Statement of

General Norton A. Schwartz, USAF

Commander, United States Transportation Command

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Before the House Armed Services Committee

On the State of the Command

March 21, 2007

**[INTRODUCING THE UNITED STATES TRANSPORTATION COMMAND]{.underline}**

**[(USTRANSCOM)]{.underline}**

**[2007]{.underline}**

**[Mission/Organization]{.underline}**

USTRANSCOM, a unified combatant command (COCOM), serves as the
"quarterback" of the Joint Deployment and Distribution Enterprise
(JDDE), whose purpose is to project national security capabilities,
provide end-to-end visibility of forces and sustainment in transit and
rapidly respond to support joint logistics requirements. Through our
component commands, the Air Force's Air Mobility Command (AMC), the
Navy's Military Sealift Command (MSC), the Army's Military Surface
Deployment and Distribution Command (SDDC) and our national and
commercial partners, we execute military and commercial transportation,
terminal management, aerial refueling and global patient movement
through the Defense Transportation System (DTS). In addition to our
transportation mission, USTRANSCOM, as the Department of Defense (DOD)
Distribution Process Owner (DPO), is making improvements that enhance
the responsiveness of the Defense Logistics and Global Supply Chain
Management System for the DOD. As the DOD's DPO, designated in 2003,
redesignated in 2006, codified in the 2006 Unified Command Plan, and
institutionalizing DPO's responsibilities in DOD publications,
USTRANSCOM is leading a collaborative effort with JDDE partners across
the defense logistics community to increase the precision, reliability
and efficiency of the DOD supply chain. By increasing collaboration,
employing expeditionary tools and streamlined systems, adapting our
business models and ensuring an appropriate mix of lift assets, we
fulfill our obligations and "keep our promise" to our warfighters and
the Nation, today and tomorrow.

**[KEEPING PROMISES TO THE NATION IN 2006]{.underline}**

As we look to the future, we are mindful of operations in Iraq and
Afghanistan, and that 2006 was a challenging year. Our requirements in
support of the Global War on Terrorism (GWOT), Operation NOBLE EAGLE
(ONE), Operation IRAQI FREEDOM (OIF), and Operation ENDURING FREEDOM
(OEF) were noteworthy. AMC moved 1,394,485 passengers on deployment,
redeployment, sustainment and rest and relaxation missions, an
achievement accomplished in collaboration with our commercial industry
partners, as they provided us with a cost efficient and effective means
of moving our service personnel. This important relationship with our
commercial industry partners allowed organic aircraft to airlift 526,611
short tons (stons) of vital cargo into the US Central Command
(USCENTCOM) theater. Additionally, our C-17's airdropped 360 stons of
critical supplies for coalition forces in Afghanistan.

Our aging airborne tanker fleet, a key force multiplier, also performed
at unprecedented levels. AMC tankers delivered 128.94 million gallons of
fuel to US and coalition aircraft in support of OEF/OIF. They also
played a critical role in securing the skies over our cities in support
of ONE. Our tankers flew over 500 sorties and offloaded 2.9 million
gallons of fuel to replenish over 1,275 combat air patrol fighters and
support aircraft guarding against terrorist attacks within our borders.
This fall, our tankers launched on a minute's notice to support fighter
patrols over major US cities following the tragic civilian aircraft
crash into a residential high rise in New York City.

MSC and SDDC's contributions were equally impressive, as they delivered
1,246,106 stons/24,094,118 square feet of cargo to both OIF and OEF.
MSC's point-to-point tankers also delivered over 5.79 million gallons of
fuel supporting worldwide DOD requirements.

In USCENTCOM we worked in concert with our JDDE partners and rotated 37
Brigade Combat Teams, eight Air Expeditionary Forces (AEF), and six
Marine Air Ground Task Forces (MAGTF). Despite dynamically changing
theater requirements, USTRANSCOM delivered 95% of personnel, equipment
and cargo to final destination on time, meeting warfighter requirements.

In addition to force rotations, delivering armored vehicles, vehicle
armor kits and improved personal body armor remained a high priority.
This year we moved 6,000 armored vehicles, 600 armor kits, 1.4 million
pounds of Bradley armor tiles, and 100,000 sets of body armor.

Close collaboration with USCENTCOM has enhanced our ability to
understand requirements, forecast movements and develop better, more
cost effective transportation solutions. Through the integration of our
air and surface operations we were able to reduce the cost of
transportation for the Services by over \$60 million and free up
strategic airlift assets for higher priority missions, providing greater
flexibility to us and our customers.

Our ability to quickly respond paid dividends during the evacuation of
American citizens from Beirut during hostilities between Lebanese
Hezbollah and Israel. When requested by the Department of State (DOS) to
assist in this effort, MSC contracted three commercial vessels to
evacuate our citizens. These vessels combined with an interagency team
of other transportation assets, moved over 12,000 personnel from Beirut
to a safe haven in Cyprus where follow-on air transportation
arrangements were made. In the midst of this operation, with the safe
haven camp populations threatening to exceed capacity, AMC secured 30
additional wide-body commercial and 19 military aircraft to transport
1,833 American citizens from Cyprus to McGuire Air Force Base (AFB), New
Jersey, and 6,873 passengers to Atlanta, Baltimore, and Philadelphia. A
key to the success of this operation was the integration of the
expeditionary Contingency Response Group (CRG) into the Joint Task Force
(JTF) command and control structure. CRG personnel from McGuire AFB were
some of the first on the ground in Larnaca, Cyprus, to open the port and
assist the DOS and local personnel to establish command and control and
ensure safe operations.

While operations in USCENTCOM remain the focus of efforts, we are
mindful of USTRANSCOM's global mission to keep forces and sustainment
flowing around the world. In Germany, when a customs issue caused a
backlog of critical cargo, USTRANSCOM acted immediately with USEUCOM,
and negotiations with the German Government resulted in a streamlined,
more efficient customs process.

In the US Southern Command (USSOUTHCOM) area of responsibility (AOR),
USTRANSCOM helped plan and execute 12 Detainee Movement Operations (DMO)
from Guantanamo Bay, Cuba, to various points around the globe, resulting
in 87 detainees being repatriated, or permanently accepted by partner
nations. At home, USTRANSCOM responded to the devastating effects of
wildfires. Working closely with US Northern Command (USNORTHCOM), we
provided firefighting support via Air National Guard and Air Force
Reserve C-130s. These crews flew 530 sorties and released 12.9 million
pounds of retardant, preventing millions of dollars in damage and saving
countless acres of forest and wilderness areas. We also worked with
USNORTHCOM to develop timely response procedures to airlift Homeland
Defense Quick Reaction/Rapid Reaction Forces (QRF/RRF) using C-130s and
C-17s.

Exercise support was yet another key way USTRANSCOM supported the
geographic COCOMs. Exercises provide critical training and serve as a
venue to review business processes, and explore/refine improved
deployment and distribution processes. For example, the North American
Aerospace Defense Command (NORAD)-USNORTHCOM Ardent Sentry 06 exercise
not only included lift of 1,656 passengers and 66.5 stons of cargo to
support the employment of Homeland Defense QRF and Joint Task
Force-Civil Support elements, it also exercised Joint Task Force-Port
Opening (JTF-PO) elements. JTF-PO is an evolving joint expeditionary
capability to rapidly establish and operate an aerial port of
debarkation and cargo distribution node. This force includes command and
control (C2), airfield and distribution assessment, rapid port
clearance, in-transit visibility (ITV), and movement control elements
for distribution operations. The US Pacific Command (USPACOM) exercises
in the Republic of Korea (ROK), Reception, Staging, and Onward Movement
and Integration (RSO&I) and Ulchi Focus Lens provided similar venues for
USTRANSCOM to integrate new processes to better support the joint
warfighter.

Perhaps the most important of all our missions, but the least heralded,
is the movement of injured soldiers, sailors, marines, airmen, and
civilians from the battlefield to world-class medical treatment
facilities. This is a complex, time-sensitive, process requiring close
collaboration with doctors, military hospitals and our aero-medical
evacuation crews to ensure that combat wounded or injured personnel move
at exactly the correct time to the correct place -- and this process
works superbly. In 2006 over 7,500 patients were moved in the USCENTCOM
AOR and over 15,000 patients were moved globally.

Should the worst occur and a warfighter perishes in the defense of our
nation, USTRANSCOM ensures the most dignified transport of the honored
dead from the battlefield to their final internment. Recently enacted
legislation changed the way we transport the fallen, and we have been
working closely with the Joint Staff (JS), Office of the Secretary of
Defense (OSD), and the Services to develop a transportation strategy
that ensures our fallen warfighters return home on military or
military-contracted aircraft with honor and dignity to the military or
civilian airfield nearest the designated destination. To date, we have
provided this transportation for 103 of our fallen.

**[LEADING THE JOINT DEPLOYMENT AND DISTRIBUTION ENTERPRISE
TRANSFORMATION]{.underline}**

**[Process and Systems Transformations]{.underline}**

As we conduct the missions of today, we are transforming the JDDE to
meet both the changing environment of current operations and rapid
global mobility and distribution requirements of the future force.

Guiding our transformation efforts is the DOD sanctioned and the Joint
Requirements Oversight Committee approved Joint Logistics (Distribution)
Joint Integrating Concept (JL(D)JIC). This keystone document directs the
development of joint capabilities to enhance the movement and
sustainment of joint forces. Leading this important work is USTRANSCOM,
exercising our responsibilities as the global mobility force provider
and Distribution Process Owner.

The JDDE includes the equipment, procedures, leaders and connectivity
necessary to conduct joint distribution operations. When fully
developed, the JDDE will be a single unified enterprise with
well-defined authorities, metrics, business rules, and integrated
capabilities that can precisely and reliably see and direct the flow of
forces and sustainment.

Transformation is driving us to rethink how we conduct business. We are
moving toward arrangements with private industry that are geared towards
performance and integrated customer focused solutions. An example of
this business transformation is the Defense Transportation Coordination
Initiative (DTCI). USTRANSCOM, in partnership with the Defense Logistics
Agency (DLA) and the Military Services,** **is currently selecting a
transportation services coordinator to manage DOD freight movements in
the Continental United States (CONUS). This transportation services
coordinator will have visibility of CONUS freight movements enabling
load consolidation, use of more cost effective inter-modal solutions,
and more intelligent scheduling.  These improvements will increase the
precision and reliability of freight movement which will lead to
increased customer confidence, cost savings and more effective
employment of our workforce.  Use of a single coordinator will also help
generate relevant metrics that can be used to drive continual process
improvements across our distribution system. 

Industry has experienced cost savings on average of 12 percent through
partnering with transportation services providers.  Today, seventy-eight
percent of US companies and eighty-two percent of Fortune 100 companies
use transportation management services.  DOD is several years behind
industry and we are acting now to capitalize on this industry best
practice.  Analyses suggest cost savings in the fifteen percent range
annually over the life of a 7-year contract. DTCI is an example of how
we will leverage commercial best practices to provide best value to our
defense customers.

Just as DTCI will improve commercial transportation, USTRANSCOM's Joint
Deployment and Distribution Operations Center (JDDOC) concept is
improving integration of strategic and theater distribution. This year
we published the second edition of the JDDOC template which every
regional COCOM has used to tailor their organic JDDOCs. Currently, we
are planning a third edition to include metrics, elaborate on forward
deployed JDDOC operations and how enhanced JDDOCs can best address broad
theater logistics issues.

As we work hard to increase the reliability and precision of our
processes, the ability to measure system performance becomes
increasingly important. This year we began measuring system performance
through Integrated Distribution Lanes, where the warfighting customer
defines the output of the distribution systems in terms of on-time
delivery. USTRANSCOM, in our role as DPO, then takes appropriate action
with our components, national partners, and services to ensure the
logistics system, writ large, delivers the outcome defined by the
warfighter. We are already achieving substantial improvements in
delivery times, and we expect to make continued improvements to the
largest and most diverse supply chain that exists today.

In the current high-paced operating environment, commanders need timely
and accurate supply chain information to inform operational decision
making. With this in mind, the Under Secretary of Defense for
Acquisition, Technology and Logistics designated USTRANSCOM to be the
Department's functional proponent for Radio Frequency Identification
(RFID) and related Automated Identification Technology (AIT)
implementation. Under the new designation, USTRANSCOM will execute an
AIT implementation strategy and develop a corporate approach for use of
these asset visibility technologies. Major responsibilities include
developing an integrated AIT concept of operation to provide end-to-end
visibility, incorporating RFID and related AIT in the DPO architecture,
overseeing data quality and performance using Portfolio Management
methodology, championing funding and synchronizing RFID implementation.

We have already implemented active RFID technology at our strategic
ports to provide COCOMs detailed tracking information on the movement of
cargo throughout the transportation system and have begun passive RFID
implementation at state-side aerial ports to improve tracking of air
shipment cargo. USTRANSCOM is also evaluating the use of satellite
technology to track container movements in the USCENTCOM AOR. Our goal
on the AIT front is to craft a strategy that delivers the optimal AIT
and corresponding logistics solutions which provide the warfighter with
end-to-end visibility of forces and material moving through the DOD
supply chain.

Given the ever increasing need for information, one key responsibility
is the management of the portfolio of information technology (IT)
systems which provide that information. Historically, IT resources have
been managed and acquired as stand-alone systems rather than integral
parts of a net-centric capability. This has the effect of allowing
duplicative investment in systems or platforms that deliver the same or
similar capabilities, limiting the ability to share information or fully
incorporate doctrine, organization, training, materiel, and leadership
factors. To mitigate this problem, DOD designated USTRANSCOM the
Distribution Portfolio Manager (DPfM). Managing distribution systems as
a portfolio of capabilities will align IT with the needs of the
warfighter. This approach will provide the structure for a balanced
strategy based on enterprise level planning, integrated architectures
and warfighter proposed performance measures.

An example of this integration is the convergence of Defense Logistics
Agency's (DLA) Integrated Data Environment (IDE) logistics system and
USTRANSCOM's Global Transportation Network (GTN). USTRANSCOM is
partnering with DLA and JS-J4 to bring these programs together under the
same acquisition management framework. Converging these two systems will
create a powerful environment for managing integrated supply,
distribution, and logistics information. Another area of integration is
the Port Management Automation (PMA) initiative. PMA will support
integration of the Worldwide Port System and its manifesting
functionality into the existing Global Air Transportation Execution
System (GATES) to achieve a single joint port operations and manifesting
system. Convergence of these distribution systems will increase
logistics information sharing across DOD, enhance customer visibility
and reduce costs.

In collaboration with the Air Force and Defense Finance and Accounting
Service, we are replacing outdated, unreliable billing and accounting
processes and systems, transforming the financial management of our \$9
billion enterprise with the Defense Enterprise Accounting and Management
System (DEAMS). With implementation of Version 1.1 in FY07, DEAMS will
provide the warfighter with near real-time accurate and reliable
financial information. This cross-service application, when fielded,
will set the standard for effective and efficient stewardship of Defense
Working Capital Fund resources.

We are also modernizing our border clearance process by exploring an
integrated system that will enable automated customs clearance in most
if not all theaters of operation. We believe the single system will
streamline the process, improve host nation confidence, and minimize
cargo delays for the warfighter.

Finally, in the area of patient movement we are continuing development
of the TRANSCOM Regulating and Command and Control Evacuation System
(TRAC2ES). When fully operational in FY09, this system will provide
direct support of DOD patient movement requirements and provide a web-
and client-based system capable of In-Transit Visibility (ITV), as well
as trend analysis.

As with any similar effort, the maturity and completeness of our
portfolio management strategy will produce results over time; however,
we have already seen a substantial return on our efforts to date.

**[Organizational Realignment/Personnel Issues]{.underline}**

Although vital to what we do, the JDDE is more than just processes and
systems. It's really about people, and USTRANSCOM is focusing on
initiatives that will provide for the needs of the warfighter. First, we
are developing organizational structures, both in the distribution
network and at USTRANSCOM, to enhance the responsiveness of the JDDE. We
are developing deployable distribution command and control concepts,
procedures, and associated doctrine to enable the combatant commanders
to execute theater logistics operations with greater visibility,
control, precision and efficiency. Functional elements like JTF-PO
mentioned earlier and the Director Mobility Forces-Surface (DM4-S) were
created to support deployment and distribution activities. The DM4-S
will synchronize and direct movement of surface transportation
resources, ensuring optimum throughput at ports of debarkation (air and
sea) in the theater as prescribed by the Combined/Joint Force Land
Component Commander.

The Base Realignment and Closure (BRAC) process has presented USTRANSCOM
the unique opportunity to establish a modern command and control
structure. This important organizational realignment, in addition to
achieving BRAC savings two years earlier, accomplishes several important
things as USTRANSCOM looks to the future. First, it consolidates, at
Scott AFB, the SDDC Command Center currently in Alexandria, VA with its
execution arm currently at Ft. Eustis, VA. Second, it allows USTRANSCOM
to consolidate acquisition and contracting into a single, acquisition
center of excellence focused on delivering integrated logistics support
solutions for our customers. Third, it has enabled the creation of the
Joint Distribution Process Analysis Center (JDPAC) by consolidating
analytical elements of USTRANSCOM, AMC and SDDC. This concentration of
analysis and engineering expertise will offer unprecedented end-to-end
distribution modeling and simulation capability, advanced operations
research techniques, and sophisticated engineering tools to bear on
complex distribution problems. In summary, by consolidating locations
and concentrating joint business and analytical processes, BRAC will
drive efficiencies and enhance DTS performance for the next 20 years.
Availability of BRAC appropriations for personnel and military
construction remains key to timely execution of this effort.

In parallel with BRAC transformation, we are transforming intelligence
operations. In April 2006, USTRANSCOM established the Joint Intelligence
Operations Center-Transportation (JIOC-TRANS) to enhance integration of
intelligence, operations, and plans, to provide time-sensitive
intelligence in support of global operations, and to strengthen our
ability to conduct intelligence analysis. Focused on providing support
to the deployment and distribution process, the JIOC-TRANS ensures
intelligence capabilities and disciplines are optimally employed and
synchronized within the defense intelligence enterprise.

The military's strength is our people, and we must all make continuous
improvements to the quality of life of our warfighters. Moving is a
particularly stressful event for service members and DOD civilians, and
damage to personal property makes it even more difficult. In response,
SDDC is developing the Families First Program - a comprehensive program
that revamps DOD household goods movements to include full replacement
value for lost or damaged personal property. The program is also
shifting practices by allowing customers to go online to rate
transportation service providers, obtain online counseling via the web,
and file personal property claims directly with the transportation
service provider.

We are also operating Patriot Express commercial passenger service
between the continental United States and our forward operating
locations. In the Pacific, we recently completed an OSD-directed
restructuring that eliminated a \$13 million loss, while retaining this
desirable transportation service to mainland Japan and Okinawa. This
year, we are reviewing our European route structure and the protected
bases that support CENTCOM movements.

Finally, to ensure the viability and vitality of the JDDE, we are
developing joint logisticians - military and civilian personnel trained
to manage deployment and distribution for warfighters in joint,
inter-agency, and multinational environments. We are working with
commercial industry, civilian institutions specializing in logistics
education, and USJFCOM's Joint Knowledge Development and Distribution
Capability to develop training opportunities. Furthermore, we have
teamed with the Industrial College of the Armed Forces to bring enhanced
joint logistician training to the classroom, culminating in the
graduation of 16 students with a concentration in Supply Chain
Management in the class of 2006.

**[Maintaining Airlift Readiness for Mission Execution]{.underline}**

In addition to world-class people, the reliability and precision of the
JDDE depends on ensuring those people have world-class equipment to
operate. As we look to the future, rapid global mobility will be a key
enabler to the effectiveness of the joint force. As response times for
forces shrink from weeks to hours, our ability to rapidly aggregate and
then move operational capabilities forward will depend on versatile,
ready and effective mobility forces.

However, much of our mobility force structure requires modernization or
recapitalization, and my top priority is to work with the Air Force to
recapitalize our aging tanker fleet. The current fleet consists of 531
Eisenhower--era KC-135s and 59 Reagan--era KC-10s. The Air Force needs
to recap its KC-135 fleet with the KC-X, as well as retire those KC-135s
that are no longer able to fly or are mission ineffective. The
replacement KC-X must be a multi-mission aircraft capable of multi-point
refueling, have significant cargo and passenger carrying capability, and
be equipped with appropriate self-protection systems. The next
generation tanker, the KC-X, will not only fulfill its primary refueling
role, but also provide an array of enhanced mobility solutions. A
tailored cargo and passenger carrying capability will revolutionize our
transportation options and mitigate wear on the C-17, C-5, and C-130s by
decreasing force closure times and lessening the burden on our strategic
lift fleet.

The KC-10 fleet remains a viable platform through 2040, but it must be
modified to ensure the fleet can operate in the future global airspace
environment. To this end, AMC has initiated a KC-10 aircraft
modernization program that complies with international airspace
requirements, addresses obsolescence concerns, and provides a growth
path for future avionics upgrades.

In addition to recapitalizing the tanker fleet, AMC is modernizing the
C-5 fleet. C-5 modernization will deliver needed capability to the
warfighter through the year 2040, while improving force closure and
increasing the number of available C-5s with its unmatched outsized and
oversized, roll-on / roll-off capability \-- at a substantially reduced
cost of operation. The modernization includes avionics upgrades, new
engines, and other reliability enhancements to increase aircraft
availability, enable access to international airspace and foreign
airfields, while reducing fuel consumption by up to ten percent and
lowering operations costs. To effectively support the National Defense
Strategy, we need the C-5's unique lift capabilities in combination with
the C-17. In short, C-5 modernization is an essential companion to the
remaining C-17 procurement to meet known mobility requirements.

Another key component to our global mobility posture is providing
regional COCOMs with theater aerial delivery and distribution
capability. Air Reserve Component C-130 E/H/J personnel demobilization
and C-130 structural fatigue place a burden on our capability to meet
this critical requirement. Since October 2004, we have had 115 C-130s
grounded or restricted due to problems with the center wing box (CWB).
Over the past year alone, three Air Force C-130s were grounded and
another 14 were restricted from normal flying operations. The Air Force
has had near term success in repairing 17 of these CWBs and plans on
repairing or replacing more, but this is not the permanent solution.
Additionally, C-130 variants have experienced other challenges in the
areas of noncompliance with global air traffic regulatory requirements,
aircraft capability and sustainment, and long-term combat effectiveness.
The Avionics Modernization Program (AMP) seeks to address these issues
with standardized avionics upgrades. We would also ask that Congress
allow the Air Force to selectively retire some of the oldest aircraft,
allowing the Air Force to manage the new and legacy aircraft fleet to
best effect.

While the C-130 remains a work horse for intra-theater lift, it does not
fully meet the Joint Force need to go the "last tactical mile". The
Joint Cargo Aircraft (JCA) will be capable of meeting this joint force
requirement. Procurement of the JCA, coupled with the repair and
replacement of the CWB on select C-130s, will enable us to attain the
right mix of aircraft to meet COCOM requirements.

Another tool in our tactical airlift arsenal is the Joint Precision
Airdrop System (JPADS). Currently under development, JPADS is the "Joint
Direct Attack Munition (JDAM)" of logistics, and gives us the ability to
provide precision airdrop from higher altitudes, thereby dramatically
reducing the threat to our air crews and personnel on the ground. JPADS
provides a four-fold increase in accuracy over previous ballistic
airdrop systems and can deliver to multiple drop zones on a single pass.
We have had 147 drops during OEF and will continue to collaborate with
the Services to ensure the capability reaches its full potential.

The ability to rapidly offload cargo, while cannot be overlooked - and
that ability resides in our Tunner and Halvorsen loaders. We currently
have funded for the full complement of 318 Tunner loaders, but only 391
of 538 Halvorsens. USTRANSCOM strongly supports the Air Force
acquisition of these remaining assets to properly outfit the Nation's
air distribution "system".

Our entire air mobility and air refueling fleet is a critical capability
in our nation's ability to project power. But the expertise on the
ground which provides command and control, on-load/off-load capability,
and ground maintenance in potentially hostile environments is equally
important. AMC's capability to rapidly deploy into an austere, not
totally secured environment, quickly assess an airbase and begin
airfield operations is the Contingency Response Wing. This highly
capable force multiplier also provides the core contingent, coupled with
forces from the Army and eventually the Navy, to integrate air and
surface lines of communications for Joint Reception, Staging, Onward
Movement and Integration in the form of Joint Task Force-Port Opening.

**[Maintaining Sealift Readiness]{.underline}**

On the sealift side, our efforts parallel the air - targeted investments
in readiness, recapitalization of aging force structure and improvements
in how we maintain our organic fleet. We are in the process of
"right-sizing" the strategic sealift fleet by transferring older, lower
utility ships out of the Ready Reserve Fleet (RRF). Currently, the RRF
consists of 44 ships, from a high of 102 in 1994. The funding that had
been programmed for the maintenance of those retired vessels will now be
used to maintain and extend the service life of the remaining vessels,
fund enhancements to increase efficiency and safety, and leverage our
commercial partners to recapitalize lost capacity.

Vital to conduct any war or contingency is the requirement for enormous
quantities of fuel and USTRANSCOM is working with MSC to recapitalize
their aging tanker capability as well. International regulations and
commercial refinery standards limit the age of tankers loading and
discharging at most worldwide oil terminals to a maximum of 25 years.
MSC\'s fleet of T-5 fuel tankers will exceed their useful age in 2010.
In preparation, we are pursuing the long-term charter of U.S.
manufactured commercial tankers to transport DOD fuel.

We are also looking forward to replacing our 40-year old Offshore
Petroleum Discharge System (OPDS) tanker this June. Replacing this OPDS
vessel with a modern technology ship will significantly enhance our
capability to support the warfighter with fuel over the shore when
access to ports is unavailable.

To further shore up our strategic sealift capability, we fully support
the Navy's effort to exercise purchase options on the ships employed in
the Maritime Prepositioning Ships (MPS) program. Apart from the support
they provide for the Marine Corps' prepositioning requirements, these
ships have the dual use of providing transportation capacity for surge
and sustainment missions. Each of the charters includes favorable
purchase options.

**[Maintaining Infrastructure Readiness]{.underline}**

USTRANSCOM is working with our national partners at the Department of
Transportation (DOT) to balance peacetime and wartime surface movement
requirements on the US highway system. Through our Highways for National
Defense Program, we are preparing for the reauthorization of Surface
Transportation legislation required in FY 2010 by updating the Strategic
Highway Network. We are concentrating on congestion, condition, and
capacity issues with our intermodal deployment routes. We will continue
our close coordination efforts with DOT, the Federal Highway
Administration, and the States, through the American Association of
State Highway and Transportation Officials to identify defense
requirements. We urge Congress to ensure that defense public highway
needs are included in future national highway programs.

We are also focusing significant attention and resources on critical
infrastructure supporting global mobility. Beginning in the late 1990s,
USTRANSCOM, the geographic COCOM's, Joint Staff, Defense Logistics
Agency, and the Services implemented a comprehensive plan to improve
strategic mobility support capabilities. This year, USEUCOM and USPACOM
En-Route Infrastructure Steering Committees approved over \$1.2 billion
in construction projects to upgrade fuel receipt and storage, fuel
hydrant systems, ramps, and runways at 13 key installations.

We are looking to expand our reach into regions of increasing national
interest and potential instability, most notably Africa, Southeast Asia,
and South America. We participated in OSD strategy-led visits to all the
regional COCOMs to better understand emerging contingency plans and to
champion the need for mobility-capable cooperative security locations to
support these plans. We also led the first Global En-Route
Infrastructure Steering Committee to prioritize joint military
construction projects to expand global mobility capabilities. Like the
force structure that moves our forces, infrastructure is a cornerstone
of our ability to project national power.

**[Protecting our Forces]{.underline}**

Protecting our forces is also foundational to accomplishing our global
mission. We are leading the DOD in integration of best security
practices for securing and protecting cargo. Sharing force protection
information is crucial and our Critical Infrastructure Program (CIP) is
fostering information sharing with the DOD, DOT, US Coast Guard, and the
Transportation Security Agency. The CIP enables global mobility by
mitigating identified risks to our critical worldwide physical and cyber
transportation infrastructures. SDDC is working with the Association of
American Railroads and other key commercial partners to obtain "secure"
modes of communication. These same partners are being integrated into
regular force protection meetings to facilitate community-wide
infrastructure and force security.

Each of our components is also working to improve threat protection
measures for their specific missions. At our seaports we are making
improvements such as waterside barriers, security equipment and guard
positions. AMC is pursuing the Large Aircraft Infrared Countermeasures
system in order to detect and defeat advanced, man-portable air defense
systems which are the number one threat to mobility aircraft worldwide.
To address the radar-guided missiles and anti-aircraft artillery threat,
AMC will be fielding the Advanced Situational Awareness Countermeasures
system. This system provides mobility aircrews the capability to avoid
radar-guided threats and countermeasures to defeat threats when
avoidance is not possible. To help secure our sealift assets, MSC is
integrating Navy Embarked Security Teams. In the area of Chemical,
Biological, Radiological, Nuclear, and High Yield Explosive, we are
working with the Joint Staff on individual protective equipment and
related technological improvements.

As the Distribution Process Owner, USTRANSCOM supports all initiatives
to authenticate drivers and workers in the distribution supply chain. In
CONUS, interoperability between the Defense Biometric Identification
System (DBIDS) and the TSA Transportation Worker Identification
Credential (TWIC) programs will eventually enable driver identity
authentication via compatible biometric credentials at multiple
locations, authenticating the identity of drivers as they move between
forts, ports and bases. In the interim, SDDC will vet contractors and
stevedores in conjunction with the El Paso Intelligence Center (EPIC) as
MSC currently does for its ship's crew and associated support personnel.

Improved supply chain security includes protecting our Military Ocean
Terminals. We must provide a trained and capable security force at
adequate levels to protect critical infrastructure. Currently, SDDC
augments security of commercial strategic seaports through contracts
with local law enforcement and occasional utilization of Army Reserve
military police personnel.

**[Fiscal Stewardship]{.underline}**

USTRANSCOM, as a combatant command, is focused on effectiveness in our
supporting role to the geographic combatant commanders (GCCs). However,
we are at the same time decidedly mindful of cost.

USTRANSCOM is intensely aware of our role as stewards of a not
insignificant portion of the Nation's treasure. As such we are
constantly looking to find efficiencies. This year we implemented a
cost-management process that allows us to capture cost avoidance
information across the enterprise. From October 2005 through September
2006, USTRANSCOM avoided \$496.68 million in distribution costs: by
shifting to less costly transportation modes; by incorporating challenge
protocols which validate a customer's requests for high-cost
transportation options; by scheduling efficiencies; and, by negotiating
least cost transportation strategies with our Service customers.

**[Maintaining Partnerships]{.underline}**

Critical to the success of any enterprise is mutually supporting
relationships with partner organizations, and our enterprise is no
different. A critical partner in our nation's ability to project and
sustain forces is a viable Civil Reserve Air Fleet (CRAF). Therefore, to
ensure CRAF's future viability, we have proposed legislation to
incentivize our commercial airline partners to maintain the size and
type of lift capability DOD needs in the future. This "assured business"
initiative is designed to preserve the core of our CRAF incentives by
assuring business in an amount no greater than 80% of a five year
average of peacetime commercial contracts in a "take or pay"
arrangement. To further ensure CRAF's viability we enthusiastically
support the Fly America Act (49 USC 40118) and the Fly CRAF Act (49 USC
41106).

On the cargo side, USTRANSCOM has awarded an International Heavyweight
Express (IHX) contract to our commercial partners for cargo from 151-300
pounds. This fills a much needed customer requirement for an express
freight option for items up to 300 pounds.

Through the Maritime Security Program (MSP) and the Voluntary Intermodal
Sealift Agreement (VISA), the DOD obtains wartime sealift capability
from commercial sources utilizing privately owned, US Flag vessels, US
citizen crews and the use of these shipper's global intermodal networks.
The success of this important national program is based on a two-way
value proposition: for the DOD we receive assured access to vessels and
intermodal equipment; we receive significant cost savings by relying on
existing commercial capacity; and, we avoid significant up-front capital
investment. On the commercial side, our partners receive payments under
the MSP and priority access to US government cargoes. Unfortunately,
recent budget rescissions to the MSP program have threatened this vital
relationship, and we are engaged with others in the Executive Branch on
that issue. As an additional measure to ensure a viable US maritime
industry, we are investigating the feasibility of an assured business
incentive for the US flag maritime industry that parallels that which we
propose for the CRAF.

Finally, we are strengthening our relations with partner's strategic
seaports through our involvement in the National Port Readiness Network
(NPRN). The NPRN ensures military and commercial seaport systems are
ready to support deployment of military cargo.

In an increasingly global environment we are operating with our allies
to ensure smooth distribution operations. Currently, we dialogue with
them to exchange knowledge and determine how to best integrate our lift
capabilities. Our allies in Australia, Canada and NATO plan to procure
C-17 aircraft that will increase strategic airlift capability.
Additionally, we are making excellent use of international agreements to
further integrate our logistics systems with those of key allies. We
have a Mutual Airlift Support Agreement with the Republic of Korea which
provides access to Korean commercial aircraft to augment our own
capacity in the event of hostilities in Korea. In addition, we use the
acquisition and cross-servicing authorities provided by law to provide
and obtain reimbursable logistic support in over 30 countries.

**[Looking Ahead]{.underline}**

As the services evolve to meet future challenges, we must be in concert
with them, anticipating their requirements for innovative mobility and
distribution strategies. To meet those challenges we are exploring new
ways to provide support to the future force.

In collaboration with our partners we are using our Research,
Development, Test and Evaluation funding line to leverage emerging
technologies. Two examples are the JPADS-Mission Planner, which makes
possible precision delivery of sustainment to isolated areas in
mountainous Afghanistan; and the Wireless Gate Release System, which
automates the release of air drop bundles, doubling the C-130 JPADS
delivery capacity and reducing damage to cargo.

We are also testing common modular containers and platforms that can be
moved by sea, air or land transport without re-handling or repackaging;
that can be quickly reconfigured for movement within a theater of
operations; and that are equipped with tracking technologies to permit
seamless movement through the global distribution system. Known as the
Joint Modular Intermodal Distribution System, or JMIDS, this Joint
Capability Technology Demonstration is designed to improve end-to-end
distribution from sources of supply to point of effect while reducing
the logistics footprint in theater. Likewise, we are implementing a
single transportation tracking number -- much like commercial industry
-- to more simply track material as it moves around the globe.

We are participating in the capabilities-based assessment for the role
of Sea Basing spanning the range of military operations in the 2015-2025
timeframe. The success of Sea Basing relies heavily on advances in the
areas of cargo handling, ship-to-ship cargo transfers, sea state
mitigation through sea state four and high-speed connectors. The
evolution of the Joint Sea Base further highlights the need for a
high-speed surface connector to bridge the gap between high-speed
airlift and low-speed sealift for transport of forces and sustainment.
This is the capability we seek in the Joint High Speed Vessel
initiative.

AMC is working on its Global Mobility Concept of Operations which
outlines how future mobility forces will operate from now until 2025.
The framework it lays out centers on five operational capabilities;
airlift, air refueling, expeditionary air mobility operations, space
lift, and special operations forces mobility.

With our military operations being conducted in austere locations around
the globe, modernizing our theater airlift fleet with highly capable
aircraft is vital. To illuminate this requirements array, we are
conducting a study titled the Joint Future Theater Airlift Capabilities
Assessment (JFTACA). This effort will provide an analysis of future
joint theater airlift requirements to include fixed-wing, rotary-wing,
potentially lighter than air, and precision airdrop capabilities.

**[FINAL THOUGHTS]{.underline}**

As the Geographic Combatant Commanders reorient their capabilities and
forces to be more agile in the Global War on Terrorism; to prepare for
increasingly asymmetrical challenges around the world; and, to hedge
against uncertainty in the longer term, so must USTRANSCOM rethink our
capabilities, forces and processes. We are implementing enterprise-wide
changes to ensure that our organization, its processes and procedures
support those GCC vectors.

Our DPO initiatives are paying substantial dividends now in effective
support to the warfighter and in efficient use of our national
resources. Our readiness and modernization initiatives will ensure the
combatant commander's ability to swiftly engage and defeat America's
enemies or provide relief to populations in need. USTRANSCOM will keep
looking to the future and advocate systems and processes to move
America's military might at yet greater distances and speeds with a keen
eye on cost, value and efficiency.

I could not be prouder of the USTRANSCOM team and our national partners.
Today, we are supporting the GWOT while providing consistent precision
and velocity to ensure delivery of combat forces and humanitarian relief
in support of National objectives. Together we are transforming the
military deployment and distribution system, ensuring our nation's
ability to project national military power to engage America's enemies
or support our friends whenever and wherever the need may arise. In all
of this, a promise given by us will be a promise kept.