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33–787 2007

[H.A.S.C. No. 109–13]

MILITARY CONSTRUCTION, FAMILY HOUSING, BASE CLOSURES AND FACILITIES

OPERATIONS AND MAINTENANCE

HEARING

BEFORE THE

READINESS SUBCOMMITTEE

OF THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

HEARING HELD

MARCH 15, 2005
(II)

READINESS SUBCOMMITTEE

JOEL HEFLEY, Colorado, Chairman

HOWARD P. ‘‘BUCK’’ MCKEON, California

JOHN N. HOSTETTLER, Indiana

WALTER B. JONES, North Carolina

JIM RYUN, Kansas

ROBIN HAYES, North Carolina

HEATHER WILSON, New Mexico

KEN CALVERT, California

J. RANDY FORBES, Virginia

JEFF MILLER, Florida

TOM COLE, Oklahoma

ROB BISHOP, Utah

CANDICE S. MILLER, Michigan

MIKE ROGERS, Alabama

TRENT FRANKS, Arizona

JOHN M. MCHUGH, New York

SOLOMON P. ORTIZ, Texas

LANE EVANS, Illinois

GENE TAYLOR, Mississippi

NEIL ABERCROMBIE, Hawaii

SILVESTRE REYES, Texas

VIC SNYDER, Arkansas

CIRO D. RODRIGUEZ, Texas

ROBERT A. BRADY, Pennsylvania

BARON P. HILL, Indiana

JOHN B. LARSON, Connecticut

SUSAN A. DAVIS, California

RICK LARSEN, Washington

JIM MARSHALL, Georgia

MADELEINE Z. BORDALLO, Guam

RYAN VAART, Professional Staff Member

PAUL ARCANGELI, Professional Staff Member

CHRISTINE ROUSHDY, Staff Assistant
(III)

C O N T E N T S

CHRONOLOGICAL LIST OF HEARINGS

2005

Page

HEARING:

Tuesday, March 15, 2005, Military Construction, Family Housing, Base Closures and Facilities Operations and Maintenance ............................................ 1

APPENDIX:

Tuesday, March 15, 2005 ........................................................................................ 39

TUESDAY, MARCH 15, 2005

MILITARY CONSTRUCTION, FAMILY HOUSING, BASE CLOSURES AND

FACILITIES OPERATIONS AND MAINTENANCE

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hefley, Hon. Joel, a Representative from Colorado, Chairman, Readiness Subcommittee .............................................................................................................. 1

Ortiz, Hon. Solomon P., a Representative from Texas, Ranking Member,

Readiness Subcommittee ..................................................................................... 3

WITNESSES

Grone, Philip W., Deputy Under Secretary of Defense (Installations and Environment), Department of Defense ...................................................................... 4

Kuhn, Fred W., Deputy Assistant Secretary (Installations), Department of

the Air Force ......................................................................................................... 8

Penn, Hon. B.J., Assistant Secretary (Installations and Environment), Department of the Navy .................................................................................................. 7

Prosch, Geoffrey G., Principal Deputy Assistant Secretary (Installations and

Environment), Department of the Army ............................................................ 6

APPENDIX

PREPARED STATEMENTS:

Grone, Philip W. ............................................................................................... 43

Kuhn, Fred W. .................................................................................................. 101

Penn, Hon. B.J. ................................................................................................. 87

Prosch, Geoffrey G. ........................................................................................... 66

DOCUMENTS SUBMITTED FOR THE RECORD:

[There were no Documents submitted.]

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Mr. Forbes ......................................................................................................... 117

Mr. Taylor ......................................................................................................... 117

(1)

MILITARY CONSTRUCTION, FAMILY HOUSING, BASE

CLOSURES AND FACILITIES OPERATIONS AND MAINTENANCE

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, READINESS SUBCOMMITTEE,

Washington, DC, Tuesday, March 15, 2005.

The subcommittee met, pursuant to call, at 2:02 p.m., in room

2118, Rayburn House Office Building, Hon. Joel Hefley (chairman

of the subcommittee) presiding.

OPENING STATEMENT OF HON. JOEL HEFLEY, A REPRESENTATIVE FROM COLORADO, CHAIRMAN, READINESS SUBCOMMITTEE

Mr. HEFLEY. The committee will come to order. Today, the Readiness Subcommittee meets to address testimony from the Department of Defense (DOD) on the fiscal year 2006 budget request for

military construction, family housing, base closures and facilitiesrelated accounts.

I welcome our witnesses, and we look forward to your testimony,

particularly, Mr. Grone, we always enjoy having you back here so

that we can abuse you as much as possible, particularly in your

new role, it is your first time in your new role.

Secretary GRONE. Yes, sir.

Mr. HEFLEY. New title. So that entitles you to more abuse.

The panel before us represents the Department of Defense’s installation environment team. It is my hope that this panel will help

us to understand the facilities-related challenges facing our military. I also hope they will help to justify what I view as yet another

disappointing Military Construction (MILCON) budget request.

First, the non-Base Realignment and Closure (BRAC) MILCON request for 2006 is $400 million less than the amount appropriated

in 2005. It is also $1 billion less than the amount forecast for 2006

and last year’s budget. And as such, it appears that MILCON

budgets continue to be the bill payer for other DOD priorities.

Second, the Department continues to fall short of meeting its 95

percent goal for sustainment funding. Not only does the budget

only meet 92 percent of the requirements, but the Department still

not has implemented models for restoration, modernization and

base operations.

As a result, sustainment accounts will continue to be raided during the year to fund other must-pay requirements, and they will ultimately be executed at levels that will allow the continued erosion

of our military facilities.
2

And, finally, Army base operation support accounts are funded at approximately 70 percent of requirements, leaving them at least $1

billion short of the level necessary to keep child care centers open,

dining halls serving chow, lights turned on and base employees reporting to work.

Considering the Army base commanders have already considered

such extreme measures in fiscal year 2005 due to budget pressures,

I am astonished that the service has budgeted these accounts in

this manner for 2006.

Last year, I expressed the view that the Department had put its

facilities programs on hold until BRAC 2005 in the hope that billions of dollars in facilities funding shortfalls would vanish after

BRAC. My perspective has not changed, and I am concerned that

the backlog of shortfalls continues to grow due to new costs associated with changes in our global basing, Army transformation, Marine Corps force structure changes and now the enormous up-front

costs of BRAC.

On this note, I hope Mr. Grone will address the committee’s interest in the base realignment and closure process. Not only is the

committee interested in the Department’s justification for $1.9 billion in 2006 for implementation of BRAC decisions, but we are very

interested to hear how the Department anticipates spending $5.7

billion in fiscal year 2007 for implementation.

Furthermore, I would like to hear the Department’s justification of the relatively small $300 million request for the Office of Economic Adjustments. This office, which is tasked with the critical

role of supporting community efforts to cope with BRAC changes,

appears to be significantly underfunded for the task at hand.

And perhaps most importantly, I would like to ask Mr. Grone to

describe his vision of the Department’s disposal and reuse policies

for the upcoming BRAC rounds.

For example, what will the roles of public auctions, public benefit

conveyances and negotiated sales in BRAC property disposal, how

do you see that breaking down? And how does the Department intend to manage BRAC property clean-ups more effectively? DOD’s

approach to property disposal will affect every community touched

by the BRAC process in 2005.

For the members of this subcommittee, I should note that Mr.

Grone’s comments on BRAC today are well-timed in light of our

Thursday subcommittee briefing from Government Accountability

Office (GAO), Association of Defense Communities (NAID) and the

Office of Economic Adjustment on community options for preparing

and managing the local effects of BRAC. That briefing will be held

at 2 p.m. in 2118 in Rayburn, right here in this room.

Clearly, the panel before us has much to address, so I want to

close with one final comment. The House Armed Services Committee has a long history of recognizing the importance of facilities to

military readiness and quality of life. We believe in treating DOD

facilities as assets worthy of investment, maintenance and modernization.

The 2006 budget request does not treat DOD facilities as assets.

Instead, it treats DOD facilities accounts as bill payers for other

Department priorities. This approach erodes readiness and diminishes quality of life for America’s military personnel.
3

I am confident that our witnesses recognize this fact, and I urge

each of them to renew their commitments to increase and protect

facilities budgets in the future. This is nothing new. We have been

dealing with this for a long, long time.

At this time, I would like to recognize the Honorable Solomon

Ortiz, my friend and colleague from Texas and the ranking member

of this committee, for any comments he might have.

STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE

FROM TEXAS, RANKING MEMBER, READINESS SUBCOMMITTEE

Mr. ORTIZ. Thank you, Mr. Chairman. It is nice to see some of

our old friends here sitting on the other side.

I thank you, Mr. Chairman, and I join you in welcoming our distinguished witnesses, and I look forward to hearing their testimony

on this important issue.

Mr. Chairman, let me first say that I am concerned with the direction that the Department has taken with regards to its overall

military construction budget request. The fiscal year 2006

MILCON budget request is nearly half a billion dollars less than

the 2005 request. It is $1 billion less than last year’s budget forecast. I think this is very troubling trend.

It is a trend that suggests that MILCON continues to be used

as a bill payer for the Department’s other requirements.

At this funding level, the recapitalization of facilities will continue to slip. I hope that the Department has some plan to stop the

slide quickly and recover the ground it has lost before this shortfall

impacts the readiness of the armed forces.

I would like to point out that despite the MILCON shortage,

progress is being made on improving the condition of military family housing. It appears that the services have public-private ventures and are now on track to eliminate inadequate family housing

by fiscal year 2009. While this still is not soon enough, I am very

pleased to see many military families already benefiting from housing PPVs.

I encourage the service to continue their efforts to support quality of life and correct the family housing problems caused by years

of underfunding and neglect.

One last point I would like to address is the base operations support budget for the services. This budget was underfunded in 2004

and 2005, and the request for 2006 is no different. The Army’s request for 2006 will only fund 71 percent of the Base Operations

Support (BOS), which is the base operations support requirements,

and will fall $1 billion short of meeting the Army’s basic needs.

Base operations support represents such essential requirements

as municipal services, force protection and communication services.

It also funds family support programs, such as child care, gymnasiums, libraries and other quality of life programs that our soldiers and their families depend on.

Unless BOS is funded adequately, many installations will be

forced to cut services. I do not believe that the services can afford

to cut quality of life programs that directly affect morale. We ask

a great deal of our service members and their families. Should we

reward their service by asking for greater sacrifices at home? I
4

hope that our witnesses will take this opportunity to explain how

the Department plans to correct this serious shortfall.

Mr. Chairman, I am interested in hearing the testimony of our

witnesses and their thoughts on how we can endure the readiness

of the Department’s facilities and meet the needs of our service

members and their families.

Mr. Chairman, I thank you and welcome all the witnesses.

Thank you, Mr. Chairman.

Mr. HEFLEY. Thank you, Solomon.

First up is Phil Grone, the Deputy Undersecretary of Defense for

Installations and Environment.

And, Mr. Grone and all the witnesses, without objection, we will

enter your complete statements in the record, and I would ask each

of you to take whatever time you need. This is important testimony, but at the same time if you can keep it brief and we can

have some interchange, that would be good as well.

Next up is Geoffrey Prosch, Principal Deputy Assistant Secretary

of the Army for Installations and Environment. Next is Mr. B.J.

Penn, the newly confirmed Assistant Secretary of the Navy for Installations and Environment. And, finally, Mr. Fred Kuhn, the

Deputy Assistant Secretary of the Air Force for Installations.

Phil, with that, we will turn it over to you.

STATEMENT OF PHILIP W. GRONE, DEPUTY UNDER SECRETARY OF DEFENSE (INSTALLATIONS AND ENVIRONMENT),

DEPARTMENT OF DEFENSE

Secretary GRONE. Thank you, Mr. Chairman.

Mr. HEFLEY. And you really are welcomed back.

Secretary GRONE. I do appreciate that, sir. I truly do.

Chairman Hefley, Mr. Ortiz and distinguished members of the

Subcommittee on Readiness, I am pleased to appear before you this

afternoon with my colleagues to discuss the President’s budget request for the Department of Defense for fiscal year 2006.

This budget request for the Department continues the efforts of

this Administration to place our military infrastructure on a sound

management footing.

The Department’s management responsibilities extend to an infrastructure with 510,000 buildings and structures and a replacement value of $650 billion, as well as stewardship responsibility for

roughly 29 million acres, or 46,000 square miles of land, roughly

the size of Connecticut and my native Kentucky combined.

And this the business are comprising the Department’s support

for the support of military installations, assets and the stewardship

of natural resources includes programs totaling over $46 billion for

the coming fiscal year.

The President’s management agenda contains three key elements

for which my office has primary responsibility. Those initiatives include competitive sourcing, the privatization of military housing

and real property asset management, the last of which is the focus

of Executive Order 13327, issued on February 4 of last year.

We have made significant progress in many of these areas with

the strong assistance of the Congress. The military housing privatization initiative is achieving results. Through the end of fiscal
5

year 2004, leveraging the power of the market and the expertise of

industry, we have awarded 43 projects, privatizing 87,000 units.

To achieve the scope of those 43 projects, the taxpayer would need to provide $11 billion in military family housing construction.

Over the life cycle, these privatized projects will save the taxpayer

10 to 15 percent, even when taking into account the allowances

paid to our military personnel.

And 10 of those 43 projects have reached the end of their initial

development phase, and tenant response is very positive.

By the end of fiscal year 2007, we expect 185,000 units of housing, 84 percent of the inventory, to be privatized.

The Department’s efforts to more properly sustain and recapitalize our facilities inventory is also demonstrating results. Four years

ago, the recapitalization rate stood at 192 years. The President’s

budgets supports a recapitalization rate of 110 years, and we remain committed to our goal to achieve a 67-year recapitalization

rate in fiscal year 2008.

Facility sustainment is budgeted this year at 92 percent of the

requirement. In both cases, we have built the program around private sector best practices and commercial benchmarks wherever

they can be applied and continue to refine our models and guidance

to keep them current those best practices and benchmarks.

We also continue our efforts to strengthen the nation’s defense

through the global posture review and BRAC. Abroad, we will reconfigure our basing and presence to meet the threats of the 21st

century as opposed to the static defense of the Cold War. At home,

we will rationalize our infrastructure to further transformation and

to improve military effectiveness and business efficiency.

As well, the Department continues to be a leader in every aspect

of environmental management. To make our operations more efficient and sustainable across the Department, we are continuing

our aggressive efforts to implement environmental management

systems at our installations based on the plan, do, check, act

framework of the international standard for EMS ISO 14001.

In concert with the President’s August 2004 executive order on

facilitating cooperative conservation, the Department has developed

a program of compatible land use partnering that promotes the

twin imperative of military test and training readiness and sound

conservation stewardship through collaboration with multiple

stakeholders.

Moreover, we are fundamentally reengineering the business process for real property inventory, resulting in standard data elements

and definitions for physical, legal and financial aspects of real

property, and we have developed a real property unique identification concept that will enable greater visibility of our assets and

linking them to our financial obligations.

Our most recent defense installation strategic plan, issued late

last year, entitled, ‘‘Combat Power Begins at Home,’’ reflects our

focus on improving the management of our installation assets and

to ensure their ability to contribute to military readiness.

All of our efforts are designed to enhance the military value of

our installations and to provide a solid foundation for the training,

operation, deployment and employment of the armed forces, as well

to improve the quality of life for military personnel and their fami-
6

lies. While much remains to be done, we have accomplished a great

deal, and with the support of this subcommittee, we will continue

to do so.

Thank you, Mr. Chairman.

[The prepared statement of Secretary Grone can be found in the

Appendix on page 43.]

Mr. HEFLEY. Thank you, Phil.

Mr. Prosch.

STATEMENT OF GEOFFREY G. PROSCH, PRINCIPAL DEPUTY

ASSISTANT SECRETARY (INSTALLATIONS AND ENVIRONMENT), DEPARTMENT OF THE ARMY

Secretary PROSCH. Chairman Hefley, Ranking Member Ortiz and

members of the committee, I am pleased to appear before you

today. This is my fourth year to have this distinct honor to represent our great Army and testify before Congress.

It is wonderful to be here today with old friends and Army supporters from this committee. I look forward to the opportunities

this committee brings toward leveraging enhanced quality of life

for our soldiers and families.

I have provided a written statement for the record that provides

details of our Army’s fiscal year 2006 military construction budget.

Joining me today are my installation management partners:

Major General Geoff Miller, from the active Army; Major General

Walt Pudlowski, from the Army National Guard; and Brigadier

General Gary Profit, from the Army Reserve.

So on behalf of the entire Army installation management team,

I would like to comment briefly on the highlights of our program.

I begin by expressing our appreciation for the tremendous support that the Congress has provided to our soldiers and their families who are serving our country around the world. We are a nation

and an army at war, and our soldiers would not be able to perform

their mission so well without your steadfast support. We have submitted a military construction budget of $3.3 billion

that will fund our highest priority active Army, Army National

Guard and Army Reserve facilities, along with our family housing

requirements. This budget request supports our Army vision, encompassing current readiness, transformation and people.

As we are fighting the Global War on Terror, we are simultaneously transforming to be a more relevant and ready Army. We

are on a path with the transformation of installation management

that will allow us to achieve these objectives.

We currently have hundreds of thousands of soldiers mobilizing

and demobilizing, deploying and redeploying. More of our troops

are coming and going on our installations than in any era since

World War II. Our soldiers and installations are on point for the

nation.

And on a special note, I would ask you to keep our forward deployed soldiers in your thoughts and prayers. New forces have rotated recently to Iraq. The 3rd Infantry Division is back for its second tour, and the enemy will test them early on. Keep them in

your hearts and prayers.

The Army recently identified key focus areas to channel our efforts to win the Global War on Terror and to increase the relevance
7

and readiness of our Army. One of our focus areas is installations

as flagships, which enhances the ability of our Army installations

to project power and support families. Our installations support an

expeditionary force where soldiers train, mobilize and deploy to

fight and are sustained as they reach back for enhanced support

from the installations.

Soldiers and their families who live on and off the installation

deserve the same quality of life as is afforded the society they are

pledged to defend.

The installations are a key ingredient to combat readiness and

well-being. Our worldwide installations structure is critically

linked to Army transformation and the successful fielding of the

modular force. Military construction is a critical tool to ensure that

our installations remain relevant and ready.

Our fiscal year 2006 military construction budget will provide the

resources and facilities necessary for continue support of our mission. Let me summarize what this budget will provide for our

Army: New barracks for 5,190 soldiers, adequate on-post housing

for 5,800 Army families, increased MILCON funding for the Army

National Guard and Army Reserve over last year’s request, new

readiness centers for over 3,300 Army National Guard soldiers,

new reserve centers for over 2,700 Army Reserve soldiers, a $292

million military construction investment in training ranges and facilities support and improvements for our Stryker brigades.

With a sustained and balanced funding represented by this budget, our long-term strategy will be supported. With your help we will

continue to improve soldier and family quality of life while remaining focused on our Army’s transformation to the future force.

In closing, Mr. Chairman, I thank you for the opportunity to outline our program. As I have visited Army installations, I have witnessed steady progress that has been made, and we attribute much

of this progress and success directly to the long-standing support

of this committee and your able staff. With our continued assistance, our Army pledges to use fiscal year 2006 MILCON funding

to remain responsive to our nation’s needs.

Thank you for the opportunity to appear before your subcommittee and answer any questions you may have.

[The prepared statement of Secretary Prosch can be found in the

Appendix on page 66.]

Mr. HEFLEY. Thank you.

Mr. Penn.

STATEMENT OF HON. B.J. PENN, ASSISTANT SECRETARY (INSTALLATIONS AND ENVIRONMENT), DEPARTMENT OF THE

NAVY

Secretary PENN. Mr. Chairman, members of the subcommittee, it

is a privilege for me to be here today. Being in this job for a little

over a week, I can assure you I will be very brief.

I believe you will find much good news on the Department of the

Navy’s installations and environmental program from my written

statement. I would like to talk about one specific aspect of our fiscal year 2006 budget request: The financing of our prior BRAC

cleanup and caretaker needs with a mix of $143 million in appropriated funds and an estimated $133 million in land sales revenue.
8

It is important to view the 2006 prior BRAC request in the context of the fiscal year 2005 request. The Department expected to

finance the entire fiscal year 2005 prior BRAC program from the

sale of the former Marine Corps air station, El Toro, California and

did not request nor receive any appropriations in fiscal year 2005.

That sale was delayed by unforeseen circumstances. Fortunately,

the sale of portions of the former Marine Corps air station, Tustin,

California in 2003, gave the Department the financial flexibility to

slow fiscal year 2004 program execution to conserve cash to cover

its fiscal year 2005 environmental commitment, most of which are

in the State of California.

With fiscal year 2005 execution depleting prior year BRAC funds

and the public auction of the El Toro property still a future event,

the Department last fall opted to include appropriated funds in fiscal year 2006 to finance its minimum cleanup and caretaker needs,

along with the conservative estimates for land sales revenue to accelerate the environmental cleanup.

Although the auction of the El Toro property has now been com- pleted with a winning bid of nearly $650 million, I must caution

the members of this committee that there is still some measure of

risk ahead until the buyer and Navy complete the sales transaction

at settlement. I want to emphasize that we cannot be absolutely

sure of having land sales revenue until a settlement occurs, which

is planned for sometime in July. The buyer of a previous property

in 2003 defaulted at settlement.

Even after settlement, our past experience is that it often takes

well over four months for the sales proceeds to be processed to the

DOD accounting system before the funds are available to the Navy

for program execution.

We still have a substantial cost to complete environmental cleanup, primarily at closed bases in California, and are developing

plans to responsibly accelerate cleanup. That will be our first priority for the use of the land sales revenue.

Even with successful settlement of the El Toro property in July,

we may still need some measure of fiscal year 2006 appropriated

funds to finance first quarter program commitments.

Mr. Chairman, I would like to thank you and your committee for

all you are doing for our great country. I look forward to working

with you and the Congress on resolving this situation and on to

more challenging installations and facilities issues.

Thank you.

[The prepared statement of Secretary Penn can be found in the

Appendix on page 87.]

Mr. HEFLEY. Thank you.

Mr. Kuhn.

STATEMENT OF FRED W. KUHN, DEPUTY ASSISTANT SECRETARY (INSTALLATIONS), DEPARTMENT OF THE AIR

FORCE

Secretary KUHN. Mr. Chairman, Mr. Ortiz and distinguished

members of the committee, good afternoon.

This year’s Air Force military construction budget request is the

largest in 14 years with increases across the spectrum of Air Force

operations throughout our total force. Our fiscal year 2006 military
9

family housing submission is the largest in Air Force history and

keeps us on target to meet our goal of eliminating Continental

United States (CONUS) inadequate housing in 2007, 2008 for four

northern tier bases and 2009 overseas.

The Air Force remains committed to funding restoration and

modernization to meet the Office of the Secretary of Defense (OSD)

goal of a 67-year recapitalization rate by 2008. The Air Force is

meeting OSD facilities sustainment goal by funding 95 percent and

will continue to fund sustainment in accordance with that model.

Air Force facilities, housing and environmental programs are key

components of our support infrastructure. At home, our installations provide a stable training environment and a place to equip

and reconstitute our force. Both our stateside and overseas bases

provide force projection platforms to support combatant commanders.

Because of this, the Air Force has developed an investment strategy focused on sustaining and recapitalizing existing infrastructure, investing in quality of life improvements, accommodating new

missions, continuing strong and environmental leadership, optimizing use of public and private resources and eliminating excess obsolete infrastructure wherever possible.

In fiscal year 2006, the Air Force bolstered operation and maintenance investment in our facilities infrastructure, which is comprised of two components: Sustainment and restoration and modernization. Sustainment funds are necessary to keep good facilities

good, and restoration and modernization (R&M) funding is used to

fix critical deficiencies and to improve readiness.

This year, the amount dedicated to total force sustainment funding is $2 billion, right on the OSD goal of 95 percent of the facilities sustainment model requirement. In fiscal 2006, the Air Force’s

total force R&M funding is $174 million. In the future, the Air

Force will invest in critical infrastructure maintenance and repair

through our Operation and Maintenance (O&M) Program to

achieve the OSD goal of a facility recapitalization rate of 67 years

in 2008.

In conclusion, I would particularly like to thank the members of

this committee and the Congress for its efforts to lift the cap on

housing privatization. Without that relief, our military members

and their families would be deprived of the opportunity to choose

to live in a privatized home on or near our Air Force bases.

Our leverage of nine privatized dollars for every taxpayer dollar

would have been lost, and additional pressures on the housing

MILCON budget would have been immense. Your efforts are appreciated by all our Air Force men and women and their families.

That concludes my statement. Thank you.

[The prepared statement of Secretary Kuhn can be found in the

Appendix on page 101.]

Mr. HEFLEY. Thank each of you. We appreciate it very much.

Let me ask you, it appears that if you look at the timelines of

the BRAC process, that this bill will be completed along with the

appropriations companion bill before the BRAC process is finalized.

We do not know that for sure, but it would appear, if you look at

all the timelines, that that will be the case.
10

Phil, you and probably the rest of you, except for those who have

been here one week may not have, have visited bases after prior

backgrounds, which had new basics changes, nice new parking lots

with weeds growing up in them, computer centers, all kinds of

things that were built new at bases just prior to base closings.

We do not have enough money to do everything. We do not want

to waste any of these MILCON dollars, but we do want to provide

you what you need to do your job. So what would your suggestion

be to this committee as we look at the MILCON requests.

I know you cannot give away, because you probably do not know

at this point, you do not because it has not gone to the committee

and you may not have all your recommendations put together yet,

do not know for sure what is going to stay and go. How would you

recommend this committee handle it so that we do not waste

money on facilities that are going to be closed fairly shortly but

that we do put the money into things that are vitally needed?

Phil, you want to take that?

Secretary GRONE. Mr. Chairman, I will begin and then to the extent my colleagues want to further elaborate, certainly I hope they

will do so.

As we built this budget request, as you indicated, we did not

build the budget request and the services did not build their budget

request with an eye on recommendations for base realignment and

closure that were not yet able to be developed, because we were

still doing the analysis. So the budget request reflects the Department’s best judgment as to the support of its missions and forces

in their current configurations.

As with all things in the first year of an implementation, there

are steps we will have to go through. One of the steps we will likely

go through, and I have discussed this with the Undersecretary of

Defense Comptroller, is that upon the Secretary’s release of recommendations to the independent commission on May 6, we will

likely to provide the oversight committees and the appropriations

committees with appropriate documentation on projects that we believe in the budget request are there, by the fact of the recommendations, no longer required and may provide for some additional substitutions for other needs of the Department.

I understand with regard to internal and committee markup and

floor action, that timing is going to be a little tight, but I think it

is fair to say that if we work in a collaborative way, heading toward conference agreement, I think we can probably work this out

in a way where we will not have that kind of significant strains

of investment or that we will be putting money in the actual budget for facilities we will not require.

We will have to sort of take our chances that the commission will

not make any significant changes, but I think we will have to just,

as we work through the year, work through that.

With regard to the underlying budget request for $1.9 billion,

and you asked in your opening statement for some justification for

that, we certainly today cannot provide a justification at a detailed

level of how we would expend those funds in fiscal year 2006. That

will have to await the final determinations of the commission process.
11

We built that number taking a very careful look at the lessons

of the past. And if you look at the 1993 round of base closure and

you sort of inflate the first year’s request to current-year dollars,

it comes out to about $1.5 billion, approximately. The 1995 round,

if you applied that same analytical framework, represents about $1

billion in today’s terms.

But the General Accounting Office, as they have noted on many

occasions, indicated that the Department’s recommendations for

the 1995 round were smaller than were projected at the start of

that process, and their analysis at the time found that the services’

concerns over closing costs forced them not to take certain actions.

There was an issue of affordability with regard to the internal

BRAC process that caused the services to pull back from recommendations that they might otherwise have made.

So that when we look at that history and when we also consider

the cost of returning forces from abroad as part of the global posture realignment and our desire to do that and utilize BRAC to be

able to select sites within the United States, it seemed prudent to

us that the request for $1.9 billion was reasonable.

We will exercise the same process that we have utilized in the

first year of implementation from prior years. Upon the disposition

of the recommendations, the committees will receive a report that

detail how we will expend those funds in the first year of execution.

The Congress has traditionally given the Department great latitude on the budget request and awaiting that initial report, and it

would be my expectation based on what we will need to do with

the closure and realignment round, that we can sufficiently expend

those funds and implement them in fiscal year 2006.

Mr. HEFLEY. Would the Department have any objections to something like a reverse supplemental by the 1st of the year if there

were funds out there, we had closed the bill out, that would give

you the authority, rescission authority, reprogramming authority

for those funds so that we do not go ahead and spend them on

some things—in other words, can we be assured that you are not

going to let contracts until we know for sure what we are going to

need?

Secretary GRONE. I think it is fair to say that in implementation

we would not expend funds on any fiscal year 2006 project that we

knew we were not going to need. That would not be prudent management. And in terms of any particular device that the Congress

might suggest, I think we would have to discuss that with the appropriate senior officials in the Department, but I think anything

that would improve our ability to work cooperatively and with

some flexibility I think would be welcome.

Mr. HEFLEY. Thank you very much.

Yes.

Secretary PROSCH. Sir, If I could just reinforce what my colleague

has said, we will continue to fund our highest priority projects

without prejudice, but once the decisions have been made, we will

evaluate all projects to determine the future utility and take appropriate action. We may withhold the award if we have time to do

that, we could issue a stop work order if it is earlier enough on or

we could elect to complete the project and include the structure as
12

part of the value of the closed property that we would work with

our local reuse authority.

For us in the Army, this BRAC 2005 is very important to us. It

is a strategic lever to help us transform. We are going to be taking

a look at where we are putting our 10 new brigade units of action

to validate where we have placed them. We will be using it to verify where we reset our OCONUS brigades coming home, and we

will be using it to transform the Army by synchronizing and consolidating, and I think you will be very pleased with the candidate

list.

Thank you, sir.

Mr. HEFLEY. Well, I just want it on your radar screen that we

have made some mistakes, we have screwed up in the past with

this, and I want it very clear that we do not want to screw up with

it this time. And I am not even talking about saving money. I do

not think your MILCON budget is what it ought to be, particularly

in the Army, but we do not want to waste the money. We want to

put it where you really do need it, so help us as we work through

that process.

Mr. Ortiz.

Mr. ORTIZ. Thank you, Mr. Chairman.

Secretary Prosch, you described the installations as flagships.

Can you please explain to the committee what you mean by flagships?

Secretary PROSCH. Yes, sir. That is one of the Army’s 17 focus

areas to allow us to really bore in on what is important. And it is

to help us understand that installations are very, very key to everything we do. Think about what goes on at our installations.

That is where we project power from, that is where we support our

families, that is where we mobilize, demobilize, it supports an expeditionary force. We are transforming from a division-centric type of

organization to a brigade unit of action organization where the brigades are task organized to hit the ground running when they deploy and hit the ground.

We have to have reach-back capability and with our satellites

and our information management, our installations, we now have

that. It is critical to our soldiers and our families, and to retain an

all-volunteer force, we must have a top quality of life. Our soldiers

live there, the families stay there when they are deployed, and

surely our soldiers deserve the same quality of life that is afforded

the people off-post that they are pledged to defend.

So they are a very key part of the Army vision, and as we transform, we want to make sure we keep a focus on installations.

Mr. ORTIZ. I know that everybody on this committee is waiting

for the list to come out to see which bases are going to be on that

list, what will be recommended. And this list may include installations that are vital to the defense industrial base which supports

the war fighter.

Currently, our industrial capacity is under great strain to meet

the needs of the forces in the field. When making determinations

about base closure, is the Department considering the need to

maintain a search capacity in the industrial base? Also, how is the

Department ensuring compliance with the laws, such as the 50–50
13

rule when considering base closure. How does that play in that, the

50–50 rule?

Secretary GRONE. Mr. Ortiz, to the first part of your question on

surge, the selection criteria that the Secretary had caused to be

published required us within the scope of the analysis to consider

mobilization, demobilization, contingency and other requirements.

The Congress, believing that there was a bit of an ambiguity there

and wanting to ensure that we did, as a matter of requirement

what had been policy, required the insertion of the word, ‘‘surge,’’

into the selection criterion 3.

So all of the analysis that we are doing, pursuant to the statutory requirements for BRAC and the implementation of the selection criteria in that process, all encompasses missions to take into

account the components, the joint cross-service groups who are

analyzing the common business oriented support processes, of

which the industrial base is one, industrial base of the Department

is one. We have to take surge into account.

Surge will vary depending upon the mission, it will vary depending on the needs of the component. But we have to define it, we

have to asses it, and we have to take it into full consideration as

we develop recommendations that the Secretary will produce in

May.

So, yes, we are taking surge fully into account. And, certainly,

with regard to existing statutory frameworks, everything that we

are doing in the process is fully consistent with the statutory

frameworks of existing law, and we will produce recommendations

based upon it.

Mr. ORTIZ. So you do not think there is going to be any messing

around with the 50–50 rule.

Secretary GRONE. Mr. Ortiz, I mean, I think I would like to stand

on my statement that we will follow the statute. I would prefer not

to get into characterizations of tweaks in any areas or adjustments

in any area or what we may do in a particular area of analysis,

as the Secretary has not finalized recommendations, and I would

not want to mischaracterize what we may do within the industrial

group or in any other group. But I think it is fair to say that we

will adhere to the statutory framework as it has been laid out by

Congress.

Mr. ORTIZ. As long as you understand where this committee

stands or at least the caucus stands.

Secretary GRONE. Yes, sir.

Mr. ORTIZ. Something else that I would like to mention, I have

been through all base closures. One of the things that I see happen

is that when you close down a base many installations that have

been paid by soldiers’ funds—PXs, commissaries, theaters—are not

paid by appropriation funds. They are paid by the money generated

from soldiers’ purchases and things like that.

Are we going to take that into consideration when we shut down

a base to be sure that that money that belongs to the soldiers

comes back to the soldiers’ funds so that they can generate more

support for the soldiers, family welfare for the children and things

like that?

Secretary GRONE. It is certainly my understanding that as any

assets that are mass supported, the proceeds resulting from those
14

kind of assets would return to the NAF accounts, and I believe

there is a reserve account established, pursuant to law, for the receipt of those funds.

In prior years, there had been some difficulty with accessing

those funds, because the funds were subject to subsequent appropriation. But I believe, and I can be corrected for the record, but

I thought that provision has been addressed or there had been at

least an attempt to address it. There was direct spending, I believe,

associated with it, but I believe in a prior year it may have been

addressed.

If it has not been, I will clarify that for the record, but, certainly,

we are not unmindful of the soldier and sailors’ funds, and, certainly, as assets are disposed of, that reserve account would be in

receipt of those revenues.

Mr. ORTIZ. If you could look into that because we have seen some

foreign bases where we have shut down, and of course that had to

do with the State Department reaching an agreement of some sort

where we lost millions and millions of dollars in facilities, from golf

courses, to theaters, to bowling alleys, and we never saw that

money. I just hope that somehow we could look after the welfare

of the soldiers and that fund goes to where it belongs.

Thank you, Mr. Chairman.

Mr. HEFLEY. Mr. Ryun.

Mr. RYUN. Thank you, Mr. Chairman.

First of all, let me say thank you to the witnesses for being here

and their staff and all the personnel that are in uniform for serving

our country. We very much appreciate what you do.

I would like to address this, if I may, to Secretary Grone, and

it is with regards to housing. Due to modularity and repositioning,

many bases will soon experience large increases in soldiers coming

back, which is a good thing. For example, Fort Riley in Kansas will

have an additional 3,400 troops early 2006 and possibly more later

in the future. Bases like this may experience housing shortages for

military and civilian personnel.

What is DOD doing with regard to accommodating these needs,

and do you have any recommendations for the surrounding communities as to ways they might be able to be prepared for all of this?

Secretary GRONE. Mr. Ryun, I certainly would, particularly with

regard to the Army, yield at the appropriate time to my colleague,

Mr. Prosch, but in a general way, what we have to be mindful of

when we permanently station forces in new locations, particularly

when we have a significant increase in the population of that base,

the housing of course is an issue.

We will do whatever we can to work cooperatively with state and

particularly local government and the development community to

ensure how we can do that in as seamless a way as we possibly

can.

With regard to our own programs, certainly our policy remains

that we want to rely on the private sector and the private market

first. If it is clear that that is not able to be absorbed or there is

a capacity issue, our housing privatization authorities give us the

ability to begin look at alternatives that would begin to build out

that deficit, address that deficit to ensure that our people have adequate housing options available to them.
15

It will be a long-term process in some ways, but I believe that

we are postured well internally looking at the heart of that question. Certainly, there are some things that we are not in a position

to do yet until we have final outcomes. Where will temporary units

of action be based on a permanent basis? Where will forces returning from Europe be based on a permanent basis?

And as those decisions come into clarity, we will be able to work

with all affected stakeholders in this process but certainly local

government to ensure that we have as seamless a transition as we

possibly we can. But we are not unmindful of the impact, particularly on the local housing markets, and we are going to address

that as well as we can.

Secretary KUHN. If I could add to that just a couple of examples

of the cooperative efforts the Air Force and the Army and housing

privatization are working the McGuire Air Force Base-Fort Dix

combined initiative in New Jersey. We have been asked to look and

consult with the Army as they are doing housing privatization at

Fort Lewis in Washington and we at McCord Air Force Base taking

into account that there might be additional forces from the Army

potentially coming into Fort Lewis and how could our privatization

help that.

We also have provisions, Mr. Ryun, in our housing privatization

contracts that allow the successful developer, at his own risk, to

build beyond the requirement. In other words, if he believes that

they will come and occupy his housing with some minimal restrictions, he is allowed to build above the requirement, anticipating

some of those points that you have. We are trying to be flexible in

these areas.

Mr. RYUN. And if I may say, I appreciate the assurance you have

given me, because I know a lot of my smaller communities that

surround those particular installations are just concerned, they just

need to know that there is a plan, and I wanted to reassure them

of that, but I also know that there are certain things that have to

happen here first.

And if I may go to a second question just very briefly, Fort Leavenworth is in my district and it is entering a final phase of construction on the Lewis and Clark Education Center. I have been informed that the fiscal year 2006 budget actually reduces the

planned funding for that center by several hundred thousand dollars. Too early yet to tell what that cut means. In other words, if

they start the project, are they going to have sufficient funds to actually finish it?

And so I guess that is my question: What kind of guarantee once

they start, if they should start this, will there be that there might

be some shifting of funds to allow them to go ahead and complete

this most important education center?

Secretary PROSCH. Sir, let me comment for a minute, and let me

just assure you on your previous question that the Army has

pledged to work closely with you for the RCI project at Fort Riley,

which we are very excited about. You will notice in the fiscal year

2006 budget, we do have $68 million of equity investment to fund

the pump to make sure that that project goes.

And for the record, I would like to thank the good chairman and

this committee for really coming up with this overall military hous-
16

ing privatization initiative. You all really created this, and we

thank you for lifting the cap and for helping us to sustain this.

Concerning the Lewis and Clark facility, I am going to be at Fort

Leavenworth on the 28th of March with Lieutenant General Scott

Wallace, my college classmate. We are going to do a terrain walk,

and I will get back to you personally to let you know the status

of that project. I would invite you to join us if you would like, sir.

We are going to have our installation association United States

Army symposium in Kansas City where Phil Grone is one of the

keynote speakers, and so we will be in your area of operations, and

I will bore into that for you, sir.

Mr. RYUN. Thank you very much.

Thank you, Mr. Chairman.

Secretary PROSCH. And, finally, sir, our goal is to build it to the

total requirement.

Mr. HEFLEY. Dr. Snyder.

Dr. SNYDER. Thank you, Mr. Chairman.

Thank you, folks, for being here.

Secretary Grone, I wanted to ask, I guess I have three questions

I wanted to direct to you. First one can just be a really short answer.

One of the concerns that I guess all Americans that follow the

issue has always been about the BRAC processes, both past and future, is are they going to be decided on the merits and not on the

politics or in whose district or all the kind of pressures, and it

seems like we have had a tremendous number of lobbyists involved

in these kinds of activities on base closure.

If you were to give the process, as it has progressed over the last

year or two, at this point, in terms of a process that is proceeding

based on the merits and not on considerations other than the merits, what kind of a letter grade would you give it, A, B, C, D or

F?

Secretary GRONE. On the merits, I give it an A-plus. I mean,

there has been no consideration of politics in development, analysis, process. And as we build options for the leadership to consider

and for ultimately for the Secretary to recommend, political considerations are not—favoritism toward any area for any particular

consideration that bears no relationship to the military value simply is not part of the process.

Dr. SNYDER. Good. Thank you.

Secretary PROSCH. Sir, if I could just add from the Army’s perspective, I have been very pleased to have the opportunity to participate. Ever since August, twice a week, we have been really

working this very hard, and the thing that is encouraging in this

BRAC is the jointness.

There are seven joint cross-service groups—Education and training, supply and storage, industrial, technical, medical, intelligence,

headquarters and support activities—that are working very closely

with the services. We have visibility over the Air Force and the

Navy data, and so I think we have the opportunity for the first

time to really have some jointness, to have an Army unit stationed

at an Air Force base where it makes sense.

Dr. SNYDER. Thank you.
17

Secretary Grone, the second question I wanted to ask is about

real property maintenance, and I read through your statement, and

I do not know if the terminology has changed or I am having trouble sorting it out.

You may remember, I think it was in 1998 or so, one year on the

committee staff here we had a witness from the National Academy

of Engineering that thought we needed to aim for a two percent of

plant replacement value as an annual budgetary number for real

property maintenance. And if my calculation is right, $650 billion

from your statement of real property replacement value gets us to

$13 billion, an approximation of real property maintenance.

But I cannot—I mean, where are we at with regard to that? Did

you aim for a two percent goal? Help me understand. Maybe the

terminology has changed a bit or I do not understand the terminology.

Secretary GRONE. Yes, sir. I believe I can do that. What I am

looking for is a couple of quick numbers here.

Dr. SNYDER. Are you in your written statement?

Secretary GRONE. One way of looking at a long-term maintenance requirement is the, and sort of an older way of sort of thinking about the question was as a raw percentage of plant replacement value. Depending on the kind of inventory you are discussing

or depending, frankly, on which engineer you are talking to, it

could be two percent, it could be three percent. I have seen some

as high as 3.5 or 4 percent.

But in many ways, what we have tried to do is we have tried to

move away from that framework, because it is useful as sort of a

blunt instrument. What it is not useful is looking at your requirements from the experience of industry, the experience of what happens in your own inventory.

So what we have tried to do is move the framework from simply

one that is driven by a raw dollar calculation to one that relies on

private sector, appropriate public sector and other benchmarks, rigorously controlled by cost factors that feed a model that is sort of

based on our own inventory.

So what we have tried to do is bring in a whole series of private

sector best practices and apply them to our inventory in a way that

would generate a requirement, a need for the Department to sustain its assets over the long term, attempt as best we can to budget

to that need and execute as well as we can.

Over the long term, a fully funded sustainment program will

have an impact or an effect on the long-term build to recapitalize

your facilities. No one, in industry or in government, knows what

the one-to-one relationship between those two are, but we are doing

a lot of research and work on it.

But the old real property management, real property maintenance framework has given way to a different, more nuanced, more

highly rigorously benchmarked concept called sustainment.

Dr. SNYDER. It seems that my time is up, Phil. It seems, though,

that what you call more nuanced, it seems to me it is a bit difficult

to follow. I mean, I frankly cannot tell if we have too much money

or too little money in line with Mr. Hefley’s concerns that we have

got a bill payer budget rather than an assets budget or we are just

like baby bear’s porridge and just right. And I do not know how to
18

follow these numbers over time, and maybe that is something I

could talk to you another time about.

Secretary GRONE. Well, the baseline does change every year.

Cost factors change every year.

Dr. SNYDER. Right.

Secretary GRONE. For two or three running years, we were able

to hold cost factors down, but with global markets, concrete lumber

prices and the rest increasing, our need increases. We are trying

to track markets, and we are trying to track private sector benchmark costs and apply them to our own facilities. That is really

what we pay. We do not pay based on what happens to be two percent of our plant value. We pay on what is actually going on in the

marketplace.

So in this President’s budget, we have budgeted for 92 percent

of the sustainment requirement. It is not full sustainment. It is a

bit of a reduction in terms of the percentage of the requirement

from what, as the chairman indicated earlier, but we do believe

that it is a very sufficient amount to continue us on the pathway

to good management practice.

And the fact of the matter is just a handful of years ago, we had

no way of understanding what the need was. Now we have a way

with a model to understand the need and try to resource to that

need as best we can.

Dr. SNYDER. And maybe we can follow it over time.

Secretary GRONE. Yes, sir.

Dr. SNYDER. Thank you all for being here.

Thank you, Mr. Secretary.

Mr. HEFLEY. Dr. Schwarz.

Dr. SCHWARZ. Thank you, Mr. Chairman.

I would like to have each of you, perhaps starting with Mr.

Grone and then Mr. Prosch, Mr. Penn, Mr. Kuhn, comment on the

concept of joint reserve bases and with the BRAC coming, with

there being numbers of reserve units which might be moved or actually shut down or combined with other reserve units and with

there being certainly ample property on numbers of bases, one in

fact in my district, how enthusiastic is the Department of Defense

about joint reserve bases, having a base which would have an

Army Reserve outfit, a Navy Reserve outfit, a Marine Reserve outfit and an Air Force Reserve outfit on it, maybe a couple of guard

units from that state as well?

Does that not seem to be a pretty efficient way if such property

is available and that property might have a 10,000-foot prevailing

wind runway, it might have rail facilities, it might have—Mr.

Grone, why are you smiling?

Secretary GRONE. I just was not sure if you were thinking about

any particular installation. [Laughter.]

Dr. SCHWARZ. And might have 7,500 acres right next door that

has been nothing other than a military base since 1917, but who

is counting.

So just the general concept of joint reserve bases. Is that something that you are considering? Is that something that the Department considers a good idea?

Secretary GRONE. Well, certainly, sir, one of the important concepts, predicates of this BRAC process is to try to find ways and
19

means to improve the joint utilization of all of our assets, be they

active or reserve, and to try to employ them more effectively from

a total force concept.

So whether it would be opportunities that might present themselves in the process to create more joint reserve installations or

facilities or to have reserve and active more directly share even

more of the assets than they do today, all of those options are on

the table as part of the process.

What we aim to do through that process is not start with the

predicate that we have to have so many joint facilities come out at

the end of the process. Where we want is we are starting with the

best military value we can. And in order to support the joint war

fighter, we are looking at all the options that we can to assure that

we have the best infrastructure support for the joint war fighter.

And in many cases, that may result in a recommendation to do

something on a more joint basis.

But in terms of how many or whether or what the weight of emphasis is going to be on final recommendations, I simply could not

say.

Dr. SCHWARZ. Would it be safe to say that in general it is a concept that you would embrace?

Secretary GRONE. Jointness is an important part of the BRAC

process.

Dr. SCHWARZ. Any of the other gentlemen care to comment on

that idea?

Secretary PROSCH. Yes, sir, if I could just comment. I would just

assure you that Lieutenant General Schultz, the chief of the Army

Guard, and Lieutenant General Helmly, chief of the Army Reserves, have a chair and meet with us every Tuesday at the Army

Senior Review Group as we analyze all of our BRAC options with

our active members.

One of the tools that you all have given us, the real property exchange tool, we have been using that to good use. Where we find

an old armory and maybe a valuable piece of terrain in an urban

area and we work with the local community to build a perhaps

joint facility out in the suburbs. That is a great tool that you all

have given us, something we are going to look at as we execute this

BRAC 2005.

But if I could ask my colleagues behind me from the reserves and

the guard, do you have any comments?

General PROFIT. Sir, Gary Profit, deputy chief of the Army Reserve.

I would only add that we have a process action team inside of

the BRAC process that is looking at every opportunity to create

joint reserve basing throughout CONUS, and we think it has great

promise.

Dr. SCHWARZ. Thank you, gentlemen.

Thank you, Mr. Chairman.

Mr. HEFLEY. Mr. Butterfield.

Mr. BUTTERFIELD. Thank you, Mr. Chairman.

First, let me thank the four of you for coming forward today to

give us your testimony and certainly thank you for the work that

you do for our country. I want to direct my specific question to Secretary Penn.
20

Now, Mr. Secretary, I realize that you have only been on the job

for a few days; so have I. That is why I am sitting on the lower

tier at the far end. And so I share your anxiety, and I thank you

so very much for coming forward today with your testimony.

I trust that by now you are somewhat familiar with the outlying

landing field in eastern North Carolina. If not, I want to share a

bit with you to give you some information on it.

The Navy is proposing to place an outlying landing field in my

congressional district, which is in eastern North Carolina. Specifically, the field is to be located in Washington and Beaufort Counties, and I just want this committee to know and I want you to

know and the Navy and the Nation to know that I fully support

the development of an outlying landing field and certainly I support it in eastern North Carolina.

My constituents there in eastern North Carolina likewise support

the development of such a field. But we are concerned, we are

deeply concerned, the citizens of eastern North Carolina are concerned that this landing field is being placed in the middle of a

wildlife refuge, and that is not good. And the citizens are very concerned about it. They feel that it is unwise and unfair to locate this

landing field at this location.

The governor of our state commissioned a team of experts recently to examine this site and to propose alternatives, viable alternatives that may be within a few minutes of flying time from

Oceana and Cherry Point and the other bases. And in just a few

minutes I would like to submit a copy of the draft of that report

of the governor’s commission for your consideration and to be a

part of the record.

What further complicates this matter, Mr. Secretary, is the fact

that the United States District Court has heard this case; it is in

litigation. A lawsuit was brought by the citizens of those two counties to the U.S. District Court, and the court has ruled in their

favor and has issued an injunction against the Navy prohibiting

further development of this site.

So we are very concerned about it, and I want you—I do not

want to unduly put you on the spot here today. I realize that you

are new to the process, but I want you to know that the people of

eastern North Carolina are deeply concerned with locating this

landing field in the middle of a wildlife refuge, and we are begging

the Navy, we are urging the Navy to look at alternative sites.

I guess my first question is, Mr. Secretary, are you familiar with

this issue in any respect?

Secretary PENN. Yes, sir, I am familiar with it.

Mr. BUTTERFIELD. Okay. And I guess the next question is, is the

Navy just unalterably opposed to exploring any alternative site? In

other words, are you willing to look at any alternatives whatsoever?

Secretary PENN. Sir, until we have the final results from the

court action, the only thing we are doing is looking at other analysis of the environment.

Mr. BUTTERFIELD. Well, the case is ongoing, certainly——

Secretary PENN. Right.
21

Mr. BUTTERFIELD [continuing]. In the appellate courts, but for

my understanding, the Navy is still attempting to acquire land in

this region.

Secretary PENN. No, sir, we are not.

Mr. BUTTERFIELD. That is not correct.

Secretary PENN. No, sir, that is not correct.

Mr. BUTTERFIELD. And so the land that has been acquired—you

are no longer making an acquisitions.

Secretary PENN. That is correct, sir.

Mr. BUTTERFIELD. All right. Has the Navy completed any type of

bird management plan that would reduce the risk to pilots? This

wildlife refuge is full of animals and birds that are 20 pounds in

weight, they are 9 feet in diameter when fully extended. And the

citizens are just so concerned about the possibility of bird strikes.

Have you explored any——

Secretary PENN. Yes, sir.

Mr. BUTTERFIELD. Have you done any research on this?

Secretary PENN. We are in the process of conducting a BASH,

which is what they call a study, on bird impacts now. And from experience, I can tell you there is nothing worse than hitting a bird

in a landing pattern, especially a large bird. Quite often they come

inside the cockpit with you. It is a very frightening experience. And

you can lose an aircraft and the crew.

Mr. BUTTERFIELD. And of course you are a naval aviator yourself.

Secretary PENN. Yes, sir.

Mr. BUTTERFIELD. Of course, you would share that concern.

Secretary PENN. Yes, sir.

Mr. BUTTERFIELD. Yes.

Secretary PENN. But we are analyzing it to make sure that it has

to be safe for everyone, and I think the area that we are concerned

with is not exactly near the wildlife refuge.

Mr. BUTTERFIELD. All right. I just want to continue to urge the

Navy to look at alternative sites. I know that has been resisted to

this point, but I want to encourage you to continue to look at other

sites, because other sites are available in eastern North Carolina.

And I am going to submit for the record, Mr. Chairman, with

your permission, a copy of the governor’s report. I yield back the

balance of my time.

Mr. HEFLEY. Mr. Forbes.

Mr. FORBES. And thank you all for being here today.

Secretary Prosch, I would like to particularly thank you and your

staff for all the work you have done to support the troops at Fort

Lee and their families stationed there. You have just done a great

job. And as you know, from time to time, some of those troops will

approach us and they will talk about those 1950’s era open-bay

barracks that are still there and they ask when are they going to

be modernized. And I know that you have a program that is doing

that, and I was wondering if you could just share with the committee the current status of the Army Barracks Modernization Program.

Secretary PROSCH. Yes, sir. We are in the 13th year of this program, and thanks to your solid support, we have been making

steady progress. With the fiscal year 2006 appropriation, we will be
22

85 percent complete with the modernizing of our barracks for our

136,000 single soldiers.

Over one-half of this year’s active Army MILCON budget is for

barracks. As I mentioned in my opening remarks, 5,190 new soldiers will now have barracks at the one-plus-one standard. The

one-plus-one standard, as you know, is a suite that we build for the

soldiers where we have private bedrooms, a walk-in closet, a

shared kitchen and a bathroom area.

I had a chance to take my son when he was a college student

into one of these at Fort Bragg, and he said, ‘‘Dad, how do you enlist? This is great.’’ So we thank you so much for allowing us to

give our soldiers what they really deserve.

I would like to also advise you that we are spending $250 million

of OMA dollars this fiscal year 2005 to try to get at some of our

substandard barracks that are in a red status. We want to triage

these barracks immediately and make sure the heating, the air

conditioning, in some cases mold and leaks are repaired. And so we

are going to continue to make a steady progress, and you can tell

those soldiers that it is coming, sir.

Mr. FORBES. Well, thank you, Mr. Secretary, and they appreciate

it. As you know, they have waited a long time for it, and we just

appreciate your efforts there.

Secretary Grone, I have a question for you about overseas bases.

You know, we have had a lot of discussion about long-term bases

in central Asia, for example, and I know that our traditional overseas bases existed in regions where the stability of the government

was not much at issue. But the instability is of particular concern

in some of the areas that we are looking at overseas bases.

Now, how do we ensure that our investment in long-term bases

in these regions will not be wasted if we must at some time abandoned the bases we have built?

Secretary GRONE. Well, sir, the best way I can answer your question is we have, as you indicated, tried to provide Congress with

our best thinking on this as we have moved along the process that

the Secretary initiated nearly three years ago or about three years

ago to take a look at our global assets and global basing and presence laydown and make what adjustments were necessary and prudent for the needs of the future rather than the requirements of

the past.

In September, we provided a report to Congress. It was an initial

report on our basing and presence laydown, and just within the

last two weeks or so, each of the regional combatant commanders

coordinated across the building and submitted through my office,

submitted to the committee, overseas basing and overseas master

plans for their areas of responsibility.

We are trying to take a long-term, prudent, reasonable approach

to the basing laydown that U.S. forces will require. In not all cases

are we talking about main operating bases with static forces in

which we have traditionally been organized. In many cases, what

we are looking for are access agreements, great deal of flexibility,

a lightly to no stationing of U.S. forces in many of these locations.

It would just simply give us the ability to fall in on infrastructure

as contingencies would warrant.
23

So we will have a far more mixed approach to our basing

laydown with main operating bases that look similar to our

Ramstein Air Base, a main operating base, a large contingent of

U.S. forces, significant mission and mission throughput, but in

other areas, in other regions, we will have something that looks far

less intensive that relies more on access and we can provide you

all the appropriate briefing to give you a sense of what our best

thinking is on this at the present time.

But to the extent that a good deal of that is classified, without

getting into specifics, I think that probably might be the best approach there if I might suggest that.

Mr. FORBES. Thank you, Mr. Chairman.

Secretary PROSCH. Sir, if I could just jump in, just for one second. I would just urge you to support the Army’s request for Outside Continental United States (OCONUS) funding this year. We

have very carefully selected our projects in Germany for

Grafenwoehr, Hohenfels; for Italy, Vicenza; and for Korea vicinity,

Camp Humphreys.

These are enduring installations, and we have very good combatant commanders in General Bell and General LaPorte, who for a

$20 million equity investment have earned over $800 million in

host nation funding to support these projects. So it is a very wise

investment, and we would appreciate your continued support here.

Secretary GRONE. Mr. Chairman, if I might just follow up quickly

on that point. As we were developing the initial report to the Congress last year, we were very careful to look through the last year’s

budget request as well as the Future Years Defense Program and

make financial adjustments based on where we saw the basing and

presence strategy heading over time.

So we tried to take a very forward-leaning approach to remove

military construction projects from areas where we were not intending to have a long-term presence, so we would not have that

kind of stranded investment in the future.

And what we tried to do with this budget request, as Mr. Prosch

indicated, is we have put a significant amount of resourcing, $782

million worth, for military construction to meet our requirements

based on the Combatant Commanders’ and the Secretary of Defense’s and the President’s best judgment for that overseas posture

laydown looking to the future. And that is a reasonably consistent

number, in fact it is less than what we have requested in some

prior years, but it represents very clearly our judgment as to where

we will be in the end state.

Mr. FORBES. My time is up but if at some time you could also

get back to me, I know that China and Russia are increasing their

military influence or trying to in central Asia, and whether or not

that is going to pose a threat to our long-term efforts to establish

long-term bases and facilities in that region.

Thank you, Mr. Chairman.

[The information referred to was not available at the time of

printing.]

Mr. HEFLEY. Mrs. Davis.

Ms. DAVIS OF CALIFORNIA. Thank you. Thank you, Mr. Chairman.

Thank you to all of you for being here.
24

Secretary Penn, perhaps I want to ask you more of the questions,

and I appreciate the fact that you have been on the job a very short

time. But I wanted to just ask about the rationale for the Navy

MILCON budget being below, I believe it was about a 14 percent

reduction in 2006 from 2005. That is of interest to me.

But I also wanted to applaud the fact that we have raised the

cap. I think particularly in San Diego that has been very positive.

But could you also address the fact of how are we dealing with the

privatization with bachelor housing? We know that one of the real

management strategies in privatized housing is to move families in

and out very quickly, but in some cases if we have bachelor housing, it works a little differently in the Navy because they do not

necessarily give up that place on deployments and other needs to

leave that housing.

Could you respond to that? How is that working? What is that

vision that we have for bachelor housing facilities after privatization?

Secretary PENN. Yes, ma’am. At this time, we have three projects

going for bachelor privatization. One, as you may know, is in San

Diego, and we have already started on that. It is moving along fine.

The second will be in the Chesapeake, the Hampton Roads area,

and we are looking at the third in the Puget Sound area. We are

also looking at trying to start a second phase, also in the San Diego

and Coronado area.

Ms. DAVIS OF CALIFORNIA. Does it work the same as it does for

families?

Secretary PENN. Yes, ma’am, it does. And it is working well.

Ms. DAVIS OF CALIFORNIA. So there are no transition needs that

would be different in whether or not that particular service member is actually in that housing.

Secretary PENN. That is correct, it would not. When they go to

sea, they will check out. Someone else can go in there, just like

they do now. If you are living in a barracks, you go to sea, someone

else moves into your space.

Ms. DAVIS OF CALIFORNIA. Okay. So will this be providing——

Secretary PENN. Exactly.

Ms. DAVIS OF CALIFORNIA. Okay. All right. Thank you.

I had another question about how we manage the land, because

in urban settings where we have bases, we have geographic constraints, how are we doing at looking at the best use of land on

those particular bases, especially where we have great housing

needs.

It is interesting to me that in San Diego particularly the number

of on-station housing units are so much smaller than in the community and what we depend upon in the community, and yet I do

not know if we are looking as hard as we can. Sometimes it is finding ways of developing that housing on base.

Do you have a sense of whether or not we are looking into those

issues as rigorously as we should?

Secretary PENN. Yes, ma’am, we are.

Ms. DAVIS OF CALIFORNIA. How do we evaluate that?

Secretary PENN. Quite often we try to get land obviously inside

the fence line, because we already own it and we can use that. If

it is not available, then we go outside the fence line, outside the
25

confines of the installation and purchase that land, Public Private

Venture (PPV), and go forward from there.

Ms. DAVIS OF CALIFORNIA. If we develop land within the fence

line and for some reason or other it is not filled by the military,

what happens then? Do we move the fence?

Secretary PENN. Inside the fence line not filled by the military—

sorry. If we get down to the point where we have empty units, private sector people can occupy the units inside the fence line.

Ms. DAVIS OF CALIFORNIA. On the base.

Secretary PENN. Yes, ma’am.

Ms. DAVIS OF CALIFORNIA. And have we done that on a number

of occasions?

Secretary PENN. No, we have not at this time.

Ms. DAVIS OF CALIFORNIA. Okay. Thank you.

If I have some more time, Mr. Chairman, just a minute or two,

just a question about the base operation support funding, and I

know that we do see some concerns about shifting those dollars.

Previously, we were able to take money out of other sources, the

sustainment, restoration and modernization (SRM) accounts, apparently, and I am just wondering whether or not we are finding

a different way to do that since we are not able to shift those dollars in the way that we did before? And of course some of those

dollars were spent in the past, I believe, on services such as child

support services, child care services.

Do we still have the ability to move some of those dollars if in

fact we find——

Secretary PENN. Yes, ma’am, we do. One of the things that we

have done recently we have set up a new organization called CNI,

Commander Naval Installations, and for the first time we have

been able to get our hands around a good budget as to what we

need for our boss. And this is the year we have done it. We are

confident that this is going to help us manage all of our assets

much, much better. It really seems to be working well.

Ms. DAVIS OF CALIFORNIA. Thank you very much.

Secretary PENN. Yes, ma’am.

Secretary GRONE. Ms. Davis, with the chairman’s indulgence, because it was mentioned in the chairman’s opening statement, it is

important to the question you just asked. With the sustainment—

and all of this has to be looked at as a business process for facilities.

We began some years ago to work on the sustainment question,

and we are in the seventh version of that model. We are this year

taking the recapitalization metric from a metric to a model that

will generate more fully the need for financing for recapitalization.

We are currently working on a joint—each of the services had a

way of assessing their base operating support requirements but it

is not a joint process the way sustainment and recapitalization are.

We had initially set out on a path that would have taken us

three to four years to get to a joint programming model. We have

accelerate that through working with each other to the prospect

that we may have that model within 12 months.

All of that leads to an end-to-end business process for facilities

and facilities management in the Department, which we have

never had before. Within that process, we will still have the flexi-
26

bility, barring the imposition of any statutory prohibition, but currently we have the ability to move those funds around, all of which

or most of which are operations and maintenance funding, from

sustainment to base operating support, to O&M recapitalization, as

circumstances require.

But as our end-to-end business process matures, it is better now

than it was the year prior, than it was the year prior, and it will

improve every year as we move forward, but as that process matures, we will have a far better sense as we are building a budget,

even more than we do already, and we knew a good deal today, of

what the real needs are and how we should budget and make those

respective trades as we are building the budget. Which should,

theoretically, and in most normal years put us in a position where

we would have less money moving from pot A to pot B, because we

would be more in a position to define that need.

We still need flexibility, however, for unanticipated bills, so we

are working a joint business process together. We are putting more

funds into these areas than we have in the past. We are

benchmarking them to private sector standards while retaining

some flexibility to meet our needs.

Ms. DAVIS OF CALIFORNIA. Mr. Secretary, if I may, just what

would indicate to you that that is not working? What would be the

first thing that you would look at in hoping that that flexibility exists that would not be occurring? How would you define that?

Secretary GRONE. Well, currently we have the flexibility to move

funds from sustainment to base operating support and back, subject to the transfer limitations that are imposed by Congress and

subject to reprogramming.

If there is a specific sort of instance at an installation, we can

certainly look at that, but I am not—absent looking at sort of broad

trends in execution or the way in which funds would move around,

that is usually what we would look to as an indicator of something

that is either we did not anticipate a requirement or a bill or whatever it might be.

Ms. DAVIS OF CALIFORNIA. One quick question: Will you still

have the ability to shift the money between the BOS and the SRM

under the new appropriations alignment?

Secretary GRONE. We would have that ability now and we would

have that ability in the future.

Ms. DAVIS OF CALIFORNIA. Okay. You will have it. Okay. I was

trying to get at that question. Thank you.

Mr. HEFLEY. Mr. Hayes. Sorry to wake you, Mr. Hayes. [Laughter.]

Mr. HAYES. Thank you, Mr. Chairman. I have been here so long

I had forgotten about it. Anyway, thank you for holding the hearing. Gentlemen, thanks for being here. Secretary Prosch, the Army

is having big problems, as you were just talking to Ms. Davis

about, SRM and BOS funding. The Army’s 2006 request will fund

only 72 percent of BOS requirements which are typically must-pay

bills. These accounts must be funded at approximately 90 percent

in order to maintain base services.

I am aware that the Army is in the process of identifying ways

to fund BOS at 90 percent in 2005 and 2006, but meeting this re-
27

quirement would require as much as $1.8 billion in additional

funding for BOS.

How will you meet the 2005 and 2006 goal, and why does the

Army continue to fund BOS at levels far below spending requirements? Question number one.

Number two, I am also aware that the Army’s budget for 2006

funds SRM at only 91 percent, short of the 95 that DOD has as

a goal. As you know, SRM accounts that are regularly utilized as

bill payers for BOS requirements generated 400 unheated buildings

at Fort Bragg and a lack of SRM funds. This is unacceptable. We

have talked about it. Redefining heat in a building with a space

heater or a stove is not the way to solve the problem. I am aware the Army has already shifted approximately $400

million from SRM to BOS in 2005. Because SRM accounts are raided to pay BOS, in 2004, sustainment budget received less than 60

percent of requirements, and we are on a similar track in 2005.

Mr. Secretary, I would not buy a new vehicle or build a new

building if I did not have funds to pay for the upkeep or the gas

and the oil.

If your MILCON dollars are unwisely spent, there is no way to

sustain the facilities. How do you intend to fix this SRM funding

deficit, both in short and long term?

And last but not least, Secretary Kuhn, if we have the time, the

Air Force is embarking upon privatized housing. From what I hear

it is going very well. As you know, we have a successful program

at Fort Bragg in its third year. At such installations as Pope and

Bragg where there is already a privatized housing program, to

what degree are you working with the other service and existing

developers to ensure a seamless and uniform housing program to

all service members which is really working well?

Thank you.

Secretary PROSCH. Sir, let me start off. Our goal is to work closely with OSD to try to get this model to where we do fund SRM and

BOS at the right level. The Army has historically underfunded

BOS and SRM. Our installations have been the bill payer too long.

Our Secretary and our Chief two weeks ago have made a bold

policy change. They said that in some ways our socks do not match.

We say that the quality of life and that infrastructure is key, and

so we need to go ahead and get on with doing that. And they have

made the decision starting in 2005 to fund our base operations support and our sustainment at 90 percent.

So we are going to do that this year, we are going to do that in

the 2006 budget, and we pledge next year to go ahead and work

this up-front, as we should be doing.

We thank you for all your support at Fort Bragg. We did have

a bad cold spell there with over 400 buildings without heat. As of

yesterday, 45 of those buildings are without heat. We will get them

fixed in the next three weeks, and we pledge to take care of our

soldiers and our facilities, sir.

Secretary KUHN. If I could answer your question on the housing

privatization at Pope Air Force Base, we had originally looked at

Pope as a stand-alone housing privatization project because of the

basic allowance for housing. Its financials placed it in doubt as to

whether it could be economically feasible.
28

So we have now grouped Pope Air Force Base, Andrews Air Force

Base here in Maryland and MacDill Air Force Base in Florida in

a group of three that we will be going our in early 2006 with the

RFP asking for bids on all of those as one group. And then we plan

to award that in early 2007.

Mr. HAYES. Thank you, Mr. Secretary, and I appreciate those

comments. It has been very, very successful for the folks in uniform.

Mr. Prosch—and welcome back, Phil, as well—I appreciate the

high level of awareness that you have and the commitment to fixing it. Is there any kind of market we can lay down on the table

to show that for sure this is going to take place this time?

Secretary PROSCH. Yes, sir. We have our mid-year review coming

up here toward the end of March. Why don’t I promise to come see

you and the good chairman and tell you how we are going to realign our funds from different bins to make sure that the base support is funded properly?

Mr. HAYES. Appreciate that. And bring the money, we will be

glad to see you. [Laughter.]

Mr. HEFLEY. Mr. Marshall.

Mr. MARSHALL. Thank you, Mr. Chairman. Appreciate you all

being here. I will get the advertising out of the way to start out

with. Secretary Prosch, I know you know that Stewart and

Benning are ready to welcome any of the 10 brigades you want to

send that way. And Warner Robins is already a multi-service,

multi-mission facility. So that takes care of the advertising.

Secretary Kuhn, in your testimony, you make reference to the

Air Force’s commitment to be recapitalizing on a 67-year schedule.

That would be about 1.5 percent of your current capital. You say

that in the sustainment budget you are at 95 percent this year.

Secretary KUHN. That is correct.

Mr. MARSHALL. You say that you have fallen short on the balance of the recapitalization and modernization——

Secretary KUHN. And restoration and modernization.

Mr. MARSHALL. Restoration and modernization. You are at 173

and you say that by 2006—no pardon me, 2008, two years from

now, the backlog will be 9.8 billion. Assuming that the recapitalization—and I have heard what Secretary Grone said where we have

gone through seven theories already and we are into our eighth as

far as this sort of issue is concerned—but assuming the Air Force’s

commitment to a 67-year schedule, that is 1.5 percent, what is 1.5

percent of our current capital? What should we be spending right

now, on average?

Secretary KUHN. On average, in restoration and modernization?

In the 2006, like you said, we have the $2 billion for sustainment

and——

Mr. MARSHALL. And 173.

Secretary KUHN [continuing]. And 173. And in restoration and

modernization to reach the recap rate in 2008, we will have to get

to just a little under $800 million, and we have budgeted for that

to hit the 67 recap in 2008. I realize that——

Mr. MARSHALL. You have got in your testimony a description what you call a $9.8 billion shortfall as of 2006. Maybe I am

misreading this. I do not think I am. It is on page four.
29

Secretary KUHN. I am going to have to go back and look at that.

Mr. MARSHALL. It says, ‘‘The restoration and modernization back- log is projected to grow to nearly $9.8 billion in 2006.’’

Secretary KUHN. I am not sure that is necessarily associated

with how we reach the recap rate as to what we think needs to be

funded in those programs. I think we have a ways to go. We are

going to have to come out of a little bit of a deeper valley than we

thought, but we have the money into the President’s budget in the

future years, and we still believe that we are on goal to hit 67-year

recap, not only in year 2008 but in the years thereafter.

Mr. MARSHALL. We had a huge problem with recapitalization of

the quarters, housing stock for soldiers, airmen, Marines, sailors,

and at some point prior to my tenure we made the decision to have

private funding, recapitalization and then lease, which effectively

is just borrowing money and adding to our debt. But it inures to

our benefit right now because we get a whole bunch of money that

we can invest, and, consequently, we have a nice new housing stock

that is available for these soldiers.

Secretary KUHN. That is correct.

Mr. MARSHALL. Have we considered doing the same thing with

regard to our commercial capital stock? I toured Robins on Saturday, some 1940 warehouses that were converted to office space and

are now, what is that, 65 or 67 years old, pretty sorry shape, housing about 4,000 people who are doing support services for our efforts in Iraq and Afghanistan and in pretty bad circumstances.

The cost to just fix that with a new building would be in the neighborhood of maybe $200 million, $300 million. I am sure we

could find private individuals willing to do it and lease it back to

us.

Secretary KUHN. I think we are trying to do just that through

a concept that has been available in the law to us in recent years,

called the enhanced use lease, where the military departments now

are authorized to use underutilized property to allow somebody

outside of the fence, in the private sector, to do something, to build

something on that underutilized land that insures to their benefit

and for the use of that land to build something that inures to our

benefit.

We are asking all of the commands to look at that, Air Force Materiel Command (AFMC) under which Robins falls, has not that I

know of, but Hill Air Force Base in Utah is looking at using this

authority over a period of probably 20 years to use private sector

funding to gain facilities that would encompass perhaps as much

as one-third of the installation through this enhanced use lease

process. The Army is doing it as Walter Reed, and we are looking

at many other ways of leveraging private sector dollars.

Now, there are issues associated with this—force protection

issues, allowing people to come on to the base—but if all these are

met and they are met to the satisfaction of the installation commander, we are definitely looking at ways of leveraging private sector dollars in our commercial activities, as we have in our housing

privatization and utility privatization.

Mr. MARSHALL. Secretary Grone, I know I am out of time. I do

not know whether you are the appropriate person to do this. I

would certainly like somebody to come in and help me understand
30

the effective dollars and cents of these kinds of techniques used to

modernize our stock.

It just seems to me that this is like buying a car, borrowing the

money to do so, effectively adds debt, whether you call it a lease

or you call it a loan, and if you combine the extent to which we

are failing to recapitalize, so, for example, the $9.8 billion backlog,

which, in essence, is a future obligation, with the obligations that

are incurred as part of the leasing processes, I wonder to what extent we are just adding debt that is just not showing on the books.

Secretary GRONE. Well, Mr. Marshall, we will be happy to provide you a briefing and have whatever discussion you believe may

be necessary.

I do want to clarify one item, though, if I might. The discussion

about housing seemed to center, unless I misinterpreted it, on the

notion that we would lease the housing back from the private sector. That is not what we are doing in housing privatization.

If it is an on-base housing area, in many cases we retain the fee

simple title and we out-lease that land on a 50-year or longer lease

to a private entity, which the financial markets treat as ownership.

Off-base, it is not our land.

If we are conveying housing units into the stock, we convey those

as part of the deal, they become the property of the developer, and

the individual service member chooses whether to execute a lease

with that developer. The government does not lease the housing

back from the private developer. The risk is on the private sector.

What this program gives us the ability to do is give our people

better housing options. They are competitive with the private marketplace, but in the sense that it builds up a financial liability with

all that implied from some sort of a leasing arrangement, as one

might traditionally think about it, it is certainly not that, although

it is understandable why one might draw that conclusion. But we

do not lease the housing back for our people. Our people make

those individual choices themselves.

Mr. HEFLEY. Mr. Ryan.

Mr. RYAN. Thank you, Mr. Chairman. We have a vote here, so

I am going to try to be relatively brief.

Real quick, over the past few BRAC closures, how much savings

have we recognized up to this point, do you know? I have not seen

any number. Ballpark.

Secretary GRONE. The Government Accountability Office and

every audit that we have seen suggests that the annual recurring

savings from after implementation of all prior BRAC decisions is

approximately $7 billion a year, with $17 billion that we saw

through the implementation of the prior 4 rounds of BRAC. But

that is $7 billion is an annual recurring savings based on decisions

that were taken in those four rounds.

Mr. RYAN. Great. Thank you very much.

One of the questions I have, and I am not going to plug my base

directly, the 910th Airlift in Youngstown, I guess I will do it directly. [Laughter.]

I am not going to let everybody else do it and then I am not

going to do it.

One of the questions and the concerns that I had is as we are

moving troops back to this country and we are closing down bases
31

in the new post–9–11 threats that we may and maybe the role that

some of these air bases or military installations are going to play

for homeland security. And one of the concerns is we may close

down a base that may be able to somehow help us down the line

that we may not see just yet.

What role throughout the closure process will location play? I

mean, we are in Youngstown, Ohio. We are 500 miles from twothirds of the country. We have the only fixed wing aerial spray

unit, and there are things that we are working on for biopreparedness with Kent State where that aerial spray unit may play a role

down the line in some kind of homeland security issue. Is location

considered in the process?

Secretary GRONE. Certainly, location is a key component of the

assessment process. The availability of land, air, sea assets, associated facilities is part of the selection criteria upon which the Secretary must make his judgment to develop his recommendation.

From a homeland defense, homeland security perspective, homeland defense is a mission of the Department, and we certainly take

that mission into account as we build a basing laydown and infrastructure for the future. We are doing that.

So, certainly, all of those factors are a part of the process. Without being able to be specific about any given location, certainly,

that is an obvious part of—an overt part of the selection criteria

and a part of the assessment process internally.

Mr. RYAN. Thank you. One final——

Mr. HEFLEY. Very quickly, Mr. Ryan, or we could come back if

you would like to come back and finish up your testimony.

Mr. RYAN. Yes. I will get you and let Mr. Taylor go.

Mr. HEFLEY. Can the witnesses stay? Okay. Evidently, we just

have one vote, so we will go try to do it quickly and come back.

The committee stands in recess.

[Recess.]

Mr. HEFLEY. The committee will come back to order, and since

Mr. Ryan is not here right now, we will go to Mr. Taylor.

Mr. TAYLOR. Thank you, Mr. Chairman. I am reading with great

interest the environmental hurdles of building the outfield that is

described in Secretary Penn’s remarks in North Carolina. Secretary

Penn, if Cecil Field were still part of the Navy’s inventory, would

you have to be doing all that in North Carolina?

Secretary PENN. I honestly do not know, sir, but I know I love

Cecil Field.

Mr. TAYLOR. I think the correct is answer, no, if Cecil Field was

still in the inventory, we would not be looking for additional bases.

Why was Cecil Field closed? Did the local community ask us to

close it or was that the result of a base closure decision?

Secretary PENN. I believe that was the result of a base closure,

sir.

Mr. TAYLOR. Secretary Penn, while I have you, I just on Saturday visited—and I realize you have only been on the job a couple

of days, but on Saturday I visited some brand new family housing

built to take care of the sailors at Homeport Pascagoula. And when

I say brand new, they have not even been occupied yet.

With this round of BRAC, should Pascagoula be marked for closure or mothballing or whatever, what becomes of that housing?
32

And the reason I ask is the housing is located almost equal distance between Homeport Pascagoula and Keesler Field in Biloxi,

Mississippi.

What I am curious is, is there a mechanism where another

branch of the service could ask of that, because the absolute last

thing I want to see is this housing built at taxpayers’ expense either allowed to fall into disrepair for lack of use or, worse yet, be

sold for pennies on the dollar in some brother-in-law deal that just

makes all of us look bad.

Secretary PENN. No, sir. It is PPV. It is up to the partner as to

what happens to the house.

Mr. TAYLOR. If I am not mistaken, this is not that. I think this

was actually paid for with taxpayer funds. There was some talk at

some point of transferring it over to a public-private venture, but

the word I got on Saturday that it was actually taxpayer money

that built that.

Secretary PENN. Sir, I will take that for the record and get back

to you.

[The information referred to was not available at the time of

printing.]

Mr. TAYLOR. Would you?

Secretary PENN. Pleasure, yes, sir.

Mr. TAYLOR. Secretary—and I do not mean any offense—Prosch?

Secretary PROSCH. Prosch.

Mr. TAYLOR. Okay. Recently returned from Roosevelt Roads to

see the—again, do not say this happily—to see that base being shut

down. I think it is a mistake. I did not realize it was buried in the

authorization bill a couple years ago, but I voted for it, and therefore I share the responsibility.

It is my understanding that not only did that language require

the closing of Roosevelt Roads, which, again, I think is a mistake,

but has pretty well put a moratorium on all military construction

on the island of Puerto Rico.

A, is that accurate, and, B, what sort of problems, what sort of

unintended problems is that creating for the Army down there that

maybe we can correct in this year’s bill?

Secretary PROSCH. Let me talk about that. Thank you for the opportunity to discuss that, then I am going to defer to my reserve

colleagues in the rear here.

We have got about 4,500 reserve soldiers in 48 units, in 14 different locations across the island, and if you look at the number of

soldiers and the total population per capita, Puerto Rico is as high

as any state we have got for serving their country. And so it is important that we try to sustain the facilities that we use.

Overcrowding can be relieved through the use of military construction funds, and the problem we have is that this moratorium

was imposed. And you will see in the Army-recommended and

OSD-approved legislation some relief from this moratorium, because we think it is important that we be able to lift this moratorium and be able to drive on with our construction.

The guard wants to put their headquarters at Fort Buchanan.

Fort Buchanan could be a satellite for consolidation of a lot of outlying reserve units. And so it would be very important if we could

get your support on that.
33

And I would just briefly like to ask my reserve and guard colleague to my rear to comment on that.

General PROFIT. Yes, sir, if I could. First of all, the moratorium

applies only to Fort Buchanan, but having said that, Fort Buchanan is the centerpiece of an island-wide answer to facilities in

Puerto Rico. That also includes an enclave at Naval Station Roosevelt Roads, Camp Santiago and armories and reserve centers

throughout the island.

Frankly, sir, you asked about the impact. The impact is that it

is not very helpful for us to be able to provide facilities for quality

of life and quality of service for soldiers, sailors, airmen, Marines,

coastguardsmen that frankly is commensurate with their service to

the nation. And we would ask your support to lift the moratorium.

Mr. TAYLOR. Mr. Chairman, if I may.

Secretary Penn, one thing I did notice at Roosevelt Roads—I am

a scrounger by nature, I literally built a boat out of other people’s

junk, of course, it looks like it—but one of the things that I noticed

is that at Roosevelt Roads—I come from hurricane country. Loss of

power is something we anticipate every August and September,

and therefore almost every community one of the things they really

place a premium on are generators for the courthouse, for the jail,

for the police and fire departments.

One of the things I did notice at Roosevelt Roads, on the good

side, is that the Navy had done a very good job of pulling almost

every stick of furniture out of there, because I did not want to see

anything wasted.

On the not so good side, and I do want to compliment the young

lieutenant commander who rode me around that Saturday, who

gave up his Saturday and did a great job, one of the things I did

notice is there were probably 100 generators of various capacities,

some of them in the hundreds of kilowatts, that the Navy had

planned on leaving behind.

I would ask that you take another look at that. I think that given

that local communities can use them, given that the guard and reserve, particularly engineering battalions have left behind in Iraq

almost all of their generators, I would hope that the Navy, again,

using our great CBs, using the reserve capacity that you have,

using possibly the Puerto Rican National Guard engineering units,

I hate to see that transferred to the next person who buys those

buildings. They are going to get a bargain anyway. They do not

need a bargain plus that.

Secretary PENN. Yes, sir. Yes, sir.

Mr. TAYLOR. And that was my request of you. If you could follow

up on that.

Secretary PENN. I will follow up on that, sir.

[The information referred to was not available at the time of

printing.]

Mr. TAYLOR. And, quite frankly, if you can find no one else that

is interested in it, I would certainly like the opportunity to see if

I cannot get the Mississippi National Guard down there.

Secretary PENN. Yes, sir.

Mr. TAYLOR. Okay.

Secretary PENN. We will get back to you.

Mr. TAYLOR. Thank you, Mr. Chairman.
34

Mr. HEFLEY. So far as lifting the moratorium, I would like to say

just as one member of this committee, I would not put a dime of

military money back into Puerto Rico if I had my way after they

shoved us off the island, which we really needed, which had a military necessity for us to use, Vieques. And we got shoved out because of local politics and politics up here, Gene.

And I think it is a darn shame. We needed that facility, and it

was not hurting anybody. But it became a political and emotional

thing, and I think we should have closed Roosevelt Roads and everything else we have got down there.

So you do not have to come lobby me on that now.

Mr. Ryan.

Mr. RYAN. Thanks, Mr. Chairman, I appreciate it.

One of the questions I had was one of the criteria for the BRAC

is the economic impact. If you could just maybe explain that a little

bit, how broad that is. My concern is that an area like I represent

that has a high unemployment rate, is very poor area, losing a base

that employs 2,000 people and has $110 million economic impact,

losing that to us means a lot more than if that base was closed

down in an area that was doing very well.

And you do not have to give me the exact stuff but just what is

your sense, because I think in the long run it may cost the government more money to—the government as a whole more money to

close down that base and that area. It may save the military

money, but it may have an overall cost to the taxpayer.

Secretary GRONE. Well, sir, I take your point, and you are certainly accurate that we do have to take into account the economic

impact of the Secretary’s recommendations on communities. How

precisely we are going to asses that, the weight of it, the breadth

of it, and how we are going to do that is not something I am in

a position to discuss today.

Suffice it to say that all of that material will become available

to the Congress and to the Commission on the 16th of May for both

entities to exercise their respective responsibilities under the statute. But it is just simply not something, because it is for the internal assessment process at this point that I cannot detail at this

time.

Mr. RYAN. Let me just encourage you, because from our position,

although we are on this committee, we also vote and represent

other interests as well. And to save money in the military budget,

to get the taxpayer more money because of the social need that

would be made there I think is very important.

So thank you very much. You guys do a great job, and I really

appreciate your time.

Thank you, Mr. Chairman.

Mr. HEFLEY. Mr. Taylor, you have a follow-up.

Mr. TAYLOR. Yes, sir.

Gentlemen, I—and, Phil, you are a great guy, we go way back

on this issue. You are for it, I am against it, and unfortunately

your side won; there will be another round of BRAC. The number

that was tossed out repeatedly by the Secretary of Defense and others was somewhere in the neighborhood of 23, 24 percent excess capacity.
35

I look out and I see the simultaneous cancellation or reduction

or delay in the purchase of the DDX, the tall combat ship, the F–

22, the V–22, C–130 Js, and I know I am missing a couple. I happen to believe that reflects—and then I have talked to friends within the services who tell me how their O&M accounts are being raided. I happen to believe that that reflects the hidden costs of the

war in Iraq where we are just not being straight with the American

people as to the true cost of this. And so in order to do that war

right, and I hope we are doing it right, we are creating some future

vulnerabilities over here.

My fear is that now that we have given the Department authority for another round of BRAC, that it is not 24 percent of capacity,

that it is actually much worse than that, because you are looking

for some additional savings to cover the cost of the war in Iraq.

What guarantees do we have, if any, that this round of BRAC will

not end up closing one base out of three or two bases out of five,

as far as a percent of total capacity?

Secretary GRONE. Mr. Taylor, the best way for me to answer that

question at the present time is to say what that number is and

what it is not.

That number was an estimate of excess capacity based on

baseloading construct which was the best way that we could judge

capacity at that time, absent an actual BRAC analysis. The Congress asked on two occasions, once in 1998 and once last year, for

reports to be delivered that assessed balance of excess capacity

available to the Department.

In the 1998, the number across the entirety of the Department

came out to 23 percent. The number in the last report to Congress

came out at 24.

I think we have gone to great lengths to say, and I have said repeatedly, that that does not necessarily mean that one base in four

will close. The entire thrust of base realignment and closure or the

mandatory direction from the Congress, not a matter of discretionary policy choice by the Department, but as a matter of law is

that the military value of our installations and the missions that

they support is the primary consideration for base closure and realignment recommendations. Not savings, not targets for capacity

reduction, but the military value to the national defense based on

a 20-year threat assessment and force projection and also founded

upon the selection criteria.

I cannot give you any assurances with regard to specific numbers, because the Secretary has not made his recommendations

clear. What I can say is that we have set no internal or external

targets with regard to savings projections that have to be achieved

with regard to this BRAC. We take very seriously our obligations

under the statute to ensure that military value is the highest criteria by which we make these judgments.

We believe there are savings to be had, specifically for the kinds

of things that you have spoken about that accrue from getting rid

of excess capacity that we no longer require. Our track record demonstrates that, and I know we have had disagreements on that

point, but, clearly, there are savings to be had from offloading infrastructure that is not required for the mission and not required
36

by the Department for any purpose. Those funds can be used for

a better and higher military use.

So all I can assure you today is that we are doing the best we

can to develop options for the Secretary for his consideration and

ultimately his recommendation that have military value as that

best and highest criteria within the process and that we have not

established any arbitrary targets for closure and realignment, and

we certainly have not set any internal goals for simply closing

bases for the sake of achieving a budgetary target. That is not

what we are doing.

Mr. TAYLOR. Again, to the point, the number that was thrown

out is 24 percent excess capacity; you have confirmed that. Is there

anything to limit it from being 30 percent? Is there anything to

limit it from being 50 percent?

Secretary GRONE. The limitation is the best military judgment of

the uniformed and civilian leadership of the Department.

Mr. TAYLOR. Okay. But in simplistic terms, there is really nothing to stop this BRAC from closing every other base in America if

they choose to.

Secretary GRONE. Congress provided no baseline, and it provided

no ceiling to the scope of the analysis, specifically, because it asked

us to look at it from the perspective of military value.

Mr. TAYLOR. Just wanted to get that on the record.

Thank you, Mr. Chairman.

Mr. HEFLEY. Thank you, Mr. Taylor. Mr. Taylor has had two continuing themes when we talk about BRAC. One is Cecil Field we

have already talked about, and we did screw up there, I think. We

should not have lost that. That is one of the mistakes of the BRAC

process.

And the other is that we get value for what we give up. And that

was part of the original formula when we talked about the BRAC

thing. Mr. Armey brought the BRAC procedure to the floor and we

talked about in our calculations about how much money we were

going to save and what we were going to do with it and so forth,

that we would actually sell these properties and they would bring

in money, and we would use that to make better some of the installations we had. And that has worked to a greater or lesser extent

over the years, most lesser extent, I think.

What is your sense, Phil, that in terms of getting value in this

BRAC process, because there are some places that have very little

economic value. They are good for a base and they are good for not

much else. And there are some places with enormous value. The

one, Gene, that you referred to many times is that island in New

York and so forth—what?

Mr. TAYLOR. Governor’s Island.

Mr. HEFLEY. Governor’s Island, which has enormous value or

anywhere around San Diego or Norfolk or Jacksonville would have

enormous value.

So do we plan to give this stuff away mostly or do we plan to

try to do what we can to realize value from it?

Secretary GRONE. Well, Mr. Chairman, we are taking a very good

hard look at lessons learned from the past from prior rounds of

BRAC and taking into account the comments that we received from

a number of sources to include members who have expressed con-
37

cern about the disposal process over the years, including members

of this committee.

Recently, I have spoken about five fairly broad principles through

which we would entertain and manage our policy process for base

reuse after the decisions are rendered and assuming they are enacted into law.

First, we want to do whatever we can to expedite the movement

of the mission. It is in the interest of the Department to have realigned missions or missions moving from a closed installation to

their ultimate destination as expeditiously as we can.

That is certainly in the interest of military efficiency and effectiveness, and it certainly leads to the second principle, which would

be that we must do what we can, and we will do what we can, to

expedite the beneficial reuse of a closed military installation, to put

it back on the local tax rolls so it can provide the kind of economic

benefit to the local community that it can.

In many cases, those processes have taken a significantly long

time for a number of reasons, and we are looking at those reasons

very carefully to see what we can do to expedite it.

Fundamentally, what we seek to do as a third principle is to implement a mixed toolkit approach. And by that, I mean all the authorities that are currently available to the military departments,

be it public sale, public benefit conveyances, economic development

conveyances, whatever the package of authorities that is necessary

are all on the table, and in many cases we could have a cookie-cutter approach but it would not be very effective.

And, quite frankly, in the early part of the first rounds of BRAC,

we probably overestimated both our capacity and our ability to execute public sale in an effective way. Over the years, that pendulum

tended to swing very much to the other direction, much to the consternation, I think, of a number of players in the process.

What we are trying to do is rebalance that equation, recognize

that we have some powerful authorities at our disposal but that we

have to have all of the authorities at our disposal in order to this

process to be effective.

Within that mixed toolkit, certainly, we do want to rely as a

fourth principle more on the market. So to the extent that we have

assets that are valuable in the public marketplace, we should seek

and will seek to sell those where we can, assuming that they are

not the subject of a public benefit conveyance or other process. But

we do want to try to maximize value in return for these parcels

where it is appropriate, and it will be appropriate in a number of

venues.

Our ability to do that, both to execute the mixed toolkit and to

maximize value, relying on the market, is entirely dependent on

the fifth principle, which means we cannot execute any of this

without a very strong partnership with state and local government,

those who have zoning authority, state environmental regulators,

state and local development authorities in the private sector to do

what is necessary to develop a local redevelopment plan or base

reuse plan that can be effectively and expeditiously implemented.

So it is would not be a process of we will have a parcel property

and we will stand off to the side and try to sell it, as some have

suggested we might do. For this process to be effective, we have to
38

be involved in an aggressive way at the local level, with affected

parties, to ensure that we get the best plan developed and that can

provide us where we are going to use public sales the maximum

value for property.

The Navy has one that recently at El Toro, they have done it and

are postured to do it at Naval Station Roosevelt Roads, using a

mixed toolkit approach, relying on public sale where it is viable, relying on strong partnership with state and local government and

the local redevelopment interest to make sure that we do have a

package that can, in the event we do have a base closure, put ourselves in the best position possible to have economic reuse in the

most expeditious way we can.

Mr. HEFLEY. Thank you. Are there any other questions?

If not, we want to thank you again for being with us. Your testimony was very, very helpful.

The committee stands adjourned.

[Whereupon, at 4:25 p.m., the subcommittee was adjourned.]
A P P E N D I X

MARCH 15, 2005

PREPARED STATEMENTS SUBMITTED FOR THE RECORD

MARCH 15, 2005

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QUESTIONS AND ANSWERS SUBMITTED FOR THE

RECORD

MARCH 15, 2005

(117)

QUESTIONS SUBMITTED BY MR. FORBES

Mr. FORBES My time is up but if at some time you could also get back to me,

I know that China and Russia are increasing their military influence or trying to

in central Asia, and whether or not that is going to pose a threat to our long-term

efforts to establish long-term bases and facilities in that region.

Secretary GRONE. [The information was not available at the time of printing.]

QUESTIONS SUBMITTED BY MR. TAYLOR

Mr. TAYLOR. Secretary Penn, while I have you, I just on Saturday visited—and

I realize you have only been on the job a couple of days, but on Saturday I visited

some brand new family housing built to take care of the sailors at Homeport

Pascagoula. And when I say brand new, they have not even been occupied yet.

With this round of BRAC, should Pascagoula be marked for closure or mothballing

or whatever, what becomes of that housing? And the reason I ask is the housing

is located almost equal distance between Homeport Pascagoula and Keesler Field

in Biloxi, Mississippi.

What I am curious is, is there a mechanism where another branch of the service

could ask of that, because the absolute last thing I want to see is this housing built

at taxpayers’ expense either allowed to fall into disrepair for lack of use or, worse

yet, be sold for pennies on the dollar in some brother-in-law deal that just makes

all of us look bad.

If I am not mistaken, this is not that. I think this was actually paid for with taxpayer funds. There was some talk at some point of transferring it over to a publicprivate venture, but the word I got on Saturday that it was actually taxpayer money

that built that.

Secretary PENN. [The information was not available at the time of printing.]

Mr. TAYLOR. Secretary Penn, one thing I did notice at Roosevelt Roads—I am a

scrounger by nature, I literally built a boat out of other people’s junk, of course, it

looks like it—but one of the things that I noticed is that at Roosevelt Roads—I come

from hurricane country. Loss of power is something we anticipate every August and

September, and therefore almost every community one of the things they really

place a premium on are generators for the courthouse, for the jail, for the police and

fire departments.

One of the things I did notice at Roosevelt Roads, on the good side, is that the

Navy had done a very good job of pulling almost every stick of furniture out of

there, because I did not want to see anything wasted.

On the not so good side, and I do want to compliment the young lieutenant commander who rode me around that Saturday, who gave up his Saturday and did a

great job, one of the things I did notice is there were probably 100 generators of

various capacities, some of them in the hundreds of kilowatts, that the Navy had

planned on leaving behind.

I would ask that you take another look at that. I think that given that local communities can use them, given that the guard and reserve, particularly engineering

battalions have left behind in Iraq almost all of their generators, I would hope that

the Navy, again, using our great CBs, using the reserve capacity that you have,

using possibly the Puerto Rican National Guard engineering units, I hate to see that

transferred to the next person who buys those buildings. They are going to get a

bargain anyway. They do not need a bargain plus that.

Secretary PENN. [The information was not availabe at the time of printing.]

Æ