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96–178 PDF 2004

S. HRG. 108–681 

CONTINGENT EMERGENCY RESERVE FUND REQUEST FOR IRAQ AND AFGHANISTAN FOR 

FISCAL YEAR 2005 

HEARING 

BEFORE A

SUBCOMMITTEE OF THE 

COMMITTEE ON APPROPRIATIONS 

UNITED STATES SENATE 

ONE HUNDRED EIGHTH CONGRESS 

SECOND SESSION 

SPECIAL HEARING 

JUNE 2, 2004—WASHINGTON, DC 

Printed for the use of the Committee on Appropriations 

( 

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate 
(II) 

COMMITTEE ON APPROPRIATIONS 

TED STEVENS, Alaska, Chairman 

THAD COCHRAN, Mississippi 

ARLEN SPECTER, Pennsylvania 

PETE V. DOMENICI, New Mexico 

CHRISTOPHER S. BOND, Missouri 

MITCH MCCONNELL, Kentucky 

CONRAD BURNS, Montana 

RICHARD C. SHELBY, Alabama 

JUDD GREGG, New Hampshire 

ROBERT F. BENNETT, Utah 

BEN NIGHTHORSE CAMPBELL, Colorado 

LARRY CRAIG, Idaho 

KAY BAILEY HUTCHISON, Texas 

MIKE DEWINE, Ohio 

SAM BROWNBACK, Kansas 

ROBERT C. BYRD, West Virginia 

DANIEL K. INOUYE, Hawaii 

ERNEST F. HOLLINGS, South Carolina 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

BARBARA A. MIKULSKI, Maryland 

HARRY REID, Nevada 

HERB KOHL, Wisconsin 

PATTY MURRAY, Washington 

BYRON L. DORGAN, North Dakota 

DIANNE FEINSTEIN, California 

RICHARD J. DURBIN, Illinois 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

JAMES W. MORHARD, Staff Director 

LISA SUTHERLAND, Deputy Staff Director 

TERRENCE E. SAUVAIN, Minority Staff Director 

SUBCOMMITTEE ON DEFENSE

TED STEVENS, Alaska, Chairman 

THAD COCHRAN, Mississippi 

ARLEN SPECTER, Pennsylvania 

PETE V. DOMENICI, New Mexico 

CHRISTOPHER S. BOND, Missouri 

MITCH MCCONNELL, Kentucky 

RICHARD C. SHELBY, Alabama 

JUDD GREGG, New Hampshire 

KAY BAILEY HUTCHISON, Texas 

CONRAD BURNS, Montana 

DANIEL K. INOUYE, Hawaii 

ERNEST F. HOLLINGS, South Carolina 

ROBERT C. BYRD, West Virginia 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

BYRON L. DORGAN, North Dakota 

RICHARD J. DURBIN, Illinois 

HARRY REID, Nevada 

DIANNE FEINSTEIN, California 

Professional Staff 

SID ASHWORTH

JENNIFER CHARTRAND

ALYCIA FARRELL

TOM HAWKINS

ROBERT J. HENKE

LESLEY KALAN

MAZIE R. MATTSON

BRIAN POTTS

KRAIG SIRACUSE

BRIAN WILSON

CHARLES J. HOUY (Minority) 

NICOLE RUTBERG DI RESTA (Minority) 

BETSY SCHMID (Minority) 

Administrative Support 

JANELLE TREON
(III) 

C O N T E N T S 

Page 

Statement of Hon. Joel D. Kaplan, Deputy Director, Office of Management 

and Budget ........................................................................................................... 1 

Opening Statement of Senator Ted Stevens .......................................................... 1 

Statement of Senator Daniel K. Inouye ................................................................. 2 

Timing of Fiscal Year 2005 Supplemental ............................................................ 3 

Opening Statement of Joel D. Kaplan ................................................................... 4 

Prepared Statement of Joel D. Kaplan .................................................................. 5 

Statement of Lawrence J. Lanzillotta, Under Secretary of Defense (Acting 

Comptroller), Department of Defense ................................................................. 6 

Prepared Statement of Larry J. Lanzillotta .......................................................... 6 

The President’s $25 Billion Reserve Fund ............................................................. 7 

Funding Flexibility .................................................................................................. 7 

Statement of General Peter Pace, United States Marine Corps, Vice Chairman, Joint Chiefs of Staff, Department of Defense ........................................... 8 

Guard and Reserve .................................................................................................. 8 

Justification Materials for Request ........................................................................ 9 

Protection of Troops ................................................................................................. 10 

Coalition Partners ................................................................................................... 12 

Heavy Truck Recapitalization ................................................................................ 12 

Embassy Construction and Civil Operations ........................................................ 13 

Funding for U.S. Mission in Iraq ........................................................................... 14 

Release of Funds From $25 Billion Reserve .......................................................... 16 

Flexibility for Use of the $25 Billion ...................................................................... 17 

Role Played by the Military Services ..................................................................... 18 

Mid-year Review ...................................................................................................... 18 

Recruiting and Retention ........................................................................................ 19 

Monthly Costs of Operations .................................................................................. 20 

Access to the Contingent Emergency Reserve Fund in Fiscal Year 2004 ........... 21 

Troops in Afghanistan ............................................................................................. 23 

DOD Need for Greater General Transfer Authority ............................................. 23 

Home Security Forces .............................................................................................. 24 

Estimating Fiscal Year 2005 Incremental Costs ................................................... 26 

How Has Fiscal Year 2003 and 2004 Supplementals Been Spent? ..................... 28 

Likely Changes in Funding Requirement .............................................................. 29 

Iraqi Government .................................................................................................... 30 

Operations in Afghanistan ...................................................................................... 32 

Elections ................................................................................................................... 34

Additional Committee Questions ............................................................................ 34 

Questions Submitted to Hon. Joel D. Kaplan ....................................................... 34 

Questions Submitted by Senator Christopher S. Bond ........................................ 34 

Question Submitted to Lawrence J. Lanzillotta ................................................... 35 

Question Submitted by Senator Christopher S. Bond .......................................... 35 

Question Submitted to General Peter Pace ........................................................... 35 

Question Submitted by Senator Christopher S. Bond .......................................... 35 

(1) 

CONTINGENT EMERGENCY RESERVE FUND 

REQUEST FOR IRAQ AND AFGHANISTAN 

FOR FISCAL YEAR 2005 

WEDNESDAY, JUNE 2, 2004 

U.S. SENATE, SUBCOMMITTEE ON DEFENSE, COMMITTEE ON APPROPRIATIONS, Washington, DC. 

The subcommittee met at 10 a.m., in room SD–192, Dirksen Senate Office Building, Hon. Ted Stevens (chairman) presiding. 

Present: Senators Stevens, Cochran, Domenici, Bond, Gregg, 

Burns, Inouye, Byrd, and Dorgan. 

STATEMENT OF HON. JOEL D. KAPLAN, DEPUTY DIRECTOR, OFFICE 

OF MANAGEMENT AND BUDGET 

OPENING STATEMENT OF SENATOR TED STEVENS

Senator STEVENS. Good morning. Welcome to our witnesses. 

We’re pleased to have you all back with us again. Our subcommittee is meeting this morning for a special hearing convened 

specially to review the President’s request for $25 billion as a reserve fund for military operations in Iraq and Afghanistan. Deputy 

Director Kaplan, we welcome you in your first appearance before 

the committee, and Mr. Lanzillotta, we welcome you back. You testified with Secretary Rumsfeld about 1 month ago, and it’s a challenging and important time to be the acting Department of Defense 

(DOD) Comptroller, I’m sure of that. So we thank you for your 

service. General Pace, it’s always good to see you. We welcome you 

again. We look forward to hearing your perspective. 

As we meet today, our servicemen and women remain engaged 

in combat missions in Iraq and Afghanistan. They are the ones who 

are fighting and winning the global war on terrorism. To meet 

their commitment and ensure that they have the resources they 

need to get their job done, the President has proposed $25 billion 

in a contingent emergency reserve fund. Our military commanders 

must make prudent operational plans. They must be prepared to 

respond to the dynamic events on the battlefield. We expect nothing less of our military leadership and our people in uniform. 

So the Congress also must plan for and provide the resources for 

our military forces needed to do their job. Our military commanders in the field and the troops that are doing the hard work 

must not find that fiscal issues or the availability of money constrain them in any way. The last thing we want an operational 

commander concerned about is whether or not there’s enough 
2 

money to do the job. I applaud the President’s decision to ask for 

these resources now and the President requested resources for the 

Iraqi Freedom Fund (IFF), a flexible transfer account that Congress created in 2003 with the Iraqi supplemental. 

As requested, this version of the IFF is different in two important ways. First, funds are explicit only to support operations in 

Iraq or Afghanistan. Previous IFF language was somewhat broader 

and allowed the use of the funds for the global war on terrorism. 

Second, funds would become available after two actions by the 

President. The President must first transmit an official budget request and designate the amount as an emergency and as essential 

to support the activities or agencies in Iraq or Afghanistan. The request includes the requirement for a 5-day advanced congressional 

notification before making any transfer from the fund, the same requirement that Congress included in the original Iraq Freedom 

Fund. 

I want to remind the committee that this hearing is about the 

President’s request for the $25 billion reserve fund. It’s really not 

an appropriate place to have a policy debate on Iraq or a hearing 

on the allegations of Iraq prisoner abuse. It’s our hope that this 

hearing will stay on track and focused on the appropriations matters before us. We expect other members to—ranking member, 

former chairman, is with us now. I do expect a full committee to 

attend this hearing. 

We will make your statements, gentlemen, a part of the committee record in full, and we’ll ask you to present them to us as 

briefly as you may. I would like to turn now to the co-chairman of 

the subcommittee for his remarks. 

STATEMENT OF SENATOR DANIEL K. INOUYE

Senator INOUYE. I thank you very much. I’m pleased to join our 

chairman in welcoming all of you to discuss the administration’s request for fiscal year 2005 emergency funding for the wars in Iraq 

and Afghanistan. We did not anticipate a supplemental request to 

come before Congress this year. When the Congress passed the $87 

billion supplemental last October, we were told by the administration that those funds would cover the costs of war for the next 18 

months. 

However, due to unforeseen circumstances in theater that called 

for more forces than planned, resulted in more damage and loss of 

equipment than predicted and longer duration than anticipated, 

the services’ accounts are running short. I think we should make 

it very clear that this committee and this Congress support our 

forces deployed overseas and we’ll make certain that we provide 

adequate funds to provide for their safe return. 

Nevertheless, Mr. Chairman, I have several concerns and questions about the request before us this morning. It is my understanding that when the administration fashioned this request that 

the services were not consulted. Without their input, how did the 

administration arrive at this $25 billion figure and determine what 

accounts to apply it to? The request includes $5 billion to reimburse other appropriations and classified programs. There’s no information regarding how that $5 billion would be spent and I hope 
3 

that you will address how the Department plans to use the unclassified portion of these funds. 

We have learned in recent weeks that the Army has procurement 

shortfalls for activities such as resetting the force and modularity. 

In addition, both the Army and Marine Corps have shortfalls for 

replacing lost and damaged equipment and for critical items such 

as aircraft survivability equipment, ammunition, vehicle armor, 

and rapid fuel equipment. 

I understand there’s no funding in the supplemental request earmarked for these items. I’m interested in hearing from you on how 

the Department intends to address these concerns. 

Furthermore, with rising costs associated with increase in troop 

strength on ground, what is the status of the remaining fiscal year 

2004 funds? We’ve been told that this is part one of a two-part supplemental request for fiscal year 2005. We anticipate receiving another request for funding the wars when the administration sends 

over next year’s budget request. 

I hope you will discuss this morning how the administration determined what is funded in this supplemental versus the one we 

expect to receive next year. I raise these points, Mr. Chairman, because the Congress has been provided very limited information on 

how these funds will be used, and because I noted in a recent Wall 

Street Journal article that an unidentified senior administration official said that Congress is not provided detailed information if 

they don’t ask the right questions. 

Finally, I remain concerned about recruiting and retention. I 

think all of us do. The Active Forces are stretched thin. We are relying heavily on our Guard and Reserve forces to serve extended 

tours overseas. The forces are performing magnificently, but how 

long can we sustain this pace of operations? How can we expect the 

operational tempo to slow down? 

So, Mr. Chairman, these are some of the questions that have 

been of concern to me, and I hope that you’ll be able to respond 

to these issues. I thank you, Mr. Chairman. 

Senator STEVENS. Thank you. It will be my intention to ask that 

members accept a 5-minute limitation. You and I have used about 

3 minutes apiece. I’ll just ask one question and then yield to Senator Inouye and then we’ll follow the early-bird rule and first early 

bird was Senator Byrd, so we will try to move along so everyone 

that comes in will have a chance to ask—make some comments or 

ask questions. 

TIMING OF FISCAL YEAR 2005 SUPPLEMENTAL

My question really pertains to the change. I was the one that 

went to the Office of Management and Budget (OMB) and asked 

that we not have a supplemental presented to us this summer because of the shortness of this session due to the long recess for the 

two conventions. And we were told that OMB and DOD agreed and 

they would not seek a 2005 supplemental this year, a supplemental 

until next year, until after the first of the year of 2005. That has 

obviously changed and the President requested $25 billion. We expect this to be used as indicated for—only for Afghanistan and Iraq 

plus the $5 billion that Senator Inouye mentioned. And we’ve had 

another change, and that has been the decision to not reduce the 
4 

forces in Iraq, but to maintain the level of 135,000 through calendar year 2005. 

Now, my question really goes to Director Kaplan and Mr. 

Lanzillotta. We understand that it’s difficult to present a supplemental for what might occur over the next 18 months, and this reserve fund really seems to be directed to the first 4 months of the 

next fiscal year. Is there a plan to add to this supplemental after 

the beginning of the year? Could you tell us, one of you, what timeframe does this reserve fund really purport to cover? 

Mr. KAPLAN. Yes, Mr. Chairman. As you know, due to many conversations you’ve had with the administration, it was not the administration’s plan to come forward with a fiscal year 2005 supplemental until calendar year 2005 when we will have more precise 

and reliable estimates of what the needs on the ground in Iraq and 

Afghanistan will be. 

You mentioned some of the challenges in terms of operational requirements that have developed in the last couple of months. The 

President has been very clear with us at OMB and throughout the 

administration in his commitment to provide the commanders on 

the ground the resources they need and the confidence that the resources will be there when they need them. 

With that in mind, Secretary Rumsfeld came to the President 

several weeks ago and reported that because of changing conditions 

in Iraq and Afghanistan, we needed to request from the Congress 

basically an insurance policy. It had been our intention to cash flow 

until we could submit a full and reliable supplemental request in 

calendar year 2005. Given uncertainties, the developments in Iraq, 

the political situation, the security situation, we thought it was advisable to get an insurance policy in place to help the services get 

to the fiscal year 2005 supplemental. It remains our intention, Mr. 

Chairman, to come before the Congress in early calendar year 2005 

and ask for that full supplemental to carry us through the rest of 

fiscal year 2005. 

Senator STEVENS. I apologize to the committee and to our witnesses. I failed to let you make your statements in my eagerness 

to answer my question. Would you care to make your statement, 

Mr. Kaplan? 

OPENING STATEMENT OF JOEL D. KAPLAN

Mr. KAPLAN. As you wish, Mr. Chairman. I’ll be very brief. 

Thank you, Mr. Chairman, and members of the committee for inviting me to appear to discuss the President’s request for the $25 

billion contingent emergency reserve fund. The administration as 

always, Mr. Chairman, appreciates your support and this committee’s unwavering support for our men and women engaged in the 

war on terror, and we look forward to working with you on this important request. 

I do have a full text I’ll submit for the record, but I’ll just be very 

brief in highlighting the key factors, and we just talked about a 

couple of them, that shaped our thinking in putting together this 

request. First, we were guided by the President’s clear and consistent direction, make sure the commanders and troops in the field 

have the resources they need to accomplish the mission. 
5 

Second, the request would appropriate the reserve into service 

accounts within the Iraq Freedom Fund, which was established by 

the Congress, as you mentioned, Mr. Chairman, in the fiscal year 

2003 supplemental. We wanted to work with an existing structure 

for which the Congress has shown support in the past. 

Third, the funding is requested as a contingent emergency reserve with the funds activated only after the President submits a 

request designating all or part of the funding as an emergency and 

essential to operations in Iraq or Afghanistan. 

Fourth, again, as you mentioned, Mr. Chairman, the reserve is 

intended for operations in Iraq and Afghanistan only. 

Fifth, we’re seeking this reserve in addition to funds requested 

for DOD’s base in the President’s 2005 budget. The President believes strongly that the transformation agenda and rebuilding of 

our core defense capabilities must be funded on a predictable and 

reliable path, and we urge the Congress to fully fund the Department’s base request. 

PREPARED STATEMENT

Finally, as I just mentioned in my answer to your question, Mr. 

Chairman, I’d like to note that we do continue to plan to come to 

the Congress with a full supplemental request for fiscal year 2005 

early in the calendar year when we can have more precise and reliable estimates of what the operational needs are likely to be during 

2005. Thank you, Mr. Chairman. I look forward to answering the 

rest of the committee’s questions. 

[The statement follows:] 

PREPARED STATEMENT OF JOEL D. KAPLAN

Thank you, Mr. Chairman and Members of the Committee, for inviting me to appear before you today to discuss the President’s request for a $25 billion contingent 

emergency reserve fund for operations in Iraq and Afghanistan. In recent remarks, 

the President reiterated this Nation’s commitment to our Armed Forces engaged in 

Iraq, Afghanistan, and elsewhere around the world in the War on Terror. The President has never wavered in this commitment. Consequently, his direction to us has 

been clear and consistent: make sure the commanders have the resources they need 

to accomplish the mission and protect our men and women in uniform. 

It is with those men and women in mind that the President decided to propose 

this contingent emergency reserve fund, to provide the commanders and the troops 

in the field the confidence that the resources they need will be there when they need 

them. This reserve fund, if enacted by Congress, will guarantee we have the ability 

to respond to rapidly changing conditions in the region, while affording the necessary time and experience after the transition in Iraq and the elections in Afghanistan to ensure that a Supplemental request made of the Congress in early 2005 

more accurately and completely reflects real needs. 

There are several core principles that guided the Administration’s request for this 

reserve fund. First, it should be made available as a contingent reserve activated 

only after the President submits a request designating the funds as an emergency 

and essential to operations in Iraq or Afghanistan. Based on our work with the Department of Defense and the Services, it is clear that they will need to—and can 

without disruption—pull forward funds planned for the second half of the year to 

use in the first and second quarter for operational needs if the tempo continues at 

the current high pace. However, in the current environment, a need to ‘‘cashflow’’ 

from the last two quarters in 2005 has the potential to raise concern about the 

availability and reliability of resources later in the year. We wanted to provide commanders, as well as the troops serving in the field, with the confidence that nothing 

will stand in the way of the President’s pledge to provide them with the resources 

they need to accomplish their mission. A reserve fund guarantees they will have 

what they need when they need it. 
6 

Second, we wanted to propose a structure based on authorities and accounts familiar to and supported by the Congress. Therefore, we have requested funds appropriated into the Iraq Freedom Fund, established by the Congress in the fiscal year 

2003 Supplemental. We have also requested allocation of funds into specific service 

accounts, again as enacted by the Congress. 

Third, the reserve fund should provide adequate flexibility to allow us to respond 

to a fluid operational environment and emerging requirements. The Department of 

Defense and we believe that at the current pace the pressure points in planning and 

executing are likely to develop in the Operation and Maintenance accounts, and particularly Army and Marine Corps O&M. This understanding is reflected in the allocations in the request we sent to the Congress. However, we also are seeking to assure that these resources are matched with transfer authority to promptly address 

changing requirements, including emerging procurement requirements related to 

force protection. 

Fourth, the reserve should address requirements in Afghanistan and Iraq only. 

We believe the base 2005 request provides ample resources to meet requirements 

unrelated to the critical operational missions in Iraq and Afghanistan. 

Fifth, we want to assure that enactment of the contingency emergency reserve 

does not come at the expense of the President’s 2005 base request for the Defense 

Department of $401.7 billion. Early in his Administration, the President determined 

that predictability in funding was critical to fulfilling the Department’s transformation agenda. That predictability is even more important now as the services 

are asked to fully engage in the war against terror abroad, even as they fundamentally transform their organization, infrastructure, force, and doctrine. While some 

may argue to shift requirements identified in the 2005 base request into the proposed reserve, such a shift risks creating uncertainty and disruption in the Department’s planning and execution of key national security policies and missions. 

Finally, I’d just like to note that this Administration has tremendous respect for 

Congress’ Constitutional role, and its responsibility, in authorizing and appropriating resources for our Armed Services. It is in deference to this role that we 

want to make sure that the next supplemental request you consider is accurate and 

precise as to the military’s needs. Some have recommended that we simply extrapolate from today’s costs, multiplying those costs over some fixed period as the basis 

for a request. We have found that such estimates often mean funds are mismatched 

with accounts and the requirements that actually develop. The combination of a reserve fund that can be activated as needed with a future supplemental built on actual 2005 conditions assures we will spend what is necessary to support our troops 

and their vital mission. 

Thank you again for the privilege of appearing before this Committee with my 

distinguished colleagues. I will be happy to take your questions. 

Senator STEVENS. Yes, Mr. Lanzillotta. 

STATEMENT OF LAWRENCE J. LANZILLOTTA, UNDER SECRETARY OF 

DEFENSE (ACTING COMPTROLLER), DEPARTMENT OF DEFENSE 

Mr. LANZILLOTTA. Thank you, Mr. Chairman. I will leave my 

statement to be submitted into the record. But to just emphasize 

the point that Director Kaplan made, and to answer a question 

that Senator Inouye raised, it was this consultation with the services during the mid-year review to understand corporately the financial situation that we were in and the Department that led the 

Secretary to seek and report to the President on this condition and 

why we needed certain things for the end of the year. 

I just wanted to emphasize it was the consultation with the services at every step of the way that led us to get a full understanding 

of our 2004 requirements, our plan, and also the need for this reserve fund to get us to the supplemental in the spring next year. 

Senator STEVENS. Thank you. 

[The statement follows:] 

PREPARED STATEMENT OF LARRY J. LANZILLOTTA

Mr. Chairman and Members of the Committee, I am happy to be here today to 

testify in support of President Bush’s request for a $25 billion reserve fund. 
7 

THE PRESIDENT’S $25 BILLION RESERVE FUND

The reserve fund we are requesting will provide an insurance plan so the Department of Defense (DOD) has adequate resources for both its core defense activities 

and its operations in Iraq and Afghanistan. It is critical to avoid any disruption in 

funding for our military forces. 

The Department’s plan had been to cash flow fiscal year 2005 operations in Iraq 

and Afghanistan until a Supplemental budget request could be prepared by early 

2005. Now, however, our higher projected troop levels increase the risk that certain 

accounts—especially Operation and Maintenance, Army—would have difficulty cash 

flowing operations beyond the February-March timeframe in 2005. This reserve 

fund will eliminate that risk and provide a margin of safety. 

The reserve fund would be used primarily for operation and maintenance (O&M) 

requirements, but a portion is expected to be used for force protection needs. Requirements are likely to include: 

—Fuel for helicopters, tanks, and other vehicles. 

—Transportation costs for movement of personnel and equipment in and out of 

the theater of operations. 

—Equipment maintenance (such as lubricants, repair parts) and logistics supplies. 

—Force protection needs such as individual body armor and up-armored 

HMMWVs and for possible support for Army modularity. 

The Administration still anticipates submitting a supplemental appropriation request to Congress in early 2005 to fund incremental costs for contingency operations. It continues to be impossible to know what our total supplemental funding 

needs will be for fiscal year 2005—particularly after the election in Afghanistan and 

after sovereignty is transferred in Iraq. Depending on the circumstances, we could 

face the need for either more or fewer troops—and more or less intensive operations. 

FUNDING FLEXIBILITY

I want to make a special plea for giving the Department of Defense the needed 

flexibility that this reserve fund would provide. The request was structured to reflect the reality that certain O&M accounts will have the greatest difficulty in meeting requirements without this reserve, until a full supplemental request can be provided. 

I especially urge you to avoid designating a portion of this fund for specific investment programs, because that would undermine the central purpose of the fund. It 

would make it much more likely that the Department could not finance its incremental war-related requirements—especially O&M requirements—all the way until 

fiscal year 2005 supplemental appropriations are approved. As the President requested, funding should be in accounts likely to be under the greatest strain during 

the first half of fiscal year 2005. 

Besides supporting the flexibility requested for the $25 billion reserve fund in fiscal year 2005, the Department of Defense needs the Committee’s help in making 

it through the rest of fiscal year 2004. The Office of Management and Budget and 

DOD leaders continue to expect that fiscal year 2004 requirements can be financed 

with the resources available in the fiscal year 2004 DOD budget and fiscal year 

2004 Emergency Supplemental Appropriations. However, to accomplish that the Department needs to be able to shift funds to finance and sustain its current operations. We soon will have exhausted our existing transfer authority, and so we will 

have no authority to move resources to meet all our must-pay fiscal year 2004 bills. 

I urge you to approve an additional $2 billion in general transfer authority (GTA) 

to enable the Department to get through the remainder of fiscal year 2004 with its 

existing resources. 

Finally, looking ahead to fiscal year 2005, I urge you to support the $4 billion in 

general transfer authority requested in the President’s budget. The Department’s 

need for higher GTA, especially during this time of war, has been evident in this 

current fiscal year. 

CLOSING

In closing, I want to thank this committee for your continuing strong support to 

U.S. security and to our military people. We look forward to continuing to work 

closely with you on behalf of America’s armed forces and their vital missions around 

the globe. Thank you. 

Senator STEVENS. General, do you have an opening statement? 
8 

STATEMENT OF GENERAL PETER PACE, UNITED STATES MARINE 

CORPS, VICE CHAIRMAN, JOINT CHIEFS OF STAFF, DEPARTMENT OF DEFENSE 

General PACE. Sir, I’ll keep my remarks very brief, but I’d be remiss if I didn’t say a few thank you, first to this committee and 

through you all to the entire Congress. We do have the world’s best 

military and we have it because of the sustained bipartisan support 

of this Congress and we thank you for that. 

Second to the magnificent young men and women who are serving right now overseas and defending our freedoms. They and their 

families deserve our respect and our appreciation and they certainly have it from everyone in this room. And to the guardsmen 

and reservists who have put their lives on hold to be able to serve 

their country and to their employers. The guardsmen and reserves 

are truly performing magnificently well, and they performed so 

well that it’s obvious that the employers who have let them go have 

gaps in their workforce and we appreciate their support. 

Last, if I may have the temerity to do so, sir, we just completed 

a wonderful Memorial Day weekend where we, among other things, 

witnessed the unveiling of the World War II memorial, to you, Senator Inouye, your medal of honor, to you, Mr. Chairman, your distinguished flying cross. To everyone on this committee and in this 

room who served, thank you very much. 

Senator STEVENS. Thank you very much, General. Senator 

Inouye, you have 2 minutes left. 

Senator INOUYE. General Pace, when Senator Stevens and I were 

in World War II, we knew that we would be there on the front 

until combat ceased. But today you’re trying your best to limit our 

force deployments to 6 months or 1 year. But now we find that 

we’ve gone to the limit, all the available forces are being used, reservists are being used, National Guard units all being used. In 

fact, we are pulling out forces from Korea. 

In light of the current situation in Iraq, do you think that this 

is a good strategy? 

GUARD AND RESERVE

General PACE. Sir, we’ve gone back and reviewed the time in 

combat where a soldier or marine is effective, and all of the studies 

from World War II and Korea and Vietnam indicate that at about 

the 1-year mark a person’s, an individual’s personal capacity to endure combat drops off significantly. So I believe that we have the 

correct strategy as far as the time that we ask an individual to 

spend continuously in combat. 

Second, with regard to the use of the Guard and Reserve, clearly 

because we have now been using the Guard and the Reserve for 

more than 2 years in certain military occupational specialities, we 

need to rebalance the force. 

And General Schoomaker and the Army have identified about 

100,000 billets that are either in the Guard and Reserve right now 

or in the Active Force that should be flip-flopped with each other 

so that we have more of the requisite skills in the Active Force so 

we do not have to rely quite as heavily in the future on the Reserve 

and the Guard, sir. 
9 

Senator INOUYE. Speaking of General Schoomaker, the General 

requested additional 30,000 troops, but in this funding we have 

nothing there for 30,000, I think about 1,200. What do we expect 

from you? What can we expect from you? 

General PACE. Sir, General Schoomaker has requested from the 

Secretary and has received from the Secretary temporary authority 

to go over the standing end strength of the Army by about 30,000 

soldiers. That will allow him to take his 10 divisions, which are 

currently configured in 33 brigades, and swap out, as I’ve mentioned, some of the skills, retrain, reorganize, and have 43 to 48 

brigades at the end of this reorganization process. 

Right now, the proposal to fund that is as part of the transformation, as part of the resetting of the force, as part of the supplemental request, yet to be submitted for next year to be funded, 

sir. 

Senator INOUYE. So it’s not in this $25 billion? 

General PACE. It is not in this $25 billion, no, sir. 

Senator INOUYE. My time is up. 

Senator STEVENS. Thank you. Senator Byrd, you’re recognized for 

5 minutes. 

JUSTIFICATION MATERIALS FOR REQUEST

Senator BYRD. Thank you, Mr. Chairman. We’ve done a great job 

in sending a man to the Moon and returning him to Earth safely, 

but it’s amazing that we haven’t yet been able to prepare an adequate and good system, public address system. 

Senator Stevens, since I’m limited to 5 minutes, I’ll save it, but 

a little at this point. The amendment that you and Senator Warner 

are proposing on this $25 billion request is a vast improvement, 

and I thank you, a vast improvement over the outrageous power 

and money grab that the President sought in his original request 

to Congress. He wants it all, no strings attached. But our chairman 

and our ranking member and Mr. Warner have proposed to do 

things differently. 

I commend you, Mr. Chairman, for the steps you’ve taken to impose accountability on the Defense Department and to provide the 

means for Congress to exercise some oversight of how this money 

is spent, and we ought to insist on that always. That’s not only the 

right, but it’s the duty of the appropriators in their fairness to the 

request, of course, and also in their fairness to the expectation of 

the taxpayers. 

I think we can do more, however, without infringing on the flexibility that the Defense Department so badly wants. For example, 

I believe that the transfer authority should be limited to $2.5 billion, which amounts to 10 percent of the entire $25 billion. That 

seems to me to be giving the Defense Department an adequate bit 

of flexibility. It seems to me that giving the Defense Department 

a 10 percent margin of error in calculating where it will need these 

funds provides more than adequate flexibility. 

I also believe, Mr. Chairman, that the chairman and ranking 

members of the House and Senate Appropriations Committees 

should be included in the consultation and notification process in 

addition to the congressional defense committees. This request, 
10 

after all, amounts to supplemental funding regardless of what the 

administration chooses to call it. 

Furthermore, I believe that this committee needs to see detailed 

justification material on this request before we sign off on it. For 

my part, I have seen no coherent explanation of how the administration arrived at the figure of $25 billion, and I believe we need 

to have that explanation before we okay the request. Mr. Chairman, I thank you again for what you have already done in seeking 

adequate accountability. 

I have a question now for Director Kaplan. Director, does the administration intend to submit a detailed justification for this $25 

billion request? 

Mr. KAPLAN. Yes, Senator, we will submit a justification for the 

request. Should the Congress appropriate the contingent emergency reserve fund, as the President, in consultation with the Secretary of Defense, designates needs as an emergency and essential 

to operations, we fully intend and expect to consult with the Congress in advance of submitting that request. 

Senator BYRD. Let me ask the question again so I can be sure 

I understand what you’re saying. Do you intend to submit a detailed justification insofar as you possibly can for this $25 billion 

request? 

Mr. KAPLAN. Yes, Senator, insofar as we possibly can, keeping in 

mind the evolving situation on the ground and our expectation that 

it will continue to evolve in ways that we don’t necessarily know 

at this time. 

Senator BYRD. All right. I guess my time is up. My time is up, 

thank you. 

Senator STEVENS. Thank you very much. Senator Cochran is 

next. 

Senator COCHRAN. Mr. Chairman, thank you very much for convening this hearing. We appreciate the cooperation of the Defense 

Department, OMB, and the Deputy Chairman of the Joint Chiefs 

for being here and helping us understand this request. 

It seems to me that the request is, as submitted, is something 

that is justified if the ongoing costs above what you have available 

to you is expected to be $5 billion a month. We do need to respond 

in a way that provides you the resources you need to be sure that 

our troops are protected who are in the field. I understand that 

some of these funds will be used to upgrade the capacity of our vehicles to withstand attacks from these improvised explosive devices. Is that correct, General Pace? Is that one of the reasons for 

this supplemental being requested at this time? 

PROTECTION OF TROOPS

General PACE. Senator, some of the funds from the supplemental 

could be used for that purpose. As you know, Congress this year 

allowed us to use almost $1 billion, over $750 million specifically 

for force protection of our troops to include body armor, up-armored 

Humvees and the like. So as we spent the fiscal year 2004 money, 

we were able to come to you, explain to you what we wanted to use 

it for, and you allowed us to do that. 
11 

The $25 billion that is the emergency fund could be used for 

those purposes or for others, depending upon what we face once we 

get to October 1, sir. 

Senator COCHRAN. Well, I just want to make sure that the record 

is clear that the request is being submitted for additional funding 

that can be used to enhance force protection of our troops who are 

in the field. We’ve all come to realize through news reports and the 

briefings that we’ve received here on Capitol Hill that this is a very 

real threat, and that more and more of these rocket-propelled grenades and other devices like that that are designed to kill our 

troops who are operating vehicles and trying to protect the Iraqi 

people as they establish their capacity for self-government and for 

ruling their own country through a democratic process. To me it’s 

a very timely request and I’m hopeful that our committee will act 

quickly and with unanimity in approving and supporting the administration’s request. 

General PACE. Sir, it can be and it will be. 

Senator COCHRAN. Thank you, Mr. Chairman. 

Senator STEVENS. Senator Bond. 

Senator BOND. Thank you very much, Mr. Chairman, and welcome, Mr. Kaplan and Mr. Lanzillotta and General Pace. I particularly appreciate and associate myself with the remarks of General 

Pace and we thank you for those, sir. We look forward to working 

with the chairman and the ranking member and I certainly agree 

with Senator Cochran on the need to ensure that our troops have 

everything they need to fulfill the mission. 

I was very interested in some things that came up recently. Apparently in Iraq no news is good news. Two months ago everybody 

was talking about Fallujah, the brutal murder and desecration of 

four Americans, every mosque in the city calling for jihad, local police and fire departments ceasing to exist. But thanks to the great 

work of the marines and the cooperation of the Iraqis, everything’s 

quiet and it’s off the news pages now. 

Just this past weekend I watched the movie, ‘‘Ike: Preparation 

for D-Day’’, and the thought struck me that if we had had 24-hour 

news coverage of D-Day with all the problems that were encountered there and all of the changes in plans that occurred, all of the 

things that went wrong, the New York Times and the Columbia 

Broadcasting System (CBS) would be calling for the firing of General Eisenhower and probably the defeat of the President as a result. 

I am concerned we are not getting some reports on the successes 

that are coming out of Iraq, and I think the American people deserve to know about the so-called rest of the story. And I hope we 

can do a better job of that. With the new Iraqi interim government 

we may have an opportunity to get a better picture. 

But General Pace, I’d like to ask you a question. There are some 

people who are saying we have far too few troops in Iraq. Obviously 

the protection of the troops themselves is key to the accomplishment of their mission and requires a certain level of troop strength. 

However, I think there are other considerations about the presence, 

the total presence of United States (U.S.) forces that may be a factor. Could you comment on whether you think we have adequate 
12 

troops, and will the additional troops being sought enable us to fulfill our mission within the constraints that exist? 

COALITION PARTNERS

General PACE. Senator, thank you. We review that constantly, 

both here in Washington, and more importantly, the commanders 

in the field. And General Franks and General Abizaid have come 

in with their troops request. Those of us on the Joint Chiefs have 

reviewed their request and done our own independent analysis. We 

thought we would be at about 115,000 troops today. As a result of 

the increased attacks, because the enemy is concerned about the 

fact that we are in fact going to return sovereignty on June 30, the 

increased attacks have resulted in us analyzing that we need more 

troops on the ground, an extra 20,000 were asked for and have 

been provided, and that 135,000 now will be the level to stay at for 

the foreseeable future. 

We’re also reviewing literally as I speak in the Pentagon right 

now, and we’ll be presenting in the tank this afternoon, a lookout 

for the next 5, 6, 8 months, how the U.S. forces are deployed, how 

we are intermixed with our coalition partners and whether or not 

that’s right, and then how we intend to begin looking at the turnover of individual responsibilities to the new Iraqi army, the new 

Iraqi police force, and the like. So this is a constant process, sir. 

I am personally comfortable with the size force we have there right 

now. When you combine 135,000 United States and about 24,000 

coalition and another 250,000 Iraqis, granted in various stages, but 

all coming online, that’s a very significant coalition force. 

Senator BOND. I hope my colleagues would agree with me that 

the decisions made by the commanders in the field and the leadership in Washington should be the definitive word on the number 

of troops. 

HEAVY TRUCK RECAPITALIZATION

Let me ask either Mr. Lanzillotta or Mr. Kaplan, I recently sup- ported an effort calling for $200 million to increase the heavy truck 

recapitalization fund account. We hear reports that trucks in Afghanistan and Iraq are getting years’ worth of use in 2 months. 

Does this supplemental adequately factor in the costs associated 

with the Army’s reset requirements for its transportation fleet? 

Mr. LANZILLOTTA. Senator, let me take a stab at that one. This 

reserve fund is not meant to address all the resetting of the force 

requirements that we’re going to incur. This fund is only to allow 

us to support the cash flow or reduce or mitigate the problems and 

the risks associated with cash flowing our operation and maintenance (O&M) accounts, specifically in the Army, through this time 

period. The resetting of the force or the wear and tear on the equipment is a problem. It’s one that the Department is addressing and 

it’s one that the Secretary has charged the Director of Program 

Analysis and Evaluation (PA&E) to do a study as to what that requirement actually is, because we are finding as we study more 

and more that this equipment ages differently on wear and tear. 

The Director of PA&E is going to do that study and we hope to address this issue, and when we do the full supplemental later this 

year, or I should say earlier next year. 
13 

Senator BOND. Thank you, Mr. Chairman. 

Senator STEVENS. Senator Gregg. 

EMBASSY CONSTRUCTION AND CIVIL OPERATIONS

Senator GREGG. Yes, Mr. Kaplan, in this $25 billion, is there any 

money allocated toward the construction of the new Embassy, 

which is estimated to be $1 billion, and the maintenance of the 

civil operations, which the authority is going to hand off to the 

State Department post-June 30? 

Mr. KAPLAN. Senator, as to the first part of your question, there 

is no money in this contingent emergency reserve fund for construction of a new Embassy. It is the view of the State Department 

that we’re not quite there yet on construction of a new Embassy. 

As you mentioned, Senator, the State Department will be taking 

responsibility for the mission in Iraq post-June 30, and there will 

be funding requirements for the State Department at that time. 

For the remainder of 2004, we have identified available funding in 

the administrative accounts for the reconstruction fund in monies 

that the State Department received for an Embassy in the previous 

supplemental that the Congress appropriated. 

When we get to fiscal year 2005, the State Department has esti- mated the cost of running the Embassy operations will be about $1 

billion exclusive of any construction, which again there are no 

plans for at this time. Of that $1 billion, only about $170 million 

of that have to do with traditional Embassy personnel-type operations. The State Department, as I said, has some money in 2005 

for that. Our expectation is that the State Department would cash 

flow from their accounts until the supplemental in 2005 to make 

up the difference of that $170 million. The rest of that $1 billion 

is for security and logistics, which are currently being covered by 

the Department of Defense, and our expectation is that the Department of Defense will continue these activities until the fiscal year 

2005 supplemental is available to carry those costs. 

So we do think that the State Department will be covered until 

we can get to that fiscal year 2005 supplemental. We have discussed this at some length with both the Department of Defense 

and the State Department and there’s an agreement that 

everybody’s comfortable will provide the State Department the resources they need. 

Senator GREGG. Well, that comes as news to me and I’m chairman of the committee that has responsibility for funding the State 

Department, so I suggest you get that information up in writing to 

us, because we’re not going to fund an area that you people think 

you’ve got the money for in that—in the framework you just laid 

it out, and we certainly don’t want to be pointed to as underfunding the State Department—— 

Senator BYRD. Mr. Chairman, would the distinguished Senator 

speak a little louder? 

Senator GREGG. It’s just a long way from—I’ll move over a little 

closer to it, Senator. 

Senator BYRD. It’s better now. 

Senator GREGG. So I would like to get that explanation of how 

you plan to fund the State Department, the building of the Embassy, the maintenance of the Embassy, and the operational re-
14 

quirements that they will have post-June 30, all of which in your 

explanation, as I understand it, will require no additional funds 

being put into the State Department accounts in the 2005 budget 

as it was sent up. 

Mr. KAPLAN. That’s right, Senator, in the 2005 regular appropriations. We would expect to address your concerns, Senator, in 

the full fiscal year 2005 supplemental. 

Senator GREGG. I just want that in writing. 

Mr. KAPLAN. Absolutely, Senator. 

Senator GREGG. Thank you. 

Senator STEVENS. An interesting point. I thought there was still some money left in Mr. Bremer’s account from the $87 billion to 

initiate the construction of that Embassy. 

Mr. KAPLAN. Senator, you’re correct. I think I omitted reference 

to—there is a fourth quarter apportionment in the Coalition Provisional Authority (CPA) account that’s about $180 million that will 

go toward the 2004 costs. I don’t believe it’s for construction, Mr. 

Chairman, but it is for the ongoing operations, and that will defray 

some of the 2004 costs of maintaining and operating the mission 

once it opens its doors for business on July 1. 

Senator STEVENS. That’s not before us now, but Senator Gregg 

is right, we need to have some explanation of what will be the transitional situation for funding for the non-defense portion of our activities in Iraq post-June 30. 

Mr. KAPLAN. We’ll provide that for you in writing, Mr. Chairman. 

[The information follows:] 

FUNDING FOR U.S. MISSION IN IRAQ

As Deputy Secretary of State Armitage and Under Secretary Grossman have testified before the Senate Foreign Relations Committee and House International Relations Committee, the total cost of the U.S. Mission in Iraq for fiscal year 2004 and 

fiscal year 2005 is currently estimated to be approximately $1.5 billion, excluding 

costs of construction of a new embassy. (Please see ‘‘Funding Availability for State 

Department Fiscal Year 2004/05 Operations in Iraq.’’) 

For the fourth quarter of fiscal year 2004, the costs to stand up and operate the 

U.S. Mission and continue necessary functions of the Coalition Provisional Authority 

(CPA) will be in the range of $480 million, including funds to support readying temporary facilities, providing additional Information Technology infrastructure, administrative and personnel support costs, establishing regional State Department 

teams, and funding a temporary Iraq Relief and Reconstruction Management Organization (IRMO). These costs will be covered through existing funds in CPA’s fourth 

quarter operating budget ($196 million) available to State as the successor to CPA, 

the one percent transfer of Iraq Relief and Reconstruction Funds ($184 million) 

available under law for operating expenses, and from funds directly appropriated to 

the Department of State in fiscal year 2003 supplemental appropriations ($97.3 million). 

For fiscal year 2005, the estimated operating cost is approximately $1 billion, 

which is exclusive of capital facility costs for a new embassy compound and the Program Contracting Office (PCO). The largest cost components of running the U.S. 

Mission in fiscal year 2005 are logistics and security. Deputy Secretary of State 

Armitage together with Deputy Secretary of Defense Wolfowitz testified before the 

Senate Foreign Relations Committee on May 18 that their expectation is that DOD 

will continue to supply Logistics Civilian Augmentation Program (LOGCAP) and security support for the new Mission until Ambassador Negroponte and his team have 

time to assess the actual needs and provide an estimate that can be included as 

part of a 2005 supplemental request. The annual cost of this support is currently 

estimated at about $800 million. The remaining fiscal year 2005 traditional embassy 

operating costs will be covered through funds requested by the State Department 

in the fiscal year 2005 budget and any remaining funds carried over from the fourth 

quarter of fiscal year 2004. State may have to rely on portions of its base Diplomatic 

and Consular Programs (D&CP) regular operating account to cash flow any interim 
15 

requirements until a supplemental is requested in 2005. These estimates continue 

to be in flux and will be refined as we work through the transition process. 

With respect to the new permanent embassy, the State Department has begun the 

planning process for a new compound in Baghdad and has selected a site for construction. The Department continues to work to develop requirements, such as determining the appropriate number of staff for the facility, so that when we do come 

forward with a cost estimate, it is based on the right size and build for the Department’s long term plans. In the interim, the Department is in the process of renovating three facilities (a chancery building, an embassy annex, and the ambassador’s residence) in the Green Zone, using funds appropriated for this purpose in 

the Iraq Reconstruction supplemental. 

FUNDING AVAILABILITY FOR STATE DEPARTMENT FISCAL YEAR 2004/05 OPERATIONS IN IRAQ 

[In millions of dollars] 

Amount 

Identified State Resources/Support for Iraq 

Fiscal Year 2005 State Budget Request ............................................................................................................. 46.2 

Fiscal Year 2003 War Supplemental ................................................................................................................... 97.3 

Fiscal Year 2004 4th Quarter CPA operating expenses ...................................................................................... 195.8 

IRRF up to 1 percent transfer for ‘‘Operating Expenses’’ of the CPA ................................................................ 184.4 

Total State Resources Fiscal Year 2004/2005 ....................................................................................... 523.7 

Estimate of State Fiscal Year 2004/05 U.S. Mission Costs for Iraq 

Fiscal Year 2004 Embassy Operations (including regional teams, security, and logistics) .............................. 482.5 

Fiscal Year 2005: 

Embassy Operations (excluding security and logistics) ............................................................................. 191.4 

Security and Logistics ................................................................................................................................. 1 817.2 

Total ........................................................................................................................................................ 1,008.6 

Fiscal Year 2004/2005 Total estimated U.S. Mission Costs ................................................................. 1,491.1 

1 DOD will provide security and logistics support. 

State Operations 

The fiscal year 2005 State budget includes $46.2 million in Diplomatic and Consular Programs (D&CP) for operations, security, and personnel funding to support 

activities in Iraq. This includes: $29 million to cover 120 staff positions being moved 

to the Iraq mission; $10 million for basic Baghdad mission operations; and $7.2 for 

security costs. 

$97.3 million from the fiscal year 2003 War Supplemental is available in fiscal 

year 2004 and 2005 for embassy facilities and set-up costs—including $35.8 million 

for initial operating and security costs and $61.5 million for temporary embassy facilities. 

Of CPA’s operating expenses, $195.8 million has been apportioned to the 4th 

quarter fiscal year 2004 and should be available to the State Department after the 

June 30th transition, based on current apportionment schedules. 

Pursuant to the fiscal year 2004 Supplemental, up to 1 percent of the Iraq Relief 

and Reconstruction Fund (IRRF) ($184.4 million) may be transferred to CPA or its 

successor organization for operating expenses. In addition, the fiscal year 2004 Supplemental language provides that up to 10 percent of IRRF funds that are obligated, 

managed, or administered by agencies (other than CPA) can be made available to 

pay for administrative expenses. 

DOD support for Security and Logistics 

The largest cost components for the fiscal year 2005 Iraq mission are logistics and 

security. It is the expectation that DOD will continue to cover logistics and security 

contracts for its uniformed and civilian personnel and the Iraq mission until the 

State Department has time to assess the actual needs and provide an estimate that 

can be included in a 2005 supplemental request. 

If necessary, State may rely on portions of its fiscal year 2005 base Diplomatic 

and Consular Programs (D&CP) regular operating account of $3.626 billion (excludes D&CP worldwide security funding) to cash flow any interim requirements in 
16 

fiscal year 2005 until other funding becomes available. Approximately 45 percent of 

State’s D&CP regular operating funds are apportioned to the 3rd and 4th quarters. 

Senator GREGG. My point was that they’re not expecting any of this $25 billion to be used for that, so they’re looking for some— 

there’s unaccounted-for funds which are going to be used to accomplish that, which I’m still trying to figure out where those funds 

are and how we’re going to get them. 

Mr. KAPLAN. If I may, Senator, in the period beginning in fiscal 

year 2005 on October 1, we expect that the Department of Defense, 

until the fiscal year 2005 supplemental is enacted, will continue to 

cover the costs that it’s currently incurring with respect to security 

and to the logistics contract, which the Department of Defense currently owns. 

Senator GREGG. I’m not sure the State Department understands 

it in those terms and I’d want to make sure everybody’s on the 

same page here. That’s why I would like to get a written statement 

from OMB as to what your understanding is and I intend to vet 

it with the State Department to see if that’s their understanding. And don’t forget we’ve got $1 billion sitting somewhere to build 

an Embassy, which I haven’t seen the money for yet. It’s not in the 

budget. 

Mr. KAPLAN. That’s correct, Senator. 

Senator STEVENS. That’s an additional aspect to this transition, 

and I hope that you’ll ask OMB to cover the full scope of that transition, not just Defense activities, but under possible—under this 

reserve account, but where we’re going to get the money to continue the activities that previously have been done by Mr. Bremer’s 

accounts. 

RELEASE OF FUNDS FROM $25 BILLION RESERVE

I would like to ask this question, and that is how would this contingency emergency reserve fund really operate in terms of the 

drawdown? Do you anticipate making requests for bulk transfers or 

is this going to be a line-by-line operational account that we are 

asked to release? 

Mr. LANZILLOTTA. Senator, we would plan to handle this much 

similar to how we do the IFF. Right now it requires a 5-day notification of a move out of the transfer out of the account. We do quarterly reports and then we do spot reporting as requested as to how 

these transfers occur. 

Senator STEVENS. Well, there are two differences from the IFF 

account under this request. These funds are specifically only for 

Iraq and Afghanistan. The IFF language allows that money to be 

used for the global war on terrorism. Second, this request two actions by the President. One is the transmission of the official budget request, and second, a designation that the amount is emergency 

essential to support the activities in Iraq and Afghanistan. 

Now, again though, are we looking for bulk money to be transferred going in from the fund to another activity or are we going 

to look at this on a line-by-line basis? 

Mr. LANZILLOTTA. We would look at this fund, you’re correct, Mr. 

Chairman, as far as the restrictions and the framework that this 

fund would be used for. 

Senator STEVENS. Totally military requirements now? 
17 

Mr. LANZILLOTTA. Totally military requirements for Iraq, Afghanistan, to support the operational costs that are associated with 

those operations and some force protection needs. We outlined as 

to which accounts that we believe that money should go to up to, 

I think $14 billion up to Army O&M account. The procedure I was 

outlining is what the current procedure is that we have in place 

as far as notification to Congress as to when these transfers occur. 

FLEXIBILITY FOR USE OF THE $25 BILLION

Senator STEVENS. Let’s make sure—the request is written so that 

the funds may be available to transfer to service operations and 

maintenance accounts, and $14 billion for O&M Army, $1 billion 

for O&M Navy, $2 billion for O&M Marine Corps, $1 billion for 

O&M Air Force, $2 billion for O&M Defense-wide, and up to $5 billion for other DOD appropriations that might be supplemented. 

The language is permissive, not binding. 

Now, what I want to know is, what is binding about this? Can you send us a request you want the whole $25 billion transferred 

without any strings attached? 

Mr. LANZILLOTTA. Senator, when we—the fund is set up, those 

accounts specifically for the O&M accounts because we know those 

are the accounts that are under the most stress. Where we were 

looking for some flexibility was in the centralized piece of it or 

down at the bottom was what we normally refer to as the IFF portion. And what we wanted the flexibility for was to address force 

protection needs, specifically like Humvees, we were recently made 

aware of the Army requirement for a possible other 3,000 up-armored Humvees. 

Senator STEVENS. I’m over on my time, but some of my colleagues have said that you’re asking us to give you a blank check 

because that word ‘‘may’’ in this provision. Now, I would intend to 

change that to say it shall be used only for these accounts except 

for the $5 billion. Are you going to object to that? 

Mr. LANZILLOTTA. As long as—no, Senator. What we would like 

to have though is the general transfer authority necessary that if 

the situation would change on the ground, we would have the sufficient flexibility with notification to Congress to make those 

changes. 

Senator STEVENS. The food and forage concept applies to the 

funds we give you for the Department of Defense. If you run into 

trouble you can use any funds you’ve got. What we’re talking about 

is this reserve fund now. Can you take it and put it wherever you 

want, just notify us we want $25 billion and we’re going to put it 

wherever you want? That’s a blank check theory and it’s something 

we’re going to run into in the floor and I don’t like to run into it. 

So I intend to change that word to ‘‘shall’’ so that there’s no blank 

check involved. You shall use this money for those accounts. You 

have broad discretion, $5 billion for other appropriations. Now, I 

think that’s sufficient under this. I hope you agree. 

Mr. LANZILLOTTA. Yes, Mr. Chairman. 

Senator STEVENS. Thank you. Senator Inouye. 

Senator BYRD. Mr. Chairman, might I ask a question along the 

line that you—— 

Senator STEVENS. Yes, sir. If Senator Inouye agrees. 
18 

Senator BYRD. He said yes in answer to your question. We don’t 

know what that means. 

Senator STEVENS. It means that we will change the word ‘‘may’’ 

to ‘‘shall’’ and they shall use these funds only as designated in the 

request for those specific funds and there is no possibility of asking 

for a blank check, take all the amounts and do what they want. 

They must use it either for O&M account up to $14 billion, $1 billion for the Navy, $2 billion for Marine Corps, $1 billion for Air 

Force, $2 billion for the Defense-wide, and there’s $5 billion for 

other DOD appropriations that they can use that within the Department as they see fit, but it still is limited to Iran—pardon me, 

to Iraq and Afghanistan. 

Senator BYRD. I fully agree and I compliment you and our ranking member. I just wasn’t sure what the witness meant when he 

just said yes. 

Senator STEVENS. Well, I hope he agreed with me, Senator. 

Mr. LANZILLOTTA. Correct, Mr. Chairman. 

Senator BYRD. Now, what does that mean? 

Mr. LANZILLOTTA. There were specific accounts laid out with specific dollar amounts that Mr. Chairman has said that this—we 

change from discretionary authority to ‘‘shall.’’ He would leave a 

small IFF-type account at the bottom that we would be able to use 

to address our force protection needs or a changing situation on the 

ground. 

Senator BYRD. Thank you, Mr. Chairman. 

Senator STEVENS. Senator Inouye. 

ROLE PLAYED BY THE MILITARY SERVICES

Senator INOUYE. Yes, sir. I’m still concerned about the process 

being used to develop this request. I’ve been told that the services 

had very little to do with the final determination of the size and 

purpose of this supplemental fund. What role do you permit the 

services? Do they play any role? 

Mr. LANZILLOTTA. Senator, when we developed the mid-year review process, the services played an active role in every step of the 

situation to develop the requirements for 2004. When we developed 

the reserve account as it was presented by the administration to 

Congress, this was simply meant to address the Army’s need and 

the Department’s need to relieve or mitigate the risk associated 

with cash flowing these accounts. 

The services have been briefed every step of the way to include 

service secretaries, service chiefs, on the actions taken, and they 

have been able to play and provide their input. 

MID-YEAR REVIEW

General PACE. Senator, if I might add, I was in the room during 

the mid-year review. The way Mr. Lanzillotta just described it is 

exactly accurate. There was a general discussion in the room based 

on what we learned in the mid-year review that it looked like it 

would be prudent to have a contingency fund as we got to the beginning of fiscal year 2005 so that we could stabilize the way we 

were spending on the force, stabilize training, and be able to continue operations. So that discussion did take place. 
19 

With regard to the specific numbers of dollars that would be 

asked for, sir, I was not privy to that particular conversation. 

Senator INOUYE. So you’re telling the committee that the service 

chiefs were well aware as to size and the purpose of these funds? 

General PACE. No, I did not say that, sir. What I said was the 

service chiefs were very much aware and part of the discussion 

with the Secretary of Defense that said we should come forward if 

we could earlier than February, March 2005 and get some kind of 

insurance policy for our operations. The exact size of that was not 

discussed in the meetings that I was. 

Mr. LANZILLOTTA. Can I clarify that point, Senator? 

Senator INOUYE. Yes, sir. 

Mr. LANZILLOTTA. The services fully participated in developing 

what the requirements were for 2004 and 2005. When we developed what the size of this number should be, we have—it was kind 

of done at a technical level with what we call a cost team, and on 

the cost team there’s representatives from the services, there’s representatives from the joint staff that they use and they together 

and they try to cost out what the impact of the operations would 

be next year. And we looked at that to see, based on what this cost 

team had put together from the services and the joint staff that 

participate, as to what that number ought to be to get us to the 

point where we thought that we could get a supplemental submitted and approved by the Congress. The exact number of the $25 

billion was never taken to the service chiefs. 

General PACE. But the service chiefs were aware of that once the 

number was developed and the chairman was told by the Secretary 

it looked like it would be about $25 billion. The chairman shared 

that with the rest of the Joint Chiefs in the tank and that was 

very, very satisfactory to all of us. 

RECRUITING AND RETENTION

Senator INOUYE. I have just one more question. Can you provide 

this committee at this time on the numbers involved in recruiting 

and retention? 

General PACE. Sir, I can take for the record the exact numbers. 

I can tell you, sir, that on the active side of the house for recruiting 

we are meeting our goals, for retention we are meeting our goals. 

On the Reserve side, the last numbers I saw, recruiting were off 

by 1 or 2 percent, retention was off by 1 or 2 percent. National 

Guard right now, the Air National Guard, the last number I saw 

recruiting was off about 23 percent, but I can get you the exact 

numbers, sir. 

[The information follows:] 

FISCAL YEAR 2004 RECRUITING STATISTICS (THROUGH APRIL 30, 2004) 

Service Percent of goal 

Active: 

Army ............................................................................................................................................................ 100 

Navy ............................................................................................................................................................. 100 

Marine Corps ............................................................................................................................................... 101 

Air Force ...................................................................................................................................................... 103 

Reserve: 

Army National Guard ................................................................................................................................... 93 
20 

FISCAL YEAR 2004 RECRUITING STATISTICS (THROUGH APRIL 30, 2004)—Continued 

Service Percent of goal 

Army Reserve ............................................................................................................................................... 95 

Naval Reserve ............................................................................................................................................. 109 

Marine Corps Reserve ................................................................................................................................. 109 

Air National Guard ...................................................................................................................................... 77 

Air Force Reserve ........................................................................................................................................ 92 

Senator INOUYE. So you’re satisfied with those numbers? 

General PACE. No. I’m satisfied that those are accurate numbers, 

sir, not satisfied with what the numbers portend. We need to be 

very attentive to the way that we’re using especially our Guard and 

Reserve. We need to ensure that when we ask these great Americans to put their lives on hold and serve their country that the mission we are giving them is a valid mission, that we are up-front 

with them as far as when we are going to call them back to duty, 

how long we are going to keep them on active duty, when they will 

be returned to their employers, and that we do as quickly as we 

can the rebalance of the force so that we do not rely on the Reserves for things that Active Forces should be doing. 

Senator INOUYE. I thank you. 

Senator BYRD. May I ask the Senator to yield? 

Senator STEVENS. Senator, you’re recognized for 5 minutes. 

Senator BYRD. I would ask the Senator from Hawaii, what were 

the Army and Guard statistics? I don’t believe I heard them. 

General PACE. Sir, I don’t have in my head the exact number. I 

believe the Army Guard is about 2 or 3 percent. I’m not positive 

of that. I do know that the Air Guard is off about 23 percent. And 

what I said to Senator Inouye, sir, is that I would get for the record 

the exact number so you have it correct. 

Senator BYRD. How long does it take to get that for the record? 

General PACE. Sir, we should be able to get that today. 

Senator BYRD. Mr. Chairman, I think it would be good if we 

knew those figures today. 

Senator STEVENS. Yes, Senator, we’d be happy to have them 

today as requested, Senator Byrd. The numbers for the Air Guard 

remind me of the numbers at the time of the Persian Gulf war. You 

remember, Senator Inouye, we were over and met with them. 

Those fell off at that time too. The Air Guard was particularly disturbed at that time as I recall. But we would like to have the numbers if you’ll provide them. 

General PACE. Yes, sir. Can do. 

Senator STEVENS. Senator, you’re recognized for 5 minutes. 

MONTHLY COSTS OF OPERATIONS

Senator BYRD. General Pace, what is the current monthly cost of 

operations in Iraq and do you expect the anticipated spike in violence over the coming weeks to affect that cost? 

General PACE. Sir, I’d like to turn to Mr. Lanzillotta for the answer to the exact cost. I have a number in my head, but I know 

he knows exactly. 

To answer your second question, we do expect violence to increase between now and June 30 as it already has in April and 

May, because our enemies fully understand that transfer of sov-
21 

ereignty back to the Iraqi people and their ability as an Iraqi people then to hold elections later on this year, to write their own constitution, to have a representative form of government, goes at the 

very heart of what the terrorists are trying to do, which is to stifle 

freedom. 

Senator BYRD. You’re going a little beyond my question, but 

thank you. Do you have any concern if the transfer—— 

Senator STEVENS. Senator, Mr. Lanzillotta had answers to your 

question, the first part of your question, if you’d like to hear them. 

Senator BYRD. Yes, thank you for calling that omission on my 

part. 

Mr. LANZILLOTTA. Senator, our current operational tempo in Iraq 

is about $4 billion a month. We expect with the increase of troops 

that were recently announced that that will jump each month between $120 million to $160 million, depending on the rotation of 

the troops that are coming out there each month. 

Senator STEVENS. $160 million now you’re talking about? 

Mr. LANZILLOTTA. Correct, Mr. Chairman. Now, for Afghanistan, 

our current operational tempo rate is about $700 million. It 

changes on a monthly basis. 

ACCESS TO THE CONTINGENT EMERGENCY RESERVE FUND IN FISCAL

YEAR 2004

Senator BYRD. Do you have any concern if the transition is bloodier than anticipated that some of this $25 billion will be needed before the end of this fiscal year? 

Mr. KAPLAN. Senator, the Department of Defense has conducted 

their mid-year execution review for fiscal year 2004 and as I understand it, the conclusion of that review is that based on the needs 

as we know them today, with sufficient transfer authority, general 

transfer authority in 2004, the Department will be able to cover 

those needs as we know them today. 

To your question, Senator, if the situation on the ground in the 

next few months were to be more violent than even General Pace 

described, then having some portion of the reserve available as an 

insurance policy in 2004, I expect would provide the services additional comfort. 

Senator STEVENS. Would the Senator yield there? 

Senator BYRD. Yes. 

Senator STEVENS. It would be my intention to ask the committee 

to provide that whatever funds are available for this IFF would be 

available upon enactment just to make sure we don’t face another 

request for the balance of this year. So we would make these funds 

available upon enactment in the event such emergency would 

occur. 

Senator BYRD. Well, Mr. Chairman, I thank you for that. I am 

concerned about this IFF, what that means, what additional flexibilities that may give. 

Senator STEVENS. My proposal would only affect—only impact 

the effective date of the availability of these funds. As requested, 

they would be available on October 1. Under my amendment, they 

would be available from the date of the enactment of this bill, just 

the fund itself, not the whole 2005 defense funds, but just for this 
22 

reserve fund, the reserve would be there as soon as Congress enacts the bill, or passes the bill and the President signs it. 

Senator BYRD. When the term IFF is used, does that mean that 

there may be some needs beyond those pertaining to Iraq and Afghanistan? 

Senator STEVENS. This bill—this fund applies only to Iraq and 

Afghanistan, Senator. 

Senator BYRD. I thank you, Mr. Chairman. 

Senator STEVENS. I correct that. There’s $5 billion that could be 

allocated to any one of the services at the request of the President 

with the approval of Congress. 

Senator BYRD. But would that—would the committee have the 

understanding that anything that goes beyond Afghanistan and 

Iraq comes back to this committee? 

Senator STEVENS. That’s correct. That’s my understanding. The 

request for the reserve is limited to Iraq and Afghanistan, but $5 

billion could be used throughout the services again without regard 

to their limitations of the request for a specific service. 

Senator BYRD. But—I’m sorry if I’m taking too much time—I 

want to be sure that none of that money can be used for making 

wars elsewhere. I want that understood that the funds would be 

used only for Afghanistan and Iraq. 

Senator STEVENS. It specifically states in the bill that it’s for an 

emergency essential to support activities and agencies in Iraq or 

Afghanistan, period. Even the $5 billion for the Defense-wide and 

classified programs are limited to Iraq and Afghanistan. 

Senator BYRD. Mr. Chairman, that answers my question. Thank 

you. 

Senator STEVENS. Senator, I used some of your time, so if you 

wish to have a few more minutes, please proceed. 

Senator BYRD. Thank you. General Pace, I’m growing increasingly concerned about the continuing and possibly growing insurgency in Afghanistan. That’s where the first war began. That’s the 

war I fully support. Four American military personnel were reported killed in Afghanistan in recent days as were four Afghan 

soldiers. The news report I read described the toll on the U.S.-led 

coalition forces in Afghanistan as among the worst for a single attack since the United States invaded Afghanistan in 2001. This is 

a troubling development. Afghanistan seems to have become the 

forgotten war. And yet reports like this remind us that it is still 

a war and that American military personnel are continuing to fight 

and die there. 

Would you give us an assessment of the current situation in Afghanistan? Let me just finish this question. At the end of April, 

General Abizaid reported that there were approximately 20,000 

U.S. military personnel in Afghanistan as a result of increased offensive operations and troop rotations. That level is about twice 

what the U.S. military presence in Afghanistan had been. Approximately—here’s my question—how many U.S. troops are currently 

in Afghanistan and how many coalition forces? And then I asked 

an earlier question which you won’t have time for right now, Mr. 

Chairman, I want General Pace to give us an assessment of the 

current situation in Afghanistan whenever you see that we have 

time without imposing on the other members. I don’t want to im-
23 

pose on their time. But specifically, approximately how many U.S. 

troops are currently in Afghanistan, how many coalition forces? 

TROOPS IN AFGHANISTAN

General PACE. Sir, we have approximately 19,000 U.S. troops in 

Afghanistan right now. We have approximately 8,000 coalition 

troops in Afghanistan. The four soldiers you mentioned who were 

killed in action in the past week were in a vehicle that hit a mine. 

Most of the U.S. forces are in the south, southeast part of Afghanistan operating in the provinces along the Pakistan border and are 

working in cooperation with the forces from Pakistan as they 

work—as the Pakistan forces work in Pakistan. 

Senator BYRD. Thank you, Mr. Chairman. 

Senator STEVENS. Thank you. Senator Cochran. 

Senator COCHRAN. Mr. Chairman, the Memorial Day break gave 

us all an opportunity to go back to our States and I had the good 

fortune of being able to visit a new defense manufacturing facility 

in Stone County, Mississippi, which is assembling and installing on 

Bradley fighting vehicles a reactive armor plate that permits the 

safeguarding of these vehicles and the occupants of these vehicles 

against rocket-propelled grenade attacks. It was a very interesting 

experience for me and it shows that we have technologies evolving 

and are using technologies that are evolving now to make it safer 

for our troops and safer for our equipment, less costly for equipment that would have otherwise been destroyed by these rocketpropelled grenade devices. 

My question is, I assume from the answers to your questions from Senator Stevens and others that the funds in the $5 billion 

account may very well be used for helping to ensure that we’re taking advantage of emerging technologies and new developments in 

defensive mechanisms to protect our forces in the field in Afghanistan and in Iraq. Is that correct? 

General PACE. Sir, that is correct. 

Senator COCHRAN. I have no other questions, Mr. Chairman. 

Senator STEVENS. Thank you very much. Senator Domenici. 

Senator DOMENICI. Thank you, Mr. Chairman. I have one technical question and then I’d like the General to talk about another 

issue. Mr.—how do you say it—Lanzillotta. I should know that, I 

should know how to say that. They’ve said mine wrong so many 

times I tried to say yours right, but I couldn’t. 

DOD NEED FOR GREATER GENERAL TRANSFER AUTHORITY

Let me ask you, it seems to me that even with what we have 

been talking about that you may need some general transfer authority in order to make this work. Can you discuss with me that 

issue and tell us what you think about the necessity for that? 

Mr. LANZILLOTTA. Thank you, Senator. We have completed—are 

in the process of completing our mid-year review, and hopefully in 

the next couple of weeks we’ll have our annual omnibus reprogramming that we’d normally do up to the Hill. We feel that we’re going 

to be short in general transfer authority somewhere in the neighborhood of $1 to $2 billion. 

The problem is we were provided general transfer authority in 

the supplemental and then we were provided general transfer au-
24 

thority, but the combination of the two doesn’t make up to allow 

us to transfer the money where we have assets available from 

under execution to where the bills are. To complete this year 

though, we will need between $1 to $2 billion of general transfer 

authority. 

Senator DOMENICI. Thank you very much. General, the most 

startling thing to me that’s happened with reference to America is 

what happened in Saudi Arabia with terrorists taking over a building within the compound for civilian workers in the oil patch. I 

think it indicates, I regret to say so, but I think it indicates that 

the Saudi oil is vulnerable, that the Saudi kingdom is vulnerable. 

I’m very, very worried about it. As a matter of fact, I believe that 

this generation serving right now is going to go down in history as 

the worst generation instead of the best in terms of the energy situation. 

If in fact we do not do anything about the situation of an energy 

policy, I clearly believe that some of us won’t be here, but some 

will, when America will be brought to her knees without a terrorist 

firing a shot in America if we get a substantial oil disruption. How 

many remember the Iranian disruption? We were in gas lines. In 

Brooklyn, they shot each other, remember, Senator Byrd, because 

somebody went around the line and somebody had a pistol and got 

mad and early in the morning, 5 o’clock, they were waiting in gas 

lines. That was a little tiny disruption. This one could be a monster 

disruption from what I see. 

Now, General, you can’t fix the world and you can’t fix Saudi 

Arabian anti-terrorist forces, but I guarantee you that Iraq won’t 

work unless the police and military of the Iraqis are ready. Can 

you tell us, how is the training of these men and women from Iraq? 

How is it going? What’s your assessment? Are they really getting 

better? We’re talking about turning the government over. Will they 

be ready to take a significant portion of the load, or will we still 

be almost exclusively in charge? Now, I think they’ve been doing 

better. I read even, in the biased press, that some of the trained 

Iraqis are involved in a number of these security situations—putting out the fires, et cetera. Could you just address this for us? I 

think it’s terrifically important. 

General PACE. Sir, they have been doing better, but we can be 

doing better in helping them to get better. In the Iraqi Civil Defense Corps (ICDC), for example, the forces that are—— 

Senator DOMENICI. What is ICDC? 

HOME SECURITY FORCES

General PACE. The home security forces, battalion-size organizations that we’re going to have about 36 of, to a tune of about 40,000 

across the entire country. Their equipment right now is on order 

but not yet in theater. Their training is being done by local U.S. 

forces, but we need to be working first, as we are, and with Congress’ support, to get the equipment to them more quickly, to train 

alongside them, and then to work alongside them in the field. 

One major lesson from the last month is that understandably 

Iraqis do not want to fight for a foreign power no matter who that 

is. They want to fight for their own government. And with the 

stand up, the announcement and the stand up of Prime Minister 
25 

Alawi and the rest of the interim Iraqi Government, these Iraqi 

soldiers will now have an Iraqi Government to respond to, an Iraqi 

flag to fight under, and have a purpose for which they can lend 

their energies. 

But we do need to do better with the five forces, the civil defense 

corps, the new Iraqi army, the police force, those that are providing 

protection on the fixed facilities like oil fields and the like, and the 

border guard. We need to increase that, and in fact, there is a general officer who was just confirmed last week by the Senate to go 

over and take charge of that entire Iraqi security force operation 

for us. He is going over this week. 

Senator DOMENICI. What’s his name? 

General PACE. That is Lieutenant General Petraeus, Dave 

Petraeus. General Petraeus was a Major General obviously until 

about 2 weeks ago. He was the 101st Airborne Division commander 

up in Mosul, did a fantastic job there for 1 year, has been home 

about 2 or 3 months and has been selected to go back because of 

his demonstrated capabilities in the battlefield to help us reorganize all parts of the Iraqi security force. 

Senator DOMENICI. Mr. Chairman, I would like to say to you and 

Senator Inouye that I believe this is the most important issue, 

training the forces of Iraq. None of this is going to work if they are 

not properly trained and equipped. I believe we ought to push the 

military to get that going as fast as possible and spend as much 

money as necessary to see that it works. In fact, it is not so good 

if they can’t get their equipment. Why will they believe us if in fact 

we train them and tell them they are in charge and then we don’t 

have their equipment? 

So, General, I know you’re not in charge, but I hope that I speak 

for these Senators. There is no way to win this without the Iraqis 

becoming trained and taking over, or having a plan for them to 

take over. Thank you, Mr. Chairman. 

Senator STEVENS. Well, Senator, as I understand this proposal, 

if the money was used in Iraq by the Department of Defense to 

train people of Iraqi descent, that would be consistent with the request. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you very much. I regret 

I was late, delayed by another committee, but I have read your testimony. First, let me say I don’t think there’s anyone on this subcommittee that will ever withhold the resources that are needed to 

carry out your missions, and I think the evidence is the chairman 

and the ranking member and every member of this subcommittee 

wants to support that which is necessary for our troops who are 

doing what this country has asked them to do. I do want to, however, say that this—that the $25 billion reserve 

fund is an unusual request I think in the scheme of things over 

many years, and it is, according to your testimony, to provide flexibility, and you urge us to avoid designating a portion of the fund 

for specific investment programs because that would undermine 

the purpose of the fund, which I guess is flexibility. 

It seems to me that we would have some basic knowledge of 

knowing what our needs are going to be for the next 3 months, 6 

months, or 12 months. And let me come to the—in the last year’s 

Defense appropriations bill, we said this, section 8139, it is the 
26 

sense of the Senate that, one, any requests for funds for a fiscal 

year for an ongoing overseas military operation, including operations in Afghanistan and Iraq, should be included in the annual 

budget of the President for such fiscal year as submitted to Congress under section 1105 of the U.S. Code. 

ESTIMATING FISCAL YEAR 2005 INCREMENTAL COSTS

I still do not understand why we do not have some better notion 

of what the expenditure needs are going to be for the coming fiscal 

year, and perhaps we can talk just a bit about that. Can you respond to that question? Obviously you have not—you have ignored 

the sense of the Senate provision that was in last year’s appropriations bill, but explain to me why there’s not some basic attempt to 

try to tell us and the American people what this cost will be in the 

coming fiscal year. 

Mr. LANZILLOTTA. Senator, let me try. What the attempt was, 

and what I meant on that statement was, we are using this reserve 

fund to pay for our operational costs associated with operations in 

Iraq and Afghanistan. If that money is diverted toward other 

things outside of those operational costs, then that undermines the 

purpose of trying to mitigate the risk associated with cash flow and 

the services and the commanders’ need to cash flow these accounts. 

We fully intend to address these other issues as far as wear and 

tear and equipment, other requirements associated, in a full supplemental, in which case we would submit that to the administration and up to the Hill for consideration. As far as being able to, 

last February, include the cost of the operations in this year’s 

budget, we’re in this situation that we had an early supplemental 

this year in 2004 and the service budgets for fiscal year 2006 would 

be due to us in August. To project the costs for 2006 would be difficult because the situation on the ground changes and the reality 

changes on the ground. And so what we are here for with this reserve fund is to be able to address that changing situation. 

Some of the changes over the last couple of months have been 

forced deployment. We’ve added—or the combatant commanders 

have needed for additional troops. We have had to put those additional troops on the ground to meet those needs. That was an assumption that wasn’t in the supplemental and that’s why we’re basically here today. 

Senator DORGAN. You make a fair point with respect to 2006, but 

what do you expect our costs to be in 2005? I mean, do you just 

anticipate that we’ll just keep going along and every time money 

is needed we’ll just do an emergency supplemental? I’m just asking 

if we have some basis for understanding what our costs will be in 

the coming fiscal year for these operations? 

Mr. LANZILLOTTA. I think that we’ve been forthcoming as to what 

the current operation costs, as far as what our burn rates have 

been. The problem that we have right now is the unforecasted 

things that happen on the ground to be able to adjust to meet 

those. Even when we finished 2004, we found significant problems 

in trying to get our arms around what the requirements on the 

ground versus the assets that were made available in 2004 on an 

early supplemental. What we—— 
27 

Senator DORGAN. I’m sorry, I don’t mean to interrupt you. Go 

ahead. 

Mr. LANZILLOTTA. We don’t have the data or the accuracy to be 

able to project that far ahead as to what possibly could happen. 

And then we get into a situation where we need to come back and 

ask for additional general transfer authority, we need to ask for reserve funds. 

Senator DORGAN. But it seems to me it’s a function of planning. 

If our so-called burn rate is now roughly $5 billion a month, that’s 

$60 billion a year and you’re asking for $25 billion as a contingency 

fund. Does that mean that next spring we’ll be asked for $35 billion 

in emergency supplemental monies or more? 

Senator STEVENS. This is the Senator’s last question. 

Senator DORGAN. I wonder if the witness could answer. 

Mr. KAPLAN. Senator, if I may, our expectation is we would like 

not to have to ask for a contingent supplemental in 2005—that’s 

why we’ve planned to come to the Congress at the beginning of calendar year 2005 when we actually do have more reliable and precise estimates and the best sense of how things have developed in 

the intervening months. Calendar year 2005 obviously is many 

months away, and as we’ve seen just in the last couple months, circumstances on the ground in Iraq do continue to evolve. Obviously 

they’ve evolved in a more violent fashion in the last couple months. 

The hope is, as our military engages with Iraqi forces and continues the acceleration of the training, equipping, and enlisting the 

Iraqis in providing their own security, the hope is that the needs 

as we get into 2005 will diminish. Obviously the contingent emergency reserve fund is there until we get to calendar year 2005 and 

the supplemental to provide the insurance if operations don’t diminish or if they continue at the increased operational rate that 

we’ve experienced in the last couple months and that General Pace 

has spoken about. 

Senator STEVENS. Thank you, Senator. For the Senator’s information, I would oppose the Senator’s amendment. We have operated during this period in Afghanistan and Iraq under the concept 

that we do receive supplementals. To my knowledge, the administration has not used the food and forage fund concept yet in these 

two actions. We have used supplementals as they’ve been presented. 

The Iraqi Freedom Fund, which was created in 2003 as a supplemental and was again used in the 2004 supplemental, it really has 

financial flexibility and congressional oversight. I asked for some 

rundown of what has happened. Seventeen billion dollars has been 

provided in the IFF in the past, and about $944 million remains 

available to the Department of Defense, and we expect that to be 

spent during the balance of 2004. The IFF has a 5-day advance notification requirement before DOD can transfer funds. To date, 

DOD has sent us 33 IFF notifications accounting for every dollar 

that’s been spent. In a couple of cases, the DOD sought prior approval where required for a procurement new start. As allowed by 

law and to prudently manage funds, DOD also transferred money 

back into the IFF in order to keep the excess funds from lapsing 

at the end of the last fiscal year. 
28 

Now, I have some general questions to ask Mr. Lanzillotta about 

this. How has the—— 

Senator DORGAN. Mr. Chairman, might I clarify, I was not suggesting an amendment, and all I did was read current law that was 

in the 2004 Defense Appropriations Act, so I’m not proposing an 

amendment. I was just reading the sense of the Senate that was 

in the appropriations act last year. 

Senator STEVENS. That’s the sense of the Senate, but I misunderstood. I thought the Senator was going to present that as an 

amendment. 

HOW HAS FISCAL YEAR 2003 AND 2004 SUPPLEMENTALS BEEN SPENT?

I asked Mr. Lanzillotta, how has the fiscal year 2003/2004 Iraqi 

Freedom Fund been spent in your opinion? 

Mr. LANZILLOTTA. Mr. Chairman, out of the $65 billion that was 

made available in 2004, we’ve obligated $32.1 billion, $25 billion in 

Iraq, $4.5 billion in Afghanistan, and $2.1 billion in Noble Eagle, 

which is stateside mobilization of Guard and Reserve. In 2003, we 

had two pieces of the supplemental. We had the $9.97 billion that 

was provided in an omnibus appropriations in January and the 

$62.5 billion that was provided in the supplemental for a total of 

$72 billion. Of that, we’ve spent $45.6 billion in Iraq, $12.7 billion 

in Afghanistan, and $6.5 billion in Operation Noble Eagle. That’s 

for $64.8 billion. It doesn’t include the intel numbers. 

Senator STEVENS. Do you believe that the flexibility provided by 

the IFF has been important to the operations of your Department 

from a financial point of view? 

Mr. LANZILLOTTA. Yes, Mr. Chairman, I do. What it has allowed 

us to do, and it has been mentioned already, is it allowed us to 

react to some force protection requirements. When we submitted 

the supplemental, we had force protection requirements in there 

for up-armored Humvees. Since then, that requirement has 

changed about three times, in which case the flexibility in the IFF 

has allowed us to meet that requirement to transfer money into 

Other Procurement, Army for the Army to continue to build up-armored Humvees at a rate sufficient to meet their requirements. 

Senator STEVENS. General Pace, in response to a request for information how this fund was, for examples of how it was spent for 

force protection equipment like the body armor, I was also informed that it was used to up-armor Humvees and it was used to 

augment the monies that we provided to destroy captured Iraqi 

ammunition, to deal with the ammunition dumps. Can you tell us 

how important it is to have this fund available for commanders in 

the field so they can respond quickly to changes and not have to 

go back through the process of budget approval right through the 

Department over to OMB and to Congress? 

General PACE. Sir, it is very important for all the reasons you 

mentioned. We have about 178,000 new sets of body armor out 

there, one for each person in theater. You have building toward— 

almost 4,000 up-armored Humvees have been paid for out of this 

fund. You have about another 8,000 sets of armor that’s hung on 

the sides of other vehicles and these were made possible because 

of the flexibilities inherent in the Iraqi Freedom Fund. Further, 

flexibilities like contingency emergency responds program (CERP) 
29 

where you have the ability for commanders to use that money in 

the field, they do not have to come back to the Army, for example, 

asking Army to reprogram some money, which means that Army 

then can continue to train the soldiers back here and repair the 

equipment back here that needs to go back on the next rotation. 

So all these things help provide stability across the force. 

Senator STEVENS. The committee knows I publicly apologized to 

Senator Feinstein for the actions that I recommended in limiting 

the monies available to deal with the ammunition dumps. When we 

discovered how serious they were, I was very pleased to see that 

you had used the reserve fund to deal with those ammunition 

dumps. If we approve this reserve fund, is that the type of action 

that you would use the money for in the event we discover some 

more of those dumps? By the way, I don’t know if you know, we’ve 

discovered some 8,500 dumps so far. There’s more ammunition, I 

think, in Iraq than the rest of the world stacked up in the ground 

openly. I really support any activity that will deal with those, although I understand it’s almost an impossible task right now with 

the terrorism that’s going on. Could you comment on that, General? 

General PACE. Sir, it is the exact kind of thing that we would do 

with this money. The numbers today are, we have discovered over 

300,000 short tons of ammunition in today over 9,500 locations. 

They have been compressed now down to 63 locations. We’ve destroyed about 150,000 short tons, but there’s another 150,000 short 

tons to go. But that 300,000 tons that we found is estimated to be 

about one-half of the 600,000 tons that was believed to be in the 

country when we began the war. 

Senator STEVENS. It could be out there buried, hidden. There’s 

still stuff that may be found that you would need money immediately to deal with, right? 

General PACE. Absolutely, yes, sir. 

Senator STEVENS. So I commend you for that and I commend this 

committee. The concept of a reserve fund to deal with issues, emergencies issues, Mr. Lanzillotta, these are emergency funds, right? 

You don’t use them for routine activities of any one of the services 

in Iraq? 

Mr. LANZILLOTTA. Correct, Mr. Chairman. 

Senator STEVENS. Senator Inouye. 

LIKELY CHANGES IN FUNDING REQUIREMENT

Senator INOUYE. With the recent United Nations’ involvement in 

the establishment of this interim government, and with the selection of a president, prime minister, et cetera, are you sufficiently 

optimistic that the funding requirement may come down in the 

next 18 months? 

Mr. LANZILLOTTA. Senator, to tell you the truth, I don’t know in 

the next 18 months what will happen. 

Senator STEVENS. When you sat here, I’m assuming you’re telling 

the truth all the time. 

Mr. LANZILLOTTA. I stand corrected. In the next 18 months, my 

personal opinion is I have no idea what this requirement will do. 

I’ve watched this requirement change on a dime, and that is what 

makes a prediction of a supplemental in 2005 so hard, because just 

finishing 2004 the requirements have changed so dramatically. So 
30 

I am not optimistic that I know what that number is in 2005 and 

that the requirement will come down. 

Senator INOUYE. But do you look upon the new developments 

with optimism? 

Mr. LANZILLOTTA. Senator, I certainly do. I certainly think that 

the transition to the Iraqi people eventually will stabilize and is 

the only way to stabilize that country. 

Senator INOUYE. Thank you. 

Senator STEVENS. Senator Byrd. 

Senator BYRD. Thank you. What about those who have said, hell 

no, we won’t go? How much confidence can we have in the Iraqis 

to fight Iraqis in order to bring security and stability to the country? Hell no, we won’t go. Does the witness understand my question? General Pace. 

IRAQI GOVERNMENT

General PACE. I understand it. I don’t know how it’s said in Arabic, but I understand what you just said in English. I believe that 

Iraqi young men led by Iraqi leaders serving an Iraqi Government 

that is selected, elected by the Iraqi people, that those young men 

will serve that government, will rally around their flag, will do the 

right thing for their government. So I am optimistic about the announcements that have been made over the last couple of days 

about the progress in standing up a new government. 

Senator BYRD. General Pace, my office has recently begun to 

hear reports from my constituents that our troops in Iraq will soon 

have their rest and relaxation (R&R) leaves substantially reduced. 

This R&R leave, which allows troops to return home for up to 2 

weeks, has been critical to military families who have been forced 

to deal with the deployment of a family member to Iraq for 1 year 

or more. Are these reports accurate? Is there now or will there soon 

be a cutback in the R&R leave for our troops in Iraq? 

General PACE. Those reports are not accurate. There will not be 

a cutback, sir. 

Senator BYRD. So there’s—there will not be a cutback in the 

R&R leave for our troops in Iraq? 

General PACE. That is correct, sir. A soldier who gets assigned 

to Iraq for 1 year is given the opportunity to take a R&R about 

midway through his or her tour. 

Senator BYRD. When can our troops expect their leave to be restored? 

General PACE. Yesterday, sir, because it wasn’t taken away. 

Senator BYRD. I beg the witness to pardon. 

General PACE. I’m sorry, sir. You said when could it be restored. 

Because I believe that it never was taken away, sir, the answer is 

yesterday or the day before, because it never was taken away. 

Senator BYRD. In other words then, my office has been incorrectly informed with respect to the report that I earlier alluded to, 

namely that our troops in Iraq will soon have their rest and relaxation leaves substantially reduced? 

General PACE. They will not have their rest and leave reduced, 

sir. 
31 

Senator BYRD. Are our troops also able to visit recreation centers 

in Iraq and neighboring countries for shorter periods. What’s going 

to happen, if anything, with respect to this? 

General PACE. Sir, to my knowledge, those programs are on solid 

ground. Each of the neighboring countries, of course, reviews their 

own programs over time. I will double check on the neighboring 

countries, but I’m not aware of any reduction in any of the programs in the neighboring countries. 

Senator BYRD. I thank you, General Pace. Now, if I may have a 

question for Mr. Kaplan. Is there not a need—let me back this up 

just a little bit—last week, DOD asked the Coast Guard to increase 

the number of personnel in Iraq from 300 to 400 and to increase 

the number of ships. Prior to that request, the Coast Guard had 

estimated their fiscal year 2005 costs for the mission in Iraq at $95 

to $105 million. Is there not a need to include specific language in 

the supplemental authorization and appropriation that transfers 

funds from DOD to the Coast Guard? The current version, as I understand it, of the Warner-Stevens language makes no reference to 

the Coast Guard. Perhaps, Mr. Chairman, I could ask you if I may 

do so timidly to answer that question. 

Senator STEVENS. Yes, $400 million has been transferred from 

this fund to the Coast Guard so far. Because of our great interest 

in Alaska, having half the coastline of the United States, we maintained a little contact with the Coast Guard to see how much of 

their funds are being spent. But since they are technically an arm 

of the Department of Defense, when mobilized by the President, 

they will be able to have portions of this fund to carry out their 

activities as I understand it, and they have had parts of the fund 

that has previously been made available to the Department of Defense, as I said, $400 million has already been transferred to them 

in the past. 

Senator BYRD. Then, Mr. Chairman, is it not—where there is no 

vision, the people perish. Would it not be well to exercise our vision 

to include specific language in the supplemental authorization and 

appropriations that transfers funds from DOD to the Coast Guard? 

Senator STEVENS. I would see no problem with that because I 

think it’s implied already, and they have used the fund in the past. 

It’s the same fund we’re putting this money into. But I’d see no 

problem. As a matter of fact, I’d welcome the opportunity to sponsor with you a provision that says that to the extent necessary 

these funds may be used for the activities of the Coast Guard carrying out the activities in Iraq. I don’t think they’re necessary for 

Afghanistan. I don’t think they’ll be necessary there. 

Senator BYRD. No West Virginia for the same reason. We have 

no coastline. 

Senator STEVENS. We’d welcome them back in Alaska whenever 

they can come back, Senator. 

Senator BYRD. Senator, I’m one Senator who voted to bring Alaska and Hawaii into the union. 

Senator STEVENS. We honor you for that continually, sir. 

Senator BYRD. And may I thank you, Mr. Chairman, I thank you 

for your suggestion that we might work together on such language. 

Senator STEVENS. Thank you. Senator Inouye, do you have any 

further questions? We expect to have this be the last hearing for 
32 

this subcommittee. We do appreciate your coming today. I think it’s 

a very important and productive hearing. I want to assure you that 

we stand ready, as Senators here have stated from both sides of 

the aisle, to respond at any time when resources subject to our control are necessary to ensure the troops in the field or preparing to 

go to the field being trained for that, have the resources needed to 

get the job done and get it done with as full protection as possible. 

I’m constrained to say that the Senator from West Virginia’s 

questions about leave I think were of interest to Senator Inouye 

and I. We got 4-day leave before we left to go overseas and we got 

1 week leave when we came back from overseas. We didn’t get 

R&R and we didn’t get leave to go to any rest center or any recreation center during the period of World War II. So I’m pleased to 

see that these people have it, don’t misunderstand me, but it is 

something new in terms of the cost of operations of the Department 

of Defense. That’s an enormous, enormous burden to ensure that 

those forces have at least one trip home after, what, 6 months, 

General? 

General PACE. Sir, sometime during the year, usually between 4 

to 8 months. 

Senator STEVENS. They’ve got a trip back to the place of their 

choice as I understand it, to come home to the place of their choice, 

or is it to home? 

General PACE. Sir, it’s a very generous—place of their choice. 

Senator STEVENS. But it’s needed and I hope we can talk later 

sometime about the necessity to restore the confidence in our system to increase the enlistment rates in the Air National Guard and 

to restore the total enlistment rates for the whole Department of 

Defense. We thank you for—— 

Senator BYRD. Mr. Chairman? 

Senator STEVENS. Yes, sir. 

OPERATIONS IN AFGHANISTAN

Senator BYRD. Could I impose on the chairman and the ranking 

member just briefly? What is the current monthly cost of operations in Afghanistan, and how much of the $25 billion in this 

budget request is for operations in Afghanistan? 

Mr. LANZILLOTTA. Senator, we’re currently spending about $700 

million a month in incremental costs for Afghanistan. This fund is 

envisioned to be able to relieve stress on the service, particularly 

the Army, for both operations in Afghanistan and Iraq. I don’t really have a breakout as to exactly how in the future that it will come 

out. 

Senator BYRD. Mr. Chairman, may we have some estimate of 

this—of the needs? Do we have some estimate as to the monthly 

costs of operations in Afghanistan and how much? 

Senator STEVENS. Senator, could you allow me to interrupt? 

Senator BYRD. Yes. 

Senator STEVENS. This fund is for emergencies. 

Senator BYRD. Yes. 

Senator STEVENS. The funds that are available for routine activities are in the regular bill, but the emergencies, I don’t see how we 

could predict them. 
33 

Senator BYRD. I don’t think this is an unimportant question or 

an impossible one for the people who are in charge and who use 

the pencil and so on by the minute. I don’t think it’s something out 

of the order to have this question answered at least as well as can 

be, how much of the $25 billion in this budget request would Mr. 

Kaplan estimate to be for operations in Afghanistan? 

Mr. KAPLAN. Senator, the best we can do as we sit here today 

is to tell you what we’re spending in Afghanistan today, and that’s 

as Mr. Lanzillotta reported, on the order of $700 million a month. 

As with Iraq and as is the purpose of this contingent emergency 

reserve fund, we don’t know what we’ll be spending in the future, 

for instance, in Iraq, as we move toward democratic elections for 

that country. 

Senator BYRD. But this fund is not for democratic elections, is it? 

Mr. KAPLAN. No, Senator. This fund is for the military operations 

in Iraq and Afghanistan. I only refer to the elections to make the 

point that we don’t know what precisely the situation on the 

ground will be as we move into fiscal year 2005. The fund is there, 

as the chairman has indicated, to make sure that the commanders 

on the ground in both Iraq and Afghanistan have what they need 

and to relieve pressure on the Department of Defense so that they 

don’t have to go too far into their accounts. 

Senator STEVENS. Senator, it would not be used for the elections, 

but it would be used to assure that our troops in Iraq have the 

funds in Iraq to react on a security basis to assure that the elections were carried out openly and freely, and we cannot estimate 

what that will be. I don’t know what it will be. 

On Afghanistan, we spent a substantial amount of time with 

General Jones as he went through the proposed transition in Afghanistan to a more peaceful circumstance, and that too has some 

contingencies in it that means that there could be emergencies develop in Afghanistan. But he could give us no estimate of what 

would be required because he doesn’t know what the emergencies 

might be. 

But we did have the amount that had been used in Afghanistan 

for the funds that exist today, and that has been—I don’t have the 

total—but some of these funds that have been used from the IFF 

in the past have been for Afghanistan. We could get the Senator 

that figure, how much of the funds have been used there in the 

past as compared to how much was used in Iraq. 

Senator BYRD. I think that would be good information for the 

subcommittee and the committee. Perhaps General Pace might 

have some view of how much of the $25 billion is expected to be 

for operations in Afghanistan. I’m very interested in Afghanistan. 

I was there 49 years ago and I have a great admiration for those 

people, but I just don’t believe that we’re giving enough attention 

to the war in Afghanistan. That’s the war I really have supported 

from the beginning. Does the General have any idea as to how 

much of the $25 billion is for operations in Afghanistan? 

General PACE. Sir, I am no more prescient than the others who 

have already spoken. We are spending about $700,000 a month 

there. 

Senator STEVENS. $700 million. 
34 

ELECTIONS

General PACE. You could multiply that by month if you’d like to 

to come up with an estimate. We have elections coming up in September in Afghanistan. There will be additional security needs 

there. There could be enemy activity because of that, those elections, that would require us to do more than we’re doing day to day 

right now security-wise, so the number could change, sir. But it 

would be a guess, and the math that you would do based on 

$700,000 a month is the same that I would do, sir. 

Senator STEVENS. Would the Senator yield just a moment? 

Senator BYRD. Yes. 

Senator STEVENS. I’m told that the North Atlantic Treaty Organization (NATO) participation now is increasing. When we were 

there just a few weeks ago, there had been sort of a delay in NATO 

fulfilling its commitments, but NATO is now coming into Afghanistan in a way that it’s not into Iraq, so as it comes in, its participation will augment the funds that we are spending there. The rate 

of expenditure now is decreasing as I understand it, so the problem 

is, is there any kind of formal resumption of real true hostilities 

from the remaining Taliban enclaves and that’s, I don’t think anyone can predict it. 

But the good news is that NATO forces are coming in and that 

four districts of Afghanistan are becoming linked by a road we are 

building, which is sort of like a beltway through the whole country. 

I share the Senator’s concern for Afghanistan because I too went 

there years ago to Pakistan and what we saw immediately after we 

reentered Afghanistan on the trip there was a shocking, shocking 

situation. I told people when I came back, having seen China destroyed by the Japanese, the destruction in Afghanistan was far beyond the destruction that was in China. 

ADDITIONAL COMMITTEE QUESTIONS

Senator BYRD. Mr. Chairman, as the ranking member of the Appropriations Committee, I wish to thank you and I want to thank 

my friend from Hawaii, the ranking member of the subcommittee, 

for the work you’re doing. I want to thank you for the hearing 

you’re holding today. And I want to thank General Pace and the 

other two witnesses for their contributions to this effort. Thank you 

very much. 

Senator STEVENS. Thank you, sir. 

[The following questions were not asked at the hearing, but were 

submitted to the Department for response subsequent to the hearing:] 

QUESTIONS SUBMITTED TO HON. JOEL D. KAPLAN

QUESTIONS SUBMITTED BY SENATOR CHRISTOPHER S. BOND

Question. Recently I supported an effort calling for a $200 million increase in the 

heavy truck recapitalization fund account. It is reported that our heavy trucks in 

Iraq and Afghanistan are getting a year’s worth of use in two months. Does this 

supplemental adequately factor in the costs associated with the Army’s reset requirements for its transportation fleet? 

Answer. The Department of Defense (DOD) and the Army are closely monitoring 

the wear on vehicles in Iraq. Based on current estimates of vehicle use, the combination of the fiscal year 2005 President’s Budget, a planned fiscal year 2005 sup-
35 

plemental, and potential use of the $25 billion fund will provide a flexible means 

to adequately cover costs associated with the Army’s transportation fleet requirements, including recapitalization. 

Question. Once the CPA transfers authority to the Iraqi Interim Government who 

will make the decision for the acquisition of military related equipment for Iraqi 

forces? Has the DOD considered equipping Iraqi forces with U.S. manufactured 

equipment (and replacing this equipment with newly manufactured and upgraded 

American made equipment)? 

As U.S. Forces place a greater reliance on Iraqi forces throughout Iraq it is important that the equipment Iraqi forces rely upon be dependable and can be reliably 

repaired and kept up. Transferring U.S. manufactured equipment to the Iraqi’s will 

ensure that parts and service is available to Iraqi’s in keeping their military equipment in good repair. 

Answer. Decisions on the types and numbers of arms secured for the Iraqi forces 

will be made, in consultation with appropriate officials of the Iraqi Interim Government, by the Department of Defense and General Petraeus, who is leading the effort 

to train, equip and mobilize the Iraqi security forces. 

QUESTION SUBMITTED TO LAWRENCE J. LANZILLOTTA

QUESTION SUBMITTED BY SENATOR CHRISTOPHER S. BOND

Question. Recently I supported an effort calling for a $200 million increase in the 

heavy truck recapitalization fund account. It is reported that our heavy trucks in 

Iraq and Afghaniatan are getting a year’s worth of use in two months. Does this 

supplemental adequately factor in the costs associated with the Army’s reset requirements for its transportation fleet? 

Answer. No. This reserve fund is not meant to address all the resetting of the 

force requirements that we are going to incur. This fund is only to allow us to mitigate the problems and risks associated with cash flowing our O&M accounts, specifically in the Army, until fiscal year 2005 supplemental appropriations can be approved. The resetting of the force or the wear and tear on the equipment is a problem that the Department is addressing. Secretary Rumsfeld has charged the director of PA&E to do a study as to what that requirement actually is, because we are 

finding that this equipment ages differently on wear and tear. We hope to address 

this truck recapitalization issue when we prepare the fiscal year 2005 supplemental 

appropriations request. 

QUESTION SUBMITTED TO GENERAL PETER PACE

QUESTION SUBMITTED BY SENATOR CHRISTOPHER S. BOND

Question. Once the CPA transfers authority to the Iraqi Interim Government who 

will make the decision for the acquisition of military related equipment for Iraqi 

forces? Has the DOD considered equipping Iraqi forces with U.S. manufactured 

equipment (and replacing this equipment with newly manufactured and upgraded 

American made equipment)? As U.S. Forces place a greater reliance on Iraqi forces 

throughout Iraq it is important that the equipment Iraqi forces rely upon be dependable and can be reliably repaired and kept up. Transferring U.S. manufactured 

equipment to the Iraqi’s will ensure that parts and service is available to Iraqi’s in 

keeping their equipment in good repair. 

Answer. Decisions regarding the types and quantity of equipment for the Iraqi 

Armed Forces will be made by the Iraqi Ministry of Defence, under the advice of 

Lieutenant General Petraeus’s Multi-National Security Transition Command—Iraq 

(MNSTC–I), formerly the Office of Security Transition. Many factors will go into the 

recommendations MNSTC–I provides, including equipment availability, production 

lead times, interoperability with existing systems, procurement and maintenance 

costs and training requirements. While the MNSTC–I analysis may recommend a 

number of U.S.-produced items for the armed forces, the Iraqis have the final say 

regarding what they believe best meets their needs, what they can afford to buy and 

from whom it should be purchased. 

The Department of Defense has and will continue to consider U.S. equipment for 

the Iraqi Security Forces. We are already providing significant quantities of radios, 

field gear, vehicles and night vision devices to the Iraqis, and as new requirements 

emerge we will continue to assess if U.S. equipment will meet Iraq’s needs. 
36 

CONCLUSION OF HEARING

Senator STEVENS. If there’s nothing further to come before the 

subcommittee, this is the last meeting of this subcommittee on the 

fiscal year 2005 budget. Thank you all very much. 

[Whereupon, at 11:45 a.m., Wednesday, June 2, the hearing was 

concluded, and the subcommittee was recessed, to reconvene subject to the call of the Chair.] 

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