U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

i

64–887 2001

[H.A.S.C. No. 106–40]

HEARINGS

ON

NATIONAL DEFENSE AUTHORIZATION ACT

FOR FISCAL YEAR 2001—H.R. 4205

AND

OVERSIGHT OF PREVIOUSLY AUTHORIZED

PROGRAMS

BEFORE THE

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MILITARY READINESS SUBCOMMITTEE HEARINGS

ON

TITLE III—OPERATION AND

MAINTENANCE

JOINTLY WITH

COMMITTEE ON GOVERNMENT REFORM

SUBCOMMITTEE ON THE CIVIL SERVICE

MARCH 9, 2000

Serial No. 106–164

HEARINGS HELD

FEBRUARY 29, MARCH 1 AND MARCH 9, 2000

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: (202) 512-1800 Fax: (202) 512-2250

Mail: Stop SSOP, Washington, DC 20402-0001

(II)

MILITARY READINESS SUBCOMMITTEE

HERBERT H. BATEMAN, Virginia, Chairman

SAXBY CHAMBLISS, Georgia

WALTER B. JONES, JR., North Carolina

BOB RILEY, Alabama

DUNCAN HUNTER, California

JAMES V. HANSEN, Utah

CURT WELDON, Pennsylvania

TILLIE K. FOWLER, Florida

JAMES TALENT, Missouri

TERRY EVERETT, Alabama

JIM GIBBONS, Nevada

DONALD SHERWOOD, Pennsylvania

SOLOMON P. ORTIZ, Texas

NORMAN SISISKY, Virginia

JOHN M. SPRATT, JR., South Carolina

OWEN PICKETT, Virginia

ROBERT A. UNDERWOOD, Guam

ROD R. BLAGOJEVICH, Illinois

ADAM SMITH, Washington

JAMES H. MALONEY, Connecticut

MIKE MCINTYRE, North Carolina

CIRO D. RODRIGUEZ, Texas

PETER M. STEFFES, Professional Staff Member

JOSEPH F. BOESSEN, Professional Staff Member

MARY ELLEN FRASER, Counsel

THOMAS E. HAWLEY, Professional Staff Member

DIANE W. BOWMAN, Staff Assistant

COMMITTEE ON GOVERNMENT REFORM

SUBCOMMITTEE ON THE CIVIL SERVICE

JOE SCARBOROUGH, Florida, Chairman

ASA HUTCHINSON, Arkansas

CONSTANCE A. MORELLA, Maryland

JOHN L. MICA, Florida

DAN MILLER, Florida

ELIJAH E. CUMMINGS, Maryland

ELEANOR HOLMES NORTON, Washington,

DC

THOMAS H. ALLEN, Maine

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

GARRY EWING, Staff Director

SUSAN WAREN, Professional Staff Member

BETHANY JENKINS, Clerk

TANIA SHAND, Minority Professional Staff Member

(II)

(III)

C O N T E N T S

CHRONOLOGICAL LIST OF HEARINGS

2000

Page

HEARINGS:

Tuesday, February 29, 2000, Fiscal Year 2001 National Defense Authorization

Act—Adequacy of the Fiscal Year 2001 Budget Request to Meet Readiness

Needs ..................................................................................................................... 1

Wednesday, March 1, 2000, Fiscal Year 2001 National Defense Authorization

Act—Real Property Maintenance and Infrastructure Sustainment Funding . 151

Thursday, March 9, 2000, Fiscal Year 2001 National Defense Authorization

Act—Civilian Personnel Readiness, joint with the Committee on Government Reform, Subcommittee on the Civil Service ............................................. 279

APPENDIXES:

Tuesday, February 29, 2000 ................................................................................... 33

Wednesday, March 1, 2000 ..................................................................................... 191

Thursday, March 9, 2000 ........................................................................................ 319

TUESDAY, FEBRUARY 29, 2000

FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT—ADEQUACY OF THE FISCAL YEAR 2001 BUDGET REQUEST TO MEET

READINESS NEEDS

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bateman, Hon. Herbert H., a Representative from Virginia, Chairman, Military Readiness Subcommittee ............................................................................. 1

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

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

WITNESSES

Dake, Gen. Terrence R., Assistant Commandant of the Marine Corps, U.S.

Marine Corps ........................................................................................................ 11

Keane, Gen. John M., Vice Chief of Staff, U.S. Army .......................................... 4

Lyles, Gen. Lester L., Vice Chief of Staff, U.S. Air Force .................................... 7

Pilling, Adm. Donald L., U.S. Navy, Vice Chief of Naval Operations ................. 6

APPENDIX

PREPARED STATEMENTS:

Dake, Gen. Terrence R. .................................................................................... 76

Keane, Gen. John M. ........................................................................................ 37

Lyles, Gen. Lester L. ........................................................................................ 66

Pilling, Adm. Donald L. ................................................................................... 47

Rabkin, Norman J., Director, National Security Preparedness, National

Security and International Affairs Division, U.S. General Accounting

Office .............................................................................................................. 88

DOCUMENTS SUBMITTED FOR THE RECORD:

Active Fixed Wing ............................................................................................ 103

Page

IV

DOCUMENTS SUBMITTED FOR THE RECORD—Continued

Active Rotary Wing .......................................................................................... 103

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Mr. Bateman ..................................................................................................... 107

Mrs. Fowler ....................................................................................................... 150

WEDNESDAY, MARCH 1, 2000

FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT—REAL

PROPERTY MAINTENANCE AND INFRASTRUCTURE SUSTAINMENT

FUNDING

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bateman, Hon. Herbert H., a Representative from Virginia, Chairman, Military Readiness Subcommittee ............................................................................. 151

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

Military Readiness Subcommittee ...................................................................... 156

WITNESSES

Curtin, Neal P., Associate Director, National Security Preparedness Issues,

National Security and International Affairs Division; accompanied by Brenda S. Farrell, Assistant Director, National Security Preparedness Issues,

National Security and International Affairs Division ....................................... 152

Mashburn, Maj. Gen. Harold, Jr., Director of Facilities and Services Division,

Office of the Deputy Chief of Staff for Installations and Logistics, U.S.

Marine Corps ........................................................................................................ 175

Robbins, Maj. Gen. Earnest O., II, the Civil Engineer, U.S. Air Force ............... 173

Smith, Rear Adm. Louis M., Commander, Naval Facilities Engineering Command, U.S. Navy .................................................................................................. 172

Van Antwerp, Maj. Gen. Robert L., Jr., Assistant Chief of Staff for Installation Management, U.S. Army ............................................................................. 170

Yim, Hon. Randall A., Deputy Under Secretary of Defense for Installations .... 163

APPENDIX

PREPARED STATEMENTS:

Chan, Kwai-Cheung, Director, Special Studies and Evaluations, National

Security and International Affairs Division, U.S. General Accounting

Office .............................................................................................................. 252

Curtin, Neal P. .................................................................................................. 198

Mashburn, Maj. Gen. Harold, Jr. .................................................................... 244

Ortiz, Hon. Solomon P. ..................................................................................... 195

Robbins, Maj. Gen. Earnest O., II ................................................................... 235

Smith, Rear Adm. Louis M. ............................................................................. 228

Van Antwerp, Maj. Gen. Robert L., Jr. ........................................................... 221

Yim, Hon. Randall A. ....................................................................................... 205

DOCUMENTS SUBMITTED FOR THE RECORD:

[There were no Documents submitted for the Record.]

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Mr. Bateman ..................................................................................................... 269

Mr. Hansen ....................................................................................................... 277

Page

V

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD—Continued

Mr. Ortiz ........................................................................................................... 277

THURSDAY, MARCH 9, 2000

FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT—

CIVILIAN PERSONNEL READINESS

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bateman, Hon. Herbert H., a Representative from Virginia, Chairman, Military Readiness Subcommittee ............................................................................. 279

Cummings, Hon. Elijah E., Jr., a Representative from Maryland, Ranking

Member, the Civil Service Subcommittee .......................................................... 284

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

Military Readiness Subcommittee ...................................................................... 282

WITNESSES

Cipolla, Frank, Director, Center for Human Resources Management, National

Academy of Public Administration; Michael Brostek, Associate Director,

Federal Management and Workforce Issues, General Accounting Office;

accompanied by Barry Holman, Associate Director, Defense Management

Issues, General Accounting Office ...................................................................... 285

Disney, Dr. Diane M., Deputy Assistant Secretary of Defense for Civilian

Personnel Policy; David L. Snyder, Deputy Assistant Secretary of the Army

(Civilian Personnel Policy); Betty S. Welch, Deputy Assistant Secretary

of the Navy for Civilian Personnel; Mary Lou Keener, Deputy Assistant

Secretary of the Air Force for Force Management and Personnel; and David

O. Cooke, Director of Administration and Management, Office of the Secretary of Defense .................................................................................................. 299

Mica, Hon. John L., a Representative from Florida ............................................. 280

APPENDIX

PREPARED STATEMENTS:

Brostek, Michael ............................................................................................... 341

Cipolla, Frank ................................................................................................... 326

Cooke, David O. ................................................................................................ 415

Disney, Hon. Diane M. ..................................................................................... 358

Holman, Barry .................................................................................................. 341

Keener, Hon. Mary Lou ................................................................................... 400

Scarborough, Hon. Joe, a Representative from Florida, Chairman, the

Civil Service Subcommittee .......................................................................... 323

Snyder, Hon. David L. ...................................................................................... 378

Welch, Hon. Betty S. ........................................................................................ 391

DOCUMENTS SUBMITTED FOR THE RECORD:

[There were no Documents submitted for the Record.]

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Mr. Bateman ..................................................................................................... 431

Mr. Chambliss ................................................................................................... 449

Mr. Underwood ................................................................................................. 450

(VII)

106TH CONGRESS

2D SESSION

H. R. 4205

To authorize appropriations for fiscal year 2001 for military activities of the Department of Defense and for military construction, to prescribe military personnel

strengths for fiscal year 2001, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 6, 2000

MR. SPENCE (for himself and Mr. SKELTON) (both by request) introduced the

following bill; which was referred to the Committee on Armed Services

A BILL

To authorize appropriations for fiscal year 2001 for military activities of the Department of Defense and for military construction, to prescribe military personnel

strengths for fiscal year 2001, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘National Defense Authorization Act for Fiscal Year

2001’’.

* * * * * * *

TITLE III—OPERATION AND MAINTENANCE

Subtitle A—Authorization of Appropriations

SEC. 301. OPERATION AND MAINTENANCE FUNDING.

Funds are hereby authorized to be appropriated for fiscal year 2001 for the use

of the Armed Forces of the United States and other activities and agencies of the

Department of Defense, for expenses, not otherwise provided for, for operation and

maintenance, in amounts as follows:

(1) For the Army, $19,123,731,000.

(2) For the Navy, $23,300,154,000.

(3) For the Marine Corps, $2,705,658,000.

(4) For the Air Force, $22,346,977,000.

(5) For the Defense-wide activities, $11,920,069,000.

(6) For the Army Reserve, $1,521,418,000.

(7) For the Naval Reserve, $960,946,000.

(8) For the Marine Corps Reserve, $133,959,000.

(9) For the Air Force Reserve, $1,885,859,000.

(10) For the Army National Guard, $3,182,335,000.

(11) For the Air National Guard, $3,446,375,000.

(12) For the Defense Inspector General, $144,245,000.

(13) For the United States Court of Appeals for the Armed Forces, $8,574,000.

(14) For Environmental Restoration, Army, $389,932,000.

(15) For Environmental Restoration, Navy, $294,038,000.

VIII

(16) For Environmental Restoration, Air Force, $376,300,000.

(17) For Environmental Restoration, Defense-wide, $23,412,000.

(18) For Environmental Restoration, Formerly Used Defense Sites,

$186,499,000.

(19) For Overseas Humanitarian, Disaster, and Civic Aid programs,

$64,900,000.

(20) For Drug Interdiction and Counter-drug Activities, Defense-wide,

$836,300,000.

(21) For the Kaho’olawe Island Conveyance, Remediation, and Environmental

Restoration Trust Fund, $25,000,000.

(22) For the Defense Health Program, $11,244,543,000.

(23) For Cooperative Threat Reduction programs, $458,400,000.

(24) For Overseas Contingency Operations Transfer Fund, $4,100,577,000.

SEC. 302. WORKING CAPITAL FUNDS.

Funds are hereby authorized to be appropriated for fiscal year 2001 for the use

of the Armed Forces of the United States and other activities and agencies of the

Department of Defense for providing capital for working capital and revolving funds

in amounts as follows:

(1) For the Defense Working Capital Funds, $916,276,000.

(2) For the National Defense Sealift Fund, $388,158,000.

SEC. 303. ARMED FORCES RETIREMENT HOME.

There is hereby authorized to be appropriated for fiscal year 2001 from the Armed

Forces Retirement Home Trust Fund the sum of $69,832,000 for the operation of

the Armed Forces Retirement Home, including the United States Soldiers’ and Airmen’s Home and the Naval Home.

SEC. 304. TRANSFERS FROM THE NATIONAL DEFENSE STOCKPILE TRANSACTION FUND.

(a) TRANSFER AUTHORITY.—To the extent provided in appropriations Acts not

more than $150,000,000 is authorized to be transferred from the National Defense

Stockpile Transaction Fund to operation and maintenance accounts for fiscal year

2001 in amounts as follows:

(1) For the Army, $50,000,000.

(2) For the Navy, $50,000,000.

(3) For the Air Force, $50,000,000.

(b) TREATMENT OF TRANSFERS.—Amounts transferred under this section—

(1) shall be merged with, and be available for the same purposes and the

same period as, the amounts in the accounts to which transferred; and

(2) may not be expended for an item that has been denied authorization of

appropriations by Congress.

Subtitle B—Environmental Provisions

SEC. 311. REIMBURSEMENT FOR CERTAIN COSTS IN CONNECTION WITH THE FORMER

NANSEMOND ORDNANCE DEPOT SITE, IN SUFFOLK, VIRGINIA.

(a) AUTHORITY TO REIMBURSE EPA.—The Secretary of Defense may pay not more

than $98,210.00, using funds described in subsection (b), to the Former Nansemond

Ordnance Depot Site Special Account within the Hazardous Substance Superfund

established by section 9507 of the Internal Revenue Code of 1986 (26 U.S.C. 9507)

to reimburse the Environmental Protection Agency for costs incurred by the agency

in overseeing a time critical removal action (TCRA) under CERCLA being performed

by DoD under the Defense Environmental Restoration Program (10 U.S.C. 2701) for

ordnance and explosive safety hazards at the Former Nansemond Ordnance Depot

Site in Suffolk, Virginia, pursuant to an Interagency Agreement, entered into by the

Department of the Army and the Environmental Protection Agency on January 3,

2000.

(b) SOURCE OF FUNDS.—Any payment under subsection (a) shall be made using

amounts authorized to be appropriated by section 301 to Environmental Restoration, Formerly Used Defense Sites.

(c) CERCLA DEFINED.—In this section, the term ‘‘CERCLA’’ means the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42

U.S.C. 9601 et seq.).

SEC. 312. PAYMENT OF FINES OR PENALTIES IMPOSED FOR ENVIRONMENTAL VIOLATIONS.

The Secretary of the Military Department concerned may pay from funds otherwise available for such purposes not more than the following amounts at the locations and for the purposes indicated below:

IX

(1) For the Department of the Army: (A) $993,000 for Walter Reed Army Medical Center, Washington, D.C.,

under the Resource Conservation and Recovery Act, in satisfaction of a fine

imposed by Environmental Protection Agency Region 3, for a Supplemental

Environmental Project. (B) $377,250 for Fort Campbell, Kentucky, under the Resource Conservation and Recovery Act, in satisfaction of a fine imposed by Environmental

Protection Agency Region 4, for a Supplemental Environmental Project. (C) $20,701 for Fort Gordon, Georgia, under the Resource Conservation

and Recovery Act, in satisfaction of a fine imposed by the State of Georgia,

for a Supplemental Environmental Project. (D) $78,500 for Pueblo Chemical Depot, Colorado, under the Resource

Conservation and Recovery Act, in satisfaction of a fine imposed by the

State of Colorado, for Supplemental Environmental Projects. (E) $20,000 for Deseret Chemical Depot, Utah, under the Resource Conservation and Recovery Act, in satisfaction of a fine imposed by the State

of Utah, for a Supplemental Environmental Project.

(2) For the Department of the Navy: (A) $108,800 for Allegany Ballistics Laboratory, West Virginia, under the

Resource Conservation and Recovery Act, to the West Virginia Division of

Environmental Protection to pay a cash penalty. (B) $5,000 for Naval Air Station, Corpus Christi, Texas, under the Clean

Air Act, to Environmental Protection Agency Region 6, to pay a cash penalty.

Subtitle C—Other Matters

SEC. 321. REIMBURSEMENT BY CIVIL AIR CARRIERS FOR SUPPORT PROVIDED AT JOHNSTON

ATOLL.

(a) IN GENERAL.—Chapter 949 of title 10, United States Code, is amended by adding at the end the following new section:

‘‘§ 9783. Reimbursement by civil air carriers for support provided at Johnston Atoll

‘‘(a) AUTHORITY OF THE SECRETARY.—Subject to subsection (b), the Secretary of

the Air Force may issue regulations requiring payment by civil air carriers for support provided to them at Johnston Atoll. ‘‘(b) TYPES OF CHARGES.—Any regulations issued under subsection (a)— ‘‘(1) may charge, but not exceed, the actual costs, including indirect costs, of

support provided by the United States to the civil air carrier; ‘‘(2) may only include charges for support requested by the civil air carrier

or required to accommodate the civil air carrier’s use of Johnston Atoll; and ‘‘(3) shall provide that charges under them shall be in lieu of any otherwise

collectable landing fees.

‘‘(c) SUPPORT DEFINED.—In this section, the term ‘‘support’’ includes the costs of

construction, repairs, services, or supplies, including, but not limited to, fuel, fire

rescue, use of facilities, improvements required to accommodate use by civil air carriers, police, safety, housing, food, air traffic control, and suspension of military operations on the island (including operations at the Johnston Atoll Chemical Agent

Demilitarization System).

‘‘(d) DISPOSITION OF PAYMENTS.—Notwithstanding any other provision of law,

amounts collected from a civil air carrier under this section shall be credited to the

appropriations under which the costs associated with the support were incurred.

Amounts so credited shall be available for obligation for the same period as the appropriation to which credited.

‘‘(e) PAY-AS-YOU-GO SCORING.—From the cash proceeds resulting from services

provided to civil air carriers at Johnston Atoll under the authorities provided by this

section, for which the Air Force does not have existing authority to retain, up to

the following amounts shall be transferred to Miscellaneous Receipts in the Treasury:

‘‘(1) In FY 2001, $219,000;

‘‘(2) In FY 2002, $219,000;

‘‘(3) In FY 2003, $219,000;

‘‘(4) In FY 2001, $219,000; and

‘‘(5) In FY 2001, $219,000.’’.

(b) CLERICAL AMENDMENTS.—The table of sections at the beginning of chapter

949, United States Code, is amended by adding at the end the following new item:

‘‘9783. Reimbursement by civil air carriers for support provided at Johnston Atoll.’’.

X

SEC. 322. USE OF EXCESS TITANIUM SPONGE IN THE NATIONAL DEFENSE STOCKPILE FOR

MANUFACTURING DEPARTMENT OF DEFENSE EQUIPMENT.

(a) TRANSFER AUTHORIZED.—Upon the request of the Secretary of a Military Department or the Director of a Defense Agency, the Secretary of Defense may transfer excess titanium sponge from the stocks of the National Defense Stockpile for use

in manufacturing defense equipment.

(b) NON-REIMBURSABLE.—Transfer under this section shall be without a requirement to reimburse the National Defense Stockpile Transaction Fund. The recipient

Military Department shall pay all transportation and related costs incurred in connection with the transfer.

(c) RELATIONSHIP TO OTHER DISPOSAL AUTHORITY.—The quantity of titanium

sponge transferred under this section may not exceed the amount identified as excess in section 3304 of the National Defense Authorization Act for Fiscal Year 1998

(Public Law 105–85, 111 Stat. 2057). Transfers to the Secretary of the Army pursuant to section 3305 of the National Defense Authorization Act for Fiscal Year 1996

(Public Law 104–106, 110 Stat. 630) take precedence over transfers under this section.

SEC. 323. CLARIFICATION AND EXTENSION OF PILOT PROGRAM FOR ACCEPTANCE AND USE

OF LANDING FEES CHARGED FOR USE OF DOMESTIC MILITARY AIRFIELDS BY

CIVIL AIRCRAFT.

Section 377 of the Strom Thurmond National Defense Authorization Act for Fiscal

Year 1999, Public Law 105–261, is amended as follows:

(1) in subsection (a)—

(A) by striking ‘‘1999 and 2000’’ and inserting ‘‘2001, 2002, and 2003’’;

and

(B) by striking the last sentence of such subsection and inserting ‘‘Authority to carry out a pilot program under this section shall terminate September 30, 2003.’’;

(2) by amending subsection (b) to read as follows:

‘‘(b) LANDING FEES DEFINED.—For purposes of this section, the term ‘landing fees’

shall mean any fee established under or in accordance with regulations of the military department concerned, whether prescribed by fee schedule or imposed under

a joint-use agreement, to recover costs for civil aircraft use of the department’s airfields in the United States, its territories and possessions.’’;

(3) in subsection (c), by striking ‘‘Amounts received for a fiscal year in payment of landing fees imposed’’ and inserting ‘‘Landing fees collected.’’; and

(4) in subsection (d)—

(A) by striking ‘‘March 31, 2000’’, and inserting ‘‘March 31, 2003,’’; and

(B) by striking ‘‘December 31, 1999’’ and inserting ‘‘December 31, 2002.’’.

SEC. 324. ECONOMIC DISTRIBUTION OF DISTILLED SPIRITS.

Subsection 2488(c) of title 10, United States Code, is amended—

(1) by striking paragraph (2); and

(2) by redesignating paragraph (3) as paragraph (2).

* * * * * * *

(1)

FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT—ADEQUACY OF THE FISCAL YEAR 2001

BUDGET REQUEST TO MEET READINESS NEEDS

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, MILITARY READINESS SUBCOMMITTEE, Washington, DC, Tuesday, February 29, 2000.

The subcommittee met, pursuant to notice, at 2:04 p.m., in room

2212, Rayburn House Office Building, Hon. Herbert H. Bateman

(chairman of the subcommittee), presiding.

OPENING STATEMENT OF HON. HERBERT H. BATEMAN, A REPRESENTATIVE FROM VIRGINIA, CHAIRMAN, MILITARY READINESS SUBCOMMITTEE

Mr. BATEMAN. The subcommittee will come to order. This afternoon, the Subcommittee on Military Readiness is meeting to get a

better understanding of current readiness of the military services,

and to get an assessment of the current and next year’s budget requests to adequately sustain acceptable levels of readiness.

We have asked the vice chiefs of staff from each of the four military services to give us their views on these issues. The vice chief

of staff of each of the military departments is charged with overseeing the day-to-day operations of their respective services.

Over the past five years, the Subcommittee on Military Readiness has taken issue with the shortages in the Administration’s

budget proposal in several areas that the subcommittee believes

are critical to maintaining readiness in the military services.

These areas include base operations support, real property maintenance, depot maintenance, ship repairs and overhauls, operational tempo, quality of life improvements, and mobility enhancement funds. Between 1994 and 2000, this committee recommended

over $10 billion in additional funding to the Administration’s requests in just these areas.

However, this significant additional attention has not corrected

the continual shortfalls in these accounts. One of the reasons for

these shortfalls has been continued unscheduled and unbudgeted

deployments which have caused severe strain on personnel and

equipment. I am glad to see that, at last this year, funding for all

of our current operations has been included.

However, I see on the horizon some contingencies that just may

pop up and which aren’t included and which again can have a very,

very detrimental affect on your planning and execution of the budget that we authorized and for which funds are appropriate.

Another reason is the high cost to maintain equipment that is

well past its designed usage with little relief in sight.

2

After an initial look at the budget proposal for fiscal year 2001,

it would appear that for the first time in many years, there is

growth in the readiness accounts. This is good news, but this

growth is primarily a reflection of a significant increase in the price

of fuel and for normal inflation.

Setting aside these growth factors, there is very little new money

to arrest and turn around the declining readiness problems that

are plaguing our military. In addition, the budget before us projects

that readiness funding levels will decrease by nearly $2 billion in

fiscal year 2002.

As they have done in previous years, the chiefs of the military

services provided the committee with their lists of unfunded priorities for fiscal year 2001 that total $15.5 billion and estimated that

the unfunded shortfall in the next five years to be at $84.2 billion.

Even after this committee’s addition to the budget request of $3.2

billion last year to reduce the readiness unfunded priorities of the

military services, the list continues to grow.

Although the fiscal year 2001 budget request does contain increases in other important areas such as procurement and military

personnel, the allusion that the level of funding for readiness meets

all of the services requirements is overstated. It is beyond my understanding how improvements to military readiness can be met

with only inflationary increases, decreases in funding in the coming

years, and ever-increasing unfunded requirements that are many

billions short in several critical areas.

Another area that has concerned me and many members of the

subcommittee is what the services do with the funds Congress authorizes and appropriates. A recent General Accounting Office

(GAO) report notes that over a five-year period from 1994 to 1998,

the Department of Defense (DOD) changed funding in various operation & management (O&M) accounts by almost $43 billion compared with the amounts of money the Congress originally designated for those accounts.

Article One, Section Eight of the Constitution requires that Congress provide for the military. I and the members of the committee

take this responsibility very seriously. I understand that operational needs of the military require the movement of funds during

the year of execution, but movements of this magnitude outside of

the normal legislative process are clearly not acceptable.

Also unacceptable is the continual under-execution of funds provided by Congress. As an example, during this same five-year period, the Navy it is said under-executed its ship depot maintenance

account by over $1.2 billion. The Air Force under-executed its primary combat forces account by $988 million.

And the Army, in only two years—1997 and 1998—under-executed its combat divisions account by $580 million. These three

specific service accounts are considered by DOD to be the most directly related to readiness and have been designated by Congress

as high priority readiness-related accounts. It is my intention to

find out why these critical readiness accounts are consistently

under-spent.

What we would like to hear from our witnesses today is what has

been done with the significant amounts of additional funding provided by Congress to fix readiness, what are the reasons why we

3

are not there yet, and what it will take to not only arrest the decline in readiness, but to provide a permanent, sustainable course

of action to return readiness to acceptable levels.

We would also like to hear from our witnesses on their assessment of current readiness and the risks involved in maintaining

readiness in the current and projected budget levels.

Because we owe it to the American taxpayer and our military

men and women to ensure that there is sound stewardship over the

resources that are entrusted to the Department of Defense, the

hearing today is especially important. The issues we will discuss

today have the potential of affecting military readiness now and in

the future.

Our witnesses today will be—and we are very pleased and honored to have them with us—General John M. Keane, Vice Chief of

Staff, U.S. Army; Admiral Donald L. Pilling, Vice Chief of Naval

Operations, U.S. Navy; General Lester L. Lyles, Vice Chief of Staff,

U.S. Air Force; and General Terrence Dake, Assistant Commandant, U.S. Marine Corps.

Prior to hearing from our witnesses, I will now yield to the ranking Democratic member of the subcommittee, Mr. Ortiz, for any

comments he may choose to make.

STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE

FROM TEXAS, RANKING MEMBER, MILITARY READINESS

SUBCOMMITTEE

Mr. ORTIZ. Thank you, Mr. Chairman. I join you in welcoming

our distinguished witnesses, the vice chiefs of staff and the assistant commandant of the U.S. Marine Corps, to this hearing today.

I thank them for their service to this great nation, and I look forward to their assessments of the readiness posture and funding

issues.

As we start the second session of the 106th Congress, I also want

to thank you, Mr. Chairman, for your dedicated and impartial leadership of the readiness subcommittee. I am certain that I state for

my colleagues in saying how much we appreciate your sincere interest in improving the readiness, Mr. Chairman, of our military

forces, and the impartial manner you have been leading the activities of the subcommittee.

It is very instructive for me to reflect back on my tenure on the

readiness subcommittee; and I feel compelled, in this, our first

readiness subcommittee hearing of the century, to take a little time

to share some of my thoughts and concerns.

First, I remain impressed with the outstanding performance of

our uniformed personnel and dedicated civilian personnel. They

have performed diligently under some very trying circumstances.

Even under the stress of high operating tempo (OPTEMPO) and

the uncertainty of outsourcing and privatization initiatives, they

have continued to perform more with less. They deserve all the accolades that we give them.

I am disappointed, though, that we must continue in this century

to fight to improve the overall readiness posture of the force. Making real and sustainable progress in getting rid of the repair and

the spare parts problem, or making a dent in the real property

maintenance backlog, appears to be impossible.

4

Like you, Mr. Chairman, I am concerned about where did all of

this money go. Does the department really consider the readiness

account a slush fund? What is going to be the result of them doing

all of the so-called DOD efficiency initiatives and the Congressional

acts to the budget request? Notwithstanding all of the new and innovative maintenance concepts and the out-sourcing initiative, we

are still struggling with the same issues—a prudently maintained

infrastructure and a marginally acceptable level of force readiness.

To make matters worse, the marginally acceptable equipment

readiness comes on the backs of already over-worked personnel. As

we try to understand the adequacy of this budget submission, I

hope each of you will address budget assumptions and considerations that continue to puzzle me, and that is how to incorporate

savings from future outsourcing initiatives in the current budget,

and what would be the impact of not achieving the savings as identified?

I also think it would be helpful to share with the subcommittee

your experience with achieving the savings that have been projected so far. I would like to know how the services budget for the

conduct of the value self-sourcing studies? Have any of you conducted any studies on the impact of the outsourcing initiatives? On

the retention and productivity of the civilian work force? Have the

initiatives made a difference in attracting the quality and quantity

of new workers needed to take care of our aging work force concerns?

Mr. Chairman, the answers to those questions are critical for our

understanding of the Administration’s budget request. I am not

convinced that the Department has a thorough understanding of

the cost or consequences that are associated with some of these reform initiatives. I ask these questions today because the hearing

schedule does not permit a separate outsourcing hearing session

before we mark up the bill. I do believe that any answers they provide us today would be very instructive.

Again, I welcome our distinguished witnesses here today, and I

look forward to their testimony and responses to the questions.

Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Ortiz, and now General Keane,

and our other witnesses, we have your written statements. They

will be made part of the record in their entirety; and General

Keane, if you would like to proceed, followed by Admiral Pilling

and by General Lyles and then General Dake, we will be happy to

hear from you.

STATEMENT OF GEN. JOHN M. KEANE, VICE CHIEF OF STAFF,

U.S. ARMY

General KEANE. Mr. Chairman, thank you. Chairman Bateman,

Congressman Ortiz, distinguished members of the readiness committee, I’m honored to be here today with my fellow vice-chiefs, and

thank you for the opportunity to appear before you to discuss the

President’s 2001 budget request and its impact on Army readiness.

I also will submit this brief opening statement; and as we indicated, the much longer version for the record. I just want to take

this opportunity to thank all the members of the committee for

your support for Army readiness. During the past five years, you

5

have contributed $741 million to Army readiness over the President’s budget request.

What that has translated to us is improved readiness that has

bolstered our depot maintenance, training in OPTEMPO, and also

our ammunition management programs, which support the entire

Army.

As Chairman Bateman indicated, over the last ten years, they

have really been very busy years for us since the end of the cold

war. It has simply been one of the busiest times in the last, 20th

century; and throughout this period, our Army has focused on its

primary mission—that is, to train and win its nation’s wars. Our

number one priority has been, and will continue to be, maintaining

a trained and ready Army. By trained and ready in Army language, we mean C–1, and traditionally we have been a C–1 Army;

but frankly, we are not a C–1 Army today. That is not to say that

we cannot accomplish all that the nation expects of us, but the farther we move away from the C–1 standard, the greater the risk involved, and the greater the price we pay in the long term.

You began the reversal of our readiness decline last year. We

thank you for that support, and we need your support to continue

that momentum. The President’s budget request provides the required resources to meet our most compelling readiness requirements. The budget allows us to fund our ground OPTEMPO accounts at 100 percent of validated requirements for the active component, the National Guard, and the Reserves, and our air

OPTEMPO at nearly 100 percent as well.

It is, however, a budget with little flexibility. We have had to

make some tough choices with this budget, and there are some

areas specifically in real property maintenance in depot maintenance accounts that we are not able to be as proactive as we would

like. Real Property Maintenance (RPM) remains under-funded for

all three of our components in 2001.

The budget formed 69 percent of the requirements for the active

component, 63 percent for the National Guard, and 75 percent for

the Army Reserve. These RPM shortfalls will likely increase the

risk of higher future costs due to deferred maintenance and renovation of older facilities.

Depot maintenance support receives a slight boost in 2001, but

overall depot operations are still only funded at 80 percent of the

requirements for the active component and 77 percent for the Reserve component. The shortfall could force us to defer maintenance

and upgrades for some of our major combat systems, thereby increasing the likelihood of reduced operational readiness rates and

affecting, certainly, the availability of our equipment for training.

Let me say that last October, General Shinseki and Secretary

Caldera announced the Army’s vision for the future, a vision which

involves no less than the complete transformation of our Army into

a force that is more strategically responsive and dominant across

the full spectrum of our operations.

That force will have stretch goals to deploy a combat brigade in

96 hours, a division in 120 hours, and five divisions within 30 days.

This budget request allows us to begin the movement toward that

transformation. We have embarked on a journey to make the most

dramatic changes to our Army since World War II, to make the

6

Army more responsive today and to shape our capabilities for tomorrow.

With your help, we intend to do three primary things with this

budget: to protect the readiness of the Army, number one; and

number two, to provide a quality of life experience for our soldiers

and their families; and number three, to begin the transformation

of our Army.

To accomplish all of that, we have submitted our portion of the

President’s budget, and we have also identified $5.4 billion in unfunded requirements that would be tracked from those three goals.

We appreciate your continued support and your consideration.

Mr. Chairman, thank you for the invitation to appear today. I look

forward to your questions.

[The prepared statement of General Keane can be found in the

Appendix on page 37.]

Mr. BATEMAN. Thank you, General Keane, and Admiral Pilling.

STATEMENT OF ADM. DONALD L. PILLING, U.S. NAVY, VICE

CHIEF OF NAVAL OPERATIONS

Admiral PILLING. Thank you, Mr. Chairman, distinguished members of the committee, thank you for the opportunity to discuss the

Navy’s operations and maintenance budget with you today.

Today’s Navy is the most capable and the most ready in the

world. Over 45 percent of the fleet is under way today, either deployed or engaged in training for deployment. The men and women

of three carrier battle groups and three amphibious ready groups

are en route to or on station in the Mediterranean Sea, in the Arabian Gulf. Another battle group and amphibious group are operating in the Western Pacific. These Naval forces are maintaining

our forward presence and are ready for combat operations if the

nation needs them. This is the core of what our O&M budget buys.

With your permission, I would like to talk about three specific

items: personnel, current readiness, and then recapitalization.

Our readiness depends on our ability to attract and retain high

quality motivated and trained sailors, even as the nation’s strong

economy imposes significant challenges in recruiting and retention.

Last year’s focus on recruiting with the assistance of this committee resulted in the Navy meeting its fiscal year 1999 recruiting

goal. It will take at least this much effort and money to sustain

success in recruiting this year.

Retention of sailors once we recruit them continues to be a problem. Although we are seeing some improvement as a result of the

recent pay and bonus improvements, retention rates in all categories remain below our steady state targets. Those gains that we

have been able to make in recruiting and retention have improved

readiness. The number of gapped at-sea billets has declined from

a high of over 18,000 in 1998 to roughly 9,200 today.

Today the readiness of our deployed forces continues to be satisfactory. This is validated by the impressive performance of our fleet

units in Operations ALLIED FORCE and SOUTHERN WATCH.

Our non-deployed readiness has always by design been lower than

that of our deployed forces, because the Navy operates on a cycle

of readiness that peaks as a ship or a squadron departs for deployment.

7

The strain of high OPTEMPO, frequent deployments, and aging

ships and aircraft is seen in the progressive decline of our forces’

readiness in between their deployments. O&M funding shortfalls

today, when they occur, have a greater and more rapid impact on

non-deployed forces than in the past.

In the area of aviation, we have repriced the Flying Owl program

within operations and maintenance to better reflect the increase in

costs associated with sustaining our aging aircraft.

Aircraft depot maintenance funding is sufficient to ensure that

deployed squadrons have 100 percent of the necessary aircraft,

while non-deployed have at least 90 percent. Also as a result of lessons learned in Kosovo, fiscal year 2001 includes $23 million in

funding for spare parts and equipment necessary to establish one

additional EA6–B squadron.

In the area of ship operations, our operations and maintenance

funds are adequate to achieve our ship OPTEMPO goals of 50.5 underway days per quarter for deployed ships, and 28 underway days

per quarter for non-deployed ships. We are concerned with funding

for ship depot maintenance as our fleet commanders are telling us

that we have underestimated what it will take to properly support

planned availabilities.

The reductions that we had to take in our O&M appropriation

as a result of the fiscal year 2000 rescission of .52 percent were targeted at real property maintenance to protect the critical fleet flying hour and maintenance accounts. This $120 million reduction

will have a serious impact on the readiness of our shore facilities.

Looking to the future, increasing our investment to support the

recapitalization and modernization of our Navy is essential to

maintaining operational readiness. Adequate readiness can only be

sustained in the future with a modernization and recapitalization

program that delivers sufficient numbers of technologically superior platforms and systems to the fleet.

I remain concerned that we are falling behind in this effort. We

need to invest now with a focused and expanded program to maintain superiority through the first half of the 21st century.

Balancing the fiscal and operational needs of today with the defense requirements of tomorrow is a challenging task. We cannot

accomplish this alone. We need your continued support.

Mr. Chairman, again, I would like to thank you and this committee for all you have done for the Navy, and I look forward to

working with you in the future; and I will be happy to answer any

questions the committee might have.

[The prepared statement of Admiral Pilling can be found in the

Appendix on page 47.]

Mr. BATEMAN. Thank you very much, Admiral Pilling, and now

we are pleased to hear from General Lyles.

STATEMENT OF GEN. LESTER L. LYLES, VICE CHIEF OF STAFF,

U.S. AIR FORCE

General LYLES. Mr. Chairman, good afternoon. I want to also

thank you and Mr. Ortiz and the rest of the members of the committee for your very strong support to all of the services, and particularly to the U.S. Air Force.

8

I would like to just make a few brief comments relative to the

readiness posture for the U.S. Air Force and the many challenges

that we face today and certainly into the future.

1999 was another banner year for the Air Force. Our forces were

deployed throughout the world in various contingencies, starting at

the beginning of the year in DESERT FOX over the skies of Iraq,

to ALLIED FORCE, to the continued operations of Operations

NORTHERN WATCH and SOUTHERN WATCH, and the humanitarian operations both here and abroad.

We showed in Kosovo, as an example, that your Air Force, our

Air Force, was ready when the nation called, as it is today literally

across the world. Today we have some 90,000 airmen who are stationed throughout the world and the United States. We have some

250 aircraft that are permanently stationed across the world in

various contingencies, and we have been successful in all the different missions that the country has called upon for the U.S. Air

Force.

Yet, in spite of those successes, we still have faced many, many

challenges, and those challenges in some respects, Mr. Chairman,

reflect the balanced budget that we tried to put together and reflect

in the President’s budget. The challenges are in the area of people,

readiness, infrastructure, and modernization; and if you don’t

mind, I will just briefly make a comment about the first three— people, readiness and infrastructure.

We have increased the funding for our readiness posture, particularly for spares support for all of our various programs and all

of our supporting activities. We increased the funding in 1999, beginning in 1999 to address the shortfalls that we had over the past

years. We continue that increase in funding in the year 2000, and

the President’s budget for 2001 reflects a continuation of that particular posture.

I am optimistic that the sustained funding for readiness will

allow us to turn around the readiness decline that we have experienced over the last several years, but we have not yet reached that

particular goal. All the indicators, the leading indicators are very,

very positive, but they have not yet reflected in what’s happening

out in the field, and what is happening in the troops that are deployed.

Overall readiness of our major operation units are down 26 percent since 1996, and 11 percent in the last year alone. Today only

68 percent of our combat units are reporting readiness in the top

two categories, C–1 and C–2. That’s far short of our goal of 92 percent. Overall for the U.S. Air Force, both combat forces and support

forces, 82 percent of our forces are at the C–1 and C–2 level, but

again, it doesn’t reach the goal of 92 percent.

We are taking a number of steps, Mr. Chairman, to try to reverse

this readiness decline. The first, as I indicated before, is to readily

remedy the issue relative to parts shortage. We have funded spares

at 100 percent in fiscal year 2000, and we reflect that again in the

President’s budget for 2001.

We have taken process initiatives and contract initiatives to reduce vendor lead time to make sure we can get the new components that we are procuring out to the field and out to our depots

as rapidly as we possibly can. We are making upgrades and imVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 E:\HEARINGS\72364 pfrm11 PsN: 72364
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provements in reliability to literally all of our platforms. We have

some 279 initiatives totaling $2.8 billion across a fighter—impacting the F–16 and F–16 engines particularly—the C–5 program, the

C–130 program, KC–135 program, and many, many others.

We are also taking steps to make sure we are addressing the

concern for our people, and particularly the expeditionary nature

that the Air Force finds itself involved in. Our Expeditionary Air

Force (EAF) concept that we initiated formally beginning this past

fall is proceeding very, very well. We are in the initial steps of our

EAF concept, but the Commanders in Chief (CINCs) are very, very

supportive and so far very, very pleased with everything we are

trying to do to support them while giving a better definition to the

expeditionary nature of the U.S. Air Force.

We think, Mr. Chairman, that we have the right fixes, and that

we are going to turn the mission capability rates around; but we

have not reset yet, and our indicators though positive, have not

shown the results out into the field, and we will continue the emphasis in this particular area.

In the area of people, because of the pace of our operations

around the world, we are now, today, 40 percent fewer than we

were ten years ago, but yet 400 percent increase in OPTEMPO for

our people. Our airmen are working harder than ever before, and

the strain is beginning to show.

Mr. Chairman, thanks to you, this particular committee, and the

rest of the Congress, we are beginning to take the positive steps

to help our people, and particularly those in the field. You have improved the pay and benefits for our airmen last year, and for their

families; and we thank you graciously for all the things that you

have done to help them in that particular area.

The compensation package will be a very, very strong benefit toward us being able to support our people with the quality of life

that they deserve; and as I mentioned before, our expeditionary Air

Force is providing both the predictability and the stability to our

airmen that they need to accomplish their mission.

Mr. Chairman, another factor in readiness, the very, very complex readiness equation, is the issue of recruiting and retaining

good people, and retention and recruitment for the U.S. Air Force.

We are facing the toughest environment that we have had in decades. Our robust civilian economy and the low propensity to enlist

for all of our people around the United States have made this a

major, major challenge for us, something we have never faced before in the U.S. Air Force.

In spite of an increase of 600 people last year above what we

have normally recruited, we still missed our recruiting goals by

about 1700 people last year, even with the higher goal that we established for ourselves. We’re already this year, so far, some 1700

still short for the numbers we need in fiscal year 2000.

We are taking actions to try and remedy that particular situation, but enlistment and retention go hand in hand. Our enlistment

and retention remains a major concern for us. We are missing our

goals in all of our categories for first term enlistments, second term

enlistments, and career enlistments.

We have taken a number of steps to encourage our young people

to enlist, and to stay in the U.S. Air Force, and to make it a career.

10

We have added re-enlistment bonuses; some 73 percent of the Air

Force skills now receive a re-enlistment bonus. That’s up from 34

percent in fiscal year 1997.

We have a full court press to improve our recruiting skills and

recruiting manpower. We are the lowest service in terms of the

numbers of recruiters out there in the field, and we’re trying to

change that for the U.S. Air Force for now and the future. We’re

going to be increasing the number of recruiters by some 850 by

April of 2001 to bring our number of recruiters up to about 2,000.

Today we are about 900 or so.

We have also increased TV advertising for the first time for the

U.S. Air Force. Our numbers in fiscal year 1999 were up to about

$70 million; and for 2000 and 2001, we’re going to be at about $65

million to begin advertising and telling the story for the U.S. Air

Force, and again, enticing people to want to recruit and come into

the U.S. Air Force.

And finally, we have expanded incentives so that initial enlisted

bonuses are offered for now 100 skills in the U.S. Air Force. That’s

up from a low of only four skills just a couple of years ago.

Finally, in the area of infrastructure, we are making strides to

try and stay balanced in terms of our infrastructure funding. We

are nowhere near the numbers we need to keep the infrastructure

where it should be, and to make improvements in that area that

need to be addressed.

Infrastructure is sort of the Peter that ends up the one we rob

to pay for Paul, and all the other different areas that we have in

our affordability equation for the U.S. Air Force. As a result of this,

our RPM backlog is growing to about the tune of $4.3 billion. We

are at the level now where all we can do is maintain RPM at literally one percent. That’s enough for preventive maintenance only,

and it limits us to repairs only as we address our shortfalls.

MILCON levels are steady from where they were last year, but

they are one-third of what our validated needs are; and in the area

of military family housing, we’re taking steps to address the military family housing plan that we presented to Congress last year.

This plan was applauded by Congress, but we need to make sure

we have the funds in the out-years to address all the different

things we need to make that plan a reality.

The bottom line, Mr. Chairman, is that readiness is very, very

fragile for the U.S. Air Force. While, like the other services, we

would never, ever stop short of accomplishing the mission, we will

be doing it at higher risk if we can’t address some of these issues

that I just outlined to you; and we are trying to make sure in our

balanced budget that we are trying to address each one of those

areas.

Let me close, Mr. Chairman, by just making a comment. I know

you just recently returned from a trip to Europe with some of the

members of this committee and other Members of Congress, and

you had an opportunity to address and see and talk to really the

secret, if you will, for the success of the U.S. Air Force, indeed for

the other services, and that’s our troops out in the field.

They are dedicated. They are proud. They are doing everything

they can to support the mission and to support this country. Their

morale is very high in spite of the challenges that are ahead of us,

11

and they fully appreciate everything that the Congress has been

trying to do for them.

What we owe to them is literally the very best in quality of life,

in equipment, and support and modernized weapon systems that is

possible, given all of our budget constraints.

Mr. Chairman, I thank you for the opportunity to talk to you,

and I look forward to answering any of your questions. Thank you.

[The prepared statement of General Lyles can be found in the

Appendix on page 66.]

Mr. BATEMAN. Thank you, General Lyles.

General Dake.

STATEMENT OF GEN. TERRENCE R. DAKE, ASSISTANT

COMMANDANT OF THE MARINE CORPS, U.S. MARINE CORPS

General DAKE. Thank you, Mr. Chairman, Mr. Ortiz. Thank you

for allowing me to come before this great committee and speak to

you about your Marine Corps.

The help that this committee and the Congress gave the Marine

Corps this past year was very much appreciated. It represented a

turn in what had been a long decline in the funding for the Marine

Corps in many ways. There is more to be done, and we look forward to working with this committee and Members of the Congress

to take on that future load.

The Marine Corps is ready. We are a force in readiness, as you

have directed us to be. We balance that readiness across four pillars, and it is a balancing act as we do that. The first pillar is our

people, the Marines and their families. Today the Commanding

General of the Marine Corps Recruiting Command told me that we

would make our recruiting goals for the 56th month in row, and

we did by the end of this day. This is a leap year, and I have to

say we are glad we have an additional day in February in which

to make those goals, because recruiting continues to be a very

tough business, and one in which we are engaged heavily throughout the Corps, from top to bottom.

We believe also that the things which this committee was instrumental in doing such as retirement, fixing the pay table reforms,

the pay raises, and as I travel around the Corps, it means a great

deal to Marines and their families; and if there is something remaining to be done in that area, they would tell you that Tricare

or medical care is of a concern to them, and I’m sure you have

heard those same things in your travels.

The second pillar of our readiness is our legacy of equipment.

You spoke about it earlier, Mr. Ortiz, when you spoke about older

equipment that is aging and taking longer to repair; and we do so

and maintain the readiness on the backs of our Marines. It takes

us longer, but it also costs us more to repair that same equipment.

On many occasions, the parts that we need to repair it are no

longer made by any contractor, and it takes them time to retool

and then time for all of those parts to improve our readiness.

But having said that, our readiness has improved. We are 92

percent on the ground for Marine ground equipment readiness; and

we have arrested the decline in the aviation side, particularly on

our helicopter aviation, so we remain a force in readiness on those

counts.

12

We look for ways in which we can find an economy of force, if

you will, to take care of the legacy of equipment, such things as remanufacturing. We will remanufacture our Light Armored Vehicles

(LAV’s). We will remanufacture some of our trucks. We will buy

new trucks as well as the second version of the HMMWVs. We are

looking for ways in which we can make it easier to maintain and

buy in a cost-effective way to bridge the gap to modernization in

those accounts.

The third pillar is infrastructure. This, too, is where we have

taken money and put it into our readiness accounts so that we can

meet the mandate of the Congress to be a force in readiness. We

have some good news. Each year we have put more than $50 million into our BOQs; and by 2004, there will be no Marine that will

live in either a squad bay type of barracks, nor use a gang head.

Those are good news items.

We have arrested the decline in backlog of managed real property which was headed to be a billion dollars by 2003. That is now

arresting steadily. However, it still remains at $685 million of

backlog in repair which we have insufficient funds to work off in

that period.

We also look at our family housing. We will have all of the family

housing that needs to be refurbished and repaired; it will be completed by 2010. That’s one of the things that we are looking to increase as we work our infrastructure over the next year.

The one infrastructure item which we would like to take on with

the Congress this year, and that is the funding for the procurement

for the Blount Island command. Blount Island is a port off of the

East Coast. It’s in Florida and is in fact is used to refurbish and

repair our equipment. It’s on our maritime pre-positioning. This is

the equipment that gives us the sustainability for real time as we

put Marines, wherever they are around the world, into combat or

operations, they will use the equipment aboard those ships.

In a longer context for the nation, Blount Island represents the

busiest port during DESERT SHIELD and DESERT STORM. It

loaded more ships out than any other East Coast port. We believe

it is not only a Marine Corps asset; but a national asset, and we

enjoin you to work with us to take on the procurement of that particular command.

Our final pillar is modernization. Modernization is really longterm readiness. It is really the final answer to the legacy systems

and how you combat the readiness degradation that they represent.

We are looking at long-term readiness; our premier program on

the ground sides is our Advanced Amphibious Assault Vehicle

(AAAV). On the air side is the MV–22 and Joint Strike Fighter,

and those continue. We are also looking to do things in the mandate, or the common knowledge is fix artillery. We are looking for

the Lightweight 155 as a program which is our modernization of

artillery and others as we have outlined in our plans.

In war fighting areas, the Commandant has brought back the

Marine Expeditionary Brigade. In conversations and meetings with

the Chief of Naval Operations (CNO) and the commandant sponsoring Navy/Marine Corps leadership, we have come away with the

Marine Expeditionary Brigade. This is what I call the middleweight fighter. It bridges the gap between our Marine ExpeditionVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 E:\HEARINGS\72364 pfrm11 PsN: 72364
13

ary Unit (MEU) Special Operations Command (SOC) which is

about battalion level force, and our Operational Maneuver from the

Sea (OMFTS), which are a division level force.

The Marine Expeditionary Brigade comes with its own ground,

its air, and its sustainability for 30 days. It is a potent force that

the Commandant is bringing back.

We have many good things that we are working on this year,

much to the credit of this committee and the Congress, that we

have had funding beyond what we have seen in the past. However,

there is more to go.

I look forward to working with the Congress on that, and I look

forward to your questions. Thank you.

[The prepared statement of General Dake can be found in the

Appendix on page 76.]

Mr. BATEMAN. Thank you very much, General Dake. Thank you

all. The last Quarterly Readiness Report that the committee has

received was the period ending September 30th of last year. We

have now had another quarter ending December the 31st. Has that

Quarterly Readiness Report been completed and in your hands?

General KEANE. Yes, sir, it has been completed, and I was told

it was leaving the building either yesterday or today; and clearly

we can do better at providing that report to you. We truly understand that.

Mr. BATEMAN. I have been anxiously awaiting it, and I don’t understand why we would have to wait that long; and I am almost

embarrassed to have to ask when are we going to receive it, so

please expedite that.

General KEANE. Well, the Army, just to be up front with you, our

portion of that, we have been late seven out of the last ten quarters, and we are going to fix it. After that conversation I had with

you in your office, we intend to do something about it.

Mr. BATEMAN. All right, thank you, General. Your statements

and the written versions that I reviewed last evening are all replete with shortfalls in many accounts, none perhaps as significant

as your real property maintenance accounts. Did I hear for the Air

Force that there’s a $4 billion backlog of real property maintenance?

General LYLES. When you look in the aggregate, Mr. Chairman,

that’s the true number. That reflects decline or lack of funding for

real property maintenance or RPM over the last four or five years,

and what we project for the future. The funding we had last year,

the funding we have in the budget this year keeps us at, or gets

us to a one percent real property maintenance level, if you will. It

allows us to do emergency repairs to sustain things, but it doesn’t

allow us to make the kind of major changes you need to literally

turn that situation around.

We will not allow people to sit in leaky buildings, as an example,

but we won’t be able to fix the roof completely, or to replace the

roof, and those are the kinds of things that we’re going to be facing

with that kind of funding level.

Mr. BATEMAN. I have difficulty understanding why people aren’t

yelling and screaming and banging their fists on the table if you’ve

got those kinds of problems; and they continue to be unfunded year

after year after year. It appalls me to have senior military leaders

14

leave my office with almost a tone of gee whiz, this is getting so

much better, I’m going to get 69 percent of requirements in this

budget.

I don’t think 69 percent of identified requirements is acceptable,

and I hope you are going to help the committee with the Administration and with the American people to understand that you have

vital needs which are being unfunded; and we cannot do this for

you unless you help us. The way you can help us is being very

forthcoming and high profile in asserting that the need is there.

I’m going to suspend before I get more frustrated, and recognize

Mr. Ortiz.

Mr. ORTIZ. Thank you, Mr. Chairman. I have a couple of questions for General Keane. Maybe he can help me. Do you know for

the Army to recapitalize its air and ground fleet, it would appear

logical that the Army would also need to recapitalize its repair and

maintenance depots for recapitalization work that they place.

What are the Army’s plans to recapitalize the infrastructure,

equipment and facilities at Corpus Christi Army Depot in order to

recapitalize the Army aviation fleet? Maybe you can give me a

little— General KEANE. Mr. Congressman, you know that we do have a

recapitalization effort with development of our Long Bow Apache

helicopter, and some improvements we’ll be making to the CH–47;

and quite frankly, we are looking very hard at elimination of the

AH–1 Cobra and the UH–1 because they are Vietnam era aircraft

as well.

In reference to your question about depots, and specifically Corpus Christi, the depots are funded out of the Army working capital

fund, and their RPM, if you will, or recapitalization effort, comes

from the rates that they’re charging in terms of the repair and

maintenance that are conducted at those facilities.

And those are competitively established, as you know, so that is

where the monies come from to do repair and maintenance in those

facilities. Let me just be up front with you. We have absolutely no

intention of letting that depot decay so that the infrastructure falls

down around it; and then the Army says this is too tough, we’ve

got to walk away from it. That’s not our intent.

Our intent is to make certain that that facility continues to function, and that the facility is adequate to meet the needs of those

great people that work in that facility.

Mr. ORTIZ. You know, and I think if I—and correct me if I’m

wrong—it would take about $400 million to repair all those

Apaches that have to be repaired. Is that cost now, is that going

to be included in your supplemental to make up the cost that it

took? I don’t think that the money that was spent was in the budget.

General KEANE. That’s correct, the money is not in the budget.

The money is in the supplemental; and it is also identified as unfunded requirements, part of the $5.4 billion that we have as an

unfunded requirement.

Mr. ORTIZ. I had some other questions, but let me also pass to

some of the other members, and I will come back around for the

next round.

Mr. BATEMAN. Mr. Hansen.

15

Mr. HANSEN. Thank you, Mr. Chairman. Mr. Chairman, I hope

you realize that General Lyles will be the commander of Air Materiel Command in a short time. It used to be the commanding officer

of Ogden Air Logistics Center (ALC), and congratulations to General Lyles because I don’t know a more capable fellow to do it, or

officer.

You know, General Lyles, if I may ask you, or any of the other

folks who are there, you know, some of the extreme environmental

groups have filed a federal lawsuit that would prohibit any overflights under 2,000 feet; and they have wisely done it in Washington, D.C. because there is a certain judge here that goes along

with them about on everything, if I may say so.

Tell me what effect, if they are granted that until a National Environmental Protection Agency (NEPA) or Environmental Impact

Statement (EIS) statement is done, and the length of time of

those—and I’m sensitive to this as Chairman on the Committee on

Public Lands—it would take a long time and cost big, big bucks— what effect would that have on readiness if they were successful?

What if the judge grants them that?

General LYLES. Well, Congressman Hansen, as you well know,

one of the major elements to readiness is training, proper training

for our people, particularly to prepare them to go in harm’s way situations, as an example. We depend on the ranges that we have, all

the ranges—test ranges, development ranges, training ranges—to

be the element that allows us to train our forces to go to any sort

of scenario they may have to face.

If we are faced with the situation where we can’t provide adequate flying at the right kind of levels, elevations to do the proper

training, that would tremendously, tremendously impact our ability

to support readiness factors for our forces.

The ranges are getting fewer and fewer as it is, and the numbers

and the encroachment sort of threats are becoming more and more

of a viable concern to all of us, and we are trying to do everything

we can to protect and make sure we keep them at least where they

are today, if not the ability to expand them in the future.

Mr. HANSEN. Admiral, I guess you would have some of those

same concerns with the Navy air?

Admiral PILLING. Yes, sir. I mean, we have requirements for our

pilots to be able to do low level flights as part of the training syllabus.

Mr. HANSEN. I am sure the Marines are dragging your wheels

through the grass all the time, aren’t you? Isn’t that part of your

work?

General DAKE. That’s an important part of what we do. We

would be really hard-pressed for readiness if we could not do those

types of training.

Mr. HANSEN. You will support us if this committee sees fit to do

something to remedy that problem, I would hope.

General LYLES. That’s correct, yes, sir.

Mr. HANSEN. General Lyles, let me ask you one more, if I could.

As you know, Secretary Peters has issued a waiver for 50/50 legislation which may be necessary to support the transition of workloads from the closing of Kelly and Kelly Logistics Center (KLC).

I will discuss this as according to ALC; however, after closer invesVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 E:\HEARINGS\72364 pfrm11 PsN: 72364
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tigation, I’m somewhat concerned that some of the folks in the Air

Force don’t see it the same way the secretary sees it, and with any

problem the Air Force may have complying with the 50/50 is not

with the transition workload, but rather part of the much deeper

problem.

In fact, in an Air Force Materiel Command letter signed only two

weeks ago, it states, ‘‘these bridge contracts may represent a sense

of a much larger problem and should not be the only justification

to support the air waiver with 50 percent limitation.’’ It goes on to say the problem is much larger and extends beyond

fiscal year 2000. The letter identifies the much greater problem as

‘‘the general trend to move logistic support to the private sector

and increasing costs of contract and interim logistic support.’’ Now, I know you are not the commander there yet, General, and

this doesn’t fall on your watch; but I am just kind of curious, can

you kind of tell the committee whether the Air Force problem of

complying with the 50/50 law is indeed much deeper and long term

than is indicated by this recent waiver request?

General LYLES. Congressman Hansen, I think the answer and

the comments that you have heard from Secretary Peters are really

the corporate and right strategy for the U.S. Air Force. That is, we

believe in 50/50. We are going to do everything we can to make

sure we don’t violate the law. I just became aware of that letter

that you referred to just today, and we need to go back to make

sure that all of our people understand that this is something that

we are serious about, and we are going to already have initiated

the sort of processes to make sure we look at any sort of activity

that can potentially move workload and give us a situation where

we knowingly, or even unknowingly, violate the law.

The bridge contracts were a situation, I think everybody understands, we were somewhat forced into that situation because of the

readiness posture, in part. We literally underestimated what it

would take to move the workload from Kelly and also from Sacramento. The bridge contracts allowed us to remedy that situation

and help our readiness.

We cannot allow any systemic sort of processes out there to take

the workload away from us and violate the 50/50, so we will be

watching that very, very closely. I know who signed that letter, and

I will be talking to that individual very soon.

Mr. HANSEN. Thank you, Mr. Chairman. May I ask another question?

Mr. BATEMAN. Certainly.

Mr. HANSEN. Thank you, Mr. Chairman. Admiral, a great concern in my mind—and I guess it is because of my visits to Puerto

Rico as Chairman of the Public Lands and Parks Committee—is

this problem in Vieques. Do you have another place, General,

where you train with live fire in coordinated areas on the East

Coast?

Admiral PILLING. Where we can do all of the combined training?

Mr. HANSEN. All of the combined training.

Admiral PILLING. No, sir, there is no place that we know of on

the East Coast. We have a commission to study this by the Center

for Naval Analysis to look at alternatives if we have to leave

Vieques as a result of the referendum the states place next year.

17

Mr. HANSEN. Is it a true statement, then, that you are sending

out people that really haven’t passed the final test, so to speak, in

your carrier battle groups and your Marine people? Would that be

a correct statement?

Admiral PILLING. They are—we have three destroyers that have

just deployed, the battle group that is on its way into the Mediterranean. They are on their way up to Cape Wrath in Scotland to

try and finish up the naval surface fire support that they couldn’t

do at Vieques. They are up there now. They are at 15-foot seas, and

it doesn’t look like it’s going to be a very easy task for them to get

qualified up there, so we are not getting the training we need.

Mr. HANSEN. No disrespect to the kind of agreement that you

folks are working out with the folks in Puerto Rico, but there’s 48

states that we do live firing in right now, and I would feel it would

be a terrible precedent if we have to now take a vote on live firing

on where you can and cannot do it as if it would follow along with

the suggestion that has been put forth.

I was down there at one time as Chairman of Public Lands and

Parks, and a large developer said I can’t see a place in the Caribbean that would be greater than this to put in beautiful beaches

and all that type of thing.

I hope those folks down there don’t get the idea that they are

headed that way. I personally feel that this is a grave mistake on

the part of the Administration, and it should be put back just as

it was prior to that time, and I further think the Justice Department is making a terrible mistake when you’ve got people that are

trespassing in an area that they don’t go out there and tell them

they can’t disobey the law. I mean, that would happen any other

place.

General Lyles knows, just west of the Ogden Air Logistics Center, we have an area called the Utaques Training Range. It is huge.

It’s one of the biggest ones around, clear air space to 58,000 feet.

Now recently some of the environmental people are saying well, we

ought to go out there and camp there, they won’t throw us off.

They did that, and they just about closed down Hill Air Force

Base, because what could we do? I can’t believe, Mr. Chairman,

and I say it respectfully, that this Administration is not going down

there and making people obey the law. I further can’t believe that

they are going to the point that they are going to say fine, you can

vote on it, and if you vote to let us bomb you, we will give you $40

million.

Well, my goodness, the island itself is probably 200 to $300 million, and frankly, I think this committee or the committee ought to

do something that is more dynamic to put this situation back as

it was prior to this political fiasco we have gotten into.

Thank you, Mr. Chairman. Is that clear enough? [Laughter.]

Mr. BATEMAN. I would take issue with the gentleman in one respect. You said you would respectfully disagree. I am not even

into—

Mr. HANSEN. Did I say respectfully? I apologize.

Mr. BATEMAN. I am not even respectful in my disagreement with

the ridiculous position that this Administration has taken and the

incredible mess that we’ve gotten ourselves into vis-a-vis Vieques.

It is as bad as, I believe, we are giving them $40 million if they

18

vote to let us bomb them, and then we will give them $50 million

more. There is no other place that is under the sovereignty of the

United States of America where our national security needs require

a local referendum of voters before our national security interest

can be pursued and protected.

I think it is outrageous, just as the gentleman from Utah did, but

we will pass on now to Mr. Pickett.

Mr. PICKETT. Thank you, Mr. Chairman. Gentlemen, welcome.

Good to have you here today. The quality of life issue for our people

is very important, because it has a lot to do with retention and recruiting. I know we talked a lot about several things, of housing

and health care, and the resale system and things of that sort.

One thing that hasn’t gotten much attention in recent years I

think is the DOD’s school system for the military families that are

stationed overseas, and how do you all believe that this is working,

and what kind of feedback are you getting from the military people

whose children are attending these schools overseas?

General KEANE. I’ll lead off, if you would like. We have had feedback on the DOD school system. It runs a spectrum. Our soldiers

and families in Korea feel the school system is adequate. Our soldiers and families in Europe have challenges with the school system. The staffing, they indicate, is not what it should be. They also

indicate that some of the facilities that they are having to send

their children in are decaying and are not the kind of adequate facilities that you would want to send American children to school in.

The CINC in the European command, I don’t want to speak for

him, but I will tell you that he came forward as far as the joint

requirements oversight council and solicited support from the services for the DOD school system and identified to the services some

of the problems that I just enumerated to you.

General LYLES. Mr. Pickett, let me speak from the Air Force’s

perspective. I think the schools and the quality of schools is a very,

very important mission for quality life for our people overseas, and

it is an area that our commanders over there are trying to address,

and address in a very aggressive manner.

We are very, very pleased that our two commanders, primary

commanders overseas, former General Johnny Jumper, used to be

the commander of the U.S. Air Forces in Europe, and General Pat

Gambol in the Pacific, both had taken strong initiatives to try to

define a school improvement program. That’s not the formal title,

but that’s essentially what it’s all about.

It contains essentially four dimensions. Making sure that we

have the right kind of technologies in our schools so that they can

be up to date and get the right kind of information and teaching

quality to our students; to make sure that the teacher ratio, the

teacher-to-student ratio, is appropriate—we want it to be no worse

than 18 to 1, which is sort of a national standard; it has been a

lot worse in the past—to make sure we have proper accountability

for the teachers, that they are properly certified, and to make sure

that we are watching this and watching literally on almost a daily

basis. They have made great strides as a result of this sort of

school improvement program, and we now are going to make sure

that we continue to support it and start monitoring and maxing

funds to support that every year as part of our program.

19

Admiral PILLING. As you know, the Navy presence overseas, permanent presence overseas, isn’t very great; but in referring to the

JR review that General Keane mentioned, the staff sort of used

several methods to look at the schools, particularly in Europe, because that was where the CINC, the CINC over there, was complaining about.

On the matrix of scores on tests and costs per student, the DOD

schools overseas were better than the average in the United States.

They were not as good as Fairfax County, and so that was where

the rub is. The CINC clearly would like them to be as good as we

find as a relatively well-off part of this country.

Mr. PICKETT. Thank you very much. I don’t know if you want to

add anything.

General DAKE. I would only add that in Okinawa, where the preponderance of Marines are forward deployed, the DOD schools are

very important to us. My children went to each of those, a boy and

a girl, and they graduated from these schools, so it’s important,

and high quality at least in the Pacific. We don’t have the experience with the European schools.

Mr. PICKETT. I know that there have been some comments about

the backlog and the maintenance of real property, and there appears to be a continuation of a backlog in having available enough

spare parts; and there is also, there appears to be a backlog in the

depot maintenance in all of the services, but I would like to ask

each of you, if you were able to get more funding for your respective services, where would be your first priority for funding in the

year 2001?

And I say that in looking at this three-year comparison I see

here, it looks like it has been pretty nearly a flat level funding over

the past three years. I don’t see how you are making it when you

take into account the inflation, even though the inflation is perceived to be modest. I don’t know how you all can make it from

year to year on the same dollar amount.

But could you tell me what your first priority would be if you get

more funding?

General KEANE. Yes, sir. Our first priority overall would be in

the readiness account, to buy back one, to bring up Base Operations (BASOP’s) up to 100 percent although it is funded higher

than this year than it has been in the past, our RPM and also our

depot maintenance account.

We are losing in the RPM business, frankly. The industry standard I think, as everyone knows, is about three percent to recapitalize, and the Army is somewhere around one percent, and we

can’t keep up with it is frankly the issue. I know Congressman

Bateman mentioned 69 percent. That’s the Army number.

Believe me, we would like to make that number higher, but given

the other things that we must do as well, and try to balance an

Army budget with the programs that we have to fund is a tough

choice.

So our only answer, to be quite frank about it, is you have to increase our top one hit. We can’t get there within this budget.

Mr. PICKETT. Admiral Pilling.

Admiral PILLING. Probably our first priority would be increasing

the sources for recruiting and retention; but of the three categories

20

that you mentioned, I think spares in particular, aviation spares,

would be at the top of the list. Second would be depot maintenance,

and the third priority for us would be real property maintenance.

The first two are much more closely tied to deployed readiness

because as you know, we put our emphasis on readiness.

General LYLES. Congressman Pickett, I guess our response would

be very much in line with the under-funded priority list. The number one thing on that list is retention and recruiting initiatives,

about $60 million that we are asking for in the Unfunded Priority

List (UPL), mainly because that is such a major dimension of readiness that you don’t usually think about.

The other major items that are part of the UPL are base operating support, which is the day-to-day operations of our installations and facilities, and the RPM, which is another major dimension for, again, readiness, and third, the infrastructure guide log

that you talked about earlier.

What’s not reflected on the top ten for our unfunded priority list

are spares; and the reason why is because with the help of Congress, we put about a billion dollars over the last year or so in getting our spares numbers back up, both in terms of Kosovo supplemental, additional money that the Air Force and Congress put its

spares; and we are now waiting for the turn-around of the results

of the spares increase that we funded over the last two years.

We put a premium, a higher premium on RPM, base operating

support, and recruiting and retention because of that previous

funding of the spares.

Mr. PICKETT. General.

General DAKE. We have an unfunded priority list of $1.4 billion

in 2001. That’s all those four areas that I spoke about—personnel

accounts, and in there I’m talking things from recruiting through

those accounts; our infrastructure, which has been up there for our

readiness, and in many cases, not so much on O&M that has been

a problem, is we have taken it from accounts and moved it into our

readiness accounts to keep our readiness high.

Modernization is our long-term readiness. We do believe in, of

course, our legacy system, so the $1.4 billion is straight across

those four pillars.

Mr. PICKETT. Okay, thank you. Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Pickett. Mr. Riley.

Mr. RILEY. Thank you, Mr. Chairman. Gentlemen, it is good to

see you again. I have one question for General Keane. General

Keane, we are about to make this transformation to a medium

armed vehicle that you and I talked about in my office a few weeks

ago. With the level of procurement the way it is today, and the

shortfall that we have across the board that we have in all the

services today, how do you plan on funding that, or do you essentially plan to take some some of the existing equipment that we

have out there now, modify it, and make it into that medium category?

General KEANE. Yes, that was a tough question for us. We clearly, one, we recognize the need, we have to change and get a more

responsive force so that we can move strategically. The issue is

how do you fund it?

21

We had to take a look at our own equipment infrastructure and

make some tough choices in our modernization program. We recommended to Congress to kill seven systems over the following

years to give us some of the funding to start this program up, and

also the restructuring of two programs, most notably the Crusader

program and our Forward Scout combat system.

That was part of the strategy. The other part of the strategy was

to obtain from Department of Defense and the Administration at

least half the dollars to help get us started, and that contract was

established. So that gets us going in the early years.

And our challenge will still continue to be there; because while

there was savings from those programs that we are recommending

termination for, most of the savings in those programs does not

come until the later years, where the acquisition of those pieces of

equipment lie. Right now, a lot of those programs are still in R&D,

so there is not as much money there.

In the later years, it starts to pay for itself with the termination

of those systems. So we are in a struggle, to be quite frank about

it, to transform this Army with the kind of budget numbers that

we have; and we had to do some of that, obviously, out of our own

hide to be able to do it, to be very frank about it. And they were— every single one of those was a tough choice, because obviously we

had a requirement for those programs or we never would have submitted that request to the Congress to begin with.

Mr. RILEY. Do we have equipment out there that is available

today? And it seems like it just makes sense if you could take some

of the equipment we have today and modify it, bring it back on

line. You could do it not only cheaper, but you could also do it faster. I don’t know that we have the time to make that deployment

or that change in our— General KEANE. That’s a good question. We clearly are looking

to design an objective force for the future, and we are putting that

objective force in research and development right now, and providing some monies to do that, and also with the help of Defense

Advanced Research Projects Agency (DARPA), we hope to get some

technology answers in the 2003 time frame, and then produce the

objective force in 2012.

What we are doing now is trying to acquire some of the characteristics of that force in the near term with off-the-shelf technology;

but we made a decision ourselves, what we wanted was a fair and

open competition, and we did not want to predispose ourselves to

any of the technologies that exist out there to include some of those

that we have been using ourselves, like 113 armed personnel carriers that have been in the Army ever since I have been a part of

it.

So the companies that have owned those legacy systems, if you

will, are part of this competition that we intend to take place in

May and June, and also others who have provided other types of

capabilities—for example, real capability solutions—to achieve this

overall capability that we are looking for.

We wanted fair and open competition in an attempt to get the

best available that is out there. That was our thought process. By

doing that, it has taken us a little longer to get to that major competition; but we think in the long run it will better serve our solVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 E:\HEARINGS\72364 pfrm11 PsN: 72364
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diers and the American people if we have that fair and open competition.

Mr. RILEY. One more question, Mr. Chairman, if I can, is that

I hope you will look at as we open this up to open and fair competition, I hope that the depots will be included in that competition.

One of the things that I particularly hope you will do is look at

the partnering arrangements we have like the AIM–21 program in

Aniston where you combine the best of both worlds, and I think it’s

very, very effective.

So I would encourage you as you go through this process, to tell

everyone that is going to be participating in this competition to

look at the options of partnering the way we did in Aniston on the

AIM–21. I think it’s a wonderful program.

General KEANE. Sir, we agree with you, and something that has

not received much notoriety with the transformation strategy because inside the Army to a large degree and maybe even outside,

we are a platform-center organization; and at times we can’t help

ourselves. We just have a tendency to look at these platforms that

we have, and in which new ones we’re trying to acquire, but an important part of the transformation is a recapitalization of our legacy force, and principally I’m talking about increased locality for

our life force, and recapitalization of our heavy armored force.

We have made what we think is a critical decision, and that is

to take the Abrams tank back to zero hours and zero miles. In

other words, we would re-do that tank except for its hull, and obviously it will be digitized as well. We see that tank being around

for the next 20 years, to be quite frank about it, as well as the supporting systems that are around in support of the Abrams tank.

So we intend to recapitalize a portion of our heavy armored force

to make certain that we still continue to have that kind of overlap.

If we have to go toe-to-toe with an adversary that has that kind

of capability, we want to make certain that America has an Army

that can defeat anybody else’s Army with that kind of capability.

Mr. RILEY. Thank you, General.

Mr. BATEMAN. Thank you, Mr. Riley. Admiral Pilling, as recently

as Sunday, I was on one of the P–3Cs, land-based P–3Cs, that you

make reference to in your written statement. I want you to look

into something for me.

Admiral PILLING. Sure.

Mr. BATEMAN. On at least that one, and I don’t know whether

it is characteristic of all of them, the toilet in the plane doesn’t

function, and there is some work-around substitute for it, and some

of the most enormously skilled and talented people you have fly on

that plane for up to 12-hour flights during their mission, and some

of them are women, and this is a preposterous result, and even if

it ends up with a scandal of an 800 dollar toilet seat, something

needs to be fixed. Would you look into that for me?

Admiral PILLING. Absolutely, sir.

Mr. BATEMAN. Mr. Ortiz.

Mr. ORTIZ. Thank you. I have a question that maybe Admiral

Pilling and General Dake can assist me. I have been monitoring

the tragic accident that occurred in Vieques; and as we look to

what the proposal has been, you know, when you have a lemon, all

23

you can do is make lemonade, and this is where we are at right

now.

But what about the $40 million that has been, that is going to

be used for Vieques now? Is that coming out of an Office of Personnel Management account? Your overall maintenance account? Or is

that a supplemental? How are you going to work this $40 mil- lion?

Admiral PILLING. As I understand it, none of those dollars are in

the defense budget. They are all in the budgets of the other agencies, such as Commerce and Transportation, and they are all focused entirely on infrastructure on the island of Vieques.

Mr. ORTIZ. I see.

That answered my question, Mr. Chairman. I don’t have anything further.

Mr. BATEMAN. Mr. Hansen.

Mr. HANSEN. Thank you, Mr. Chairman. Okay, gentlemen,

maybe you can help me on an issue. Yesterday I was out in the

west and was talking to an officer of one of the Reserve units, and

he got into this question of retention and recruitment, and he said

‘‘I really can’t understand this.’’ He said ‘‘they have lowered the

tests of mental agility’’ or whatever you call that, and he said ‘‘on

physical,’’ he said, ‘‘I have these guys and I am always filling out

forms because they can’t do’’—and then he listed it, and I can’t remember what it was—what they had to do in a six-month period,

and they had two shots at it, and if they didn’t make it, they were

out the door.

It was so many push-ups, had to run two miles and such—I can’t

remember all of them—and so we talked about it for a while, and

he said ‘‘what if they had ten shots at it?‘‘ He said ‘‘I think some

of them could have made it.‘‘ But he said they just had those two,

and he said so they can’t do three more push-ups or sit-ups in that

length of time, but why do we cut them out?

He said ‘‘If I gave them more tries, they could probably make it.‘‘ I was sitting there wondering. I mean, I’m sure there’s got to be

lines drawn somewhere, and you have got to make some things. I

remember when I was in boot camp when I was 18 years old; they

were pretty strong on some of those things. We all had to pass

that, and it was fine. It was kind of enjoyable when you are at the

peak of your capacity, but some of these guys don’t do those things,

especially in the Reserve units.

I’m just wondering why those—you are lowering one, but you

keep another one high like that with some folks that can’t quite

make it.

I’m speaking out of the other side of my mouth—I sound like a

politician here—but I was also talking to an instructor pilot for helicopters for the Army, and he said he had been instructed to lower

the grades that he would normally give so that he didn’t flunk as

many guys out.

Now, you’ve got to help me here. Am I wrong on both of those

counts?

General KEANE. Well, Mr. Congressman, I don’t know for sure,

to tell you the truth. What I can tell you is certainly mental agility

standards are not being lowered. Second, physical training standards are very important to an Army, as you can well imagine. We

have to have certain levels of physical strength and stamina to

24

meet the requisites of the battlefield, and we clearly administer to

our standards—to our people on a periodic basis physical training

tests to ensure they are meeting those standards; and if they fail

it, we give them a reasonable period of time so that they can pass

this test, and also we give them some counseling to ensure they understand what is at stake here.

I will be more than happy to take a look at it, what’s taking

place with this organization; and maybe we could speak privately

about who the organization is so I can focus in on it a little bit better.

Mr. HANSEN. Excuse me, General. He says he is losing five percent of his group every year, five percent because they can’t do

three more push-ups. You don’t agree with that?

General KEANE. I can’t speak to it. I have no specific knowledge.

I will tell you this, and I’m not going to hide this from you, we have

more challenges with American youth today than what we used to

have in terms of their physical strength when they come to us. A

lot of them are overweight, and a lot of them do not meet acceptable physical standards, and that’s what basic training is all about;

and then we have to maintain and sustain those standards over

time.

For the most part, we are being very, very successful in doing

that. I have to take a look at this thing and focus in on it to give

you a much better answer than what I can here today, sir.

Mr. HANSEN. Are we lowering the standards at all on people who

are flying aircraft or helicopters, these expensive airplanes we buy?

General KEANE. I have no knowledge of that. The only thing that

we did, we did do this, in the last couple of years, we did cut back

on the number of flight hours, flying hours that it was taking to

graduate as a pilot in the Army. We are corrupting that, and we

have discovered that what we wound up doing for ourselves is burdening the receiving unit, and they have to compensate by doing

some additional individual pilot training that we reduced in flight

school, initial entry flight school in the Army.

That’s the only standard that I’m aware of that we moved away

from, and we are putting that back to where it was. In our judgment, it was a mistake.

The other I’m not familiar with at all. I am not suggesting it may

not have happened, but I just don’t know the facts of it.

Mr. HANSEN. Thank you.

General LYLES. Congressman Hansen, we have not lowered any

standards either from the Air Force, obviously, certainly for our pilots and the kind of training that they have to go through. But

even though we are strapped for recruiting, we have also taken a

stand that we are not going to reduce the standards for our enlisted folks coming into the U.S. Air Force.

We have been challenged as to why our rate of acceptance of

graduates, GEDs, is lower than the other services, but we have

made a conscious decision that we want 98 percent of our people

coming in on enlisted force to have high school diplomas, not

GEDs—only two percent GEDs—and we have decided to stick to

that even though it would give us some marginal increase to our

recruiting numbers if we were to lower it down to 95 percent, as

an example.

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We think it’s the right thing to do, given the technical complexity

of all the things we are trying to do in the U.S. Air Force, and we

are going to stick by that, at least for the time being.

Mr. HANSEN. General Dake, would you like to respond?

General DAKE. Yes, sir, I would like to address a bit what we call

the first term enlisted plan, so if people come in for a four year enlistment, we are concerned about the number of them which actually complete their full four years.

We have reduced those who had—we had about 58 percent of the

Marine Corps was in our first term. We are a very young force. At

8,000 a year, 8,000 people—not each year, but 8,000 in our first

term failed to complete it for various reasons. It could be physical

fitness, it could be humanitarian, there could be a lot of other reasons why people do not make it through that first term of enlistment.

We think that is very important that we increase that. We have

actually reduced our attrition by 22 percent. We think that’s a combination of things that we have strengthened rather than reduced

standards, that we have strengthened things like the crucible in

our recruit training, that we have looked to the commanders to be

more involved so that if there is a problem of a Marine in their

command, that they personally get involved to make sure that everything is in fact done, not just by regulation, but also by that

which makes sense to the readiness of their command.

We believe that 22 percent reduction equates to 1800 Marines

which in our recruiters is about two battalions worth of Marines

that we keep now that over the past five years, we would have

been losing by those same rates.

So it is an important thing to have this first term enlistment,

that they complete that; and we believe if you work hard at it and

give command attention, you can make a difference, and we have

done that without lowering any standards.

Mr. HANSEN. Okay.

Admiral PILLING. Let me just comment on the Navy. The only

thing we have changed on entry standards in the last couple of

years was during the drawdown as we were getting smaller, we required 95 percent of our recruits to have high school degrees. When

we finished the drawdown, we went back to the DOD standard

which we had maintained all through the 1980s of 90 percent high

school degree graduates.

And on PT, physical readiness standards, we are changing our

program right now. You take your test every six months, and if you

have three failures in four years, last year we would have thrown

you out. That’s three failures in four years, so it’s a year-and-a-half

process.

We are going to change that this year to three failures in four

years means you can’t reenlist, but you stay until the end of your

enlistment.

Mr. HANSEN. Thank you, General. I appreciate that. Thank you,

Mr. Chairman.

Mr. BATEMAN. General Keane, during the course of the weekend,

I met with a warrant officer in the Army, and if my recollection of

the facts is correct, he was in Kosovo detached from his unit during

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the course of a three-year tour in Germany, but six months of that

tour he will spend in Kosovo.

He expressed a concern and a negative factor in whether or not

he would be willing to stay in the service, that he would expect to

go to another short tour, i.e., probably Korea, because he had a

long tour in Germany.

Now, I think if that is anything like accurate, the Army needs

to be refining the way it is looking at its personnel for purposes of

reassignments. If he does a three-year tour in Germany, six

months of which is in the worst of circumstances in Kosovo, that

is not exactly the kind of thing that you then want to send your

guy off onto another hardship tour.

So I hope the Army would be looking at kind of a reassignment

policy, and not perhaps just assuming everybody who got a tour in

Germany is equal to everyone else that has a tour that was supposed to have been in Germany, but ended up with part of it being

somewhere else.

General KEANE. Yes, sir. I thank you for that question, and by

the way, just many thanks for the time you spent with our troops

in Bosnia and I know that you probably don’t want any personal

acknowledgement of this, but we truly appreciate the fact that you

were on a patrol of soldiers and that you truly found out what it

is like for them day in and day out.

For our soldiers who were deployed to Germany for a routine

three-year assignment, it is almost a certainty that they will do six

months, at least, and possibly longer, in Bosnia or Kosovo. It is also

probable that they will do another six months in that three-year

assignment as well.

What we are doing in our personnel management is to ensure

that those soldiers, whether it is six months or two six-month

tours, we have a safeguard in place to prevent them from going to

short tour overseas assignments.

I’ll be up front with you. About a year and a half ago, we had

some of these problems, and I was the commander of some people

that that was happening to, and we had to put these safeguards

in place to ensure that the system would, that that would not happen.

So we think we have got that fixed, and it has been fixed for

some time now. So that youngster can be assured he is not going

to go on short term assignments, but he could possibly face another

six month assignment—I don’t know how long he has been in Germany as well—because that’s the demands that are there.

Mr. BATEMAN. Thank you, General. Let me advise you, the subcommittee and the panel, that I have to go and make a phone call,

and so I’m going to ask Mr. Riley if he would preside, and I also

want the panel to be aware that I will have some questions that

I want to submit to you for the record, and that Ms. Fowler, who

has had to go to a leadership meeting, if she doesn’t get back, she

has some questions which she will be submitting for the record.

Mr. Riley, if you would.

Mr. RILEY [presiding]. Gentlemen, I just have one question, and

this may be an oversimplification. First let me say that I’m glad

we don’t have these mental agility and physical agility tests for

Congressmen. If we did, I don’t know how well we would survive.

27

But when you look today at the reduced level of training like we

have talked about in Vieques, our chiefs come in and tell us that

we are $84 billion short over the next five years, our OPTEMPO

levels are probably the highest they have ever been in peace time.

We have an almost critical manpower shortage in just about all of

the branches.

This is a readiness committee. On a scale of one to ten, where

is our readiness level today?

General KEANE. Well, on a scale of one to ten for the Army, we

are somewhere around a seven or eight, I would probably put it at.

When you consider all of what we’re talking about in terms of readiness, you know, we measure readiness in a readiness report; and

we are essentially looking at the numbers of people we have, the

equipment that’s there, and the training.

But in the Army, we would like to argue more that readiness is

clearly more than that. It is some of the other things that we have

discussed here. It is our base ops capability, it’s our RPM strategy,

our depot maintenance strategy, as well as the amount of ammunition that we have. It’s what we have in war reserves that deal with

all of those issues.

And personnel readiness, not just the numbers of people, but the

quality of the life experience for our people is a factor in human

readiness that’s important in all the services.

So to be quite frank about it, we are challenged in those other

areas, and that’s how I would categorize it for the Army.

Admiral PILLING. For the same reason General Keane points out

how difficult it is to put a single number on it, because the Navy

deliberately under-resources non-deployed units so that all of our

forward deployed units at the pointy end of the spear are C–1, C– 2 units; on any given day we might have 40 to 50 percent of our

ships and squadrons not ready to go.

So that would say we are somewhere around a five or six on a

sale of ten. The easier way to describe it is in terms of risk, I think.

The risk you have with the non-deployed force, the force that is in

the integral and training cycle, if you have accepting contingency,

that’s a high risk contingency to get finished in the time lines that

are laid out in the war plans.

General LYLES. I have to agree with Admiral Pilling. I think you

need to look at this very, very complex equation in a lot of different

ways. The number that we sort of attest to is about 6.5 to seven,

and that reflects primarily our combat units and those that are at

the C–1 or C–2 level.

But when you look at the definition of C–1 and C–2, it doesn’t

mean that we won’t accomplish the mission, it means that the risk

will be a little bit higher in accomplishing the mission, and we

might make some trades and things like that to make sure that

those units that are at the pointy end of the spear can get everything accomplished and do it very, very successfully.

But the best number we would have to say would be 6-1/2 to 7,

and it reflects just those at C–1 and C–2.

General DAKE. Sir, the Marine Corps as a force of readiness, we

sacrifice a lot to try to keep that high, so that our deployed forces

are well-trained and equipped when they go. We have chosen to

take risks in the reserve equipments that they do not have at their

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home stations. That is where if you were to look at our ground

equipments which the readiness is high—over 92 percent of those

that’s in our possession in the active side.

If we were to go to the Reserve side, that which they have on

their stations would be above 90 percent as well, and that which

is in the depots and waiting for call is where we have chosen to

take some risk, so that is where we would find, if there were more

funding to bring readiness up, it would go to areas such as that.

But I would also say that we are balanced in the C–1, C–2 category and we are holding costs; and, in fact, you will see an improvement from the one quarterly report that is referenced I think

at the end of September or the beginning of September, and the

one in December. We have actually had some units that will in

greater number go to C–1 and C–2, so I don’t know how to quite

put a number on it for you, sir, but that’s our sacrifice to move toward readiness.

Mr. RILEY. Gentlemen, if you can’t put a number on it, I don’t

know how we ever will up here, and I guess that’s what I’m trying

to do. The last two-and-a-half years, we have constantly talked

about all the problems, but until we get to a point that we can realize on this committee where we are, because the next question is

if we are at fives and sixes and sevens now, where will be five

years from now without a major, major infusion of capital?

General DAKE. Point well taken, sir, about my not putting a

number on it so how can you. I think the answer that I would pose

to that is that as we look at where we took the billpayers, that’s

where we would look for the funding in this case, in 2001 of $1.4

billion to restore us to that which we believe is what is needed.

Mr. RILEY. Well, and I think that’s what the chairman was trying to get to a little earlier. If we are at a six or a seven now without a major infusion of money within the next four to five years,

where would you say that the Army will be five years from now if

we are at seven now?

General KEANE. We’ll decline.

Mr. RILEY. How much?

General KEANE. Probably one or two, I would imagine.

Mr. RILEY. So we will be down to fives.

General KEANE. Right. And clearly that, that is in the context of

the total readiness complexity that I was talking about. It goes beyond just a report, and that’s what your struggle is. There is no

readiness report that will satisfy that question which you have

asked. This is much more complex than that report.

Mr. RILEY. It is, and I think it’s the complexity that keeps us

from doing our job on this committee. There are so many things out

there that we need to simplify this to a term that we can go out

and we can sell it, you can sell it. If we don’t, I think we will continue to go around trying to arbitrate various provisions, and not

look at what is really required for overall force.

A few weeks ago we heard a report in the full committee about

the train wreck that is coming, and I took the little book, the little

pamphlet they gave us, took it home and read it. I will be honest

with you. It was frightening, and I guess that’s my point. If we

were starting at a ten today, or a nine or a ten, four or five years

from now maybe we would be down to a seven, but if you are tellVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 E:\HEARINGS\72364 pfrm11 PsN: 72364
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ing me we are at fives and sixes now, and we have got this train

wreck coming, especially with procurement, or the inability to have

those procurement levels, it seems to me like unless we do something very drastic within the next year or two, you guys are going

to have a problem that you can’t, almost cannot control.

General KEANE. Congressman Riley, I think you’re sensing a bit

of frustration from all of us in some respects in how do we define

this, and how do we define a good quantifiable number.

If you look as an example, I think all of the services are reflecting today; we’re addressing people issues. We’re trying to make

sure we’re addressing recruiting and retention. That helps readiness in the future. We are addressing things like modernization,

which is future readiness. We are addressing readiness itself in

terms of spares and things of that nature; and if we can keep that

up, that will help us.

The one area that I think we all are suffering from, and that

we’re all concerned about, is infrastructure, and I’ll be honest with

you, I’m not quite sure if you’re addressing three of the four, and

not addressing the fourth, whether that means you will continue to

go down, or you will level off, or slightly come up a little bit.

We’re not quite sure of the exact science in this, and I can’t give

you a good quantifiable number, but I feel positive that at least

three of the areas are being addressed positively.

Mr. RILEY. Let me give you one option. We all know the level of

deployments we have all over the world with every one of your

branches. At what time do we step up and say we can’t continue

to have all those deployments all over the world using up our men

and our equipment? At what point do we go out and ask our allies

to take a larger role?

If this Administration is not committed to adequately funding

the troop strength that we have now, when do we, and how do we,

talk to our allies about increasing their share of the burden?

General KEANE. Well, I’ll take a stab at it, sir. First of all, in

terms of the basic deployment that we’re conducting in Bosnia and

Kosovo, I think you are aware that our allies participated in both

of those deployments as well; and certainly in Kosovo, for example,

the latest deployment the Army is involved in with our 6,000 soldiers, clearly the sum of the allied involvement clearly exceeds the

Army’s participation.

I think our CINCs and the Chairman and our civilian leaders

work towards that end, to get greater participation in these operations and deployment that we have around the world, and I think

they have had some success with it. But I wouldn’t hide from you

that these deployments really take a toll on us.

I would say this, though. Our soldiers on these deployments that

you visited, and Congressman Bateman and his colleagues have

just returned from, our retention rates during those deployments

go off the charts. The Army actually exceeded its retention objectives last year by 6,100 soldiers, and we’re doing good this year.

We attribute a portion of that to the satisfaction and generally

sense of self-worth and self-esteem that comes from doing something that’s important and makes a difference in other people’s

lives, so those deployments, while they take a toll on family readiVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 E:\HEARINGS\72364 pfrm11 PsN: 72364
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ness, there is also something special that is happening to the individual soldier that’s participating.

What we have to do is make certain we are treating those deployments equitably for our soldiers, and we’re not over-burdening

them as well.

The other point I’ll make to you is, I wouldn’t hide this from you,

I mean, we are looking at the Army in terms of its size. I mean,

do we have the right size Army? Number one, we have to be able

to recruit for the Army, and we do that. And we are being challenged by that. Last year we came up 6,300 short. This year we

have made our recruiting objective in every single month to include

this month, but we know we are going to be challenged in the next

three months.

We believe we have to recruit for the size of the Army that we

have. We’re going to bring all of our war fighting divisions up to

100 percent strength by doing some things internal to the Army

that we have been unwilling to do in the past.

Those will be tough calls for us, but we’re going to take this readiness from a people perspective off the table and solve that problem

for ourselves; and we do have a study ongoing in terms of what the

size of this Army is based on the foreseeable future and the operational deployments that we’re facing.

When we’ve got that answer, we will come back and present it

to you as well as others, to the Administration. Thanks.

General LYLES. Congressman Riley, the Kosovo was a major lesson learned again for air power, and when I say air power, I’m not

just talking about the U.S. Air Force, I’m talking about Navy air

power, Marine Corps air power.

The United States did the bulk of the missions, obviously, from

the air, and we have proved once again that our modernized capabilities across the board for the three services are very, very important for prosecuting successfully and efficiently that kind of contingency warfare.

We are starting, and have started for some time, to dialogue with

our allies, to urge them to get precision guided munitions, to urge

them to get more stand-off munitions, to urge them to get the intelligence surveillance, have platforms, even to urge them to get more

airlift capabilities so we don’t have to depend just on the United

States to provide those, in those kinds of contingencies like we saw

during Kosovo.

It’s an uphill situation for them, obviously, and major investments that they will have to commit to, but we want to make sure

that we are opening this dialogue and urging them to be prepared

to take on some of these missions in the future.

Mr. RILEY. So have you met with any success?

General LYLES. At least they are listening and they’re talking

and within their budgets, to date, obviously, nothing that I could

pinpoint, but at least they’re talking about it, and I think to some

extent, some of our allies realize that they were in somewhat of— I won’t call it an embarrassing situation; they wanted to contribute

more, and did not have the sort of platforms, and those I talked

to, particularly the senior airmen in some of those countries, they

realize that they’re—they just need to stand up and be accounted

for in some of these areas.

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Admiral PILLING. Sir, if I could go back to your issue on single

number characterization of where we are going, I think the chiefs

have told you that if the OPTEMPO remains the same with the

current force structure, and the current environment for people as

far as recruiting and retention, the number is going to be $84 billion.

Mr. RILEY. That’s right.

Admiral PILLING. If you’re going to try and balance near-term

readiness and far-term readiness. It’s $84 billion.

Mr. RILEY. And I guess that’s my point. There doesn’t seem to

be a consensus to try to find that $84 billion. Without that $84 billion, where will we be four or five years from now? That’s what I’m

saying. When I read this report and looked at our OPTEMPO level,

the way it is today, if we don’t drastically reduce that, if we don’t

make some of these procurements, if we don’t get at least part of

that $84 billion, it seems to me like three or four years from now,

our soldiers and our sailors and our airmen are going to be at extreme risk that I don’t believe that we should put them in.

It is going to be up to you gentlemen to sell this, and that’s what

I’m saying. I think sometimes we make it so complicated and so

complex in these hearings when we talk about each individual

thing that is going on, that it’s hard to understand how dramatic

this change is going to be unless we do something relatively soon,

and I see no sentiment in the Administration to make that happen.

And like I said, it is beginning to frighten me. When I talked to

people on Airborne Warning and Control System Aircraft (AWACs)

last year, who had done already back-to-back six month tours, and

he said I’m getting out of this. He said I’ve got two kids at home

and I will not do it. I joined the Air Force to fly, and I love it, but

I will not be gone from my children a year and a half at a time.

We’ve got to make some very critical decisions. We either cut

back our deployments, or we put these young men and women at

an unacceptable level of risk, as far as I’m concerned.

General DAKE. Sir, could I mention—

Mr. RILEY. Yes, sir.

General DAKE. Could I talk about deployments a bit? It is somewhat different on the part of the Marine Corps insomuch as we are

forward-deployed. It is a cycling thing that we do. We base our

DEPTEMPO on new Special Operations Crafts (SOCs) off of the

East Coast, with 58 percent of the Marine Corps being in that first

term.

They really joined to do something. They joined for some bit of

adventure. We at least are seeing the stressors of constant deployments within our professional force, the ones who are beyond their

first term, now they are called to go again and now their families

are growing; that’s where I think we must find balance.

There’s two types of deployments, the types you do on a national

basis, where you sail off and do the business of the nation, and the

other that we generate ourselves to go to Twenty-Nine Palms, for

example, to train up. Either way, that Marine is away from his or

her family.

We try very hard to try to control the training deployments. We

don’t believe that the operational deployments that we have been

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given, as long as they stay in an SOC that we are manned and

equipped to do, we can handle that on a sustained basis.

We have got to control our own deployments for training and

those types of things which are our own self-generating. Now, deployments outside of those scheduled ones are the ones that will

become increasingly difficult to do.

Mr. RILEY. Gentlemen, you have a tremendous task ahead of you,

you really do. The only thing that I would like to leave you with

is just that each one of the branches, each one of you individually,

are going to have to become strong advocates, strong proponents for

additional funding or a reduction in deployments, because if not, I

think that this country faces some perilous times ahead.

I want to thank you for your candid opinions. Thank you for the

service you give to this country, and thank you for appearing before

this committee.

Thank you very much.

[Whereupon, at 3:45 p.m., the subcommittee was adjourned.]

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A P P E N D I X

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QUESTIONS SUBMITTED BY MR. BATEMAN

UNDER EXECUTION OF FUNDS

Mr. BATEMAN. Why does the Army consistently request 100 percent funding for

it operating tempo accounts and then consistently underexecute these available

funds?

General KEANE. We request full funding for our operating tempo (OPTEMPO) accounts (the readiness Sub-Activity Groups (SAGs) 111, 112, 113, 114, and 115) because they form the basis of our training requirements to provide trained and ready

forces to meet the National Military Strategy based upon the Army’s Combined

Arms Training Strategy (CATS).

However, our ability to successfully execute this training is reliant upon the training support and infrastructure available to the commander. As an example, a unit

cannot successfully conduct range training without the targets to support that

event. Targets are not part of OPTEMPO accounts, but are obviously needed to execute this training. Commanders need to balance resources to fully support training.

In addition to training concerns, commanders must provide for a minimum acceptable quality of life for soldiers and families. These quality of life requirements also

compete for scarce resources in accounts that have not been traditionally funded.

When quality of life and other essential base operations are not funded adequately,

commanders are faced with the tough decision whether to train to 100% or migrate

a small portion of those funds to other accounts. Finally, when units are deployed

for scheduled events, like peace keeping operations, or unscheduled activities, like

disaster relief, they may lose the opportunity to train on their combat vehicles, further decreasing the ability to fully execute their OPTEMPO miles.

FUTURE TANK MILE REQUIREMENTS

Mr. BATEMAN. Why is actual historical use not factored into the Army’s Training

Resource Model when determining future tank mile requirements?

General KEANE. Historical use is factored into the Army’s Training Resource

Model in the form of cost factors, and these are used to determine future tank mile

resource requirements. The Cost and Economic Analysis Center (CEAC) computes

a cost per mile based upon a three-year moving average. Future tank mile requirements are not directly related to historical miles driven. Requirements are based on

the Combined Arms Training Strategy (CATS), which provides for a mix of live, virtual, and simulation in training.

OPERATING TEMPO

Mr. BATEMAN. Where did the Army spend the $400 million intended for operating

tempo in fiscal year 1999?

General KEANE. During any fiscal year, there are several things that can happen

to cause execution of a program to differ from the appropriated amount. First, there

are transfers ($102 million) that result from undistributed congressional adjustments that are spread across all programs. Second, there are transfers ($126 million) that result from Headquarters, Department of Army either fixing ‘‘Army-wide’’

bills which result from changes in policy or economic environment, or funding new

requirements that have emerged since the budget request was submitted. The Army

leadership is actively involved throughout this process and makes the tough choices

on the most pressing requirements. After all the Congressional and HQDA transfers

are applied to the base funding, it is then sent to our Major Commands (MACOMs)

for execution. In the past two years, we have decreased the amount of the HQDA

transfers by over 60%, which in turn provides the MACOM commanders more flexibility with the funding they are provided.

The commanders in the field must balance priorities during the course of the fiscal year, often resulting in the further transfer of OPTEMPO funds. We have always

fully funded the OPTEMPO account at the expense of other readiness accounts,

such as Base Operations Support (BOS) and Real Property Maintenance (RPM). Due

to funding constraints, many of the requirements in these areas remain unfunded,

108

eventually impacting directly on our soldiers’ quality of life. OPTEMPO, BOS, and

RPM are normally the commander’s largest accounts and provide the maximum

amount of flexibility. The majority of the transfers that we make are from one readiness-related account to another, or to support training ranges, airfield operations,

and related activities; all critical elements in keeping our forces trained and ready.

In FY99, OPTEMPO funds were transferred to the following accounts: RPM ($66

million), BOS ($23 million), and Force Readiness ($52 million).

Finally, we also provide an offset to our contingency based on the forces we have

deployed. The OPTEMPO funding that was programmed for these units is transferred to our Miscellaneous Activities account to offset the costs of these operations.

In FY99, $23 million was transferred for this purpose.

TANK MILE TRAINING READINESS

Mr. BATEMAN. Because Army commanders are not achieving the 800-tank miletraining goal, how is actual training within a range of 630 to 654 tank miles, from

fiscal year 1996 through 1998, affecting readiness levels?

General KEANE. The Army requires the resources that have been provided to sustain our ability to train as well as conduct that training. There are numerous factors

such as time, personnel, equipment, ammunition, and available training facilities

that affect a commander’s training level evaluation. Reduced training funds do not

necessarily have an immediate impact on training readiness. The impact is often

subtle and cumulative over time, not manifesting itself in reported readiness until

sometime in the future. Missed training opportunities today cannot be easily made

up and will ultimately result in poorer trained units and leaders who missed critical

experience.

Under current reporting procedures, the unit commander determines the training

level for his unit by estimating the number of additional training days required for

the unit to become fully trained on its mission essential task list (METL). The

METL is a list of those critical wartime tasks the unit must be able to perform to

accomplish its wartime mission. METL proficiency is a function of training frequency, duration, and intensity. Reducing tank miles affects both the frequency and

duration of unit training events. Additionally, per Congressional guidance, the Army

continues to develop a reporting system that is more objective in nature.

O&M AND RPM BUDGET REQUESTS

Mr. BATEMAN. Why is the Army not submitting realistic budget requests that

would fully fund the costs for operating and maintaining bases and related real

property?

General KEANE. The Army submits balanced, realistic budget requests given the

top-line constraints, which preclude full funding of all readiness accounts. The Fiscal Year 2001 budget funds Real Property Maintenance and Base Operations Support at a critical level to continue operations with tolerable risk. Critical levels for

fiscal year 2001 are 96 percent of total requirements for Base Operations Support

and 69 percent for Real Property Maintenance.

READINESS/OPTEMPO BALANCE

Mr. BATEMAN. How do Army commanders balance the increased readiness risk by

decreasing the desired operating tempo requirements?

General KEANE. The commander is the one best suited to make the decisions regarding increasing readiness risk by migrating Operations and Maintenance (O&M)

funds used for unit training to other purposes. This flexibility is provided to the

commander to maximize the benefit from available funding to meet the full spectrum of the unit’s training needs as well as the installation’s quality of life needs.

The operating tempo (OPTEMPO) requirements are based on the Combined Arms

Training Strategy (CATS), which provides a menu of tasks that are associated with

events that when executed will result in a combat ready battalion. Each commander

makes an assessment of the status of the unit and determines what events to conduct and the area and degree of risk to assume. He/she may shorten or eliminate

training events or lessen their intensity with the view in mind that he/she can make

up the shortfall in the time between notification to deploy and actual deployment.

There are many variables associated with these decisions, and we rely on the local

commander’s judgment.

Mr. BATEMAN. Specifically, how is readiness affected by continually achieving less

in operating tempo goals?

General KEANE. Today’s Army is capable of fulfilling its current missions as outlined under the National Military Strategy, within acceptable ranges of risk. DeclinVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00118 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm11 PsN: 72364
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ing resources, however, has meant that commanders have, at various times, been

compelled to make choices between quality of life resourcing and training

resourcing. Commanders train their units to the extent of resources actually available. In some cases, this has meant that their readiness is less than desired, increasing risk, as reflected in their readiness reports. Increased risk in readiness

does not mean that the U.S. Army would not prevail in any scenario. Instead, it

means the potential loss in national treasure could be higher.

Mr. BATEMAN. What units are affected the most? Please be specific.

General KEANE. Units that are forced to function outside their normal METL proficiencies tend to have their readiness affected, since their activities are not directly

related to their warfighting missions. Their additional missions are not necessarily

a component of their readiness rating. In general, combat support elements seem

to be affected to a greater extent than combat or combat service support elements,

whose missions more closely approximate their METL tasks.

TRANSFER OF CONTINGENCY FUNDS

Mr. BATEMAN. For fiscal year 1997, the Army transferred over $1.4 billion from

the centrally-managed Contingency Account into O&M subactivities where it was

used such as in combat units, tactical support, and force-related training and special

activities. However, for fiscal year 1998, the Army transfer $1.6 billion from the centrally-managed Contingency Account into one subactivity for miscellaneous or additional activities. What are the pros and cons that the Army has learned by transferring contingency funds into one special account opposed to several individual subactivities like divisions and corps combat forces?

General KEANE. Accounting for the majority of Army contingency operations costs

in a single, separate subactivity account allows us to more accurately identify all

contingency costs. This includes incremental costs for direct support of the operation

and training offset costs for training not conducted due to deployment. This also allows us to clearly identify budget execution by element of resource and operational

phase. The result is also an ability to more accurately estimate the funding required

for subsequent years of an ongoing contingency, or estimate the cost of an unplanned contingency of a similar type. We found that transferring funds into several

subactivity accounts made it more difficult to separate contingency costs from normal baseline training costs.

ARNG ENHANCED BRIGADE DEPLOYMENT

Mr. BATEMAN. We’ve put a lot of resources into the National Guard enhanced brigades. How many times have they deployed, and why are they not used more often?

General KEANE. During fiscal years 1999 and 2000, six infantry companies from

the 39th (Arkansas) and 41st (Oregon) enhanced separate brigades were deployed

in support of Operation DESERT FOCUS, providing security for patriot missile batteries in Southwest Asia. Elements of the 30th (North Carolina), 45th (Oklahoma),

48th (Georgia), 155th (Mississippi), 116th (Idaho), 76th (Indiana) and 218th (South

Carolina) brigades are currently scheduled to deploy in support of Stabilization

Force (SFOR) rotations 8 thru 12 for operations in Bosnia. Presently all 15 enhanced separate brigades are fully integrated into existing warplans. The Army National Guard (ARNG) enhanced separate brigades have been utilized when the situation required and current planning has incorporated these capabilities to best support a variety of scenarios. As the Army begins it’s Transformation to a lighter,

more responsive, and more lethal force, ARNG enhanced separate brigades will be

called upon to mitigate risk as Active Component (AC) units transition to objective

organizations.

Mr. BATEMAN. Do you believe that the purchase of the M-Gator, a low-cost offthe-shelf piece of equipment, is necessary to the needs of the Army? If so, why is

it not on the budget?

General KEANE. The M-Gator would provide the Army, in particular our light

units, with an increased capability to perform their mission. The Army views the

‘‘Drop Zone Mobility Enhancement System’’ as a unit level procurement and did not

fund the system as an Army centrally managed line item in the procurement budget. However, commanders in the field may purchase the M-Gator out of their day

to day, operating funds (OMA).

Mr. BATEMAN. Do you believe that the purchase of the M-Gator will be included

in future budget requests?

General KEANE. At this time, there is no plan to include the ‘‘Drop Zone Mobility

Enhancement System’’ in future budget requests.

Mr. BATEMAN. As a light Infantryman, can you comment on the utility and need

for the system in our Light Divisions?

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General KEANE. The Army’s Light Divisions require a high degree of mobility and

must be rapidly deployable. An M-Gator type vehicle, which is easily deployed,

would provide Light Divisions with an increased lift capability that would assist in

the movement of supplies and light equipment, and the evacuation of casualties.

UNEXECUTED ACCOUNTS

Mr. BATEMAN. GAO’s recent report on O&M fund movements-Defense Budget:

DOD Should Further Improve Visibility and Accountability of O&M Fund Movements (GAO/NSIAD–00–18, Feb. 9, 2000) found that the Navy has consistently

underexecuted its funding for ship depot maintenance by about $1.2 billion or 10.5

percent from fiscal year 1994 through 1998. This subcommittee is encouraged to

learn that the Navy obligated most of its funding in fiscal year 1998 for ship depot

maintenance, however, when viewed over a five year period, the amounts not used

for ship depot maintenance need explaining.

Why did the Navy not use all of its available funding for ship depot maintenance

in light of its ship overhauls and other ship depot maintenance requirements?

Admiral PILLING. In any year of execution, requirements arise which must be

funded from within available resources. When this occurs, the Navy must balance

this new requirement against currently funded operations and commitments, including ship depot maintenance, and decide which programs will be sacrificed to accommodate the higher priority new program. Also, ship depot maintenance takes it’s

fair share of Congressional undistributed reductions which, until fiscal year 1999,

were not reflected in the appropriated amounts and thus appear to be programmatic

decreases by the Navy. Over the five year period referenced (FY 1994–98), these reductions amounted to almost $200 million. Last, there are sometimes programmatic

decisions made during the year of execution which lead to funding changes. For example, the latest QDR directed ship force structure reductions that led to the cancellation of fiscal year 1998 availabilities for ships that were to be decommissioned

as a result.

Mr. BATEMAN. Where did the Navy ultimately spend these funds if not obligated

to meet these ship depot maintenance requirements?

Admiral PILLING. As noted above, there are many different programs that may

have higher priority emergent requirements in a given year. In particular, contingency operations are often not fully financed by the Overseas Contingency Operations Transfer Fund (OCOTF), necessitating transfers, usually from maintenance

accounts which afford greater flexibility, to operating accounts.

FLIGHT TRAINING

Mr. BATEMAN. Concerns have been expressed that funding has been insufficient

in the recent past to train pilots to be combat proficient in all areas of their aircraft’s capabilities, e.g. air-to-air, air to ground, etc. The FY01 budget funds tactical

air flying hours to maintain primary mission readiness (PMR) at 85% of requirements, that same as last two years.

Given the sophistication of the systems Navy pilots have to operate, shouldn’t

funding and flying hours be increasing?

Admiral PILLING. Whenever there is an increase in the sophistication of any

weapon system there is a need for training to that capability. The issue is determining, funding, and fielding the appropriate training system for each increasingly

sophisticated task. In the case of naval aviation the answer is in a proper mix of

flight hours for dedicated training and simulator hours in a device whose capabilities and fidelity match those of the aircraft. The current budgeted flight hours will

provide the dedicated airborne training necessary as long as all the other required

elements are available. These are aircraft capable of flight, enough people to fly and

maintain these aircraft, an adequate supply of spare parts on the supply shelves,

as well as the availability of practice weapons and weapon ranges to fire them.

These training hours must not be sacrificed to sustain an increased forward presence operational tempo, nor can the funds be used resource other priorities or the

result will surely be decreased training opportunities and declining readiness. The

remaining element of this naval aviation training readiness equation, simulators,

must also be addressed. Given the expense of precision weapons and their increased

range, there are few opportunities to experience live training. Simulators with the

same high degree of sophistication as our aircraft can provide a significant portion

of the fundamental training requirements leading up to the final exam of actual aircraft weapon firing. The numbers and sophistication of these simulators must be in

balance with the previously noted elements that comprise the aviation readiness

equation. The answer to your question is in achieving this balance.

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Mr. BATEMAN. Are you confident that you can maintain aircrew proficiency, safety, and all other training requirements with this level of funding?

Admiral PILLING. As discussed above, as long as we keep all the elements of the

aviation readiness equation in balance, the budgeted hours will accomplish what

you describe.

NAVY MARINE CORPS INTRANET NMCI

Mr. BATEMAN. In June of this year, the Navy intends to award a contract to one

prime vendor who will have the responsibility for purchasing, operating and maintaining all of the Department of the Navy (DON) computers and video capabilities.

The contract is for five years with three options years. At an estimated $2B per

year, this contract could have a total value of $16B. There are currently no funds

identified in either this year’s budget or the budget request for fiscal year 2001 to

pay for this contract.

Why is the initiative, referred to as NMCI, not included in the fiscal year 2001

Budget request?

Admiral PILLING. All of the Department of the Navy claimants have traditionally

budgeted for their Information Technology (IT) network and support services in operating accounts and specifically identified modernization programs which are subsequently reported in their IT budget extracts. These requirements are based on

their unique needs. NMCI is envisioned as a new approach in contracting for IT

services within the Department of the Navy. It’s a firm fixed price, performancebased services contract. To meet our future strategic computing and communications

capability, IT is a required ‘‘utility’’ for our future, bought from the commercial sector just as we buy other types of utilities (e.g., water, telephone, and electricity). The

NMCI contract has 37 Service Level Agreements (SLA) developed using industry

best practices. Industry will be paid, or penalized, depending on their ability to satisfy the SLAs at each of our customer’s site. By managing NMCI as an end-to-end

capability under a single commercial service provider, we will be able to provide

greater access, interoperability and security to the communication and data exchange to all of our Sailors and Marines. The claimants will continue to budget for

their local needs under the NMCI contract. To give the Congress better insight into

where these funds will be coming from to pay the NMCI bill, we have prepared a

300b-like exhibit and will prepare a 53-like exhibit for fiscal year 2002 and out.

Mr. BATEMAN. Does the Navy consider this a major acquisition? Why or why not?

Admiral PILLING. The Department of the Navy does not consider NMCI to be a

major acquisition. NMCI is a service contract that will provide IT services much like

a utility. The DON and DOD have agreed that a tailored Oversight Framework is

appropriate and signed a memorandum of agreement (MOA) to this effect on March

8, 2000. The MOA was signed by the Deputy DOD CIO, Deputy DON CIO, and Deputy Assistant Secretary of the Navy (C4I). Additionally, in accordance with OMB

Circular A–11, Part III, DOD works with OMB to determine oversight requirements,

which has not yet been accomplished with respect to NMCI.

Mr. BATEMAN. Does the Navy believe that the NMCI contract must comply with

the Clinger-Cohen Act? If not, why not?

Admiral PILLING. NMCI fully embraces and implements the principles of the

Clinger-Cohen Act (CCA). Under NMCI, we are reengineering the way we do IT infrastructure planning and execution. Using industry best practices, we are improving the agency’s performance, improving both our warfighting and warfighting support missions, and making use of commercial services in our NMCI effort by adopting a seat management type approach to IT outfitting used by industry. This is consistent with our DON IT Strategic Planning efforts and with our support of the

DOD Strategic Plan. Also, as part of our NMCI effort, we will be fully compliant

with the Joint Technical Architecture (JTA), our naval Standards and Architecture

plans, and the emerging DOD Global Information Grid (GIG) efforts. We are taking

a common industry solution based approach built around the Gartner Total Cost of

Ownership model across the Department that will quantify the net benefits of our

approach. We’ve adopted industry based Service Level Agreements to measure performance of the NMCI and of the vendor selected to implement it. We’ve established

a tiered oversight process of this initiative that includes JCS, USJFCOM,

USCINCPAC, DISA, OSD, and all elements of the Department of Navy.

Mr. BATEMAN. Has the Navy discussed the budgeting implications of this initiative with OMB? If not, why not?

Admiral PILLING. Our preliminary discussions with OMB have, to date, been limited to our approach to Small Business participation. We are in the process of scheduling NMCI briefings to the OMB senior staff to discuss all of the other elements

of this initiative.

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Mr. BATEMAN. Does the Navy consider the NMCI contract as the purchase of a

capital asset? Why or why not?

Admiral PILLING. The Department of the Navy does not consider this to be the

purchase of a capital asset in accordance with the definition of capital asset in OMB

Circular A–11, Part III. Specifically, the NMCI concept is that the service provider

will own and operate the equipment and infrastructure to provide IT services, much

like a utility. The contract is a ‘‘services’’ contract, not a lease contract.

Mr. BATEMAN. Does the Navy consider the NMCI contract to be a capital lease?

If not, why not?

Admiral PILLING. No. The Department of the Navy does not consider the NMCI

contract to be a capital lease under the DOD Financial Management Regulations,

Volume 4, Chapter 7, or OMB Circular A–11. Generally, capital leases are treated

as a means to acquire an asset. The intent of NMCI is to acquire a service, not a

capital asset. NMCI is a multi-year commercial services contract, under which the

service provider will own and operate the equipment and infrastructure similar to

a utility. The DON has no legal interest or title in the property.

Mr. BATEMAN. Is the Navy fully complying with OMB Circular A–11 for its NMCI

contract? If not, why not?

Admiral PILLING. IT budget reporting requirements are documented in Part 1,

Section 53, ‘‘Information Technology’’, and Part , ‘‘Planning, Budgeting and Acquisition of Capital Assets’’. Section 53 provides guidance for the preparation of Exhibit

53, i.e., IT budget exhibit. The DON currently reports all IT resources by functional

area and major and non-major IT acquisition program in Exhibit 53 in accordance

with the OSD budget guidance. Contractual vehicles used by IT acquisition programs to acquire resources are not separately identified, except as noted below

under the discussion of Exhibit 300b. All IT resources acquired from the NMCI contract will be reported in the future in Exhibit 53 under the applicable IT acquisition

program, as is currently the case with the resources acquired from the separate, individual contracts which NMCI will replace.

Part III of OMB Circular A–11 contains guidance for the preparation of Exhibit

300b. An Exhibit 300b is required for major acquisitions (paragraph 300.3) only,

which for the fiscal year 2001 budget request OSD and OMB have mutually agreed

are the major IT acquisition programs so designated in OSD (C3I) memo of May

5, 1999 and reported in Exhibit 53 as discussed above. Currently, there are no ‘‘con- tracts’’ designated as ‘‘major’’ for which an Exhibit 300b is required.

However, because of the size of the NMCI effort and its importance to the Department, we developed and submitted a 300b-like document to Professional Staff Members from both the HAC and HASC. This action was completed by the Department

of the Navy CIO March 6, 2000.

Mr. BATEMAN. How many government employees will lose their jobs as a result

of the NMCI contract being awarded?

Admiral PILLING. The Department is currently involved in a comprehensive evaluation of both the number of civilian jobs that will be affected by NMCI implementation, and the impact that this change in jobs will have on our existing civilian

workforce.

While the Department of the Navy (DON) does not currently possess the end-toend capability that will be provided under NMCI, at the local level, DON activities

do operate IT networks and provide communication services. In many cases, these

local services are currently provided by the commercial sector. In other cases, these

local functions are performed by military and/or government civilian personnel. Consequently, while not the intent of NMCI, when DON transitions to an NMCI contract, network administration and operations, and communications positions currently performed by in-house personnel will be displaced.

Information workers are in high demand in both the private and public sectors.

Recruiting and retaining such workers is a continuing and deepening challenge. Implementation of NMCI will displace some DON employees who possess highly valued information skills from their current positions, and we will make a concerted

effort to retain these workers on the Navy Marine Corps team. Civilian employees

currently performing these functions will either have to transition into other important IT competencies within the Department, such as knowledge management, legacy systems support, application development, etc., or, if they want to continue to

work in the network operations field, will have to transition to the private sector.

A clause that addresses a right of first refusal has been included in the NMCI

Request for Proposals (RFP), to allow affected personnel to be considered for employment with the winning contractor. In addition, a provision addressing retraining opportunities has been identified as an option item in the NMCI RFP. Our on-going

evaluation will also fully consider additional options to provide assistance and support to our valuable employees during this transition process. Our expectation is

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that, through our concerted efforts, coupled with both the versatility of our IT professionals and the shortage of IT expertise nation-wide, we will be able to minimize

the impact on our civilian workforce.

We will keep you informed of our progress, and provide you with the results of

our on-going analysis.

Mr. BATEMAN. Why is the Navy not conducting a cost comparison under OMB Circular A–76 for the functions affected by NMCI?

Admiral PILLING. The issue of A–76 applicability was studied in detail and the

Department of the Navy Office of the General Counsel made a determination that

the NMCI encompasses what will become a recurring Department of the Navy need

for services that can be obtained from a commercial source. Accordingly, the policies

and guidance contained in OMB Circular A–76 and its revised supplemental handbook are applicable. However, it is the Navy’s position that the NMCI may be acquired without the need to conduct an OMB Circular A–76 cost comparison because

it falls within the exception applicable to ‘‘new requirements.’’ The secure, end-toend global functional services we will be procuring under the NMCI contract is not

a function currently performed by Department of the Navy employees or military

personnel.

Mr. BATEMAN. Please identify, specifically, how the Navy will pay for the NMCI

contract this year and in fiscal year 2001.

Admiral PILLING. Every year, the DON CIO submits an Information Technology

(IT) Budget extract to Congress that highlights the Department’s expenditures in

IT, across the board. These same funds will be used by the claimants to procure

services from the NMCI contract.

In fiscal year 2000, approximately $20 million of the Operations and Maintenance

(O&M) monies slated to satisfy our basic IT operations and service requirements

have been identified and put into ready reserves to support the beginning of the

claimant’s transition to NMCI during the last quarter of fiscal year 2000.

Three steps have been taken in our spiral maturity process for determining our

outyear funding for NMCI. The initial reference point is the Department’s $3.46 billion fiscal year 2001 IT Budget submission. The office of the DON CIO analyzed the

claimant’s fiscal year 2001 IT Budget submissions for all programs and support efforts that appeared to fund any services that would be obviated by NMCI. For the

purpose of this initial evaluation, the DON CIO office erred on the side of conservatism, excluding many appropriations and all civilian salaries. This analysis indicates approximately $1.62B of the total fiscal year 2001 IT Budget could be applicable as the NMCI source of funding. After completing this analysis, we reviewed the

current per seat cost estimates from the NMCI Business Case Analysis (BCA) that

showed an estimated $1.52B spent by the claimants in these areas. This data was

then compared with known fiscal year 2001 NMCI implementation plans that reflect

our cost projections. Please Note: The projected FY01 costs of NMCI are the cost

for number of seats transitioning to NMCI in fiscal year 2001. This cost is SOURCE

SELECTION SENSITIVE but was previously provided under protective marking.

Please see our detailed NMCI FY01 Funding Source Review submission dated

March 17, 2000.

To ensure the fidelity of the initial answers to the NMCI funding source review,

the Department’s Reinvestment in Infrastructure (RII) Group, a business management review board with senior level representation from across the claimants, is

conducting a detailed, claimant-by-claimant analysis and bottom up review of their

expenditures and IT budget submissions. Not only are they evaluating the funding

components that made up the $1.62B estimate generated by the DON CIO, they will

evaluate all CIO excluded funding appropriations and all other cost-of-doing business elements ensuring that all aspects of funding that might be obviated by NMCI

are captured.

To complete the funding source review, the results of the RII Group’s analysis will

be compared to the final NMCI contract proposal costs, after the vendors have completed their due diligence. During due diligence, the vendors will be visiting Navy

and Marine Corps bases and stations to determine what portions of the Department’s existing infrastructure can be used in their performance solution. Once determined, the Department will be credited for those investments, further reducing the

NMCI seat costs. This final review will determine if any additional adjustments

might be required in the fiscal year 2001 budget so that they may be addressed with

Congress prior to the start of execution.

Mr. BATEMAN. Why does the Navy not consider this initiative an Acquisition Program or Major Automated Information Systems Program as defined under DOD

Regulation 5000.2R?

Admiral PILLING. The Department does not consider NMCI to be either an Acquisition Program or a Major Automated Information System as defined by DOD

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5000.2–R. NMCI is a contract vehicle for ordering a prescribed level of performancebased commercial IT services at a fixed price per seat. These Information Technology services will be contracted for similar to a ‘‘utility’’ and will be funded annually by the operations and maintenance appropriation. As such, NMCI does not

meet the criteria for designation as an acquisition program.

However, the Department of Defense (DOD) and the Department of the Navy

have agreed that a tailored Oversight Framework is appropriate. We are jointly implementing the oversight framework agreed to in our March 8, 2000 memorandum

of agreement. The PEO (IT) in his concurrent assignment as the Enterprise Acquisition Manager for Information Technology (EAMIT) has been assigned responsibility

for NMCI.

Mr. BATEMAN.Does the Department of Defense, including the Office of the General

Counsel, fully agree with the Navy’s plans for NMCI and specifically to the above

questions?

Admiral PILLING. The former Deputy Secretary of Defense (DEPSECDEF), current

acting DEPSECDEF, Department of Defense Chief Information Officer (ASD C3I)

and immediate staff, Office of the Secretary of Defense (Program Assessment and

Evaluation), Joint Chiefs of Staff J6, Joint Forces Command J6, Pacific Command

J6, and numerous OSD personnel have been briefed on our NMCI efforts. We requested and obtained both ASD C3I and DEPSECDEF’s approval to release our

RFP to industry. The Joint and operational staff mentioned above are part of our

contract and technical oversight teams.

In a recent letter to the General Accounting Office, the DOD CIO, Mr. Arthur

Money, was quoted as saying, ‘‘My office fully supports the goals of the NMCI acquisition. It will establish an enterprise-wide capability within the Navy providing its

service members and employees end-to-end, secure and assured access to a full

range of voice, video and data services. The NMCI will expand operating capability

of naval forces by eliminating interoperability problems and other impediments to

productivity and speed of command, while at the same time reducing the security

risks and overall costs. As it becomes fully interoperable and secure, it is positioned

to serve as a major component of the Global Information Grid (GIG).’’

As for specific review or agreement of the OSD staff to the answers to your questions, the OSD C3I staff helped jointly prepare all of the oversight guidance on

NMCI and its designation as a Special Interest Initiative. They have not reviewed

or commented on the Department of Navy’s positions with regard to applicability

and interpretation of various provisions of A–76 or A–11. Likewise, while aware of

the strategic elements of our approach toward financing and personnel management, OSD has not specifically endorsed them.

The DON Office of General Counsel previously discussed with the DOD Office of

General Counsel DON’s position on applicability of A–76 and other related statutes.

Additionally, discussions are being initiated on the Department’s other responses as

discussed above. We will keep you advised of their progress.

FLYING HOUR FUNDING AFFECT ON READINESS

Mr. BATEMAN. Explain movement of funds intended for the Air Force’s flying hour

program from fiscal years 1995 through 1998 and what affect, if any, this has had

on readiness. Is movement of funds from the Air Force’s flying hour program continuing for fiscal years 1999 and 2000?

General LYLES. Between FY95 and FY97, the movement of funds from the Air

Force flying hour program was negligible, averaging less than .4% of the budgeted

funding. In FY98, execution of flying training programs was impacted by declining

mission capable rates and high opstempo due to contingency operations. Contingency deployments precluded full execution of home-station training sorties and, as

a result, the Air Force did not fly the hours as originally programmed. Consequently, unobligated flying hour funds were used to relieve chronic high priority

readiness shortfalls, as reported in GAO’s 8 July 1999 report: Defense Budget: Observations on the Air Force Flying-Hour Program. In FY99, we experienced a similar outcome due to increased commitments in Operations Desert Fox and Allied

Force. However, for FY00 we are currently on course to execute our flying hour

funding as programmed. Many years of high operations tempo, coupled with aging

equipment, the lack of spare parts and engines have impacted our near-term readiness. The Air Force has experienced a decline in mission capable rates of approximately 9.9% since FY94. Additionally, low retention of maintenance personnel has

caused a corresponding increase in non-mission capable for maintenance (NMCM)

rates. The Air Force is addressing these issues through increased funding for spare

parts and numerous retention and recruiting initiatives.

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FUNDING FOR PRIMARY COMBAT FORCES

Mr. BATEMAN. Will the Air Force highlight the funding for primary combat forces

and explain to what extent movement of funds has taken place in this subactivity,

particularly in fiscal years 1994 to 1996?

General LYLES. According to the GAO’s report, Defense Budget: DOD Should Further Improve Visibility and Accountability of O&M Fund Movements (GAO/NSIAD–

00–18, Feb. 9, 2000), the Air Force moved the following funds from the Primary

Combat Forces subactivity in fiscal years 1994 through 1996.

Constant 1999 dollars in millions

Fiscal Year

Difference

between

Congressionally

designated and

obligated

Amounts

Percent

Change

1994 ................................................................................................................................ 71.7 2.5

1995 ................................................................................................................................ 148.3 4.8

1996 ................................................................................................................................ 217.2 7.9

The GAO report addresses Congressionally designated funds which it defines as

the budget request plus or minus any allocated changes made by the Congress.

In an effort to provide field commanders maximum flexibility to respond to changing mission requirements, the Air Force does not generally limit the movement of

funds between subactivity groups unless specifically required to by law. However,

limitations are placed on the high priority readiness activities, and the Air Force

does report funding adjustments in these activities in the annual ‘‘End of Year’’ report. The movement of funds reflects the ever-changing situations faced by our field

commanders and, given the substantial lead-time (∼2 years) between initial programming and actual execution, these variances are not surprising.

FUNDING SOURCE FOR REAL PROPERTY

Mr. BATEMAN. The Air Force reported that it moved $155 million into its operating forces real property maintenance subactivity but did not indicate where the

funds came from in the fiscal year 1998 high-priority readiness-related transfer report. The Air Force did state, however, the funds were needed for repairs to runways, maintenance hangers, utility systems, roofs and other real property assets.

What was the funding source for the $155 million used for real property maintenance in fiscal year 1998? Depending on the subactivity that was the source for this

funding, how was effected-subactivity impacted?

General LYLES. Funding was sourced by field commanders from various accounts

which would suffer the least impact. Specific reporting systems do not track the specific movement of funds.

MISSION CAPABILITY RATES

Mr. BATEMAN. What are your current mission capable rates and what has been

the impact of the last few years decline in these rates?

General LYLES. The current mission capable (MC) rate for total Air Force (Active,

Reserve & Guard) is 74.2% for April 2000. This is a 2.8% increase from the previous

month. Active Air Force MC rate is 77.4% and the Reserve Component MC rate is

69.7% (both as of April 2000).

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MC rates for fighter aircraft as a group have increased over the past 12 months,

rising from 74.9% in May 1999 to 77% in April 2000. (A–l0, F–l5, F–l5E, F–l6, and

F–ll7)

Bombers MC rates (B–1 and B–52 combined) have varied over the past 12

months, from a low of 61.4% in Sep. 1999 to a high of 70.6% in the month of Oct.

1999; the April 2000 rate is 64.8%. The monthly rates have been slightly higher but

fairly consistent with the previous fiscal year.

Strategic airlifters overall MC rates have decreased over the past 12 months, from

73.7% in May 1999 to 68.4% in April 2000. (C–5, C–17, and C–141)

Other aircraft, particularly the KC–135, have diminished the overall AF MC rate.

The KC–135 has suffered significant problems with the stab-trim actuator which

grounded much of the fleet during the past six months, but this situation improved

in April 2000.

The annualized MC rate for Total AF is 72.4%. This is a 1.1% decrease from the

FY99 rate of 73.5%. The annual MC rate for the Active AF is higher at 75.8%; the

Reserve Component falls below Total AF with an MC rate of 67.2%.

IMPACT: Decreased MC rates have driven down sortie generation capabilities,

which in turn, have negatively impacted the ability of combat forces to maintain

their required level of training. It should be noted that improvements in monthly

MC metrics through April provide leading indication on annual rates. If that trend

continues, the annual rates should begin showing the improvement later this year.

Note: FY00 annual numbers are Oct. 1999 through April 2000. Aggregate AF figures

are based on the following aircraft: A–10, F–15, F–15E, F–16, F–4 (through FY98),

F–111 (through FY97), B–1, B–52, C–5, C–17, C–141, E–3, C–130, and KC–135.

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DECLINE IN AIRCRAFT MISSION CAPABLE RATES

Mr. BATEMAN. Is the steady and substantial decline in aircraft mission capable

rates reason for concern? Specifically, are current mission capable rates for any of

your key aircraft, such as the C–5, lower than the rates that you need to have to

meet the demands of your most demanding contingency missions?

General LYLES. The Air Force needs to maintain a strong global readiness and

warfighting capability to support our national military strategy. The nature of rapidly responsive aerospace power requires high levels of readiness. Therefore, our

steady and substantial decline in aircraft mission capable rates is reason for concern.

While the overall strategic fleet has shown a decline in mission capable rate, the

C–5 is of greatest concern. The importance of our C–5 fleet was highlighted during

Kosovo operations. Although the C–5s flew only 34% of our overall intertheater missions, they were critical in moving over 50% of the outsize equipment along the deployment phase from CONUS to Europe. According to the Chairman of the Joint

Chiefs of Staff (CJCS), Allied Force was ‘‘the most precise and lowest-collateral-damage air campaign in history-with no U.S. or allied combat casualties in 78 days of

around-the-clock operations and over 38,000 combat sorties.’’ A portion of that success belongs to the C–5’s responsive movement of precision munitions from CONUS

into the AOR.

The C–5’s readiness remains a significant concern. The C–5, which is important

to every peacetime deployment we undertake today, is even more critical in an

MTW scenario where we are required to move significantly more unit equipment

from CONUS. Based on the Mobility Requirements Study-Bottom-Up Review Update (MRS–BURU), the C–5 Galaxy fleet is expected to achieve a 75% MC rate in

order to meet warfighting CINC requirements. Today, the C–5 maintains an MC

rate of approximately 61%. Substandard MC rates put wartime scenarios at risk.

Moreover, a substandard MC rate means fewer tails in peacetime to support ongoing daily ops, humanitarian relief efforts, Presidential support missions, and contingency operations.

The Air Force is putting together a C–5 modernization program that will work

to raise C–5’s reliability but even if we succeed, based on the time required to complete RDT&E and subsequent modifications, we will not see MC rates rise significantly until 2005, and assuming full funding for these programs, we will not reach

the 75% MC rate until approximately 2014. Air Mobility Command is examining its

current and forecasted combat power projection shortfalls, using the Mobility Requirements Study 2005 (MRS–05) scenarios, in its ‘‘Oversize and Outsize Analysis

of Alternatives.’’ We are hopeful that the recommendations from that analysis will

suggest an operationally effective, best-value force mix of C–5 and C–17 aircraft solution to meet today’s and tomorrow’s Oversize/Outsize requirements.

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UNACCEPTABLE AIRCRAFT MISSION CAPABILITY RATES

Mr. BATEMAN. Which aircraft have potential problems in maintaining acceptable

mission capable rates, and what are the required and actual mission capable rates

of each?

General LYLES. Several airframes as outlined below are experiencing difficulties

in achieving and maintaining acceptable mission capable rates. This is due to a combination of supply and maintenance issues, such as lack of skilled maintenance technicians, retention problems, prior years underfunding, effects of aging aircraft,

OPTEMPO, and technical surprises.

AIRCRAFT LEAD MAJCOM

GOAL

ACTUAL

MC

RATE

B–1 ................................................................................................................................................. 67% 54.8%

C–5 ................................................................................................................................................. 75% 58.6%

E–3 ................................................................................................................................................. 85% 73.4%

KC–135 ........................................................................................................................................... 85% 66.8%

ACTIONS TO IMPROVE MISSION CAPABLE RATES

Mr. BATEMAN. What action is being taken to improve the mission capable rates

of these aircraft?

General LYLES. The Air Force has implemented several actions to improve mission

capable rates. In particular, we have focused on improving spare parts support to

the warfighter through improved funding, expedited parts deliveries, partnership

with Defense Logistics Agency (DLA) to improve support and funding for low demand—high cost aviation assets, and stabilization in the depot transition. Also, we

are improving the supply processes and incorporating those into the logistics transformation plans.

In FY99, DOD added $904M in cost authority to support increased sales and to

purchase or repair spare parts. The objective was to restock the shelves with critical

spares and reconstitute the fleet from Kosovo operations. In addition, with the help

of Congress in the FY00 PB, Air Force was able to fully fund the increased consumption of primary operating stock.... spares to support the peacetime flying

hour program. In the case of engine components, typically the most expensive and

hardest to support spares, the Air Force Materiel Command has implemented innovative contracting methodologies. The General Electric Engine Corporate Contract

(for example) reduces the acquisition lead-time for its fighter engine components

from 400+ days to 90–150 days. Also, Logistics Transformation efforts are underway

to improve internal processes by increasing accountability/responsibility for Supply

Chain Managers, reducing customer wait time, enhancing total asset visibility, and

improving metrics to track execution.

Anecdotal evidence indicates spares support to the field is generally improving.

Backorders for reparable spare parts have been reduced 54% from December 1998

to April 2000. The latest monthly (April 2000) Total Not Mission Capable for Supply

rate for fighter aircraft is 11.8%, the best seen in 23 months. The Air Force remains

cautiously optimistic that overall MC rates will continue to improve.

FUNDING CONTRIBUTING TO LOW MISSION CAPABILITY RATES

Mr. BATEMAN. Was insufficient funding a contributing cause of these lower-thanrequired mission capable rates and, if so, what requirements were not funded and

what caused the funding shortfall?

General LYLES. Yes, insufficient funding was a contributing factor to the decline

in mission capable rates. Spare parts shortages arose from funding problems in the

1990s, and are a major contributor to the Air Force’s readiness decline over the past

several years. Downsizing of the Air Force spare parts inventory went too far. Supply systems were pushed to the limits as Air Force units deployed more often. As

a result the non-mission capable rate attributed directly to supply shortfalls increased from 8.6% in FY91 to 14% in FY99.

In FY99–01, Congress, DOD, and Air Force took specific actions to address shortfalls in spare parts funding. This combination of support fully funded the validated

peacetime spare parts requirement. However, after working through Kosovo lessons

learned and completing a thorough review of the levels required in the Readiness

Spares Package (RSP) kits, there is an FY01 shortfall of $75M, which is included

on the Air Force UPL.

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AIRCREWS NOT GETTING THE RIGHT FLYING HOURS

Mr. BATEMAN. The subcommittee understands that many of the aircrew members

deployed for contingency operations are getting a lot of flying hours, but not necessarily the right flying hours.

Is this still the case, or if not, what has been done to correct this situation?

General LYLES. Home station flying is made up of almost 100 percent training.

On the other hand, flying in support of contingencies is defined by the contingency

air tasking order. Its requirements are by nature often narrow in scope, repetitive,

and offer little opportunity to train to the full spectrum of normal requirements. The

result is that sometimes aircrews can find themselves needing to accomplish certain

training events even though they have flown as many or more hours than they

would have during the same time at home station. Most aircraft training events

must be accomplished every 45 to 90 days. Many of these are generic and can be

completed while flying in support of the contingency. Sometimes, however, all training cannot be accomplished. To relieve this situation, the Air Force has implemented

several initiatives. First and foremost, the implementation of the Air Expeditionary

Force concept provides stability and predictability necessary to accomplish training

and most operational requirements. This concept provides for aircrew training

throughout its 15-month cycle ensuring that they are trained to meet operational

needs during its 90-day rotation. A spin up period immediately prior to deployment

provides the opportunity to ‘‘front-load’’ training. A reconstitution period following

redeployment provides the opportunity to restore all unit mission areas. Second, at

Operation NORTHERN and SOUTHERN WATCH up to 5 days a month are dedicated to training. Last, in light of the Air Expeditionary Force, Air Combat Command is re-examining aircrew training requirements with the intent of aligning

training with the AEF schedule. This initiative is still being developed but promises

to provide insight into better ways of keeping aircrew training on track during contingencies.

Mr. BATEMAN. How concerned are you with this shortfall in depot maintenance

funding and will this impact on your ability to meet your mission requirements and/

or future contingency operations?

General DAKE. The depot maintenance backlog is currently at a manageable level

and poses no serious threat to near term readiness. However, a continued rise in

backlog will ultimately degrade readiness as Operating Force Commanders are

forced to apply scarce O&M funding towards maintenance of equipment that cannot

be inducted to the Depot for repair. Funding the depot maintenance shortfall is a

proactive measure which will reduce depot maintenance backlog to a more acceptable level while allowing Operating Force Commanders the ability to use their resources according to their financial plan.

READINESS FUNDING

Mr. BATEMAN. From your point of view, what readiness critical requirements are

unfunded or underfunded in the fiscal year 2001 budget requests? What are the

near-term and long-term readiness impacts of this underfunding?

General KEANE. We are nearly $1 billion dollars underfunded in readiness requirements for fiscal year 2001. Our most pressing underfunded requirements include duty military occupational specialty qualification and leader development for

the Reserve Component, some Title XI program costs, test and evaluation, training

devices and range modernization, installation information infrastructure modernization, sustainment systems technical support, and real property maintenance. These

programs have been funded only to essential levels to reduce risk to a tolerable degree.

In the near-term, we will continue to lag behind in duty military occupational special qualification, thus creating a wider gap to cross in funding to attain our required level of service-wide skills qualification. Testing constraints will delay new

equipment fielding. Our infrastructure will continue to erode and lack essential

connectivity to support training and deployments, and our maintenance of critical

combat systems will be less efficient. Each of these individual effects will degrade

our current operational readiness. In the long-term, attaining necessary levels of

warfighting capability by the timeframes envisioned by our National Military Strategy will be placed at greater risk as individual modernization programs (hardware

and equipment) are delayed due to lack of funding.

Admiral PILLING. The Navy’s highest priorities as reflected in the Chief of Naval

Operations’ Unfunded Requirements List of 9 February 2000 are in the areas of personnel and readiness. These personnel and readiness priorities are as follows:

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1. Personnel End Strength and Recruiting Incentives

77.0M

2. Readiness Aircraft Procurement, Navy APN–6 Spares

174.0M

3. Readiness Fast Combat Support Ship AOE Depot Maintenance

40.0M

4. Readiness Ship Depot Maintenance

142.3M

5. Readiness Real Property Maintenance

136.6M

6. Personnel Career Sea Pay

118.7M

7. Readiness Amphibious Assault Ship LHA Midlife

32.0M

8. Readiness Training Ordnance

26.0M

9. Readiness Laser Guided Bombs and Bomb Kits

20.0M

Any funding that can be appropriated to address these unfunded areas would be

of great benefit to Navy preparedness.

We are meeting our near-term obligations but not funding these priorities will

place the Navy’s long-term readiness at risk and continue to make it increasingly

difficult to prepare our deploying battle groups for deployment. Battle groups that

are not deployed or preparing for deployment are in C–3 or C–4 status and current

underfunding in these critical readiness areas makes it increasingly difficult to

move them through the Inter-Deployment Training Cycle to a C–2 and ultimately

C–1 readiness status.

General LYLES. The increased costs of maintaining our aging aircraft fleet has forced the Air Force to allocate an additional $300 million into Depot Level Reparables (DLRs) in FY01. These funds would otherwise have been used for base support

and real property maintenance requirements. Both of these programs directly support quality of life and our worldwide mission and were already fiscally constrained.

In addition to shortfalls due to aging weapons systems, base support requirements

($145 million) and Real Property Maintenance ($278 million for mission critical

projects) are further stressing our O&M budget. Furthermore, during development

of the FY01 Budget, the Air Force has identified 24 programs totaling over $2.8 billion in critical unfunded requirements in the categories of Readiness, People, Infrastructure, and Modernization. Each contributes to near-term or long-term readiness

of the Air Force. In addition to DLR costs, our top readiness shortfalls are engine

repair production ($75 million), readiness spares packages (RSPs) ($62 million), and

training munitions ($79 million). Infrastructure requirements include $1.1 billion for

MilCon and $650 million for Military Family Housing. Finally, modernization requirements total over $400 million for KC–135 re-engining, C–32 communications

upgrades and the EELV.

General DAKE. As our Commandant, General Jones, has testified, his focus is on

the support of the Operating Forces and, specifically, the primacy of the Marine AirGround Task Force (MAGTF). The readiness of the MAGTF rests on four pillars:

(1) our Marines and their families, (2) our legacy systems, (3) our infrastructure,

and (4) our modernization effort. These pillars must remain strong in their own

right and in the correct proportion so that the structure of readiness remains solid

now and in the future. Thus, our challenge is to maintain the individual strength

of each pillar, while achieving a proper balance in our application of resources

amongst the pillars. Because of the need to balance readiness, we were unable to

fully fund all of our requirements.

As General Jones discussed in his 9 February letters to the Chairman and Ranking Minority Member of the Committee, the Marine Corps’ most critical Fiscal Year

2001 shortfall total approximately $1.5 billion. These shortfalls are spread across

our four readiness pillars. They include recruiting and retention initiatives, family

housing, barracks and other quality of life projects in support of our Marines and

their families. Critical support for our legacy systems through depot maintenance,

corrosion control, and Operating Forces is also included. Bridging modernization

through updating our existing ground and aviation platforms continues to be

stressed. Concerning our aging infrastructure, accelerating both family housing and

military construction projects, and devoting more resources to maintenance of real

property is highlighted. Finally, increasing the pace of modernization for both our

ground and aviation equipment is identified for additional funding.

We have and will continue to maintain our near-term readiness—mainly through

the efforts of our young Marines. But hard work is becoming overwork as our major

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ground and aviation weapon systems are facing block obsolescence. The key to the

health of Marine Corps readiness is the modernization of our equipment and infrastructure. During the 1990’s, in order to maintain near-term readiness, we had to

forgo much of our planned modernization. Because of this, many of our ground and

aviation weapon systems now face block obsolescence. Adequate infrastructure and

modernization has become a near-term readiness issue. These modernization and infrastructure shortfalls are reflected in our unfunded priority list. Over $1.0 billion

of the $1.5 billion total unfunded priorities is Research and Development or Procurement funds to upgrade/extend the life of or replace our legacy systems. An additional $0.3 billion is infrastructure support—Family Housing, Military Construction

and Real Property Maintenance.

CONTINGENCY OPERATIONS READINESS IMPACT

Mr. BATEMAN. The deployment of personnel in support of contingency operations

(CONOPS) has increased over the last few years. This increased pace of operations

has fallen most heavily on small number of critical units with unique specialties,

including special forces, electronic warfare, and military police. What other types of

forces have been heavily effected by CONOPS?

General KEANE. An analysis of Army units indicates that our air defense artillery,

armor, and military intelligence units have also been affected by CONOPS. The effect of CONOPS on particular types of Army units is a function of the number of

forces available to respond to requirements. Units with relatively small numbers in

the force structure are subject to greater involvement in support of CONOPS.

Whereas unit types with larger force structure may have the ability to more evenly

distribute deployments over a larger structure. For example, our Patriot units have

recently experienced an increase in deployment to provide support for CONOPS.

The Army has taken steps to reduce impacts to these units including sourcing of

the Kosovo and Bosnia missions under a single corps to improve deployment predictability and enhanced readiness.

PACE OF OPERATIONS

Admiral PILLING. While EA–6B’s supporting the electronic warfare mission cited

above, are the platform within the Navy that has been impacted the most by contingencies in recent years, SAND DECK and EP–3 aircraft are also small communities

that have been heavily tasked during contingency operations.

General LYLES. In general, all our units are suffering from the effects of the high

TEMPO and subsequent downturn in readiness as a result of our participation in

worldwide contingencies over the years. Those units and career fields that were

heavily engaged in Kosovo operations this past year were particularly hard hit.

There are, however, certain career fields and units that have been tasked more

heavily than others. This is true not only for active duty units but also some reserve

component assets. These include our ‘‘Low Density/High Demand’’ (LD/HD) systems

such as our command and control assets; our intelligence, surveillance, and reconnaissance assets; and our special operations and rescue assets. Other systems such

as airlifters, tankers, and some specialized fighters have also seen heavy taskings.

The personnel associated with these systems historically have been experiencing

TEMPO in excess of the Air Force target maximum of 120 days deployed in a 365

day period. These skills include linguists, intelligence specialists, airborne warning

and control personnel, combat controllers, and para-rescue personnel as well as load

masters, specialized maintenance career fields, and flight engineers. Security forces

personnel, special tactics teams, civil engineers, and communications specialists

have also had a history of high deployment rates. Currently, in-flight refueling technicians, services personnel, fire protection specialists, vehicle operators/maintainers,

fuels, and munitions personnel round out the top skill levels reported as having

high TEMPO.

General DAKE. Marine Corps readiness has not been significantly impacted by

long-term or prolonged contingency operations. In the past, our normal forward-deployed forces have met most contingency requirements, and in terms of unit deployments, the scope of our deployments have not gone much beyond our normal deployment level. The Marine Corps averages 23,000 Marines forward deployed at any

given time, and with the exception of a few specialized personnel or high-demand

low-density assets, it has been these Marines that have been used routinely to respond to contingencies through out the world. The predictability built into our unit

deployments has been essential to reducing the stress associated with higher operational tempo. Achieving predictability while complying with National Military

Strategy and the Department of State’s Forward Presence Agreements is accomVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00131 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm11 PsN: 72364
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plished through the execution of our time tested rotational deployment cycles and

our participation in the SECDEF directed Naval Force Presence Policy.

READINESS OF AFFECTED FORCES

Mr. BATEMAN. How has the readiness of these forces been impacted over the last

few years?

General KEANE. The overall impact of extended deployments on the readiness of

these units has decreased. This is due in part to our ability to maintain training

proficiency while deployed. As deployment locations mature, units are provided

training opportunities to sustain warfighting skills.

Reducing contingency operations (CONOPS) deployment time reduces degradation

of warfighting skills. For combat units, readiness reports indicate a degradation of

warfighting skills as they train for and focus on peacekeeping missions, conduct the

mission, and redeploy. While in a deployed status, units are frequently not afforded

adequate range and training facilities to conduct collective training on warfighting

skills. For example, armor and infantry units do not have available facilities or time

to sustain and conduct crew gunnery qualifications and unit level maneuvers when

deployed in support of CONOPS. Only upon redeployment can these units execute

training plans on collective warfighting tasks. This trend is not as severe for combat

support and combat service support units because portions of their wartime tasks

may be conducted under the conditions of the CONOPS mission. Because extended

CONOPS require a rotation of units, up to three units may be involved in the various stages of preparation, execution of the mission, and retraining of warfighting

skills. As such, the CONOPS impacts on readiness have an affect on up to three

units.

Admiral PILLING. The mission readiness of these units was basically unaffected

by the surge in operating tempo caused by contingency operations. There were some

parts issues caused by the increase over planned flying hours. If surge operations

had continued there would have likely been impacts to training readiness.

General LYLES. Unpredictability and duration of TEMPO demands have led to declining retention across the force, but most severely in mid-career pilots and sergeants with special skills. These increased peacetime deployments negatively impact

wartime training and participation in exercises. Quality of life issues emerge as

stay-at-home and deploying forces struggle to cope under strain of increased

TEMPO. We are hopeful the Expeditionary Aerospace Force (EAF) concept will

structure the Air Force to respond to increased peacetime demands of our National

Military Strategy and enhance our ability to maintain wartime readiness for both

the near- and long-term.

General DAKE. The readiness of our forward-deployed forces has not been significantly impacted by long-term or prolonged contingency operations. Most contingency

requirements have been responded to by our normal forward-deployed forces or by

rescheduling normal deployments to a newly required location. The Marine Corps

averages 23,000 Marines forward deployed at any given time and these Marines are

used routinely to respond to contingencies throughout the world. Prolonged contingencies, such as Somalia, and peacekeeping endeavors have provided unique training opportunities to Marine Corps forces but come at the expense of increased operating costs and wear and tear on our legacy equipment.

DEPLOYMENT IMPACT ON PERSONNEL READINESS

Mr. BATEMAN. The deployment of personnel in support of contingency operations

has increased over the last few years. This increased pace of operations has fallen

most heavily on a small number of critical units with unique specialties, including

special forces, electronic warfare, and military police.

Would you please identify key indicators that would provide the best measures

of deployments’ impact on personnel readiness?

General KEANE. There are several indicators the Army uses to evaluate deployment impact on personnel readiness. These indicators include the number of training days a unit requires after a deployment to achieve combat readiness, the skill

tempo by military occupational specialty (MOS), and the deployment tempo of highdemand/low-density units. Additionally, a semi-annual survey of military personnel

provides anecdotal information on the impact of deployments on soldiers. The results of analyses conducted on the affects of deployment on retention provide only

general conclusions. However, studies show some level of deployment is acceptable.

It increases morale, unit cohesion, MOS competency, and job satisfaction, all of

which improve personnel readiness. However, when the length and frequency of deployments increase, it negatively affects the Army’s ability to retain soldiers and

man the force and, therefore, negatively affects readiness.

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Admiral PILLING. SORTS, PERSTEMPO, and Retention rates are indicators that

would identify the impact that contingencies have upon involved units.

General LYLES. People continue to be our most vital resource—they are the most

critical component of readiness. The intense demands we place on them as the perform the Air Force missions around the world require highly motivated, highly

skilled, professional airmen. However, we are performing more missions with fewer

people. Indeed, today’s active duty force is smaller than at any other time in Air

Force history.

Recruiting and retention of our force are key indicators in the readiness equation.

The negative retention trend exacerbates the high operations TEMPO problem because it places greater burden on those who continue to serve. Quality of life issues

emerge as stay-at-home and deploying forces struggle to cope under strain of increased TEMPO.

The EAF concept helps ensure that the nation has trained aerospace forces, as

well as providing our people relief from the high TEMPO in a turbulent world.

General DAKE. The key indicator’s that best measure contingency deployments’

impact on personnel readiness would be the unit commander’s assessment rating of

his personnel readiness as reported in the Status of Resources and Training System

(SORTS) and the unit’s personnel retention rate. Marine Corps forward-deployed

forces maintain a high personnel readiness rating and traditionally these units have

high retention rates.

PACE OF OPERATIONS

Mr. BATEMAN. What are the advantages and disadvantages of changing the force

structure to increase the number of critical units with unique capabilities, assuming

no increase in total force structure?

General KEANE. The Army uses the Total Army Analysis (TAA) process to optimize the force structure to meet its requirements. Since the end of the Cold War,

these requirements have changed and, in some cases, placed increased demands on

certain units with unique capabilities. As we resource the force structure in preparation to fight two nearly-simultaneous major theater wars (MTW), we consider the

requirements for these unique units in smaller scale contingencies (SSC) and engagement operations. We have used the discipline of the TAA process and its associated force feasibility review to analyze the impacts of activating, converting, and inactivating units and to prioritize those force structure changes to ensure we properly execute our core mission of winning the Nation’s wars. Increasing the number

of unique units is an advantage to enabling execution of our engagement and SSC

missions, but we must assess the risk of our ability to execute the MTWs if the increase to these unique units is made at the expense of our warfighting units. As

we progress through the Army’s Transformation, we will continue to optimize our

force structure to maintain the Army’s ability to operate across the full spectrum

of requirements.

Admiral PILLING. The challenge is to respond to the dynamic strategic environment facing our Navy within the framework of a constrained budget. The fact that

we have a shortage of critical units with unique capabilities today is one indication

that the QDR 1997 battle force may not be enough in the future. Fewer ships, aircraft, and personnel are available today to accomplish the same naval missions, coincident with a marked increase in crisis response and contingency requirements—

there is no elasticity left in the fleet. However, undue shifting of resources to react

to today’s problems mortgages the future and is not the answer; we must merge

both. Our resource investments must be linked to the strategic organizing principles

derived from the Navy’s vision of the future. Fundamentally, the solution lies in

matching our investments for the future—modernization and recapitalization—to

the pace of emerging threats so that readiness is not sacrificed. Resource allocation

must be driven by strategic vision if we are to build the right Navy for today, and

tomorrow, while staying under the top line.

General LYLES. Assuming no increases in force structure, any changes to force

structure would be to the detriment of other programs. It does not make sense to

decrease other programs to gain these advantages.

General DAKE. The size and composition of the Marine Corps’ force structure is

based on the 2 MTW requirement. Without an increase in force structure, increasing

the number of units of a given type will result in the reduction in the number of

units of another type required to meet the 2 MTW requirement. While affording increased capability in one area, increasing the number of unique units without an

increase in force structure simultaneously increases risk in another area.

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FUNDING FOR TRAINING CENTERS

Mr. BATEMAN. It is the Subcommittee’s understanding that the budget information contained in these reports (budget year, current year, and prior year) is available when the President submits the budget request in early February, yet the committee continually receives O&M justification material by late February/March

timeframe. We are encouraged to learn that, for the first time, all the services will

be providing these materials on the Internet. Thus, it is expected the information

will be available earlier because printing delays will no longer be a consideration.

Yet it is the end of February and none of the services have their justification material available on the Internet. Given that O&Mthe largest appropriation groupin the

Defense budget, what efforts are underway that would allow for details in justifying

this request to be available earlier?

General KEANE. The current budgeting schedule and milestones within the planning, programming, budgeting, and execution system do not allow for earlier submission of budget justification materials. To facilitate access to budget justification

material, the Department of Defense requires all unclassified budget justification

material be posted on an access-controlled Internet web site by all submitting organizations. This allows wider access to the justification material by interested parties

on Capitol Hill.

Admiral PILLING. The Navy has ongoing efforts to streamline and automate the

information provided as justification of our O&M budget estimates. This has shortened our response time somewhat in the past year, and promises to produce even

more time savings in the future, allowing us to send justification material to OSD

and OMB more quickly after their budget decisions are finalized.

General LYLES. The Air Force provides O&M budget justification as required by

OSD and OMB. These materials are required within 30 days of submission of the

President’s Budget and we will make every effort to meet or exceed this requirement.

General DAKE. We are not aware of any efforts to provide O&M justification earlier. As a small portion of the overall Department of Navy budget, we strive to meet

the deadlines set by the Secretary of the Navy to support the official submission of

justification materials. Once the President’s Budget is made available to the Congress, we quickly engage with the Congressional Staff regarding the details of the

O&MMC budget.

FUNDING FOR MAJOR EXERCISES

Mr. BATEMAN. To what extent are you fully funded for major exercises, and for

the advanced combat unit training levels you desire?

General KEANE. Combat training center rotations are the biggest exercises our

units conduct. The National Training Center, the Joint Readiness Training Center,

and the Combined Arms Maneuver Training Center are the crown jewels of Army

collective training. In fiscal year 2001, the training centers’ operations are fully

funded to conduct scheduled training rotations. Because of competing requirements,

the Army has taken risk with the recapitalization and modernization of the combat

training centers (CTCs) that support these exercises. The opposing forces (OPFOR)

tracked vehicle fleet of M551 and M60A3 tanks and M113 armored personnel carriers continues to age, requiring extensive maintenance costs as these systems

quickly approach the end of the useful lives. The instrumentation systems, built 20

years ago with 1970’s technology, are losing feedback capability and will not support

digital equipment. To continue to garner the maximum training benefit from the

centers, and keep them relevant to current and future operational environments, we

must modernize the training centers’ prepositioned fleets, OPFOR fleets, and instrumentation systems to provide maximum training benefit for, and feedback to, the

rotational units.

Admiral PILLING. Today, Navy’s readiness is adequate to meet all operational

commitments. On any given day, approximately 35% of our forces are deployed

around the world and ready for combat if necessary. The remainder is at home in

various stages of readiness as they prepare for their next deployment. The Navy

trains for a deployed combat ready presence and completes all required training as

part of the Inter-Deployment Training Cycle. The uncertain future of the availability of the Vieques training range continues to pose a significant challenge to our

Carrier Battle Groups as they try to find a means to establish combat proficiencies

prior to deployment.

General LYLES. The FY01 President’s Budget fully funds the Air Force requirement for major exercises and advanced combat unit training, with the following exceptions.

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As identified on the FY01 Air Force Unfunded Priority List (UPL), there is a shortfall of $125M in FY01 for training munitions. These munitions are critical to

train aircrews to 100% of combat ready requirements. Without this, degraded readiness levels could be experienced, or WRM munitions might be expended for this

training.

Although not on the Air Force FY01 UPL, there is also a shortfall in the JCS Exercises program. The FY01 President’s Budget requested $37.1M. This supports only

60% to 70% of Theater CINC requirements. The Appropriation committee marks reduced the $37.1M by $12.2M to $24.9M. This supports only 40% to 50% of the Theater CINC requirements.

General DAKE. The Marine Corps has four major training and exercise programs.

These programs are Combined Arms Exercises (CAXs) at Twentynine Palms, Ca;

Mountain Warfare Training Center (MWTC) courses at Bridgeport, Ca; Weapons

and Tactics Instructor (WTI) courses at Yuma, Az; and our Marine Expeditionary

Unit (Special Operations Capable) (MEU(SOC)) pre-deployment workups on the east

and west coasts and in Okinawa, Japan. These four programs are essential for us

to provide trained and ready Marine units. As Service priorities, these programs are

fully funded.

PREPARATION AND CONDUCT OF MAJOR EXERCISES

Mr. BATEMAN. To what extent have reductions in training ordnance and declines

in mission capable rates affected the preparation for and conduct of these exercises?

General KEANE. Exercises tend not to be impacted by either of these items as

commanders focus available resources on those units preparing for and executing

the exercises. Approximately 65 percent of the annual Army ammunition budget

funds training ammunition to meet historic execution levels. We have been very successful meeting our C–1 readiness goals with this level of training ammunition support, but the Army Vision anticipates increased ammunition requirements with increased training costs. Despite shortages of funding, mission capable rates have not

substantially impacted exercise training or execution.

Admiral PILLING. Navy’s deployed readiness remains satisfactory, but because of

our cyclical readiness posture, we expect non-deployed readiness to be at a lower

level. The Navy has leveled the steady downward trend in readiness, after reaching

a high in the 80s. The enhancements provided in the fiscal year 2000 budget address some of our most pressing needs. With the help of Congress, we have applied

considerable resources to ameliorating the problem, but it will take time for the

positive effects to be reflected throughout the Fleet and operating forces.

General LYLES. There have been no major impacts to preparation for and conduct

of exercises due to training ordnance reductions or declining mission capable rates.

The impact of ordnance shortages on preparation for and conduct of exercises is

mitigated because of the priority commands tend to place on major exercises vice

day-to-day training. Additionally, the Air Force strategy is to use War Reserve Material munitions when possible to partially fill the training shortfalls. Although this

strategy facilitates higher rates of training, it is also decreasing our WRM Munitions stockpile and results in a slight increase in the risks associated with a 2–MTW

scenario. As identified on the FY01 Air Force Unfunded Priority List (UPL), there

is a shortfall of $125M in FY01 for training munitions.

In cases where applicable weapon systems have experienced a decline in mission

capable rates, we are using the same strategy of exercises taking priority over home

station training.

General DAKE. Competing priorities for fiscal resources do not allow us to fund

training munitions to the required levels stated in our aircraft Training and Readiness manuals. The Marine Corps in conjunction with Naval Aviation is recommending that beginning in FY02 we base line training ordnance funding at 70% of

that required by aircraft T&R manuals. Currently, the fleet trains with those munitions made available to them and to date has not experienced a degradation in

training readiness significant enough to effect SORTS. Some of the ordnance used

to support training comes from warfighting inventories which are currently not

being adequately replaced to maintain the inventories at present levels. At this

point, the overall affect of reduced training ordnance and decreased mission capable

rates is subjective and difficult to measure. Our aviators continue to deploy ready

for combat and required training is being accomplished. However, the quality of

training suffers when training munitions are funded at less than optimum levels.

TRAINING CENTER REQUIREMENTS

Mr. BATEMAN. The committee is aware that individuals and units arriving at the

major training centers are not adequately trained to compete with resident opposing

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forces when they initially arrive at the training centers. To what extent have you

had to lower the training center requirements for newly arriving individuals such

as pilots?

General KEANE. The Army appreciates the committee’s support of our combat

training centers. The CTCs remain the Army’s crown jewels for training our leaders

and soldiers in executing their wartime mission essential tasks. The centers achieve

this enhanced training readiness through strict adherence to doctrinal training

standards. Units arrive at the CTCs at different levels of training readiness due to

operational mission requirements or limited home station training. Based on these

differences, the CTCs, in coordination with the division commander of the training

unit, establish training conditions for the unit in order to ensure the soldiers and

units receive the best possible training experience. This condition setting allows soldiers and units to achieve significant improvement in their training readiness. If

soldiers or units are at risk because of training weaknesses, then conditions are created to allow the soldier or unit to safely conduct the training.

Admiral PILLING. Navy’s deployed readiness remains satisfactory, but because of

the cyclical nature of our deployments, we expect non-deployed readiness to be at

a lower level. As reflected in recent Navy ‘‘Bathtub’’ graphs, the post-deployment Air

Wing Readiness rating drop off is occurring earlier in the readiness cycle and is falling deeper. As a result, Air Wings remain at lower readiness levels longer during

the Inter Deployment Training Cycle. This lower level of readiness requires a steeper ramp-up prior to deployment. At the Naval Aviation Strike Warfare Center,

Fallon, this equates to pilots arriving for training less prepared than in the past.

Additionally, training requirements have increased over the past as the threat, systems, weapons and tactics have become more complex and the opportunities to train

with required systems have decreased.

General LYLES. The Air Force continues to produce quality combat pilots who

have the skills needed to perform the Air Force’s flying missions; evidence their success in Operations Allied Force and Shining Hope. During Allied Force our sustained combat operations equaled that of a major theater war, as the Air Force flew

the majority of the NATO’s 38,000 combat sorties. We provided over 900 personnel

and flew more that 700 airlift sorties in support of Shinning Hope, providing civil

engineering, logistics, and security for many thousands of the more than 1.3 million

displaced Kosovars.

However, maintaining a mission ready aircrew force has become increasingly

more difficult for several reasons. Operations tempo (OPTEMPO) has increased

fourfold since 1990. Additionally, a strong economy continues to draw large numbers

of pilots from the military to the airlines. The challenges have been significant from

the maintenance perspective as well. The effects of increased OPTEMPO, low retention of maintenance technicians, aging aircraft and equipment, and lack of spare

parts end engines have combined to cause decreased aircraft mission capable rates.

Implementation of the AEF is but one example of our efforts to improve the quality of life of our Air Force people. Our airmen are well trained, motivated and ready

to serve. As a result of outstanding support from the Administration and Congress

we’ve taken a number of steps to improve retention. Pay table reform and enhanced

bonuses for pilots and other critical specialties will all go a long way toward closing

the wage gap between our airmen and their civilian counterparts. To offset the pilot

shortage, the Air Force has doubled its pilot production since the mid-90’s. In FY99–

01, Congress, DOD, and the Air Force took specific actions to address our shortfalls

in spare parts funding. In the Air Force FY00 and 01 President’s Budget, we fully

funded the spare parts validated requirement.

As laid out in the Air Force’s FY01 budget program and beyond, a balanced and

integrated approach that focuses on four fundamentals—people, readiness, modernization, and infrastructure—is key to the Air Force maintaining a quality aircrew force whose size and readiness enable it to accomplish the mission today and

tomorrow. Continued congressional support will facilitate the essential readiness

and other improvements the Air Force needs to continue to produce quality combat

pilots, and remain the world’s preeminent aerospace force.

General DAKE. The Marine Corps has not had to lower training center requirements for newly arrived units or pilots. Our training program is not designed, nor

do we expect, to have combat units or pilots arrive fully trained when they arrive

at our training center.

At our principal training center in Twenty-nine Palms, we conduct 10 Combined

Arms Exercises (CAX) a year.

The CAX Program is the centerpiece of the Marine Corps’ live-fire unit training.

It uses a building block approach which sequentially trains and integrates all combat systems into a full combined arms live-fire evolution. The mission of the CAX

program is to train a Marine Air Ground Task Force (MAGTF), centered around a

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reinforced rifle battalion (the Ground Combat Element or GCE). Emphasis is on

planning the integration of fire support and mechanized maneuver in a desert environment, and then executing the plan with the full array of ground and air weapons

live-fire. As the premier expeditionary and live-fire combined arms and maneuver

training program in the United States, participating CAX units enjoy many unique

training opportunities not duplicated anywhere else.

Commanders receive approximately three days of instruction focused on the tactical skills necessary to successfully employ combined arms in a mechanized desert

environment. These classes emphasize such skills as fire support coordination and

engagement area building.

The first week of CAX focuses on company level training at the 400 series ranges.

Individual Marines receive intensive, professional instruction and rehearsed live-fire

practical application of fire-and-movement techniques and fortified positions clearing procedures. As individuals, fireteams, and squads perfect their live-fire skills

under the close, personal observation of experienced, tactical instructors/evaluators,

the training progresses into platoon and company level live-fire combined arms attacks.

The second week of CAX focuses on mounted (helicopter and assault amphibian

vehicle (AAV)) tactics. The training then logically evolves into battalion level combined arms evolutions which synergistically bring together all elements of the

MAGTF in offensive and defensive scenarios. Detailed after-action reviews (AARs)

follow each evolution to reinforce the positive and negative lessons learned at all

levels.

The CAX program culminates in the third week with a three day final exercise

(FINEX) designed to increase the Marines’ understanding of the effects of both his

weapon system and those that will support him on the battlefield. This FINEX is

a live-fire exercise that does not include force on force training.

TRAINING

Mr. BATEMAN. The Chairman of the Joint Chiefs of Staff’s (CJCS) joint training

exercise program continues to require a large commitmentin funding, personnel, and

resources. How do we keep cost down while conducting the necessary training? Are

you adequately funded to participate in these exercise? What operations tempo

(OPTEMPO) concerns do you have with the current level of Joint Chiefs of Staff exercises?

General KEANE. Army funding in support of the CJCS exercises program has been

significantly reduced during the last few years. Starting in fiscal year 1999, Army

funding for CJCS exercises has been reduced 30 percent ($58.2 million to $40.9 million). Funding constraints have required the Army to reduce participation in CJCS

exercises in recent years. Unified commands and Army component commands analyze every training event in CJCS exercises to ensure that Army forces receive the

maximum training value for resources expended.

The 30 percent reduction in Army funding for CJCS exercises which was implemented in fiscal year 1999 still allowed the Army to support the Commanders in

Chief (CINC’s) critical joint training requirements. Because of additional Congres- sional reductions in Army support to CJCS exercises in fiscal year 2000 ($10 million), the Army is not adequately funded to support the CINC’s critical joint exercise

requirements. It has been necessary to reduce Army participation in CJCS exercises

due to Congressional funding reductions.

We are very concerned with OPTEMPO and will continue to make every effort

to keep it at an acceptable level. While CJCS exercises increase Army OPTEMPO,

the primary contributors to increased OPTEMPO levels are operational commitments in Kuwait, Bosnia, Kosovo and the other force presence requirements.

Admiral PILLING. The significance of declining readiness among non-deployed

forces is that these units constitute critical follow-on forces that are expected to rapidly deploy in the event of a Major Theater War (MTW). The deeper the ‘‘bathtub’’ becomes, the greater the risk to being able to respond with combat-ready, followon forces. The Chairman of the Joint Chiefs of Staff recently assessed higher risk

for accomplishing a two MTW scenario. This, in part, was due to the readiness degradation observed among Navy’s non-deployed forces.

JCS TRAINING PROGRAM

General LYLES. We keep cost down while conducting the necessary training by restructuring, realigning, consolidating, and elimination.

Restructuring involves changing the forces involved in the exercise. This may involve changes in the numbers and/or types of forces participating, as well as their

employment locations. For example, United States Air Forces, Europe participated

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in some exercises by flying from home station instead of deploying to another location.

Realigning can be accomplished by changing deployment, employment, or redeployment dates. This can have significant advantages by enhancing joint training

through participation in multiple exercises while decreasing deployment or redeployment times for the forces involved and utilizing air mobility assets more efficiently.

This may involve a slightly longer time away from home for the forces involved but

reduces the number of man-days and potentially eliminates the requirements for a

second or third deployment.

Consolidating allows the CINCs and the Air Force to combine exercises to meet

multiple objectives. This works well when different CINCs can use the same overarching exercise to execute one or more exercises. For instance, TRANSCOM executed TURBO CHALLENGE in conjunction with PACOM’s RSO&I. Combining exercises in this manner allows the Air Force to have personnel accomplish several different training objectives during a single deployment.

Due to our current fiscal constraints, we are not able to adequately fund 100%

participation in these exercises. Although not on the Air Force FY01 Unfunded Priority List (UPL), there is a shortfall in the JCS Exercises program. The FY01 President’s Budget (PB) requested $37.1M. This supports only 60% to 70% of Theater

CINC requirements. The FY01 Appropriation Committee marks reduced the PB request of $37.1M by $12.2M to $24.9M. This supports only 40% to 50% of the Theater

CINC requirements. For example, USAFE program has been funded at approximately 63% of the total requirements since FY96. Wholesale exercise cancellation

has been averted by the selective reduction of participation and by operating from

home stations, reducing readiness values of the exercises. A reduction in FY01 may

force USAFE to curtail or cancel current planned events in support of several joint

and combined exercises at the expense of readiness and engagement in Europe and

Africa. In addition, USAFE’s capability to work and fly with other allied nations and

to stand up JTFs for real world operations will suffer.

Overall, the effects on OPSTEMPO from the exercise program is only a small part

of total OPSTEMPO and PERSTEMPO. JCS exercises account for 1.4% of the time

personnel are on temporary duty (TDY) while contingencies account for 22.7% of

personnel TDY time.

General DAKE. The Marine Corps places a high priority on joint training and exercises. Joint and Service exercises are complementary forms of required Service combat proficiency training and not mutually exclusive. Joint exercises allow the Marine Corps to demonstrate its ability to rapidly project forces globally, and also enhance interoperability with other Services, allies and coalition partners. The key to

funding, planning, and conducting Service and joint exercises is to ensure we maintain the proper balance between them.

Our Marine Force commanders strive to meet the requirements of multiple commanders. Unlike other Service component commands which characteristically support only one geographic combatant command, each Marine Force supports three

combatant commanders’ exercise and engagement programs: The Commander, U.S.

Marine Corps Forces Atlantic (COMMARFORLANT) supports U.S. Joint Forces

Command, U.S. European Command, and U.S. Southern Command, and the Commander, U.S. Marine Corps Forces Pacific (COMMARFORPAC) supports U.S. Pacific Command, U.S. Central Command, and the sub-unified command, U.S. Forces

Korea.

KEEPING JOINT TRAINING COSTS DOWN WHILE CONDUCTING NECESSARY TRAINING:

The best way to keep joint training costs down is to ensure that we are conducting

only necessary joint training. From a Service perspective, ‘‘necessary joint training’’

is based on joint warfighting requirements. These requirements should be the driving factors behind all Joint Training System (JTS) events. To be ‘‘requirementsbased,’’ exercises should be scheduled and conducted by forces needing to meet those

joint training requirements. Once a force successfully performs all its required

tasks, it is then considered trained and ready for joint operations. Any joint training

for that force after it meets all its joint training requirements is redundant.

A major challenge to ‘‘keeping joint training costs down while conducting necessary training’’ is that all joint exercises are not based on the joint warfighting

training requirements for the forces involved. Combatant commanders also view

joint exercises as theater engagement opportunities. Service components are tasked

by their combatant commanders to participate in exercises beyond those required

for their training in order to support other Service components, staffs, and theater

engagement events. From the perspectives of the force provider and the actual parVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00138 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm11 PsN: 72364
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ticipating forces, an exercise is an exercise and the same costs are there whether

it’s warfighting requirements based or engagement requirements based.

JCS EXERCISE FUNDING:

In recent years, JCS exercise funding has decreased, with decrements coming in

the year of execution, while joint exercise and engagement requirements have increased. Marine Forces have been placed in a dilemma that challenges their Servicejoint exercise balance: either justify to one or more combatant commanders why

their respective exercises won’t be supported, or fully support all the exercises by

taking operation and maintenance (O&M) funds from their Service programs. The

funding for Service participation in JCS exercises has not kept pace with the increased joint exercise and engagement activities required by the combatant commanders.

OPTEMPO CONCERNS:

We have OPTEMPO concerns with the increasing number of joint exercise and engagement activities for our finite number of operational units.

Our Marine Forces’ staffs are also challenged by the hectic ‘‘commander-stafftempo’’ to meet the planning and administrative requirements of these multiple exercise programs. One typical joint exercise usually features several conferences for

concept development and initial, mid, and final planning. Besides these temporary

additional duty (TAD) requirements, the commander and his staff must also train

to respond to real-world contingencies in any of their respective combatant commands’ theatres. Contingency support in one theatre often does NOT eliminate simultaneous exercise support in another supported theatre.

PERSONNEL TRAINING

Mr. BATEMAN. In your personal opinion, are the personnel within your respective

commands receiving the required training to develop the necessaryskills to perform

all of the tasks that will be assigned to them?

General KEANE. I am confident in our training doctrine and our leaders’ abilities

to apply it in their training programs to produce trained and ready units. The primary objective of our training strategy is to produce soldiers, leaders, and units

trained to a specific Army standard. Army training is adequately resourced to execute the combined arms training strategies to achieve a standard of readiness that

supports execution of the National Military Strategy. The combined arms training

strategy is an overarching concept that provides training strategies for America’s Army. They are task-based, two-year training management programs that use proponent-developed strategies to support unit training. Combined arms training strategies will continually evolve and be refined as units apply these strategies in developing their training and resource requirements.

Admiral PILLING. As part of an effort to reduce the workload on our sailors, we

issued a directive that reduced the number of inspections and assist visits imposed

on the Fleet during the Inter-Deployment Training Cycle by 25%. By consolidating

training evolutions and eliminating redundancy, where it made sense, we have

achieved greater efficiency. The additional time given back to the commanding officers allows them to conduct unit training and at the same time improve the quality

of life of Sailors.

General LYLES. Our forces are well trained today to perform their missions. The

Kosovo operation showed that we have the best-trained force in the world even with

the many stresses on our personnel and readiness training. However, the 400% increase in the number of deployed forces since the end of the cold war is straining

the ability of the Air Force to continue to meet its training requirements and readiness. High operations tempo, aging equipment, and the cumulative effect of too few

dollars raises concerns about future readiness. To ensure the Air Force can maintain its quality of training and readiness in the future will require a decrease in

tempo by increasing the force structure and/or reducing our commitments.

General DAKE. Yes. We have developed Occupational Field training tracks which

allow all Marines to accomplish tasks/missions appropriate for their rank and experience level.

FUNDING FOR TRAINING CENTERS

Mr. BATEMAN. In your personal opinion, are the training centers in your commands adequately funded and do they have all the necessary equipment to perform

their training?

General KEANE. In fiscal year 2001, the training centers’ operations are adequately funded to conduct scheduled training rotations. The recapitalization and

modernization of the centers, however, are not adequately funded. The opposing

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forces (OPFOR) tracked vehicle fleet of M551 and M60A3 tanks and M113 armored

personnel carriers continues to age, requiring extensive maintenance costs as these

systems quickly approach the end of the useful lives. The instrumentation systems,

built 20 years ago with 1970’s technology, are losing feedback capability and will

not support digital equipment. To continue to garner the maximum training benefit

from the centers, and keep them relevant to current and future operational environments, we must modernize the training centers’ pre-positioned fleets, OPFOR fleets,

and instrumentation systems to provide maximum training benefit for and feedback

to the rotational units.

The training centers are given high priority due to initial entry training requirements, but there are still significant unfunded needs for life cycle replacement of

organizational clothing and individual equipment, training aids and devices, conduct

of field training exercises, barracks maintenance, and garrison support. Additional

funding is needed to support new training for a digital force while continuing to

train analog systems. Likewise, leader development and self-development programs

require additional funding to keep pace with Army Transformation and digitization

of the force.

Funding for repair parts, range modernization, combat training center (CTC) modernization, replacement of furniture, and maintenance and upgrade of simulators is

much lower than required. Requirements for training aids, devices, simulators and

simulations (TADSS) at training bases have either been filled, partially filled, not

filled, or are in need of upgrades due to tactical system change, refurbishing due

to equipment age, or lack of repair parts. This includes modernization of the CTCs.

Constrained resources either in the training mission area or in program manager

programs contribute to shortfalls in total quantities of TADSS being fielded to the

training base or to the lack of upgrading or refurbishing the TADSS currently fielded.

Additionally, changing force structure and the fielding of new systems have aggravated the situation at training bases due to the requirement to keep old TADSS

needed to train old systems still in the Active and/or Reserve components. Additionally, inadequate TADSS levels and TADSS configured with obsolete systems reduce

the ability to train on all required tasks, provide adequate hands-on time, and

causes increased TADSS usage to meet the training load.

Admiral PILLING. Training centers have a finite number of aircraft available for

training and compete with deploying Carrier Air Wings for parts and maintenance

personnel to support these aircraft. As an example, the Navy Strike and Air Warfare Center (NSAWC) has an adequate number of older variant F–14s/F–18s to accomplish their training mission. However, these older aircraft are inherently less capable and require increased maintenance support to maintain a Ready For Training

status. Further, parts support is provided at a lower level of priority than for deploying Carrier Air Wing aircraft, and aircraft maintenance is accomplished within

the constricts of a civilian contract rather than by Navy assets.

In order to achieve the NSAWC mission, we augment NSAWC aircraft (on a limited, ad-hoc basis) with aircraft from a Reserve Composite Squadron (VFC–13). As

a longer term solution, we are working with the Air Force to upgrade the quality

of the adversary aircraft.

General LYLES. The Air Force strives to procure and utilize training equipment

and simulators used by Technical Training Centers that is the same or similar to

what is used in the field. There are significant deficiencies. The 10 Mar. 00 Air

Force Inspection Agency ‘‘Eagle Look’’ report on Aircraft Maintenance Training Devices Management identified 25% of 223 training devices as not being current with

the weapon system they support; therefore, they could not be used for training.

When new operational systems are fielded today, training equipment needed to support the system is procured at the same time as the operational system. This was

not true for past legacy systems. For example, some Space Operations training for

legacy systems are conducted using outdated, homegrown systems unlike what is

used in the field. This will continue until the entire legacy system can be replaced.

A primary concern is the sustainment of training equipment once it has been procured. Adequate funding is not always readily available to maintain training equipment that matches the field. Your continued support and assistance will help us

continue to match training and field equipment.

General DAKE. Yes, The funding posture for 29 Palms is a total of approximately

$60M in fiscal year 2001. Maintenance of Real Property (MRP) and Base Operations

Support (BOS) make up over 70% of this funding. The Enhanced Equipment Allowance Pool (EEAP) makes up 17%. Funding is sufficient to cover maintenance and

personnel requirements. The funding posture is similar to the rest of the Marine

Corps in that funding is not robust, but adequate to support the mission without

degrading readiness.

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TRAINING EQUIPMENT

Mr. BATEMAN. In your personal opinion, is the equipment that the training centers within your respective commands train with the same or similar to the equipment that trainees will be assigned to upon completion of training?

General KEANE. Equipment at the training centers is similar to equipment in the

field but I would caveat that training modernization, to include the combat training

centers, is not keeping pace with force modernization. In many cases, our training

base receives equipment years after a trainee’s arrives at their follow on unit.

Some soldiers are being ‘‘trained down’’ to outdated automation systems rather

than ‘‘trained up’’ to the latest systems already in the field because the available

equipment will not accept the upgraded software. This necessitates additional training time at the soldiers gaining unit to bridge the gap.

Admiral PILLING. The Navy trains and deploys onboard the same ships and aircraft they train with during the Inter-Deployment Training Cycle. Every effort is

made at our fleet training commands to provide a training environment similar to

at sea conditions.

EQUIPMENT SIMILAR THAT TRAINEES WILL BE ASSIGNED

General LYLES. For the most part, training equipment and simulators used by

Technical Training Centers are the same or similar to what is used in the field.

However, there are significant deficiencies. The 10 Mar. 00 Air Force Inspection

Agency ‘‘Eagle Look’’ report on Aircraft Maintenance Training Devices Management

identified 25 percent of 223 training devices as not being current with the weapon

system they support; therefore, they could not be used for training. When new operational systems are fielded today, training equipment needed to support the system

is procured at the same time as the operational system. This was not true for past

legacy systems. For example, some Space Operations training for legacy systems are

conducted using outdated, homegrown systems unlike what is used in the field. This

continues until the entire legacy system can be replaced.

Technical training’s biggest problem is sustaining training equipment once it has

been procured. Just recently, AETC was able to replace outdated 386 computers at

Keesler AFB, where communication/computer training is conducted, with state-ofthe-art computers. Unfortunately, adequate funding is not always provided for technology refresh efforts needed to keep training equipment current, matching what is

used in the field. While funding has been provided for hardware, no funding has

been programmed for interactive courseware development-training modernization

that is critical in ensuring students arrive mission-ready to their first duty stations.

Sustaining training equipment due to rapidly changing technology is difficult to

fund in today’s fiscally constrained environment.

For Airlift/Tanker, Fighter, SOF, and Air Battle Manager flying training most

equipment is the same or similar to equipment used in the field. C–130s training

at Little Rock is performed exclusively on C–130Es, while the operational fleet consists of various models (E, H1, H2 and H3). Since C–130Es represent only about

43% of the total C–130 fleet, most operational units must accomplish some difference training on their assigned model aircraft. This training varies from model

to model. E-to-H1 training may require only a short top-off course, whereas E-toH3 training is much more extensive. The new C–130J (and the future C–130X) are

different enough from the current fleet and each other to require their own unique

training systems. The C–5, C–17, and C–141 fleet at Altus is representative of the

operational fleet. However, unlike the C–17 and C–141, the C–5s’s cargo compartment trainer is inadequate (a metal platform with metal poles defining the width

and breadth of the cargo compartment only). Load masters depart Altus as unqualified loadmasters. At their home they require an average of 120 days to achieve full

mission ready status, to include survival school, thus driving a bill for operational

units and impacting their C-ratings. The KC–135R fleet at Altus is not compatible

with the KC–135E training some AFRC/ANG crews receive. The R-model and Emodel have different engines, engine instrumentation, electrical systems, and auxiliary power units. Crews go to a follow-on difference course (2 weeks) to fly the Emodel after training at Altus. In addition, while the front-end crew on KC–135R

models fly in a full-visual color display environment with up-to-date avionics, the

boom operators (who deliver the fuel—aircraft’s primary mission) train on 1960s

circa technology, two dimensional ‘‘pong-like’’ screens with circa 1950s/1960s technology simulated communications and life support equipment. The result is some

negative learning and added flying required for boom operator students. [Booms do

not drive sortie generation, pilot students do.] Neither AETC nor AMC were able

to secure funding in the Program Objective Memorandum (POM) for an upgraded

simulator although both commands supported it. F–16s at Luke AFB are Block 25

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and 42. No operational units have these blocks of aircraft. Even though Block 25/

30 and Block 40/42 aircraft are similar, there are enough differences to impact

training, since AETC aircraft are frequently not upgraded to the level of the aircraft

in the field. NVG training is still being worked as an issue, and the Block 50 HARM

Targeting System is a very different weapon system and mission that will require

academic training at Luke followed by flight training once operational. Training

equipment for the F–22 is being procured as part of the acquisition process and will,

therefore, be the same as fielded aircraft. For Special Operations Forces, the MC– 130H Talon II is the same version for both training at Kirtland and in the field.

However, for the MH–53, training is accomplished using an older J-model while the

field uses the M-model which has an improved navigation and electronic warfare

suite. Students trained in the J-model require additional training and certification

at their operational units in the MH–53M. Additionally, in the MC–130, Kirtland

trains crews in the MC–130P (Combat Shadow), an AFSOC version of the HC–130.

The Combat Shadow has improved navigation systems, but an older version radar

than the ACC field units. For HH–60 training, the same version helicopter is used,

but without the Integrated FLIR (Forward Looking Infrared) system that allows enhanced crew capabilities for night/low visibility conditions. For AFSPC and AMC future crewmembers the UH–1N is the same version for training at Kirtland and in

the field. The training equipment used for Air Battle Managers is the same or similar to equipment used operationally.

General DAKE. The equipment at our Formal Training Schoolhouses is the same

or similar to that which our Marines will use when they reach the Marine Operating Forces.

LEVELS OF TRAINING

Mr. BATEMAN. In your personal opinion, are you, within your respective services

able to accomplish the level of training required by the organizations that trainees

are assigned?

General KEANE. Yes. The principal goal of initial entry training units is to develop

soldiers of character who are competent in their warfighting and technical skills,

possess warrior spirit, successfully contribute to their first units, and successfully

complete their first enlistment. We maintain a dialogue with the gaining units to

gauge the quality of our product. We balance unit requirements with our ability to

deliver trained soldiers within the limits of time, money, and available resources.

There are sometimes resource constraints that do not allow us to expose soldiers to

every piece of equipment they may encounter at their first unit, but we deliver soldiers with the fundamental skills that provide the basis from which units can further develop them into seasoned veterans.

Admiral PILLING. The Navy’s primary combat training is conducted during the

Inter-Deployment Training Cycle. Our ships and aircraft undergo maintenance and

sharpen warfighting skills and proficiencies that have migrated to a basic level due

to crew turnover and a lack of opportunity to train while in maintenance periods.

Advanced training allows us to deploy combat ready troops. The Navy has found

that the cyclical posture makes the most effective use of constrained resources. However, this efficiency means that funding shortfalls, when they occur, have a greater

and more rapid impact today than in the past.

General LYLES. Our forces are well trained today to perform their missions. The

Kosovo operation showed that we have the best-trained force in the world even with

the many stresses on our personnel and readiness training. However, the 400% increase in the number of deployed forces since the end of the cold war is straining

the ability of the Air Force to continue to meet its training requirements and readiness. High operations tempo, aging equipment, and the cumulative effect of too few

dollars raises concerns about future readiness. To ensure the Air Force can maintain its quality of training and readiness in the future will require a decrease in

tempo by increasing the force structure and/or reducing our commitments.

General DAKE. There are no readiness impacts that I am aware of that can be

traced back to shortfalls in the institutional training base.

ADEQUACY OF TRAINING

Mr. BATEMAN. Forces engaged in peace operations often lack the opportunity to

fully train in their warfighting skills. What efforts are being taken to provide adequate training when these forces return to regular units?

General KEANE. Since the end of the Cold War, the Army has significantly increased its role in peace operations. We have deployed countless soldiers and units

across the globe to perform humanitarian and combat tasks. In every deployment,

the Army has captured the lessons learned, integrated them into our training base,

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and trained them at our combat training centers. Last year, General Shinseki mandated that units would execute a deployment exercise as part of their battle command training program warfighter exercise. Additionally, the Combat Maneuver

Training Center and Joint Readiness Training Center execute mission rehearsal exercises for units selected for deployment to Bosnia or Kosovo. This training prepares

soldiers and units to handle the arduous tasks associated with peace operations, as

well as maintain combat readiness. We have found that it takes roughly a year to

return these soldiers and units to a high readiness state once they re-deploy to

home station. This readiness is achieved through annual training requirements for

weapons, individual soldiers, and unit training.

Admiral PILLING. The Navy prepares itself during the Inter-Deployment Training

Cycle to conduct a broad spectrum of operations. Whether we are flying air strikes

over Kosovo, or maintaining a forward presence in the Gulf our forces are ready to

conduct combat missions from the sea.

General LYLES. Returning units enter a ‘Pause’ period followed by a ‘Normal

Training and Exercise’ (NTE) period, in accordance with AEF procedures. The

length of time required to regain pre-deployment skill levels is dependent on the

length of the previous deployment, the experience level of the crews, as well as the

types of missions and aircraft flown. Weighing these factors, the retraining time is

scheduled based on the extent the unit was deployed and the personnel and operations tempo they maintained. The Pause and NTE time frame, for other factors

(training, equipment, deferred maintenance, and manpower), is also very dependent

on the specifics of each unit/capability.

Genera DAKE. Whenever a unit or detachment is deployed apart from the parent

unit for a period of time, leaders and commanders at all levels make an assessment

of the subordinate units’ capability to execute its warfighting missions upon return.

If a unit’s warfighting capability has been degraded, then leaders and commanders

will design an accelerated training program to assist the unit in regaining proficiency in individual mission essential tasks and overall unit capability. For units

at home station, the training will involve exercises and training events in and

around the home station that address warfighting deficiencies. Additionally, units

may be scheduled to participate in a Combined Arms Exercise at Twenty-nine

Palms, California, or a unit may be scheduled to enhance individual and unit skills

at the Mountain Warfare Training Center in Bridgeport, California.

Units forward deployed, both Marine Expeditionary Units (Special Operations Capable) (MEU(SOC))s, as well as infantry battalions, artillery batteries, and fixed

wing and rotary wing squadrons deploying as part of the Marine Corps Unit Deployment Program (UDP), have an aggressive schedule of events during their deployment that normally includes large scale exercises involving some degree of

sustainment training. For example, from April through September 1999, 26

MEU(SOC) participated in Operation SHINING HOPE, providing security to Albanian refugees fleeing Kosovo; Operation NOBLE ANVIL/ALLIED FORCE, NATO’s

bombing of Kosovo; and Operation JOINT GUARDIAN, NATO peace enforcement of

Kosovo. While conducting port visits following these operations, 26 MEU(SOC) was

tasked to provide support to Operation AVID RESPONSE, earthquake relief operations in Izmit, Turkey. Following the termination of U.S. support to Operation

AVID RESPONSE, 26 MEU(SOC) immediately went into preparation for two significant bilateral training exercises designed to work on improving relation with the

participating nations, while also providing valuable sustainment training for the

Marines and sailors of 26 MEU(SOC). Units participating in the Unit Deployment

Program are also scheduled to participate in exercises that take place in the Pacific

theater. The Foal Eagle and Balikatan series of exercises are two examples of these

exercises, which provide excellent individual and unit sustainment training opportunities.

Mr. BATEMAN. Given the high pace operations, a smaller force structure and constrained resources, can you say unequivocally that today our forces are receiving the

same quality training and training experience and are obtaining levels of proficiency

across the spectrum of skill, requirements as five or ten years ago?

Admiral PILLING. Carrier Battle Groups today, in general, are deploying at a level

of readiness below where they were a decade ago. While nearly every unit in the

past decade has deployed combat-ready, that degree of readiness has diminished

over time. It is important to note that Defense Planning Guidance specifies a range

of readiness each unit must be within before entering their theater of operations.

Over the past decade, Navy has remained within this range.

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QUALITY TRAINING

General LYLES. Today we operate throughout the world with a 40% smaller force

structure and with two-thirds fewer overseas bases than only a decade ago. As a

result, almost 40% of the deployable active air force are operating outside the U.S.

from 12 overseas bases and 16 forward operating locations. Deployments have become a way of life for our airmen.

The Expeditionary Aerospace Force (EAF) concept represents a transformation

from Cold War operations, changing how we organize, train, equip and sustain our

forces to meet the challenges of today’s global security environment. Organized

around 10 EAF’s employed in pairs for 90 days over a 15-month cycle, the EAF concept provides better trained aerospace forces to the CINC’s while adding predictability and stability to the lives of our airmen.

The combination of several years of constant high operations tempo, aging aircraft

and years of underfunding our spares account have taken a toll on readiness and

understandably raises concern for the future. Recent operations in Kosovo though,

reinforced the fact we have the best-trained force in the world. Our fiscal year 2001

budget program is based on sustaining our decisive fighting force through a balanced program that addresses today’s readiness while fostering innovative solutions

to the challenges of the future. We continually scrutinize the state of our overall

readiness and with the help of Congress are taking positive steps to correct deficiencies. To ensure the Air Force can maintain its quality of training, proficiency

and readiness in the future will require the continued support of the Administration

and Congress.

General DAKE. The readiness of our Operating Forces is the highest priority for

the Marine Corps. It was ten years ago and remains so today. Not only does the

training standards we hold ourselves to remain high, but we have strengthened the

way we make and transform Marines. We recruit the highest quality men and

women. We retained our proven, tough, demanding recruit training program and enhanced it to ensure our Marines are ready to prevail in the future. Following recruit

training, these new Marines come under the Cohesion program, which carries them

as a team through their military occupational specialty training into the Operating

Forces, resulting in more cohesive units. This transformation process is sustained

through the reinforcement of core values and by holding Marines strictly accountable throughout their careers. Our quality training and transformation process provides stronger, smarter, and more capable Marines who have the maturity and flexibility to meet the challenges of the 21st Century battlefield. We cannot use the term

‘‘unequivocally’’ because the yardsticks to measure ‘‘now’’ and ‘‘ten years ago’’ are

not available because both technology and the type and size of the anticipated adversary have changed. However, we can say that in many cases Marines are receiving better training than they were. For example: Technology infusion at the Marine

Corps Communication Electronics School has reduced the time to train, improved

retention and decreased attrition in Basic Electronics training. The Training Development System, implemented in the last year, requires entry-level training to focus

on core requirements and a distribution of follow-on training. This results in providing more Military Occupational Specialty qualified, trained Marines to the Operating Forces than in the past. To some degree, austerity has forced us to find ways

to do things smarter, cheaper, and in many ways better.

Mr. BATEMAN. What has been the impact on readiness of these diversions of funds

from training accounts? How do you make up for training that did not occur?

Admiral PILLING. The Navy has seen a slight decline in training levels as reported

in the Status Of Resources and Training System over the past ten years. That said,

today’s Navy is the most capable in the world and continues to demonstrate forward-deployed readiness in meeting America’s security obligations across the globe.

It is important to note that Defense Planning Guidance specifies a range of readiness each unit must be within before entering their theater of operations. Over the

past decade, Navy has remained within this range.

General LYLES. The Air Force maintains a delicate balance between mission and

support areas. Decentralized execution of funding provided to our Commanders

gives them the flexibility to balance mission and support requirements. We are not

aware of any impact to readiness due to funding transfers.

General DAKE. Diversions in funds have affected the preparation for exercises.

Training exercises are tremendous builders of combat readiness due to the synergies

of combining realistic, combat-scenario operations and logistics in high tempo. Individual and small-unit preparation training in advance of the exercises must be performed without, or with less than optimal resources. To gain training synergies during the exercises, equipment must be ready and capable. Individual and small-unit

training in advance is often sacrificed immediately prior to exercises in deference

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to performing remedial maintenance on the equipment so that the unit is ready for

the exercise. While we can never make up for training that did not occur, commanders make every concession to try to tailor their units’s training schedules so

that the participants can ramp up steeply but safely to training standards. Our

training centers accommodate the commander’s needs to the greatest feasible extent. Recognizing that we can never make up for lost training, we find that we can’t

afford to train every Marine in every task that might be expected of him or her.

Using the axiom of the student now becoming the instructor, we assure that specialized skills are resident in enough Marines that we can collectively meet all requirements without excessive expenditure or unacceptable personnel tempo.

Mr. BATEMAN. Would it not be better to adequately fund the accounts that habitually are underfunded and therefore, provide enough funds for training so training

doesn’t need to be cancelled?

Admiral PILLING. Navy’s overall readiness trend continues to be satisfactory. Deployed readiness remains high, but because of our cyclical readiness posture, we expect non-deployed readiness to be at a lower level of readiness. This is a direct result of units entering the Inter-Deployment Training Cycle, where ships and aircraft

undergo maintenance and warfighting skills and proficiencies migrate to a basic

level due to crew turnover and a lack of opportunity to train while in maintenance

periods. We have found that this cyclical posture makes the most efficient and effective use of constrained resources. However, this efficiency means that funding shortfalls, when they occur, have a greater and more rapid impact today than in the past.

General LYLES. The Air Force budget submission represents a balanced program

of priorities within current funding constraints. Our budget request reflects the Air

Force’s top priorities and our Unfunded Priority List (UPL) prioritizes those requirements that could not be funded in the budget.

General DAKE. Yes, habitually underfunded accounts eventually become regarded as ‘‘bill payers’’ and as a result the quality of their intended purpose is eroded. Cancellation of training is a serious matter. The scheduling and timing required to get

the right person to the right training is often subject to opportunity in a high Optempo environment. Cancellation therefore often equates to a training opportunity

lost and a capability never attained.

SPARE PARTS

Mr. BATEMAN. The committee is aware that spare parts are scarce and mission

capable rates have suffered as a result in all the services.

What is your sense of the adequacy of spare parts in your major operational

units?

Admiral PILLING. Spares availability for major operational units is for the most

part sufficient, though there are pockets of concern that need to be resolved. The

most challenging area is aviation spares allowances in support of non-deployed

units. Spare parts levels on deployed units are adequate to support the current

operational tempo, but achieving and maintaining deployed unit spare part support

has meant diverting assets from non-deployed units. A recent study of the Navy’s capacity to surge multiple aircraft carrier battle groups confirmed that a great deal

of aviation spare parts pooling and diversion from shore sites would be necessary

to support some wartime scenarios. The majority of the support problems result

from imbalances among the appropriated and working capital fund accounts provided for spare parts as described below in question 35. During the last Program

Objective Memorandum (POM) and Budget cycle, the Navy began a concerted series

of actions to address these spares support problems. In particular, the Navy has addressed shortfalls with the Aircraft Procurement, Navy, Budget Activity 6 (APN–6)

account that is used to fund planeside spare parts on ships and at naval air stations. Due to lead times involved with the procurement of technologically complex

aircraft spare parts, these actions will take time to manifest themselves in the form

of improved readiness.

SPARE PARTS—ADEQUACY

General LYLES. Anecdotal evidence indicates spares support to the field is generally improving. Backorders for reparable spare parts have been reduced 54% from

December 1998 to June 2000. Deliveries are ahead of schedule for the FY99 add of

$382M in Obligation Authority for ‘‘bow wave’’ requirements to restock shelves. In

addition, the get well program for engines is making slow, but steady progress;

there are currently only 6 of 26 engine types Air Force wide not meeting War Reserve Engine (WRE) requirements. Along with Air Force efforts to improve reparable spare parts availability, we have partnered with the Defense Logistics Agency to execute the Aviation Investment initiative for consumables. DLA is investing

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$500M over a four-year period to increase support levels for aviation and engine related parts; 53% of this is targeted for Air Force weapon systems.

The latest monthly (May 2000) Total Not Mission Capable for Supply (TNMCS)

rate for Air Combat Command fighter aircraft is 11.4%, the best seen in 24 months.

The overall Air Force TNMCS rate decreased (improved) from 16.1% in Sep. 1999

to 13.4% in May 2000. The Air Force remains cautiously optimistic that the supply

rate will continue to improve. However, future years’ full funding is needed to sustain improvements in supply availability. In addition, aging aircraft, high-demand

aircraft issues, and depot workload transition difficulties continue to pose challenges

for the supply system.

General DAKE. We are optimistic that recent additional funding for spare parts

of equipment in our major operational ground units will be adequate in the short

term. Additionally, the introduction of new systems to the operating forces will help

sustain ground equipment readiness rates.

Our major aviation operational units sense of adequacy of spare parts can only

be viewed in relation to all measurements as outlined in the graphs and text below.

Not Mission Capable Supply (NMCS) represents the percent of time that an aircraft

is down for parts. This measurement provides an indication that there is a parts

problem. In summary, on the fixed wing side, the adequacy of spare parts has been

a problem due to problems with the AV8B engine. The removal, inspection and repair of these engines resulted in unanticipated demand for spare parts. Increasing

the availability and safety of the AV8B aircraft has been the subject of the Harrier

Action Review Panel (HARP). On the rotary side, the adequacy of spare parts has

increased as we are overcoming problems with CH53, Gearbox assemblies, Swash

plates and Rotor Compressors and CH–46 Transmissions. Details are as follows:

On the Fixed Wing side we have experienced a slight decreasing trend in readiness, from 74.5 percent in FY90 to 71.7 percent in FY00. This decline can be attributed to a noticeable increase, from 11.1 percent in FY90 to 16.7 percent in FY00,

in the percentage of time that an aircraft is down for parts. This is illustrated on

the graph below as Not Mission Capable Supply (NMCS). Issues with the AV8B Engine have caused a significant increase in NMCS time and a resulting decrease in

Mission Capable rates.

[The information referred to can be found in the Appendix on page 103.]

On the Rotary Wing side we have experienced a continued increasing trend in

readiness, from 64.8 percent in FY90 to 76.3 percent in FY00. This rise in Mission

Capability (MC) results from a significant decrease, from 23.3 percent in FY90 to

12.8 percent in FY00, in the percentage of time that an aircraft is down for parts.

This is illustrated on the graph below as Not Mission Capable Supply (NMCS). The

decrease in readiness that occurred in fiscal years 1996 and 1997 was as a result

of problems with CH53, Gearbox assemblies, Swash plates and Rotor Compressors

and CH–46 Transmissions. The focused effort to resolve these issues has resulted

in the steady upward trend in readiness since FY96.

[The information referred to can be found in the Appendix on page 103.]

Mr. BATEMAN. What do you think the principle reasons are for spare parts shortages?

Admiral PILLING. A combination of factors in recent years, has led to a decline

in available aircraft spare parts. The primary reason for spare parts shortfalls has

been the increased age of aircraft, coupled with the upward demand for material

to maintain these aging aircraft. We are seeing trends where components are failing

more often and repairs to these components are more complex and longer to repair.

In a growing number of cases we are experiencing failure of items which had never

been forecasted to fail. This growing demand level continues to squeeze the spares

budgets and is exacerbated by the shortage of adequate funding within Naval Air

Systems Command (NAVAIR) to support program related logistics/program related

engineering. These two efforts are central to the process where engineers keep

ahead of reliability problems and develop engineering fixes to maintenance problems.

A second major cause for spares shortfalls has been the imbalance between the

three inter-related funding streams which support aviation spares levels. Frankly,

the significance of maintaining the balance of these funds had not been determined

until this past Program Objective Memorandum (POM) cycle. The specific accounts

in questions are:

• Aircraft Procurement, Navy-Budget Activity 6 (APN–6)—APN–6 is used to

procure planeside spares commensurate with procurement of new aircraft and modification of existing aircraft. Allowances are computed via a readiness based spares

analysis, a process which ties the spares package for an aircraft to the readiness

that each part provides to the overall availability of the aircraft to perform its mission. Since these planeside spares allowances are computed with a readiness based

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model, any APN–6 shortage will directly reduce the available spares, and will directly negatively impact readiness.

• Operations and Maintenance, Navy (O&M, N)—O&M, N funds are provided

in the Flying Hour Program (FHP) for customers to buy spares when needed in support of operations and training. Ideally, when a spare is needed to repair an aircraft,

the spare was previously bought with APN–6 funding and is available on the

planeside shelf to complete the repair. FHP funds are then used to replenish the

planeside shelf stock spares as they are consumed in support of daily operations.

There have been instances in the past, where planeside shelf stock was used to complete repairs, but replenishment was delayed due to lack of FHP funding. These replenishment delays naturally result in queuing problems throughout the entire supply chain and if not stemmed, could result in a large bow wave of unfunded requirements. There have been instances where a lack of FHP funding has resulted in deferring replenishment/repair action from one fiscal year into the next.

• Navy Working Capital Fund (NWCF) and Defense WCF(DWCF)—Wholesale

supply system spare parts are bought and managed by the Navy and the Defense

Logistics Agency (DLA) through the use of NWCF and DWCF obligational authority.

These wholesale spares are procured and stocked in order to prevent a potential

‘‘lead-time delay’’ from manufacturers, distributors, and civilian/military repair depots by ensuring availability when needed. In short, the working capital funds buy

the readiness lead-time for the operators. If the spare is not procured in advance

of Fleet demand, then there is the risk that material will not be on hand to support

operator needs.

The relationship and balance between these accounts (APN–6; FHP O&M, N; and

NWCF/DWCF) is critical to providing readiness through spare parts support. Underfunding of appropriated accounts (APN–6 and FHP O&M, N) will have a direct negative impact on wholesale obligational authority (NWCF/DWCF) resulting in less

than adequate spares support for required Fully Mission Capable rates. The underfunding of the APN–6 and FHP O&M, N accounts described above have impacted

NWCF/DWCF obligational authority adversely over the past few years. Maintaining

these three funding streams is key to maintaining the overall health of aviation. All

of the factors and relationships described above have resulted in degradation of

spare parts supplies in support of Naval Aviation.

Last, over the past decade Navy, as well as other services, has reduced wholesale

inventories in response to Department of Defense and National Performance Review

goals. These inventory reductions have resulted in elimination of intermediate

spares levels, more reliance on agile transportation, and a reduction of obligational

authority at a time when additional funding is required to support the growing

spare requirements for our aging aircraft. Reduction of inventories is not in itself

a bad objective... inventory reductions out of the context of the overall logistics

and maintenance process can lead to inefficiencies and a decrease in aircraft readiness.

General LYLES. The Air Force Materiel Command looked at this and concluded

a primary reason was the constrained spares funding of the mid 1990’s which

leaned out inventories. With the help of Congress, the Air Force is making significant strides to fully fund spares requirements. However, the funding shortfall is just

one part of the problem. A combination of other factors include increased failures

due to aging weapon systems, technical surprises, poor forecasting, production

shortages and vanishing vendors, aggressive inventory reductions, degraded

consumable item support, and the effects of workload transfers associated with the

BRAC closures. The Air Force is committed to improving spares support and several

initiatives are underway to attack spares problems on all fronts.

General DAKE. As equipment continues to age and is maintained beyond its

planned service life, unplanned failures or spikes in usage may occur which may necessitate additional repair part funding. Ultimately, the answer to achieve sustained

improvements in our ground equipment readiness is to continue to modernize and

field equipment with high reliability which will help minimize the demand for repairable funding.

The principle reason for the spare parts shortage for our fixed wing aircraft is directly attributed to problems with the AV8B engine that resulted in over fifty bare

firewalls. Improper manufacture of critical components has made it essential to remove and replace engines and engine related components. The removal and replacement of these engines resulted in a surge of unanticipated requirements for parts

that are not normally expected to fail.

The problem with the failed parts was the result of a quality control process problem that emerged on the Pegasus assembly line. Although not known to be directly

responsible for any of the FY99 Class A mishaps, these problems are critical and

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have contributed directly to the large number of aircraft without engines and the

very low availability across the Harrier fleet.

Historic underfunding of the Reliability Centered Maintenance concept has also

been targeted as a cause of recent aircraft/engine related readiness problems. Specifically in the Component Improvement Programs (CIP) and Program Related Logistics (PRL) accounts. These accounts are critical to long-term engine performance

and reliability. They provide for data collection, trend and cause analysis, corrective

design/engineering and improved component testing. Over the last 5–7 years, as

funding has decreased, the number of unanswered Engineering Investigations has

grown and the length of time to field approved changes has reached an average in

excess of 9 years. Program funding level has been sufficient only to be reactive to

mishaps vice proactively identifying and correcting problems before they lead to mishaps. The Marine Corps recognized this and in 1997 formed the Harrier Review

Panel to identify the who, what, where and how of required corrective actions.

Mr. BATEMAN. The committee is aware that one of the most often used methods

of overcoming parts shortages is to cannibalize parts from a like type of aircraft and

put it on the vehicle or aircraft to make it operational.

What is your cannibalization policy?

Admiral PILLING. While the Navy does not have a published goal for

cannibalizations, recent fleet surveys have indicated that the current level of aircraft spare part cannibalizations is adversely affecting job satisfaction of maintenance personnel and pilots. At a minimum, Navy would like to see a decline in the

total cannibalization rate to the levels achieved in 1995 & 1996. Some level of cannibalization is inevitable in order to maintain the deployed squadrons at the highest

levels of readiness. However, the current level of cannibalization is impacting retention and is therefore unacceptable.

General LYLES. The Air Force cannibalization policy allows a cannibalization action to occur when a not mission capable (NMC) condition will prevent the accomplishment of a mission and the required assets are not immediately available from

supply. Prior to a cannibalization action, a verification is conducted confirming the

required component can not be sourced from on base assets within the allotted time.

In addition, the cannibalization decision authority considers man-hour availability,

impacts, and the risks of damaging serviceable equipment. Additionally Major Command guidance for cannibalization actions identifies specific procedures, individual

responsibilities, and documentation requirements.

General DAKE. The Marine Corps does not utilize cannibalization to maintain its

ground equipment readiness. However, it can be authorized on an exception basis

when an operational commitment is imminent, and only when a required part cannot be obtained in a timely basis. Approval for such a procedure is strictly regulated

and controlled.

For Aviation the cannibalization policy as outlined in OPNAV instruction

4790.2G. is as follows:

a. Ensure an aggressive and effective management program is in place to control

cannibalization of aeronautical equipment. To the maximum extent possible, ensure

selective cannibalization actions are planned to prevent aircraft from being in a nonflyable status for more than 30 consecutive days.

b. All cannibalization actions shall be authorized and directed by Maintenance

Control (a division within a squadron).

c. All levels of command are directed to actively pursue appropriate courses of action to properly manage cannibalization within their areas of purview. In assessing

the effectiveness of this undertaking, it is imperative management guides, such as

supply material availability, A799 rate, repair turn around time, point of entry effectiveness, and supply response time be considered in conjunction with such measurement criteria as cannibalizations per 100 flight hours and cannibalization maintenance man-hours per cannibalization.

Mr. BATEMAN. Do you maintain good records of the cannibalizations that take

place?

Admiral PILLING. Records are not centrally maintained for spare part

cannibalizations associated with ships and submarines. Because of maintenance procedures and on board system redundancy, ship and submarine spare part cannibalization are infrequent and have only a very minor, if any, impact on readiness.

Cannibalizations of spare parts among aircraft are much more prevalent in the

Navy. Because spare parts cannibalizations are much more prevalent, accurate centralized records are maintained and updated real-time in the Naval Aviation Logistics Command Management Information System (NALCOMIS). Maintenance personnel input all cannibalization actions in NALCOMIS as they occur. These cannibalization records are maintained in Naval Aviation Logistics Data Analysis

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(NALDA) database. These records can be accessed electronically on demand at various Navy commands.

General LYLES. Yes, the Air Force policy requires documentation anytime a cannibalization action is taken. These actions are recorded in the core automated data

system (CAMS). In addition these maintenance actions are reviewed and validated

to ensure accuracy.

General DAKE. If cannibalizations are authorized for ground equipment, strict

managerial control practices are adhered to at the command and maintenance facilities.

For Aviation units all cannibalization actions are required to be documented as

outlined in OPNAV instruction 4790.2G. They are documented daily and reported

via maintenance data systems monthly to be viewed at all levels of the Chain of

Command.

SPARE PARTS

Mr. BATEMAN. What are the trends?

Admiral PILLING. The cannibalization trend per 100 flight hours for the past 10

years appears below. The cannibalization rate in 1999 indicated the first downturn

in that metric since 1995. The source of the information is the Naval Aviation Logistics Data Analysis (NALDA) database.

Year Rate

1990 ................................................................................................................................................................................ 10.4

1991 ................................................................................................................................................................................ 10.4

1992 ................................................................................................................................................................................ 10.2

1993 ................................................................................................................................................................................ 9.8

1994 ................................................................................................................................................................................ 9.6

1995 ................................................................................................................................................................................ 8.4

1996 ................................................................................................................................................................................ 8.4

1997 ................................................................................................................................................................................ 9.1

1998 ................................................................................................................................................................................ 9.3

1999 ................................................................................................................................................................................ 8.9

General LYLES. Cannibalization actions per 100 sorties for overall Air Force have

leveled off in recent years but we continue to pursue spare funding and policy

changes to drive further reduction. As the chart below indicates, FY00 CANNs per

100 sorties were 11.7 (through May 2000) versus 12.3 for FY99-lowest rates since

1996.

Although CANN rates decreased for most weapon systems, we have focused on

several critical aircraft spare parts issues that remain a source of CANN activity.

The B–1 has experienced about 84 CANNs per 100 sorties since FY97. The C–5 MC

rates increased from approximately 45 to 55 percent since FY95. We expect ongoing

initiatives to diminish these rates over the next year.

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General DAKE. There are no outstanding trends for ground equipment. Cannibalization is the last resort for supply support in the Marine Corps.

For Aviation units from FY96 until present there has been a 28% increase in the

number of cannibalization actions for fixed-wing aircraft and a 3% increase for rotary-wing. The increase in cannibalizations on the fixed wing side is also attributed

to the problems outlined above with the AV8B engine.

SAVINGS FROM A–76 STUDIES

Mr. BATEMAN. The pressures on service budgetsare obvious. One key of many for

success, is the aggressive privatization, or A–76, studies underway that must create

substantial savings. What will happen to your budget if your A–76 studies yield the

savings you projected?

General KEANE. If our A–76 studies don’t yield the savings reflected in our budget, installations will have to re-prioritize requirements to ensure that all salaries

and other ‘‘must-fund’’ requirements are paid.

Admiral PILLING. The savings have already been taken against applicable program elements. The A–76 program is an element of the Navy’s Strategic Sourcing

initiative. This effort recognizes the benefits of doing a review of an entire function

using business process efficiency efforts in conjunction with A–76. The net effect of

the Strategic Sourcing effort is providing installation infrastructure with a greater

ability to streamline operations and achieve cost saving using a variety of approaches. Using an approach that is tailored to meet the unique requirements of a

function provides increased flexibility to achieve targeted savings. Our experience

to date with 44 A–76 studies completed demonstrates the projected savings target

is achievable. After all efforts have been exhausted to achieve efficiencies (and total

projected savings), if a shortfall still exists then other programs will be reduced, deferred or eliminated. Across the Future Years Defense Plan (FYDP), the solution

would require transferring resources from other programs or recapitalization accounts back into base operating support. This is very unpalatable because of the

negative effect it would have on force structure and long-term readiness.

General LYLES. In the past three years, we have experienced between 35% and

40% savings for Air Force cost comparisons. However, if a particular A–76 cost comparisons does not provide the expected savings, any shortfalls will be covered within

Air Force Total Obligation Authority. The Air Force has taken the expected savings

into account and allocated those savings to force modernization priorities through

the outyears. A–76 savings are clearly contributing to the cost effectiveness of the

Air Force.

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General DAKE. The Marine Corps is continuing to aggressively pursue the identification of opportunities for potential A–76 competitions. If these opportunities do

not yield the savings identified, the Marine Corps will continue to search out other

areas where Business Process Reengineering, Regionalization, Activity Based Costing, and other improvement methodologies may be utilized. We anticipate that we

will make our projected savings even if additional A–76 opportunities are not forthcoming.

SENIOR READINESS OVERSIGHT COUNCIL

Mr. BATEMAN. a. In your opinion, how effective has the Senior Readiness Oversight Council (SROC) been since its inception?

b. What significant contributions has the Council made in dealing with readiness

issues?

c. What are some of the tangible items that have emerged from this process?

d. Since the inception of the JMRR process and the SROC a little more than a

year ago, how have these reviews improved our ability to assess readiness? What

trends have been identified as a result of these reviews?

General KEANE. a. The SROC has been an effective mechanism for addressing key

readiness issues. The monthly meeting of the senior civilian and military leadership

has provided a forum for examining both near- and far-term readiness. The flexibility of the Office of the Secretary of Defense in determining agenda items has ensured that current, relevant topics were discussed.

b. The SROC, together with the Joint Monthly Readiness Review (JMRR) and the

Quarterly Readiness Report to Congress (QRRC), has provided greater insight into

Army readiness at the operational and strategic levels. In particular, it has given

the Army and other Services the opportunity to communicate issues and trends and

to develop coordinated approaches toward problem resolution.

c. The SROC process has highlighted many of the Army’s top readiness concerns

and contributed to addressing these concerns in the past few years. Tangible results

include: increased funding for recruiting; formation of an integrated process team

to review current chemical-biological defense readiness standards; detailed planning

for Balkans disengagement; and decisions regarding the equipping and locating of

war reserve pre-positioned sets.

d. The JMRR ties together all levels of readiness assessment by providing a comprehensive analysis of the military’s ability to execute the National Military Strategy. The combatant commanders in chief and combat support agencies identify readiness deficiencies that are reported to the SROC each quarter, which results in direct visibility by senior decision makers. This process has identified several trends

relevant to the Army, i.e., shortages of combat support/combat service support assets, the need to replace aging equipment, shortages of key personnel, and shortages

of strategic sea and air lift assets.

Admiral PILLING. a. From the Office of the Chief of Naval Operations perspective,

the SROC has been effective in the following ways:

(1) Visibility of U.S. Navy Readiness issues at the Office of the Secretary of Defense (OSD) Level.

(2) OSD visibility of joint readiness issues, including those relating to the U.S.

Navy.

(3) Consensus building between Services, Joint Staff and OSD on implementation

of new laws or programs.

b. While it is difficult to identify a readiness issue that was resolved solely

through the Senior Readiness Oversight Council (SROC) process, it is clear the

SROC process ensures senior leadership visibility on key readiness issues on a

monthly basis. As stated above, the consensus building within the Department of

Defense is critical when dealing with the Planning, Programming, and Budgeting

System process.

c. The key benefit of the Senior Readiness Oversight Council (SROC) process is

the coordination between the Services, Joint Staff and OSD on issues prior to the

briefing. The SROC process allows different organizations within the Department of

Defense to work together on issues in an efficient and timely manner. Otherwise,

issues of readiness interest could be assigned for group study and be delayed in

committee. While the SROC is not a decision making forum, the scheduling of a particular readiness issue for the SROC brief facilitates movement in the decision making process of Service, Joint Service and Office of the Secretary of Defense leaders.

d. The JMRR process allows visibility of viewpoints of both operators and planners. At the end of the JMRR Process, operators have a sense of the relative importance of readiness degradations. The JMRR–SROC link allows the inclusion of the

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possible political, budgetary and fiscal realities. In the end, both processes help military leadership prioritize the funding and execution of warfighting plans.

For OPNAV, the JMRR and SROC process has been invaluable in educating the

other services and Office of the Secretary of Defense in the uniqueness of Navy

readiness. Navy readiness terms, such as, Bathtub and Inter-Deployment Training

Cycle are now common parlance in DOD.

General LYLES. a. The SROC brings the senior civilian and military leadership together in monthly meetings to review significant readiness topics. Its focus is primarily to provide advice to the Secretary on matters of broad policy related to readiness. This forum provides the Air Force and its sister Services the opportunity to

communicate our key concerns to not only keep senior leadership informed but enables them to take appropriate corrective actions.

b. The SROC is one of several avenues to address both near-term and long-term

readiness issues. Combined with the other forums that include the JMRR and Quarterly Report to Congress (QRRC) the SROC continues to help place emphasis on

those programs that has garnered significant gains for the Services over the past

two years.

c. The SROC process has highlighted many of our top readiness concerns and contributed to addressing these concerns over the past few years. This has resulted in

the following: reversed REDUX retirement plan, efforts to close the pay gap, increases to Depot Program Equipment Maintenance, increases to Readiness Spares

Packages, and $20B topline increase for the AF for FY00–05.

d. The JMRR and SROC have: highlighted declining unit readiness; assessed

CINCs and Combat Support Agencies ability to integrate and synchronize units and

equipment provided by the Services to meet day-to-day wartime requirements; and

identified appropriate CINC deficiencies. We have seen a steady improvement in the

number of deficiencies over the past 2 years which is an indicator that the JMRR

and SROC process works.

General DAKE. a. In my opinion, the Senior Readiness Oversight Council has been

a highly successful forum for vetting Marine Corps readiness issues.

b. From a Marine Corps perspective, the council provides visibility into and assessment of the Marine Corps’ unique contribution to the National Military Strategy. The Council provides a forum to examine readiness issues and concerns that

challenge the services and offers opportunities for attacking those challenges. Additionally, the council is a vehicle for the Joint Staff and the Office of the Secretary

of Defense to hear and address Service concerns as they relate to joint or DOD initiatives, activities, and/or policies.

c. The Marine Corps has been able to bring attention to its top readiness concerns: recruiting and retaining personnel, the costs of maintaining legacy equipment, and the need to modernize both our equipment and infrastructure. For example during the September SROC, the Marine Corps addressed recent readiness challenges associated with our AV–8B Harrier community after the Harriers were

grounded due to problems associated with engine production quality, lower readiness rates, and increased mishap rates. A get-well plan to restore the AV–8B community’s operational health was briefed at the SROC. Subsequent, SROCs were

used to provide updates to the plan as required. Additionally, the SROC affords the

Services the opportunity to voice their concerns and express their opinions on the

potential impacts of Defense legislation and Joint and/or DOD driven initiatives.

d. The JMRRs and SROCs effectively allow the Marine Corps to assess its readiness and contributions to joint warfare. In the latest JMRRs, our personnel readiness was satisfactory as we continued to meet recruiting goals and put a concerted

effort into our retention efforts. Our ground and aviation equipment readiness remained high, but are a concern due to the age of this equipment and the rising costs

associated with maintaining it. Aviation training readiness continued to be a challenge in some units due to maintenance requirements and aircrew shortages. Training readiness for ground units continued on track commensurate with unit deployment cycles. Our Maritime Prepositioning Squadrons continued to maintain a high

level of equipment readiness as the squadrons rotated ships through the Blount Island facility for their regularly scheduled maintenance cycles.

DEPARTMENT OF DEFENSE (DOD) DEPENDENT SCHOOLS

Mr. BATEMAN. More often than we would like, we hear complaints from parents

about DOD schools. But, the news is not all bad-recent news reports have touted

the test scores coming out of DOD schools, particularly for minority children, as a

success story. How does your service view DOD schools, both overseas and domestic?

General KEANE. We believe that the DOD school system delivers quality education

to our soldiers’ children in the United States and abroad, but there are areas that

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can be improved. Across America, local school districts need to modernize facilities

and upgrade their instructional technology systems. Likewise, this is also a challenge for the DOD schools that educate our children. The Army strongly encourages

parental involvement in the schools, which helps to improve both the system and

the results it produces. Some curriculum concerns voiced by parents relating to materials DOD introduced were successfully resolved through the school home partnership program.

Admiral PILLING. The Navy views the Department of Defense (DOD) schools as

a key supporter of the installation mission by providing a high-quality education for

the children of our active duty forces in a drug-free, safe environment. Thus, DOD

schools are an important enhancer of family quality of life on the installation. According to standardized test scores, students in DOD schools are doing very well as

compared with their counterparts in civilian United States school districts, especially in terms of minority achievement, and general satisfaction with many aspects

of DOD schools, both overseas and domestic, is high, according to surveys. While

there are always areas that need improvement, and individual problems at the local

level that need to be resolved, DOD schools, both overseas and domestic, are more

than adequately fulfilling their core mission.

General LYLES. There are 31,000 children enrolled in Air Force supported schools

operated by DOD overseas and in the United States and its territories. Surveys indicate that concern for the education of their children is among the most important

quality of life issues for our families. We continue to work very closely with our

DOD school leadership to adequately resource and prioritize for the educational

needs of our children. Significant program improvements have been achieved in the

past year including full day kindergarten programs, reduced pupil-to-teacher ratios

in grades 1–3, and additional manning for school counselors and psychologists. Our

goal is a world class school system that can serve as a model of excellence.

General DAKE. The Marine Corps views both overseas and domestic DOD schools

as supporting the installation mission by providing a quality education foundation

for students in a drug free, crime free environment, thus enhancing family quality

of life.

Mr. BATEMAN. Are your commanders able to work with school officials at the local

level to resolve issues?

General KEANE. Yes. There is a great deal of cooperation between school officials

and the Army installations they serve. The Army has individuals designated as a

school liaison officers who work for local commanders. The liaisons are responsible

for the day-to-day interface with the military communities and school personnel.

Admiral PILLING. In most cases, relationships between local schools and installation commanders are strong, but of course these relationships will naturally vary

from one command to the next. Some of the formalized relationships between commanders and customers and the school include such things as local councils, school

liaison officers acting as a day-to-day point of contact between school officials and

base commanders, school advisory committees, school adoption programs and parent-teacher organizations. These contacts enable most issues to be resolved at the

local level. In those cases where a local issue is reflective of a larger policy concern

or legislative remedy, other forums such as the Dependents Education Council,

which consists of senior representatives from the major commands, serve as avenues

for problem resolution and input to the Department of Defense Education Activity.

General LYLES. Our parents and commanders are working with school officials at

the community level to forge partnerships toward this end. We are particularly

proud of the active role that parents are taking in supporting schools. Our commanders are focused on addressing dependent education issues with school administrators and staff. We will continue to make improvements in remaining goals including better school system response to parental concerns, facilities and maintenance,

summer school programs, advanced placement course offerings, staffing of small

schools, and distance learning opportunities. We appreciate the Congressional support for our dependent schools, which are an essential element of our ability to attract and retain good people.

General DAKE. In most cases, relationships between local schools and installation

commanders are strong, whether they are DOD schools or are governed by a local

education agency. For example, the Joint Venture in Education Forum brings the

state of Hawaii and military officials together to resolve education issues affecting

military children in the state run school system. Our current relationships with

school officials enable resolution of most issues at the local level.

Mr. BATEMAN. Considering that military bases are in a partnership with local

communities in places where there are no DOD schools, do you think local community schools receive enough impact aid money to provide a decent education for military children? Should DOD provide more funding to ensure that local schools are

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properly compensated for teaching military children, particularly as housing privatization initiatives place more military children into local schools?

General KEANE. Most schools districts do not have enough money to meet all their

needs. Impact aid is a Department of Education function and the Army would welcome funding increases.

Admiral PILLING. Since this program and its funding are administered by the Department of Education and given directly to local school districts, which may each

have their own highly localized funding structures, it is difficult to assess whether

each local community school is receiving enough Impact Aid money to provide a decent education for military children. However, it is true that the Impact Aid program, as a whole, has historically not been funded to its full entitlement and that

impacted schooldistricts in a number of locations struggle to provide a decent education for not only military children, but for all children attending those

schools.This struggle is often a result of the amount of Impact Aid funding a particular school district receives, but there may also be other factors unrelated to Impact Aid at play as well.

Impact Aid is provided not only to school districts impacted by military children,

but also to school districts impacted by other federal presence, such as for children

residing on Indian lands or in federal low-rent housing projects. Specific Department of Defense funding to ensure appropriate compensation of local schools for

military family members would be unnecessary if the entire Impact Aid program

was fully funded and all school districts impacted by a qualifying federal presence

received their full entitlement to funds according to their reported student populations. However, the Department of Defense has a responsibility to take into account the impact of its policies and practices on local school districts and to take

steps wherever possible to minimize their effects. For example, housing privatization initiatives can affect both the amount of Impact Aid funding support for the

local school (where federal ownership of the land is retained by the federal government, Impact Aid funding support for local schools is maintained) and also the student population of the school district (as new housing units are built on land where

previously units did not exist, student population within a district can increase).

General LYLES. We fully support the Impact Aid Program authorized by the Congress and administered by the Department of Education. We believe that this is the

most appropriate way to compensate local communities which are impacted by the

presence of military children and which may be disadvantaged in funding local

schools from a normal tax base perspective. We have conducted no analysis of the

adequacy of the current impact aid funding levels. We would have to defer to local

and State education officials and the Department of Education for an accurate assessment including the potential impact that housing privatization may have. At

this time, the only impact we foresee with housing privatization is to increase the

number of houses in local communities that are subject to local taxation, which in

turn should increase the local tax base.

General DAKE. The current funding for impact aid appears to be insufficient to

offset the costs incurred by public schools impacted by Federal entities. For example, Oceanside Unified School District in California receives on the average $1,040

per military child in impact aid, while spending $5,670 to educate that child. Analysis of this nature, by locality could be useful for future decisions.

THE AGING CIVILIAN WORKFORCE

Mr. BATEMAN. Aging workforce: We continue to hear anecdotal stories about an

aging workforce among DOD civilians. The concern is that the current ‘‘baby boomer’’ workforce will retire all at once, leaving serious gaps of hard to find skill among

our civilian workforce. Have you been briefed on this issue, and does your service

have plans to address it?

General KEANE. The Army is fully aware of this issue. In preparation for the expected losses, we are trying to increase our entry-level intake to professional, administrative, and technological occupations through the Army career intern program. The intern program is designed to prepare employees in these occupations for

successful performance and advancement. In addition, we are now employing more

aggressive and effective recruitment strategies. We are centrally funding a student

career experience program for college juniors and seniors who may be noncompetitively placed in intern positions. To compete with private industry, we are offering

recruitment bonuses for engineers, scientists, and computer specialists, as well as

accelerated promotions for engineers, permanent change of station moves for all interns, and in some cases, advanced in-hire rates of pay. All of these initiatives will

help us grow the leaders of tomorrow, accomplish the necessary transfer of institutional knowledge, and restore a more balanced age distribution to our workforce.

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Admiral PILLING. As a result of years of downsizing, the Department of the Navy

employs a workforce that is rapidly approaching retirement age. As the labor shortage intensifies, competition for qualified, dedicated employees is becoming even

more challenging. The Department of the Navy is committed to improving our efforts and our results in attracting a workforce that reflects the diversity of our nation and meets our mission needs.

We are revitalizing our recruiting efforts to ensure that accurate and effective job

information is readily available to a cadre of well-trained and experienced recruiters. This year, we are conducting recruiter conferences and training aimed at enhancing our recruitment efforts at colleges, universities, and career fairs. We have

developed standardized guidelines and materials for use by recruiters, and are identifying opportunities for sharing resources and best practices. Our goal is to ensure

the Department of the Navy is seen as an employer of choice by our current workforce and by high quality candidates for our future jobs.

We are also revitalizing our apprentice programs. During the past ten years, our

apprentice programs slowed down to a trickle. More recently, the Navy has received

additional funding earmarked for revitalization of the apprentice program.

Finally, we are working with the Center for Naval Analyses to assess the wellness

of our civilian workforce to determine where we are now, and where we should be

heading, to ensure we have the right people with the right skills in the right jobs

to support the Department’s many missions.

General LYLES. Yes, I have been briefed on this issue. The Air Force does have

plans to address it. As a point of clarification, when we use the terminology ‘‘aging

workforce,’’ we do not mean chronological age. We have seen no research to lead us

to conclude that age is a meaningful predictor of knowledge, skills, abilities, or performance.

Our workforce shaping concept centers on ‘‘the age’’ of the workforce in terms of

experience mix and ‘‘the age’’’ of the skills our employees possess. First, we are concerned with recruiting and retaining adequate numbers of quality personnel at all

levels of experience to ensure we have a viable pool of candidates on-board and

available for positions of higher responsibility as today’s incumbents retire. This can

be thought of as ‘‘succession planning.’’ Second, we have historically relied on the

lateral entry flexibility inherent in our semi-open civilian personnel system to fill

any voids in experience we may observe. However, the demographics of the United

States professional population as a whole lead us to believe we must begin to craft

a ‘‘grow your own’’ policy for sustaining certain segments of our workforce. Our civilian system needs to evolve toward one which builds on the best practices of both

the current civilian and military personnel systems. With that as a backdrop, we

see an increasing reliance on workforce analysis and modeling as being critical to

properly framing our policies and programs to meet our needs.

To provide commanders with a state-of-the-art, sustainable civilian workforce capable of meeting tomorrow’s challenges, we have developed a workforce management strategy which includes the following solutions: managing our accessions with

properly sized force renewal programs; pursuing legislative initiatives that would

help us entice scientists and engineers from academia and industry to invigorate our

research laboratories; expanding and targeting training and retraining; and pursuing legislative initiatives for separations management through the use of buyouts

(incentives) for voluntary, targeted force shaping.

General DAKE. Yes, I’ve discussed this issue and the broader issue of civilian

workforce development with the Commandant and his staff. In fact, the Commandant asked our senior civilian leadership to undertake a project to revitalize our

career development program for civilians and take a more active role in charting

civilian career paths, providing for skills and leadership development, and planning

for succession. That project is well under way and I believe it will result in better

opportunities for our civilian Marines as well as a more structured approach to the

way we handle workforce planning.

CIVILIAN PERSONNEL REGIONALIZATION

Mr. BATEMAN. Regionalization: DOD and the military services are completing a

civilian personnel regionalization initiative that takes about two thirds of local base

civilian personnel offices and relocates some of the personnel and most of the support functions to these distant regions. We have heard some field commanders complain that service has worsened under this new system. What are your views on this

program?

If you view service as poor under this new system, what should be done about

the situation?

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General KEANE. The regionalization initiative has caused some turmoil and

changed the way we do business. However, we are now seeing improvements in the

quality and timeliness of service. For example, job fill time is steadily improving.

We are filling a record number of jobs using fewer personnel specialists. With the

development of the Army Civilian Productivity System (CIVPRO), we now have the

ability to accurately measure fill time. With CIVPRO, we are able to track, down

to the installation level, the average number of calendar days it takes to fill positions-from the date a recruitment request is received in personnel, to the date a job

offer is accepted. The classification program has also improved. The backlog has

been eliminated and the classification process is now much more responsive.

The quality and timeliness of service is improving; however, we believe it is important to consider streamlining command and control of the entire civilian personnel process to further improve the delivery of services. In January 1999, a General Accounting Office study found that there are too many organizational and personnel layers between customer and service provider. The study also found that

standardized processes and procedures necessary to achieve efficiencies are not

being followed.

A recent Army study reported that splitting civilian personnel service responsibilities between two separate command elements is not efficient because the division

of work generates differences in policy application and decreases service consistency.

The study recommended streamlining command and control of regional and installation personnel centers and unifying installation personnel center command and control under the Office of the Assistant Secretary of the Army (Manpower and Reserve

Affairs). The Army is interested in exploring the concept of streamlining command

and control of the civilian personnel process.

Admiral PILLING. The Department of the Navy’s civilian human resources community is focused on fully implementing one of the most ambitious reorganizations of

civilian human resources management in the past 30 years. Looking back, we have

made tremendous progress in this effort. Looking forward, we still have significant

room for improvement.

During the last year, performance standards for our Human Resources Service

Centers were established by the Human Resources Service Delivery Board of Directors (BOD), which is comprised of Senior Executive Service and Flag officers representing our largest commands. When compared to the BOD metrics, we find that

performance standards are consistently being met by six of our eight service centers.

We are actively engaged in helping the remaining two centers to improve performance to the acceptable level. While any performance shortfall can be a problem for

our field commanders, we are encouraged by the improved performance of the majority of our service centers, and expect to see continuous performance improvement

in all of our centers in the immediate future.

Regionalization is working, but is not problem free. Some of our Human Resources

Service Centers (HRSC) have experienced problems adjusting to the new organizational structure, new standardized procedures and the tremendous processing workload. We recognize these problems and are working hard to solve them.

The process of providing regionalized human resources service delivery was predicated on the availability of new technology (the Modern System) to be provided by

the Department of Defense (DOD). Deployment of the Modern System has been delayed, and is now scheduled for completion during calendar year 2000. We are hopeful the Modern System will significantly improve the quality and timeliness of civilian human resources services to the Department of the Navy.

It has now been 4 years since we began the DOD-mandated regionalization of civilian Human Resources (HR) service delivery. We are accumulating data on performance at each of our service centers, and see some encouraging trends. To ensure

that we continue to pursue the right path toward excellence in human resources

service delivery, we have embarked on a functionality assessment, which will focus

on HR functions across the Department. We expect to have this process completed

by September 30, 2000.

REGIONALIZATION INITIATIVE

General LYLES. Regionalization of civilian personnel services is a November 1993

Program Decision Memorandum (PDM) directed effort to regionalize and consolidate

civilian personnel processes in exchange for anticipated resultant manpower savings. A Program Budget Decision (PBD) required an increase in civilian personnel

servicing ratios from 1:60 (one personnelist for each 60 employees) to 1:71, envisioned to be achieved by regionalizing service. Further, the servicing ratio is projected to go to 1:88 following modernization of the personnel information system.

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In response to these requirements, workload transition and realignment of personnel resources to the Air Force Personnel Center began in August 1996. Regionalization efforts proceeded through January 1999 at which time approximately 48%

of the Air Force civilian workforce was receiving service from the Air Force Personnel Center, and the Air Force achieved a servicing ratio of approximately 1:68.

However, extensive and ongoing internal assessments, as well as customer feedback,

indicated that levels of service previously provided had not been maintained.

In order to address customer service concerns, a hiatus from transitioning further

workload to the Air Force Personnel Center was established in January 1999, and

additional personnel resources were assigned to the center to accommodate the

workload already in place. In addition, customer service functions involving face-toface contact with managers and supervisors were returned to local civilian personnel

offices with corresponding personnel resources. These measures resulted in demonstrable improvements in customer service and the center’s timeliness metrics.

Many challenges remain in order to meet mandated servicing ratios while providing world class service in a centralized environment. We are establishing a team

specifically dedicated to examining our civilian personnel policies and practices with

a view toward reengineering them and taking full advantage of economies that can

be gained through the use of technological advances and centralization. We also continue to review and evaluate the distribution of work and resources within the Air

Force Personnel Center and between that organization and the local civilian personnel offices in order to arrive at an optimum operations structure. We are also

optimizing our information management system and making personnel services

available via the worldwide web. We believe that these efforts will help us meet our

customer service obligations as we strive to achieve the DOD-directed servicing ratios.

General DAKE. The concept behind regionalization was based on the expectation

that centralization of personnel processing and other ‘‘back room’’ personnel processes could be done with significantly fewer people and no degradation of service

to the customer. Our experience under regionalization to date has not met that expectation. In fact, service in such critical areas as filling vacancies in a timely manner with quality people, paying our civilians properly and on time, and providing

responsive counseling on benefits and retirement has worsened. In large part, this

degradation in service is a function of reducing the civilian human resources professional workforce before we had the automated process enhancements in place to

make the remaining staff more effective. The long awaited DOD Modem Defense Civilian Personnel Data System is still in the testing phase and has not yet proven

capable of delivering everything we expect from it.

We need to take a fresh look at how we deliver civilian human resources services

both at the regional level and local level. If we find, as I expect we will, some processes were centralized that should have remained at the local base or station, we

need to correct that. Also, I believe we need to relook at the resource levels for this

function. If our initial cuts were too deep, we should step up and provide the resource levels we need to make the process effective. Once we are confident the function is properly resourced, we need to set challenging measures of effectiveness and

hold our civilian human resources professionals accountable for meeting them. The

Department of Navy has already begun this review in the form of a functionality

assessment of the civilian human resources process. I am hopeful it will give us the

answers we need to give our commanders and civilian employees the quality service

they deserve.

FUEL

Mr. BATEMAN. The fiscal year 2000 budget assumed significant savings in fuel

costs. As we all know, those assumptions proved wrong and necessitated a $1.2 billion increaseto all of the O&M accounts for the coming year. Consequently, each of

the services must not only pay higher costs but the new rates also include a charge

to make up for the too low rate charged last year. What impact are these higher

prices having on your operations and ability to continue to train and maintain readiness?

General KEANE. The increased fuel costs represent decreased buying power for

units, especially those tactical units whose budgets are under continual pressure

from other external forces such as military airlift costs, which must be reimbursed.

Since training has priority, commanders must decide where to take the funds needed for the additional fuel costs. The ability to continue to train and maintain readiness will be achieved by taking risk in other areas.

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FUEL, DOD AGENCIES, AND REVOLVING FUNDS

Admiral PILLING. When fuel (or any other working capital fund commodity or

service) prices are set by OSD, the Services budgets are modified to reflect the

changed requirements. That is, when fuel prices increase, our budget is increased

to enable us to pay the higher price. Therefore, our training and other readiness

operations are not affected by changes in fuel prices.

General LYLES. Rates for DLA spare parts are stabilized and will not change during year of execution. Should rising fuel prices put a financial strain on DLA, budget

rates will be adjusted accordingly. Transportation (fuel) costs are a small portion of

overhead expenses and therefore not a significant factor in overall spares pricing.

TRANSCOM does not establish rates specifically for spares; each service’s Working

Capital Funds (such as the AF Materiel Support Division) pass a composite rate to

TRANSCOM to be incorporated into overall Transportation Working Capital Fund

(TWCF) rates. Although TRANSCOM’s channel costs are higher due to increased

FY01 fuel prices, FY01 TWCF rates are stabilized and the higher costs will be

passed to the customer during budget year vice execution year.

General DAKE. Higher prices have had a dual impact. First they have forced us

to look for efficiencies in operating and training. When that avenue is exhausted,

we reduce training in the number of tasks that we might expect of a Marine rather

than reducing the quality of training across the spectrum. Second, because our sister services are feeling the same pricing impacts in consolidated and co-located

training environments, they often compensate by reducing support to tenant units,

including Marines. This shifts the cost burden to the tenants, thereby reducing the

amount of funds available for students to attend the school house.

EFFECT OF HIGHER FUEL COSTS

Mr. BATEMAN. Have the higher fuel prices affected other ratescharged in revolving

funds the same way, thereby compounding the effects on strained service budgets?

General KEANE. The depot maintenance and ordnance activity groups in the Army

working capital fund projected the cost of fuel during fiscal year (FY) 2001 to be

$2 million more than when the rates were set in the Fiscal Year 2001 President’s

Budget. When the cost of fuel was increased in the budget, funds were added to the

customer’s budgets, so that the same amount of training and operations were funded at the revised price. Revolving fund rates were increased by equivalent amounts.

The total Department of Defense budget was increased by the amount that fuel

costs increased.

Admiral PILLING. Estimated Fiscal Year 2001 Navy Working Capital Fund fuel

costs were projected to increase somewhat over fiscal year 2000 levels, most significantly in the Military Sealift Command activity group (approximately $29M). Customers were provided additional funding in order to afford the increased rates.

General LYLES. Fundamentally, the revolving fund concept accomplishes what it

was designed to do and provides the customer flexibility by absorbing gains/losses

throughout the fiscal year. The working capital fund must break even, not necessarily annually, but over the long term by recovering losses through future price

increases. Like any functioning system when assumptions do not materialize, you

deal with the consequences. In this instance, the benefit of stabilized rates and enabling the customer to plan and budget more confidently, outweighs the time lag

problem from stabilized rates to the year of execution.

General DAKE. No, not in the current fiscal year. The revolving fund both buys

and sells fuel at the Defense Logistics Agency’s (DLA) stabilized prices. This ‘‘stabilized rate’’ policy serves to protect appropriated fund customers from unforeseen

cost changes such as the recent fuel price increases.

EFFECT OF HIGHER FUEL COSTS ON SPARE PARTS

Mr. BATEMAN. Have TRANSCOM and DLA rates for spare parts also risen as a

result of fuel costs rising in the economy?

General KEANE. The Department of the Army does not have access to information

to address this issue. The Department of Defense is in the best position to respond

to this concern.

Admiral PILLING. To the best of our knowledge, the Department of the Navy is

not aware of significant cost increases from the United States Transportation Command (TRANSCOM) or the Defense Logistics Agency that are specifically identifiable to rising fuel costs. While it seems plausible that a portion of their rate changes

may be fuel driven, we do not have visibility of the individual cost factors which

were used to build their overall rate change.

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General DAKE. No, not in the current fiscal year. The revolving fund budget is

based on sales and purchases at stabilized prices. This ‘‘stabilized rate’’ policy serves

to protect appropriated fund customers from unforeseen cost changes such as the

recent fuel price increases.

REVOLVING FUND SYSTEM

Mr. BATEMAN. While the revolving fund system stabilizes ratesfor the year of execution, does this system work well when assumptions do not pan out and you are

in effect stuck for two large bills in the next year (having to pay this year’s high

rate and make up for last year’s underpayment)?

General KEANE. Department of Defense revolving fund policies and procedures

provide the services alternatives in offsetting execution year losses. The services can

request to spread the required rate increase over two years to lessen potential program impacts. This gives the Services some flexibility in offsetting prior year losses.

The system works well in that it protects customers from losing buying power in

the year of execution. Further, through the budget process, the system facilitates

fully funding the customers for budgeted rates.

Admiral PILLING. Stabilized rates play an important role in preserving approved

Department of the Navy (DON) programs by insulating customers from the adverse

effects of changes in costs during execution. Although there may be significant rate

increases in the future to offset a combination of prior year losses and projected increases in future Defense Working Capital Fund costs, there is some benefit to the

DON of having the lead-time to prioritize requirements and realign resources within

the budget cycle. If fuel costs were allowed to fluctuate during execution, the sudden

requirement to re-prioritize requirements and realign resources to fund higher fuel

costs could have a serious, negative impact on DON program and mission performance.

General DAKE. Yes, the current Office of the Secretary of Defense (OSD) procedures for establishing prices/rates within the working capital fund business areas

and for adjusting customer funding work well. OSD sets rates/prices at levels required to recover the cost of products or services provided by a working capital fund

business area. Actual gains or losses realized are reflected in offsetting adjustments

to stabilized rates in subsequent fiscal years. Additionally, during the budget review

process, OSD adjusts customer’s appropriated fund accounts to finance the fluctuations. Thus, the customer doesn’t have to realign funding from other programs during the year of execution to cover unplanned cost increases. Nor does the customer

normally have to absorb rate/price changes in subsequent years. OSD procedures

ensure customers are adequately funded in the future to cover rate increases/decreases that result from the unplanned losses and gains.

Mr. BATEMAN. I was on one of the P–3Cs, land-based P–3Cs, that you make reference to in your written statement. On at least that one, and I don’t know whether

it is characteristic of all of them, the toilet in the plane doesn’t function, and there

is some work-around substitute for it, and some of the most enormously skilled and

talented people you have fly on that plane for up to 12-hour flights during their mission, and some of them are women, and this is a preposterous result, and even if

it ends up with a scandal of an 800 dollar toilet seat, something needs to be fixed.

Would you look into that for me?

Admiral PILLING. Navy has recognized the need for upgrading toilet facilities on

its P–3C aircraft. A 1994/95 study was conducted with the requirement that toilet

facility options considered be compatible with both genders, private and secure, usable at all sites, and environmentally friendly. One option considered from this study

resulted in an Engineering Change Proposal (ECP P–3–423) for installation of

flushable toilets. This ECP was updated recently and the toilet has now been installed on Customs P–3 aircraft, although due to cost and length of installation time

considerations, it has not been installed on P–3C aircraft. The study recommended

options that were implemented in 1995 to modify the current P–3C toilet incorporating privacy and security upgrades. Navy is completing additional reviews of

current Commercial Off the Shelf toilet facility options that may provide a more cost

effective installation, meeting the requirements above but requiring a less complex

and shorter duration installation than a true flushable toilet. Future modifications

will be implemented to provide suitable facilities for our P–3C aircrews while balancing cost, satisfaction of flight safety requirements and complexity of installation

considerations.

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QUESTIONS SUBMITTED BY MRS. FOWLER

Mrs. FOWLER. Navy P–3s played a critical role in the Kosovo campaign, where

they performed armed surveillance and reconnaissance, precision targeting, and

strike missions. I recently received the Navy’s brief on this and it was most impressive.

However, the P–3 program remains unsettled today. The Navy was recently compelled to negotiate a significant restructuring of a major P–3 maintenance and repair contract, the net result of which will be the early termination of the Sustained

Readiness Program (SRP).

As I understand it, there are currently some 19 P–3 Update III aircraft that will

not now undergo SRP after residing at the contractor’s site for extended periods.

These aircraft are in dire need of depot maintenance. Meanwhile, high OPTEMPO

rates have placed a heavy burden on those P–3s that were not scheduled for SRP.

According to my information, P–3 Commodores on both the East and West Coasts

are wrestling with a severe shortage of flight worthy assets.

The CNO’s FY01 Unfunded Requirements List includes funding for other important P–3 programs, including AIP, but it does not reference the need for additional

O&M dollars for the P–3 community.

Does that reflect the Navy leadership’s belief that the FY01 budget request adequately reflects depot maintenance requirements for the P–3, or is it just that the

final decision on restructuring the SRP program did not occur until after the CNO’s

list was completed?

Admiral PILLING. The latter supposition is correct. The recommendation to discontinue SRP inductions after the 13 P–3s which were already in process was made

in mid-January, 2000 and the stop work order was not issued until January 21. By

this date, staffing for the CNO’s FY01 Unfunded Requirements list was well underway. An agreement in principle between the Navy and Raytheon was reached in

mid-February—past the February 16, 2000 date of the CNO’s report. The official

contract modification was ultimately signed on March 31, 2000.

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FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT—REAL PROPERTY MAINTENANCE AND INFRASTRUCTURE SUSTAINMENT FUNDING

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, MILITARY READINESS SUBCOMMITTEE, Washington, DC, Wednesday, March 1, 2000.

The subcommittee met, pursuant to call, at 10:06 a.m., in room

2118, Rayburn House Office Building, Washington, DC, Hon. Herbert H. Bateman (chairman of the subcommittee) presiding.

OPENING STATEMENT OF HON. HERBERT H. BATEMAN, A REPRESENTATIVE FROM VIRGINIA, CHAIRMAN, MILITARY READINESS SUBCOMMITTEE

Mr. BATEMAN. The subcommittee will please come to order. And

I apologize to our witnesses and to all others that we are later getting underway than the schedule calls for. My colleagues have conferences hither there and yon and other, I am sure, vital business

that would deter them from being where they are supposed to be

at this hour. I hope they will be joining us in great numbers shortly.

I would like to welcome everyone here today to the Subcommittee

on Military Readiness Hearing on Real Property Maintenance. This

is a critical quality of life area with a funding backlog that continues to grow with no indication that funding in the future will

improve. The committee understands that the Department of Defense (DOD) does not have a comprehensive strategy for managing

its maintenance and repair needs. Each military service sets its

own standards for maintaining its property using different methods

to assess property conditions, prioritize repairs, and allocate funds.

We are told that in some cases, bases and major commands within

the services sometimes applied their own assessment criteria and

do so inconsistently.

I must tell you that it baffles me as to how the military departments can determine their actual needs and make intelligent decisions about how much money needs to be budgeted without having

a consistent policy. Due to systematic underfunding, it seems obvious to me that the backlog of repairs and maintenance can be expected to continue to grow in future years as has been the case in

the past. The transfer of scarce funds from other readiness accounts will continue to be necessary.

As an example, records indicate that from fiscal years 1994 through 1999, the services moved $7.1 billion from other accounts

into real property maintenance and base operations over and above

the amount requested and authorized by the Congress. Although

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the amount varied between each service, Department of Defense

records show that a portion of this money was moved from unit

training funds, such as flight hours, tank miles, and steaming

days. This, of course, has a direct impact on readiness. Now, I want

to learn from our witnesses what we can expect in this area in the

future.

For the past five years, Congress has been adding money to the

defense budget, only to read in the press that it is pork that the

military didn’t ask for and doesn’t want. I submit to you that had we not added over $10 billion to the military readiness budget during the past several years, the state of readiness and backlog of

real property maintenance would be much worse than it is.

We are very fortunate to have two panels of witnesses today who

can help us understand the magnitude of the problems in real

property maintenance management and some of the efforts, hopefully, that are ongoing to improve the situation. The first panel is

made up of General Accounting Office representatives who are

doing research in some of the areas associated with real property

maintenance. I look forward to their testimony to help us understand the past funding of real property maintenance, especially the

transfers that have been necessary in this area.

Our second panel is made up of representatives from the Department of Defense and the four services who work these problems on

a regular basis. The panel can give us insight into the challenges

they face and some idea about how we can all work toward improving the working and living conditions of our men and women in the

military services. We look forward to their testimony.

The gentleman from Texas, Mr. Ortiz, and the Ranking Member

of the subcommittee, is detained on some other business and will

be joining us shortly. He has asked that I submit his written statement for the record.

[The prepared statement of Mr. Ortiz can be found in the Appendix on page 195.]

Now we will begin with our first panel of witnesses, which consists of the following General Accounting Office witnesses: Mr. Neal

P. Curtin, Associate Director, and Ms. Brenda S. Farrell, Assistant

Director, National Security Preparedness Issues, National Security

and International Affairs Division of the General Accounting Office.

Mr. Curtin, Ms. Farrell, we welcome you; and your written statements will be made a part of the record, and you may proceed in

any way you see fit.

STATEMENT OF NEAL P. CURTIN, ASSOCIATE DIRECTOR, NATIONAL SECURITY PREPAREDNESS ISSUES, NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION; ACCOMPANIED BY BRENDA S. FARRELL, ASSISTANT DIRECTOR, NATIONAL SECURITY PREPAREDNESS ISSUES, NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION

Mr. CURTIN. Thank you, Mr. Chairman. As you mentioned, we

have submitted our statements for the record and we, actually,

submitted two statements, one that summarizes work that we just

issued yesterday and a report on a movement of funds, and the

other summarizes work we did last year on the overall issue of the

DOD management of the real property maintenance. I thought

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what I would do is take a few minutes this morning in my opening

remarks to provide some background and perspective on those

issues and kind of a brief overview of what General Accounting Office (GAO) has been saying about these issues over the recent past.

DOD and the military services are responsible for maintaining

more real property than any other entity in the world. And some

numbers that illustrate that, more than 320,000 buildings; those

buildings contain about 2.1 billion square feet of space and include

such diverse things as day care centers, barracks, aircraft hangars,

utility generation plants, supply depots, and such unusual items as

piers, and railroad lines; 1.1 million square yards of pavement for

things like runways and parking areas; tens of thousands of miles

of roads and bridges. All of those items have a plant replacement

value, a total value, that is upwards of $1/2 trillion; that is over

$500 billion.

Most of the funds to operate and maintain those facilities come

out of the operation and maintenance accounts; specifically,

through base operations and real property maintenance sub-activities. So maybe a couple of definitions there would be helpful. Real

property maintenance funds are used to maintain and repair all

those myriad facilities and structures. DOD and the services have

been spending about $5 billion annually out of this real property

maintenance area.

Base operations, on the other hand, funds the services that provide the basic operation of the installations; things such as utilities, base communications, snow removal, security, and morale,

welfare and recreation activities. And base operations funding runs

in the range of $12 to $13 billion annually in recent years.

In a 1997 report, GAO talked a little bit about what has happened to the DOD facilities since the post-cold war drawdown. And

what we said was that the reduction in forces and in spending in

real dollars in DOD was reduced by 30 percent or so, been roughly

a 30 percent reduction. But DOD facilities worldwide in terms of

the numbers of installations have only been reduced by about 21

percent. And in fact, in terms of square feet of installations, the reduction has only been about 10 percent. But during that same

time, the real property maintenance funding was reduced by about

40 percent, a much greater cut than the space reductions.

So this is part of what has led to the backlog in maintenance and

repair projects that you refer to. In our work last year, we reported

DOD’s latest estimate of the backlog. It had grown from about $8.9

billion in 1992 to $14.6 billion in 1998. And I think it is safe to say

that that backlog has continued to grow since then. Nothing has

happened in the last year-and-a-half that would have reduced that

backlog.

In that 1997 report, we recommended that DOD establish more

consistent criteria and facility condition data, as you mentioned,

use those tools to establish a better strategic approach to facility

management and make sure that unneeded and obsolete facilities

were being demolished to save operation and maintenance funds.

At about the same time, and for several years, we included the defense infrastructure management area in our GAO high risk series

among the government programs that we consider most vulnerable

to fraud, risk, abuse, and mismanagement. In this case, the reason

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for including it on the list is because of the excess capacity and the

lack of an overall facilities management strategy. There really is a

risk of losing the value of those facilities.

In September of last year, then we reported again on real property management and, again, we cited the inconsistencies that still

existed in the policies and practices among the different services

and, again, the lack of an overall DOD-wide strategy. In fact, we

went so far as to say in that report—and I will quote from that— without an overall management strategy, the services real property

maintenance is in disarray. We reported that the services were

funding only a portion of the facilities maintenance requirements,

thus allowing the backlog to continue to grow. And we made several recommendations aimed at improving the DOD-wide approach

and strategy for real property maintenance. And we understand

that DOD has taken recent action to implement some of those recommendations.

We have been briefed on some of what DOD is doing and, clearly,

they have initiated some promising activities and approaches. And

it is still a little early to make sure they are going to work; implementation is always the key. It is easier to start some of these initiatives than to complete them. But I do feel comfortable in saying

that, you know, at this point, DOD has been responsive to our latest report.

Against that backdrop, the Fiscal Year 2000 Defense Authorization Act mandated GAO to study various aspects of real property

maintenance and base operations funding. The overall concern that

the conference report expressed is with the impact of all this on

readiness. And specifically, we were asked to look at four things,

and one of them is the movement of funds by the services into and

out of the real property maintenance and base operation sub-activities after the initial Congressional action. Second, the impact of the

movement of these funds on unit training and quality of life issues.

Third, the backlog of maintenance and repair and the impact that

it has on readiness. And finally, DOD’s management structure and

process for handling facility management.

The report issued yesterday focuses on just the first aspect of the

act, dealing with the movement of funds. And I think we need to

work with the committee and with the Senate side as well to decide

what issues to pursue next and what priorities are going to be coming out of this hearing and any action this year.

Regarding the movement of funds, let me just quickly summarize

the report we issued yesterday. During 1994 to 1999, the period we

are asked to look at, the four services—and this is the active component only—moved about $7.1 billion into base operations and

real property maintenance over and above the $88.6 billion that

Congress originally designated for those areas. That is about an

eight percent increase over that period. The largest movement of

funds was in the early years of that period, with the Army and Air

Force moving the largest amount and the largest percentage of

funds. Almost three-quarters of the increase was for base operations, with the remainder going for real property maintenance.

While it is difficult in DOD’s system—in fact, you really can’t do

it in DOD’s system—to directly track where the money comes from

and where the money goes in the operation and management

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(O&M) accounts, we did want to try to get a handle on what was

happening during this same period for unit training because the

concern we had is that money was moving from training into these

real property and base operations areas. And we found kind of a

mixed situation there for unit training.

The Army was the only service that consistently had a net movement of funds out of unit training, and they had movement into

base ops and real property maintenance. From 1997 to 1999, for example, the Army obligated about $1.1 billion, or about 12 percent

less for unit training than Congressionally designated. The Air

Force moved funds out of training in the early years of our study,

1994 to 1995, but they actually moved greater amounts into training in the last four years. And the Navy and Marines consistently

moved funds into unit training, about eight percent above the Congressional designations. So the picture there is not clear in all the

services.

DOD has considerable discretion to move funds among these subactivities; and in many cases, Congress is notified of these movements. And some degree of flexibility is important, I think, in letting the services adjust to changes that occur during the year. At

the same time, though, it is important that good, consistent judgments are being made to assure that funds are going to the most

important activities and the most needed areas. And this is where

the overall policy and strategy needs to come into play. That is

where it is important, if you have that baseline, then you have better assurance that the money is moving in the right directions.

A couple of comments to conclude here on readiness and the implications of the movement of these funds for readiness. I want to

reemphasize that we have not drawn any conclusions at this point

about the effect of this movement of funds on readiness. Moving

funds into base ops and real property maintenance by itself doesn’t

automatically mean that readiness is being degraded by that movement for a few reasons. Most of the funds that we saw moving

went into the operating forces budget activity, which is the main,

most closely associated with readiness, the main activity. And a lot

of those funds would go for things like repair of runways, or repair

of maintenance facilities, that could have a direct positive impact

on readiness and may be very good decisions.

Other funding could improve the quality of life or morale welfare

and recreation activities that would have an indirect, but still,

could have a positive impact on morale and readiness. Even the

movement of funds out of training doesn’t always imply a degrading of readiness, although it is a concern, certainly. Training efficiencies during the year may have reduced the need for funds, or

some training may have been cancelled, freeing up funds for other

priorities. Those are the kinds of details that we would really need

some extensive study to get a good handle on, and that is one of

the things we need to talk about for future work.

Let me stop there, and I hope that overview has been useful, and

I would certainly be glad to take any questions.

[The prepared statement of Mr. Curtin can be found in the Appendix on page 198.]

Mr. BATEMAN. Thank you, Mr. Curtain. As is apparent, we are

now joined by our distinguished Ranking Member, Mr. Ortiz,

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whose statement has been made a part of the record. But if you

have any comments you would like to make, they are welcome at

this time.

STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE

FROM TEXAS, RANKING MEMBER, MILITARY READINESS

SUBCOMMITTEE

Mr. ORTIZ. No. I just want to take this opportunity to welcome

the witnesses this morning, and I am sorry I was late. I had a prior

meeting, but I am happy that you are here. And I hope to learn

something from you, and I know that we will. Thank you, Mr.

Chairman.

Mr. BATEMAN. Thank you, Mr. Ortiz. Ms. Farrell, do you have

any comments that you would like to offer before we begin questions?

Ms. FARRELL. I will be happy to take any questions on our report

that was issued just yesterday and build upon what you would like

to address.

Mr. BATEMAN. Very good. Well, let me try the generic approach

to the problem we are wrestling with. It is apparent to me from

what you have said, that we just can’t sit here and point fingers,

and say you moved lots of money from here to there without knowing the policy and the rationale that underlie why you moved the

money from here to there.

But it also occurs to me that if there is no Department of Defense-wide standard or criteria by which each of the services is held

accountable for managing the maintenance of its real property, we

are losing a very important management tool and coming to grips

with how much is vital and how much is essential to see by some

measurable, general criteria or standard of looking after our public

assets that are held by the Department of Defense.

It also occurs to me that we perhaps need some inventory of Department of Defense assets, real property assets which have

reached a point where it may be a lot more efficient to provide the

funding to demolish them than it is to continue to maintain them.

And we ought to be, perhaps, developing an inventory of such facilities in order that we can see that we appropriately fund it in

order that we can achieve over time the savings that can be put

into doing other things that are more important.

The bothersome thing about this is I am hearing you, Mr. Curtin,

say that in some instances we have taken money from training and

put it into real property maintenance. In other instances, I am

hearing you say that we have done the reverse. And I don’t know

whether to be mad at somebody for doing one or mad at somebody

for doing two; but don’t we need some way that we can get a handle on where the money is moving and why it is moving that way

if the Congress really is going to play in the orthodox traditional

role in the formulation of a defense budget, which under the Constitution, it is our essential responsibility to do?

Mr. CURTIN. Yes. The best tool right now to get any kind of handle on this, and we tried to use it in the work we did this year,

are the high priority readiness reports that the committee has required DOD to provide. But they are anecdotal for the most part,

and they don’t always talk about the impact on readiness. They

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will tell you which account money moved from and which account

it moved into, but it is hard to get a good feel that that was a good

judgment, that yes, it moved from an area that the need was less

into an area where the need was greater.

And that is the best thing that is out there right now, but it is

still inadequate to really do what you are saying, to really be comfortable that the Department is being a good steward of these

funds and a good steward of the properties.

Brenda, I don’t know if you have— Ms. FARRELL. I agree. The value of the priority readiness reports

was evident in the report that we issued a couple of days ago on

the movement of all O&M funds, where we identified the 43— Mr. BATEMAN. Pull the microphone closer, please.

Ms. FARRELL. Yes, sir. Can you hear me now, Mr. Chairman?

Mr. BATEMAN. Yes.

Ms. FARRELL. I was saying that I agree with the value of the

high priority readiness reports, and those reports have been most

helpful. And the other report that we issued earlier this week, looking at the total movement of O&M funds, where we identified $43

billion that had been moved between the period of fiscal year

1998—it was 1994 through 1998. Those are for selected activities.

Those are areas that Congress has designated to be of high priority

readiness. Those reports should continue, but DOD could be encouraged to maybe elaborate on the detailed explanations for the

reasons for those movements.

Mr. CURTIN. And again, if the Department and the services had

a better overall strategy and some overall consistency in the way

they do things, you could feel more comfortable about the movement of these funds. But right now, I don’t have that comfort level

at all.

Mr. BATEMAN. Is it realistic for the committee to, in the Defense

Authorization Bill, to include a provision directing the nature and

type of some new reporting so that the Department of Defense, all

the services, and the committee could have a better handle on the

policy decisions about movement of funds?

Mr. CURTIN. I am reluctant, I think, to recommend more reporting from DOD. I think Ms. Farrell’s idea of making the current

high priority readiness report more useful would probably be a

good way to go. And again, I think you made a very good point earlier about the data. And we have said that in all the work that we

have done, that DOD just doesn’t have a good handle on what its

facilities inventory is and the condition of that. That is the starting

point. Until you have that, it is hard to be comfortable that the

funds are moving to the right place, no matter what reporting we

do, I guess.

Mr. BATEMAN. I hate to use the onerous term, reporting, because

we get more reports now than we can read. But I am interested

in data, and strike the word report—

Mr. CURTIN. I understand.

Mr. BATEMAN.—and say, do we need to require in some uniform

methodology data from the Department of Defense and each of the

services in order that they, as well as we, can look at it to measure

the extent to which there is a problem and how to best get a solution to the problem?

158

Mr. CURTIN. That may be something to look at, Mr. Chairman.

I don’t have a good comfort level right now to exactly what the best

data would be for you to get, but we can look at that. I mean— Mr. BATEMAN. I am going to ask you if you would look at it and

give me the benefit of your thinking on it. I have not sat here and

listened this morning, and all of a sudden, had a blinding flash of

rationality that tells me I know exactly how to fix this problem; but

the Secretary and all of the services, I think we all have got to be

looking at a better way that we can look at a set of data and be

able to come to better management decisions. And so I am earnestly soliciting your help in doing that. Mr. Ortiz.

Mr. ORTIZ. Since Mr. Sisisky has been here waiting longer than

I have, I will yield to Mr. Sisisky.

Mr. BATEMAN. That is sure generous of the ranking member, and

I am pleased to— Mr. SISISKY. And I appreciate he didn’t mention age either so

that makes me feel a little better today. Isn’t the problem money?

Money is the problem. Every time we have a contingency, something comes down from the Pentagon, cut the base ops 20 percent

or 30 percent. Isn’t that really the problem?

Mr. CURTIN. The services tend to put the money into operating

tempo (OPTEMPO). You are right. And whatever is leftover tends

to go to— Mr. SISISKY. And then we don’t know when they have a supplemental, whether it goes back in, and I am willing to bet it doesn’t.

We have been cutting base ops for so long it is just beyond belief,

you know. How do you get data on it, you know—you can’t. I think

that is the real problem. And you know, we can fence the money.

We do it in military construction. If we appropriate money, authorize money, for military construction, that is what it is used for. And

I don’t think even in the contingencies they can take out of that

fund. And maybe that is what we have to do.

I mean, sometimes we have a problem and we look for difficult

answers to it, but it may be simple answers to it. But that doesn’t

solve the problem as I see it now, because we are so far behind,

and getting behind, in real property maintenance that it is beyond

belief. It will never catch up. I mean, you know, that is why I said,

money, everything is money. As a matter of fact, the Chairman

mentioned about destroying buildings. We did have a fund for that.

I know in a shipyard that I represent, man, we are tearing down

buildings as fast as we can get them—amazing amounts of money

being saved. You don’t heat them, you don’t have to repair them,

you know, all of these things. That is the way to do it, but fence

the money. If we can find a way to fence the money in there, that

they can’t put their hands on it—I don’t know how the gentlemen

in uniform can even manage what they do to be very honest with

you, not knowing what is going to happen.

Let me ask you another question. I also notice a trend to privatize public works in areas. Has that had any effect? Did you take

a look at that to see about the maintenance?

Mr. CURTIN. I haven’t tried to make that connection, no.

Mr. SISISKY. I may ask the military people whether they have

seen anything on that.

Mr. CURTIN. They may have better information on that.

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Mr. SISISKY. Because you know, when you have to let a contractor fix the sewerage, you may say, let it go. We don’t have the

money there. But if you have got the people there in public works,

they may fix it, you know. I am just thinking out loud. But no matter what you do, and no matter what criteria, and no matter what

strategy is taking place, you still have got to have the money to do

it, and it has to be consistent. And some of these bases are just

reeling from the problems of base ops and other things, because 20

percent cut, on a 20 percent cut, on a 20 percent cut, and it just

goes on and on.

Mr. CURTIN. The only caution I would make, the only comment

on that—and I agree, ultimately, you have got to have money to

make this work—but we would sure like to see a better handle on

just what facilities we have, and the condition they are in, and

something more consistent across services, so that money is going

to the right places. If you want to provide additional money, that

is fine, but make sure it goes to repair the facilities that need it

the most. And I am not sure right now DOD could know that because of the lack of this— Mr. SISISKY. Well, it isn’t just a lack of that, a lack of accounting

system that would—I mean, let us be honest, you know. I hate to

say it out loud, but— Mr. CURTIN. So there is a lot of data problems in DOD.

Mr. SISISKY. Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Sisisky. And now, Ms. Fowler.

Mrs. FOWLER. Thank you, Mr. Chairman. And thank you, Mr.

Curtin, for being here. This is an interesting report, and I share

the concerns that have been expressed already by the Chairman

and Mr. Sisisky, because we go around to these bases, and we see

the facilities and the problems, and money that is not getting spent

where it needs to be, and it is our young peoples’ quality of life that

suffers so often. And then we wonder why we are losing them in

the process.

And I noticed in going through your survey, that you surveyed

about 517 bases and major commands, and pointed out that the

major commands only requested funding for about 20 percent of

their known real property maintenance needs in fiscal year 1997,

and they were funded at an even lower rate. Did you determine

why these major commands were requesting so little of their required funding? Is that same practice still going on today as far as

the requests we are getting from the major commands? And is this

indicating that maybe the backlog is even greater than what they

are showing us on paper?

Mr. CURTIN. I think—on the first part of your question, I think

the major commands have put their emphasis on OPTEMPO, and

the traditionally funded tank miles, and airplane hours, and steaming hours, and those get the funding that the services compute that

are needed; and they work from there. And probably, the lowest

priority for funds becomes the real property maintenance and the

base operations. They feel they can squeeze those, defer as much

as possible, and then fund the OPTEMPO. And I don’t see that

changing anytime in the future if it is left to the services.

In terms of the backlog, this backlog of maintenance and repairs

is an interesting area and; clearly, the numbers have been growing.

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But again, what I am afraid of is that a lot of the facilities in that

backlog are things that, as Mr. Sisisky said, really should be torn

down. And we have been carrying them on the books and we have

been spending operations and maintenance money on them. And

we can’t get a good handle. It is another area where the services

are inconsistent as to how they define that backlog and what is a

critical backlog versus deferrable types of backlog. They have several different categories that the services use. And no one that I

know of has been able to state with any comfort level that that

number is any good.

Now, we talked about the 15 billion backlog. That is DOD’s number. I would definitely call that an unaudited number. GAO has

never had a chance to get a good look at that number, but as you

say, the accounting systems, in general, are problematic. So I don’t

have much confidence in that number.

Mrs. FOWLER. This is what is so distressing, because at a time

when all of us on this subcommittee and on this committee, really,

are trying to get more dollars into our defense budget, because

there are critical things we need, when time and again, things like

this are shown where the Defense Department is not using good accounting practices, you can’t find an audit trail, where the money

is going. You can’t document what the needs are. It makes it very

difficult for those of us who are proponents of trying to get more

funding into defense to defend that. And we somehow—any suggestions you can give us, because I know that is what the Chairman

is looking for, how to hold the Pentagon’s feet to the fire.

And we keep being told this year after year, oh, we are putting

these good practices in, we are changing this system. And it still

isn’t being done. I looked at this list of some of the current promising practices that they are trying to do but, yet, not all of the

military services have implemented these; and they have got a long

way to go. So I think what we are looking for is what can we do

to hold their feet to the fire. We set these accounts, we put the

money in, they move it anyway.

As I said, we get these reports. Reports don’t mean a hill of

beans, because they are still going to move it where they want to

move, use it how they want to use it, find ways around it. Anytime

you do a law, there is always a loophole to it. And so it is very frustrating to us and frustrating to the people we deal with on a daily

basis out on these bases that are struggling to keep them up. And

we say, well, we have sent this amount of money. Well, they sure

aren’t seeing it.

So any suggestions I think we can get from GAO on how to better get a handle on this, and how to get this Defense Department

to be more accountable and more receptive to the need to do that,

because we can’t just keep putting the money in when it can’t be

accounted for. We want to put it in, but we want to get it—you

know, we have got to show just like any business in this country,

that it is being spent wisely, and accounted for, and auditable, and

we know where it is going. So thank you for what GAO is doing,

and we just appreciate any further advice and assistance you can

give us on this. Thank you.

Mr. CURTIN. Thank you.

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Mr. BATEMAN. Thank you, Ms. Fowler. Before I recognize Mr.

Ortiz, let me try to get something clarified. As I recall what is in

your statement and your testimony is that this is not a phenomena,

that all the money that gets moved around gets moved from tank

miles, steaming hours, flying hours, to real property maintenance

and base operations support. Sometimes that happens, there are

some where that has occurred. But more often than not, it is the

reverse, where real property maintenance funds go into augmenting operational accounts and doing operational requirements.

Mr. CURTIN. Well, it is interesting the way I think it is working,

as best we can piece it together, is I think in the budget process

and the budget buildup, real property maintenance and base ops,

are getting a fairly low priority and the OPTEMPO, and tank

miles, and things are getting the priority. But what we saw in

terms of movement during the course of the year is that most of

the movement, the net movement—there are ins and outs during

the year—but the net movement is into—is back into base ops and

Real Property Maintenance (RPM), because it was the lowest priority and was underfunded to begin with.

And, in fact, you see kind of a pattern where early in the year

money seems to be pulled out of base ops and RPM and used for

training events or special things that come up that need funding.

And then toward the end of the year the money moves back as the

services found out they couldn’t execute their full training program,

or contingency money came available during the course of the year.

Money moves back into these RPM and base maintenance accounts,

and that makes it a harder management problem for the installations and for the commands as well, because they are never quite

sure through the course of the year how much they can count on.

And a lot of their funding tends to come at the end of the year,

a lot of the increase in funding is towards the end of the year and

they have to make some quick decisions on what facilities will get

the priority. So it is a difficult management task. I mean, you talk

about the frustration of the installation commanders, there really

has to be a high level of frustration. And we feel that as auditors,

we want to get our hands on some hard numbers. But certainly the

installation people feel it the worst.

Mr. BATEMAN. Well, I am sure they do, and their frustration is

even more important than my frustration. But I certainly have a

lot of frustration, because I know that during the period that I

have chaired the subcommittee, we start in the authorization process that we are responsible for primarily, with we are going to fund

what is said to be necessary for every steaming day, for every tank

mile, for every flying hour that is necessary for training purposes.

That has been just an article of faith in the way we approach putting together the authorization bill. And yet, that doesn’t necessarily mean that is what happens to it at the end of the day.

Mr. CURTIN. No.

Mr. BATEMAN. Okay. I am sorry to be taking— Mr. CURTIN. On that point, they don’t pick on the Army so much,

but the Army, in our data at least, seemed to be the service with

the most movement out of unit training for whatever reason; and

we would like to get behind that a little bit.

Mr. BATEMAN. It might be something like Bosnia and Kosovo.

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Mr. CURTIN. Well, that would do it, yes. That gets your attention.

Mr. BATEMAN. Mr. Ortiz.

Mr. ORTIZ. Thank you, Mr. Chairman. Now, my question would

be what benefits do you think would result from the presence of the

DOD-wide strategy for addressing the RPM crisis?

Mr. CURTIN. Well, I think because the funds are so limited—and

maybe we can find a way to get more money into that—but with

the limited money, we have got to be sure that money is going to

the facilities, and the installations, and the specific activities within that installation that are the highest priority based on a lot of

factors. I mean, based on how important they are to the mission

and, you know, what kind of condition they are in.

Without some kind of coherent plan across the department, you

may—see, what we see is buildings being classified one way in the

Army and completely differently in the Navy. And we look at them,

and most experts look at them, they say they are about the same

condition. So where do you put your money? And until you can

come up with something more consistent, you don’t have a good

handle on where you should spend that next dollar to have the best

impact on our facilities across the board.

Mr. ORTIZ. You know, and maybe this should be a question for

the next panel, is there a central depository where the different

agencies, the services, report as to the building in each command

that should be destroyed or have no useful purposes? And like Mr.

Sisisky just stated, where we can save money by demolishing those.

Do we know what we have around the different military bases?

Mr. CURTIN. Well, I think the next panel can talk about that in

more detail, but as it turns out, that is one area in which DOD,

I think, has gotten its act together a little better, based partly— maybe I can give some credit to GAO here—our 1997 report put

a lot of emphasis on that, and I think as a result of that, there is

a special fund now and plan. DOD has a pretty good handle on

what they want to demolish, the numbers of buildings, the number

of square feet. I think they are fairly well into that program now

and they have got a target date. I mean, that is one of the places

where they have tried to get a better handle on it and they are a

little farther along. I feel a little better about that area now.

Mr. ORTIZ. Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Ortiz.

Mr. Hansen.

Mr. HANSEN. Thank you, Mr. Chairman. I really don’t have any

questions for the GAO, but I do have some questions for the next

panel. My problem is that I have to go a resource meeting in a couple minutes. So I would ask that I could submit these written questions to the Army and the Air Force, which I feel very strongly

about. Would that be—

Mr. BATEMAN. That certainly would be in order. And I understand the unfortunate conflicts that we have. But yes, any questions you may have can be submitted for the record.

Mr. HANSEN. Thank you.

Mr. BATEMAN. Let me mention before we bring forth the next

panel that I have been furnished with figures from the unfunded

priorities list from each of the military services for real property

maintenance for fiscal year 2001. For the Army, this says $250 milVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00172 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm11 PsN: 72364
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lion; for the Navy, $136.6 million; for the Marine Corp, $49 million;

and for the Air Force, $437 million; which totals $873.3 million.

That figure, as large as it is, is woefully less than what I had

been told is the outstanding backlog of real property maintenance.

Is this, at least in part, because one of the Vice Chiefs of Staff of

one of the services said to me almost with an approving tone, gee,

this year’s budget funds 69 percent of our real property maintenance requirements.

Can we have confidence that these figures do, indeed, represent

the only unfunded priorities of each of the services for real property

management? I don’t know whether the GAO panel has any response to that, but it is sort of forewarning the next panel that we

would like to hear from you.

Mr. CURTIN. It may also be a rhetorical question, Mr. Chairman.

I don’t know how it could represent all the needs.

Mr. BATEMAN. Does anyone else have a question? Mr. Smith, any

questions of this panel? All right. If not, then thank you very much

for your testimony and for your important work that you have done

for GAO and, especially, for this committee.

Mr. CURTIN. Thank you. I look forward to continuing to work

with you.

Mr. BATEMAN. Our next panel of witnesses consists of Mr. Randall A. Yim, Deputy Under Secretary of Defense for Installations;

Major General Robert L. Van Antwerp, Jr., Deputy Chief of Staff

for Installations and Housing for the United States Army; Rear Admiral Louis M. Smith, Commander, Naval Facilities Engineering

Command and Chief of Navy Civil Engineers; Major General Earnest O. Robbins, II, The Civil Engineer of the United States Air

Force; and Major General Harold Mashburn, Jr., Assistant Deputy

Chief of Staff, Installations and Logistics for the United States Marine Corps.

Secretary Yim, we would be pleased to hear from you. Your full

statement will be made a part of the record, and you can proceed

in such manner as you choose.

STATEMENT OF HON. RANDALL A. YIM, DEPUTY UNDER

SECRETARY OF DEFENSE FOR INSTALLATIONS

Secretary YIM. Thank you very much, Mr. Chairman. Good morning, Mr. Chairman, Mr. Ortiz, distinguished members of this committee. I want to thank you for the strong support of the military

program, to provide it, and the strong support for the people that

are defending our country, both military and civilian. I also want

to, particularly, thank you and my colleagues at GAO for your recognition of the important role that installations and infrastructure

plays in maintaining readiness, and of the interrelationship between the many components of readiness and installation.

Military installations, in our view, are the foundation for a

strong national defense and the platforms from which our forces

successfully execute their very diverse missions. We are aware we

maintain and deploy weapon systems, and where we train and mobilize for combat; in short, we are the foundation for the projection

of power whenever and wherever needed. But installations are also

where our military and civilian people live and work and where

they become key members of the communities. And real property

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maintenance is absolutely the key for us in maintaining that foundation. We have to maintain the facilities that they support, not

undermine or compromise our missions or quality of life.

In short, I am really just saying what you already recognized,

that there is a crucial relationship between readiness, and training,

and missions, and weapon systems, and the quality of life, and the

condition of our facilities, and that we have to recognize these relationships and take the appropriate steps to maintain and improve

the condition of our facilities. And we are, frankly, talking a bit

more than money. But please don’t take my comments wrong,

money always helps. Our great task is to become more cost efficient

as well as enhance the performance of our facilities to support the

military missions.

So not only must we maintain proper funding levels for our facilities, but we have an obligation to spend that money more wisely

and as efficiently as possible. We are continually faced with the

stark reality of having to balance facility funding needs with other

priorities, such as weapons, recapitalization, and modernization, research and development, and quality of life, and other requirements. So we have to not only make the best use of the funding

we do receive as a result of this difficult balancing process, but we

need to find ways to cut our costs and save money that can be used

to support our other major programs as well as installations.

And when I talk about cutting cost, I am not talking about blindly cutting cost or blindly closing facilities. I believe that when we

are talking about cutting costs, it is inextricably tied to finding better ways of doing our business, because these process improvements are really the key, I think, to the long-term savings that we

hope to achieve. And finding, however, these process improvements

involve change, and this change can be very difficult for us. But

there it is also a time, as my colleagues in the military will indicate, of great change in the military. Our services are really substantially reshaping their force structure and operational constructs to meet the challenges that they are facing now of asymmetric threats, of home land defense, of specific targets against

non-traditional areas like our computer information management

systems.

And so, too, must the installations match up, reshape, to support

these mission requirements. We have to be as adaptable and multifaceted as the military is going to—we have to adopt better business practices, we have to become interoperable as the military is

trying to be with our allies. So we cannot afford, both on a monetary sense and in a mission sense, to be physically isolated either

technologically or physically from the communities in which we operate. For example, by creating proprietary systems of installation

management that are incompatible with the rest of the world or

commercial off-the-shelf applications.

We need to recognize this and then take steps to assure that installations are viewed as integral parts of the new weapon systems

that we are fielding and the training missions that we require. We

can’t afford to field these new leap ahead technology weapon systems but lack the installations or platforms to support them. We

cannot ask our people to perform these complex new missions without the facilities to house and train them, and this is precisely the

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reason why you will see all of us here in installations playing an

important role in the upcoming Quadrennial Defense Review

(QDR) process. We must prepare ourselves to have an important

role in the QDR in May 2001 when it will come out. And as importantly, we have to have the proper analytic tools available to us to

be able to intelligently participate in the Quadrennial Defense Review.

So one of the things I am talking about is just as we seek leapahead technology for weapons platforms, we have to find leapahead training and knowledge management techniques for our installation commanders. But to meet these cost efficiency and performance enhancement goals that we have set, we have to spend

some of our money and intellectual capital on devising new and

interactive ways to learn about these very complex installation

management issues that we face, such as utility and housing privatization, such as energy deregulation, outsourcing. And I think

that we have pioneered in the military these wargaming scenarios.

Perhaps there is something like that, that we can also pioneer and

just disseminate into complex installation management techniques

out to the field, on the field commander to rely upon.

Now, we are really committed to reshaping the installation infrastructure through several related initiatives, and I am going to

briefly touch on a few of them. They include the privatization of

our housing and utility systems. We need to manage our energy

much, much better. We spent $2.2 billion on energy commodities

alone. There is a lot of money to be made there. We need to

outlease some of our underutilized facilities, not dispose of them,

but perhaps make better dual use of them. We need to competitively source, rely on the private sector, frankly, for a lot of our

noninherently government functions. And we have to improve the

standards of a lot of our critical facilities like barracks and dormitories. And of course, we do need additional rounds of base closure. The Department must be able to pursue all of these initiatives, because they really complement each other, and no single one

replaced the other one.

Let me talk briefly about Base Realignment and Closure (BRAC).

The argument that we are making for BRAC I think is relatively

straightforward. We are simply wasting money on maintaining facilities and bases, excess capacity that we neither use now or have

a need of for the future. And while we can debate the magnitude

of the cost savings, there is little doubt that we have achieved savings during the first four rounds of BRAC. Our estimates of about

$14.5 billion by 2001, and about $5.7 billion every year thereafter,

were actually called reasonable and credible by the CBO and the

GAO.

But I want to emphasize that when we talk about BRAC, we are

talking much more than just a comptroller-driven drill here. We

need the authority to really realign and reshape our installation

structure to meet the rapidly changing force structure in mission

requirements envisioned by the Army, for example, in vision 2010,

or the Air Force in the aerospace expeditionary force concept.

The 1997 QDR talked about the need for two more rounds of

base closures. Our December 1999 mobilization report that we submitted to Congress said that we had not closed assets that we

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could not reconstitute or really made some—we did not make fundamentally unsound decisions in the four prior BRAC’s.

And most importantly, what we are talking about, if we are proposing BRAC rounds in 2003 and 2005, we can then take advantage of installation’s role in the 2001 Quadrennial Defense Review

to really have a plan on how the installations need to match up

with the changing force structures and act accordingly. We are on

the path for demolition. We have set targets by 1993, to demolish

over 80 million square feet. We are more than half-way on that

path, and we are actually under budget right now on the cost of

demolition. That is probably not going to maintain, because we are

kind of picking off the easy stuff to demolish, and it is going to increase a little bit; but we are going to meet that 80 million square

feet. And as Congressman Sisisky and others have mentioned, it is

going to be a big benefit for us. We just don’t need to maintain that

stuff.

We do have to also stretch our RPM dollars by adopting these

best possible business practices, and we have to tap the best

brains, not only in the private sector but also within our very

strong public employees. And so we have to really make a strategic

decision, who is in the best position to supply us with basic goods

and services, not only now but into the future. And we believe that

privatization or competitive sourcing, the competition aspect is not

only the best way to do that but also the fairest way to do that.

That is why we are aggressively seeking privatization of our utility

distribution systems combined with effort toward better energy

management and getting better deals in the energy commodity

market, particularly with so much deregulation going on throughout the country.

That is why we are pursuing housing privatization, relying on

experts in the private sector to help us meet a really critical family

housing shortage. We have over 200,000 inadequate family housing

units. We just wouldn’t be able to fix that within a reasonable period of time using just MILCON. We need to leverage against the

private capital. We are getting about an eight-to-one leverage effect, which means we can improve our family housing condition

about eight times as fast as if we were just relying upon traditional

MILCON. I know we have some examples in Texas in Congressman Ortiz’s area.

Let me spend a few minutes—just a minute on housing. Secretary of Defense Cohen prioritized housing as one of his two top

priorities, improving family housing as one of his two top priorities

this year, along with reforming our healthcare system. He has proposed a three-part program, increased reliance on housing privatization, a robust MILCON, where housing privatization doesn’t

work, and a substantial increase in the basic allowance for housing.

Now, the Basic Allowance for Housing (BAH), the basic allowance for housing rate, will allow more people to immediately have

better quality housing options off-base, because they can afford to

live off-base. It also, because that is the principal economic driver

for housing privatization, it will stimulate more and better—not

only more, but better housing privatization projects. And hopefully,

it will take the pressure off of our on-base housing requirements

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where we maintain old, or outdated, or cost-ineffective facilities, because we have to meet the housing need.

We are also seeking legislation to make better use of our underutilized properties by enhancing leasing. We are talking about trying to really give an incentive at the installation level. Part of our

problem, I think, as GAO correctly points out, is that a lot of our

money for installations gets shifted around. We need that flexibility, we really do. But if we can have enhanced leasing opportunities where we make dual use of facilities, then we can keep that

money, be it in kind contributions or real money at the installation

commander level, without having it go up the chain and then come

back to us. Because frankly, it doesn’t come back to us in the same

shape that it went up the chain. That would be a big plus forward

for our installation commanders. And those programs are described

in much more detail in my statement.

Now all of this sounds kind of good, but I want to hit one other

point that is squarely on your criticism, sir, and the GAO criticisms. We can’t really do all this stuff, and we can’t effectively participate in the QDR. We can’t advocate for our positions unless we

have—we significantly improve our analytical tools. To effectively

go where we need to go, we have to know where we are. And I accept, I agree with, your criticisms, GAO criticisms, that the Department has lacked, the services have lacked, comprehensive data not

only on what we have, but what we need; and we have migration

of funds. There is no question that those are the facts.

Here are some of the things that we are trying to do to address

these problems. As the first panel indicated, the GAO issued a report last September on real property management needs improvement, or in disarray, I think was one of their conclusions. The Senate Armed Services Committee (SASC) conducted a hearing in October—excuse me. Both before and after the hearing, I, personally,

with my staff, met with GAO. We went over their report. After the

hearing, we went over the report. We went and visited the sites

identified in the reports this last winter to get firsthand knowledge

of those tools. I had the pleasure of meeting with Mr. Curtin yesterday to discuss his report. Some of the things we are going to do,

we have committed to follow-up exercise with him. But more than

that, just kind of talking with people, we are trying to develop

some really basic analytic tools here.

We need to first, as you point out, Mr. Chairman, accurately inventory what we have. The models that we are creating to validate

our requirements fundamentally depend upon—this is the concept

of garbage in, garbage out—you have to know what you are sticking into the models before it can spit out accurate data for us. So

we are really trying to improve the integrity of our real property

inventory now. The services have all submitted preliminary data to

us. We are screening it and scrubbing it. We hope to have a much,

much better handle on exactly what we have within the next coming months because, simply, it is true; the services do report the

data slightly differently. So we are hoping to get some consistency

in that.

Second, we are devoting a lot of our effort to improving the RPM

requirements determination process to better justify RPM funding

in our constrained fiscal environment. We are the advocates for inVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00177 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm11 PsN: 72364
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stallations here. If we cannot really lay on the table true requirements with the level of precision that can guide site specific decisions, either in the MILCON or the RPM budgets, then we are just

not effective advocates.

We cannot defend the programs when we go up against the

wrong comptrollers or other programmers and compete for the limited budget resources. And this has really been one of our most persistent problems, a lack of sufficient RPM funding caused, in part,

by our own inability to know exactly what we need, compounded

by an inability to effectively compare requirements across the services. So this is what we are trying to do, and we know this is not

an overnight fix, and this has been an endemic problem for the Department of Defense and the services.

We are trying to lay the foundation to really correct this problem.

First, we are making extensive use of an Installation Policy Board

which I chair along with the senior leaders here of the services, not

only on the civilian side, the uniform, and perhaps more importantly, we have brought the senior service engineers and then representatives from the financing and program community. I am very

pleased with this board. We meet every single month. We are treating this board as the Board of Directors for Installations within the

Department of Defense. It is augmented by outside planning and

fiscal policy experts. We are allowing this board then to do peer review and auditing of the installation requirements, trying to get

some consistency and standards across the services, and then serve

as an effective forum where we can’t solve it at our level, frame the

issue, elevate it up to the senior levels as much as possible. Every

single month we are meeting. I am dragging these poor gentlemen

to these meetings every month, but I think we have been very effective about that.

Second, we are developing—or the board is supervising the maturation and the development of three very important analytical tools

for us. First is a facility strategic plan. We knew that we had to

give some thought if we were ever going to justify to Congress,

which has very legitimate concerns about our request for BRAC.

We had to have a strategic plan about how the installations would

fit and match up with the force structure. We have some discussions about that now. There has been talk about what type of information do we need, what types of facilities we need to maintain.

We are going to have the fruits of our labor be fed into the QDR

discussions that are being built up now for May 2001, and we hope

to then really have a strategic aspect of the QDR for facility planning.

Next, we are really supervising in the board the development of

a facility sustainment model using auditable—I think some of you

used that term—auditable data input that will properly model and

identify the funds that will keep our facilities in good working

order. This is really going to enhance our ability to make estimates

of what we really need and then defend us better in the budget

process. And it is based on validated commercially bench marked

maintenance costs for each type of facility and then, of course, an

accurate inventory of our property.

We have already developed a cost factor handbook that I would

like to introduce for the record, sir, based on private sector techVerDate 11-MAY-2000 14:47 Jun 04, 2001 Jkt 010199 PO 00000 Frm 00178 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm11 PsN: 72364
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niques for real property maintenance and construction. We are in

the final validation of our real property inventories. We hope to

have this facility sustainment model on line for fiscal year 2002

budget programming and preparation. That means late spring,

early summer, actually have the model up and running.

[The information referred to is retained in the committee files

and can be viewed upon request.]

We really like this. This is, for example, use the building—a variety of outside factors like the Building Owners Management Association, a nationally recognized organization that provides data on

maintenance and repair costs. We have used a lot of commercially

bench-marked factors to get a handle on what we should be spending on maintenance and repair. For example, outside sources use

maybe 2 to 4 percent of the plant value for maintenance and repair

for RPM. We have a goal of around 2 percent, but we are not really

close to that. We are probably somewhere around 1–1.5 percent. It

is hard to really even estimate what we are spending because we

use several different sources.

And finally, we are overseeing an installation readiness reporting

system for the first time. And your committee was really the impetus for this. The installation component is going to be included as

part of the overall operational readiness reporting being submitted

by the services and DOD, roughly, the spring of this year. So we

are developing, rolling up the various services different ways of reporting the status of readiness of installations. The Army has perhaps the most developed model on that. We are getting some consistency, and you will see that from us in the spring.

And let me conclude now. I know I am running over. Let me conclude with the words, if I could, of Will Rogers. He said that even

if you are on the right track, you are going to get run over if you

stand still. And I believe that we are on the right track. We have

a lot of work to do, though. And I think that this subcommittee and

GAO has really been a catalyst for us. We are trying not to stay

still, but we are trying to move with some speed and innovation.

One of the innovations, again, if I can give a commercial, is the

leap ahead training management techniques for our installation

commanders and our field leaders. We asked these guys to be fullfledged city managers in very, very complex areas with half-day

training and two-day training entering—get us a better deal on the

energy deregulation market. People are studying this for years as

they go up against the energy power managers.

And I think we need to have this leap ahead knowledge management, knowledge training tools, such as the wargaming interactive

stuff that I have talked about, and I think it is a function that, I

am no longer 20 years old, but I can’t imagine some of the potential

that some of the computer based gaming technology could lead for

us. But we would like to see some devotion of thought to really leap

ahead management techniques so we can disseminate to the field.

And then I think that would be a big benefit for us.

So again, thank you for your continued support of our program,

sir.

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

Appendix on page 205.]

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Mr. BATEMAN. Thank you very much, Secretary Yim. I want to

tell you I am very impressed with your testimony. What you have

said is a source of considerable comfort to me and, I am sure, the

other members of the subcommittee. It would appear to be that you

are getting about doing the kind of things that we hoped someone

was going to be doing in order to develop the management and analytical tools that are going to be helpful to all of us in getting our

hands around this very difficult problem of real property maintenance and base operations support funding, and making sure that

those were taken care of, and not taken care of at the expense of

training and other programs or vice versa. What you have said is,

indeed, very encouraging.

Let me now ask General Van Antwerp if he would address the

committee.

STATEMENT OF MAJ. GEN. ROBERT L. VAN ANTWERP, JR., ASSISTANT CHIEF OF STAFF FOR INSTALLATION MANAGEMENT, U.S. ARMY

General VAN ANTWERP. Thank you, Mr. Chairman, members of

the committee. It is just great to be here with you. This is a subject

that is near and dear to everyone on this panel’s heart. I would like

first just to say about Mr. Yim—we kind of chuckled when he said

about the meetings he gathers us for—this team has been forged

by Mr. Yim this year far beyond our expectations. There is a great

trading of ideas, there is some very innovative things we are doing

to try and get a handle on this, and I just give him the credit; not

to make his head feel bigger, but he is just doing an outstanding

job with all of us, and we in the Army surely appreciate that.

There is no question in our minds that facilities’ condition is a

component of readiness in the Army. And as has been said three

of the last five years, the Army migrated money into the RPM account. And it is a recognition of many factors, Kosovo and other

factors, but it shows you the sense of the commanders out there in

the field. I want to thank you for the Congressional adds that we

have had and the quality of life enhancement funds that have been

very crucial to us and help us in that. But as Mr. Sisisky says, it

is dollars to a great extent. There is only so much you can do on

the initiative realm before it comes down to dollars.

Of course, I am sure you are all aware of the Army’s new vision

to transform itself. A lot of that vision will impact our installations

as we try and project our power quicker. It means we have to look

at our airfields and those power projection things. We also have to

look at how we are training our force, our new force. Some of the

things we see there will be the need for if we change equipment,

and as we transform equipment, will be for the equipment shops.

The other part of that is probably for more urban type training,

mount training. So we are very much looking at the effect of the

transformation on our facilities.

The Army has a comprehensive strategy. It involves the active,

the Reserve, and the Guard, and it is one—we all have the same

standards. So when you get a report from our installation status

report that says the facilities in the Guard is rated at C–3, that

is on the very same standard as the facilities in the active force.

171

From our viewpoint, the Army has about 166,000 facilities. The

average age of those facilities is 44 years old. There is two factors

that really impact: one is the number of facilities that you have to

maintain, and the other factor is the condition and age kind of

lumped in there. As all the services are doing, we have a very good

program for demolition. The Army feels right now, based on our installation status report we have 28 percent excess infrastructure.

And we have a program, we have about 150 million square feet.

Back in 1992, there was identified in our status report that we

needed to demolish, that we don’t need to maintain and be putting

money into keeping them up. To-date, we have demolished 68 million square feet. We will take another 10 million down, roughly, in

2001, with what is in the 2001 budget, so we are getting there.

When the installations tell you they could use a lot more—Fort

Hood, if you could give them another 10 million today, they would

use it; Fort Bragg, another 10 million today. They can’t get this

down fast enough.

The second part, I will just tell you that we are funding RPM at

69 percent this year, and it is woefully inadequate. We did make

a change from last year with about the same level of funding in

RPM as last year. We dropped ten percentage points, roughly, in

how we are satisfying the requirement. That is because we understand the requirement much clearer now, and we made—we bit the

bullet and said we are going to make a change and accurately reflect, based on standards, what is the backlog. If that backlog had

current funding, we hope to be—and hope isn’t a strategy—but that

we plan to be by 2005 at 80 percent at the current funding, at 69

percent in 2001. But that is still woefully low, because 100 percent

keeps it just like it is. Our unfunded requirement of $250 million that you addressed,

that will get us—if it is sustained, it will get us to the 90 percent mark by 2005, if it is $250 million addition every year. That still

doesn’t get at the big backlog. We have over a $15 billion backlog

in quality. But it will get us so we are sustaining close to that level

of 100 percent. You combine that with a military construction program that is renovating, remodeling and upgrading facilities; that

and the 90 percent RPM will get us to a good position.

I just want to conclude by saying that it has to be a balanced

strategy, I think, between RPM and MILCON. And that strategy

has really two pieces: it has the sustainment piece and it has the

modernization piece. And our challenge is to balance those. What

we have done up to this point is go after a very focused program.

We have gone after permanent party barracks for quality of life of

our soldiers, a readiness issue. We have gone after strategic mobility in order to upgrade so that we can project our forces from our

power projection platforms.

We do have a future strategy that is in my written statement.

We would be glad to talk further if there are any questions. And

sir, that concludes my statement. And again, it is great to be with

you here today.

[The prepared statement of General Van Antwerp can be found

in the Appendix on page 221.]

Mr. BATEMAN. Thank you very much, General. And now, Admiral

Smith.

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STATEMENT OF REAR ADM. LOUIS M. SMITH, COMMANDER,

NAVAL FACILITIES ENGINEERING COMMAND, U.S. NAVY

Admiral SMITH. Good morning, Mr. Chairman, members of the

committee. I am Rear Admiral Lou Smith, the Commander of the

Naval Facilities Engineering Command, and it is a pleasure to be

here before the committee this morning. I would request, sir, that

my written statement be included for the record.

Mr. BATEMAN. It will be included.

Admiral SMITH. Thank you, sir. I do appreciate this opportunity

to be here this morning to talk about real property maintenance,

and I thank you for your ongoing support for this program within

the Navy. I talk a lot in my written testimony about our efforts to

overcome the challenges of maintaining our aging infrastructure

within the limited resources we have. We, in addition to get more

dollars into the program, are trying to reduce the size of requirement. We do this through our ongoing efforts for regionalization

and consolidation to eliminate redundancies we have and consolidate where we can.

We, too, have a very aggressive demolition program. It is a program that was beefed up in fiscal year 1996. The results are seen

around the Navy. We have demolished almost 7 million square feet

already. We hope to get to 10 by 2002. It looks like now we will

demolish another 5.5 million by 2002. And I would add for Mr. Sisisky that the added serendipity we have had there is that people

are saying how pretty our bases look now that we have torn down

a lot of these—yes, sir. It is amazing. We are also pursuing privatization in areas. Mr. Yim mentioned utilities; we are looking at

that. We are looking hard at a lot of other areas, such as housing,

that aren’t necessarily inherently governmental, that we could get

from the private sector and, again, reduce our facilities requirement.

Our RPM funding this year is good news for us. If you look at

it, it is an increase from last year. Last year, our asset protection

index, what was mentioned before our percentage of funding to our

plant value, was at 1.6 percent; this year, it is at 1.8 percent. We

are getting closer to that industry threshold of 2.0 percent. This allows us to do some, what we call tailored funding, where we will

fund our mission critical infrastructure, such as quality of life,

piers, runways, utilities, and training facilities to a C–2 rating condition. This will also help us to significantly slow the growth of the

backlog of maintenance and repair in our other facilities.

Ideally, I would hope to strive for C–2 readiness in all of our facility categories to avoid continuing deterioration, but the truth is

we are a long way away from being there. With our fixed top line,

our RPM program continues to be a balancing account that is needed by our warfighters to support higher priority readiness programs and emergent requirements. Accordingly, we work very

closely with Mr. Yim and his staff, as well as the other services,

to develop tools that better clarify the impact of these RPM reductions.

In fiscal year 1999, our number of mission categories reporting

C–3 or C–4 facilities condition increased for the first time in five

years. Mr. Chairman, I would tell you it is imperative we need to

reverse this trend. Deep down, the Navy does believe that the

173

measure of our readiness is closely linked with the quality of our

shore facilities. Quality facilities improve the quality of life for our

people, reduce our cost of ownership, and as always, impact our

ability to train and retain our sailors.

This concludes my opening statement, sir. I would be more than

pleased to answer any questions you or the rest of the committee

may have.

[The prepared statement of Admiral Smith can be found in the

Appendix on page 228.]

Mr. BATEMAN. Thank you, Admiral Smith. And now, we look forward to hearing from General Robbins.

STATEMENT OF MAJ. GEN. EARNEST O. ROBBINS, II, THE CIVIL

ENGINEER, U.S. AIR FORCE

General ROBBINS. Good morning, Mr. Chairman, members of the

committee. I appreciate the opportunity to address the Air Force’s

real property maintenance requirements with you this morning.

With your permission, I also will submit my full testimony for the

record.

As you know, we manage our facilities in infrastructure through

two major programs, as was previously pointed out. First, the real

property maintenance, or RPM account, provides funds to maintain

the Air Force infrastructure already in place. Second, the military

construction appropriation allows the Air Force to replace antiquated facilities and to bed down new weapons systems. And although the focus of today’s hearing is obviously on the RPM account, success in both of these areas must be complimentary to

allow us to provide the quality facilities we need to support our

missions and our people.

While there are clearly several areas where we have achieved notable successes as a result of excellent Congressional support, continued constraints in RPM and MILCON are beginning to show in

degraded facilities and supporting infrastructure, as you have determined during your visits.

In fiscal year 2001, RPM in the Air Force is funded at what we

in the Air Force call the preventive maintenance level, or PML.

And this will allow us to accomplish only the day-to-day maintenance required to sustain real property facilities and infrastructure. It does not provide the resources necessary to accomplish

much of the needed maintenance and repair. And although the Air

Force continues to operate, we are increasingly required to develop

work-arounds which impact Air Force combat capability and operational efficiencies. Examples include deteriorated airfield pavements, which require longer aircraft taxi times, reduced munitions

storage capability due to degraded storage igloos, and increased foreign object damage risk to aircraft engines.

The Air Force’s current level of RPM funding defers most nonPML maintenance and repair, resulting in a current backlog of

some $4.3 billion. Now, we have developed an RPM metric, which

we call the Facility Investment Metric, or the FIM, to identify requirements above and beyond those day-to-day maintenance requirements I have mentioned. The FIM stratifies facility requirements based not on facility condition, but on mission impact, and

allows us to identify and track our most critical needs.

174

We mentioned the inventory earlier. The active Air Force has

about 108,000 buildings; of those, about 58,000 are 40 years old or

older, and so we obviously face a challenge in the day-to-day maintenance and repair that we encounter in the field. On the demolition front, since 1996, the Air Force has demolished some 1,700

buildings. And as Dr. Yim indicated, we are on the right glide slope

to meet the DOD guidance to complete the demolition program.

The scenario I have laid out for you, if we project it out to continue until fiscal year 2003 when the RPM program funding finally

begins to increase within the Air Force budget, funding is currently

projected to grow from one percent of the plant replacement value,

which it is in the 2001 budget, to just over 1.4 percent by fiscal

year 2005. This means our backlog will not disappear overnight

and Air Force operations and readiness will continue to show increasingly adverse effects. Until then, the Air Force must limit

RPM funding to the preventive maintenance level so that we can

fund higher priority programs within our current total obligation

authority.

There is good news regarding facilities. The Air Force has benefited over the past four years from Congressional adds to the RPM

account for quality of life enhancements. This effort has allowed

the Air Force to greatly improve conditions in our dormitories and

other traditional quality of life facilities. And we deeply appreciate

your support in this high visibility and high impact area.

We obviously still have a lot of work to do. The Air Force currently has over $200 million worth of validated unfunded dormitory

requirements. There also exists nearly $400 million of other validated unfunded quality of life requirements, such as child development centers, community centers, fitness centers, youth centers,

and so on. Your support for quality of life enhancements will continue to have a positive effect on our airmen in the field.

It is our responsibility to provide policy makers and decision

makers with informed assessments of requirements along with our

best engineering judgments regarding impacts on readiness and

quality of life. We continue to capitalize on the limited resources

at our disposal, and just as importantly, on the ingenuity and dedication of our officers, enlisted personnel, civilians, and contractors

to operate and maintain our bases to the best of our ability.

However, tough choices still lie ahead for the Air Force. As General Ryan stated during his recent testimony before this committee,

the Air Force has identified a priority list that includes items related to personnel, readiness, modernization, and a very large need

to support our infrastructure.

In conclusion, Mr. Chairman, I want to thank the committee

again for its strong support of Air Force programs and the benefits

they provided the Air Force in terms of readiness, retention, recruiting, and the quality performance of our people. I would be

happy to address any questions.

[The prepared statement of General Robbins can be found in the

Appendix on page 235.]

Mr. BATEMAN. Thank you, General Robbins. And now, we look

forward to hearing from General Mashburn.

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STATEMENT OF MAJ. GEN. HAROLD MASHBURN, JR., DIRECTOR OF FACILITIES AND SERVICES DIVISION, OFFICE OF

THE DEPUTY CHIEF OF STAFF FOR INSTALLATIONS AND LOGISTICS, U.S. MARINE CORPS

General MASHBURN. Thank you, Mr. Chairman, members of the

committee. I certainly concur with all the comments my colleagues

have made, and I really appreciate the opportunity to address Marine Corps concerns for real property maintenance. I think from the

discussions we have had today, we understand what an onerous

task this is as far as management.

You have heard General Jones, our Commandant, say that we

have four pillars of readiness: Marines and their families, our legacy systems, infrastructure, modernization; all of that coming from

the bottom line and the top line—very difficult to really look at

those. However, looking at real property maintenance, it goes

across all pillars, even looking at maintaining our legacy equipment, our old equipment, it actually does.

Is it true that we have deferred maintenance to help fund new

timeliness? Certainly, it is, but we have done it during the budget

process, knowingly doing it because of essentials, not the other way

around. I can remember last August when all the monies came in

that perhaps were not being able to be executed. We went out for

a call to the field, what programs can you execute, installations, by

30 September—$66 million worth. They were executable because

they were ready, and we were able to execute $29 million in a very

short period of time—just fantastic work by the field.

And actually, if you look at the history over the past several

years, we have been able to execute more in real property maintenance than was actually anticipated at the beginning of the fiscal

year. We have several goals: the unfriendly priority list of $49 million was mentioned. That is required to reach one of our goals,

which is to reduce the backlog of maintenance repair to $106 million by 2010. That is a goal, and that this why it is on deficiency.

Another goal is the recapitalization rate. Presently, our recapitalization rate, while industry’s is at 50 years, is well over 100 years.

Our goal is modest, 70 years. Real property maintenance funding

request for 2001, we have requested an increase of $50 million; and

it is a substantial increase, but it funds 90 percent requirement.

Last year, we were able to reduce our backlog in maintenance repair with the programming request for 2001. We are looking at a

$20 million reduction in backlog maintenance repair; again, looking

at sustained funding increases of perhaps $49 million a year to

reach that 2010 goal.

Funding is the key. Is it adequate? It is adequate to maintain old

facilities with sometimes band-aid approaches? We must sustain

increases to reach our goal through 2010. We must combine it, as

my colleagues have said, with strong demolition plans and a very

strong military construction plan.

We are working together with Mr. Yim and the other services,

of course, to really look at how we can orchestrate, first, the inventory upon which to base our requirements, and then to really be

able to establish our goals for the end state. As a major concern,

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nance real property transcends all pillars. It is critical because it

is quality of life.

We talk about quality of life. Sometimes we think about family

care centers, family service centers, commissaries, PX’s. Quality of

life to Marines means something else: all about good roads, runways that don’t have foreign object damage to the aircraft, basic infrastructure requirements. That is quality of life; quality of life that

brings back our Marines alive.

Again, thank you very much, Mr. Chairman, for your support. I

look forward to answering any questions.

[The prepared statement of General Mashburn can be found in

the Appendix on page 244.]

Mr. BATEMAN. Thank you very much, General Mashburn, and all

of the witnesses who are part of this panel. Secretary Yim, I want

to repeat again how pleased I am to get the indications from you

that there is a very concerted, and I sense, a well-conceived effort

to get your hands around the managerial and analysis problem

that underlies so much of what we have been talking about today.

I want to commend you for that and for all of the members of the

military team who flank you for their understanding of the wisdom

and necessity of doing that.

I want to return to the matter of BRAC and base closures. And

I don’t mean this in a vagaritive kind of way, but I think the perspective—or perception here on the Hill is that we would be into

that process before now except for some loss of confidence in

whether or not the last process in some manner, at least, allegedly,

is perceived to having been politicized. Leaving that aside, I have

no doubt but what we have more facilities than the downsized

armed services require, and that we need critical analysis and decision making as to what to keep and what to arrange and rearrange.

But you are talking in terms of two BRAC rounds. Explain to

me, if you would, why you say two instead of one well-conceived

and properly executed round.

Secretary YIM. What we are estimating is about a 23 percent excess infrastructure, and the thinking is that that is too big of a bite

to take in one round itself. That is quite a bit of excess infrastructure to take down. What has happened in the prior BRAC rounds,

particularly, in 1993 and 1995, is the experience has shown that

from the 1993 round, and you could make additional adjustments

and tweaks in the subsequent follow-up round in 1995. And that

is what we are envisioning, a 2003 round and a 2005 round, again,

to make those tweaks and adjustments.

It is—and frankly, if you ask us, well, would you take one round?

Yes, we would definitely take one round, and we would try to do

the very best job we could in that one round. Our analysis is that

given the amount of the infrastructure that we believe needs to be

taken down and shifted around—because it is not just closure, it

is realignment, the two would benefit us more.

Mr. BATEMAN. I am sure you are aware that the base closure

process is a very, very turbulent and traumatic kind of phenomena

for hundreds of communities throughout America. It is nonetheless

going to be something that at a point in time we must do. I just

have some hesitation as to whether we need to put them through

177

it twice as opposed to doing it comprehensively and doing it soundly once. I want to have you express your views as to why the dual

round instead of a single round.

Secretary YIM. One of the things we are doing also, Mr. Chairman, is to try to mitigate the impact of it. And with the help of

Congress last year, we were able to—and Congressman Ortiz and

Congressman Rodriguez—enact legislation to allow us to transfer

the assets of our closing military bases to the communities at no

cost for job generation purposes. And that, I think, has gone a long

way to mitigating the impact or economic dislocation and trauma

that the communities go through. But there is still no question that

this is a traumatic process, just like any of our downsizing efforts,

and we understand your point very well, sir.

Mr. BATEMAN. Mr. Ortiz.

Mr. ORTIZ. Thank you, Mr. Chairman. I appreciate you all being

with us today and the fine work that you have done under the circumstances. And I know that money happens to be the problem, of

which we don’t have enough. But I am going to be asking some

questions for all of the services. And my first question would be the

question that I asked the prior panel, what benefits do you think

will result from the presence of a DOD-wide strategy for addressing, you know, the RPM crisis, and how do you assess your service

infrastructure recapitalization program? And then, what are your

long-range plans for breaking the cycle of increasing the RPM

backlog? And maybe you can give us a little input as to what we

can expect.

Mr. BATEMAN. If you would suspend for a moment—Mr. Ortiz, I

find myself in the situation where I made an improvident commitment to be somewhere at 11:45. So I am going, with the utmost

confidence, proposing you of the responsibility for presiding over

the hearing at the point where I have to leave, which is going to

be in about two minutes.

Mr. ORTIZ. That is fine, and I will not let Mr. Sisisky call for a

vote.

Mr. BATEMAN. Well, I might even be willing to go along with

that.

Secretary YIM. Thank you very much. Yes, we are trying to get

some degree of consistency, but the biggest problem we have is— and it has been suggested that we have a floor, for example—is

that I believe that we really do need the programming flexibility.

We do see a lot of money being spent on training in the first part

of the year, and then a lot of money coming in to RPM at the end

of the year, as General Mashburn has indicated. That is actually

good for us, because the only people that really can execute at the

end of the year when money falls out is really the installation guys.

So we really are benefiting from that type of budgeting system.

The problem we face is that people are accused of having soft requirements within our own systems, our own comptrollers. The

RPM needs, you don’t know what you need, you don’t really know what you have. How can you really say that this $10 million is

really going to improve readiness? It is very difficult for us to create algorithms or connections between a specific mission readiness

and a specific dollar devotion to a particular facility. So people accuse us of having soft requirements.

178

That is why it was very important for us to have this cooperative

effort to get to a facility sustainment model that had commercial

bench marks. So what I believe, where we are headed, is we are

not going to get a floor unless it is mandated. That is not what the

services nor the Department is requesting. However, what we need

to do is increase the visibility of the decisions, either to fund or not

to fund, and that is what we are attempting to do in the facility

sustainment model so we can say to our programmers, okay, we

know that you need this $50 million, but this $50 million would

have done this, and the consequences of not giving us that $50 million this year and only giving us 20 is this. And we hope to get to

that level of granularity in our model.

Mr. ORTIZ [presiding]. Any of the services who would like to respond to my question?

General VAN ANTWERP. Yes, sir. I would like to just say I think

the facility sustainment model that Mr. Yim is working with the

services; we have had the installation status report for several

years—it is pretty mature at this point, and it is somewhat akin

to that and will fold into that. I think the key to that is the standards that you have so you know exactly what the condition is, and

what this facility sustainment model and the installation status report does, it actually—you go out and you look at a facility. You

have a checklist, and when you are done, you know whether that— you know the sustainment costs and you know the modernization

costs of that facility. So that is the first part.

And then it gets into how do you break this chain that you alluded to. I think it is a combination of getting rid of, as we have

already discussed, what we don’t need anymore, so we are not

pouring valuable dollars into that. And then the second part, you

have to get this funding up to a level that while you are trying to

sustain, it is not deteriorating at a greater rate. We are on a

downslope right now because of chronic underfunding. And so we

have to get it up to a level that allows us to—no fooling, not let

the stuff we have go down further.

You combine that with a good program of military construction

and modernization, and you take some of those C–4, what we

would call a C–4, not mission capable facility, and you either tear

it down or build a new one, or you really go in and modernize it.

I think that is how you break it. We know the cost of that in the

Army, to break that in RPM is about $500 million a year. Frankly,

if we are going to do that over the next several years to sustain

it, that very high level will break this trend that we are in right

now.

Mr. ORTIZ. Admiral.

Admiral SMITH. Sir, I would offer that I really would check into

everything that has been said so far. Within the Navy, I think, it

is just a few simple words. The first is to focus what we have. We

are spending money on operational facilities, quality of life facilities, training facilities, things that we know we are going to have

and we are going to keep. We are going to get rid of things we don’t

need anymore, whether that is by demolition, or by outsourcing, or

by privatization. We are going to consolidate where we can. And I

would be remiss if I talked—and we are going to coordinate that,

obviously, with our MILCON program to recapitalize our plant

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ashore. But I would be remiss if I didn’t also mention that we are

going to have—if we are going to have the discipline internally to

break this cycle of poverty, we are going to need to educate our

people. And it is not just our base commanders. It is also the people who live and work in these facilities as well as the people who

fund those, our good friends in the comptroller business in Washington about not just a metric, but also, what this does and what

the payback is for us.

Our former Commanding Officer (CO), Admiral Boorda, used to

say, quality of life is the last thing that happened to you today, and

we are very sensitive to the fact that if you can live in a wonderful

brand new one-plus-one barracks but, yet, at your workplace, the

roof leaks, you have got an old typewriter instead of a word processor, that is not going to be an incentive for you to stay around

in the Navy whether you are a civil servant or an active duty military member. So it is a multi-faceted approach, but I think we are

on top of it and we are making enormous progress.

Mr. ORTIZ. Thank you. Mr. Robbins.

General ROBBINS. Yes, sir. I would only add on the facility

sustainment model, I think the beauty of it, and its utility to us

as engineers, will be that because it is based on and bench marked

against industry standards, commercial standards, as opposed to

something that perhaps was just dreamed up, if that is the right

term, internal in the Department of Defense—will allow us to better articulate and justify our requirements within the various corporate structures of our services, the Air Force Council, in my case,

where we won’t be just talking what civil engineers think we need,

but Mr. Yim will have delivered to us a model that we can point

to and say this is the way the rest of the world, commercial airports, universities, other government agencies, state governments,

et cetera, approach this very nagging problem that we have. So I

think that is the primary benefit that we see from developing a

new model that we can all abide by across the uniformed services.

Mr. ORTIZ. Thank you very much. General.

General MASHBURN. Yes, sir. The only thing I could add is we

must maintain the flexibility that is provided by not fencing real

property maintenance money. For instance, I mentioned the four

pillars of readiness, our legacy systems, very old equipment. During the course of a year, what happens if our vehicles’ transmissions have a severe breakdown throughout the fleet—not under

warranty—very difficult to handle unless there is something

unfenced. If you have to weigh repairing the Amphibious Assault

Vehicle’s (AAV’s) versus repairing an old building, I think the commandant is right in making a decision as far as warfighting. So I

just request that we be allowed to maintain the flexibility of managing the program with added emphasis on reporting properly.

Mr. ORTIZ. Thank you very much. I now will yield to my good

friend, Mr. Sisisky, for any questions that he must have.

Mr. SISISKY. Thank you. You don’t want a fence then. Is that

what you are saying? You want the flexibility to move that money

around. Is that what you just said?

General MASHBURN. Yes, sir.

Mr. SISISKY. And you think that is the proper way to do it?

General. MASHBURN. I do, sir, with better management tools.

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Mr. SISISKY. Thank all of you for being here today. Mr. Yim, I

have never had the pleasure of seeing you before. As these gentlemen will testify, I was a pretty outspoken member of the Military

Construction Committee, but they wouldn’t let me serve on it this

year.

I would just get back for a minute to BRAC, and I know what

the Chairman’s—we have talked about it many times, the fear of

two BRAC’s. And the fear is not over two BRAC’s, the fear is messing it up. For instance, in 1993, they closed the Naval Aviation

Depot (NADEP) in Norfolk; that is the Air Rework facility. They

closed it, basically, because the captain who was commanding the

place took a gamble on 600 employees—this is a true story—that

they were going to get enough business, when he should have RIF’d

or laid them off, but he didn’t do it, and he readily admitted it. So

the cost went up and they took that picture right at that time and

they closed it. Two years later, they sent it to Jacksonville. Two

years later, they closed Jacksonville, Cecil Field, and sent all the

airplanes to Norfolk. Now, they repair the airplanes in Jacksonville, and all of them were sitting up in Norfolk, so they had to fly

down to get repaired.

But I can tell you a worse one than that. The Navy, was it—I

forget the name of it, but it had to do with communications and

radio work. It was done at the Norfolk Naval Shipyard in the

annex, St. Julian Annex. So they closed Charleston in that year.

I forget what year it was. They took all those ships out of Charleston, but they put the communications system, so now, the only one

that benefited was U.S. Air, because then they had to fly from— you know, so that is our fear of two, you know, maybe you wouldn’t

mess up, you would be more careful in one. But you are going to

have enough trouble just getting one through, so I don’t know. But

just prepare yourself for that.

I think that’s what they—you know, all this talk about—all of

you talked about the real estate aspect of it. Nobody mentioned

anything about base operations. That thing is really—am I imagining that that is hurt worse than anything, all the cuts in that?

Is that my imagination or is it just base commanders complaining?

Anybody like to—

General VAN ANTWERP. I could just for the Army, we are in 2001,

this budget funds the base ops at 96 percent to run the base. So

I think it is really more in the RPM— Mr. SISISKY. Excuse me. Ninety-six percent of what figure?

General VAN ANTWERP. Of the requirement.

Mr. SISISKY. Of the requirement?

General VAN ANTWERP. Yes, sir. So that is the—

Mr. SISISKY. While you have got the microphone, you made a

statement about the 90 percent mark in 2005. That is what you

want to get to in real property maintenance?

General VAN ANTWERP. At least that high. I mean, I will tell you

a—

Mr. SISISKY. Well, let me just tell you what the problem is in

that. You have been snookered, because they are basing that savings on an illusion that privatization is going to produce about $5

billion. Now, you prove it to me that it is going to do $5 billion.

I am telling you, your fund is going to be shrunk if you base it on

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that. And that is what I worry about. And a lot of other things that

are happening in the Department of Defense, based on an illusion

that it may happen.

I am not sure, Mr. Yim, when you said that the savings are real,

coming off of the BRAC, that we do know that they are real. I got

so upset eight years ago. I put the largest amendment that has

ever happened in this place, a $70 billion amendment, and guess

what it was for—to do away with DBOF because everybody was

dipping their hands in the DBOF fund, which had to do with the

D-builders all around and shortening those, you know. So you

know, I worry, because I have seen it happen, you know, if we are

going to save it in the accounting system is probably not the best

that we will even know.

Public works, now, is that an illusion of mine, too, that you privatize mostly public works. And is that saving a lot of money?

Admiral SMITH. If I could take that one, sir. I answered this, of

course, as a two-time public works officer and a former Commanding Officer (CO) of a DBOF-funded activity, I am sensitive to

everything that you were talking about. We, of course, have a very

active Commercial Activities (CA) outsourcing program, and public

works utilities, of course, is a part of public works, and this is my

third round of A–76 in my career. And I don’t think any of them

were easy, and this one isn’t any easier either. We have gone back

and, of course, we are in the middle of a lot of studies. We are

studying everything from janitorial services and trash collection up

through, basically, utilities privatization and outsourcing of vehicles for our fleets.

We are finding savings. We found some substantial savings, and

I would be glad to detail those for you for the record. The savings,

what our friends in the comptroller shops have already taken from

the budgets, that is not always a match, and I think that is what

you were alluding to before, sir; but there is money to be saved

there. There is money for us in the facility side to save there. Within my clemency at Naval Facility (NAVFAC), I have 1,200 people

who work on managing, maintaining, operating, and repairing utility systems. I am not sure I need any of these people. Now, I never

say never—I mean, I never say always, because I know I have got

people doing that on Diego Garcia; and it is hard to get Hawaiian

Electric to hook a line up all the way to Diego Garcia.

But I think the point here is that we not only can save some

money, and that is reason enough to keep doing it, but also, it does

have a ripple effect back into our facility requirements on base, because where we can outsource utilities, we don’t need a utilities

shop on base anymore. Usually, the local power company or whoever will provide that in their own facilities off base.

Mr. SISISKY. Well, in the largest Naval installation in the world,

you are doing that right now. I don’t know if you gentlemen know,

but down in Norfolk there is one commander of everything. He is

in charge of every base that is around there, everybody reports to

him. But public works, you know what bothers me; if you have people with sewerage, or anything, and they do maintenance work, but

you save money by letting them go, and you privatize it so you do

it when you have a problem, then that may be a problem. And that

is why I say the savings may be an illusion to some degree.

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Admiral SMITH. Yes, sir. And that is always a concern, again,

that you estimate the savings higher than they actually are. From

a provision of service side, I do remember—that is why I have got

all this gray hair—when we first contracted out things like trash

collection, and we had several contractors default, it is kind of well,

what happens once you get rid of the trash trucks and you can’t

pick it up yourself.

Mr. SISISKY. I will tell you a better one than that. They hired a

foreign company to fix cranes. I didn’t realize fixing cranes was

about $250,000, these huge cranes at the shipyard.

Admiral SMITH. Portal cranes, yes, sir.

Mr. SISISKY. So they hired this company, and it was a foreign

company, said they could do it for $50,000. Well, what they did,

they went bankrupt like in nine months. So do you know what I

did? They have got a little thing in military construction budget,

and you probably know, building a railroad down there. What we

are going to do now, and it will pay back in five years, we are

building a railroad to move the cranes all around the yard and do

away with half the cranes. It makes sense.

Admiral SMITH. Yes, sir.

Mr. SISISKY. So you say that it is not an illusion, or is an illusion,

that we are saving money, or you don’t know?

Admiral SMITH. I would say, sir, it is not an illusion. We are saving money. It is a question of how much and, again, does it match

the projections.

Mr. SISISKY. I know the one question I really want to ask all of

you, though. When they dip into RPM or base operations for contingencies, what percentage do you get back? Do you get it all back,

half back? The Marine Corps said they got $6 billion—or $29 million back.

General VAN ANTWERP. I didn’t understand what percentage that

was that he—

Mr. SISISKY. I don’t know either. That is why—

General VAN ANTWERP. From the Army’s standpoint, I will have

to get that one for you for the record. We do get some of it back.

There is no question about it. Is it 100 percent? I would speculate

no.

Mr. SISISKY. I don’t want you to get in trouble.

General VAN ANTWERP. I know. Thank you, sir. I appreciate that.

Admiral SMITH. Sir, I would have to say the Navy is happiest forward deployed around the world, and if we have got to take money

out of RPM, well, there is enough Naval officer left in me to say,

so be it. But I would say—I will take that also, if I could, that we

get most all of it back. We do pretty well at the end of the year.

But again, it is a matter of priorities. It really is.

Mr. SISISKY. General Robbins.

General ROBBINS. I think the prudent thing for an engineer in

the Air Force to say would be, since we don’t have any money to

start with, we don’t have any to lose. Perhaps, the more politically

correct answer would be, it would be hard to say how much is diverted from RPM to go to contingencies to start with, as was alluded by one of the panelists earlier. We tend to be underfunded

in the budget process itself. And so to determine how much we

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didn’t get because a contingency comes along becomes a pretty difficult accounting problem.

I know of no instance in my previous experience at Air Combat

Command, sir, down at Langley, which you are familiar with—I

don’t remember us ever taking money that we already distributed

to the wings and air combat command for RPM, pulling it back and

saying we need to fund contingencies with this. What really has

happened is we have seen a decrease in the year-end fallout money

that comes our way, because it tends to be used to pay for those

contingencies.

We got a good healthy chunk of money after the Kosovo supplemental. Whether it is distributed, dollar for dollar, where we would

have put that money in the first place or not is almost impossible

to determine.

Mr. SISISKY. All right.

General MASHBURN. Yes, sir. I would say it competes very well.

I would not at any time say we could get 100 percent reimbursement, but it competes very well.

Mr. SISISKY. I do have another question, but I will let my friend

over here ask some questions. I am sorry. Then I will come back.

Mr. ORTIZ. I yield to my good friend and colleague from Texas,

Mr. Rodriguez. Congressman.

Mr. RODRIGUEZ. I know Congressman Sisisky is very shy and so

I want to thank you for yielding to me. I wanted to share with you,

we have in San Antonio, and I am sure throughout the country, a

lot of old bases, like Fort Sam and Randolph, that have some beautiful structures. And I know the last thing we want to do is knock

some of those down. In fact, in some cases, the communities would

not allow us to do that.

But I wanted to throw out the question in terms of whether we

need to do anything special in terms of historically for those historical sites that are throughout the country, in terms of making sure

we maintain them appropriately because we want to do that for

historical reasons. Also, in terms of I realize that a lot of them are

still being utilized; and so I wanted to make sure, you know, I want

to get your feedback on that one.

Second, I wanted to also—I know, Mr. Yim, you mentioned a little bit in terms of the Brooks project in San Antonio; and I would

want for you maybe to make some comments, because I think that

not all bases are the same, but there are some opportunities out

there—not, you know, despite BRAC, or whatever, but to also look

in terms of some cost-effective measures in terms of reducing the

costs and cost operations. And I would want for you also to make

some comments in that area.

Secretary YIM. Yes. Thank you. First, on the historic issues, the

historic properties, and this is more than just historic quarters; we

have historic buildings, facilities. What we are suggesting is in our

proposal for enhanced use leasing of our underutilized facilities,

that the historic properties give a character to our installations

and, actually, are often coveted by the private sector to use for representational events, conferences. It gives a cachet that is very nice

for the private sector to use; and since we don’t use a lot of our

historical facilities to the full extent, that that is perhaps a vehicle

that we could have some dual use, or renting of our facilities, and

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then capture the money in our enhanced use leasing proposal, and

then keep it at that installation either to help maintain that historic property or to fund other real property maintenance or other

infrastructure requirements.

And I think that would—that would give then some functional

significance to the preservation of our historic properties. If we are

just looking at preserving them for their historical sense without

a functional significance, there is always pressure to demolish them

or underutilize them. We would like to give an economic, functional

significance to them in that manner; and I think that is a good vehicle.

Our data seems to show, and I think many people think it is

much more expensive to maintain historic properties than others,

that is probably not precisely true. It is more a function of the age

rather than their historical character itself. And then if you also

look at the life cycle cost of them, if we are putting a slate roof,

for example, back on an historic property because that is what the

appearance was, it has a much longer useful life than other types

of building material. So over the cycle, the life cycle, it is about the

same as most of our other facilities. But that is one that we would

like to look at.

The other significance of historic properties is people are beginning to lose contact with the military and what role the military

plays. And to the extent we can use historic properties as draws

for the general public to come onto our bases or participate, it gives

them a better sense of what the military is all about, and that fulfills another important goal for us.

With respect to Brooks, as you know, sir, I am a very big advocate of Brooks and other projects like Brooks. Brooks is a project

where we are actually asking a partnership in a true sense between the military installation and the community to help us with

our operating costs. We are talking about concepts even as innovative as perhaps even leasing the whole—or conveying the whole

property to the community and leasing back on the assumption

that the private sector, taking advantage of the economies of scale,

can be more efficient in management of installations than we can.

And plus, it allows us to fulfill that other goal I just talked about,

integrating the military function, military life, with the community,

and giving people a better sense of what we do. So I think there

is great potential in Brooks. We were able last year to get legislation allowing us to proceed. We have some reports back to Congress

on that, in July, on progress for that. But you will see that my office installation is very, very strongly supportive of those type of

concepts.

I would like to mention one other thing, if I could, too, on our

funding. And to go back to Congressman Sisisky’s view, we do have

problems with estimating the savings. And sometimes our budgets

are—the comptrollers take more in assumed savings than perhaps

we really can deliver. I also have to mention that last year, Congress in the Appropriations Act took $100 million from us on assumed savings from competitive sourcing. And that was quite a hit

that we took from our own budget lines. So we would ask your support in helping us maintain our projections.

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Mr. RODRIGUEZ. Thank you for those comments. Let me add one

other thing. When you talked about historical sites, I know—and

I would ask that, you know, because I think we have some unique

sites out there. I have the distinction also of having Fort Ringo

that was one of the forts that goes back a long time—not Bill

Ringo, Fort Ringo. And it was turned over to the school district

down there. And it is a beautiful facility right on the Rio Grande

out there in Rio Grande City. And it used to be called Davis Landing way back in the 1850’s, and so it is a beautiful facility. Yet, you

know, and so you see some of those sites out there. And I think

we have an obligation, I think, to all Americans that we kind of

safeguard some of those sites. And I am not sure, exactly, how to

go about that, but I would hope that maybe in the future we would

come up with some recommendations as to how to do that.

In reference to your comments, also, regarding Brooks, I think it

is a unique opportunity. Not all communities would want to do

that. Fortunately, we do have a community in San Antonio that is

willing to move forward on some of that. Mainly, because of experiences from the closure of a base that had 20,000 people there, and

that is Kelly. And so I want to thank you for being here and your

comments. Thank you. And I relinquish the remaining time to my

colleague.

Mr. ORTIZ. I think that Congressman Sisisky has another soft

question for— Mr. SISISKY. Well, just following on him, an historical thing, it

is amazing what you can do with buildings today. We have historical plaques, Civil War plaques, at the Norfolk Naval Shipyard, and

we have modernized those buildings. Now, they look terrible

from—I mean, they are brick, they are not terrible, but they are

old buildings. But you should see what they have done on the inside. It is unbelievable with computers, and carpets, and lighting,

and everything. We have also built a very expensive hospital down

there, and one of the buildings, you cannot tear down, so we will

make that the administration building. So you know, there is something.

But what I wanted to ask you, I have told General Van Antwerp

this story, and it has to do with family housing. I was over in

Korea last fall, and I was having lunch with a group of soldiers.

And you know, you go around the table from the state, I am from

Fairfax, Alexandria, Fredericksburg, Richmond, and I get to this

last one, and he says, Congressman, I am from Fort Lee, Virginia,

and my family is living in the house while I am over here that you

helped build. And I will tell you, I have never had a feeling in my

life like that. But it was on base.

And this is what I am asking you. I tried when I was on military

construction to do something simple like the Virginia Housing and

Development Authority, to loan money to sailors, because the Navy

was in a position not to guarantee completely; but if you are an

east coast sailor, you will usually be placed in Norfolk. If you are

a west coast sailor, you would be in San Diego or Bremerton. So

they could buy a house, even the lower enlisted person with very

little interest rate.

But how important do you think—and I know this is true with

the Army. And of course, now, with the new expedition in the Air

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Force and Marine Corps, how important is it living on base in a

family atmosphere where a young man or woman knows that when

they are overseas, their family is in a family group. How would you

weigh the importance of that?

General VAN ANTWERP. Sir, I would say from an Army standpoint, it is very important. If you just look at the waiting list of

people wanting to move on post, you will find they are enormous.

They can run two years, over two years. Right now, we house about

25 percent of our people on our installations, so the majority of people live off the installation. But there is no question that it is the

most attractive, both probably from a financial standpoint, from a

community security standpoint, from having all of the benefits of

living on post for the activities that are there for youth, just a lot

of pluses why you want to do that.

But we—you know, our deficit on post is huge, if we would try

and bring the percentage up much.

Mr. ORTIZ. And if I may, I think that because the military owns

the land, if there is enough land on base, then it would be cheaper

to build—and correct me if I am wrong—than it would be to, either

if it is a joint venture on the outside, because of the land that is

owned. Now, many of the bases might not have as much land. But

maybe you can add that to the question that Mr. Sisisky just

asked.

General VAN ANTWERP. I would just—in our one housing privatization that we awarded recently at Fort Carson, Colorado, part of

that contract is to build 800 new sets. Of that 800 sets, that number was devised in working with the local population. We are finding that out in the economy, they can do mostly the two bedrooms.

But the three and four bedrooms for our junior people, what they

can’t get out on the economy for what their allowance is, that is

what we are going to build on the installation. And with that land,

the little cost of land, if you have the space, it is a winner. So you

are exactly on target there, sir.

Mr. ORTIZ. Admiral.

Admiral SMITH. Thank you, sir. First off, to say the Navy is for

the large part coastal and urban, over 80 percent of our sailors live

out in town in the community right now. That doesn’t mean that

the socialization that is offered by being on base and living in the

community isn’t of value to us, especially, when our sailors will deploy for six months or longer at a time. So that is an important

thing to us to be able to provide to our service members.

Within the seven Planning, Programming and Budgeting (PPB)

actions we have ongoing right now, some of them in Texas, we are

also looking at using some of the authorities that the Virginia

Housing Development Authority (VHDA) has in the Tidewater

area. Land fleet had already proposed yet another pilot project; and

they brought that to Washington, and we are talking to the Navy

Secretary and Mr. Yim’s staff about perhaps proposing that forward. I mean, that is not soup yet, but I think you all will be hearing from us shortly about that because, again, that is a wonderful

agency down there. And our goal, as always, whether it is married

family housing or bachelor housing, is to try to help more sailors

faster.

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Mr. SISISKY. I will tell you what made me ask the question if you

really want to know the truth, other than that young man thrilling

me in Korea. We were interviewing dependent wives after Kosovo.

I went down to Norfolk with the President and the Secretary of Defense. And one of the dependent wives said, you know, what really

worries me—and she said, not in Norfolk, Virginia, because this is

a military town, not in Norfolk, Virginia; but we are kind of treated

like being on welfare all the time—we are second class citizens.

People think we just get doles out from the government, and she

was very sincere. She was in other places that I have been. She

said I just want to make it plain, that this isn’t Norfolk.

And I wonder if that permeates through the system. That is why

I mentioned the on-base housing versus the off-base housing.

Secretary YIM. I think, Congressman, that I have to give a slightly different view, too. There is some doubt on the other side, in fairness to the issue, that particularly with families now that have

working spouses, that if they could afford better quarters off-base,

that they would prefer to live off-base. There was a recent study,

for example, to that effect. Now, there is always going to be a need,

always a need for on-base housing. We are never going to go completely away from that. We also are privatizing on-base housing so

we can keep it on base but have the management responsibility

shifted to the private sector, and there is some benefits of doing

that.

When we overbuild on-base housing, there is quite a tale that

goes along with it—roads, and support centers, and child care centers, and schools, et cetera. So there is quite an associated cost that

sometimes also can be shifted to the community. I think that the

increases in the basic allowance for housing, we are going to see

does it really drive down a lot of the requirements. Is the Rand

study correct, are people going to prefer to live off base? And I

think we are going to see a mix of people still preferring to live on

base, but more and more people actually preferring the off-base alternatives if they can afford quality quarters.

Mr. SISISKY. If they can buy now. May I—because this is something that is bothering me, and I haven’t been on a military construction subcommittee to really get in it. I was in it for a while.

Do we have any real estate experts in the Department of Defense

now? I mean, for leasing. Let me tell you why. I raised cain—I

mean, you can’t believe—over Southcom’s leasing down in Miami.

I could not believe that anything like that—and then, you know,

the government Corps of Engineers did it, but he doesn’t have the

expertise to do it. I doubt whether you gentlemen have the expertise. But there are people that are skilled, that knowing how to

make a deal, you know, and maybe you are the ones. I don’t know.

But do we have anybody, because Mr. Hamre promised me he

was going to get some people in there that really were experts, because you mentioned privatization on federal land; and you are getting complicated deals here that are not easy deals, because you

may say you are 100 years behind, but we are going to catch up

through privatization; and it may be costing so much money that

you are really not catching up.

Secretary YIM. That is a concern, sir. And I mentioned that we

needed to get better knowledge management tools out in the field.

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There is a lot of in-house, it is smart people. And it is not because

they are not smart, it is because they don’t have the experience.

This is a very different deal for us, and this is not a housing construction project. What we are looking at is a management project

over time. The deals don’t crash and burn in the first couple of

years because they look like a standard construction project and we

can do that. They will crash and burn if the financial or cash flows

aren’t sufficient to be able to do the repair and replace the roofs

in the tenth year, or the fifteenth year, or the O&M account isn’t

sufficiently funded and the guys go bankrupt on us.

A lot of people, a lot of the services are augmenting with outside

real estate experts that have worked this issue for either public entities or for private sector and bringing on that expertise and really

learning how to do this. That is why we have had, frankly, a slow

pace of housing privatization.

Mr. SISISKY. It has been slow, there is no question about that.

Secretary YIM. And I think we, justifiably, should be criticized for

it has been slow. We have had some fits and starts. This is all part

of this kind of market research, because we didn’t even really

know, frankly, what to ask for when we went out to the private

sector. And I think we are getting better on that.

Mr. SISISKY. All right. I will let everybody go to lunch.

Mr. ORTIZ. Just one more question if nobody else has any questions. You know, I know that industry has a cost analysis system,

more or less, how much it costs to maintain a square foot of building. And when you look at that, it may be a newer facility versus

an older facility. Could you give me the difference, more or less,

how much it would cost to maintain a newer facility and an old facility?

Secretary YIM. I think that I will need to take that one for the

record, because there will be a variety of different factors. So let

me not just give you a cavalier attitude or answer. We will look at

that more closely. That is what we tried to do with this costing

handbook, is to try to get commercially benchmarked measurements on what it would cost to maintain both old and new facilities.

Mr. ORTIZ. Thanks, Mr. Secretary. General.

General VAN ANTWERP. Sir, I would just say that right now in the Army, we are around $3.50 per square foot, but that is for all

the buildings. And as you recognize, if it is a new building, it could

be less. I personally think, based on the private sector and what

we found, it is somewhere in the $5 to $6 range, $5 to $6 a square

foot. It is very dependent on the type of building, the type of use.

A warehouse space is much less than a child care center, for instance. So it has some dependence on that. But it is up in the $5

to $6 range, I would think.

Mr. ORTIZ. Thank you. Anybody else? If not, we want to thank—

I am sorry.

General MASHBURN. Sir, if I could address Mr. Sisisky’s question

concerning base housing and the requirements for dependents of

deploying members; historically, we have found that we have concentrated so much on the 25 to 30 percent of our military families

who live on base and we greatly neglected that 70 to 75 percent

who lived off. We found that many of our young Marine families

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desire to go to their home and be with their parents and family

when our young Marines deploy. So I think in the entire package

of benefits, we really must concentrate on Basic Allowance for

Housing (BAH), medical benefits, so that when they go home, they

feel like they are still part of the military.

Mr. ORTIZ. Thank you, sir. If there is no further questions—he

moves, Mr. Sisisky. I am glad he is my friend. Let me thank Mr.

Secretary and all of you for being here. I think that this was a very

informative hearing this morning. We want to thank you, and if

there is no further business, this meeting is adjourned.

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.]

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A P P E N D I X

MARCH 1, 2000

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PREPARED STATEMENTS SUBMITTED FOR THE RECORD

MARCH 1, 2000

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QUESTIONS AND ANSWERS SUBMITTED FOR THE

RECORD

MARCH 1, 2000

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QUESTIONS SUBMITTED BY MR. BATEMAN

Mr. BATEMAN. BACKGROUND: GAO noted in its opening statement that before

1996, base operations and real property maintenance were not separately identified.

Since then, the services have budgeted and obligated money to each of these areas

separately. Real property maintenance funds are used to maintain and repair buildings, structures, warehouses, roadways, runways, railway tracks and utility plants.

Base operations funding is used for services such as utilities, base communications,

snow removal, security, and morale, welfare, and recreations activities.

What brought about this change in the military services’ budget structure in

1996?

Mr. CURTIN. A Department of Defense program decision memorandum dated October 27, 1994, directed the Under Secretary of Defense (Comptroller) to lead a study

to develop alternative budget structures and reporting methods for the operations

and maintenance (O&M) appropriations. The objective was to determine if changes

should be made to improve visibility into planning, programming, and execution.

DOD considered real property maintenance funded through O&M significant not

only in dollar terms ($5.1 billion in FY 1996) but also in terms of the quality of life

of DOD personnel, and therefore personnel morale and readiness. Although real

property maintenance was separately identified in the budget structure for the military services budget estimate submission it was merged with base operations in the

President’s budget request. The merger created a base support O&M program that

was nearly 19% of the O&M budget in fiscal year 1996. Thus, to improve visibility

of both real property maintenance and base operations the study recommended separate identity in the O&M budget structure for these two areas.

Mr. BATEMAN. BACKGROUND: GAO noted in its testimony that during fiscal

years 1996 through 1999, the services’ reported obligations were $2.7 billion (4.5

percent) more for base operations and real property maintenance than the initial

congressional designation of $61.2 billion. GAO identified most of the increase as

going toward base operations.

Which service has the greatest concentration of this movement and has the trend

to move funds into base operations decreased or increased?

Mr. CURTIN. During fiscal year 1996 through 1999, of all the services, the Army

had the greatest movement of operation and maintenance funds, totaling over $1.2

billion, into base operations. Every year during this period the Army moved funds

into base operations. While the trend varied the Army moved the most funds into

base operations in fiscal year 1996, about $502 million, and the least funds in fiscal

year 1998, about $71 million. However, the Air Force consistently moved over $900

million to base operations during the same period. The Air Force moved the greatest

amount into base operations in fiscal year 1999, over $519 million, and the least

amount in fiscal year 1997, over $72 million.

Mr. BATEMAN. BACKGROUND: GAO noted in its statement that it is not possible to trace the origins of all funds moved into or out of budget subactivities, such

as unit training. However, GAO goes on to say that in fiscal years 1997 and 1998

the Army moved about $641 million from unit training to real property maintenance

and base operations.

If this movement is not traceable, how did GAO identify that $641 million was

moved from unit training to real property maintenance?

Mr. CURTIN. DOD is required to provide detailed data on budget movements for

high-priority readiness-related budget subactivities. These reports describe movements of funds for some of the subactivities designated as high-priority by Congress

and must include the total amounts moved into and out of these subactivities and

an explanation of the reasons for the movement. It was through these reports that

we were able to identify the $641 million moved from training to real property

maintenance and base operations by the Army and $35 million moved from training

to real property maintenance and base operations by the Air Force.

Mr. BATEMAN. How much of the $641 million went towards real property maintenance and how much towards base operations?

Mr. CURTIN. Of the $641 million the Army moved, $519 million ($112 million in

fiscal year 1998, $407 million in fiscal year 1997) was for base operations while $122

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1Military Infrastructure: Real Property Management Needs Improvement (GAO/NSIAD–99–

1000, Sept. 7, 1999).

million was for real property maintenance. Of the $35 million the Air Force moved,

all was for real property maintenance.

Mr. BATEMAN. BACKGROUND: The GAO conducted a survey of 517 bases and

major commands. The survey pointed out that major commands only requested

funding for approximately 20 percent of the know RPM needs in fiscal year 1997.

These same commands were actually funded at a rate even lower than the requested 20 percent of need.

Why did the major commands request so little of the required funding?

Mr. CURTIN. As we reported in September 1999, according to DOD headquarters

facility management officials of each service, funding real property maintenance is

not their services’ first priority. An Army official described it as the last of four priorities. The major commands and bases understand that this is the culture of real

property maintenance and have acted accordingly—as reflected in the data reported

to us by the commands and the bases.

Mr. BATEMAN. Do you expect that the same practice goes on today?

Mr. CURTIN. DOD’s 1999 planning guidance does not specify any funding level or

goals for the maintenance of property, other than stating that the services are to

fund maintenance at a level they consider adequate to execute missions. DOD told

us that the 1999 language retreats from guidance provided in 1996, which directed

the services to provide sufficient funding to reverse deterioration of facilities and to

improve their effectiveness.

Mr. BATEMAN. Does this indicate that perhaps the backlog is, in fact, greater than

what the services or DOD now thinks it to be?

Mr. CURTIN. As of October 1999, the services were projecting increases in their

repair backlogs because they planned to fund maintenance and repair below identified needs over the next several years. For example, the Air Force has planned no

money at all for repair projects until fiscal year 2003 (although it plans to spend

some funds on emergency minor repairs and other forms of what it terms preventive

maintenance). The services rate the urgency of their backlogs differently, and in the

absence of a single rating system, it is difficult to determine how urgent these needs

truly are. Therefore, simply providing additional funding will not ensure that the

most important deficiencies are funded first or that buildings with repair needs exceeding a large percentage of their replacement value are not demolished instead

(saving money in the long run).

Mr. BATEMAN. BACKGROUND: As a result of the work that GAO and others

have done in researching RPM and the problem of the continued growth in the

backlog in maintenance, the GAO has identified a number of things that could be

done to manage the problem better.

What are the top two or three things that DOD and/or the services could do to

help get control of RPM and the continuous growth of the backlog?

Mr. CURTIN. As we reported in September 1999,1 DOD does not have a comprehensive strategy for managing its maintenance and repair needs. Rather, each

service sets its own standards for maintaining infrastructure. Without standard assessment criteria, DOD cannot compare maintenance costs or facility conditions

across the services. This hampers the development of a sound strategy for managing

the upkeep of the military’s infrastructure. Further, the services cannot ensure that

their ratings of facilities’ conditions are valid or reliable either at individual bases

or within each of the services because facility assessors do not apply their service’s

criteria consistently. Thus, DOD’s strategy should include:

• Uniform standards that set the minimum condition in which military facilities

are to be maintained and standardized condition assessment criteria;

• Standard criteria by which the services are to allocate space for different types

of facilities, (e.g. barracks, classrooms, administrative buildings) and against which

RPM funding allocations will be measured;

• Standard criteria for inventorying DOD and service property (except for relatively few service-unique facilities).

USE OF TRAINING FUNDS TO PAY FOR BASE OPERATIONS AND RPM

Mr. BATEMAN. BACKGROUND: The military services’ principal source of funding

for RPM and base operations is their O&M appropriations, and the Services have

flexibility in using those funds. Congress is concerned about moving funds from unit

training to RPM and base ops and the impact on readiness.

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Who decides to use O&M funds, such as those for unit training, to pay for base

operations or real property maintenance and what procedures are in place to monitor those decisions?

Secretary YIM. Normally, the installation commander or the major command commander makes the decision to migrate unit training funds to base operations or real

property maintenance (RPM) accounts, or conversely from base operations and RPM

to unit training. These commanders must balance priorities and requirements during the course of the fiscal year to ensure continued unit readiness, thus they require the flexibility to transfer funds between accounts where and when necessary.

These commanders are in the best position to maximize the benefit from available

funding in meeting unit training and installation mission needs. Congress and DOD

have established guidelines that enable any transfer of funds within readiness accounts to be tracked at the Service headquarters level. Proposed transfers of funds

between budget activities in excess of $15 million are subject to Congressional approval. This requires written notification to the Congress for the cumulative value

of transfers in excess of $15 million into or out of operating tempo subactivity

groups (SAGs). A Re-baselining Report is sent to Congress in February which identifies any Congressional and Service adjustments (transfers) made in conjunction with

release of the O&M appropriation to the Service Major Commands. A monthly report is provided by the Defense Finance and Accounting System (DFAS) to Congress

that shows current obligation data and any transfer of funding between SAGs. Reports are also provided to Congress for any major reprogramming actions that require approval.

MOVEMENT OF FUNDS FROM UNIT TRAINING TO PAY FOR REAL PROPERTY AND BASE

OPERATIONS

Mr. BATEMAN. Who decides to use O&M funds, such as those for unit training,

to pay for base operations or real property maintenance and what procedures are

in place to monitor those decisions?

General VAN ANTWERP. Generally the field troop unit commander, who is frequently also the installation commander, or the major command (MACOM) commander, makes the decisions on migrating O&M funds, such as unit training funds,

to other purposes. These commanders must balance priorities during the course of

the fiscal year to ensure continued unit readiness, thus they require some flexibility

to transfer funds between accounts when necessary. These commanders are in the

best position to maximize the benefit from available funding in meeting unit training needs and installation mission needs.

Congress and DOD have established guidelines that enable any transfer of funds

within readiness accounts to be tracked at the Headquarters, Department of the

Army (HQDA) level. Tools used include:

• Restrictions: Proposed transfers of funds between budget activities in excess of

$15 million are subject to Congressional approval. In addition, transfers in excess

of $15 million into or out of the Operations and Maintenance, Army (OMA) appropriation Depot Maintenance subactivity group (SAG) are also subject to this rule.

Written notification to Congress for the cumulative value of transfers in excess of

$15 million into or out of operating tempo (OPTEMPO) SAGs is required. The conventional ammunition account has a statutory floor of $355 million.

• Rebaselining Report: Report sent to Congress in February which identifies any

Congressional and HQDA adjustments (transfers) made in conjunction with release

of the OMA appropriation to the MACOMs.

• 1002 report: Monthly report provided by Defense Finance and Accounting System (DFAS) to Congress that provides current obligation data and shows any transfer of funding between SAGs.

• 1415s Provided to Congress for the major reprogramming actions that require

approval.

Admiral SMITH. O&M funds used for base operating support (BOS) and real property maintenance (RPM) are managed by Navy claimant commands per the guidelines of their submitted budgets and funding authorizations. Within a given budget

activity, decisions to move funds between sub activity groups, including BOS and

RPM, are made by the claimant. However, realignments between budget activities

and proposed increases or decreases to Congressional special interest items require

advance approval from Navy Comptroller staff, which monitors and controls such actions via internal Navy tracking procedures. In a few cases, Congressional approval

is also required. As funds are moved between programs, Navy BOS and RPM have

historically been used as a source to augment unit training and operational requirements, rather than the recipient of such transfers.

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General ROBBINS. The AF maintains a delicate balance between mission and support areas. In order to maintain this daily balance, commanders are required to continually evaluate funding required for mission sustainment and support areas. Additionally, they must be allowed to ultimately determine when funds budgeted for one

purpose are used for another such as read property maintenance or support of base

operations. Their evaluation is based upon a close and immediate knowledge of the

competing requirements, the current availability of O&M funding within their units,

and the impact on the accounts to be offset. As the data which comprised the input

for the annual President’s Budget is finalized almost a year in advance of actual

appropriation by Congress, it is impossible to forecast with 100 percent accuracy the

actual daily requirements to which a local commander must react. The commander

is entrusted with the responsibility to perform his Air Force mission and is expected

to take actions necessary to get the job done. Given the funding constraints, the demands placed upon the Air Force, and the age of our equipment and facilities, funding flexibility in the O&M account is absolutely essential. Should the financial ability to react to changing circumstances be further curtailed by more severely constraining our commanders’ ability to react to our ever-changing environment, the

overall mission readiness of the Air Force will be adversely impacted.

General MASHBURN. The Marine Corps historically has not moved funds from unit

training to real property maintenance or base operations. Unit training is as close

as the Marine Corps gets to having an ‘‘untouchable program.’’ Since operational

readiness is the cornerstone of the Marine Corps’ ability to be the nation’s ‘‘9–1– 1 Force,’’ operating forces funding, of which unit training falls under, is a top priority.

Despite executing unit training programs as budgeted, training is sometimes not

at the level hoped for and readiness is not at 100 percent. The Marine Corps tracks

readiness using our Status of Resources and Training System (SORTS) along with

the Global On-line Marine Edit and Report System (GOMERS). These reports provide a macro-overview of a unit’s personnel manning, equipment and supply fill,

equipment readiness and training as assessed by the unit commander. Readiness information is then sent to the Pentagon and is accessible at Headquarters Marine

Corps (HQMC).

Last, Headquarters Marine Corps trusts and empowers the fleet commanders to

move funds from one program to another to meet the operational requirements of

their command within threshold limits. The commanders at Marine Forces Atlantic,

Pacific and Reserve are closer to problems as they arise, and they can identify organic unit trends before HQMC can. The Marine Corps is very attentive to the

needs of its Operational Commanders, as that is where we interrelate with the

CINCs and execute contingencies, exercises and operations.

Mr. BATEMAN. How do the services determine what the impact on readiness will

be if they move funds from unit training to real property maintenance or base operations? More specifically, who tracks the readiness implications of this movement?

Secretary YIM. Realignments between budget activities and proposed increases or

decreases to Congressional special interest items require advance approval from the

Services’ Comptroller staffs, which monitor and control such actions via internal

tracking procedures. The impacts of these decisions are tracked at the Service headquarters level using annual readiness and execution reports.

General VAN ANTWERP. Commanders assess their unit’s current readiness level

and make training and resourcing decisions based upon their unique situation. The

commander in the field is in the best position with the perspective to make these

decisions. At a macro level, readiness is monitored using the Unit Status Report

(USR), which is submitted monthly to Headquarters, Department of the Army

(HQDA). HQDA relies on the commanders’ comments on the USR to identify any

problems relating to training, training enablers, real property maintenance or base

operations that would adversely affect readiness. HQDA works with the major commands to resolve resourcing issues that impact unit readiness.

Admiral SMITH. As noted in the recent March 2000, GAO Report, Analysis of Real

Property Maintenance and Base Operations Fund Movements, (GAO/NSIAD–00–87,

February 29, 2000) the Navy has consistently moved funds into unit training, increasing them by $1.9 billion from FY94 to FY99. However, as indicated in the response to question 1 above, realignments between budget activities and proposed increases or decreases to Congressional special interest items require advance approval from Navy Comptroller staff, which monitors and controls such actions via

internal Navy tracking procedures. The impacts of these decisions are tracked at the

headquarters level using our annual readiness and execution reports.

General ROBBINS. Commanders are required to continuously assess the readiness

of their units, however readiness is more than just flying training. It encompasses

a myriad of activities including maintaining structurally sound facilities in which

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to perform maintenance, training and other support functions. In addition, unit

readiness requires assigned personnel to be fed, housed, paid and otherwise supported so they can perform their mission. Perhaps the most difficult decision expected of any commander is to maintain the delicate balance between unit training

and the essential functions supporting that training and military readiness. The Air

Force delegates the authority to move funds within budget activities to commanders

to ensure the decision is made by the person closest to the problems.

General MASHBURN. The Marine Corps historically has not moved funds from unit

training to real property maintenance or base operations. Unit training programs

are as close the Marine Corps gets to having an ‘‘untouchable program.’’ Since operational readiness is the cornerstone of the Marine Corps’ ability to be the nation’s

‘‘9–1–1 Force,’’ operating forces funding, of which unit training falls under, is a top

priority.

Despite executing unit training programs as budgeted, training is sometimes not

at the level hoped for and readiness is not at 100 percent. The Marine Corps tracks

readiness using our Status of Resources and Training System (SORTS) along with

the Global On-line Marine Edit and Report System (GOMERS). These reports provide a macro-overview of a unit’s personnel manning, equipment and supply fill,

equipment readiness and training as assessed by the unit commander. Readiness information is then sent to the Pentagon and is accessible at Headquarters Marine

Corps (HQMC).

Last, Headquarters Marine Corps trusts and empowers the fleet commanders to

move funds from one program to another to meet the operational requirements of

their command within threshold limits. The commanders at Marine Forces Atlantic,

Pacific and Reserve are closer to problems as they arise, and they can identify organic unit trends before HQMC can. The Marine Corps is very attentive to the

needs of its Operational Commanders, as that is where we interrelate with the

CINCs and execute contingencies, exercises and operations.

FUNDING FOR FACILITIES STRATEGIC PLAN

Mr. BATEMAN. BACKGROUND: In a May 1997 GAO Report—Defense Infrastructure: Demolition of Unneeded Buildings Can Help Avoid Operation Cost, (GAO/

NSIAD–97–125, May 13, 1997)—GAO found that DOD and the services did not have

complete, reliable information on the costs associated with either maintaining their

current facilities infrastructure or with infrastructure reduction options. Such information is needed to develop a department-wide strategic plan that considers difficult infrastructure options to meet the requirements of the Government Performance and Results Act (Public Law 103–62) which requires federal agencies to develop agency wide strategic plans. Further, such information is critical to meet the

requirements for more complete disclosure of the costs, associated with facilities’ deferred maintenance and demolition in financial statements, called for by the Chief

Financial Officers’ Act of 1990.

To collaborate, in another GAO Report—Military Infrastructure: Real Property

Management Needs Improvement, (GAO/NSIAD–99–100, September 7, 1999)—GAO

again noted that DOD does not have a comprehensive strategy for maintaining the

services’ infrastructure. Rather, each service sets its own standards for maintaining

infrastructure. As a result, the services differ in the way they rate property conditions, prioritize repairs, and allocate resources. For example, a barracks rated ‘‘satisfactory’’ by one service may be rated as ‘‘unsatisfactory’’ by another. GAO reported

that although DOD funded development of a strategic maintenance plan in its fiscal

year 1999 budget, it shifted the funding to other priorities in early 1999.

What were the other priorities that required the funding planned for the development of a strategic maintenance plan?

Secretary YIM. The draft DOD Facilities Strategic Plan was not formally published due to constrained funding in the OSD studies program. With regard to facility maintenance, specifically, the OSD studies program did fund the research to support the Facilities Sustainment Model, which is a major element of the overall strategic plan.

General VAN ANTWERP. The draft DOD Facilities Strategic Plan, which was put

together by a cross-Department Working Group two years ago, has not been formally published due to a need to update the plan and to constrained funding in the

OSD studies program. Before publishing the plan, it needs to be updated as a result

of initiatives we’ve taken based on the draft plan and to incorporate recommendations from recent GAO reports on Real Property Management.

Admiral SMITH. The draft DOD Facilities Strategic Plan has not been formally

published due to constrained funding in the OSD studies program.

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General ROBBINS. The draft DOD Facilities Strategic Plan has not been published

due to constrained funding in the OSD studies program. However, OSD is pressing

ahead with many of the initiatives developed by the OSD-led planning group. We

fully support their efforts on the Plan.

General MASHBURN. The strategic plan was being developed by DOD with the

participation of the services. The draft DOD Facilities Strategic Plan has not been

formally published due to constrained funding in the OSD studies program. I defer

to DOD concerning the other requirements.

STATUS OF FACILITIES STRATEGIC PLAN

Mr. BATEMAN. BACKGROUND: In a May 1997 GAO Report—Defense Infrastructure: Demolition of Unneeded Buildings Can Help Avoid Operation Cost, (GAO/

NSIAD–97–125, May 13, 1997)—GAO found that DOD and the services did not have

complete, reliable information on the costs associated with either maintaining their

current facilities infrastructure or with infrastructure reduction options. Such information is needed to develop a department-wide strategic plan that considers difficult infrastructure options to meet the requirements of the Government Performance and Results Act (Public Law 103–62) which requires federal agencies to develop agency wide strategic plans. Further, such information is critical to meet the

requirements for more complete disclosure of the costs, associated with facilities’ deferred maintenance and demolition in financial statements, called for by the Chief

Financial Officers’ Act of 1990.

To collaborate, in another GAO Report—Military Infrastructure: Real Property

Management Needs Improvement, (GAO/NSIAD–99–100, September 7, 1999)—GAO

again noted that DOD does not have a comprehensive strategy for maintaining the

services’ infrastructure. Rather, each service sets its own standards for maintaining

infrastructure. As a result, the services differ in the way they rate property conditions, prioritize repairs, and allocate resources. For example, a barracks rated ‘‘satisfactory’’ by one service may be rated as ‘‘unsatisfactory’’ by another. GAO reported

that although DOD funded development of a strategic maintenance plan in its fiscal

year 1999 budget, it shifted the funding to other priorities in early 1999.

What is the current status of development of a strategic plan?

Secretary YIM. Only formal publishing of the plan is on hold. OSD and the Services have been actively working over the last two years to implement several of the

initiatives in the draft plan. For example, the draft plan called for an initiative to

‘‘better define RPM requirements’’ and to ‘‘develop better asset management tools’’

which lead directly to the Facilities Sustainment Model (FSM). The draft plan also

called for things like the Facilities Aging Model, two more rounds of BRAC, and better utilization (e.g. joint use). While we have not formally published the plan, we

are working to implement the high priority initiatives, and we have established the

Installations Policy Board (IPB) to oversee it.

General VAN ANTWERP. The current status is that formal publishing of the entire

plan is on hold. OSD and the Services have been actively working over the last two

years to implement several of the initiatives in the draft plan—for example, the

draft plan called for an initiative to ‘‘better define RPM requirements’’ and to ‘‘develop better asset management tools’’—which leads directly to the Facilities

Sustainment Model (FSM). The draft plan also called for things like the Facilities

Aging Model, two more rounds of BRAC, and better utilization (e.g. joint use). While

we have not formally published the plan, we are working to implement the high priority initiatives, and we have established the Installations Policy Board (IPB) to

oversee it.

Admiral SMITH. The current status is that formal publishing of the entire plan

is on hold but OSD and the Services are working to implement several of the plan’s

initiatives, including an initiative to improve the facilities maintenance and repair

programs via the Facilities Sustainment Model.

General ROBBINS. The current status is that formal publishing of the entire plan

is on hold. We fully support DOD’s efforts and have been actively supporting several

initiatives in the draft plan. For example, we are pressing ahead on improvements

to our Facilities Sustainment Model (FSM) and the Facilities Aging Model in support for the plan.

General MASHBURN. Formal publishing of the entire plan is on hold. However,

OSD and the Services are working to implement several of the plan’s initiatives, including one to improve facilities maintenance and repair programs via the Facilities

Sustainment Model.

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RPM BACKLOG AND PRIORITIZING RPM SPENDING

Mr. BATEMAN. BACKGROUND: In a GAO Report, Defense Infrastructure: Demolition of Unneeded Buildings Can Help Avoid Operation Costs, (GAO/NSIAD–97– 125), GAO stated that with the post-cold war drawdown, DOD facilities worldwide,

as measured by square feet of space, were reduced by about 10 percent through

BRAC rounds. During that same period, RPM funding was cut by an estimated 40

percent. This led to a backlog of M&R projects in the Services. In another GAO Report, Military Infrastructure: Real Property Management Needs Improvement, (GAO/

NSIAD–99–100, Sep. 7, 1999), DOD estimated that the backlog had grown from about $8.9 billion in 1992 to $14.6 billion in 1998.

What are the Services’ current estimates for the real property maintenance backlog? How do the services prioritize spending to address the most pressing or urgent,

real property maintenance needs?

Secretary YIM. Backlog by itself is not a total indicator of the requirement for

maintenance and repair funding in any one year since it does not address the need

for annual sustainment funding. The backlog might be best understood as accumulated repair work (excluding non-repair work) resulting from constrained maintenance and repair funding in previous years. With this caveat, the reported numbers

are:

Army: $15.4 Billion

Navy: $2.8 Billion (critical backlog only)

Air Force: $4.3 Billion

Marine Corps: $717 Million

The Services generally leave it up to their major commands to distribute RPM

funds to their installations. Their major command and installation commanders are

at the highest level for prioritizing RPM requirements because they know their facility maintenance and repair requirements and how best to utilize the scarce RPM

funding. Generally, they prioritize their spending to correct deficiencies that have

the largest impact on mission readiness and that contribute to C3 or C4 ratings on

the annual base readiness report.

General VAN ANTWERP. Sir, I would just say that right now in the Army, we are around $3.50 psf, but that is for all the buildings. . . . a new building could be less.

. . . based on the private sector . . . it is somewhere in the $5 to $6 range per

square foot. It is very dependent on the type of building . . .

It does cost more to maintain an older facility vice a newer one. Based on ‘‘The

Whitestone Building Maintenance and Repair Cost Reference 1999,’’ it costs about

60% more to maintain an older facility. Using facilities sustainment costs from

‘‘Whitestone’’, a 2-story office building that’s 1–10 years old would cost an average $1.03 per square foot to sustain (maintain) annually. This price does not include repairs and operating services such as washing floors and cutting grass. That same

facility, when it is adequately sustained over its life, would cost an average $1.71

per square foot when it is 41–50 years old. For a 50-room dormitory, it’s $2.18 for

a newer building vice $3.50 for an older one. Now that’s a powerful argument for

recapitalizing—that means our average 40+ year old physical plant is costing us

60% more to sustain than it would if we could drive the average age down toward

10 years or so. If we have a $5 billion RPM requirement now, we’d have a $3 billion

requirement then.

The services generally leave it up to their major commands to distribute

sustainment (RPM) funds to their installations. Their major command and installation commanders are at the highest level for prioritizing RPM requirements because

they know their facility maintenance and repair requirements and how best to utilize the scarce RPM funding. Generally, they prioritize their spending to correct deficiencies that have the largest impact on mission readiness and that contribute to

C3 or C4 ratings on the annual base readiness report.

Admiral SMITH. The Navy’s critical RPM backlog at the end of FY99 was $2.8 billion.

Major claimants and regional commanders prioritize their special projects program to correct deficiencies that have the largest impact on mission readiness and

that contribute, to C3 or C4 ratings on the annual base readiness report. For deficiencies that are below special project scope, each installation prioritizes their unfunded critical deficiencies in their Maintenance Action Plan, which provides the

execution plan for the coming fiscal year.

General ROBBINS. The Air Force current total force backlog of real property maintenance is $4.3B (FY01), which is based on those requirements with the greatest

mission impact (Critical and degraded) which remain unfunded at the end of the

fiscal year. Real property maintenance (RPM) is funded at what we call the Preventive Maintenance Level (PML) to accomplish only the day-to-day maintenance reVerDate 11-MAY-2000 14:30 Jun 05, 2001 Jkt 010199 PO 00000 Frm 00285 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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quired to sustain real property facilities and infrastructure. For affordability considerations the Air Force calculates its PML funding level at one percent of our plant

replacement value. We also have a tool we call the Facility Investment Metric (FIM)

which stratifies facility requirements based on mission impact. Installation and

Major Command Commanders must make the difficult decision to fund PML work

while deferring FIM identified projects or fund the most critical FIM projects while

deferring maintenance work.

General MASHBURN. The projected real property maintenance backlogs for the

years 2000, 2001 and 2002 are $685 million, $666 million, and $665 million respectively.

The Marine Corps has two complementary methods for prioritizing real property

needs. First, it provides over half of its real property maintenance funding directly

to the base commander to use on day-to-day maintenance requirements. These

funds pay for salaries, materials and contracts required to take care of recurring

and emergency maintenance, along with small repair and minor construction contracts. The base commander is in the best position to select the small projects that

need to be done to keep the base running.

Second, those projects costing over $300,000 are field validated by representatives

from Headquarters Marine Corps. These projects receive a rating score based on facility type and condition, cost savings and base priority. Headquarters then

prioritizes projects Marine Corps wide and provides funding on a project by project

basis to make sure the most urgent work is being done.

Finally, the process can now be checked using a mission readiness rating system.

Using this system we can evaluate if the funds are being applied, at the individual

base level, to the areas that show the lowest mission readiness.

BUDGET REQUESTS FOR OPERATING AND MAINTAINING BASES AND RELATED REAL

PROPERTY

Mr. BATEMAN. Why is the Army not submitting realistic budget requests that

would fully fund the costs for operating and maintaining bases and related real

property?

General VAN ANTWERP. The Army works in a funding constrained environment.

With each funding decision comes risk balanced against the benefits of funding one

action over another. Headquarters, Department of the Army also recognizes the importance of facility condition on readiness and the need for more RPM funding.

Therefore the Army future years development program (FYDP), as of President’s

Budget 2001, increases RPM over the FYDP for fiscal years 2001 through 2005 by

ramping to 80% of requirement by fiscal year 2005. Because of the significance of

the RPM shortfall, the Army also identified $250 million, ranked number eight in

the first band (Readiness) of unfunded priorities, should additional funds be made

available for fiscal year 2001.

READINESS BALANCE

Mr. BATEMAN. How do Army commanders balance the increased readiness risk by

decreasing the desired operating tempo requirements? Specifically, how is readiness

affected by continually achieving less in operating tempo goals? What units are affected the most? Please be specific.

General VAN ANTWERP. Army commanders cannot change OPTEMPO requirements because they are based upon the Combined Arms Training Strategy (CATS).

However, the commander does have the flexibility to make the decisions on where

to take risk in a limited funding environment. Most of the funds migrated from

OPTEMPO are used for unit training enablers, such as ranges, base operations

(BASOPS) and real property maintenance (RPM). There are other alternatives that

commanders use to manage risk that do not have a short-term adverse affect on

readiness. For example, the commander can defer maintenance while maintaining

the unit’s equipment readiness rating. In the long term, deferred maintenance may

be reflected in a lower equipment readiness rate. In summary, every unit is affected

by its individual circumstances and the commander’s decisions based upon the situation and resources available.

FUNDING SOURCE FOR REAL PROPERTY MAINTENANCE IN FY98

Mr. BATEMAN. BACKGROUND: The Air Force reported that it moved $155 million into its operating forces real property maintenance budget subactivity but did

not indicate where the funds came from in the fiscal year 1998 high-priority readiness-related transfer report. The Air Force did state, however, the funds were needVerDate 11-MAY-2000 14:30 Jun 05, 2001 Jkt 010199 PO 00000 Frm 00286 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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ed for repairs to runways, maintenance hangers, utility systems, roofs and other

real property assets.

What was the funding source for the $155 million used for real property maintenance in fiscal year 1998?

Depending upon the budget subactivity that was the source for this funding, how

was affected-subactivity impacted?

General ROBBINS. Funding was sourced by field commanders from various accounts which would suffer the least impact. Specific reporting systems do not track

the specific movement of funds.

QUESTIONS SUBMITTED BY MR. ORTIZ

Mr. ORTIZ. Just one more question if nobody else has any questions. You know,

I know that industry has a cost analysis system, more or less, how much it costs

to maintain a square foot of building. And when you look at that, it may be a newer

facility versus an older facility.

Could you give me the difference, more or less, how much it would cost to maintain a newer facility and an older facility?

Secretary YIM. I think that I will need to take that one for the record, because

there will be a variety of different factors. So let me not just give you a cavalier

attitude or answer. We will look at that more closely. That is what we tried to do

with this costing handbook, is to try to get commercially benchmarked measurements on what it would cost to maintain both old and new facilities.

General VAN ANTWERP. Based on standard, commercial cost factors, a properly

maintained building 40–50 years old costs about 60% more to sustain (via maintenance and repair) than a new building 1–10 years old. See the table:

ROUTINE MAINTENANCE AND REPAIR COSTS FOR NEW VERSUS OLD BUILDINGS (PER SQUARE

FOOT) 1

1–10 Years Old 40–50 Years Old

Office Building (Two Stories) ........................................................................ $1.03 $1.71

Dormitory (50 Rooms) .................................................................................... $2.18 $3.50

1 Analysis based on ‘‘Whitestone Building Maintenance and Repair Cost Reference 1999.’’ Costs are for the Washington DC area.

QUESTIONS SUBMITTED BY MR. HANSEN

MICHAEL FIELD, DUGWAY PROVING GROUND

Mr. HANSEN. Everyone agrees Michael Field is critical and irreplaceable. No one

stepped up to pay the costs of keeping it viable. If someone does not give me a better

answer this year, I intend to take one of two actions, first transferring Michael Field

to the Air Force and directing them to fund it, or directing the closure of Michael

Field as a danger to anyone who might land there. Can you tell me why we should

not take these drastic actions, and if not when the Army and Air Force will be solving this problem?

General VAN ANTWERP. Although the Air Force is the major user of Michael Field,

the Army recognizes the need for Michael Field as a critical port of entry for the

delivery of agents to support tri-service missions for DOD’s Chemical and Biological

Defense Program. NASA has also expressed interest in using the airfield. The estimated cost for repair of the field is $19 million.

PREVENTIVE MAINTENANCE INSPECTIONS, AND TRACKING AND PRIORITIZING RPM

REQUIREMENTS

Mr. HANSEN. The Vice Chiefs testified yesterday that they would not allow troops

to sit in buildings that leak, but instead of the roof being replaced only the area

that leaks would be fixed. . . . we schedule our tactical equipment to be inspected

at regular intervals, a preventive maintenance checks and services to be exact, that

is adhered to without fail. This helped to identify discrepancies before any sort of

catastrophic failure occurs. If we had this same, or similar, system for infrastructure, I would imagine we would have more success in fixing problems before they

become an emergency—this ‘‘finger in the dike’’ method used now is going to

fail . . . can you comment on that and what it would take to get DOD on a system

that allows all services to track and prioritize RPM requirements?

278

General VAN ANTWERP. The Department of Defense has already investigated the

possibility of doing periodic detailed engineering inspections of facilities and concluded that it is a good idea, but unaffordable both in dollars and manpower. The

Army implemented the Installation Status Report (ISR) which provides a non-technical facility user’s inspection of the condition of a facility. This report provides an

installation management tool from which the installation can develop maintenance

and repair trends, potential maintenance and repair projects, and future RPM requirements. Only installation commanders can prioritize RPM requirements because

only they can judge the severity of their RPM problems and the risks of doing one

project over another. This is why Headquarters, Department of the Army does not

designate or prioritize RPM projects. The ISR does provide a method at Army level

to track the effectiveness of RPM funding by showing condition trends for facility

types, but tracking specific maintenance and repair projects would be of little management value at Army headquarters level.

MICHAEL FIELD

Mr. HANSEN. The Air Force on the other hand is the primary user of the runway

which is the primary divert field for all operations on the southern range of the

UTTR. At least once a month an F–16 emergency diverts to Michael Field. The Air

Force contributes nothing to the maintenance of this critical asset.

In addition to DOD this field is a critical NASA asset and serves as a Space shuttle divert field and more importantly as the test site of the first several flights of

emerging technologies such as X–33.

Everyone agrees Michael is critical and irreplaceable. No one has stepped up to

pay the costs of keeping it viable. If someone does not give me a better answer this

year, I intend to take one of two actions, first transferring Michael Field to the Air

Force and directing them to fund it, or directing the closure of Michael Field as a

danger to anyone who might land there. Can any of you tell me why we should not

take these drastic actions, and if not when the Army and Air Force will be solving

this problem?

General ROBBINS. Michael Army Airfield (MAAF) is an Army facility and the

Army is responsible for maintenance of this airfield. The Air Force does use the field

as an F–16 emergency divert airfield from the Utah Test and Training Range

(UTTR).

The Air Force recognizes that this issue must be addressed. A meeting was held

18 April 2000 to further discuss options and responsibilities for repairs at MAAF.

Attendees included 388 FW/CCM, Dugway Proving Ground Commander, Utah ANG

Commandant and MAAF’s Commander and airfield manager. The results are currently being staffed through Air Combat Command. We will provide an update no

later than 30 June 2000.

TRACK AND PRIORITIZE RPM REQUIREMENTS

Mr. HANSEN. The Vice Chiefs testified yesterday that they would not allow troops

to sit in building that leak, but instead of the roof being replaced only the area that

leaks would be fixed . . . we schedule our tactical equipment to be inspected at

regular intervals, a preventive maintenance checks and services schedule to be

exact, that is adhered to without fail. This helps to identify discrepancies before any

sort of catastrophic failure occurs. If we had this same, or similar, system for infrastructure, I would imagine we would have more success in fixing problems before

they become an emergency—this ‘‘finger in the dike’’ method used now is going to

fail . . . can you comment on that and what it would take to get DOD on a system

that allows all services to track and prioritize RPM requirements?

General ROBBINS. The Air Force is able to track and prioritize its facility requirements adequately now. Installations are capable of identifying their day-to-day

maintenance requirements. In addition, our Facility Investment Metric (FIM) is

used to stratify the most critical facility repair and minor construction requirements

in terms of mission impact. Funding the requirements is the challenge. Commanders must make the difficult decision, within available funding, whether to fund

their day-to-day requirements and defer FIM projects or whether to fund their most

critical FIM requirements while deferring day-to-day maintenance.

We are working with OSD to develop a Facility Sustainment Model, which will

allow us to better identify our facility and infrastructure funding requirements

using current industry practices. Once the model is fully implemented and our requirement is determined, we will work the results through the Air Force corporate

structure.

(279)

FISCAL YEAR 2001 NATIONAL DEFENSE AUTHORIZATION ACT—CIVILIAN PERSONNEL READINESS

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED

SERVICES, MILITARY READINESS SUBCOMMITTEE, JOINT

WITH THE COMMITTEE ON GOVERNMENT REFORM, THE

CIVIL SERVICE SUBCOMMITTEE, WASHINGTON, DC,

THURSDAY, MARCH 9, 2000.

The subcommittees met, pursuant to notice, at 1:05 p.m., in room

2118, Rayburn House Office Building, Hon. Herbert H. Bateman

(chairman of the subcommittee on Military Readiness) presiding.

OPENING STATEMENT OF HON. HERBERT H. BATEMAN, A REPRESENTATIVE FROM VIRGINIA, CHAIRMAN, MILITARY READINESS SUBCOMMITTEE

Mr. BATEMAN. The hearing will come to order.

Our colleagues from the Civil Service Subcommittee of the Government Reform Committee join us today for the first combined

hearing of these two subcommittees, at least within my memory.

I particularly welcome Congressman John Mica of Florida, who is

substituting for Chairman Scarborough, in view of Chairman

Scarborough’s illness.

I am also pleased to welcome the Ranking Member, Mr.

Cummings, and the other members of the subcommittee as partners in our efforts to oversee the Department of Defense’s (DOD’s)

management of its civilian personnel workforce.

I recognize that many of the civilian personnel provisions we include each year in our defense authorization bill come within the

jurisdiction of the Civil Service Subcommittee, and you have always been most cooperative and generous in your assistance to us.

The joint hearing provides our witnesses a unique opportunity to

discuss issues before both committees of jurisdiction.

One of the primary reasons we scheduled this hearing is to discuss the effect of the civilian drawdown on the Department of Defense’s civilian workforce and ultimately its effect on the readiness

of our military forces.

Few Americans understand that the Department of Defense has

reduced its civilian workforce by more than 38 percent over the last

10 years, compared with a 35 percent reduction in active duty military forces. Many, many skilled workers across the country and

overseas have left Department of Defense employment permanently.

I am also concerned that these rather dramatic reductions have

occurred in such a way that the department released needed personnel who possessed essential skills. It is time to examine our ciVerDate 11-MAY-2000 14:30 Jun 05, 2001 Jkt 010199 PO 00000 Frm 00289 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm09 PsN: 72364
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vilian workforce to ensure we will have the people with the skills

we need in the future.

In that regard, I would like our witnesses to provide the subcommittees an assessment of their current skills inventory and

what additional tools they may need, if any, to properly align the

workforce of their respective service. Additionally, I would like

some assurances that the Department of Defense and the military

services have planned for the future. In other words, do they have

a template for the skills and the workers needed to support future

operations so that younger workers can begin to be hired and

trained now to meet those future needs?

If you do not have a clear vision of where you need to go, it is

difficult for this committee to intelligently address issues and implement solutions.

In addition, we continue to hear concerns about the department’s

aging workforce as an increasing number of workers are eligible to

retire. The question is will you need their skills when they do retire and do you have someone in the pipeline to fill those essential

positions?

I would expect that some very careful analysis has been done before you ask our two subcommittees to consider measures changing

long established personnel policies to solve a problem that so far

has not been demonstrated or proven.

Finally, over the years, the department has requested and received authority to operate a variety of civilian personnel demonstration projects. I would like to hear what has been learned

from the existing demonstrations. From the reactions we get back

home when base closures are considered or reductions in force are

announced, it is apparent that Federal jobs are still highly coveted.

Therefore, it seems counterintuitive that we would have difficulty

hiring new workers.

That is why I would like to see some careful analysis behind any

request for new authorities, and I would insist that any new authorities be carefully targeted at skills the department has demonstrated that it cannot hire. For example, the Air Force reports

having difficulty hiring engineers. The Army has a different experience. Why is that?

Today, the subcommittees will hear testimony from experts in

workforce shaping issues and from the civilian personnel policy directors of the department. It is my belief that our hearing today

will assist us in making the necessary decisions for our civilian

workforce in the future.

Before proceeding to our witnesses, let me now recognize the gentleman from Florida, Mr. Mica, for his opening remarks.

STATEMENT OF HON. JOHN L. MICA, A REPRESENTATIVE

FROM FLORIDA

Mr. MICA. Thank you, Mr. Chairman. I appreciate this opportunity to join you and members of your subcommittee at this hearing this afternoon. I look forward to working with you and also the

Civil Service Subcommittee chairman, Chairman Scarborough,

who, unfortunately, cannot be with us today because of his injury.

I am pleased to join also Ranking Members Ortiz and also Mr.

Cummings. Mr. Cummings has also been ranking on the Civil

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Service and very active in these issues. It is particularly important

that we have leaders like this as we address the issues of civilian

personnel readiness.

This is a vitally important matter, Mr. Chairman, and I commend you for initiating this inquiry. As the former chairman of the

Civil Service Subcommittee, I also want to thank you for the cooperation my staff and I have received from you and your staff on

civilian personnel issues in the past Congresses. I am confident

that the close working relationship will continue, as evidenced

today by this joint hearing.

Today we will examine the state of readiness of the civilian

workforce that supports our servicemen and women. This hearing

is really the beginning of a process that will continue as our subcommittees work through a variety of civilian workforce proposals

in conjunction with this defense authorization bill.

I look forward to hearing the witnesses today, all of whom bring

a great deal of expertise on these civil service issues and civilian

defense issues.

Mr. Chairman, there are several matters that I asked the Department of Defense and others to address as we consider the readiness issue today and throughout the remainder of this Congress.

One key issue is the effect of the dramatic reduction in civilian

personnel at the Department of Defense which you referred to in

your opening statement and also that in all of our military departments. Again, putting that reduction in perspective, Mr. Chairman,

the drop in full-time equivalent employment at those agencies will

account for 73 percent of the net personnel reduction government

wide by the end of fiscal year 2001.

We need to know, Mr. Chairman, how this drawdown has affected the ability of our current workforce to support America’s

military forces now. If there are critical short-term problems that

must be addressed now, the witnesses should identify them and

provide us with concrete proposals for dealing with them.

Mr. Chairman, we have heard a lot about the threat of a hollow

military; and this Congress has taken steps to turn that problem

around. America must always have the best fighting forces in the

world. The men and women in our armed forces must be the best

trained and the best equipped. But an inadequate civilian support

system will degrade the performance of even the best military force

in the world. That is why we also need to be concerned about a hollow support system.

Together with the administration and everyone on both sides of

the aisle, we must determine the optimum mix of skills and the optimum mix of contractors and employees needed to preserve our

Nation’s strength and security.

As we look to the future, Mr. Chairman, it is important that Congress make certain the Department of Defense and the military departments are integrating civilian workforce planning with the

military’s strategic planning. Until we know what kind of military

missions and forces we must plan for, neither the Congress nor the

administration can reasonably begin assessing our civilian workforce needs.

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I will expect today’s witnesses to demonstrate that their civilian

personnel strategies are in fact solidly tied to anticipated military

needs.

I will also expect a clear explanation of why such things as an

older workforce are considered problems and not simply facts or experienced personnel to deal with. And I also want to know what

agencies are doing and plan to do to train or, where necessary, retrain their existing employees.

Another key issue that I would like our witnesses to address is

whether today’s civilian benefit structure should be modified to attract highly qualified and motivated individuals. Do we need more

flexible benefits and more portable retirement systems to help us

compete for highly skilled workers, particularly younger workers

who do not necessarily plan to make their careers with just one

employer?

I am pleased to see also the gentleman from Virginia here that

I have worked with in the past in trying to bring us into the 21st

century in that regard. I appreciate his efforts. Sorry to see him retiring, and you retiring and anyone else who is retiring that has

done such a good job toward these efforts.

So, Mr. Chairman, I look forward to receiving answers to these

questions and working with you in this joint effort today.

Mr. BATEMAN. Thank you very much, Mr. Mica.

Now I would like to recognize my good friend and the Ranking

Democratic Member of the Readiness Subcommittee, Solomon Ortiz

of Texas.

STATEMENT OF HON. SOLOMON P. ORTIZ, A REPRESENTATIVE

FROM TEXAS, RANKING MEMBER, MILITARY READINESS

SUBCOMMITTEE

Mr. ORTIZ. Thank you, Mr. Chairman, for agreeing to hold this

hearing today and, of course, we are happy to have our colleagues

with us.

This is the first civilian personnel readiness hearing we have

conducted in quite some time. It does not mean that we have not

been enacting legislation impacting on the matter during this time.

It is more of a case of the absence of an opportunity to look at civilian personnel policies and practices in an integrated manner.

I join you in welcoming all of our witnesses here today. I also appreciate the opportunity to explore this important issue with our

colleagues on the Civil Service Subcommittee of the Government

Reform Committee.

Mr. Chairman, while there are many civilian personnel issues

that loom before us, I am very much concerned with the problems

and challenges associated with a dwindling and an aging workforce. I have also heard some of my colleagues express their concerns about these matters.

During preparation for this hearing, I was reminded that the

United States will reportedly be the last of the developed nations

to experience the aging of its population. By 2025, nearly 18 percent of all Americans will be over the age of 65. This aging population not only affects the demands for funds for non-defense activities, it also impacts on the quantity and quality of civilian perVerDate 11-MAY-2000 14:30 Jun 05, 2001 Jkt 010199 PO 00000 Frm 00292 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm09 PsN: 72364
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sonnel we will be able to attract and to retain to meet the department’s technical and management challenges.

I am most familiar with the situation at the Corpus Christi Army

Depot, where today there are no employees under the age of 30.

The significance of this fact is that it is easier for a 30-year-old to

climb around an airframe in the 60 degree heat of summer than

it is for a 50 to 60-year-old, and I can vouch for that.

From my study of the Army Materiel Command civilian personnel status, I found that in six critical career programs, 72 percent of the workforce is over 40 and 35 percent is above age 50.

Today, the average is 48.7. By the year 2004, some 50 percent of

the Army Materiel Command’s civilian workforce will be retirement eligible. I think those statistics by themselves tell us a lot.

Notwithstanding the current trend toward outsourcing privatization of functions that have traditionally been performed by Department of Defense (DOD) civilians, the promised increased reliability

of new equipment and the innovative maintenance and management concepts that we hear about, I am convinced that there will

always be a need for a core DOD civilian workforce. I am not sure

that the department is in the best posture at this time to prepare

for the future while there is still time.

It is not the same in DOD as it is in some sectors of the Department of Energy. In the Department of Energy, we are scrambling

to capture the experiences of personnel who work nuclear weapons

issues before they disappear. But the impact could be the same if

we do not take the steps necessary to make sure that we have in

place the right policies and programs to meet our future civilian

workforce requirement.

I know that we have had programs in existence for some years

to attract, train, and retain white collar employees and the department tells me that those programs have been useful. But when I

inquire about blue collar technical employees, I find a different

story. Some of the skills needed require long lead times to produce

these highly trained technicians we need to maintain the increasingly complex equipment we are procuring. Some of the same skills

are required to maintain the legacy equipment that we will retain

in the inventory for some time.

It is my assessment that we just do not have sufficient programs

in place to meet future requirements. It is for that reason I am proposing that the Department of the Army conduct a pilot apprentice

program at Army depots that will address the future need for some

already known hard-to-find blue collar technicians.

The Army Materiel Command has provided a detailed listing of

what skills are wanting depot by depot. The outcome of this program will be useful in assessing strategies designed to solve this

problem in other places in the department.

Mr. Chairman, there are some tasks that I am convinced must

be accomplished sooner rather than later. We need to understand

the potential implications of aging population on national security.

We need to better understand what are our future workforce requirements so that appropriate policies and plans can be put in

place to address the totality of the problem. There is a need to understand the impact of the drawdowns on productivity as well as

284

our ability to attract and retain the quality and quantity of workers that we need.

We need to understand the linkage between the perceived problem and the separate bits of legislation we have enacted and the

department’s policies and practices. We need to develop legislation

if needed to provide the tools needed to properly shape the workforce. We need to understand the costs so that we can ensure that

an integrated investment strategy is developed and in place to

guide the implementation of rational and achievable civilian personnel goals.

This is not a case of mission impossible, and I know it is not

something that can be accomplished without considerable effort,

but it must be done. We must make the investment or we will not

provide for the future workforce capable of meeting technical and

management challenges, all to the detriment of readiness.

Mr. Chairman, I thank you for your insight and for your vision

and thank you for holding this hearing today.

Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Ortiz.

And now I am pleased to recognize the Ranking Member of the

Civil Service Subcommittee, Mr. Elijah Cummings of Maryland.

STATEMENT OF HON. ELIJAH E. CUMMINGS, JR., A REPRESENTATIVE FROM MARYLAND, RANKING MEMBER, THE

CIVIL SERVICE SUBCOMMITTEE

Mr. CUMMINGS. Thank you very much, Mr. Chairman, and Ranking Member Ortiz of the Military Readiness Subcommittee, and

certainly to Mr. Mica and Chairman Scarborough of our Civil Service Committee. I really do appreciate you scheduling this hearing.

This hearing sends a message to Federal agencies that it is important to plan for the future and develop a strategic approach to

manage, train, retain, develop, hire, pay and evaluate their most

valuable assets, its employees.

As Ranking Member of the Civil Service Subcommittee, I am

aware of the impact of downsizing, contracting out, reductions in

force, and an aging workforce can have on employees and the management of employees. Morale suffers due to limited career and

promotion opportunities; people become insecure about their jobs

and are forced to work longer hours to accomplish the same

amount of work.

When this occurs, not only do employees suffer, but the agency

and its mission do as well. This situation is exacerbated in the case

of the Department of Defense.

In 1996, the General Accounting Office (GAO) reported that between the years of 1987 and 1995, DOD reduced its civilian workforce by approximately 25 percent or about 284,000 personnel. GAO

noted that by the time DOD finishes its downsizing plans in fiscal

year 2001, DOD would have reduced its civilian workforce to about

728,300 personnel, almost 35 percent below the 1987 end strength

and about 16 percent below the 1995 end strength.

When the GAO report was issued, DOD reported that civilian

downsizing had not adversely affected military readiness at the installations visited by GAO. However, DOD did state that if not

285

managed properly in the future, civilian downsizing could have an

adverse effect on combat units.

I look forward to hearing from DOD as to the current status of

its downsizing efforts, its impact on civilian employees and its strategic plan to manage its workforce in the future. Any testimony the

witnesses can offer to help us understand this issue is most appreciated.

Thank you very much.

Mr. BATEMAN. Thank you, Mr. Cummings.

At this point, I would like to ask unanimous consent to have

Chairman Scarborough’s statement made a part of the record.

[The prepared statement of Mr. Scarborough can be found in the

Appendix on page 323.]

Mr. BATEMAN. Now I would like to welcome our first panel of

witnesses who are experts in the work shaping issues that we are

principally concerned with today.

The first panel consists of Mr. Frank Cipolla, Director of the

Center for Human Resources Management of the National Academy of Public Administration; and Mr. Michael Brostek, Associate

Director, Federal Management and Workforce Issues for the General Accounting Office, who is accompanied by Mr. Barry Holman,

Associate Director, Defense Management Issues, of the General Accounting Office.

Gentlemen, we welcome you. All of your written statements will

be made a part of the record.

And now, Mr. Cipolla, I will call on you to proceed as you may

choose.

STATEMENTS OF FRANK CIPOLLA, DIRECTOR, CENTER FOR

HUMAN RESOURCES MANAGEMENT, NATIONAL ACADEMY

OF PUBLIC ADMINISTRATION; MICHAEL BROSTEK, ASSOCIATE DIRECTOR, FEDERAL MANAGEMENT AND WORKFORCE ISSUES, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY BARRY HOLMAN, ASSOCIATE DIRECTOR, DEFENSE MANAGEMENT ISSUES, GENERAL ACCOUNTING OFFICE

Mr. CIPOLLA. Thank you, Mr. Chairman. We, as you mentioned,

did submit a detailed statement for the record, so at this time I

would like to just give a brief oral summary.

We appreciate the opportunity to appear today to discuss civilian

personnel readiness.

The National Academy of Public Administration is an independent, non-profit, non-partisan organization chartered by the

Congress to improve governance. We hope to be able to provide

some outside DOD perspectives on this issue, which is of extreme

importance now to most Federal agencies, including DOD.

I would like to before I proceed acknowledge the presence today

of the newly-appointed president of the National Academy, someone you know, I know, Mr. Robert O’Neal, who is here in the audience.

Mr. BATEMAN. We congratulate the academy on its choice and I

am very, very pleased to see my friend Bob O’Neal again.

Mr. CIPOLLA. Thank you, sir.

We have been putting a good deal of priority on this subject of

workforce planning and workforce shaping and a good bit of our reVerDate 11-MAY-2000 08:32 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00295 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm09 PsN: 72364
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cent work has included a number of subjects that are relevant to

this hearing.

I have included a listing of several recent studies and reports on

these subjects. I can make those available for the record, if you

wish.

Mr. BATEMAN. We would be pleased to have them.

Mr. CIPOLLA. Good. We will do that.

Some background. Civilian personnel readiness is an important

subject, as I mentioned, not just for DOD, but certainly including

DOD. Projecting the role and the composition of the civilian component of the total force is a continuing challenge, even more so as

agencies look ahead and attempt to build the workforce from where

downsizing and restructuring left it.

There is no doubt that the task faced by DOD and its components to assure that the right people are in the right place at the

right time is more daunting than ever. They are searching for answers to questions about what civilians will be doing, what is the

right civilian-military mix, what are the competencies or skill sets

that will be needed, how will the skills and knowledge of the current workforce be updated, what is the best approach to recruiting

for scarce skills, and what needs to be done to retain senior level

expertise in key occupations.

Most Federal agencies are facing these or similar questions after

spending the better part of the last decade trying to manage

downsizing, keeping the adverse impact on people to a minimum

and working to get maximum productivity from the workforce that

is left, all while still adhering to merit principles that have been

the foundation of Federal employment since 1883.

Federal managers now find themselves in a war for talent, trying

to compete in a tough market and making decisions about human

capital investment. Government and the private sector alike are

discovering that they cannot address these questions in a rational

and defensible way without instituting a systematic process of

workforce planning. Last year, the academy looked at 17 Federal

agencies and found that most of them were beginning to do that.

I would like to share some of that information along with primarily some key conclusions about this subject and I will just state

those at this point and then if you have questions, I would be

happy to comment on them. They are detailed in the prepared

statement.

The first of those is that workforce requirements must be linked

to the agency’s overall strategic plans. That has already been said

in a number of ways, but we cannot over stress that point. Agency

strategic plans must have a people component. That needs to be

part of the process.

The second point is that workforce planning must include the collection and analysis of data about the external environment as well

as information about the current workforce. We have already heard

some of those trends that are going to be shaping and are already

shaping the workforce and the workplace over the next 5 to 10

years: skill shortages, increasing age of the workforce, increasing

retirement eligibility, the workforce becoming more diverse, technology making possible alternative work arrangements, and the

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newer generations of employees having different values and expectations about work and the workplace.

The third point is that projections of future workforce requirements must be expressed in terms of needed skills and competencies, not just numbers of full-time permanent employees.

Fourth, decisions on the composition of the future workforce

should consider the use of flexible employment arrangements. Increasingly, the right people for getting the job done in the future

will be a mix of workers and a mix of employment arrangements.

Fifth, managers must be given maximum flexibility in managing

work and assigning staff to meet changing mission and program requirements. The civilian personnel system, to the extent that it is

possible, must accommodate the requirement for that flexibility.

The sixth point, human capital development and continuous

learning should be viewed as an organizational investment and

given a high strategic priority. Federal agencies need to transform

training programs into an ongoing process of re-skilling and re-tooling the workforce to acquire and maintain the competencies needed

to keep up with the changes in mission technology and the content

of work itself.

And the seventh and final point relates to retirement incentives.

Retirement incentives should be used selectively to support restructuring and to retain needed talent in scarce skill occupations. And

we could elaborate on that, but I think I have completed my time.

I’d be happy to answer any questions you have, sir.

[The prepared statement of Mr. Cipolla can be found in the Appendix on page 326.]

Mr. BATEMAN. Thank you very much, Mr. Cipolla.

Now we would be very pleased to hear from Mr. Brostek.

Mr. BROSTEK. Thank you, Mr. Chairman. I am pleased to be here

to discuss why this is an opportune time to assess human capital

management at the Department of Defense and a self-assessment

checklist that GAO has developed to help agency leaders focus on

improving the management of their workforce.

My observations on DOD’s human capital management situation

are based on work we have done at DOD throughout the 1990s

that provide us some perspectives on the issues that have arisen

during downsizing, but do not represent a comprehensive assessment of workforce planning at the Department of Defense.

However, in summary, several factors suggest that this is an important time for DOD to assess its human capital practices. Public

and private high performance organizations recognize that people

are their key asset. It is through the talent and dedicated work of

staff that missions get accomplished. Therefore, sound management calls for continually reassessing human capital management,

especially in a dynamic environment. And surely DOD is in a dynamic environment.

DOD’s civilian workforce, as has been mentioned, is about 36

percent smaller now than it was in 1989 and it is likely to get

smaller. In part, due to these reductions, imbalances exist in the

age distribution of DOD staff. The average age of civilian staff has

been increasing while the proportion of younger staff who are the

pipeline of future talent and leadership has been dropping.

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DOD reform initiatives are also changing the way the department does business and new business practices affect the competencies that employees must have. Together, these changes suggest that DOD faces challenges in ensuring that it will have the

talented workforce that it needs in the next decade.

To help agencies assess their human capital management and to

deal with these challenges, we developed a five-part assessment

framework that we believe can be useful in aligning human capital

management with agencies’ missions, goals and strategies.

I will talk very briefly about each portion of that framework.

The first part starts with strategic planning because decisions

made today determine whether an agency will have the workforce

that it needs in the future. A workforce cannot be reshaped overnight. For instance, if an agency’s strategic plan calls for a greater

reliance on information technology, there are implications for the

competencies that the workforce will need.

The actions needed to reshape the workforce such as training,

hiring employees with requisite skills and possibly separating employees whose skill sets are no longer well matched to agency needs

must be carefully designed and implemented.

Next, our framework calls for aligning an agency’s human capital

policies and practices to support the agency’s strategy. This is

where detailed workforce planning is done. Looking at the strategies for 5 years or more into the future, the agency defines the

knowledge, skills and abilities that employees will need as well as

how many employees will be needed at that time.

Those knowledge, skills and abilities are then assessed in the

current workforce and projections are done of workforce attrition

due to things like retirement and resignations and other factors.

Then the gap needs to be assessed between the skills and abilities and size of the current workforce and the similar qualities of

the workforce in the future.

Once that gap measurement has been made, an agency is finally

prepared to actually develop a plan to transition its current workforce to that which it is going to need in the future.

The third part of our framework emphasizes that agencies must

proactively develop their future leadership. The agency must begin

by determining the qualities and characteristics that are most

needed in its future leaders.

Leaders develop over long periods of time and, therefore, agencies need to identify potential leaders early and provide them with

a variety of professional development and learning opportunities

throughout their careers.

The fourth element of the framework focuses on ensuring that

agencies recruit, develop and retain the employees with skills necessary to support mission accomplishment. In a sense, this is the

execution of the workforce plan. The workforce plan identified the

types and numbers of employees needed. At this point, agencies

need to go out and identify by targeting the individuals that have

the skills and abilities that are needed and hiring them and by targeting training to the current workforce to move their skills and

abilities to those that are required to implement the plan that the

agency has adopted for executing its mission.

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Finally, the framework focuses on ensuring that an agency’s

human capital practices and policies create a culture in which high

performance is expected and supported. Human capital practices

should enable and motivate employees to achieve high performance. Achieving high performance may be aided by a performance

management system that links to the extent possible individual

performance expectations and rewards to the success of the organization itself.

In conclusion, the dynamic changes in DOD over the past decade

and the continuing changes likely this decade underscore the importance of a well developed, human capital management strategy

to DOD’s future mission accomplishment. It is vitally important to

start by looking to the future, determining what type of workforce

will be needed for the future. When this is done, DOD can develop

plans for creating that workforce and following up with the actions

and investments needed so that when the future arrives, the right

employees with the right skills, training, tools and performance incentives will be on hand to greet that future.

That concludes my statement, and Mr. Holman and I will be

happy to answer any questions you have.

[The prepared statements of Mr. Brostek and Mr. Holman can be

found in the Appendix on page 341.]

Mr. BATEMAN. Thank you very much, Mr. Brostek.

Mr. Holman, we would be glad to hear from you if you have anything you would like to add at this time.

Mr. HOLMAN. No separate, Mr. Chairman, just an observation

that we have done a good body of work over the years, looking at

a variety of defense business practices, outsourcing, depot maintenance and issues like that and we know that the issue of civilian

personnel impacts from drawdown and readiness, aging workforce,

are issues that are very much out there that are increasing concerns to people, so we are happy to participate in this hearing

today because I think it is an important issue, that it does require

some planning to deal with.

Mr. BATEMAN. Thank you, Mr. Holman.

Mr. Brostek, let me ask you this. You have spoken of workforce

plans for the utilization of human capital which I think is very interesting terminology.

At what levels does this take place? Is this done by someone in

the Office of the Secretary of Defense or is it done there plus in

each of the military departments or is it within systems commands

or major commands within each of the services? Where does the

workforce plan begin and end?

Mr. BROSTEK. Well, I think it is going to have to occur throughout an organization the size of DOD. It has, as you know, a vast

number of employees. About 40 percent of the Federal civilian

workforce is in DOD. So I think it is impractical to expect that all

the workforce planning could be done out of one central location.

On the other hand, the important reference point for all of the

workforce planning that needs to be done is the strategy that the

department adopts for accomplishing its mission of defending the

country and that is a department-wide policy that needs to be set

and then the individual planning that needs to be done by the various components is in relation to that strategic plan that was

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adopted, the approach that the department wants to follow to carry

out its mission.

Mr. BATEMAN. We will be hearing from Department of Defense

witnesses shortly, but do you have any insights as to what degree

elements of the Department of Defense or the Office of the Secretary of Defense have become engaged in what you would call

workforce planning?

Mr. BROSTEK. Well, Mr. Chairman, I have to admit that we have

not done a comprehensive assessment of the department, but I do

have an extract from the Defense Science Board Task Force report

that came out just this past February that suggests that there is

a bit of a gap in workforce planning. If I can just quote a little

piece of this, the report says that ‘‘Today, there is no overarching

framework within which future DOD workforce is being planned.

An overarching strategic vision is needed that identifies the kind

of capabilities that DOD will need in the future, the best way to

provide those capabilities and the changes in human resources

planning and programs that will be required.’’ This is a good statement of what needs to be done, and it is also

apparently a statement that in the opinion of the Defense Science

Board that has yet to be done.

Mr. BATEMAN. What was the date of that statement?

Mr. BROSTEK. February 2000.

Mr. BATEMAN. Thank you.

Mr. Cipolla, in your written statement, you made reference to a

phenomena called telecommuting.

Mr. CIPOLLA. Yes, sir.

Mr. BATEMAN. Have you done any particular study as to the effectiveness and productivity of workers who perform by the telecommuting phenomena?

Mr. CIPOLLA. We have and among the reports that I mentioned

earlier there is some coverage of that. Recently, we had in one

agency a review of telecommuting arrangements that were in fact

negotiated with the labor union involved and we participated in the

assessment after the arrangements had been underway for some

time. This was an organization that was essentially an information

technology organization, so the nature of the work was conducive

to this sort of thing and the overall assessment was that it was

working quite well, in the view of both the employees and the

unions and the customers who were in receipt of the services of the

organization. As a generalization, it varies. And it is an extreme

culture challenge in some organizations and less so in others, and

I guess that is the best way I can describe it.

Mr. BATEMAN. I have two telecommuting centers in my district

and, of course, most of the people, almost all of them, are Federal

employees. My general understanding is that it is very, very highly

regarded by the Federal employees. I am more curious to know

whether or not Federal workforce managers are sympathetic to and

anxious to have their employees participate in that manner, but I

guess our government witnesses can cover that.

Mr. CIPOLLA. Well, frankly, our experience has been that many

managers find it difficult for a lot of the reasons that you might

imagine, all associated with a loss of control in some form or another.

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Mr. BROSTEK. We did some work on that, if I can intercede for

a minute— Mr. BATEMAN. Yes, please.

Mr. BROSTEK.—about two or three years ago and we found a

pretty similar result in the Federal Government, that there was a

mixed bag among Federal managers. Some were quite supportive,

but others were less supportive. It was around a control issue.

Sometimes it was around whether or not the manager felt that

they could really assess the performance of the individual when

they were not in the office. If the type of work that was done was

not something that could be measured easily, the supervisor was

a little reluctant to let that not occur within his or her sight.

Mr. BATEMAN. Thank you.

Mr. Mica.

Mr. Ortiz. I am sorry. Go ahead.

Mr. ORTIZ. No problem.

I would like for the witnesses, maybe all of you can give me some

input, but do you think that evidence of an aging workforce is a

condition needing correction, particularly since most of the jobs

eliminated in the Department of Defense were lower graded positions, or is more analysis needed?

Mr. CIPOLLA. On the surface, that would appear to be the conclusion that one would reach. But at the same time, if we look closely

at the skills that we need, which is what this subject is all about,

in an organization now and in the future, an aging workforce is not

necessarily an indication of something that needs to be corrected.

In fact, retaining senior level expertise in some important occupational groups that are particularly difficult to recruit for in today’s

highly competitive market is something that needs to be included

in strategic workforce planning. In other words, we need a balance.

Mr. BROSTEK. I would roughly concur with what Frank has said.

The simple fact that the workforce is aging does not in itself tells

us that there is a major problem. What it does tell us is that there

is a flag here, that some attention needs to be paid and some analysis done.

The situation in DOD is that the proportion of the workforce that

is below age 31 has dropped fairly dramatically from about 17 percent in 1989 to around 6.5 percent now. That may be an adequate

number, but I think it is something that needs to be investigated

to ensure that the people who are needed to be the future leaders

and talent of the organization are being grown.

We also have had some similar conclusions to what Mr. Cipolla

was saying about the folks who are toward the end of their career.

Sometimes it is to the advantage of the agency to offer various inducements to get people to stay a bit longer; and we do know that

a thing called phased retirement is becoming more popular in the

workforce of the country at large, where sometimes we offer people

the opportunity to come back on a part-time basis 2 or 3 days a

week or something like that, to stay in the workforce and to keep

that institutional knowledge that was gained over a long career

available to the organization.

Mr. HOLMAN. I would agree with what has been said, just echo,

I think, the key word is balance in terms of requisite skills, grade,

allowance for succession planning as we see the larger portion of

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the workforce seeming to be grouped in the 40s and 50s, closer to

the 50s, and nearing retirement in the next few years. So it is a

requirement for orderly succession planning and balance in that

workforce.

Mr. ORTIZ. And I just have one more question because I would

like for the other Members to also ask questions.

Mr. Cipolla, in your research, are you finding evidence of a general shortage of technical workers in the United States? If that is

so, given the operation of the law of supply and demand, the skilled

workers will be able to shift from job to job almost at will.

Would it not make more sense for the Department of Defense to

contract for these workers as needed, rather than trying to rewrite

civil service law to provide extraordinary authorities likely necessary to be able to maintain a large permanent staff?

Mr. CIPOLLA. Well, the premise that you stated, as you stated it,

I would have to agree with. First of all, the shortage does exist.

There is no sign that it is going to abate in the near future. The

market is going to become even more competitive for scientific,

technological and particularly people who have skills in information technology.

What you have described is actually happening, to the point that

if you looked at the numbers of the information technology workforce across government agencies, you would find that we have now

reached the point that there are more contract employees than

there are civil service employees.

That in itself is not bad, but it raises all kinds of questions about

our ability to manage that kind of a mix.

Mr. ORTIZ. Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Ortiz.

Now, Mr. Mica.

Mr. MICA. Thank you.

Just a follow-up to that, Mr. Cipolla. I am not in the military

side of this, I have watched it from the civilian side, but you do

not have to be a military analyst to see that we have a change in

the world situation and that we are now doing employments in sort

of peaks and valleys.

How do you maintain a minimal civilian force and then be in a

position to meet these peaks unless you go to contracting?

Mr. CIPOLLA. Well, I am sure our colleagues from DOD are going

to talk about the strategic sourcing process which is aimed at identifying that core workforce or those core sets of competencies that

are needed. The problem is that they need to be continually updated and there needs to be a systematic process that reassesses

those determinations in the light of what is going on in the environment.

Mr. MICA. Well, you have not answered my question.

With the active military, we have a Reserve force and we call

them up. With civilians, you have a core, then what is the model

to meet the peaks and valleys of the civilian workforce if it is not

full-time employees or contractors? How do you approach this and

be prepared all the time? What are the recommendations before we

hear from the other folks.

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Mr. CIPOLLA. I do not know that there is a model that can be applied, a quantitative model that can be applied, across a whole

agency or even a major part of it.

What has to drive the determination about what the right mix

is an assessment of what is needed in terms of the core work, what

are the competencies that are required. If we cannot get them from

internally within the department’s workforce, we cannot compete in

the market, then maybe the best response is to contract. But I do

not know of any overriding model.

Mike, maybe GAO— Mr. BROSTEK. I would agree that one of the likely sources for

dealing with considerable workload fluctuations is contracting. It is

certainly a legitimate source to turn to.

Agencies also have the ability to do some term hiring for employees, bringing them in for—I believe it is up to a 3-year period of

time, as Federal employees to work on short-term projects. That

can also be another mechanism for dealing with a fluctuating workload situation and might be a situation that is desirable to use if

you want to be creating government policy, doing inherently governmental functions, which you would not normally want to; you

would not ever really want to contract out.

If I could jump back for just a second to Mr. Ortiz’s point which

is relevant to your question, too, Mr. Mica, to the extent we do rely

more and more on a contract workforce and we use them as the

reservoir of talent for dealing with workload fluctuations, we have

to be very careful to have reserved in the Federal Government sufficient oversight capacity to monitor the cost and the quality of the

contract services that we are being provided because if we do not

have a sufficient reservoir of capacity to monitor the cost and quality, we can suffer some pretty unfortunate consequences even

through the contracting process.

Mr. MICA. One more final question, if I may, Mr. Chairman.

Mr. BATEMAN. Certainly.

Mr. MICA. We spent somewhere in the neighborhood, I think, of

$4 billion on buyouts since 1993. They came in and we did all kinds

of buyouts and I became concerned; Mr. Cummings and I held

hearings on this, about what was going on. Did we go overboard

in the buyout area? Are we now suffering from going beyond what

we should have with the buyouts or was it a balanced approach?

Mr. Cipolla.

Mr. CIPOLLA. That is a difficult question. Did we go overboard?

It has to consider the requirements and the targets that agencies

were expected to accomplish.

Unfortunately, at least in the early stages, buyouts were being

used to avoid restructuring, rather than to support restructuring.

And, of course, our recommendation is that that whole process be

turned around. To the extent that we can identify what the projected organization should be doing and structure it accordingly, if

we need buyouts, to either protect needed skills or to eliminate

those that we do not need, then that is a more appropriate use, but

the Department of Defense did not have those kinds of options, especially in the early—nor did any agency—in the early stages.

Mr. BROSTEK. We did, as you know, for you, Mr. Mica, a fair

body of work on the downsizing as it was occurring and we did find

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that early on in the downsizing period, not necessarily just through

buyouts but through all the techniques that were used, that there

was kind of a rush to meet the target and there was inadequate

planning to assure that when the target was met that the reduced

workforce, that those who were left had the knowledge, skills and

abilities necessary to perform the mission of the agency well.

Through legislation that you were involved with, as I recall,

there was a requirement that agencies begin doing better workforce

planning before they were able to offer any buyouts; and when we

investigated agencies after that legislation passed, we did see some

improvement in the targeting of the incentives for separations and

thus a better balance in the workforce as the downsizing continued.

Nevertheless, with what we saw early on in the downsizing period and the lack of hiring for a number of years during the 1990s,

we are likely to still have some imbalances in the skills and abilities of the workforce.

Mr. MICA. Thank you.

Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Mica.

Now Mr. Cummings.

Mr. CUMMINGS. Mr. Brostek, just following up on what you just

talked about, do you think there is enough authority now to be able

to maintain that balance?

In other words, if you have one area where you really need people, say, for example, technology and then you have this other area

that just hypothetically is more toward the manual labor side and

now the technology has just taken over, is there enough authority

to be able to, for example, have a buyout situation for the manual

labor folk and keep the other folk without, you know, the skilled

computer folks, without running into problems? Because it seems

like that is what you would almost have to do.

Mr. BROSTEK. As I understand it, there is not a blanket authority

that exists now for agencies to use buyouts to restructure or reshape their workforce.

As a general practice, when agencies have buyout or early out

authority, it is generally connected with a reduction in full-time

equivalents (FTEs), someone leaves with a buyout and the agency

loses one position to fill.

There have been a number of instances in which Congress has

granted exceptions to that, specific legislation that was crafted for

a specific situation in which an agency was given the ability to

offer a buyout to restructure its workforce along the lines of what

you are talking about. Whether or not a blanket authority is needed, we have not really assessed that, but we certainly think it

would be important for agencies to kind of make a fact-based case

for why they need that, even if there was a blanket authority, before they started using the buyouts again.

Mr. CUMMINGS. In my district, a private company, Domino

Sugar, I guess about 8 or 9 years ago moved to computerize itself.

It is now about 90 percent computerized and they literally cut their

workforce almost in half. And they are able now to produce sugar—

when you even throw in inflation—at the same cost that it was in

1960. That is amazing. So the question becomes when they did

that, though, they went through an intense retraining and so now

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you have these guys that used to be toting these big bags of sugar

sitting up in an air conditioned booth hitting buttons. And, you

know, it was just so interesting and they are making more money;

they are doing fine; but I was just wondering, how much emphasis

do we put on retraining of the personnel that are there?

I think, you know, that kind of thing is good for morale, when

people feel that they can now do something that they could not do

before. It also bodes well for upward mobility. All of those kinds of

things, I think, go to morale and I think that that is something

that we all have to be concerned about with regard to employees

in the Federal Government and I was just wondering where are we

on those kind of things.

Mr. BROSTEK. Well, I think both Mr. Cipolla and I indicated in

our statements that training and retraining of the workforce as the

techniques used for carrying out the mission change is a very important part of workforce planning and the execution of workforce

planning.

We do not have a very good grasp on what the training situation

is in the executive branch. There is not any central reporting of

training expenditures. We do have anecdotal evidence that during

downsizing training was one of the areas that tended to be cut and

cut fairly severely. So it is a possibility that this is an area in

which additional investments will be needed.

Mr. CUMMINGS. Now, Mr. Cipolla, you talked about flexible employment arrangements. What do you mean by that?

Mr. CIPOLLA. Well, anything other than the traditional 8 to 5 or

5-day-a week, 40-hour work week; different tour arrangements,

even different—the telecommuting that we talked about earlier.

That term would include contracting, it would include the contingent or the supplemental workforce, the temporary people that we

would add, even from an employment agency, to meet a current

need that we would not meet over the long term.

In government, in most agencies, over the years, we have tended

to think of a full-time permanent employee as the only way we fill

a position. We fill it the same way it was vacated, as opposed to

looking at different options among those that I mentioned for getting the work done.

Mr. CUMMINGS. Do we have—I mean, what elements will we

have to have, say, an agency will have to have for telecommuting

to be effective and for you to have—apparently it works in certain

kinds of private industry and I guess the question becomes just

how do we make it work, say, for Federal Government or the various agencies within the government?

Mr. CIPOLLA. It essentially has to be—at least this is our experience—a local matter and one in which employees and managers

can work out to their satisfaction—if there are unions recognized,

they should be involved, employees need to be involved as early as

possible in any proposal involving telecommuting and there may

even need to be training for managers on the advantages and disadvantages of going to a telecommuting arrangement. But it basically starts as a local process where you cannot communicate too

much about what the intent is.

Mr. CUMMINGS. All right. I do not have anything else. Thank

you.

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Mr. BATEMAN. Thank you, Mr. Cummings.

Now Mr. Underwood.

Mr. UNDERWOOD. Thank you, Mr. Chairman, and thank both of

you for having this hearing.

I want to ask a couple of questions, not so much in the framework that is offered to us here as managing human capital, but

just more or less what happens to these human beings as a result

of these so-called cost saving measures.

In particular in the community I represent, A–76, which has just

been devastating because it is not only the largest A–76 effort, it

really has altered the dynamics of Federal employment and all the

kinds of issues that have been brought out here ranging from no

more interest in Federal employment to the aging to the problems

associated with priority placement, what you do with an isolated

community in which the only other option that people have is to

seek employment in the Federal system 5,000, 6,000 miles away.

So the questions that I wanted to raise were in terms of the

thinking behind the kinds of protections or offers that we give to

Federal employees who are experiencing these job cuts and they include early retirement and the buyouts and perhaps some attention

to mobility; the two questions I have related to that and then I

have yet another question is what kind of thinking have either of

you gentlemen given to what kinds of additional programs or protections can be provided or offered to the Federal employees who

are experiencing this; and, second, has either one of you studied

what has happened to people who exercised the right of first refusal, what experiences do they undergo because the people who

are—this right of first refusal has been touted as a way to provide

some worker protection and in this particular instance that we are

just undergoing these 3 months, people are being offered—people

who used to make $28,000 a year are now being offered $17,000

a year and so. I rather doubt that, one, we have yet to see in the

Armed Services Committee the savings that allegedly come from

that and, second, we certainly see the cuts into the pay that are

given to these Federal employees.

So could you address the issue of what kind of general thinking

is there on the issue of incentives or protections and also what happens to the right of first refusal?

Mr. HOLMAN. Mr. Underwood, we have not done any systematic

look at the right of first refusal. We know that certainly is there

and it is an opportunity for Federal workers who are affected by

the A–76 process to accept employment with the winning contractor when the contractor wins the competition.

Anecdotally, I can say to you I have heard stories of communities

where the affected workers got equal if not better. I have also

heard stories of other communities where perhaps workers may

end up getting less benefits. But nothing overall that would say

what the overall trend is.

I do know of one situation that is currently underway with the

Army’s logistics modernization effort. That effort offered employees

a pretty good package, a soft landing, to accept employment with

the winning contractor; and I think the verdict is still out as to how

many of those employees will, in fact, take that offer.

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One of the things you run into at this day and time with the

aging of the workforce, you have so many workers within 5 or 6

years of being eligible for retirement and while they may have a

good safety net or a package to go to with that winning contractor,

they are not quite willing yet to forego obtaining the retirement

benefits they could get under civil service. So that is an issue that

is out there that looms that affects a lot of people; but overall, I

cannot say we have detailed information on acceptance or rejection

of the right of first refusal.

Mr. UNDERWOOD. I think that certainly suggests itself for potential study and certainly a more systematic inquiry.

What about the issue of having additional incentives or protections? Is there any other ideas that have been generated?

Mr. BROSTEK. We have not really done any investigation of what

in addition to what is currently available might be needed.

Mr. UNDERWOOD. Okay. The issue of core competencies has been

raised, trying to identify that core workforce, and the term ‘‘inherently governmental’’ is used to describe which employees or which

kinds of activities you are going to keep on civil service activities

with civil service employees.

Has, in your experience, the term ‘‘inherently governmental’’ been applied or understood evenly or have there been efforts to

kind of make the definition elastic or contract whenever someone

thinks that it is convenient to do so?

Mr. CIPOLLA. Sir, I believe that is likely a rhetorical question.

Mr. UNDERWOOD. No, I am interested—well, I am not interested

in a rhetorical answer. Maybe you can just give me some facts so

that I can ask another rhetorical question.

Mr. CIPOLLA. Our experience from talking with people in agencies, not only in DOD but across government, is that it is difficult

to reach a consistent view of what is inherently governmental, as

well as have people articulate a consistent process. And I cannot

add anything to that. That basically is— Mr. UNDERWOOD. Well, so then it is not inherent.

Mr. HOLMAN. Mr. Underwood, I think the work that we have

done on the A–76 issue indicates to us that that is very much a

subjective term. It does vary across agencies. In fact, we are doing

some work now looking at the DOD’s application of their DA–20

process as well as the FAIR act and I think it is safe to say you

do see some inconsistencies between the services. I think it is going

to be an evolutionary process as greater attention is given to looking at individual functions and trying to determine whether they

do involve work that should be done in house or potentially subject

to competition and contracting out. But there is very much an element of subjectivity involved.

Mr. UNDERWOOD. Well, thank you for those comments and obviously for it to be an evolutionary process means that a lot of people

get nicked in that process of evolution.

More importantly, as I pointed out to you, Mr. Chairman, ordinance activities are not even seen as inherently governmental in

the contracting out on this particular A–76 study and it is not even

seen as an issue of readiness; and this is a great source of disappointment to me and is a point of contention in the implementation of this particular A–76 issue that I am referring to and I cerVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00307 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm09 PsN: 72364
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tainly would ask other members of the committee to help me sort

this out.

Thank you.

Mr. BATEMAN. Thank you, Mr. Underwood.

Mr. Ortiz has a question.

Mr. ORTIZ. This goes back to when you were talking about the

necessity of having some type of balance, the contract workers

versus the civilian portion. Let me tell you of an experience I had

last week or even before that.

As you well know, some of the Apaches were grounded, could not

fly, they needed to be refurbished and that is very key to our readiness, Mr. Chairman.

They went to a private company and they told them we need to

work on 700 Apache helicopters. The answer was we can get started in May of this year and maybe finish by late 2001. Well, they

went to the civil service workers. They are finished with the work

before the other company could get started.

I do believe very strongly that there has to be a balance. The

gentleman went down and says when he came to me, I am supposed to supply these helicopters when we go to war and we were

not in any position to do so. And he went down just to thank them

because the company, without having to name a name could not do

it; but the civil service workers could do it a year before the other

company could get started. So I think that the balance, Mr. Chairman, is very, very important. I just wanted to make this point and

maybe you can add something to it or maybe you have some experiences such as this.

Mr. CIPOLLA. That is an excellent point and there are as many

anecdotes of that sort on one side of the issue as there are on the

other side, which points up the need for the validity of the process

and even more importantly for having an objective that tries to

achieve as much balance as possible.

Mr. BATEMAN. All right. Anything further?

Mr. Cummings or Mr. Ortiz.

[No response.]

Mr. BATEMAN. Gentlemen, we thank you very much for appearing before us today and giving us the benefit of your thinking on

these matters and we are in your debt.

And with that, we will excuse the first panel and ask the second

panel if they would come up and be seated.

Our second panel this afternoon consists of the following witnesses: Dr. Diane M. Disney, Deputy Assistant Secretary of Defense for Civilian Personnel Policy; Mr. David L. Snyder, Deputy

Assistant Secretary of the Army for Civilian Personnel Policy; Ms.

Betty S. Welch, Deputy Assistant Secretary of the Navy for Civilian Personnel; Ms. Mary Lou Keener, Deputy Assistant Secretary

of the Air Force for Force Management and Personnel; and Mr.

David O. Cooke, Director of Administration and Management, Office of the Secretary of Defense.

Dr. Disney, we have your full statement, and it will be made part

of the record, and now you may proceed as you choose.

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STATEMENTS OF DR. DIANE M. DISNEY, DEPUTY ASSISTANT

SECRETARY OF DEFENSE FOR CIVILIAN PERSONNEL POLICY; DAVID L. SNYDER, DEPUTY ASSISTANT SECRETARY OF

THE ARMY (CIVILIAN PERSONNEL POLICY); BETTY S.

WELCH, DEPUTY ASSISTANT SECRETARY OF THE NAVY FOR

CIVILIAN PERSONNEL; MARY LOU KEENER, DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE FOR FORCE MANAGEMENT AND PERSONNEL; AND DAVID O. COOKE, DIRECTOR

OF ADMINISTRATION AND MANAGEMENT, OFFICE OF THE

SECRETARY OF DEFENSE

Secretary DISNEY. Thank you, sir.

Mr. Chairman, members of the subcommittees, I am pleased to

be here today to discuss the matters affecting the civilian workforce

within the Department of Defense.

Over 10 consecutive years of downsizing have brought significant

changes in DOD’s workforce, as has already been pointed out. As

fiscal year 1989 ended, DOD employed about 1.15 million people.

A decade later, the number had declined to some 732,000, a drop

of over 36 percent. Plans call for another 11 percent drop from that

number by the end of fiscal year 2005.

What does all of this mean?

First, there has been a 4-year increase in the average age. Further, the number of employees younger than 31 has dropped by 76

percent. A third of current workers are aged 51 or older, as accessions have fallen from some 65,000 a year to about 20,000. This

poses problems in the transfer of institutional knowledge.

Second, we are seeing increasing levels of professionalization.

While there has been a decline in all major areas, the sharpest

drops have been in clerical and blue-collar jobs. The share in professional, technical and administrative jobs has risen.

Third, today’s workforce is more highly educated than in the past

and that is because today’s jobs require more education and training than did earlier ones. Accompanying these changes has been an

increase in typical grade level and in average costs.

We clearly have a workforce that is very different from that of

a decade ago.

We have worked hard to minimize the trauma associated with

the drawdown. Indeed, we have held layoffs to less than 9 percent

of total separations. Foremost among our internal efforts has been

our Priority Placement Program. Tied closely to that have been the

Voluntary Early Retirement Authority (VERA) and the Voluntary

Separation Incentive Payment (VSIP) better known as the buyout.

We are very grateful for your support with both of these and in related areas as well.

We also owe credit for workforce stability to our labor/management partnerships which have improved relationships, increased

productivity and reduced costs.

Unfortunate byproducts of the drawdown include the declining

rate of promotions and certain areas of skills imbalance. Another

challenge has been to develop leaders for a world of broader responsibilities, more complex missions and fewer resources. That is

why we created the award winning Defense Leadership and Management Program. This systematic investment in potential civilian

leaders will show dividends far into the future.

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Despite the pressures of change, defense civilians have continued

to dedicate themselves fully to the department’s mission. Outside

pressures, though, are taking their toll. Because of the robust

American economy, the civil service simply cannot match some private sectors’ starting salaries.

While we use the workforce shaping tools I mentioned earlier, we

ask for your continuing assistance as we enter the serious rightsizing phase. First we are continuing to develop tools for force

shaping. These would provide the flexibility to meet critical mission

needs and correct skill imbalances.

For example, some units have downsized and reengineered to

where they have the right number of employees, but might not

have the right mix of skills. We are looking to modifications of

VERA and VSIP in this regard.

We are also seeking to extend the authority for employees to participate voluntarily in reductions in force. Another request will be

to restructure the restriction on degree training. To permit us to

be more competitive in the labor market, the department is developing a proposal for an alternative hiring system.

You have also expressed interest in our personnel system regionalization and systems modernization. We now have 22 regional personnel centers. We have eliminated 10 non-interoperable data systems. Our new data management system has been successfully deployed to sites in the Army, Navy and the Air Force. After milestone 3 approval later this month, full deployment begins and these

efforts will save the department over $220 million a year.

That concludes my remarks. Thank you again for this opportunity to discuss issues related to our valuable civilian workforce,

and I will be pleased to answer your questions.

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

Appendix on page 358.]

Mr. BATEMAN. Thank you very much, Dr. Disney.

Now we will be happy to hear from Mr. Snyder, Deputy Assistant

Secretary of the Army for Civilian Personnel Policy.

Mr. Snyder.

Secretary SNYDER. Thank you, Mr. Chairman. I also have more

detailed remarks, and I will just summarize those.

Mr. BATEMAN. All of the witnesses’ prepared statements will be

made a part of the record.

Secretary SNYDER. Mr. Chairman and distinguished subcommittee members, thank you for the opportunity to testify on

Army civilian workforce issues and also for your commitment to

policies and programs that maintain the high quality of the Federal

service.

My statement will discuss the Army’s experience with the civilian drawdown, strength projections and related issues.

During the 10-year period that ended 30 September 1999, the

Army reduced its total appropriated fund strength by more than 42

percent. When only military functions are included, our civilian

strength declined by more than 44 percent during the above period.

We are programmed to reach an end strength of a little over

209,000 by 2005. This will be a 48 percent reduction from the fiscal

year 1989 level.

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We have experienced similar demographic changes to those of

DOD as a whole, including a shift toward a greater proportion of

the workforce in professional occupations and higher educational

levels.

The age and tenure of Army civilians has increased significantly

during the drawdown and 30 percent of our professional, administrative and technical workforce will be eligible for optional retirement in 2003, 62 percent in 2010.

To counter the losses we expect, it is critical that we significantly

increase our civilian recruitment and entry levels, particularly in

the professional, administrative and technical occupations. The

Army has an intern program, and that is one of the means and

methods that we use to access those who will become our future

civilian leaders. We centrally fund our intern program, but it has

declined steadily over the years during the drawdown. In 1989, we

had a total of 3,800 civilian interns. We will have 950 in fiscal year

2001.

We anticipate greater difficulty in filling journeymen level and

leadership vacancies with highly qualified and well trained employees. Given the tight labor market, recruitment competition among

employers is intense and the Army, as well as other Federal agencies, are at a competitive disadvantage because of certain requirements and restrictions of the Federal personnel system.

We are participating with the Office of the Secretary of Defense

(OSD) and the other components in a development of the DOD alternative system that Dr. Disney referred to. We also have been

participating in regionalization and it has been a challenge. We

have aggressively addressed the needs of our customers and we

will continue to do so, but it has not been easy.

Now, one final thing on the Army civilian workforce. It has been

and will continue to be a major contributor to military readiness,

performing a wide range of future functions essential to the Army’s

mission. Over 43,000 civilians of the Army are forward stationed

around the globe. Army civilians have provided direct support to

operations such as Desert Storm, Haiti and those in the Balkans.

And because of this dedication by our Army civilians to this important work, I am especially pleased to have the opportunity to

present the Army’s views on matters affecting our civilian workforce.

This concludes my remarks. I will be pleased to answer any

questions.

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

Appendix on page 378.]

Mr. BATEMAN. Thank you, Mr. Snyder.

And now we will be pleased to hear from Ms. Welch, the Deputy

Assistant Secretary of the Navy for Civilian Personnel.

Ms. Welch.

Secretary WELCH. Thank you, Chairman.

Members of the subcommittees, I am also pleased to be here

today to provide testimony about the civilian workforce of the Department of the Navy.

This afternoon I will talk to you about the impact of 10 years’

worth of civilian workforce downsizing, where we are now and

some of our plans for the future.

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Today, as a result of downsizing and reduced hiring, our civilian

workforce is 44 percent smaller than it was 10 years ago. We

achieved this reduction and minimized the impact on our civilian

workforce by using all of the tools available to us, including the

DOD priority placement program, outplacement services and the

separation incentive pay authorized by Congress in 1993. Before

the incentive pay, 56 percent of our separations were involuntary.

With incentive pay, that number dropped to 17 percent.

Downsizing left us with a more senior workforce. Ten years ago,

only 16 percent of our workforce was eligible for retirement. Today,

that figure is closer to 34 percent. This situation is even more troubling when you realize that 47 percent of our engineers, 55 percent

of our scientists and 64 percent of our contract specialists will be

eligible for retirement in the next 5 years.

The average age of our non-supervisory blue collar employees is

47. In the next 5 years, 53 percent of them will be eligible for retirement. This means we have an older workforce closer to retirement without an adequate number of replacements in the pipeline.

To prepare for the future and to ensure we have a diverse and

highly skilled civilian workforce, we recognize the need for attracting, retaining and developing employees ready to meet the Navy’s

mission. For the professional and administrative workforce, we are

supporting our commands in establishing and coordinating a recruiting effort to attract highly qualified individuals. On the blue

collar side, the Department of the Navy has a long and illustrious

history of hiring and training the best deck plate workforce in the

world.

During the past 10 years, as we have closed several of our shipyards and aviation depots, our apprentice programs slowed to a

trickle. Today, our systems commanders and the Atlantic and Pacific fleet commanders who are responsible for the department’s

depot level workforce consider the apprentice program a vital part

of their efforts to prepare for the workforce of tomorrow. Thanks

to the additional funding received in fiscal year 1999 and fiscal

year 2000, our apprentice programs are now being revived.

The well being and development of our current workforce is also

an important part of our future. Our focus is in three areas: workforce development, quality of work life and workplace dispute resolution.

First, we are committed to our workforce through programs such

as the DOD leadership and management program, the Department

of the Navy’s civilian leadership development program and continuous learning initiatives for our employees.

Second, we are continuing to encourage our commands and activities to use flexible work arrangements such as job sharing, parttime employment, alternative work schedules and satellite work locations suitable to local needs.

And, finally, we are focusing on workplace dispute resolution, an

issue of extreme importance to our employees and managers. In

1997, we launched a reengineering project to look at our equal employment opportunity program. The No. 1 problem cited by both

managers and employees was the costly, lengthy divisive process

used to resolve equal employment opportunity (EEO) complaints.

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With that in mind, we put together a pilot EEO complaint process that deals with these issues and provides a less contentious

forum for resolving workplace disputes. We are extremely pleased

with the results to date. Our employees at the pilot sites are choosing to take a more active role in early resolution of their disputes.

More of the complaints are being resolved informally, and the processing time and costs have been significantly decreased. Based on

our positive experience, we are expanding the pilots to several

more activities this year.

This concludes my remarks. Thank you for the opportunity to address you, and I would be pleased to answer any questions you may

have for me.

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

Appendix on page 391.]

Mr. BATEMAN. Thank you, Ms. Welch. I neglected to mention

that a part of your title is Secretary of the Navy for Civilian Personnel and Equal Employment Opportunity, so I can understand

why you highlighted that.

Now we will hear from Ms. Mary Lou Keener, Deputy Assistant

Secretary of the Air Force for Force Management and Personnel.

Ms. Keener.

Secretary KEENER. Mr. Chairman and members of the subcommittees, I am pleased to join Dr. Disney and other panel members in testifying on these very important issues. It is a privilege

to represent the Air Force civilian workforce whose daily contributions ensure the readiness of our force.

The Air Force cannot rely on just one element of our force for

readiness. It takes all of our people, military, civilian, Guard and

Reserve, their integrated contributions and the synergy and flexibility they create to ensure that we are the preeminent expeditionary aerospace force in the world.

We appreciate the support that the Congress has provided to address military recruiting and retention issues. Our challenges in

the civilian workforce are no less serious.

My written testimony addresses these challenges in more detail,

but I would like to spend the majority of my time this afternoon

and focus my comments on how we in the Air Force plan to address

these challenges.

I would like to tell you that we do have a plan to meet these

challenges. We have a civilian workforce shaping plan that we feel

is specifically geared to satisfy our future Air Force mission requirements. And with your help, we are prepared to begin to execute this plan.

In my written testimony on page 5, there is a colored bar graph,

and this graph depicts for you where we anticipate that our civilian

workforce needs to be by the year 2005. That graph also outlines

for you the three major elements of our workforce shaping plan

that will, we feel, assist us to reach our objectives. That plan consists of three major elements. Those major elements, as you can

see, are first of all force renewal, force skills, development skills,

accuracy and separation management.

In the area of accession planning, force renewal is a priority for

us and it is particularly critical in the depots. The depot maintenance community has experienced a decade long hiring restriction

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freeze and Base Realignment and Closure (BRAC) actions that

have resulted in a severe imbalance in skills and levels of experience.

In the next few years, we will lose more employees, particularly

in the blue collar occupations, due to years of service and we need

to undertake aggressive hiring efforts.

In the area of force development, the Air Force will invest in

training and retraining our current employees to keep them up to

date in this rapidly changing environment, but we also need the

ability to achieve that third prong of our plan which is to stimulate

and manage separations in our workforce.

The voluntary early retirement and voluntary separation incentive programs that you provided us with, and for which we are very

grateful, have been very valuable tools to rapidly draw down the

force; but we need the ability to offer targeted, voluntary incentives

that are not tied to reduction in force and can be used with more

precision in shaping the workforce that is needed to meet our mission requirements.

In closing, the Air Force believes that it takes all elements of our

total force working together in a seamless manner to sustain readiness. With your help and the tools necessary to execute our workforce shaping plan, we will sustain the best force mix and the best

talent to do our job.

We appreciate the opportunity to address these critical issues regarding the civilian component of our force, and I will be happy to

answer any questions of the panel.

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

Appendix on page 400.]

Mr. BATEMAN. Thank you, Ms. Keener.

Now we will be pleased to hear from Mr. David O. Cooke, who

is Director of Administration and Management of the Office of the

Secretary of Defense.

Mr. Cooke.

Mr. COOKE. Thank you, Mr. Chairman. I am here representing

what we call the Fourth Estate. Perhaps I had better define that.

The Fourth Estate is the Department of Defense which is not in

the Departments of Army, Navy and Air Force.

You know, it is really—

Mr. BATEMAN. Mr. Cooke, if you would, pull that microphone a

little closer to you.

Mr. COOKE. I will indeed.

The Fourth Estate is composed of defense agencies, defense field

activities, and several other defense organizations, not as alike as

peas in the pod. Some of these defense agency field activities are

very small, some of them represent substantial size, Defense Logistics Agency, for example, or the Defense Finance and Accounting

Agency.

The problems in the Fourth Estate, though, are essentially those

described by my colleagues, Dr. Disney and so forth. We appreciate

the opportunity to be heard on these problems. I can only observe

that the Fourth Estate as a group is overwhelmingly civilian, more

so than the military departments. It is more heavily white collar

and it is more heavily female in composition.

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Now, there is a tendency to think that all members of the Fourth

Estate are alike and that is simply not true in terms of organization, mission, reporting assignments and so forth. For example,

there are some, I think, misconceptions that Washington Headquarters Services is just OSD by another name, but Washington

Headquarters Services is an operating function. It supports, for example, all administrative space, General Services Administration

(GSA) space, in the National Capital Region. I have a small outfit

in Washington Headquarters Services which is responsible for absentee voting worldwide. We are doing some very interesting

things, by the way, and seeing whether we can eventually have voting by the Internet.

The Fourth Estate has grown over the years, largely by taking

functions which were fragmented among the military departments

and pulling them together into a defense agency or a defense field

activity, but nonetheless we have maintained our share of reductions along with the military departments. OSD itself, for example,

has come down by 33 percent and so there are significant reductions.

We certainly need the things that Dr. Disney talked about to

shape the workforce. We support them and I am, of course, available to answer any questions you may have.

Thank you.

[The prepared statement of Mr. Cooke can be found in the Appendix on page 415.]

Mr. BATEMAN. Thank you, Mr. Cooke, and I thank all of the witnesses for being here with us today and providing us with their testimony.

I am intrigued as to some of the statistics. I do not remember

them all, I did not write them all down, but we have a DOD wide

percentage reduction in civilian personnel. We have different percentages for each of the services.

Could you review for me what the percentage reduction has been

since, say, 1989 or whatever date is more convenient so that we

have an idea as to the relative size of the downsizing in each of

your agencies?

Secretary DISNEY. For the department as a whole, the reduction

has been from 1.15 million to roughly 732,000, which is roughly 36

percent.

Mr. BATEMAN. And for the Army, that figure is?

Secretary SNYDER. Mr. Chairman, the Army has gone from

406,000 civilians at the end of September 1989 to approximately

today about 220,000. That is roughly 42 percent.

Mr. BATEMAN. And, Ms. Welch, the Navy.

Secretary WELCH. The Navy, sir, in September 1989 we were at

about 130,000; December 1999, 184,700 or about 44 percent smaller.

Mr. BATEMAN. And, let us see. Mr. Cooke, in your Fourth Estate?

Mr. COOKE. I would like provide it for the record. You do not

want all 14 defense agencies and seven—

Mr. BATEMAN. Yes. You do not have—

Mr. COOKE. Overall, there is a substantial reduction, but that

number will be sort of meaningless because some of our larger

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agencies have taken much larger percentages than some of the

smaller ones and so forth.

Secretary DISNEY. Mr. Chairman, if I could?

Mr. BATEMAN. Yes. Certainly.

Secretary DISNEY. I would like to take this question for the

record because even though we know the numbers, there are differences in whether everyone is talking about military and civil

functions. So in order to make certain that we are giving you consistent numbers, I would like to be able to provide the data for you.

Mr. BATEMAN. That would be very helpful if you would, Dr. Disney.

Secretary DISNEY. I will do that.

Mr. BATEMAN. Ms. Keener, I did not give you a chance to answer.

Excuse me.

Secretary KEENER. Mr. Chairman, in fiscal year 1989, the Air

Force stood at 260,000 members. At the end of fiscal year 1999, we

were at 165,000 for a decrease of about 37 percent.

Mr. BATEMAN. Okay. There are further reductions in the civilian

personnel force contemplated. What is that number?

Secretary DISNEY. Yes, sir. Another 11 percent from the fiscal

1999 levels between now and the end of 2005.

Mr. BATEMAN. Who determined that that number should be 11

percent as opposed to 15 percent or 5 percent?

Secretary DISNEY. That is part of our normal budgeting process,

sir.

Mr. BATEMAN. But it is a figure developed by the Department of

Defense?

Secretary DISNEY. A department wide effort. Yes.

Mr. BATEMAN. Not something that we in the Congress said you

shall reduce by that number?

Secretary DISNEY. Well, there are some instances where the Congress indicates that we should take cuts of a certain magnitude either number or percentage, as in headquarters and as in the acquisition corps.

Mr. BATEMAN. My colleague Mr. Hunter is very prone to be very

outspoken on those categories of personnel.

Secretary DISNEY. Yes, sir.

Mr. BATEMAN. Do you have any observations you would like to

make on that subject?

Secretary DISNEY. On Mr. Hunter or on reductions? [Laughter.]

Mr. BATEMAN. I am sure we would all praise Mr. Hunter, but on

the question of the reductions and whether they are manageable.

Secretary DISNEY. Yes, sir. The department would find it much

easier to manage if there were not constraints on specific percentages in specific areas. That would make it perhaps easier to manage to meet the full competency needs for readiness as we have indicated earlier.

Mr. BATEMAN. You have spoken in terms of the number of people

and the dramatic increase in the number of people eligible for retirement. Do you contemplate a need for incentives for people not

to retire?

Secretary DISNEY. No, sir. We already have retention options

that are available to us.

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Mr. BATEMAN. So you have some tools to encourage selected

skills that are in short supply to remain in the workforce, even

though they are eligible for retirement.

Secretary DISNEY. Yes. And we find that a great many people

who are retirement eligible do not in fact retire.

Mr. BATEMAN. I have done that for a while myself.

Secretary DISNEY. And we have an example right here at the

table.

Mr. BATEMAN. Okay.

Mr. Mica.

Mr. MICA. Thank you.

I am wondering if you have looked at ways to create incentives

to stay since it costs so much to train new people; since people are

living longer and working longer, is there anything that you have

recommended in your legislative package or personnel changes and

procedures as incentives to stay?

Secretary DISNEY. No, sir.

Secretary KEENER. I would add, Mr. Mica, that in the Air Force,

we have recently executed a 10 percent across the board retention

bonus for our Reserve pilots, so that is one initiative that we have

just executed.

Mr. MICA. Well, it seems like it would, you know, in an area that

is highly technical if you can get these folks to stay on and encourage them—they are going to probably retire, get some retirement

benefits and go do the same thing somewhere else, which does not

make a whole lot of sense.

Secretary DISNEY. Well, sir, we do have the retention allowances

and we are making every effort to make certain that managers

across the department are more aware of these so that they can,

in fact, be used in areas of skills need.

Mr. MICA. Well, that is, you know, an incentive program. How

about has anyone broached the possibility of adding a month on

every year in the future toward retirement, we keep them around

a little bit longer? What is it to retire now, like 20—well, I guess

you can retire just about any time.

Secretary DISNEY. You can take early retirement after 25 years

of work at any age, but there is, of course, a reduction in the

amount that you would get.

Mr. MICA. What about 25 years and add a month every year?

Secretary DISNEY. That is a very interesting concept.

Mr. MICA. Like we are doing with Social Security. Has anybody

proposed any changes in what we have had?

Secretary DISNEY. Yes, sir. There is one option that has been proposed, that has been discussed within the department and that is

one that we call phased retirement. That stems from the belief that

people are reluctant to retire sometimes for fear of loss of income

or fear of loss of sanity. And we have tried to devise a way to address both of those concerns, which would allow an individual to

go from full employment to 75 percent time, but be able to draw

perhaps on some of the retirement income so that the income loss

would not be a problem.

The second year it would be a 50/50 arrangement and then the

person would leave. That would provide a rational way of an indiVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00317 Fmt 6601 Sfmt 6601 E:\HEARINGS\72364 pfrm09 PsN: 72364
308

vidual moving out but also of bringing somebody in and having an

orderly transfer of institutional knowledge.

Now, that is just one idea that has been discussed.

Mr. MICA. Well, it sounds like you have a heap of people that are

getting ready or will be eligible to retire and some very strategic,

high cost, difficult to replace or train or acquire, in a job market

that is becoming increasingly tight and smaller numbers; so I think

we ought to be looking at something where we could retain—have

some incentives. You know, I would love to have these people greet

me at Wal-Mart; but I think that their talents could be better utilized in some of these positions.

I am surprised that the military and civilian employment really

has not looked at more incentives to retain good folks and reward

them for staying or revised a schedule that was set up.

Mr. Bateman is going to be around and live a long, long time

past his retirement.

Mr. BATEMAN. I think the sanity might be a problem. [Laughter.]

Mr. MICA. But he will be looking for something to do.

Of course, we have our own retirement plan that is put in effect

by voters, too. It is a little bit different situation. But seriously, it

seems to me that we are sort of missing the lick and that a lot of

the civilian people are realizing this, that people work longer, they

can contribute longer; we should not push them out and then bring

in someone at a higher cost, so they have a longer productivity and

make some incentives available.

Secretary DISNEY. Yes, sir. This is an issue I agree with you

more and more on every passing year.

Mr. MICA. Particularly at your age, you should.

Secretary DISNEY. Bless your heart. [Laughter.]

We would be more than delighted to work with you and your

staff on exploring options.

Mr. MICA. You have in the past and I appreciate that. Thank

you.

Thank you, Mr. Chairman.

Mr. BATEMAN. Mr. Ortiz.

Mr. ORTIZ. Thank you.

For Ms. Welch, I have a question.

How important was it for the Navy Apprenticeship Program

funding to be outside the working capital fund earmarked? In other

words, what would happen if the funding were to be rescinded?

Secretary WELCH. First, I think we need to thank you for giving

us those funds, and it would be very important to us to continue

to have those funds outside of the working capital fund. As you

know, that was part of the reason for the degradation in the apprenticeship program to start with and so the continued budget

support is most appreciated and is being used very, very well.

Mr. ORTIZ. Very good.

And then for Mr. Snyder, what tools does the Army have in place

to ensure that it retains the necessary technical skills in its industrial facility when there are across-the-board reductions ordered?

And this is because of prior experiences that we had. At the Army

depot, you know, what they did, we said we must downsize, we

downsized; but we never took into consideration who was going to

be relieved of their duties, who was going to be out, and then we

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found ourselves that some of the technical skills that we had were

gone. So do we have something in place that will help us maintain

those skills?

Secretary SNYDER. That is a two-part answer, Mr. Ortiz, and the

first part is when activities downsize, they take a look organizationally and, as a general rule, they do not take out of the workforce skills that they need. That is one of the fundamentals of the

way that we run reductions within the Federal Government as a

whole.

Now, on the other side, where we come around in terms of accessions, we have what I call—and I referred to it in my statement— an intern program which is for the Army career program’s engineers and scientists, and it is basically a white collar program. It

is basically a white collar program that while we have those people

in that program they are insulated from reduction in force. In other

words, they will not be touched by a reduction in force. We are now

working with the Army Materiel Command to try to size, and we

are working on the requirement to try to get to an appropriate size

what an apprentice program should be because we just recently

heard from General Coburn who says this is one of his largest

needs and so we are trying to get the right size on that requirement even today. And we expect to have it finished some time in

the spring.

Mr. ORTIZ. Thank you.

Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Ortiz.

Let me ask, if I might, if each of you could address whether or

not in the phraseology of Mr. Brostek, the Department of Defense

as a whole and the military components are in the course of or

have developed a workforce plan. Do all of you have one or are you

in the process of developing one in the context of the testimony of

Mr. Cipolla and Mr. Brostek?

Secretary DISNEY. Yes, sir. The Department of Defense historically has not approached the planning for the civilian sector as it

has for the military because there are inherent differences between

the two. The military has age restrictions, it has an up or out system, it has a mix of floors and ceilings and other kinds of things

that make the planning there much more rigid. The civilian sector,

though, has no mandatory retirement age and rather than up or

out, it is much more of an up and stay kind of model.

For the past 6 years, we have been paying a great deal of attention as a department and as individual components to workforce

planning. For example, every 3 months, 3 to 4 months, we bring

all of the components in the functional areas together to assess

where we were on a great range of demographic characteristics,

successions, eligibility for retirement and so forth in 1989 and

where we are now. We look at the difference. We have built a micro

simulation model that permits us to make projections of where we

will be 5 years or so into the future, so we look at where we are

likely to be if there are no changes in policies or programs.

If we are not satisfied that we are headed in the right direction,

we use those forums to develop legislative proposals or internal

programs to change the way we operate. It is that process that has

enabled us to come forward with our legislative proposals.

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Data analysis—let me talk a little bit more about that. We have

commissioned some very special studies to help us in this regard.

In one case, Rand Corp. is working with us and the Joint Staff on

a study called future worker, future warrior, where we look at all

the military and civilian positions we have now and compare them

to all other positions. We had a cadre of occupational analysts from

a number of areas look at them across five different dimensions as

to how likely they were to change in the future and where our need

was to be. What we wanted to do was to determine the mix of competencies necessary in 2010 so that we could begin changing our

programs and influencing high schools and colleges to change

theirs to enable us to yield the right mix from which we could select in the future.

In addition, we have done any number of studies related to the

impact of A–76 and other kinds of things, so we have built a body

of research that enables us to meet the first important prong of

workforce planning which is the database.

The second thing we have done on a department wide basis is

increase our investment in education and training. We mentioned

the DLAMP program. We have also been working with the acquisition technology and logistics community to identify the key two

dozen competencies to be needed in the future so we can restructure the Defense Acquisition University to yield what we will want

in the future.

We have been doing a similar thing with the intelligence community. So there are more examples, but those will suffice for now.

And the third is to develop a managed approach to accessions

and separations.

So when we put the three of them together, we can say we have

a strategy for the department as a whole and then this cascades

down to specific plans with somewhat varying details in each of the

components.

Mr. BATEMAN. In light of Dr. Disney’s very meaningful statement, does any other witness have anything they would like to

add?

Mr. Snyder.

Secretary SNYDER. Yes, Mr. Chairman. The Army has a system

that is known as Total Army Analysis and I am sure Mr. Hawley

has probably been associated with that in the past, but the term

Total Army Analysis up until last year was not total because it did

not include the civilian part of the workforce. And so what we have

done in the Army, what we did in the Army last year was we started the process to include the whole civilian workforce in Total

Army Analysis and the TAA process goes out into the out years

to—I think it is to about 2010, if not a little bit sooner. But what

we have done with that is we use a very sophisticated projection

model on the civilian workforce side, which, as Dr. Disney says,

will do a very good and accurate job of projecting where we will be

absent any policy changes.

We then take our functional chiefs and our career program managers to take a look at the 80,000 or so high level civilians—we

have to take a look at their career fields and add into that what

they know and believe will come as a result of technology changes

and whatever.

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At the end of that, we end up with a much more precise slice of

what we believe the civilian workforce will look like.

Is it 100 percent accurate right now? No, but it is a lot better

than what we used to use.

Mr. BATEMAN. Thank you, Mr. Snyder.

Anyone else?

Secretary KEENER. Yes, sir. I would just like to add that I did

briefly describe our plan in my opening statement, but I wanted to

add that last month, in February, we executed a civilian workforce

shaping summit here in Washington. We brought stakeholders in

from all over the country and encouraged them to think out of the

box. That is why I was interested in Mr. Mica’s comments earlier

because these people were encouraged to think about the kinds of

things that you were talking about that might aid us in our workforce shaping. Also, I would like to mention that the Air Force Materiel Command (AFMC) is our largest employer of civilians, and

they have been engaged in an in-depth study over the last year to

try to come up with a plan to right size the civilian force at AFMC

and specifically look at the depot force in that command.

Mr. BATEMAN. Thank you very much.

Anyone else?

Yes, Ms. Welch.

Secretary WELCH. The Navy, as you probably well know, is much

more decentralized than our fellow components here. Over the last

2 years, we have been working with our highest ranking civilian

executives looking at how to shape our workforce for the future because it is a major concern to us.

Mr. BATEMAN. Thank you.

Mr. Cooke.

Well, apparently—are we in recess or do we have votes?

Mr. Cummings, we will call on you as we clarify whether or not

this is a recess of the House or whether it is votes.

Mr. CUMMINGS. Very well. Thank you very much, Mr. Chairman.

What are you doing with regard to colleges? Just a little earlier,

we talked about training and somebody on the panel before you all

talked about how so often when the budget is cut a lot of times

training dollars go out or are reduced and I just believe in training

because I think any time you can give people an opportunity to become better and to make more money at what they are already

doing in the field that they are already in, I think it is really good.

So I was wondering, No. 1, do you all find that to be the case?

What kind of training opportunities are there available as you try

to restructure it and make the workforce consistent with your

needs?

Secretary DISNEY. We are making a very concerted effort within

the Department of Defense to dedicate more dollars to education

and training but also to use the dollars that we have more effectively, and that cuts across every level of education and training.

Mr. CUMMINGS. So do you use colleges? I mean, in other words— Secretary DISNEY. We have in our Defense Leadership and Management program, we are offering courses that we do in conjunction with institutions of higher education. We also are proposing

some legislation this year that would eliminate the restriction

against paying for degrees. That is a barrier to us in some areas

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because while it is perfectly legal for us to pay for individual

courses and have those courses perhaps lead to a degree, that is

not necessarily the same thing as enrolling someone in a degree

program for a definite purpose. We would like the flexibility to be

able to do the latter because that is better career management.

Mr. CUMMINGS. That legislation, would it have—I mean, what

kind of teeth does it have, if any, to make sure that the person

once they get the degree, you know, sticks in that job that we are

preparing them to do? I mean, is there a certain period of time?

Secretary DISNEY. There is a requirement for staying three times

the length of the education or training. Yes, sir.

Mr. CUMMINGS. So where is that now?

Secretary DISNEY. That is in our legislative package, working its

way through the process.

Mr. COOKE. Let me tell you a program we run in OSD that does

very well. We have authority, as we all do, to bring in interns for

the summer, from colleges or what not. We decided to bring in faculty members from the historically black colleges and universities

for two reasons: one, they would be a little more mature and we

might get some better contributions from them during the summer

and, two, they would go back to their campuses and talk up OSD

and WHS as being not bad places to work and it has done reasonably well over the years.

Mr. CUMMINGS. Very good.

Mr. BATEMAN. I suspect the committee ought to recess now in

order to go and vote, but we will return, if the witnesses will be

patient with us, as soon as we can take care of two votes.

[Recess.]

Mr. BATEMAN. The hearing will resume and I will recognize Mr.

Underwood for any questions he may have.

Mr. UNDERWOOD. Thank you. Thank you very much, Mr. Chairman, and thank you for your testimony. I have read briefly through

some of it and I had a conversation with you just now, Dr. Disney,

and perhaps just for the record, I asked a question with the earlier

panel about some thinking about how to better provide assistance

to workers who are undergoing a dramatic work transition through

no fault of their own and what are some of the ideas behind that.

Any kind of new innovative ideas other than the current existing

system and what about the issue of how we deal with the term ‘‘inherently governmental,’’ which is kind of certainly a sore spot because it varies from agency to agency, I am sure; but particularly

with regards to the Department of Defense.

Secretary DISNEY. Yes, sir. ‘‘Inherently governmental’’ is a term

that can vary, the definition of which can vary from agency to

agency. As we were talking, what is inherently governmental in the

Department of Agriculture may well not be in the Department of

Defense. And I think they’re working about as many definitions of

that as there are agencies at this particular moment. But we are

going through a process within DOD to try to make certain that

there is unanimity within the department as to what this means.

Also with the department we have been very concerned about

trying to manage the downsizing humanely, not just efficiently, and

that is why we have continued to invest in our Priority Placement

Program, which is the model placement program, I think, in the

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country. This enables someone who is about to lose his or her job

for no personal fault at all to find new employment within the department.

The individual registers, perhaps as long as 2 years in advance

of a reduction in force, and is retained on the roster as long as the

year after that in order to provide an opportunity for them to turn

up a position for which the person is well qualified.

The individual registers in areas of competence and then geographic areas of preference. And if there is a position that comes

up, that person has that job unless it can be demonstrated that he

or she is not qualified.

This has served us very well. Since its founding, it has found

new jobs within the department for 161,000 people. Since our

drawdown began, it has found new jobs for some 75,000 within

DOD.

At the height of BRAC, it was finding them at the rate of 1,000

a month. Now that rate has declined because we have fewer positions into which to put people.

In the situation of Guam, we know that over 200 people were

found new jobs within priority placement and others have received

new offers. We also instituted a special program called the expanded buyout program that enabled us to pay buyouts in other

areas and then relocate someone into that empty position. An additional 40 have been able to continue their employment through

that.

So when we add the ones who have received VSIP and VERA,

we see that about 500 of the individuals who were facing dislocation through no fault of their own have either found their way into

retirement more easily than would otherwise have been the case or

have retained their employment. The others are still registered, so

there are options that are still available.

Mr. UNDERWOOD. Okay. On the issue of ‘‘inherently governmental,’’ in our discussion and certainly in this committee we have

heard it before, those activities which are directly related to

warfighting and preparation for warfighting, and what strikes me

as odd in the particular case of Guam is that we have taken ordnance handling, which I would assume almost anyone would readily admit is preparation for warfighting; it has been contracted out,

has been subjected to outsourcing.

It occurs to me that that is quite a stretch and also if the main

motivation is saving money and you have a case like a community

like Guam, which is many, many thousands of miles away, when

you reduce the inherent and the core capacity to respond to military activities out there as has already been the case with lots of

people leaving, the time in the future when there may be a bump

up or a need to raise the level of activity again, it is actually going

to be far more costly because people are going to have to be

brought in; and if it is done by the contractor, the contractor is

going to put that into whatever additional funding, any modification for their contract; or if it is going to be civil service, then obviously you have a case where you are going to have a lot of people

who are ‘‘stateside hire’’ and they are going to be entitled to many,

many more benefits.

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And it just seems to me that even though it is very difficult to

make the case here because they are all civil service employees; but

in this particular instance there was—you have what is a forward

deployed situation being dealt with as if it was another military installation, you know, with the usual economic environment and

usual numbers of people that are available for various kinds of

jobs.

But on some of these jobs that are very, very specialized, the capacity is gone and they are now thousands of miles somewhere

else.

Secretary DISNEY. Sir, I am afraid I am not totally familiar with

all the details of the reasoning for the contracting study and for

that I would have to defer to Ms. Welch of the Navy, if she would

care to comment.

Mr. UNDERWOOD. Ms. Welch.

Secretary WELCH. I cannot comment any further either as to why

that contracting out study was done, but I would be happy to find

out and get that information back to you if there is anything further we can add.

Mr. BATEMAN. If you would, supply that for the committee’s

record for the hearing. We are going to keep the record of the hearing open in the event there are other Members who have questions

and have not had a chance to pose them or if staff might have some

questions that they feel like we would be benefited from.

Also, for the record, Dr. Disney, you were going to furnish us

with the numbers on the drawdown of the various departments and

agencies within the Department of Defense. Would it be unduly

burdensome to also give to us the number of new contract employees, non-governmental employees, that are now on the payroll and

the cost of those people?

Secretary DISNEY. Well, sir, there is no requirement that that information be collected, so consequently there is no database on the

employees of the contractors. The database that we have on contracts does not include it anywhere.

Mr. BATEMAN. So you have no basis to determine how many people are now doing services for the U.S. Government under contract

relative to the number of civil service employees who have gone

away?

Secretary DISNEY. That is correct.

Mr. BATEMAN. Okay.

Mr. Chambliss.

Mr. CHAMBLISS. Thank you, Mr. Chairman.

Ms. Keener, as you correctly note in your written testimony, we

are in an increased era of contracting out and privatization as the

military and in particular the Air Force outsources new weapons

systems.

What impact does that have on the workforce’s ability to sustain

the systems that are assigned to the government and what is being

done to ensure that the government retains the skills to ensure a

ready and controlled maintenance capability?

Secretary KEENER. First, Mr. Chambliss, it is our intent to fully

comply with the 50/50 rule, the ratio, and right now we are right

at that level, so we do not intend to ever go beyond the rule and

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contract out to a greater degree, more than 50 percent of that

workforce, particularly in depots which I think you are referring to.

On the issue—the second part of your question, what do we intend to do to guarantee that we have a good balance of skills and

be able to sustain the force, in my oral statement I described the

strategic civilian workforce shaping plan that the Air Force has developed and in that statement I describe the three-prong process

that we intend to utilize to do exactly what you have asked.

First of all, we are going to deal with accession planning and

that deals with force renewal, which will be particularly important

in the area of helping us to bring in new entry level employees in

the blue collar area.

The second aspect of our plan deals with training and retraining

and that will help us to provide a better balance of the skill mix

that we have in our force.

And, last, we talked about the importance of separation management as a part of that plan; and that will assist us to expand our

VERA/VSIP authority so that we will be able to use that as a real

management tool, rather than just as a reduction in force tool, and

selectively be able to narrowly focus those individuals that we want

to offer buyouts to.

Mr. CHAMBLISS. The Air Force has previously testified about difficulty in hiring skilled personnel during surge times. Can you talk

a little bit about what impediments they do face and what we are

talking about doing to overcome those impediments?

Secretary KEENER. In certain areas, specifically, in high tech

areas, information technology, those particular areas that we really

need skilled people for, it is particularly difficult to find those people and to bring them into the workforce, but we are doing everything that we can to utilize initiatives in the area of force renewal

to be able to attract these people to the Air Force. We recognize

that there are severe impediments out there. We are dealing with

a very robust economy. But some of the specific initiatives that are

in both Dr. Disney’s testimony and in my testimony we are targeting to help us to bring in a new entry level force.

Mr. CHAMBLISS. Well, realizing that we are in a little bit different economy from what we were in in 1991 and 1992, when we

were last required to really surge, are we looking ahead to the potential impediments that may be there and do we feel confident in

the event of a near-term conflict we are going to be able to reach

out and fill that surge capacity problem?

Secretary KEENER. Yes, sir. I think we do. And the plan, as I described it in my statement, projects—this plan is really based on

what we perceive to be our mission requirements in the year 2005.

So this plan is not just a plan to try to bring in people that we

need, this is a real plan that is geared to what our mission requirements will be and that will actually help us to achieve that state

of readiness that we know we need to be at.

Mr. CHAMBLISS. Dr. Disney, I have heard complaints over the

last several years, 6 years, from quite a number of my constituents

who work at Robins Air Force Base about the lack of increases in

the wage grade pay scale compared to other areas of the State.

Can you explain why a worker, say an electrician, at Robins Air

Force Base, might be paid at a certain level while a worker doing

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the same job in Atlanta, which is less than 100 miles away, might

be paid at a higher rate or a worker doing the same job at another

government agency in Warner Robins would be paid at a higher

rate?

And also why have the general schedule employees received pay

increases equal to twice the amount of the wage grade people over

the last 14 years?

Secretary DISNEY. Yes, sir. The general schedule and the blue

collar workers find their wages set in different ways. For the general schedule, the wages are set on a national level, with the increases set nationally; and a portion of the national increase is set

aside for locality adjustments. A very small portion of that. But

what it means is that the core wage of a GS worker in Washington,

DC, is the same as that in Macon, is the same as that in Portland,

OR.

The Federal wage system employees, on the other hand, find

their wages based upon prevailing wages in the geographic area in

which they are located, generally the commuting area. These wage

areas are determined through the work of the Federal Prevailing

Rate Advisory Committee, which is advisory to the Office of Personnel Management.

That consists of both union representatives and civil service

agency representatives. The wage surveys are conducted by people

in my organization in conjunction with their labor counterparts;

and that is where the information comes from, from surveys of the

area that get used to establish what those rates are.

Mr. CHAMBLISS. Yes, well, I understand that, but I mean, you

have—for example, in our depot, you have specialized jobs that

there are not many jobs like that in the area immediately surrounding the depot. But there are those same jobs at Lockheed, for

example, and in Atlanta, which is, like I say, less than 100 miles

away and certainly within—we have folks that commute every day

back and forth to Lockheed and from Atlanta down to the depot,

and the wage rate in the Atlanta area is not used at the depot. It

is not in our prevailing wage schedule.

Why would that be the case when there is nobody else in that

category within the local area there?

Secretary DISNEY. Well, sir, I do not have all the details on that,

but I would be more than happy to find them out and to provide

information for the record for you.

Mr. CHAMBLISS. All right. If you would, please.

Secretary DISNEY. Yes, sir.

Mr. CHAMBLISS. Thank you, Mr. Chairman.

Mr. BATEMAN. Thank you, Mr. Chambliss.

Dr. Disney, I was just handed the conference report on the National Defense Authorization Act for Fiscal Year 2000 and I do not

want you to bother with it today, but on page 60, section 343, it

says ‘‘Report on use of employees of non-federal entities to provide

services to the Department of Defense.’’

I think I know the answer, but the law calls on the Secretary of

Defense to provide a report and give information. It has some caveats in it, to the extent practical. I think your answer is going to

be it is not practical, but get us a formal response to why we do

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not have the report and why you cannot, if that is the case, provide

the report.

Secretary DISNEY. Yes, sir. We will do that.

Mr. BATEMAN. Okay. Well, I believe that is certainly more than

enough time for you all at the witness table today. We do appreciate your being here and your testimony. If you would be so kind,

we may have further questions that you can submit answers to for

the record; and we adjourn with our thanks to the witnesses.

[Whereupon, at 3:22 p.m., the subcommittees were adjourned.]

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A P P E N D I X

MARCH 9, 2000

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QUESTIONS AND ANSWERS SUBMITTED FOR THE

RECORD

MARCH 9, 2000

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QUESTIONS SUBMITTED BY MR. BATEMAN

Mr. BATEMAN. In your research, are you finding evidence of a general shortage

of technical workers in the U.S.? Wouldn’t it make sense for the Department of Defense to contract for these workers as needed, rather than . . . maintaining a large

permanent staff?

Mr. CIPOLLA. There is currently a shortage of technical workers in many areas

and it will get worse. The labor force is expected to grow by only 11% from 1996

to 2006, at the same time that demand increases by 19%. According to Watson

Wyatt Worldwide, an increased demand for labor combined with the decline in the

number of workers ages 24 to 45 will create a 30% shortfall of workers in this group

over the next decade.

Many of the 20 million new jobs that will be created in the next five years will

be hard to fill due to a shortage of workers with analytical and technical skills. The

federal government will be affected more than other sectors of the economy since

knowledge workers account for a higher proportion of its workforce. According to the

federal Chief Information Officers Council, from now until 2006, there will be a need

to hire 4,600 workers to fill new IT jobs and 32,315 more to replace workers lost

by attrition.

Much of the demand for technical workers in federal agencies can be met by contracting. However, several important factors must be taken into account if contracting is to be a viable alternative. First is the determination whether the work

to be done is inherently governmental as indicated by A–76 and FAIR Act reviews.

If the work is not inherently governmental and it is determined to seek competitive sourcing, the challenge for agencies is to ensure that the private contractor selected has the capability required. Private companies are in the same ‘‘war for talent’’ as the federal government and may have difficulty hiring and retaining the required expertise in some areas. Companies may have to pay more for scarce talent,

potentially increasing the cost of contracting work requiring high tech skills.

Finally, decisions about whether to use contractors should be made on a case by

case basis. Key considerations include contractor expertise, evaluation of the quality

of work done previously, and what process must be used to hire a contractor. There

are clear benefits to be derived from the competitive sourcing process itself such as

formal work statements and performance criteria. However, there are also intangible factors which should be considered—the effect on morale, career opportunities,

and mission identity for the existing workforce.

Mr. BATEMAN. Is there an example of a firm or better yet, a government agency

which is adept at workforce shaping? What model should DOD emulate?

Mr. CIPOLLA. One of the best examples of successful workforce shaping is offered

by the National Imagery and Mapping Agency (NIMA). The NIMA, formerly known

as the Defense Mapping Agency, has a history of good workload planning and good

strategic planning overall. In the late 1980’s, NIMA’s annual customer surveys

showed that projected workloads during the next five years would be increasing. At

the same time, NIMA was in the process of automating the map-making process to

achieve cost savings. Since it couldn’t afford to modernize all its production facilities, NIMA decided to close several of them. Another consequence of automation was

that many of the skills possessed by the workforce became obsolete.

In response to these developments, NIMA implemented a proactive workforce

shaping program. Employees received extensive retraining in the technical areas

needed to support the new technology. Targeted buyouts were offered to occupations

or groups of jobs that would no longer be needed. All employees in the facilities to

be closed were offered a similar job in another facility. As a result of adopting these

policies, NIMA was able to keep the number of reductions-in-force to a minimum.

The NIMA experience illustrates how workforce shaping can be used to improve

an agency’s ability to achieve its mission, while treating employees fairly and protecting their rights.

Mr. BROSTEK. As we said in our statement before the Subcommittee, federal agencies—DOD included—can and must define the kind of workforce they will need in

the coming years, develop plans for creating that workforce, and follow up with actions and investments needed so that when the future arrives, the right employVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00441 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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1 Human Capital: Strategic Approach Should Guide DOD Civilian Workforce Management

(GAO/T–GGD/NSIAD–120, Mar. 9, 2000). 2Defense Force Management: Expanded Focus in Monitoring Civilian Force Reductions Is

Needed (GAO/T–NSIAD–92–19, Mar. 18, 1992) and Defense Force Management: Challenges Facing DOD as It Continues to Downsize Its Civilian Work Force (GAO/NSIAD–93–123, Feb. 12,

1993). 3 Human Capital: Key Principles From Nine Private Sector Organizations (GAO/GGD–00–28,

Jan. 31, 2000). 4 Human Capital: Observations on EPA’s Efforts to Implement a Workforce Planning Strategy

(GAO/T–RCED–00–129, Mar. 23, 2000); SSA Customer Service: Broad Service Delivery Plan

Needed to Address Future Challenges (GAO/T–HEHS/AIMD–00–75, Feb. 10, 2000); and Space

Shuttle: Human Capital Challenges Require Management Attention (GAO/T–NSIAD–00–133,

Mar. 22, 2000). 5 Human Capital: A Self-Assessment Checklist for Agency Leaders (GAO/GGD–99–179, Sept.

1999).

ees—with the right skills, training, tools, structures, and performance incentives— will be on hand to meet it.1 We noted that during downsizing, DOD’s approach to

civilian force reductions was less oriented toward shaping the makeup of the workforce than was the approach it used to manage its military downsizing. We also

noted that during our work on the early phases of DOD downsizing, some DOD officials voiced concerns about what was perceived to be a lack of attention to identifying and maintaining a balanced basic level of skills needed to maintain in-house

capabilities as part of the defense industrial base.2

Our work has not focused on identifying agencies that could be construed as models or provide ‘‘best practices’’ for workforce shaping, and so we cannot point to a

specific organization that DOD should emulate. However, our recent report on

human capital approaches at nine leading private-sector organizations underscored

the importance these organizations place on strategic human capital management

as fundamental to strategic business management.3 The ten human capital principles we drew from these organizations included several that are relevant to workforce shaping, including the need to identify the competencies needed to achieve

high performance of missions and goals and to build and sustain the organization’s talent pool through appropriate recruiting, hiring, development, and retention policies.

Our testimony before the Subcommittee stressed the importance, not just for

DOD, but for all federal departments and agencies, of taking a strategic approach

to human capital management. We currently have work under way on the extent

to which federal agencies have pursued workforce planning, and can say that while

most of the agencies we have examined recognize the importance of workforce planning, their efforts are generally fairly recent and vary considerably. Our work at the

Environmental Protection Agency, the Social Security Administration, and the National Aeronautics and Space Administration reflects some of the variation we have

found among agencies’ workforce planning efforts and some of the concerns we have

identified.4

As we noted in our testimony before the Subcommittee, we have developed a fivepart self-assessment framework we believe can be useful in assessing and better

aligning federal agencies’ human capital management systems with their missions,

goals, and other needs and circumstances.5 As agencies make progress in taking a

more strategic and businesslike approach to their human capital management, we

will be pleased to share with you any agency experiences we encounter that may

serve to inform DOD’s human capital efforts and your oversight of DOD civilian

workforce readiness.

Secretary DISNEY and Mr. COOKE. To pursue topics of special interest, we conduct

or commission targeted studies, such as RAND Corporation’s rigorous examination

of changing occupational requirements. Preliminary findings from that research indicate that DOD must cope with the following broad themes in the future:

• Employees with an enhanced service orientation; • Greater emphasis on the need for workers to stay current with emerging technologies; • Increased need for advanced technical skills; and • The need for better problem-solving skills among all workers.

In addition, the Department gathers workforce shaping data from special forums

(as the one on technology leadership) and analytic projects (such as that on the future acquisition workforce). These are supplemented by studies conducted by the

National Academy for Public Administration and other research organizations.

In general, our workforce appears well matched with the functions that must be

performed to support military missions around the world. However, changes in mission and in technology inevitably alter our requirements for civilian personnel and

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create spot surpluses in some occupations at some sites. Looking across all occupations, we are concerned that the civilian drawdown has left us too few of the younger workers needed to maintain the vitality of the workforce and to ensure an orderly

transition of leadership as our older workers retire. Therefore, we appreciate the

help received from Congress in providing tools that allow us to manage and shape

our workforce to meet today’s demands without resorting to costly and disruptive

reductions in force.

Secretary SNYDER. Army has a mechanism in place to examine its civilian work

force requirements to support the total force out to its farthest planning horizon,

currently about 2020. This initiative is called Civilian Personnel Management System XXI (CPMS XXI). CPMS XXI begins with an examination of future needs in

terms of skills, experience, type of employee (e.g., permanent, temporary and contractor) and, where possible, numbers of employees.

A strategic planning process is in place which guides users through steps beginning with mission and vision, into an environmental scan of the future world based

on assumptions about the future gathered from other planning documents, eventually reaching a set of actions to move us to the desired future state. The functional

managers of the 22 Army career programs, which comprise the majority of our

workforce in professional, administrative, and technical occupations, are completing

their first strategic plans. We are going to post the best plans on the internet to

aid others.

Prior to beginning their strategic planning, functional representatives examined

the work force trends for their respective career programs in order to understand

how the programs and policies of the past have shaped the force. Metrics examined

included age, years of service, gender, race and national origin, education level,

grade and retirement eligibility. We looked at overall strength, accessions and

losses. While the numbers varied considerably by skill, a few trends were universal.

Principal among these was aging—a direct result of the strategy of accomplishing

downsizing through a combination of natural and assisted attrition and reduced hiring. Aging, however, is only a symptom. The underlying problem is the growing

number of retirement-eligible employees with limited in-house replacements.

Another issue that surfaced during this process is the degree to which we must

compete for skills with the private sector. In many cases, government does not provide a competitive salary; in others, the government wage structure restricts upward mobility in ways the private sector does not.

Other initiatives affecting the workforce complicate CPMS XXI analyses. The

Quadrennial Defense Review directed further downsizing. The Defense Reform Initiative Directive 20 (DRID 20) and the Federal Activities Inventory Reform (FAIR)

Act designate functions for review for possible contracting out. Functional Area Assessments (FAA) have suggested military positions in the institutional Army that

can be moved to the warfighting Army. While all of these are fine initiatives, they

must be managed carefully to avoid breaking the civilian force in terms of continuity

of capabilities to meet future missions.

Concurrent with these analyses, Army is taking steps to assure the results are

included in the Army’s formal planning processes. We are examining the occupational relationships between the warfighting Army and the supporting civilian workforce. These correlations resemble the allocation rules familiar to the analysts who

build the warfighting force.

Secretary WELCH. In 1998, the Department of the Navy began looking across our

total workforce to assess future competency and skill requirements. A Workforce

Planning Group was created and career field sponsors identified who would analyze

current capabilities, define future requirements, and identify plans and strategies

for acquiring, developing, maintaining, and leveraging the Department’s future

workforce.

The Workforce Planning Group’s efforts have been absorbed into a more broadly

drawn corporate workforce planning initiative. Under the precepts of the Revolution

in Business Affairs, the DON has established a flag-level group of military and civilian executives who are looking at baseline data and establishing methodologies to

determine the total force requirements in the DON over the next several years.

Secretary KEENER. We have developed workforce policy assessment models to help

us analyze the probable effects of changes in our force management practices. These

projection models allow us to age the workforce under a variety of assumptions

(such as different levels of grade, experience, and sources of hiring; varied retention

rates; or diverse end strength projections) to see how the long-term shape of the

force will react. Our career field managers use these tools to determine their desired

force renewal and development programs. Our corporate succession planning efforts

sit on a firm analytical foundation, and we apply these types of analytical tools to

all aspects of human capital needs assessments.

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Headquarters, Air Force Materiel Command (AFMC), the largest employer of civilians in the Air Force, recently concluded a two-year study to identify the workforce they need to meet their missions in the future. They are responsible for designing, developing, acquiring, and maintaining today’s (and tomorrow’s) weapon

systems and platforms. AFMC’s ‘‘2005 Force Shaping Study’’ decomposed the Command into Business Areas, Centers, and Functional Areas and incorporated senior

leadership’s direction to identify the workforce skills, skill levels, and demographics

desired and needed to meet their missions. Skills mix considered developmental,

journeyman, and managerial positions and they also considered alternative component mixes, i.e. organic full-time in-house, versus contract support, versus contingent employees. This was a very broad and complex effort, and we expect the results

will be used to optimize of force management policies and programs to best obtain

and sustain a skilled and proficient workforce.

Our workforce assessment shows workforce imbalances characterized into two

areas: experience imbalances and skills imbalances. By experience imbalances, we

refer to the situation we see across the service today where we have a solid group

of mid- and senior-level employees with a great deal of knowledge and experience,

but an inadequate pool of developmental trainees coming through the pipeline. Today’s trainees are tomorrow’s journeymen and managers. Without the proper mix

of experience levels, we anticipate force management challenges in the future as today’s incumbents begin to retire. While their retirements may give us increasing opportunities to refresh the workforce, they also mean loss of a great deal of institutional knowledge. Our best case scenario would be significant intake of developmental trainees now, while we still retain our experienced employees who can train

and mentor the new folks. This intake would have to take the form of end strength

growth, else we are faced with the dilemma where we have a group of new hires

with no one around to mentor them.

We also project skills imbalances—i.e., if we were to remove our hands from the

force management controls, we would expect to have ‘‘too many’’ of one specialty and

not enough of another. This situation will be addressed through restructuring, targeted hiring, and some re-skilling. This is one area where a voluntary force shaping

incentive program, without linkage to end strength reductions and RIF, would help.

The significant negative aspects of RIF-driven organizational restructuring would

thereby be avoided, and allow us to develop a smoother transition to skills rebalancing. Authority to offer degree-granting educational opportunities to our civilian

workforce would also help us meet our strategic vision of the future workforce.

Mr. BATEMAN. What specific plans does DOD have in place or are expected to be

put into place to mitigate the imbalances? What challenges and obstacles do you

face in being able to deal with the aging workforce issue and any related workforce

imbalances?

Secretary DISNEY and Mr. COOKE. DOD has a number of strategies to mitigate

current and anticipated workforce imbalances. The first is the reshaping of the

workforce to ensure that we have the right skills match and more balanced age cohorts. The current Voluntary Early Retirement Authority (VERA) and Voluntary

Separation Incentive Payment (VSIP) enable us to offer these incentives to persons

in positions that are no longer needed at specific locations, as well as to those eligible for retirement but needing encouragement to leave so that we can retain newly

hired employees. However, the current authority may be used only in conjunction

with reduction in force. Legislative relief could permit us to target those areas

where we have skills that are surplus or no longer needed. Offering VERA/VSIP to

those employees would permit us to use the resulting attrition to hire individuals

with the needed skills.

We are encouraging the Defense Components to renew the workforce by hiring interns to bring new capabilities and skills. With the added emphasis on interns, we

hope to reverse the trend that has resulted in a 76 percent decrease since 1989 in

DOD employees who are under 31 years of age. Simultaneously we want to provide

more comprehensive career paths so those talented individuals remain in the workforce. In addition, we have developed the Defense Leadership and Management Program (DLAMP) to enhance our current civilian workforce and help ensure that we

have the right people with the right skills in our demanding jobs.

Among the challenges we face in our efforts to renew the workforce are the difficulty of attracting top talent due to negative perceptions of government employment; a robust private job market that is actively recruiting; competition from other

Federal Agencies with more flexible compensation plans; and the severe, continuing

downsizing, which has drained the capability of many organizations to absorb untrained people and still perform their mission.

Secretary SNYDER. Under CPMS XXI, Army is continually reviewing programs

and policies to balance the force. We recognize that differing parts of the force (in

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terms of mission role and occupational groupings) can be expected to behave in different ways over Army’s planning horizon. Our intention is to identify a Civilian Objective Force (COF) that gives us enough information as to grade, skill, and geographic location to recruit and sustain the most effective workforce. As I stated in

my previous answer, the analyses necessary to identify the COF are complicated by

other on-going initiatives that will affect future Army civilian workforce requirements.

Secretary WELCH. The DON is pursuing a variety of approaches to reinvigorate

our recruitment and development programs with the goal of replenishing the supply

of employees in the pipeline. We are establishing a coordinated recruitment program

through which we will train and support a cadre of recruiters who will represent

the Department at job and career fairs and conduct college recruitment at campuses

across the country.

Beyond this identification of a need to rebuild the entry and mid-level workforce,

it would be premature for the DON to develop specific strategies to deal with and

respond to specific workforce imbalances while our review of the workforce is incomplete. In general, we view the aging of our workforce to be reflective of the age distribution in the population as a whole, and therefore to be expected in the workplace.

Secretary KEENER. The Air Force has an approved workforce shaping strategy.

The three key elements include force renewal, force development (education and

training), and separation management. New accession strategies, such as greater investment in interns and other developmental trainees, will provide stability to our

long-term sustainment efforts. A collaborative process is underway to determine the

proper size of our force renewal programs. Also, changing local hiring practices will

accelerate workforce re-balancing. Skills currency, particularly in our highly technical occupations, demands attention. Skills proficiency is being emphasized through

professional continuing education, training, and retraining programs. Leadership development programs will ensure a cadre of senior executives with the breath of experience and Air Force culture needed to achieve corporate goals.

The Air Force civilian workforce is out of balance due to the way we reduced our

civilian workforce. Reductions in the civilian workforce were achieved through a

combination of loss programs and constrained accessions. Loss programs included

early retirements (Voluntary Early Retirement Authority or VERA) and incentives

(Voluntary Separation Incentive Program or VSIP) to trim the more senior year

groups and to minimize involuntary actions (Reduction In Force or RIF) which are

so devastating to our force, both organizationally and individually.

We limited the number of new hires, or constrained accessions, as the overall

force has reduced over the last ten years. This has led to problems in sustaining

the force of tomorrow. We will not have enough mid-level managers and administrators in the future from which to select tomorrow’s Senior Executives.

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This chart shows a future problem in sustaining the civilian force and a serious

future gap in Air Force civilian leadership. The chart compares the 1989 baseline

population (dotted area in the background) with our objective profiles for FY05 (the

solid line). The retirement status is depicted in the stovepipes. When considering

the drawdown we currently have planned in the Future Years Defense Program

(FYDP), we show a deficit of employees in the lower years of service (YOS), what

we refer to as a ‘‘bathtub.’’ There is also a surplus in the more senior groups, our

long-term sustainment requirements.

The mid-career population with 8 to 24 YOS is well above the line. While most

are not eligible for any retirement, those that are (approximately 30%) may be induced to accept an ‘‘early’’ retirement (VERA) with an incentive payment (VSIP)

payment of up to $25,000. Any losses generated from this group would be used not

to reduce the end strength, but will be redistributed to the more junior workforce,

one with lower average YOS and pay steps. Additionally, we plan to provide professional continuing education to get and keep the workforce current and proficient in

whatever skill set needed to perform their occupation.

Mr. BATEMAN. Your legislative proposals include at least three authorities to hire

scientific and engineering personnel and three authorities to provide college degree

training. To what degree are these proposals integrated into your overall plan for

staffing future DOD organizations?

Secretary DISNEY and Mr. COOKE. Many of the positions DOD requires in the

science and engineering fields are also required by the private sector. Given the

greater compensation and benefits flexibility outside the Federal Government, this

competition creates special problems, as DOD is committed to revitalizing its laboratory and acquisition communities. Further, in DOD as a whole, advanced technology, contract oversight, and a more complex mission have generated the need for

more advanced education and technical skills.

Our ability to compete with private industry benefit packages would be enhanced

if DOD could more broadly offer academic degree training to our current and future

workforce. Most high-technology firms consider education to be a business-essential

benefit. We need to level the playing field, as well as to support continuous learning

programs.

Because higher-level DOD positions are filled overwhelmingly by people who have

spent some time within the Department, it is essential that DOD invest in its civilian cadre. Also, the Defense Science Board’s Task Force on Human Resource Strategy has recommended that DOD expand efforts to recruit and develop interns on

specific occupational tracks and at higher levels (Presidential Management Interns).

In addition, the Defense Science Board recommended creation of an early leader development program, which we are pursuing. In brief, then the proposals mentioned

in the question are vital to meeting our future staffing needs.

Secretary SNYDER. We believe that legislative proposals that would change aspects of our civilian personnel system ought to be the product of a fully coordinated

and integrated approach.

Secretary WELCH. The legislative proposals for recruiting and hiring scientific and

engineering personnel and the degree training initiative are integral to the DON’s

future staffing plans. We are building the groundwork of a recruiting program

which will rely heavily on increased appointment and rating/ranking flexibilities.

Secretary KEENER. The legislative proposals to hire scientific and engineering personnel would provide the flexibility to continually refresh the technical skills of the

research and development workforce. In the ideal, the research and development

function would be comprised of a core of civil servants to provide continuity coupled

with collaborators—consisting of military officers, temporary and term government

employees, academia, and industry—for agility and fresh ideas. We need to be able

to tap private companies and academia for eminent scientists and engineers and be

competitive in pay and benefits. Collaborators from academia and the private sector

would work projects for up to six years. Legislation similar to the Defense Research

Projects Agency (DARPA) authority (FY99 National Defense Authorization Act, Section 1101) and the proposed Commercial Personnel Transfer Program (DOD 106–

014) would enable the Air Force to achieve this staffing model.

With regard to college degree training, under current law, agencies must prove

that an occupation is in shortage as a result of recruitment or retention problems

before degrees can be funded. This law severely limits our ability to offer professional development to employees who demonstrate the potential for future advancement. By linking the investment in education to a deliberate program of employee

development, we can better shape our staffing needs for the future.

Mr. BATEMAN. To a large degree, agencies chafe under civil service procedures

that are designed to enforce hiring on the basis of merit. All to often, those proceVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00446 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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dures take time. In your experience do you lose employees to the private sector because of this delay? What skills are those you are most likely to lose?

Secretary DISNEY and Mr. COOKE. We do not have data on how many people we

lose due to the lengthy hiring process, nor do we have data available on the number

and types of people who decline job offers. However, in some cases where timely offers are critical (recent college graduates, unemployed personnel, shortage occupations), we know that we lose applicants to faster bidders. Feedback from managers

in this issue is strongly supported by a recent report published by the Merit Systems Protection Board.

Secretary SNYDER. It is true that many applicants become discouraged or lose interest when faced with the federal hiring process. This is particularly true of applicants for entry level positions—typically recent college graduates who are pursuing

a variety of career options. For example, a vacancy announcement soliciting applicants for an entry level career intern position may be open for 30 days. The most

aggressive and highest quality candidates are actively ‘‘surfing the web’’ for employment opportunities and usually apply within a few days of the opening date of the

announcement. By the time the announcement closes and applicants are rated and

referred for consideration, the early applicants already may have accepted job offers

from other employers.

The skills that we are most likely to lose because of procedural delays are those

skills most in demand in the private sector—information technology, engineering,

scientific, and medical. It is precisely because applicants with these skills are in

such demand that their loss due to procedural delays causes us so much damage.

We believe the Federal Government needs a modernized, streamlined hiring system

that enables us to compete with private industry for the best candidates while maintaining merit principles.

Secretary WELCH. The DON fully supports adherence to merit principles and has

not found the broad concept of merit to be an unnecessary or dominant constraint

to hiring. And while we have no specific data on whether or how many potential

hires we lose to the private sector, we continue to receive reports from our field activities and commands that the inability to make immediate job offers and the lack

of competitive starting salaries causes us to lose a number of our first-choice candidates to the private sector. For this reason we strongly support DOD legislative

and regulatory initiatives aimed at improving the hiring process to alleviate some

of the more protracted procedures currently being used.

Secretary KEENER Hiring in the Federal Government on the basis of merit is a

statutory requirement under civil service law (5 U.S.C. 2301(b)). It is hard to find

fault with principles that require the selection of employees on the basis of merit

after fair and open competition and the equitable treatment of applicants without

discrimination. However, it is true that the civil service regulatory procedures that

implement these principles can complicate and lengthen the hiring process. Good

candidates, especially in the scientific and technical fields, can be lost to the private

sector because of their ability to respond more quickly.

Due to the extremely tight labor market, we expect to continue experiencing recruiting difficulties for scientific and technical personnel (e.g., scientists, engineers,

information technology, and acquisition). Private-sector high technology firms can

make a promising graduate an offer and even a counteroffer on the same day. Due

to the Federal public notice; requirements, rating and ranking procedures, and application of veterans’ preference, it is difficult for DOD recruiters to be as responsive. As a fix, DOD continues to work with the Office of Personnel Management and

other Federal agencies to seek ways to simplify the processes that will allow us to

become more competitive with the private sector. The Office of Personnel Management delegation of examining authority to the executive agencies has streamlined

the hiring process and improved our ability to quickly respond to applicants. Additionally, the DOD demonstration projects have a number of streamlining procedures, to include category ranking and scholastic achievement appointments, which

are being tested for possible future government-wide adoption. We are also optimistic that the recently proposed Executive Order for the Federal Career Intern

Program will increase our ability to compete with private industry for recent college

graduates. We will continue to push for legislative change, as appropriate, to further

streamline the Federal hiring process but still comply with merit systems principles

and veterans’ preference law.

Mr. BATEMAN. Isn’t there some danger in tossing out merit principles and allowing managers relatively unfettered authority to hire? Couldn’t we be accused of allowing managers to bypass well-established merit principles? In your experience,

does new flexibility lead to some tension with merit principles?

Secretary DISNEY and Mr. COOKE. DOD strongly supports the merit principles.

Our effort to streamline the hiring process in no way represents a degradation of

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merit system principles. Instead, our initiatives reflect the new hiring patterns

emerging in a vastly different job market and society. Selection should reflect consideration of merit principles, resulting in hiring the best person for any given position and reflecting the diversity inherent in American society. What we are proposing is a re-evaluation of the policies, procedures, and processes that surround the

implementation of the merit principles.

Our belief is that the complexity of Federal processes and procedures often complicates the selection of the best and brightest. We believe we can support and

maintain merit principles, while making hiring less cumbersome and time consuming.

Secretary SNYDER. The Army strongly supports the merit system principles set

forth in title 5, United States Code, Chapter 23 and we propose no changes to them.

We are, however, concerned about some strictures of law that often prevent us from

hiring the best available candidates. The ‘‘rule of three’’ limits selecting officials’

choices to the top three candidates on a certificate of eligibles when we use examining procedures that allow us to accept applications from outside the workforce. In

its August 1999 report ‘‘The Role of Delegated Examining Units: Hiring New Employees in a Decentralized Civil Service,’’ the Merit Systems Protection Board—

MSPB—recommended that the rule of three be modified to allow managers to consider a greater number of qualified candidates. We strongly support the MSPB recommendation and believe that its implementation would strengthen, rather than

weaken, the merit principles.

The Army doesn’t believe it is necessary to jettison merit principles in order to

modernize and streamline hiring processes. We need to take a fresh look at what

we really mean by ‘‘merit.’’ Selections based on real merit do not result from, and

cannot be equated to, adherence to all the bureaucratic procedures we must comply

with under today’s ‘‘merit system.’’ It’s time to throw away the old system, one that

has become an impediment to accomplishing the agency’s mission, and replace it

with a mechanism that allows agencies to compete effectively with the private sector

for the best and brightest candidates.

The Army has pursued a number of civil service reform initiatives in prior years

to simplify and streamline hiring processes. Our most recent initiative involves decreasing the number of appointment authorities and allowing non-competitive conversion of temporary and term employees to permanent status, reassignment of

qualified employees from excepted to competitive service without competition, and

similar actions. I forwarded this initiative to OSD in August 1999 with a recommendation that we continue to pursue broad legislative reform of appointment

authorities. Again, we believe that these reforms will not weaken existing merit

principles.

Secretary WELCH. The DON sees no conflict or tension in allowing agency managers to exercise judgment and to apply flexibilities aimed at making the hiring

process more responsive. The DON Human Resources Management community ensures that managers are aware of the merit principles and their obligation to observe these principles in the hiring and promotion processes. The goal of a meritbased system is to ensure that the best-qualified candidates are hired and promoted.

The goal of the proposed flexibilities is to ensure that the best-qualified candidates

are hired and promoted more efficiently.

Secretary KEENER. We believe merit systems principles are fundamental to Federal employment. As Federal employers, we must provide our country’s citizens an

employment system that provides fair and open competition and equitable treatment without discrimination. However, in a tight labor market, it is true these requirements can impact our ability to effectively compete with private industry, especially for scientific and technical personnel. We believe there are means available

in the current system to shorten the employment pipeline in order to make us more

competitive. Demonstration project procedures are being tested to further streamline the hiring process and still satisfy merit systems principles. As long as the minimum public notice requirements are met, best-qualified candidates are identified,

and veterans’ preference applied, the basic merit systems principles are satisfied.

We have not advocated any new flexibility that would eliminate these basic requirements. Consequently, we are not aware of any proposed flexibility that will create

tension with the basic merit principles.

Mr. BATEMAN. The Merit Systems Protection Board recently reported (Competing

for Federal Jobs: Job Search Experiences of New Hires, Feb. 2000) that the average

age of new hires government wide was about 35 in 1998. MSPB said this average

age held steady across most occupational categories. Is this similar to the average

age of new hires in DOD? If so, please explain why the average age is 35. Also, do

you see mid-thirties as a desirable age for employees?

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Secretary DISNEY and Mr. COOKE. Across DOD in FY 1999, the average age of

new employees hired with permanent appointments was 36.5 years, somewhat less

than in FY 1998 but more than the 34.2 year average in FY 1989. The hiring of

former military members, who often have unique skills and experience, accounts in

part for the average age of DOD’s new permanent employees being in the mid-30’s. Ultimately, it is the nature of the jobs to be filled that determines the educational

and experience requirements, and in some instances these can be correlated with

age. However, DOD does not regard any age as automatically appropriate for all

jobs. The paramount consideration is matching education, experience, and talent

with requirements.

Secretary SNYDER. To preclude any misunderstanding, let me make it clear that

we don’t see quality as a function of age. The important thing is to hire talented

people, regardless of how old they are. The average age of accessions into the Army

in FY99 was 33, somewhat lower than the average 35 years of age reported Federalwide by MSPB. In many instances we find that the Army is not the employer of

choice, given our limited incentives to attract younger applicants. Private industry

typically offers higher salaries and extended benefits packages for entry level jobs

in occupations that are highly competitive in the labor market. In some fields within

Army, the nature of the work is changing with the move toward contracting out government functions to private industry. The jobs remaining in the government are

becoming more concerned with contractor oversight, requiring more advanced qualifications and extended experience not found with younger applicants. In this instance, the contractors are more inclined to hire younger, entry level employees in

many of the contracted out jobs while the Army hires more experienced employees

to oversee the contract. We plan to continue our efforts to develop attractive entry

level employment packages to entice younger applicants, but must also balance that

with the need for more experienced employees.

Secretary WELCH. The current average age of new hires in the DON is 32. In

1989, the average age was 29. We have no specific information to explain the increase, but believe it could be a normal result of the outsourcing and downsizing

of the entry and developmental level work over the past 10 years and the resulting

increase in the grade level of the residual work force. Higher level work results in

higher grades, requiring a higher level of experience usually gained by an older

workforce. We have not determined whether mid-thirties is a desirable average

entry age for employees.

Secretary KEENER. Within the Air Force, the average age for new accessions in

FY99 for administrative and professional jobs at all grade levels was 40 and 38, respectively. The average age for other employment categories was slightly lower. We

have seen a slight aging trend in all employment categories over the past ten years.

During FY99, the average age for new accessions at the GS–07 and 09 levels was

35 and 41, respectively. Ten years ago the average age for new accessions at the

GS–07 and 09 levels was 31 and 38, respectively. The average age for our newly

hired centrally managed interns at the GS–07 level for FY99 was 32.

There are a number of regulatory and statutory factors that affect the average

age of new accessions. These include statutory veterans’ preference and the regulatory priority placement programs that provide employment priority for employees

being adversely affected by reduction-in-force. Further, as an open employment system, we have the capability to hire employees at any grade level, from trainee to

full-performance. During the past ten years, we have seen a shift toward a more

senior force that is directly related to hiring more experienced resources to make

up for large reductions in overall size of the workforce. Our workforce is out of balance and we have initiated corrective action. As part of our civilian workforce

sustainment efforts, we are establishing and funding more centrally managed interns and also are encouraging supervisors to restructure positions to allow for a

steady intake of developmental trainees with new ideas and state-of-the-art skills.

We do not view any particular average age (e.g., 35) as being desirable. Primarily,

we are striving for a more balanced workforce that includes employees at both the

trainee and full-performance levels.

Mr. BATEMAN. What proportion of job offers in DOD go to recent college graduates

vice older workers being selected off of priority placement program lists, or the hiring of retired military personnel? Stated another way, is the hiring that is taking

place today contributing to or helping to alleviate the aging workforce issue?

Secretary DISNEY and Mr. COOKE. In FY 1999, DOD hired 23,000 new employees

on permanent appointments. By contrast, about 4,000 existing employees were

matched with vacancies through the Priority Placement Program (PPP). We anticipate that the ratio of outside hires to internal PPP placements will increase in the

future due to two factors: (1) Our budget calls for a slowing of the drawdown in the

coming years, thus allowing us to hire more new workers; (2) The imminent compleVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00449 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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tion of the last Base Realignment and Closure round should decrease the number

of displaced workers needing help through the PPP.

Since our new hires are, on average, about nine years younger than those already

in our employ, the recruiting we have been able to do has prevented workforce aging

from progressing more than it has. About one-third of our permanent civilian accessions in FY 1999 were 30 years of age or younger. By comparison, about one in eight

was a military retiree.

Secretary SNYDER. The Department of the Army does not maintain data on job

offers made to applicants and, therefore, I cannot say how many offers today are

being made to recent college graduates, older workers on priority placement lists,

or to military retirees. The data maintained on civilian accessions show that current

Army hiring is not contributing to the aging workforce issue. In 1996 and 1999, for

example, approximately 50 percent of new hires were below the age of 35.

If one looks at hiring data for the 1980s, one finds that the percentage of new

hires below the age of 35 was higher than it is now. For example, the percentage

of new hires under 35 was approximately 66 percent in 1985 and 64 percent in

1987. The decrease in proportion of new hires under 35 over the last decade or so

can be attributed to two facts; that the population as a whole is aging and that a

shift in the composition of the Army civilian workforce has sharply reduced the

number and proportion of clerical and lower level administrative support jobs, which

are typically occupied by employees with a lower average age than other occupational categories.

As I stated in my previous answer, the Army does not believe the quality of employee performance is a function of age. The aging of the workforce is of concern

to us only in terms of whether an adequate number of well qualified individuals will

be available to succeed the large numbers of employees whom we expect to retire

in the near future.

Secretary WELCH. We have not made a comparison of hiring data against the date

of college degrees, so a determination of the proportion of these hires is not possible

at this time. However, the data show that approximately 26% of our new hires have

at least a 4-year degree and that the average grade at which they are hired is 9.9

versus 7.9 in 1989.

Secretary KEENER. According to Air Force statistics, approximately 21% of our

new accessions do not have prior Federal civilian or military experience. We do not

have data that reflects what percentage of these new hires are recent college graduates. Fifteen percent of our new accessions were employees placed from other DOD

components through the DOD Priority Placement Program and 19% were retired

military. Consequently, based on regulatory and statutory factors, as well as management decisions to select employees at the full-performance level, we now have

a workforce that is out of balance. However, we are taking the appropriate action

to hire a larger percentage of new employees at the developmental level, including

recent college graduates with the needed state-of-the-art skills.

Mr. BATEMAN. Are there certain occupational specialties or areas where the aging

workforce issue is a greater factor than in others? If so, what are they, and what

are your plans to deal with the issue?

Secretary DISNEY and Mr. COOKE. Having a regular inflow of new college graduates is most obviously crucial in our science and engineering and information technology occupations where the body of knowledge is changing most rapidly. As stated

earlier, DOD needs to be competitive with private industry benefit packages to include advanced academic degree training as well as expanding use of recruitment

and retention bonuses.

Secretary SNYDER. Yes, we are more concerned about the aging workforce in occupational specialties in which the average age is above that for most of our other occupations and there are few or no external sources of well qualified employees. Our

two career programs for ammunition management and many of the members of our

training career program are examples, although the number of employees needed

for the ammunition management function is not large. Due to the nature of ammunition management work, the Army has ‘‘grown’’ the individuals with the necessary

knowledge and experience through an internal, intensively managed career development process. As we believe that performance of the ammunition management function is likely to remain mostly in-house, we need to develop in-house replacements

for those whom we expect to retire soon. Similarly, because many of the employees

in our training career program need qualifications similar to the branch qualification required of Army officers to perform their jobs effectively, we plan to continue

‘‘growing’’ replacements in-house.

Secretary WELCH. As stated in both written and oral statements before the Readiness Subcommittee and the Civil Service Subcommittee, the DON is particularly

concerned about the data on aging as it applies to the core work of the Department.

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In the next five years, 47 percent of our engineers, 55 percent of our scientists, 70

percent of our computer specialists, and 64 percent of our contract specialists will

be eligible for retirement. These data are exacerbated by the data on hiring over

the past few years with the resulting impact on the availability of employees in the

replacement pipeline in these career fields. In response to these data, the DON has

initiated a renewed recruitment program, which will provide training, materials,

and coordination focused on both college-level and career/job fair recruiting opportunities.

Secretary KEENER. While nearly all career fields are showing similar aging

trends, we are particularly concerned with those specialties where skills currency

is of critical importance. For example, our engineering, information technology, and

acquisition occupations are susceptible to skills obsolescence due to rapidly changing

technology.

We have initiated legislative proposals to expand the use of early retirement authority and buyouts to include force shaping. Additionally, we have implemented the

force shaping strategy and conducted a Civilian Workforce Shaping Summit to develop additional legislative and policy proposals. Our objective is to achieve a sustainable/competitive career civilian workforce, with the right balance of skills and

experience to contribute to Air Force mission accomplishment now and in the future.

Mr. BATEMAN. With the emphasis on outsourcing in DOD, to what extent have

DOD components made an effort to identify a minimum level of DOD civilian employees needed to perform inherently governmental functions and ensure adequate

institutional knowledge is retained in-house to provide appropriate monitoring of

contract awards.

Secretary DISNEY and Mr. COOKE. As part of its competitive sourcing program,

the Department conducts an annual review of its manpower to determine which

military and civilian positions within the Department are inherently governmental,

subject to competition under OMB Circular A–76, and exempt from competition.

When identifying inherently governmental work, DOD Components assess what

manpower is necessary to ensure that DOD decision-making officials maintain sufficient oversight, control, and accountability over government programs and operations. This includes manpower that is needed to protect public interests by ensuring that decision-makers play an active, informed role when awarding, administering, and terminating contracts, ordering changes in contract performance or

contract quantities, taking action based on evaluations of contract performance, and

accepting or rejecting contractor products or services.

Secretary SNYDER. Within the Department of the Army, the issue of identifying

inherently Governmental functions has been viewed as a functional determination

that is largely a separate issue from that of identifying the minimum level of civilian employees needed within a function. Accordingly, the decisions as to what functions are or are not inherently Governmental have been framed more with a view

to the nature of the function itself—is this a function that can be performed in the

private sector rather than focusing on the current way contractor oversight duties

are delegated within the function. On the other hand, the very different question

of identifying the minimum level of civilian employees needed for adequate monitoring of contracts within the Department is a policy matter still under review and

is very much constrained and affected by how the Department is currently organized to perform any given function. Using this standard, about 95 percent of the

functions performed by civilian employees within the Department of the Army have

been determined to be not inherently Governmental, and about half of these noninherently Governmental functions have been exempted from private sector performance to retain core capabilities on National Security or other grounds (such as

maintaining adequate oversight of contracts). The Army recently adjudicated 127

challenges to the Federal Activities Inventory Reform Act list of non-inherently Governmental functions and made the rationale for its decisions public at the following

web site: http://www.asamra.army.pentagon.mil/fair.

Secretary WELCH. The DON has not completed its study and analysis of future

workforce requirements.

Secretary KEENER. All functional activities within DOD have conducted intense

position-by-position reviews utilizing guidance issued under Defense Reform Initiative Directive (DRID) #20, Review of Inherently Governmental Functions. This review directed the components to determine which functions and positions are inherently governmental; commercial activities exempt from OMB Circular A–76 competition; and commercial activities that should be competed. The review was completed

in Oct. 98 and resulted in the coding of all positions in the Air Force.

The Air Force will continue to annually review its entire manpower inventory in

an effort to properly identify inherently governmental functions and commercial activities. This annual review will ensure an iterative approach to capture any

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changes based on today’s dynamic environment. Regarding retention of in-house capabilities to properly monitor awarded contracts, functional area staff and managers

are retained to ensure compliance with the terms of the contract.

In addition, the Air Force has developed a Strategic Sourcing gameplan as an option for use in conjunction with A–76 studies. Strategic Sourcing is a program that

allows for a variety of options to achieve downsizing goals. While A–76 remains the

foundation, such approaches as reengineering, adoption of best business practices,

privatization, and divestitures may also be considered. While it appears most savings can be achieved through the competitive sourcing process, this initiative expands our options.

Mr. BATEMAN. Among the tools available to agencies that face recruitment and

retention challenges are recruitment bonuses and retention allowances. Despite the

media articles indicating that agencies are having difficulty attracting and retaining

employee, we understand that agencies very seldom use either of these tools. How

extensively does DOD use these tools? If they are seldom used, please explain why.

Also, if they are seldom used, do you believe that agencies should use them before

seeking any additional tools from the congress to address recruitment and retention

issues?

Secretary DISNEY and Mr. COOKE. As the table below indicated, the Department

of Defense has increased its use of recruitment bonuses, relocation bonuses, and retention allowances. From Fiscal Year (FY) 1994 through FY 1999, the number of

recruitment bonuses, relocation bonuses, and retention allowances increased 411

percent, 139 percent, and 463 percent, respectively. For the same period, the total

value of these bonuses and allowances increased 201 percent, 166 percent, and 426

percent, respectively, though the average amounts did decline for recruitment bonuses and retention allowances.

BONUSES AND ALLOWANCES PAID TO DOD CIVILIAN EMPLOYEES FY 1994 THROUGH FY 1999

Recruitment Bonuses Relocation Bonuses Retention Allowances

Number Avg. Amount Number Avg. Amount Number Avg. Amount

FY 1994 ....... 114 $10,477 52 $10,107 385 $8,904

FY 1995 ....... 89 9,862 35 7,712 486 9,276

FY 1996 ....... 96 10,373 67 10,216 675 9,812

FY 1997 ....... 137 7,132 73 11,159 957 9,570

FY 1998 ....... 177 7,800 72 9,416 1180 9,069

FY 1999 ....... 582 6,172 124 11,256 2168 8,315

There has been a significant increase in the number and value of these incentives

since the General Accounting Office reviewed retention allowances in December

1995. The Department is making effective use of these tools in appropriate situations, and supports legislative changes that would increase agency flexibility in this

area. It is important to note that because these bonuses and allowances are not increases to basic pay, they provide an effective solution only when an increase to

basic pay is not warranted.

Secretary SNYDER. The Department of Army’s database indicates the use of recruitment bonuses is on the rise. During FY 1998 only 94 recruitment bonuses were

authorized; however, there were 227 recruitment bonuses authorized for FY 1999.

Our prior limited use of recruitment bonuses is not really surprising. Given that

the Department of Defense was still undergoing downsizing in FY98, extensive use

of recruitment bonuses would have been unexpected. Now, with downsizing leveling

off, the use of recruitment bonuses appears to be on the rise.

Several activities have indicated that, although they authorized 25 percent recruitment bonuses for specific positions, the candidates did not accept the positions.

We find it regrettable that we sometimes cannot compete with private industry—

even when offering bonuses. We are aware that OPM is developing a proposal to

amend title 5, United States Code, to make certain pay flexibilities easier to use

and more helpful in recruiting and retaining employees. One of the flexibilities in

its proposal would allow larger recruitment bonuses based on the length of the new

employees’ service commitment. The Department of Army strongly endorses this

proposal, as it will better enable us to compete with private industry.

Currently activities interested in providing recruitment bonuses to eligible applicants have to pay the bonuses in lump sums. This is costly for the activity as the

bonuses can be up to 25 percent of employees’ salary. To provide greater flexibility

on payments of recruitment bonuses, OPM has proposed a change to its regulations

to allow recruitment bonuses to be paid by various methods—as an initial lump

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sum, in installments, as a final lump sum upon the completion of the full service

period, or in a combination of the above payments. This proposal will offer relief as

the costs can be spread across fiscal years. In addition, the proposal will allow greater flexibility in structuring payments that offer the employee greater incentive to

complete the full service stipulated in the agreement.

With regard to retention allowances, their usage remains low within the Department of the Army, with about 250 authorized for FY 1999. One reason for low usage

may be criteria limiting eligibility. Although Army received several inquiries regarding retention allowance eligibility, it was determined the employees did not meet the

DOD requirements. Another concern is some of our activities are competing with

other Federal agencies for experienced personnel, such as in the case of Army Air

Traffic Controllers at Fort Rucker, Alabama being hired by the Federal Aviation Administration (FAA). The FAA is no longer paid under title 5 which has increased

their salaries approximately 10 to 15 percent above General Schedule rates. OPM

is proposing a change that would allow agencies to pay a retention bonus to an employee who is likely to leave his or her job for another Federal position. This change

would greatly enhance Army’s ability to retain critical employees.

The Department of Army heartily endorses OPM’s proposals regarding the pay

flexibilities for recruitment and retention of employees. If these proposals are enacted, we should see more usage of these bonuses and allowances. These changes

would expand agency flexibility to offer the bonuses and could forestall the need for

a request to Congress for additional tools to address recruitment and retention

issues.

Secretary WELCH. The DON fully supports the use of recruitment bonuses and retention and relocation allowances as tools to meet current and future staffing needs.

We recognize, however, that these authorities are not being fully utilized across the

Department.

During FY99, DON commands and activities paid 292 recruitment bonuses (total

accessions 12,324), 57 relocation bonuses, and 262 retention bonuses (total separations 18,994). we are currently working with our commands and activities to determine why the usage data are so low, and to identify ways in which these and other

incentives and flexibilities can be more completely integrated into the staffing process. Funding is almost certainly an issue.

Secretary KEENER. Although these authorities have been used conservatively

since their creation in the Federal Employees Pay Comparability Act of 1990, the

Air Force has increasingly used these tools over the last few years, as has the rest

of the Federal Government. In FY99, a group retention allowance of 10% was approved by the DOD for Air Force reserve pilots, and was being paid to nearly 600

pilots during that fiscal year. Additionally, they have also been paid in the first half

of FY00 to critically skilled employees in certain locations, such as computer specialists. In all, for the first two quarters of FY00, 142 retention allowances (new in

FY00), 54 recruitment bonuses, and 12 relocation bonuses have been paid.

The most frequently heard reason for the bonuses’ seldom use is their cost. Payment of a lump-sum bonus does incur a substantial up-front cost, as opposed to

other compensation-related tools such as special salary rates, which are paid out

over time as part of an individual’s basic salary. The cost of bonuses adds a potential burden to already overstretched budgets since they are not separately funded,

but must be taken out of available operating budgets. If these bonuses are used,

they must compete with civilian pay requirements and other essential programs for

funding.

Agencies should be authorized to use the recruitment and retention tools that

they consider most effective in targeting individuals or groups, and should not be

required to use the bonuses before seeking other tools from the Congress. For example, since the bonuses are not credited in computing other benefits such as retirement annuities, they may not be an attractive incentive to work for the Federal

Government for some experienced, highly skilled candidates. For this reason, we believe that a variety of tools should be made available to federal managers for recruitment and retention purposes.

Mr. BATEMAN. Civilian employees are often deployed with the military forces

today. Do you have the tools you need to manage a deployed civilian workforce?

Secretary DISNEY and Mr. COOKE. We have a number of special provisions that

apply to our deployed civilians. Examples of legislative and policy initiatives that

have been effected on behalf of these employees include the following:

• Leave restoration: Under recent legislation, there is now automatic restoration

of excess annual leave for employees who are unable to schedule or use leave while

in a combat zone.

• Special Danger Pay Allowance: At DOD’s request, the Department of State

(DOS) has authorized Federal civilian employees accompanying US military forces

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the same flat rate ($150 per month) as military personnel receive when they are

authorized imminent danger pay. This flat rate only applies in areas where danger

pay is not authorized elsewhere by DOS regulation. • Medical Support: Under DOD policy, deployed civilians are authorized the same

medical treatment as their military counterparts in the theater of operations. • Casualty Assistance: Casualty assistance is provided to family members of civilians who become casualties during operational missions. • Mail: When free mail is authorized for military, civilians are also entitled to

free mail while in the theater of operation. • Recognition: We recently presented the first Armed Forces Civilian Service

Medals to civilians deployed in Bosnia and Hungary.

During Operation DESERT SHELD/STORM, fewer than 3 percent of our deployed

forces were civilians. Today, 7 percent to 13 percent of our forces deployed worldwide are civilians. Further, the increased reliance on civilians in support of military

operations will continue in the downsizing environment. Therefore, we will continue

to seek ways of addressing the unique needs of our deployed civilian personnel. To

that end, we have created a Department-wide Working Group expressly to identify

the needs of deployed civilians and propose necessary policy and legislative changes.

Secretary SNYDER. Generally speaking, we do have the tools to manage a deployed

civilian workforce. However, as a result of Operation Desert Storm, Army commands

expressed the need to provide certain benefits for deployed civilians, not only to assure fair treatment but also to provide added incentives for civilians to volunteer

for deployment. The Army supports initiatives in two areas that require improvement.

First, we need to provide emergency-essential Army civilians the opportunity to

maintain adequate life insurance protection when assigned to a combat zone. Federal Employee Group Life Insurance (FEGLI) policies do not contain a ‘‘war clause.’’ Basic life insurance and any optional insurance coverage the employee has elected

are paid even under wartime conditions. Participation in the FEGLI program is voluntary. Some employees who decline this coverage (usually offered at the time of

hiring) may have private insurance policies that contain a ‘‘war clause.’’ If they are

later designated emergency-essential and deployed, their families may not have adequate life insurance protection. Legislation is not required for OPM to grant emergency-essential civilians a FEGLI ‘‘open season’’ enrollment period. However, the

Army seeks statutory language to provide the greatest possible assurance that employees designated emergency-essential will have the opportunity to enroll in FEGLI

or to increase their FEGLI coverage. To eliminate any doubt about FEGLI coverage

in wartime conditions, the Army supports a legislative proposal precluding any loss

or reduction of FEGLI benefits that might arise during deployment.

Second, we need to improve income tax and estate tax treatment for civilians assigned to a combat zone and extend to the survivors of such employees income tax

and estate tax treatment equivalent to that afforded the survivors of service members. Specifically, Army seeks the following for civilians assigned to a combat zone:

non-applicability of Federal income tax in the year in which the employee dies in

a combat zone or from wounds, disease, or injury suffered in a combat zone; and

exemption from certain estate taxes, consistent with the exemption for service members, if the employee’s death is related to deployment to a combat zone.

Secretary WELCH. This issue is not applicable to the Navy or Marine Corps.

Secretary KEENER. A limited number of Air Force civilians have deployed to several operations, thus contributing directly to readiness. Over 200 civilians deployed

in support of Desert Shield/Storm and over 40 deployed to support our efforts in

Kosovo. Today, we have civilian members deployed supporting Operations Northern

and Southern Watch as well as Red Flag Exercises. Non-deployed civilian members

also directly contribute to our readiness by maintaining operations in garrison or

standing available to support our many reach-back operations. In addition, thousands of Air Force civilians make major contributions to readiness through technology advances in our research laboratories, and force support and maintenance

and repair in our Air Logistic Centers and depots. The synergy and flexibility created by all our Air Force people—our ‘‘Total Force—is what makes us the world’s preeminent Expeditionary Aerospace Force.

From a practical standpoint, fiscal and operational costs limit the desirability of

deploying civilians. Home station commanders have to weigh the additional cost of

deploying civilians on their operating budgets. Overtime pay (time and a half basic

pay) causes the most concern, since in most deployments, civilians must be paid

overtime for hours they work over eight hours a day or forty hours a week. These

expenses can become substantial and are paid by the commander to whom the civilian is permanently assigned. Also, since the majority of deployments utilize volunteers, the number of civilians involved is relatively small. From the deployed comVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00454 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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mander perspective, the non-combatant status of deployed civilians is a limiting factor. Accordingly, we are evaluating ways to reduce the necessity to deploy noncombatants through improved systems which enhances ‘‘reachback’’ capability to

provide services to deployed members.

For deployed civilians, we need such tools as giving deployed civilians a limited

open season for Federal Employee Government Life Insurance (FEGLI). It is a good

tool to help deployed civilians like the one already approved in the FY00 National

Defense Authorization Act for automatically carrying over annual leave.

Mr. BATEMAN. Should deployed civilian employees enjoy the same Federal tax relief as those in uniform do, or should that privilege remain unique to the military?

Has there ever been an American conflict in which civilian employees were provided

Federal tax relief?

Secretary DISNEY and Mr. COOKE. To our knowledge, civilian employees have

never enjoyed this privilege. We are currently reviewing a proposal to provide limited tax relief to civilian employees in a combat zone, but no decision has been

reached.

Secretary SNYDER. In general, no, deployed civilian employees should not enjoy

the same federal tax relief as those in uniform. Although many deployed civilians

share many of the same risks and hardships as their military counterparts, an analysis of the financial benefits reflects that a typical deployed civilian’s compensation—even without a monthly tax exclusion like that afforded deployed military

members—is currently comparable to, if not slightly higher than, the compensation

for a typical deployed military member of comparable grade. In addition to the opportunity to earn a substantial amount of overtime pay, civilians receive, under applicable circumstances, a number of allowances and differentials, e.g., danger pay

(up to 25% of base pay) and post differential (up to 25% of base pay depending on

the country of deployment). To my knowledge, Federal civilian employees have

never been provided tax relief as a result of being deployed.

As I stated in my previous answer, however, the Army does support extending to

civilian employees assigned to a combat zone the same tax treatment relative to survivor benefits that is afforded deployed military members.

Secretary WELCH. This issue is not applicable to the Navy or Marine Corps, however we would support an initiative on this issue.

Secretary KEENER. In comparing civilian pay, benefits, and allowances, deployed

civilian employees’ tax exemptions are comparable overall to their military counterparts. While deployed in a temporary duty status, federal civilian employees continue to receive their locality pay as part of their basic pay (taxable) from their permanent duty location in addition to being compensated for temporary duty such as

per diem, travel, and lodging (non-taxable). Additionally, they may receive danger

pay (upon being in a combat zone more than four hours which equates up to 25%

of their pay) and may receive post differential (upon being in a combat zone beyond

42 calendar days which equates to up to 25% of their pay), depending on the location of the deployment, which are both taxable. Military members receive a smaller

combat pay allowance, so exempting their base pay from taxes makes the situation

more equitable in comparison to civilian employees. Further, if civilians are permanently moved to an overseas area on a permanent change of station move, they do

receive additional non-taxable allowances such as quarters allowances and cost-ofliving allowances (while losing their locality pay).

There has not been an American conflict in which civilian employees were provided federal tax relief.

Mr. BATEMAN. DOD policy limits assignments overseas to five years. The reason

behind the policy is to encourage developmental assignments overseas and broaden

the experience of the civilian workforce. This reasoning is sound, but I am not so

sure that the Department is really operating a coherent program. We continually

receive correspondence from high performing employees overseas being forced to return, and never hear from those in the US being blocked from overseas assignments. Why have a policy that creates discontent, uproots good employees, and has

no apparent organized program behind it?

Secretary DISNEY and Mr. COOKE. Since 1966, the Department of Defense (DOD)

has had a policy of limiting civilian tours in foreign areas to five years or less. The

rotation policy is broadly written to reflect DOD’s worldwide responsibility. It intentionally grants the Military Departments the flexibility to implement the policy to

meet their changing mission requirements at each foreign location. While the policy’s rationale has remained essentially the same as when first issued, the emphasis

has shifted somewhat over time as overseas activities have undergone significant

changes in mission.

The rotation policy allows for continuous assessment of civilian workforce requirements and promotes the efficiency of worldwide operations. Within the overseas

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workforce, there is also a continual change in the skills that are needed as new missions emerge. The limit on foreign area tours gives management the flexibility necessary to adjust the skills mix to meet the new requirements. In addition, a foreignarea assignment provides employees with desirable international experience that is

essential to career development, particularly at the mid- and senior levels. Employees who return from overseas tours bring a healthy new perspective to their organizations in the United States. Creating vacancies through the five-year limitation is

necessary to allow this rotation to continue.

Equally as important, the employment of military spouses and family members

on our military installations is critical to their quality of life in foreign areas where

employment on the local economy may be restricted. We believe that there is a direct connection between family employment opportunities and retention of our career military members. The rotation policy also ensures a continuing supply of vacant jobs for our military spouses and family members.

In sum, then, we believe that the rotation policy greatly benefits the Department

and its overall workforce.

Secretary SNYDER. The Department of the Army (DA) recognizes that the current

Department of Defense (DOD) policy on overseas rotation means that some employees will return to the United States before they wish to do so. We support the DOD

policy. In applying it, we recognize the need for variations that overseas commanders must respond to, based on critical mission requirements in the overseas

environment. Our policy on overseas rotation provides the overseas commanders

with the flexibility to extend or deny extension of overseas tours in order to maintain a high level of expertise in the civilian workforce.

With the continued reductions in civilian employment and closing of Army installations in overseas areas, the Army must retain its ability to limit employment in

foreign areas as a means of managing overseas staffing levels and providing developmental opportunities for career employees. Our program provides Army employees return rights to the Army positions held prior to going overseas. We also assist

employees who do not have return rights, with registration and placement through

the DOD Priority Placement Program.

Secretary WELCH. The DON fully supports the 5-year overseas rotational policy

and believes that it should be equitably applied. Provisions exist in the regulations

for exceptions under unusual circumstances, and the DON has endorsed these exceptions when they were supported by the mission needs of the Department.

Secretary KEENER. In Mar. 97, the Office of the Assistant Secretary of Defense

for Civilian Personnel Policy (OASD[CPP]) drafted a memorandum in which the

five-year limitation on foreign employment established in Apr. 66 was reaffirmed.

Since that time, the Air Force has taken a less permissive view on extending employees beyond the five-year limitation. The purpose of the overseas rotation program is to provide opportunities for civilians to gain overseas experience, to provide

employment opportunities for family members, and to continue the influx of new

ideas and skills to the foreign area. Adherence to the DOD rotation policy also provides for a systematic return of employees upon completion of their overseas tours.

Essentially, it enables a greater number of Air Force employees to gain valuable,

career-enhancing experience in the overseas area. Although we continue to believe

the five-year rotation policy is fundamentally sound, there may be ways to improve

the basic policy and its execution. At a recent Overseas Human Resource Management Conference, a recommendation was made to form a Department of Defense

working group to assess the corporate and operational costs of managing the foreign

area employment limitation.

Mr. BATEMAN. Please discuss the overall expected attrition rate in the DOD civilian workforce and what level of attrition is acceptable or desirable. Of course, acceptable or desirable attrition rates might vary by occupation. In your reply, please

include data you may have available on how DOD’s attrition rate for key occupational categories compares to attrition in private sector competitors for talented employees.

Secretary DISNEY and Mr. COOKE. During FY 1999, about 7.6 percent of DOD’s

civilian employees with permanent appointments left DOD through retirement, resignation, transfer to other Federal agencies, and other types of separations. This

compares to a rate of 7.3 percent in the previous fiscal year, and 7.5 percent in FY

1997. We expect separation rates to rise modestly in the next few years as our older

workers reach retirement age, but we do not project a dramatic exodus in any single

year.

We consider these overall rates to be in the acceptable range. As the drawdown

of the civilian workforce slows in the next few years, such loss rates should, in general, create sufficient vacancies to allow DOD significant opportunities for workforce

renewal through new hiring. However, as stated elsewhere, spot surpluses will conVerDate 11-MAY-2000 08:40 Jun 06, 2001 Jkt 010199 PO 00000 Frm 00456 Fmt 6601 Sfmt 6621 E:\HEARINGS\72364 pfrm09 PsN: 72364
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tinue to occur in certain occupations at certain sites. To deal with these, we have

requested additional force-shaping tools.

The table below contains loss rates for selected occupational groups in DOD for

FY 1999. We do not have comparable data for the private sector, although available

evidence indicates that separation rates are much higher outside government.

SEPARATION RATES FOR DOD CIVILIAN EMPLOYEES WITH PERMANENT APPOINTMENTS IN FY 1999

BY SELECTED OCCUPATION GROUP

Percent

Engineers ............................................................................................................................................... 5.3

Logistics management .......................................................................................................................... 6.9

Central management ............................................................................................................................. 7.2

Production workers ................................................................................................................................ 7.4

Miscellaneous technicians .................................................................................................................... 8.5

Financial management .......................................................................................................................... 6.3

Data system management .................................................................................................................... 9.7

Secretarial ............................................................................................................................................. 8.0

Secretary SNYDER. The Army currently intensively manages approximately 84,000

civilian employees in 22 separate career programs. The overall turnover rate for

these employees is about 7% to 8% per year, a rate that has remained essentially

constant during the drawdown. We do not have comparable data for the private sector.

The Army is studying the degree of turnover variation by occupation group in

terms of the kinds of workers employed (i.e., demographic, skill, and educational

background), economic conditions, and Army’s future civilian workforce needs. The

total turnover rate in an occupational group can be assessed as either acceptable

or unacceptable only when the desired future of that group has been discerned.

Once that is accomplished, we can forecast the number of new hires or losses needed

to reach an identified target end strength level.

Secretary WELCH. Within the DON we find attrition rates to be relatively stable

in the professional series. For example, during FY99, attrition rates for mathematicians (6.2%), Physical Scientists (6.7%), Engineers (5.9%) and Biologists (8.5%) were

relatively low. We have no private sector data to use as a comparison.

Secretary KEENER. The attrition rate for our core white-collar specialties has

grown from 6% in 1996 to nearly 8% last year. The government-wide attrition rate

is approximately 7%. Our aging workforce leads us to expect higher turnover in the

future as employees reach retirement. This is a ‘‘good news/bad news’’ situation:

‘‘good’’ in that it will give us greater opportunities for bringing in new, fresh talent;

‘‘bad’’ in that we will be losing valuable, skilled, and experienced employees.

Our aggregate succession planning models show normal loss rates between 6%

and 6-1/2% are in the range where we have a reasonable balance between force renewal and retention of experienced employees. However, we need, and are in the

process of building, better forecasting models to help determine what the desired attrition rates should be for each career field.

Mr. BATEMAN. Could you review for me what the percentage reduction in your

Fourth Estate has been since, 1989 or whatever date is more convenient so that we

have an idea as to the relative size of the downsizing? Could you furnish us with

the numbers on the drawdown of the various departments and agencies within the

Department of Defense.

Secretary DISNEY. The ‘‘Fourth Estate’’ has been changing in size and scope over

the past three decades. Changes in its civilian employment over the past decade are

particularly illustrative of this fact. In September 1989, the Fourth Estate had

99,000 employees. It reached its peak in September 1994, with 155,000 employees

and has steadily declined since, with 122,000 employees as of February 2000.

These changes stemmed primarily from the establishment of Defense Agencies

and DOD Field Activities as the Department revamped its service and support

structure to improve the quality and effectiveness of products and service delivery.

This effort effectively transferred people and functions from the Military Departments and across Components to achieve unity of effort, centralized oversight, and

economies of scale. As illustrated by the numbers provided separately, this process

did not generate growth in the DOD workforce. Rather, the consolidation itself usually recognized significant savings in personnel or other resources.

Information on changes in civilian employment for all DOD is displayed in the

table below.

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DRAWDOWN IN CIVILIAN EMPLOYMENT IN DOD (ROUNDED)

September 1989 February 2000 Change Percent change

Military functions ...................... 1,117,000 ....................... 704,000 .......................... 413,000 ........... ¥37

US citizens ........................... 999,000 ....................... 652,000 .......................... 347,000 ........... ¥35

Foreign nationals ................. 118,000 ....................... 52,000 .......................... 66,000 ........... ¥56

Civil functions .......................... 31,000 ....................... 24,000 .......................... 7,000 ........... ¥23

Total ..................................... 1,148,000 ....................... 728,000 .......................... 420,000 ........... ¥37

AMC PROPOSED APPRENTICESHIP PROGRAM

Mr. BATEMAN. The Army Materiel Command has expressed some concern about

the aging of skilled workers in the depots and has suggested that an apprenticeship

program is necessary to train skilled workers for the future. What’s your view? If

you agree that such a program is necessary, please provide supporting analysis.

Secretary SNYDER. Headquarters, Department of the Army completed a preliminary analysis of AMC’s depot maintenance job families to determine whether an apprenticeship program would be of value. Our preliminary findings and HQ AMC

analysis support the need for a structured apprenticeship program in certain blue

collar occupations. However, before we can arrive at a final conclusion, we need to

determine the required endstrength for these apprenticeship occupations in future

years so that we can accurately assess the number of apprentices needed to maintain a steady state and compensate for the impact of increased retirements. My staff

is currently working with HQ AMC to complete the analysis.

Mr. BATEMAN. What has the Navy learned from the China Lake demonstration

project?

Secretary WELCH. Navy’s China Lake project opened the doors to new ways of hiring, paying, and rewarding employees. It was the first demonstration project within

the Federal Government, and it allowed managers and employees to discuss salaries

and the employer to offer salaries commensurate with employee skills, at or above

normal starting salary rates. China Lake established pay banding to permit and facilitate flexibility in pay setting commensurate with performance.

As a result of the China Lake project, which is now a permanent Alternative Personnel System, the Department of the Navy (DON) is supporting a Department of

Defense (DOD) strategy that will result in increasing flexibility in the hiring process, extending pay banding beyond the demonstration project sites, and empowering

managers to reward good performance and to deal effectively with poor performance.

While the emphasis of the China Lake project was on hiring and developing of

scientific and technical employees, the principal lessons were more generic in nature. Simplified hiring and appointing processes through such initiatives as category

ranking and reduction in the number of appointing authorities and contribution

based performance rating systems can be applied across the board.

Mr. BATEMAN. The Navy’s shipyard apprenticeship program is frequently mentioned as a model. Please describe the program, why it was begun, and the results

so far.

Secretary WELCH. The Navy’s apprenticeship program is a Department of Laborapproved hiring and training program. It provides the tools and methods needed to

identify candidates with potential to perform deck plate maintenance work, and integrates a program of formal post-high school education with on-the-job training and

mentoring to provide a source of fully qualified blue collar employees.

The Navy began its apprentice program more than 80 years ago to respond to a

need for shipbuilding and maintenance skills, which could not be fully or timely met

by the private sector. The Navy was the preeminent employer of the type of skilled

trades and crafts workers found at a shipyard, including shipfitters, welders, machinists, electricians, and pipefitters.

Apprentices are hired based on their potential ability to learn and perform trades

and crafts work. Typically, apprentices enroll in a community college-based program

of general education including courses in mathematics, drafting and blueprint reading, and materials science. They also attend formal classes at the job site where

they learn specific job skills they will need in their selected trade. The remainder

of their time is spent performing work under the guidance of journey-level workers.

During the last 10 years, as we closed shipyards and depots, our apprentice programs slowed down considerably, virtually emptying the pipeline for future workforce requirements. Now, thanks to increases in funding for FY99 and FY00, the

Navy has been able to reenergize its apprentice programs to meet identified current

and future needs. Apprentice programs at the shipyards in Pearl Harbor, Portsmouth, Puget Sound, and Norfolk are operating vigorously. During fiscal years 1999

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and 2000, 227 new apprentices were hired at Portsmouth and Pearl Harbor. Currently, each of the shipyards projects hiring from 100 to 150 additional apprentices

in a wide range of blue collar trades.

Our Systems Commands and the Atlantic and Pacific Fleet Commanders, who are

responsible for the Department’s depot-level workforce, consider the apprentice program an integral part of their efforts to prepare for the workforce of tomorrow. We

believe that the proven methods of the Navy’s apprenticeship programs can be applied in any depot-level maintenance program.

Mr. BATEMAN. Among the tools available to agencies that face recruitment and

retention challenges are recruitment bonuses and retention allowances. Despite the

media articles indicating that agencies are having difficulty attracting and retaining

employees, we understand that agencies very seldom use either of these tools. How

extensively does DOD use these tools? If they are seldom used, please explain why.

Also, if they are seldom used, do you believe that agencies should use them before

seeking any additional tools from the Congress to address recruitment and retention

issues?

Mr. COOKE. Recruitment, Retention, and Relocations bonuses (hereafter referred

to as 3R’s) are used within the Fourth Estate, with varying degrees of frequency

from agency to agency. Some agencies have attached recruitment bonuses to intern

programs as an entry-level employment incentive. Others have used the retention

allowance as a tool to retain much needed corporate knowledge and technical skills.

Other agencies regularly offer relocation bonuses in critical skill areas of senior

management. For the most part, we are able to recruit the people we need within

the present salary structure (base pay plus locality). As resources become scarcer,

we expect the use of the 3R’s provisions to increase. We do endorse the concept of

using the provisions available to us before requesting additional legislation to address recruitment and retention issues—except in cases of request for direct hire authority. In these instances, it may not be the salary that hinders the recruitment

of new employees, but the extensive steps involved in merit principles that we must

apply, that prevents us from competing with the quick selections and job offers that

private industry can make.

QUESTIONS SUBMITTED BY MR. CHAMBLISS

Mr. CHAMBLISS. Why is a worker at Robins Air Force Base paid at a certain level

but a worker in Atlanta, less than 100 miles away, might be paid at a higher rate?

Secretary DISNEY. Although the methodology for conducting wage surveys and developing area wage schedules is uniform throughout the system, no two Federal prevailing wage rate schedules are identical. Our experience in conducting locality

wage surveys has shown that these differences, for the most part, are attributable

to differences in the kind and size of private industrial employers located within

each wage area and differences in the level of wages paid for various occupations

by each private employer. Thus, the Federal prevailing rate schedules for different

areas can reflect significant differences in levels of pay.

Mr. CHAMBLISS. Why might a worker doing the same job at another government

agency at Robins AFB be paid at a higher rate?

Secretary DISNEY. Federal Wage Systems (FWS) employees doing the same job in

the same location could be paid different rates for various reasons. For example, the

employees could be at different grades or at different steps in the same grade. Some

employees may be being paid from the Wage Leader or Wage Supervisor pay scale,

or be entitled to grade or pay retention. All Department of Defense (DOD) FWS employees (not leaders or supervisors) working in Warner Robins will be paid at the

same rate if they are at the same grade and step. There may be some differences

in rates paid to other-than-DOD FWS employees because the DOD rates are based

on local private industry rates.

Mr. CHAMBLISS. Why have general schedule employees received pay increases

equal to twice the amount of the wage grade people over the last 14 years?

Secretary DISNEY. Answering this question requires differentiating the systems

and then addressing the misunderstanding about pay rates.

Pay rates for General Schedule and Federal Wage System (FWS) employees are

based on two distinctly different systems. The General Schedule is a worldwide

schedule with 32 locality pay schedules applicable to the 48 contiguous states. FWS

pay schedules are based on local prevailing rates developed by joint labor-management surveys conducted in 132 local areas. Congress restricts increases in FWS

schedules to the amount of the increase in the General Schedule plus locality payments.

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General Schedule employees have not received pay increases equal to twice the

FWS increases over the last 14 years. The following table shows the General Schedule (including locality pay) increases versus FWS increases from 1986 through 1999.

OVERALL INCREASES FOR GENERAL SCHEDULE EMPLOYEES VERSUS FEDERAL WAGE SYSTEM

EMPLOYEES IN ATLANTA AND MACON, GEORGIA (INCREASES EXPRESSED AS A PERCENT)

Year*

Nationwide General Schedule

(including locality)

FWS

Atlanta

FWS Macon DOD

FWS

Macon

Non-DOD

1986 ...................................................... 0 0 0 0

1987 ...................................................... 3.0 2.95 2.93 2.95

1988 ...................................................... 2.0 1.95 1.95 1.95

1989 ...................................................... 4.1 4.05 3.39 4.05

1990 ...................................................... 3.6 3.56 3.56 3.56

1991 ...................................................... 4.1 4.07 2.74 ¥4.28

1992 ...................................................... 4.2 4.15 3.60 3.70

1993 ...................................................... 3.7 3.29 3.34 3.00

1994 ...................................................... 2.2 2.33 1.12 1.06

1995 ...................................................... 2.6 2.95 3.04 1.39

1996 ...................................................... 2.4 2.46 2.47 1.85

1997 ...................................................... 3.0 2.63 3.07 3.06

1998 ...................................................... 2.8 2.53 2.84 2.61

1999 ...................................................... 3.6 3.40 3.62 3.62

Average ................................................. 2.95 2.88 2.69 2.04

* Calendar Year for GS and Fiscal Year for FWS.

Over the last 14 years, General Schedule employees’ pay increased an average of

2.95 percent compared to 2.88 percent for FWS employees in Atlanta, 2.69 percent

for those in Macon working for DOD, and 2.04 percent for those in Macon working

for agencies other than DOD. Since 1995 DOD FWS rates in Macon have been increasing faster than the Macon (Non-DOD) or Atlanta FWS rates.

Mr. CHAMBLISS. Some specialized government jobs in the Macon, Georgia, wage

area are not found in the private sector locally but may be found in another area,

such as Atlanta. The data in Atlanta are not used in the prevailing wage schedule

in Macon. Why would that be the case when there is nobody else in that category

within the local area?

Secretary DISNEY. Atlanta and Macon, Georgia, are separate wage areas, with the

local prevailing rates in each area being used to establish our FWS schedules. Both

the General Schedule and the FWS schedules are applied to a wide variety of positions. Since the General Schedule is national in scope, jobs from across the entire

nation are used in defining the schedule. Because the FWS schedules for Atlanta

and Macon are each based on local wages, those occupations prevalent in each area

are used to establish the schedule for that area. It is not unusual to find specialized

jobs at a Federal activity where there are no local private sector counterparts. The

FWS schedules do not address specific occupations but establish specific rates for

each grade and step for all covered occupations.

QUESTIONS SUBMITTED BY MR. UNDERWOOD

Mr. UNDERWOOD. How would we better provide assistance to workers who are undergoing a dramatic work transition through no fault of their own and what about

the issue of how we deal with the term ‘‘inherently govermental?’’ Also, would you

please provide your comments on the ordnance handing on Guam being outsourced,

the A–76 study performed, and the problems associated with having to bring people

in to perform the work.

Secretary WELCH. The ordnance handling function was included as part of the

Base Operating Support (BOS) multi-function A–76 study that was awarded to

Raytheon on April 7, 2000. Because of the success we’ve had with contractor operated functions at Naval Magazine Lualualei, Hawaii, we believe we will achieve

similar success at Naval Magazine Guam. The decision to include this function was

closely scrutinized to ensure its suitability for contracting. A contingency is included

in the contract to handle surge requirements similar to language contained in the

contract for Naval Magazine Lualualei, Hawaii. The contractor is paid based on tonnage handled, and must be able to respond to workload fluctuations including significant surges.

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Congressman Underwood’s concern that the contractor may find it difficult to hire

qualified, on-island workers for surge workload may be accurate. However, this is

a performance contract and the contractor may have to hire employees from off-island to meet performance requirements. The Department of the Navy does not monitor the details of how or from where the contractor recruits its employees. Instead,

we closely monitor the performance of the contracted work to ensure compliance

with standards of operation and adequacy of results.

Mr. UNDERWOOD. Are you able to hire the skills you need to support the military

services?

Mr. COOKE. The Fourth Estate is an amalgam of independent agencies, each with

its own personnel authorities, diverse mission, function, reporting channels, operational requirements, culture, values, and workforce composition. However, within

this diverse workforce, there is agreement that the job categories that are in high

demand and that are difficult to recruit are in the areas of Information Technology,

Electronics Engineering, Telecommunications, Acquisition, Accountants, Logistics,

Personnel Management and Clerical/Administrative support positions.

Of the job categories mentioned, Information Technology is the field where we are

experiencing and will continue to have the most difficulty in recruiting. The demand

for IT expertise is very high among many federal agencies and the private sector.

The Fourth Estate has a number of different programs and options available to

meet those highly dynamic and changing IT needs. Included in our efforts to maximize our recruitment of IT professionals are newly developed intern programs at the

high school and college levels, vigorous recruitment efforts for IT professionals, telecommuting pilot programs, and agency marketing. Some of our Fourth Estate agencies are designing developmental career programs to develop multi-functional employees, allowing the current workforce to develop new skills needed to keep up with

changing technology. Indications are that increased use of the 3R’s provisions as a

recruitment and retention tool is expected. We anticipate that such programs will

serve as an incentive to large numbers of new and current employees and provide

an opportunity for them to achieve their career goals within the agencies.

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