Corps Installations 
Command and it's a holistic look, as I understand, across the 
Marine Corps.
    From the depot perspective, I will tell you that one of the 
things that we--I believe we need to get at, from just what I 
have seen over the last week and a half or so, is our 
facilities in terms of storage, being able to get our equipment 
that is both in Albany and out in California out of the 
elements.
    I think that there is a business case, I believe there is, 
intuitively, there is a business case to be made for the money 
that we put into maintaining the equipment because of the 
effects of the elements. If we had the storage facilities to 
get them out of that, we could then take that money and maybe 
repurpose it into some other uses concerning maintenance.
    Equipment is along the same lines. The backlog, I asked 
that question last week in one of my turnover briefs. And the 
answers that I am getting right now, sir, is there is not a 
backlog, in terms of we are able to execute what is planned for 
the fiscal year. Is there equipment out there that, if we were 
able to have more time and get it in? I believe there is some 
equipment out there that is in condition codes that would 
require us to get it into depot-level maintenance.
    This is one of the questions that I am going to get after 
in the near future here, sir, and if I could maybe take that 
one for the record, in terms of specifics, in terms of backlog. 
Sir, thank you.
    [The information referred to can be found in the Appendix 
on page 43.]
    Mr. Wilson. And--and thank you for your commitment to do 
that.
    And for each of you, we recognize the uncertain fiscal 
environments are one of your significant challenges, when it 
comes to executing depot maintenance. Can you elaborate on the 
challenge, and how continuing resolutions have affected the 
depot production for the Army or Marine Corps?
    General Piggee. Yes, sir, I would like to comment on that 
perspective.
    Sir, late receipt of funds impact our ability to plan and 
program. It impacts our second- and third-tier contractors. 
Sometimes they are sole-source, small companies; mom-and-pop 
with a small workforce. And what they look for with us is 
predictability in funding and consistently, so they have the 
funds and appropriate personnel. These are skilled personnel 
that they need to maintain and retain.
    Workload continues to be our prime mission. We execute our 
workload based on sustainable readiness model. We develop our 
workload based on next to deploy, those units that are 
deploying. Those are going to the national training centers, 
our combat training centers throughout the Army, and those 
major exercises that we execute around the world.
    It is very challenging, if we receive funds late, to 
execute those missions and to perform tasks within the given 
year. And my time is almost up, but I would like to talk about 
that a little bit more, but that is how we generally organize 
our workload on an annual basis.
    Mr. Wilson. And thank you.
    General Shrader.
    General Shrader. Sir, I would echo everything that the 
lieutenant general said. The CRs [continuing resolutions], in 
the very beginning--that is one of the assumptions that you use 
in going into planning a maintenance cycle for the year. And if 
that key assumption is off--how many CRs can we expect, and 
when are we expecting the budget to be able to come to us to 
execute--if that is off, then it has a ripple effect throughout 
the year.
    And when you have multiple CRs like that, sir, like we have 
seen in the past, it just exemplary--or it just compounds that 
ripple effect. And so you find yourself at the end of the year, 
6 months, trying to execute 12 months' worth of funding and 12 
months' worth of planned work. So, yes, sir.
    Mr. Wilson. Thank you very much.
    We will now proceed to Congresswoman--Ranking Member 
Madeleine Bordallo of the beautiful territory of Guam.
    Ms. Bordallo. Thank you, Mr. Chairman. You always make my 
day.
    This question is for both of you. General Piggee, can you 
discuss the benefits permanent civilian personnel provide as 
part of your workforce at your depots and shipyards, and 
suggested strategies for continuing to incentivize and retain 
this part of your workforce?
    General Piggee. Yes, ma'am, and thank you.
    Our permanent employees are absolutely critical to success. 
As I talked about in my opening statement, it takes upwards of 
10 years sometimes to properly train our artisans from a 
journeyman--from an apprentice to a journeyman. We are able to 
manage our workload and incentivize those permanent party--
permanent employees by assisting with hiring temp [temporary] 
and term employees, and in some cases, contract capability.
    We utilize the entire workforce, both permanent, temp, and 
term, to manage the workload as it increases throughout the 
course of the year, based on specific requirements that we 
think are not long term, and the ability to have, in addition 
to our permanent employees, our temp and term employees. Those 
term employees also have an opportunity as our aging workforce 
retire, those are where we select that skilled workforce that 
are already trained to replace those artisans that we have in 
place in a permanent capacity.
    Ms. Bordallo. Thank you.
    General Shrader.
    General Shrader. Yes, ma'am. Again echoing what the 
lieutenant general said, I think what I would say is two 
things. One is, we believe if you take care of the people, the 
people take care of the mission, and the command, under my 
predecessor, he issued a Workforce 21 Plan that has six 
overarching goals in it to try to grow that workforce, right 
size, right skill sets for the future.
    But we look at that workforce, ma'am, as it is the backbone 
of our depot maintenance and it is the DNA [deoxyribonucleic 
acid] of the organization. So we really have to mind that.
    Some recommendation, ma'am, that is kind of outside of our 
four walls but acts--absolutely impacts us is STEM [science, 
technology, engineering, and mathematics] programs within our 
education departments. I think that we ought to really take a 
look at trying to foster that. In my previous job at Quantico, 
we worked with the local high school there to foster STEM 
programs and work with those students in science, technology, 
engineering, and math. And those are feeders, so into our 
intern programs and all that, yes, ma'am.
    Ms. Bordallo. Thank you. Thank you, General.
    My second question is for the both of you two. How does the 
Army and Marine Corps assess the maximum executable level of 
depot workload when developing the budget request? And what are 
the primary factors that limit the ability to increase the 
maximum executable, am I saying that right, executable level?
    And with you, General, please?
    General Piggee. Yes, ma'am, thank you. Performance to 
execution; we determine our workload based on next-to-deploy 
units, the training that is going to be conducted, and 
facilities and workforce available. To date, we have sufficient 
capacity and skilled artisans to perform the work that we have 
been asked to perform.
    Again, we have the flexibility with using our permanent 
employees, as well as our temp, term, and contract capability. 
So currently we do not have a backlog. However, what I will 
tell you when we receive work late in the year, in the year of 
execution it changes our priority. And when we have receipt of 
funds late it impacts our ability to execute that work in the 
course of that year.
    I know we will talk a little bit about carryover later, but 
we think to a degree carryover is good for us. It allows us to 
have predictable work for our workforce, also for our second- 
and third-tier contractors where they can have predictability 
of managing their workforce and their supply chain.
    Ms. Bordallo. And General.
    General Shrader. Yes, ma'am. Sort of the same process; we 
take a holistic approach. We look at the operating forces and 
what they need first to be able to do their mission, fight 
tonight, if you will, and what they need to do that.
    Then we look at the war reserves. And then we look at what 
is in prepositioning from a holistic standpoint. And then we 
build the equipment, master schedule, master work schedule; 
what is going to come through the depot maintenance program 
throughout the year.
    Things that impact, and again it goes back to kind of the--
I think the basic fundamental would be funding, enabling what 
we do. So when we receive that funding and being able to 
execute that and stay up with that schedule that we have set in 
place at the beginning of the year is critical. Yes, ma'am.
    Ms. Bordallo. Thank you very much.
    Thank you Mr. Chairman, I yield back.
    Mr. Wilson. And thank you Congresswoman Bordallo. We now 
proceed to Congressman Austin Scott of Georgia.
    Mr. Scott. Thank you, Chairman.
    Gentlemen, you both spoke to the improvements in your 
physical infrastructure. Could you speak briefly to 
improvements in information technology systems and what changes 
you expect there? And then also to the way artificial 
intelligence [AI], or machine learning, is going to have the 
ability to help make the maintenance cycles more predictable 
and precise?
    General Piggee. Yes, sir, thank you. Sir, you will often 
hear our Secretary and Chief, General Milley, often speak of 
taking advantage of AI, taking advantage of robotics, taking 
advantage of technology today.
    In fact, we have tasked General Perna in the Army Materiel 
Command to establish a center of excellence for additive 
manufacturing at--at Rock Island, Illinois, where they will 
develop techniques, processes, and procedures that they will be 
responsible to proliferate throughout the Army, where we can 
take advantage of this additive manufacturing and other machine 
learning with the intention of reducing workload, becoming more 
efficient and taking advantage of today's technology that will 
allow us to be more efficient.
    We are looking at 3D printing. We have 3D printing 
available in 16 of our depots today. We--when we--our supply 
chain is not able to provide the next--the necessary repair 
parts in a timely manner, we found that we can 3D print parts 
which reduces the amount of time we wait for our supply system. 
We have also found that we can 3D print special tools in some 
cases. Again, allowing us to be more effective and efficient in 
production of our supply chain.
    We are also looking at the condition-based maintenance 
where we put sensors on our equipment, where we can sense 
failures before they fail, where we can replace widgets vice 
major end items at a much reduced cost. This will require our 
depots to take advantage of that techniques today that is 
available. They are in the commercial industry and we are 
taking advantage of those today in our depots.
    General Shrader. Sir, the only thing I would add to that is 
inventory control. Inventory control that--the vision that I 
would have for inventory control is if you can imagine walking 
into a warehouse and you have everything in that warehouse that 
is coded with RFID [radio-frequency identification] tags. And 
then you have a set of robotics, whether they--whether they fly 
or they are ground-mounted robotics. They go through and they 
are tied into a Wi-Fi network that is within this warehouse 
that can, as it moves, it can just scan.
    And it feeds into a C2 system that has everything loaded 
into it that would be on our GCSS [Global Combat Support 
System] Marine Corps system. It's loaded into it and you know 
instantly what you have on the shelves, what condition it is 
in, what needs to be ordered, so on and so forth.
    So it is from inventory to having control over that 
inventory, to being able to order what you need and then 
feeding into the supply chain. So it is just this constant 
system that I am talking about, that is an IT [information 
technology] system, that is from end to end knowing what you 
have, inventorying it and knowing what you have, and then being 
able to order it and replenish it. So that is--it is kind of a 
vision, sir.
    Mr. Scott. With regard to one, I am glad that we use as 
many small businesses outside of the depots as we can for the 
CNC [computer numerical control] machining and other things. 
And I hope we will continue to do that.
    My question gets to, as we use those small employers that 
are out there, what steps are being taken to help them with 
cybersecurity to make sure that our technology is not stolen 
from? We have to share that information with those small 
employers for them to be able to manufacture the parts for us. 
What steps is the DOD [Department of Defense] taking, with 
regard to cyber, to make sure that our intellectual property is 
not stolen from those small employers?
    General Piggee. So, that is an issue for our entire 
government, and specifically our Army and our depots. In the 
past, our logistics systems have probably been the weakest with 
respect to cyber and defending against cyber. We are having 
dialogues with what our challenges are, sharing with them our 
best practices and--and lessons learned, and I would like to 
get a little bit additional information to provide you for the 
record----
    Mr. Scott. That is fine.
    General Piggee. Exactly what our techniques are with 
sharing with our smaller partners.
    [The information referred to can be found in the Appendix 
on page 43.]
    Mr. Scott. That is fine.
    General Shrader. Sir, I would just tell you, my previous 
job, that is what you are talking about, is an ATO process, 
authority to operate process. So any time we put a system, 
build a system, design a system software, put it online, it has 
to go through that process, and there are certain security 
checks to go into that so that we are assured, and our industry 
partners are insured, any kind of information we get from them 
and load it into that system, it is protected. So it is kind of 
a good faith effort that we have in place, working with a--with 
industry. But there is an ATO, authority to operate process 
that we go through that looks at that cybersecurity question.
    Mr. Scott. Thank you, gentlemen.
    General Shrader. Sir.
    Mr. Wilson. And thank you, Congressman Austin Scott.
    We now proceed to Congressman Don McEachin of Virginia.
    Mr. McEachin. Thank you, Mr. Chairman, and this question is 
for both--both of you, please. I know that the Navy has 
developed a shipyard recapitalization plan to address some of 
the same kinds of challenges that the--that the Army and Marine 
Corps depots face. I understand that the Army is moving in a 
similar direction. If depots across the service face similar 
challenges in terms of age, configuration of these facilities, 
and if they share a similar mission, then I assume there must 
be some value in sharing information, and perhaps coordinating 
the services.
    As all the services plan for the future of their respective 
depots, is there any effort to do department-wide planning, or 
to look for opportunities where a joint approach or joint 
efforts could be valuable? And if no such effort is in the 
works, is there a project in which either of you sees--is this 
a project in which either of you sees a potential value?
    General Piggee. And thank you, sir. And this is a--not a 
competitive environment with us in the services. We work 
together. We have work groups where we share information. As 
you probably are aware of, we do work for the other services. 
We do M1A1 [Abrams] tanks for the Marines, we do MRAPs [mine 
resistant ambushed protected vehicles] for the Marines and the 
Navy, and we do HH-60s [Pave Hawk helicopters] at Corpus 
Christi for the Air Force. And in our work groups, we determine 
the best capability, where it might exist, with the most 
economical value for the services.
    Are there opportunities for us to refine and do that 
better? I would say probably so, but I think we have a system 
in place now through our work groups and our various committees 
in working with the other services where we do specifically 
talk about our workload, and how we can balance that together 
from a joint force perspective.
    General Shrader. Sir, I will tell you this. As I get my 
arms around this job, one--it is acronym overload, and one of 
the acronyms that has been thrown at me is DMISA, and what that 
is is depot maintenance interservice agreement. So I ask, you 
know, what does that mean? And it essentially means, like, the 
Army has their 23 depots. The Marine Corps has two depots. 
There is Air Force and Navy depots that we, because we are the 
smaller, we really have to rely on them for their centers of 
excellence that do that equipment, as--the same with us. There 
is equipment that we do, as the general said, for them, like 
MRAPs for the Air Force, and so on.
    But there is a--my understanding is, is there is a, I want 
to say, formal process through this DMISA, depot maintenance 
interservice agreement, where we look at that to make sure that 
it is complementary and aligned; that there is no duplicative 
efforts, and if they are duplicate, there is a reason why we 
are doing it. So yes, sir.
    Mr. McEachin. Thank you for that.
    One of my concerns about our military installations is 
energy resiliency. Can either of you speak to the resiliency of 
your depots, specifically, relative to other kinds of 
installation? And would you mind speaking, in particular, to 
any potential role for clean energy, as we work towards greater 
resiliency?
    General Piggee. Sir, as you know, we have a combination of 
older World War II-version depots and arsenals, and we have 
some more modern facilities, and in some cases, we have World 
War II and modern facilities combined together.
    As we establish our new modernization plan, we are taking 
energy well into consideration, taking advantage of the latest 
technologies and capabilities that are out there. We have work 
to do. We work with our local partners in the communities that 
we reside to take advantage of their capabilities that exist. I 
will tell you that there is work to be done in that area, but 
we are taking into full consideration, as we modernize our 
industrial base, taking advantage of clean energy and green 
energy, and working with our partners to learn best practices.
    Mr. McEachin. Thank you.
    General Shrader. Sir, aboard Albany, we have recently 
completed, it is with Georgia Power, a solar-renewable plant 
that was--I mean, there is a huge--I don't know how many acres 
it covers, it's very large--set of solar panels out there that 
we have a direct line that feeds into the depot, so that when 
it's charging and producing power, we tap into that. So that is 
one, I think, a huge win at Albany.
    The second thing is they are also putting in a geo-cooling 
and thermal system there aboard Albany that is also helping us 
better manage the grid, if you will, down there. And then the 
other thing is, you know, we were recently hit with a tornado 
that came through, and some of the things that I have read that 
occurred there, one of the benefits, or I guess, one of the 
wins out of that was they had a backup generator process there 
within the base, that when the tornado came through, it was 
very minimal time that they were out of power and unable to 
perform the mission in facilities that were there.
    But in closing, they are really focusing on renewable 
energy, being able to, if something were to happen to the 
energy grid, the depots are still up and running. So yes, sir.
    Mr. McEachin. Thank you for that.
    And Mr. Chairman, I yield back.
    Mr. Wilson. And thank you very much, Congressman Don 
McEachin.
    We now proceed to Congresswoman Vicky Hartzler of Missouri.
    Mrs. Hartzler. All right, thank you very much, Mr. 
Chairman, and thank you, gentlemen.
    General Piggee, I was interested in your comments, because 
I am very interested and supportive of Lake City Ammunition 
Plant, which is just outside of Kansas City, very close to my 
district. It employs many people from my district, and your 
comments are certainly spot-on, this being a World War II 
facility.
    When I first visited, I was, frankly, fairly shocked at all 
of the--the condition and the number of buildings there that 
are just--needed to be razed. They have been over time, but in 
total, the government-owned and contracted operated sites, of 
which Lake City is one of them--there is--of the four largest 
ones of those constructed during World War II that collectively 
encompass a total of 33,000 acres, with approximately 2,500 
buildings, and, yeah. Many of them contain heavy industrial 
equipment requiring maintenance automation. And we have been 
maintaining there. The time I was there last year, I saw a big 
difference in the modernization and the improvements that are 
being made there to modernize.
    But, you know, this has been a problem over time, with not 
enough funding. I was pleased in fiscal year 2017 that Congress 
provided Army with additional funds to address this aging 
infrastructure, and then fiscal year 2018, the Army finally 
requested a sufficient increase through the unfunded 
requirements list, which was approved by Congress. And this 
year, I was very pleased to see that the Army requests 
significant investments for fiscal year 2019 through the FYDP 
[Future Years Defense Program]. So it looks like, you know, we 
are getting after this. I was encouraged to hear about the plan 
that is going--being developed to look at this modernization, 
that will be released at the beginning the year.
    I guess some of my questions are, since all of the 
ammunition plants are in bad shape, how does the Army 
prioritize funding for recapitalization and modernization among 
the various locations, since they all have needs?
    General Piggee. Yes, ma'am. And thank you for that 
question. And I, too, have visited Lake City and it is a 
combination of World War II vintage still making munitions the 
old-fashioned way. And I was quite surprised to see that to an 
extent, although we have made some success and improvement at 
that location.
    Ma'am, we prioritize our--again, highest priority equipment 
based on output that is desired to execute readiness--to 
improve readiness. We are--made sufficient, significant 
investment over the past 10 years. We have taken advantage of 
MILCON; the increase in authority for minor MILCON that 
Congress have provided us. We have taken advantage of the 
conversion of MILCON to O&M [operations and maintenance]. We 
are taking advantage of all the resources that we have 
available.
    As you indicated, ma'am, we have committed an investment 
over the next FYDP to improve our equipment facilities and 
machinery in our depots. And we executed a more holistic 
assessment. We are looking out for the next decade, where we 
will prioritize our facilities. And then come in and ask for 
budget execution authority to significantly improve those 
facilities after that assessment.
    Mrs. Hartzler. Great. How has the Army conducted a cost 
analysis of building new facilities versus modernizing the 
current ones? I know that was a question I had the last time I 
visited. We had a good discussion on that. But how do you 
analyze that analysis?
    General Piggee. Ma'am, that is part of our holistic 
assessment that we are executing currently. When we find 
facilities that we can repurpose, that we can execute in a 
quicker fashion, we will use the conversion authority that 
Congress has given us, to use O&M funds to do that. But that is 
part of our holistic assessment that we--that is ongoing at 
this time, ma'am.
    Mrs. Hartzler. And you said something during your 
ceremony--your ceremony-- at your testimony that I tried to 
find in the written testimony and I couldn't find. But it 
caught my ear. You said something about you would like the 
increased authorities to be able to spend money without 
congressional authority? Did--is that what you were saying?
    We worked on this in the NDAA. I had an amendment for the 
NNSA [National Nuclear Security Administration] and their 
infrastructure issues last year, where they wanted the ability 
to just go ahead and contract under, like, $25 million dollar, 
and to raise that threshold from--I can't remember. But did you 
say something like that? Are you needing Congress to increase 
your authority where you can move around funds without coming 
to us, or something?
    General Piggee. No, ma'am. I think my intention was to 
thank you for the recent authority that you gave us, with 
respect to minor MILCON, and the conversion authority from 
MILCON to O&M dollars. We think that is appropriate well within 
the resources that we need. Not additional to that, but we 
really appreciate the authority that you recently gave us.
    Mrs. Hartzler. Just want to make sure there wasn't 
something new that we could be doing to be helpful. Thank you 
very much. I yield back.
    Mr. Wilson. And thank you very much, Congresswoman Vicky 
Hartzler. We now proceed to Congressman Salud Carbajal of 
California.
    Mr. Carbajal. Thank you, Mr. Chair. And good morning to 
both of you.
    My question this morning is on civilian workforce. And it 
is addressed to both of you. Last month, the Office of 
Personnel Management sent Congress a report to cut annuities, 
reduce, then eliminate the Federal Retiree Cost-of-Living 
Adjustments and eliminate the Federal Employee Retirement 
System annuity supplement for Federal Government civilians.
    Are you both familiar with this proposal? And if so, how 
would these proposals affect your ability to recruit and retain 
a Federal civilian workforce?
    General Piggee. Sir, I personally am not aware of that 
policy and refer you to our personnel team to--that could more 
adequately address that.
    Obviously any incentives that we have, we would like to 
maintain. Our workforce are critical to success in our 
industrial facilities. And retention and retaining those 
employees and being able to recruit is extremely important to 
us. And incentives are important as well.
    Mr. Carbajal. Thank you.
    General Shrader. Sir, I am not familiar with the proposed 
reductions or cuts, but incentives are important to us. So 
anytime that something like that happens, we would have to 
assess the impact on our ability to recruit and retain. Yes, 
sir.
    Mr. Carbajal. Well, Mr. Chairman, I actually inquired about 
this issue at the last readiness hearing. And I was given 
similar answers, although your answers are little bit better.
    We are discussing the future of this Federal civilian 
workforce. And I hope in the future that our witnesses here 
today understand this, and why the results of this report can 
severely impact the future of the Department. I will be 
submitting this question for the record, again. And I strongly 
urge the witnesses to respond to the committee as soon as 
possible.
    I had a much longer list of language here to reiterate what 
is really in the report. But I won't belabor the issue. But I 
do think it is extremely critical and important, especially 
when the civilian workforce comprise a significant part of our 
readiness, that we have good answers for this and a better 
understanding.
    Thank you very much. Mr. Chairman, I yield back.
    [The information referred to can be found in the Appendix 
on page 43.]
    Mr. Wilson. And thank you, Congressman Salud Carbajal. We 
now proceed to Chairman Mike Rogers of Alabama.
    Mr. Rogers. Thank you, Mr. Chairman, and thank you all for 
your service. Thank you for being here, we appreciate you.
    You know, I am a big fan of the depot system. We can't do 
our jobs without a strong depot system. But they have been 
struggling, and we have been hearing it for years, with 
problems with carryover and the limitations that they have.
    It is my view that the services are unnecessarily 
restricting equipment overhaul, planning, and ordering to gain 
the carryover calculations. Meanwhile, the vital work being 
done at these depots must be accompanied--accomplished faster 
than ever in today's threat-filled environment to support our 
readiness. And the bean counting should not stand in the way of 
this mission.
    To each of the services, General Piggee and General 
Shrader, you may be aware that last year's House report 
accompanying the NDAA called the Office of the Secretary of 
Defense to assist, if necessary modify the carryover 
calculations. The response in April of this year provided some 
insight into each service that fell short of providing a 
solution amenable to all.
    Could you discuss the challenges unique to Army and Marine 
Corps carryover management programs, and any recommendations 
for improvement? General, we will start with you.
    General Piggee. Thank you, sir, and great to see you again, 
Congressman Rogers.
    Sir, we have worked carryover diligently and very hard. It 
is a priority in our Army Materiel Command, as you know, 
General Perna leads that effort. And he personally reviews the 
carryover. And we have reduced carryover by more than 39 
percent in the past 3 years. We continue to refine, to ensure 
that we are being effective and efficient with our workload.
    But receiving funds late in the year, continuing 
resolutions, all have an impact on our ability to execute 
requirements in the year. World events change. As priorities 
change for the Army, we get different priorities. We get 
additional work during the year of execution. It makes it 
virtually impossible to execute that requirement that we 
developed at the beginning of the year when we don't either 
have funds or changed priorities in the course of the year. 
That causes carryover.
    We think a bit of carryover is good. We are working to stay 
within the allowable limit. However, we would ask that we are 
not penalized for those items that are beyond our span of 
control. Late receipt of funds, as an example, will definitely 
have and has had an impact on our ability to execute within 
that given year.
    World requirements that change, and we get a change in 
priorities and get additional work in the year of execution, 
prevents us from executing all of that work that was originally 
programmed. So we would ask just not to be penalized for work 
that comes in, and into our depots, and also that is beyond our 
span of control.
    We are accountable. We understand the importance of 
carryover. And we are willing to work with you, with OSD, and 
with others to develop a calculation. But the current 
calculation, we agree, did not meet our needs.
    Mr. Rogers. Well, General Perna did give me some language 
that we incorporated into this year's NDAA that came out of the 
HASC [House Armed Services Committee] and out of the House.
    General Shrader is--have you seen that language that we put 
in this year's NDAA?
    General Shrader. Sir, not yet. I just took command last 
week. So, and this is----
    Mr. Rogers. Yes. If you will take a look, I am interested--
--
    General Shrader. I will, sir. Yes, sir.
    Mr. Rogers. I know it is going to fix the Army's problem 
because we got it from Army Materiel Command. But I am not sure 
if the other services are going to find it amenable to their 
concerns.
    I asked your counterparts in the Air Force in a hearing a 
couple weeks ago to look at it. So, I would urge you to do the 
same, if you would, and let me know back.
    General Shrader. I will, sir.
    [The information referred to can be found in the Appendix 
on page 44.]
    Mr. Rogers. Okay, thank you.
    With that, I yield back, Mr. Chairman.
    Mr. Wilson. Thank you, very much, Chairman Mike Rogers.
    And at this time, in lieu of a second round, if anyone has 
individual questions, and I do, with General Shrader. You cited 
the January 2017 tornado, which inflicted such damage at the 
Marine Corps Logistics Base in Albany and the surrounding 
community. How is your recovery coming along? What, 
specifically, can we do to facilitate continued tornado 
recovery? Anything we can do to back up Congressman Austin 
Scott?
    General Shrader. Sir, I appreciate the question. And I 
think things are going well, in terms of the plan to recover 
from the tornado. Specifically, there were some 47,000 
principal end items of equipment that were affected. And of the 
47,000 we have been able to get through 75 percent or, roughly, 
35,500 pieces of that and it is ready for issue back. So, it is 
been through.
    So, we have got about 25 percent more that either has to 
be--go through the limited technical inspection process, which 
may feed into the depot maintenance process. So, that is--that 
system is on track and going. Facilities, 64 buildings down 
there were damaged. Of the 64 that were damaged, 20 repairs 
have been complete. And there is ongoing 44 buildings and 
facilities that are still in various stages of completion.
    Last week I was able to talk to the lieutenant--the Navy 
lieutenant commander, Seabee, that is overseeing the whole 
project. And I think the biggest things that he was getting 
after is there are eight of our--eight of storage facilities, 
warehouses, that they are reroofing underway. And they are 
working on getting three of them still under contract, to get 
after those. So, it is all a process and I think it's going 
well, sir.
    And in terms of--the last thing I will tell you is, we do 
have money that was put in the fiscal year 2018 for a 200,000-
square-foot facility that we are going to break ground on here 
pretty soon for warehousing. So it is underway, sir.
    Mr. Wilson. Well this is reassuring, and--and we all know 
you can count on the Seabees too. So this is terrific. Are 
there any other questions?
    If not, I would like just to thank all the witnesses for 
being here today.
    I also would want to wish everyone a very happy Fourth of 
July. And if anybody's available, the Gilbert, South Carolina, 
Peach Festival is available. Don, you can come on out--come on 
down, but we would invite you to come by, but happy Fourth of 
July to everyone.
    This hearing is adjourned.
    [Whereupon, at 9:20 a.m., the subcommittee was adjourned.]

    
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                            A P P E N D I X

                             June 28, 2018

      
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             June 28, 2018

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    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      
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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             June 28, 2018

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             RESPONSE TO QUESTIONS SUBMITTED BY MR. WILSON

    General Shrader. The Marine Corps does have a backlog in facility, 
utility maintenance and depot repair. In regard to the facility and 
utility backlog, as part of our Logistics Infrastructure Planning 
Initiative the Marine Corps is holistically identifying the 
infrastructure related investments, inclusive of our Capital Investment 
Plan, needed to optimize depot operations. Through this plan we will 
seek to address the infrastructure capability and capacity challenges 
presented by aging facilities. Our plan will incorporate previous 
facilities planning and provide prioritization, phasing, and funding 
levels required to ensure that facilities investments support future 
readiness and sustainment. Our depot maintenance is funded to 80% of 
the identified requirement, to meet the Office of the Secretary of 
Defense directed threshold of 80%, which creates an unfunded backlog of 
depot maintenance. To mitigate risk and shortfalls in execution, we use 
a depot maintenance model which optimizes depot workload, ensuring 
depot investment maximizes warfighting capability. While resourcing of 
depot and field-level maintenance in support of deployed and home 
station equipment readiness has kept pace with requirements, fiscal 
realities require readiness balancing decisions, inclusive of our 
maintenance accounts. For the deferred depot maintenance, four critical 
weapon systems (AAV, LAV, Tank [M1A1/M88] and M777 Howitzer] account 
for approximately 50% of the Marine Corps depot maintenance budget, 
with 70% of our depot maintenance budget invested in just 15 total 
weapons systems, all significant Marine Corps' readiness items and 
highest depot cost drivers.   [See page 7.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. SCOTT
    General Piggee. Protecting Army's intellectual capital is vital to 
maintaining technological advantages over our adversaries, therefore 
the Army continues to partner with the Department of Defense (DOD) and 
industry to implement standards and initiatives to safeguard defense 
information and facilitate broader public-private cyber information 
sharing. The Army enforces the Defense Federal Acquisition Regulation 
Supplement (DFARS), 48 Code of Federal Regulation (CFR) subpart 204.73, 
which requires all defense contractors to provide adequate 
cybersecurity as described in National Institute of Standards (NIST) 
Special Publication (SP) 800-171, Protecting Controlled Unclassified 
Information in Nonfederal Systems and Organizations, for our sensitive 
technical information. The Army leverages a combination of DFARS 
guidance and Law Enforcement and Counterintelligence partnerships to 
help further ensure that cybersecurity contract requirements are 
commensurate with the value of our intellectual capital and risks. The 
Army also leverages the DOD Defense Industrial Base (DIB) Cybersecurity 
(CS) Activities established under 32 CFR part 236 which serves as a 
voluntary forum for the DOD and member companies of all sizes to share 
cybersecurity best practices, DOD and Federal policy challenges, and 
threats.   [See page 11.]
                                 ______
                                 
            RESPONSES TO QUESTIONS SUBMITTED BY MR. CARBAJAL
    General Piggee. The Office of Personnel Management (OPM) submitted 
four recommendations that would affect both current and future retirees 
in the Federal Employees Retirement System (FERS) and Civil Service 
Retirement System (CSRS). The recommendations are highlighted below:
    1. Elimination of Federal Employees' Retirement System (FERS) 
Annuity Supplements
    This proposal seeks to eliminate the FERS annuity supplement for 
new retirees and the supplementary annuity for survivor annuitants. 
This annuity supplement is used to cover the gap between retirement and 
Social Security eligibility for those federal employees that have to 
retire before they become Social Security eligible to receive at age 
62, such as law enforcement officers. The OPM legislative proposal 
would eliminate supplements for new retirees and for survivor 
annuitants. Reductions of this nature would negatively impact the 
compensation of former employees and impacted survivors at a crucial 
stage of their lives.
    2. Increase of CSRS and FERS High Three Average Salary Compensation 
to Pay Period to Five Years
    This proposal would amend sections of Title 5 to increase the 
period of service used to compute an annuitant's average salary under 
the CSRS and FERS by averaging an employee's basic pay in effect over 
five consecutive years of service rather than three years of service as 
is required under current law. Passage of this recommendation would 
affect the agency's ability to retain current employees who are 
retirement eligible. Additionally, a major exodus of employees with 
unique skill sets and historical knowledge, without the opportunity of 
mentoring or information sharing to new employees, could adversely 
impact our ability to ensure mission accomplishment.
    3. Increase Contributions to Federal Employees Retirement System 
(FERS)
    This proposal seeks to increase the employee deduction rates for 
the FERS. This proposal would require FERS employees to fund a greater 
portion of their retirement benefit and will negatively impact current 
compensation.
    4. Reduction or Elimination of Retirement Cost of Living 
Adjustments (COLAs)
    This proposal seeks to reduce the cost of living adjustments under 
the CSRS by one half of one percent and to eliminate cost of living 
adjustments under FERS for current and future retirees. This means most 
FERS participants would no longer receive annual cost-of-living 
adjustments. For CSRS participants, their COLAs would be 0.5 percent 
less than what the typical formula currently allows. The amendment 
would eliminate the provision requiring a reduction to an annuitant's 
FERS disability annuity by the amount of the annuitant's actual Social 
Security ``assumed disability insurance benefit'' and would require the 
reduction to be based on an annuitant's actual Social Security 
disability benefit. A reduction of this nature would adversely impact 
recruiting and retention efforts.
    The Federal Government may not always be an employer of choice when 
it comes to salary, but we are an extremely competitive employer when 
considering our total compensation package. These proposed reductions 
will significantly impact our ability to recruit and retain talent in 
an already competitive market. Reducing benefits under FERS will 
significantly impact our ability to recruit and retain a professional 
federal civilian workforce and will adversely impact Army readiness.   
[See page 15.]
    General Shrader. The current federal government civilians' 
retirement annuity is one of the most effective recruitment tools 
available to attract talented and highly qualified civilians. 
Historically, applicants have sought positions within the federal 
government based on the security of the benefits package offered, 
largely including the retirement annuity. In addition to the threats of 
sequestration, furloughs, and limited pay raises, a reduction in 
current federal benefits would further weaken our ability to recruit 
and retain quality civilians In a highly competitive job market.   [See 
page 15.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. ROGERS
    General Shrader. As stated in the response to QFR #3 [see page 49], 
our carryover management challenges are similar to those of the other 
Services. Our position is to adopt the Proposed Calculation Process 
laid out in the April 2018 Report to Congress on Revising Depot 
Maintenance Carryover Calculations HR 115-200, page 97 and move forward 
for implementation of the process. Managing carryover may be improved 
through standardized methodologies and technologies that facilitate 
managing, analyzing, and reporting within and across the Services. Such 
capabilities would support comparative analysis and present 
opportunities to develop more effective and efficient approaches to 
managing depot maintenance capabilities and capacities. Although 
standardized and automated tools could improve carry over calculations, 
at this time It would not be beneficial to have Service specific 
metrics. Carry over calculations should be standard across the 
Department of Defense in order to give the Secretary a common tool to 
measure all the Services. A disparate reporting format with variable 
factors will make it difficult for the OSD to articulate to Congress 
the aggregated information.   [See page 16.]

      
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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                             June 28, 2018

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                   QUESTIONS SUBMITTED BY MR. WILSON

    Mr. Wilson. What level of funding are your respective services 
programming to for FY20, and is that number at or above the BCA cap 
level? If the level is below the amount projected for FY20 in this 
years budget, then what is not being funded at that lower level?
    General Piggee. The administration has not yet decided what level 
of funding they will submit to Congress for FY20. At this time we are 
anticipating funding similar to the PB19 request. It should be noted 
however, that the final decision on funding is not with the 
administration but with Congress. The two-year bipartisan budget relief 
from BCA funding levels expires at the end of FY19. Therefore in FY20, 
BCA funding levels are the law of the land and will be the funding 
level unless Congress grants relief again.
    Mr. Wilson. What level of funding are your respective services 
programming to for FY20, and is that number at or above the BCA cap 
level? If the level is below the amount projected for FY20 in this 
years budget, then what is not being funded at that lower level?
    General Shrader. Our FY20 program is currently funded at the Office 
of the Secretary of Defense designated 80% of the mandated target.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. ROGERS
    Mr. Rogers. I am troubled that carryover as currently interpreted 
is a one-size-fits-all calculation. Services are unnecessarily 
restricting equipment overhaul planning and ordering to game the 
carryover calculation. Meanwhile, the vital work being done at these 
depots must be accomplished faster than ever in today's threatfilled 
environment to support our readiness-and the bean-counting should not 
stand in the way of the mission. To General Shrader, you may be aware 
that last year's House report accompanying the NDAA called for the 
Office of the Secretary of Defense to assess and, if necessary, modify 
the carryover calculation. The response in April of this year provided 
some insight into each service but fell short of providing a solution 
amenable to all. Could you discuss the challenges unique to the Marine 
Corps carryover management programs and any recommendations for 
improvement? Also, would carryover calculations and metrics that were 
specific to each service be beneficial? [QFR #3, for cross-reference.]
    General Shrader. Our carryover management challenges are similar to 
those of the other Services. Managing carryover may be improved through 
a more standardized methodology and technologies that would enable 
management, analysis and reporting within and across the Services. Such 
capabilities would support comparative analysis and may present 
opportunities to develop more effective and efficient approaches to 
managing depot maintenance capabilities and capacities. Although 
standardized and automated tools could improve carry-over calculations, 
at this time it would not be beneficial to have Service specific 
metrics. Carry over calculations should be standard across the 
Department of Defense in order to give the Secretary a common ``tool to 
measure all the Services. A disparate reporting format with variable 
factors will make it difficult for the Office of the Secretary of 
Defense to articulate to Congress the aggregated information.

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