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i 

73–426 2012

[H.A.S.C. No. 112–100] 

HEARING 

ON

NATIONAL DEFENSE AUTHORIZATION ACT 

FOR FISCAL YEAR 2013 

AND

OVERSIGHT OF PREVIOUSLY AUTHORIZED 

PROGRAMS 

BEFORE THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

FULL COMMITTEE HEARING 

ON

BUDGET REQUEST FROM THE 

DEPARTMENT OF DEFENSE 

HEARING HELD 

FEBRUARY 15, 2012 
(II) 

HOUSE COMMITTEE ON ARMED SERVICES 

ONE HUNDRED TWELFTH CONGRESS

HOWARD P. ‘‘BUCK’’ MCKEON, California, Chairman 

ROSCOE G. BARTLETT, Maryland 

MAC THORNBERRY, Texas 

WALTER B. JONES, North Carolina 

W. TODD AKIN, Missouri 

J. RANDY FORBES, Virginia 

JEFF MILLER, Florida 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

MICHAEL TURNER, Ohio 

JOHN KLINE, Minnesota 

MIKE ROGERS, Alabama 

TRENT FRANKS, Arizona 

BILL SHUSTER, Pennsylvania 

K. MICHAEL CONAWAY, Texas 

DOUG LAMBORN, Colorado 

ROB WITTMAN, Virginia 

DUNCAN HUNTER, California 

JOHN C. FLEMING, M.D., Louisiana 

MIKE COFFMAN, Colorado 

TOM ROONEY, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

SCOTT RIGELL, Virginia 

CHRIS GIBSON, New York 

VICKY HARTZLER, Missouri 

JOE HECK, Nevada 

BOBBY SCHILLING, Illinois 

JON RUNYAN, New Jersey 

AUSTIN SCOTT, Georgia 

TIM GRIFFIN, Arkansas 

STEVEN PALAZZO, Mississippi 

ALLEN B. WEST, Florida 

MARTHA ROBY, Alabama 

MO BROOKS, Alabama 

TODD YOUNG, Indiana 

ADAM SMITH, Washington 

SILVESTRE REYES, Texas 

LORETTA SANCHEZ, California 

MIKE MCINTYRE, North Carolina 

ROBERT A. BRADY, Pennsylvania 

ROBERT ANDREWS, New Jersey 

SUSAN A. DAVIS, California 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JIM COOPER, Tennessee 

MADELEINE Z. BORDALLO, Guam 

JOE COURTNEY, Connecticut 

DAVE LOEBSACK, Iowa 

NIKI TSONGAS, Massachusetts 

CHELLIE PINGREE, Maine 

LARRY KISSELL, North Carolina 

MARTIN HEINRICH, New Mexico 

BILL OWENS, New York 

JOHN R. GARAMENDI, California 

MARK S. CRITZ, Pennsylvania 

TIM RYAN, Ohio 

C.A. DUTCH RUPPERSBERGER, Maryland 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

COLLEEN HANABUSA, Hawaii 

KATHLEEN C. HOCHUL, New York 

ROBERT L. SIMMONS II, Staff Director 

JENNESS SIMLER, Professional Staff Member 

MICHAEL CASEY, Professional Staff Member 

LAUREN HAUHN, Research Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2012 

Page 

HEARING: 

Wednesday, February 15, 2012, Fiscal Year 2013 National Defense Authorization Budget Request from the Department of Defense ..................................... 1 

APPENDIX: 

Wednesday, February 15, 2012 .............................................................................. 59 

WEDNESDAY, FEBRUARY 15, 2012 

FISCAL YEAR 2013 NATIONAL DEFENSE AUTHORIZATION BUDGET 

REQUEST FROM THE DEPARTMENT OF DEFENSE 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

McKeon, Hon. Howard P. ‘‘Buck,’’ a Representative from California, Chairman, Committee on Armed Services .................................................................. 1 

Smith, Hon. Adam, a Representative from Washington, Ranking Member, 

Committee on Armed Services ............................................................................ 2 

WITNESSES 

Dempsey, GEN Martin E., USA, Chairman, Joint Chiefs of Staff ...................... 11 

Panetta, Hon. Leon E., Secretary of Defense ........................................................ 5 

APPENDIX 

PREPARED STATEMENTS: 

Dempsey, GEN Martin E. ................................................................................ 76 

McKeon, Hon. Howard P. ‘‘Buck’’ .................................................................... 63 

Panetta, Hon. Leon E. ...................................................................................... 66 

Smith, Hon. Adam ............................................................................................ 65 

DOCUMENTS SUBMITTED FOR THE RECORD: 

Letter to Chairman McKeon from Secretary Panetta, Dated November 

2, 2011 (Submitted by Mr. Turner) ............................................................. 91 

Letter to Secretary Panetta from Chairman McKeon and Mr. Turner, 

Dated September 13, 2011 (Submitted by Mr. Turner) ............................. 89 

Memorandum of Agreement between the Department of Defense and 

the Department of Energy (Submitted by Mr. Turner) ............................. 92 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Bartlett ....................................................................................................... 99 

Ms. Bordallo ...................................................................................................... 100 

Mr. Hunter ........................................................................................................ 101 

Mr. Johnson ...................................................................................................... 101 

Mr. Kline ........................................................................................................... 100 

Mr. Turner ........................................................................................................ 99 

Mr. Wilson ......................................................................................................... 99 

Mr. Wittman ..................................................................................................... 101 
Page

IV 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Ms. Bordallo ...................................................................................................... 107 

Mr. Conaway ..................................................................................................... 116 

Mr. Heinrich ..................................................................................................... 120 

Mr. Langevin ..................................................................................................... 106 

Mr. Loebsack ..................................................................................................... 115 

Mr. Owens ......................................................................................................... 121 

Mrs. Roby .......................................................................................................... 126 

Mr. Ruppersberger ........................................................................................... 122 

Mr. Schilling ..................................................................................................... 124 

Mr. Scott ............................................................................................................ 126 

Mr. Smith .......................................................................................................... 105 

Mr. Turner ........................................................................................................ 107 

Mr. Wilson ......................................................................................................... 105 

Mr. Wittman ..................................................................................................... 118 
(1) 

FISCAL YEAR 2013 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST FROM THE DEPARTMENT OF 

DEFENSE 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, Wednesday, February 15, 2012. 

The committee met, pursuant to call, at 10:05 a.m. in room 2118, 

Rayburn House Office Building, Hon. Howard P. ‘‘Buck’’ McKeon 

(chairman of the committee) presiding. 

OPENING STATEMENT OF HON. HOWARD P. ‘‘BUCK’’ MCKEON, 

A REPRESENTATIVE FROM CALIFORNIA, CHAIRMAN, COMMITTEE ON ARMED SERVICES 

The CHAIRMAN. The hearing will come to order. 

Good morning, ladies and gentlemen. Thank you for joining us 

today as we consider the President’s fiscal year 2013 budget request for the Department of Defense. To put this budget in context, 

it is critical to examine the strategy that has informed its submission. 

At the outset, I want our witnesses to know that I appreciate the 

hard work that went into the development of the strategy. It is no 

small effort to completely revise a strategy 1 year after the submission of the Quadrennial Defense Review and less than 3 months 

after the submission of a budget request. 

However, I do have serious concerns about the trajectory that 

this new strategy puts us on. Although this strategy is framed as 

making the military more nimble and flexible, it is not clear how 

slashing the Armed Forces by over 100,000 during a time of war, 

shedding force structure and postponing the modernization makes 

that so. The President must understand that the world has always 

had and will always have a leader. As America steps back, someone 

else will step forward. 

We have now heard multiple times that the strategy drove the 

budget and not the other way around. I suppose this starts with 

the President’s call to slash at least $400 billion from defense last 

April in advance of any strategic review. An honest and valid strategy for national defense can’t be founded on the premise that we 

must do more with less or even less with less. Rather, you proceed 

from a clear articulation of the full scope of the threats you face 

and the commitments you have. You then resource the strategy required to defeat those threats decisively. One does not mask insufficient resources with a strategy founded on hope. 

Furthermore, the President’s new defense strategy ‘‘supports the 

national security imperative of deficit reduction through a lower 

level of defense spending.’’ The Administration appears committed 
2 

to ensuring the military is the only sector of the Federal Government to meaningfully contribute to deficit reduction. 

Simultaneously, the budget proposes additional spending by diverting savings from declining war funding to domestic infrastructure spending. How can you save by not spending money that 

wasn’t in the budget to begin with? This is a cynical gimmick that 

once more ensures our military, and only our military, is held responsible for what little deficit reduction this budget represents. 

White House Chief of Staff Jack Lew said, the time for austerity 

is not today. Ask the 124,000 service members who will have to 

leave the military how they feel about that. 

The President’s budget is a clear articulation of his priorities. 

The President’s budget asks the men and women in uniform, who 

have given so much already, to give that much more so that the 

President might fund more domestic programs. 

The President claimed that the budget would rise every year but 

ignores the fact that this request is $46 billion less than what he 

said he needed last year and more than $5 billion less than what 

was appropriated for fiscal year 2012. Furthermore, despite the 

new strategy’s goal of pivoting to Asia, a theater where naval assets and airlift are decisive, the budget calls for retiring 9 ships, 

removes 16 more from the new construction plan, and cuts our airlift fleet by hundreds. 

This isn’t the only place where the President’s public statements 

and missions seem to diverge. We cannot neglect the war. The 

President was committed to counterinsurgency strategy in 2009, 

yet inexplicably, and certainly not based on the advice of his commanders, announced our withdrawal date and to pull out the surge 

forces before the end of the next fighting season. 

Mr. Secretary and Chairman Dempsey, before the President 

makes another announcement about troop withdrawals, I implore 

you to heed our commanders’ advice. We are seeing success. Let’s 

not make a decision to pull some of the remaining 68,000 troops 

before we see what happens this fighting season. Let’s wait to reassess any more force level decisions until the end of the year. 

I have more questions, but with that, I will conclude. Thank you 

again for being here. I look forward to your testimony and call now 

on Ranking Member Smith for his opening statement. 

[The prepared statement of Mr. McKeon can be found in the Appendix on page 63.] 

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM 

WASHINGTON, RANKING MEMBER, COMMITTEE ON ARMED 

SERVICES 

Mr. SMITH. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary and General Dempsey for being here. 

And I applaud you for the effort that you’ve put in, of course, over 

the last year. This did start quite some time ago with a major strategic review of our military and our national security needs that 

was, as has been documented, a very holistic transparent process, 

in which you brought in all of the military leaders and really sat 

down and thought about what our national security needs are 

going to be for the next 10 years. 
3 

The strategy, without question, was where this whole process 

started, and I applaud you for that. And you have laid out a very 

clear and coherent strategy. Now when it comes to the budget 

numbers, I think it is important to take a step back and have a 

little perspective on exactly what they are. 

The defense budget has doubled over the course of the last 10 

years. The budget that has been put before us, as the chairman 

points out, will be increasing the defense budget every year from 

this year forward. We hear about these cuts. These cuts are from 

what was projected to be needed to be spent a year or two ago. 

They are not actual cuts, with the sole exception of this year. 

Yes, after doubling the defense budget over the course of the last 

10 years, not even counting the overseas contingency operations 

money, this one year, we go from $530 billion last year to $525 billion, and then it goes up every single year for the next ten. It is 

part, I guess, of sort of ‘‘Washington-think’’ that when you increase 

the budget, you can call it a cut. You know, it is a decrease in the 

increase, perhaps, but it is an increase nonetheless. So we have to 

keep those numbers in perspective. 

I think it is also worth pointing out that over the course of the 

last 10 years, I don’t think there is a single person on this committee who would argue that we have done an outstanding job of 

efficiently and effectively spending those dollars on the defense 

budget. Anybody who would argue that we can’t go back and look 

at our acquisition and procurement process and do it much better, 

do it in a way that is actually going to deliver more capable pieces 

of equipment at less money, and that is what these gentlemen have 

done if they have taken a look at those last 10 years and figured 

it out how to do it better. 

Now I am not going to be overly critical of those last 10 years; 

9/11 happened, and we had to respond. We had to fund the military. And when you have to act that fast, mistakes will be made. 

And I know the people who were making those decisions back then 

did their level best in a very difficult time. 

But to not learn from that experience 10 years later and figure 

out a way to spend that money, that would be a betrayal of our job 

and of the job of the people in the Pentagon, so I applaud you for 

doing that. I think we have a budget that did put the strategy first 

that puts us in the right direction. And then also I will point out 

that this is the law. 

The budget numbers that we have projected for the next 10 years 

and that Secretary Panetta and General Dempsey had to live 

under were passed by this Congress. Now I know some Members 

of the committee voted for it and some Members didn’t, but it is 

the law of the land, passed by the House and the Senate. The $487 

billion reduction in the projected increases is the law that these 

people had to follow and that we passed and gave to them. 

So as we hear today about various different programs and areas 

where we think that this budget is cutting too much, it would be 

most helpful—and I doubt this will happen, but I will ask for it 

anyway—that if, as people are making those criticisms, they point 

out where they would like to find the money, either within the defense budget, you can say, okay, your strategy is all right, but you 

should have spent more money here and less money there. 
4 

Or if you don’t think that is possible within the defense budget, 

then by all means, let us know what taxes you want to raise to 

produce more money, or if you don’t want to do that, what other 

programs, preferably with some specificity, instead of just generally 

saying we would like to spend less money on government, that you 

are going to cut. Otherwise, this is just an exercise in imagining 

that we have more money than we actually do. 

These gentlemen didn’t have that luxury. They had to put together a budget based on the law that we gave them. And again, 

I will emphasize I think they did a very good job of it. They put 

out a strategy that understands how the world is changing. The 

main threats that we are going to face are going to be asymmetric 

nonstate terrorist threats, and then also Iran, North Korea, their 

missile technology—we need a different sort of military to confront 

that than the one that fought two major land wars in the last 10 

years. 

This strategy reflects those changes. To give one example, the 

Special Operations Command will keep going up because we know 

how critical they are to precisely the fight that we face. They are 

going to increase that ISR [intelligence, surveillance, and reconnaissance] capability, through unmanned aerial vehicles and other 

sources, also going up to make sure that we meet the needs that 

are in front of us. 

Now there are a lot of other things that aren’t going up, but that 

is because things have changed. We need a new strategy to confront the threats that we did, and in a difficult budget environment, you guys did that and put together a very good strategy. 

So I hope we will have a realistic conversation. And if more 

money wants to be spent here, tell us where we should find it and 

tell us how to balance that out. You never forget that it is also in 

our national security interest to have a strong economy and a fiscally responsible Government. And if we don’t have those things, 

the strongest military in the world will not be able to protect us. 

So this is a very interesting debate that we are going to have 

over the course of the next several months. I look forward to the 

comments from the Members of this committee and from the Secretary and the General. We have a lot of difficult work to do, but 

I think we are off to a good start, and I look forward to working 

with everybody on the committee and at the Pentagon to get the 

job done for the American people. Thank you. 

[The prepared statement of Mr. Smith can be found in the Appendix on page 65.] 

The CHAIRMAN. Thank you. 

We are fortunate to have us today our Secretary of Defense, the 

Honorable Leon E. Panetta, from the U.S. Department of Defense; 

General Martin E, Dempsey, United States Army, Chairman, Joint 

Chiefs of Staff; the Honorable Robert F. Hale, the Under Secretary 

of Defense (Comptroller) of the Department. 

Thank you, gentlemen, for being here. 

Mr. Secretary, the time is yours. 
5 

STATEMENT OF HON. LEON E. PANETTA, SECRETARY OF 

DEFENSE 

Secretary PANETTA. Thank you, Chairman McKeon, Congressman Smith, Members of this committee. 

It is always nice to be able to return to the House. It was my 

home in the past, and I still consider it one of the good moments 

of my history in public service. 

If I could ask that my statement be made part of the record, and 

I will try to summarize it as briefly as I can. 

The CHAIRMAN. No objection, so ordered. 

Secretary PANETTA. I appreciate the opportunity to appear before 

you to discuss the President’s budget request for the fiscal year 

2013 for the Department of Defense. 

Let be begin, first of all, by thanking all of you for the support 

that you provide to our service members and to their families. 

These brave men and women—and they are, for anybody who has 

gone to the battlefield or talked to those in uniform, they are without question the next greatest generation of individuals—along 

with the Department’s civilian professionals who support them, 

they have done everything that has been asked of them and more 

during more than a decade of war. And again, I thank you for the 

support that you have provided to them. 

The fiscal year 2013 budget request for the Department of Defense was, indeed, a product of very—of a very intensive strategy 

review that was conducted by the senior military and civilian leaders of the Department. All the service chiefs, all of the combatant 

commanders participated in this effort. We also had the advice and 

guidance from the national security team and the President as 

well. 

The total request represents a $614 billion investment in national defense. It includes $525.4 billion requested for the Department’s base budget and $88.5 billion in spending in support of our 

troops in combat. 

The reasons for this review are clear. First, the United States is 

at a strategic turning point after a decade of war and obviously a 

very substantial growth in defense budgets. But, second, with the 

Nation confronting very large debts and very large deficits, Congress passed the Budget Control Act of 2011, imposing by law on 

us, by law, a reduction in the defense budget of $487 billion over 

the next decade. 

We at the Department decided to step up to the plate to abide 

by the law and to use this crisis as an opportunity to try to establish a new strategy for the force of the future, and that strategy 

has guided us in making the budget choices that are contained in 

the President’s budget. The fact is that we are at a turning point 

that would probably have required us to make a strategic shift 

under any circumstances. 

The U.S. military’s mission in Iraq has ended, but we still have 

a tough fight on our hands in Afghanistan, but 2011 marked significant progress in reducing violence and transitioning to Afghanled responsibility for security. And we are on track to complete that 

transition by the end of 2014. The NATO [North Atlantic Treaty 

Organization] ministers, ISAF [International Security Assistance 
6 

Force], all of the NATO countries are unified in this strategy, and 

we are abiding by our Lisbon commitments. 

Last year, the NATO effort in Libya also concluded with the fall 

of Gadhafi, and successful counterterrorism efforts have significantly weakened Al Qaeda and decimated its leadership. 

But despite what we have able to achieve, unlike past 

drawdowns, where threats have receded, the United States still 

faces a complex array of security challenges across the globe. We 

are still a nation at war in Afghanistan. We still face threats to our 

homeland from terrorism. There is a dangerous proliferation of lethal weapons and materials. 

The behavior of Iran and North Korea continues to threaten global stability. There is continuing turmoil and unrest in the Middle 

East from Syria to Egypt to Yemen and elsewhere. Rising powers 

in Asia are testing international rules and international relationships, and there are growing concerns about cyber intrusions and 

cyber attacks. 

Our challenge must be to meet these threats; to meet these 

threats, protect our Nation and our people, and at the same time 

meet our responsibility to fiscal discipline. This is not an easy task. 

It is a tough challenge. 

To build the force we need for the future, what we decided to do 

is develop a new strategic guidance that consists of the following 

five key elements: Number one, the military will be smaller, and 

it will be leaner, but it should be agile. It should be flexible, ready 

to deploy quickly and technologically advanced. 

Second, we have to rebalance our global posture and presence to 

emphasize Asia-Pacific and the Middle East. These are the areas 

of greatest concern in the future. 

Third, for the rest of the world we need to build innovative partnerships and strengthen key alliances and key partnerships from 

Europe to Latin America to Africa. 

Fourth, we will ensure that we have the capability to quickly 

confront and defeat aggression from any adversary, anytime, anywhere. 

And, fifth, this can’t just be about cuts, it has to be about investments. What do we protect and prioritize in terms of investments, 

in technology and new capabilities, as well as our capacity to grow, 

adapt and mobilize as needed. 

While sharing this strategy and shaping the strategy, we didn’t 

want to make the mistakes of the past. And every time we have 

gone through these drawdowns there have been serious mistakes 

that have been made. Our goal was to maintain the strongest military in the world, to not hollow out the Force. That is extremely 

important: To not hollow out the Force, which means to maintain 

a large force structure and then cut training and equipment and 

all the other things that are essential to make that a first-rate 

force. Thirdly, to take a balanced approach to budget cuts, put everything on the table and look at every area in the Defense Department budget. And, lastly, to not break faith with the troops and 

their families, people that have been deployed time and time again 

to the battlefield. 

Throughout the review, we also made sure that this was an inclusive process. General Dempsey, as Chairman, and I worked 
7 

closely with the leadership of the Services, combatant commanders 

and consulted regularly with Members of Congress as well as the 

President and members of the Administration. As a result of these 

efforts, the Department is strongly unified behind the recommendations that we are presenting today. 

Consistent with the Budget Control Act, this budget reflects $259 

billion in savings in the first 5 years. We obviously project meeting 

our $487 billion number over 10 years, but in the budget we 

present to you, it is the 5-year cycle, and that includes $259 billion 

in savings. 

It is a balanced and complete package, and as I said, it follows 

the key elements that we laid out in our strategy. The savings 

come from three areas. First, efficiencies; second, force structure 

and procurement reforms and adjustments; and, finally, compensation. Compensation is an area that has grown by 90 percent, and 

we felt that we had to achieve some cost controls in the future 

there as well. 

Let me just quickly go through each of those areas. If we tighten 

up the force, then I think we have a responsibility to tighten up 

the operations of the Department by reducing excess overhead, 

eliminating waste and improving business practices across the Department. As you know, the fiscal year 2012 budget proposed about 

$150 billion in efficiencies over 5 years, and we are in the process 

of implementing those changes. 

But we felt we could do more, so we have identified another $60 

billion in additional savings over the next 5 years through measures such as streamlining support functions, consolidating IT [information technology] enterprise services, rephrasing military construction projects, consolidating inventories and reducing service 

support contractors. As we reduce force structure, we also have a 

responsibility to try to provide the most cost-efficient support for 

the force. And that is the reason the President will request Congress to authorize the Base Realignment and Closure process for 

2013 and 2015. 

Look, as somebody who has gone through BRAC [Base Realignment and Closure], and I went through it in my district and know 

what it means and know the impact that it can have, it is a controversial process that impacts on Members and impacts on their 

constituencies. I understand that. And, yet, it is the only effective 

way to try to achieve the needed infrastructure savings that we 

have to achieve in the long run. 

Lastly, to provide better financial information, we are also increasing our emphasis on audit readiness and accelerating key 

timelines. In October of 2011, I directed the Department to accelerate the efforts to achieve fully auditable financial statements. 

Originally, under a mandate, we were supposed to do that by 2017; 

I asked that it be done by 2014. 

But efficiencies alone are not enough to achieve the required savings and that is obviously why we had to make significant adjustments to force structure and procurement investments. But we did 

it in line as, again, with the strategies that we put in place. And 

let me quickly walk through those. First, we knew that coming out 

of the wars, the military would be smaller. 
8 

Our approach to accommodating these reductions was to use this 

as an opportunity, as tough as it is, to fashion an agile and flexible 

military that we will need in the future. We have got to have an 

adaptable and battle-tested army that is there for decisive action 

and capable of defeating an adversary on land and also at the same 

time be innovative. 

We need a Navy that maintains forward presence and is able to 

penetrate enemy defenses; a Marine Corps that is a middle-weight 

expeditionary force with reinvigorated amphibious capabilities; an 

Air Force that dominates air and space and provides rapid mobility 

in global strike and persistent ISR; and a National Guard and Reserve that can continue to be ready and prepare for operations 

when needed. 

To ensure an agile force, we made a conscious choice—that we 

have decided not to maintain more force structure than we could 

afford to properly train and equip. That was the point I made 

about not doing something that hollows out the Force. 

We are implementing force structure reductions that are consistent with this strategic guidance for a total savings of about $50 

billion over the next 5 years. The biggest pieces of that include resizing the Active Army, where at 562,000, we will be going down 

to about 490,000 by 2017. This will be gradual, and at that point, 

it will be a level that will still be higher than pre-9/11. 

Same thing is true for the Marine Corps. We will go from 

202,000 to 182,000 marines. We will also reduce and streamline 

the Air Force’s airlift fleet, basically going after aging C–5As and 

C–130s but will still remain a fleet of 275 strategic airlifters and 

318 C–130s. 

The Navy will protect a fleet of 285 ships and protect our highest 

priority and most flexible ships, but we will be retiring 7 lower priority Navy cruisers that, frankly, need to be upgraded with ballistic 

missile defense capability. That hasn’t happened, and it would require significant repairs in order to do that. 

Second, the strategic guidance made clear that we have got to 

protect our capabilities and project our power to Asia-Pacific and 

the Middle East. To this end, we have maintained the current 

bomber fleet. We maintained the aircraft carrier fleet, 11 ships and 

10 air wings. We maintained the big deck amphibious fleet. We restore Army and Marine Corps forces structure in the Pacific. After 

the drawdown from Iraq and the drawdown in Afghanistan, we are 

going to maintain a strong presence not only in the Pacific but in 

the Middle East as well. 

This budget also makes selected new investments to ensure that 

we develop new capabilities, $300 million to fund the next-generation Air Force bomber; $1.8 billion to develop the new Air Force 

tanker; $18.2 billion for the procurement of 10 new warships. 

Third, this strategy makes clear that even though Asia-Pacific 

and the Middle East are the areas of greatest concern and priority, 

the United States will work to strengthen our key alliances, build 

partnerships and develop innovative ways, such as rotational deployments, to sustain U.S. presence elsewhere in the world. 

With regard to NATO, we will be investing almost $200 million 

in the NATO Alliance Ground Surveillance System and $9.7 billion 
9 

to develop and deploy missile defense capabilities that protect the 

U.S. homeland and strengthen regional missile defenses. 

Fourthly, the United States must have the capability to fight 

more than one conflict at a time. This is essential. But we are in 

the 21st century, and 21st century combat is a lot different. And 

we need to have the capabilities to deal with threats in the 21st 

century. That means we need to invest in space, in cyberspace and 

long-range precision strikes and the continued growth of Special 

Operations Forces to ensure that we can still confront and defeat 

multiple adversaries, even with the force structure reductions that 

we have outlined. Even with some of the adjustments to force 

structure, this budget sustains a military that we believe is the 

strongest and will remain the strongest in the world. 

We will have an Army of more than 1 million Active and Reserve 

soldiers, 18 divisions, 65 brigade combat teams, 21 combat aviation 

brigades. We will have well a Navy battle force of 285 ships that 

will remain the most powerful and flexible naval force on Earth. 

We will have a Marine Corps with 31 infantry battalions, 10 artillery battalions, and 20 air tactical squadrons; and an Air Force 

that will continue to ensure air dominance with 54 combat coded 

fighter squadrons in the current bomber fleet. 

Lastly, we have to invest. If we are going to leap ahead of our 

adversaries technologically, we have got to be able to have some 

key investments in new technologies. We provide $11.9 billion for 

science and technology research; $2.1 billion for basic research; 

$10.4 billion to sustain continued growth in Special Operations 

Forces; $3.8 billion for unmanned air systems; and $3.4 billion for 

cyber activities. 

Let me also mention a key element that we absolutely have to 

maintain, which is a strong, capable and ready National Guard and 

Reserve. To that end, we are going to retain—we have asked the 

Army to retain mid-level officers and NCOs [noncommissioned officers], so that the structure and experienced leaders will be there 

if we have to mobilize and regrow the Force quickly. 

Another important element is to preserve our ability to quickly 

adapt and mobilize a strong and flexible industrial base. We have 

got to have an industrial base for the future. This budget recognizes that industry is our partner in the defense acquisition enterprise. 

And, finally, to the most fundamental element of our strategy 

and our decisionmaking process, our people, far more than any 

weapons system or technology, the greatest strength of the United 

States is our military, the men and women in uniform. 

One of the guiding principles in our decisionmaking process was 

to keep faith with them and their families. So we are protecting 

family assistance programs. We are protecting basic benefits. We 

are sustaining important investments in the budget to try to assist 

our troops with their needs and the needs of their families. Yet, in 

order to build the force needed to defend the country under existing 

budget constraints, the growth in costs in military pay and benefits 

has to be on a sustainable course. As I said, this is an area of the 

budget that has grown by 90 percent. We have got to implement 

some efforts to try to control those costs in the future. 
10 

The budget contains a roadmap to address the costs of military 

pay and health care and retirement in ways that we believe are 

fair, transparent, and consistent with our fundamental commitment to our people. 

Let me conclude by saying this, Members of the committee: This, 

as I said, has not been an easy task. Putting together this kind of 

balanced package has been a difficult undertaking for everyone, but 

at the same time, we have viewed it as a very important opportunity to try to shape the force we need for the future. I believe 

that all of us, the Service chiefs and the combatant commanders 

have developed a complete package here aligned to achieve our 

strategic aims and at the same time meet our responsibility to fiscal discipline. 

As you look at the individual parts this plan—and I urge you to 

do that, look at every element of the plan that we have submitted—I encourage you to bear in mind the strategic tradeoffs 

that are inherent in any particular budget decision. 

This is a zero-sum game, and as far as I know, there is no free 

money around, and the need to balance competing strategic objectives has to take place in a resource-constrained environment. We 

need your support and partnership. We look forward to that. 

I understand these are tough issues, and I also understand that 

this is the beginning, not the end, of this process. 

But this is what Congress mandated. The majority of this committee voted for the Budget Control Act. We are mandated under 

law to meet these requirements of almost a half a trillion dollars 

in savings over the next 10 years. We have taken that responsibility seriously. We need your partnership to do this in a manner 

that preserves the strongest military in the world. This will be a 

test for all of us, whether reducing the deficit is about talk or about 

action. 

And, let me finally be very clear. When you take a half a trillion 

dollars out of the defense budget, it comes with risk. We think they 

are acceptable risks. But, nevertheless, there are risks here. We 

are dealing with a smaller force. We are going to have to depend 

on the speedy mobilization. We are going to have to depend on new 

technologies. We are going to have to take care of troops coming 

home to make sure that they have jobs and have the support that 

they need. 

There is very little margin for error in this budget. 

This is why Congress must do everything possible to make certain that we avoid sequestration. That would subject the Department to roughly another $500 billion in additional cuts that would 

take place through a meat-axe approach and that we are convinced 

would hollow out the Force and inflict serious damage to the national defense. 

So the leadership of this Department, both military and civilian, 

is united behind this strategy that we presented and the budget 

that we are presenting, but we look closely to working with you in 

the months ahead to do what the American people expect of their 

leaders, to follow the law, to do our part in reducing the deficit, to 

be fiscally responsible but also to develop a force that can defend 

this country, a force that supports our men and women in uniform 
11 

and a force that is and always will be the strongest military in the 

world. 

Thank you, Mr. Chairman. 

[The prepared statement of Secretary Panetta can be found in 

the Appendix on page 66.] 

The CHAIRMAN. Thank you very much. 

General Dempsey. 

STATEMENT OF GEN MARTIN E. DEMPSEY, USA, CHAIRMAN, 

JOINT CHIEFS OF STAFF 

General DEMPSEY. Chairman McKeon, Congressman Smith distinguished Members of this committee, thank you for the opportunity to discuss the President’s defense proposed budget for fiscal 

year 2013. 

I would like to begin by saying this budget represents a responsible investment in our Nation’s security. At its core, it is an investment in our people, the sons and daughters of America who 

serve this Nation in uniform. 

Allow me to open with a few words about them and what they 

have accomplished. The last 10 years of war have been among the 

most challenging in our history. 

Through it all, the Joint Force has persevered, and it has prevailed. Our families have stood with us deployment after deployment after deployment, and so have you. Together, we have fulfilled our solemn vow to protect and defend America, her citizens 

and her interests. 

As I sit with you today, our service men and women remain globally engaged. They are deterring aggression, developing partners, 

delivering aid, and defeating our enemies. They stand strong, swift, 

and ready in every domain every day. I had the privilege to be with 

a few of them while traveling to Afghanistan and Egypt earlier last 

week. 

As always, I witnessed extraordinary courage and skill in the 

young soldiers just off patrol in the deep snows of the Hindu Kush, 

and the men and women of the NATO training mission managing 

the development of the Afghan National Security Forces and the 

brave and vigilant Marine security detachment in our embassy in 

Cairo, and in the superb junior airmen who flew us to the right 

place at the right time. They exemplify a professional military with 

a remarkable and reliable record of performance. 

In just the past year, for example, we further crippled Al Qaeda. 

We helped protect the Libyan people from near certain slaughter, 

while affirming NATO’s important role beyond the borders of Europe. We brought to a close more than 20 years of military operations in and over Iraq. And like we did in Iraq, we are steadily 

transitioning responsibility for security onto Afghan shoulders. 

And, of course, as you recall, we helped Japan recover from a perfect storm of tragedy and destruction. 

And, of course, these were just the most visible accomplishments. 

Behind the scenes and beneath the surface, we defended against 

cyber threats. We have sustained our Nation’s nuclear deterrent 

posture, and we worked with allies and partners to build capacity 

and to prevent conflict across the globe. We continue to provide this 

Nation with a wide range of options for dealing with the security 
12 

challenges that confront us. And in an increasingly competitive, 

dangerous and uncertain security environment, we must remain 

alert, responsive, adaptive, and dominant. 

This budget helps us to do that. It is informed by a real strategy 

that makes real choices. It maintains our military’s decisive edge, 

and it sustains our global leadership. 

Moreover, it ensures we keep faith with the true source of our 

strength, and that is our people. 

With this in mind, allow me to add just a few additional comments to those of the Secretary. First, this budget should be considered holistically. It is really a joint budget for a Joint Force rather 

than individual Service budgets formed parochially. It presents a 

comprehensive, carefully devised set of decisions. It achieves balance among force structure, modernization, pay, and benefits. 

Changes that aren’t informed by that context, the context of 

jointness, risk upending the balance that I have just described and 

potentially compromising the Force. 

Second, this budget represents a way point, not an end point, in 

the development of the Joint Force we will need for 2020 and beyond. It puts us on a path to restore versatility at an affordable 

cost. Specialized capabilities that were once on the margins become 

more central, even while we retain and must retain our conventional overmatch. It builds a global and networked Joint Force that 

is ably led and always ready. 

And, third, this budget does honor our commitments made to our 

military family. It keeps faith with them. There are no freezes or 

reductions in pay. There is no lessening in the quality of health 

care received by our Active Duty service members and our medically retired wounded warriors. Now that said, we simply can’t ignore the increasing cost of paying benefits. To manage costs, we 

need pragmatic reform. All of this can be done in a way that preserves our ability to recruit and then retain the best of America’s 

talented youth. 

Finally, all strategies and the budgets that support them carry 

risk. This is no different. In my judgment, the risk in this strategy 

and budget lies not in what we can do but in how much we can 

do and how often we can do it. This budget helps us buy down this 

risk by investing in our people and in the joint capabilities they 

most need. 

To close, thank you. Thank you for keeping our military strong, 

thank you for taking care of our military family, for supporting 

those who serve, who have served and importantly who will serve. 

I know you share my pride in them, and I look forward to your 

questions. 

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

Appendix on page 76.] 

The CHAIRMAN. Thank you very much. 

Thank you for your testimony. Thank you for your service. Thank 

you for doing a great job in a very difficult situation. 

You have mentioned the Deficit Reduction Act, and Mr. Smith 

mentioned it. And again, many of us voted for it; some didn’t. The 

Deficit Reduction Act called for serious reductions in our spending. 

I understand the results of the last election and people said you 

have got to go to Washington and get our financial spending in 
13 

order. Everything needs to be on the table, defense included. And 

I don’t think anybody would argue with a budget as large as we 

have in the Defense Department that we can’t find savings. And 

this is a huge, a huge cut. 

Defense accounts for 20 percent of our overall budget. And the 

first tranche of the savings that we voted on in the Deficit Reduction Act, 50 percent of the savings come out of defense. So I would 

say that we have given and given a lot out of defense. 

And then the sequestration, I mean, when we voted for the deficit reduction, we were told that the ‘‘super committee’’ [Joint Select Committee on Deficit Reduction], that the sequestration was so 

bad that it would force the super committee to do its work to find 

other savings in the entitlement programs, which is where the real 

problem is anyway. Because if we eliminated all defense spending, 

if we eliminated all education spending, if we eliminated all transportation spending, if we eliminate the total discretionary budget, 

we would still be running a deficit of over half a trillion dollars. 

So, all of this talk, all of this agony of going through all of these 

cuts, which are very significant, don’t really address the real deficit 

problem. It is not the Defense Department that is putting us into 

a very precarious situation in spending. 

Having said that, you have stepped up to the plate. You have 

found the cuts over the next 5 years that are very serious, and you 

have devised the strategy the best way you can to meet the threats 

that we can meet given the cuts. 

Just a couple years ago, before you got here, Mr. Secretary, before you got here, Mr. Chairman, Secretary Gates in that same seat 

was saying that we had to, over the next 5 years, have a 2-percent 

growth over inflation, or we would have to reduce the size of the 

Force. 

Well, that has come to pass because we not only are not having 

a 2-percent growth over inflation; we are actually having a reduction when you consider inflation. And your report from the Department points that we are going to have negative real growth over 

the next 5 years based on this budget when you take into account 

inflation. 

So we understand that, and we are going to work through that, 

and you have stepped up and said that the military can live with 

this. But the sequestration we cannot live with. I think we are all 

in total agreement on that. 

So I have a question. The way we are moving forward right now, 

there is nothing in this budget to deal with sequestration except a 

possible tax increase if that is needed at the end of the day. 

This budget that we will be dealing with kicks in, starts with the 

new fiscal year on October 1. Being realists, I think all of us understand that we are probably not going to have that budget. The Senate says that they are not going to pass one, and we will do ours 

on the House side. But being an election year, I think we probably 

understand we are not going to have a normal year. 

We haven’t had a normal year for years, so maybe we are going 

to have a normal year, and we will be with a CR [Continuing Resolution] from October 1, at least through the election. And, you 

know, I don’t know how we will come back and deal with this in 

January. 
14 

But in January, the sequestration kicks in. Now you have had 

6, 7, 8 months to really work on this budget, to go through a strategy and budget, and you have done exhaustive work to come up 

with this budget. A week or so ago, we had Dr. Carter and Admiral 

Winnefeld, the secretaries of the Services and the chiefs. And one 

of the Members of this committee asked Dr. Carter what he had 

done, what was being done to plan for sequestration. His answer 

was basically we don’t have to do any planning for it. All we have 

to do is pull out the budget and take 8 percent off of every line 

item. 

I think everybody in here probably understands the chaos that 

would create. I don’t know how many contracts the Department 

has; I know it is hundreds. Those would all have to go back and 

be renegotiated. Pensions, retirement plans, health insurance, all 

of the things that would have to be dealt with, further force reduction immediately. And given that we have got the CR hanging over 

us and then sequestration kicking in—I, Mr. Secretary, talked to 

you about this. 

I put in a bill—this is going to be serious, dealing with everything that we are talking about here today, the sequestration just 

takes it right over the top. And we are looking at all the news reports that we are hearing, the saber-rattling going on over in Iran, 

the new leadership in Korea, I mean, I think the world is in a very, 

very serious situation. 

And I know, General, you have told us in a meeting a couple 

weeks ago that in your 37 years, this is the most serious you have 

ever seen it. 

So I think these are serious questions. 

My bill would move, would pay for the first year of sequestration, 

which moves it back a year. It does it with as little pain as possible 

through attrition, decreases the size of the Federal workforce. 

But I am asking you, Mr. Secretary, if this is something you 

could support, trying to fix sequestration now instead of having all 

of the people that will be laid off this year in preparation for next 

January, if it wouldn’t be better to move ahead and fix that now, 

deal with it now, not wait for the December 31 deadline and that 

would still give us then next year to work on next year’s problems 

and sequestration. 

Secretary PANETTA. Mr. Chairman, as I have said time and time 

and time again, sequestration is a crazy process that would do untold damage to our national defense. It is a mechanism that would 

do, you know, just kind of blindsided cuts across the board and 

would really hollow out the Force. So I am prepared to work with 

you in every way possible to try to work on both sides to try and 

develop an approach that would de-trigger sequestration. My hope 

was frankly that the super committee would take that responsibility and do that. I think that is what everybody’s hope was. 

That didn’t happen and that really concerned me. And so whatever, whatever we can do on both sides to try to develop an approach that would de-trigger sequester and avoid that kind of horrific result, I am certainly prepared to work with you on that. 

The CHAIRMAN. Thank you. Thank you very much. 

Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 
15 

I will point out that the overall budget that the President submitted contained $3 trillion in 10-year savings so that if that budget were passed, that more than meets the $1.2 [trillion] that was 

required to avoid sequestration. So there was a plan put on the 

table, and I share the chairman’s remarks that the sooner we resolve that overall issue, the better for all concerned, whatever that 

plan may wind up looking like. 

And I wanted to just get a couple more comments from you about 

BRAC, because you have seen since that discussion started, it has 

not been greeted warmly on the Hill, to put it mildly, except by me. 

I think I might be the only one I think who has had a single positive thing to say about it. And I just sort of looked at it logically 

and said, you know, if we are shrinking the force by the size that 

we are in reaction to the fact that Iraq is done, Afghanistan is 

winding down, we are moving two brigades out of Europe. We are 

making substantial changes within the strategy. 

I mean, regardless of the debate about the budget, we are going 

to be moving things around. I mean, logically, there is no way we 

can do that without doing some closures and realignments; I just 

don’t see where it is possible. I certainly have a large number of 

bases in my State and various degrees of vulnerability. And I understand that, but it has to be done as far as I can see. So I will 

maybe give you just a minute or two to make another pitch for why 

we at least need to be at least a little bit more open to what, in 

my mind, is an absolutely necessary step. 

Secretary PANETTA. Well, I mean, it goes to the point that as we 

make the reductions that I think will take place under any circumstances as a result of some of the drawdowns in the wars that 

we are engaged in, we are going to have units returning or coming 

back that will be drawn down. 

That means that the force that we maintain will need less infrastructure to support it. That is just a reality. 

How do you make the decision as to what parts of that infrastructure ought to be reduced or changed or eliminated? That has 

been—frankly, that has been a challenge as long as I have been in 

this town to try to make those decisions. And ultimately what happened was that someone developed the BRAC process as a way to 

effectively do that by putting all of these decisions in one package 

and having an up-or-down vote. 

I was a part of going through three BRAC processes. I had installations in my district and one of those BRACs eliminated Fort 

Ord in my district, which represented 25 percent of my local economy. So I know the impact that the BRAC process has. At the 

same time, we were able to establish a campus of the California 

State university system there and reuse that area and, frankly, 

came out on the better end of the deal. 

But, nevertheless, it is a tough process to go through. And yet, 

you know, standing back, I can’t see a better way to do this other 

than BRAC, because if you try to do this on a piecemeal basis, you 

know, we know what is going to happen: It is not going to go anywhere. The only effective way to deal with it is to put it in this 

kind of package. 
16 

But, by the way, I also understand the costs involved. You know, 

BRAC costs a hell of a lot of money to do cleanup and all the other 

things need to be done. 

Mr. SMITH. That should be done. This is not about, you know, 

this is a way we can save money. We know it is not in our previous 

five experiences. Now, in the long term, it does save money. You 

better keep that in mind. 

Secretary PANETTA. Yes. 

Mr. SMITH. Yes, for the 5-, 10-year numbers, the long term matters. It is more about making sure you have the force structure and 

basing system that you need to support your National Security 

Strategy. 

Secretary PANETTA. That is right. 

Mr. SMITH. Thank you. I just want to make one quick editorial 

comment on Guam and just, you know, for you to be clear. I know 

we are doing the realignment in the Pacific. There are still some 

details to work out, just primarily of our negotiations with Japan, 

what to do about Okinawa and elsewhere, and I know there has 

been a significant reduction in what is going to go, the number of 

marines that are going to go to Guam from the previous plan. 

Mr. SMITH. I would just like, as you are still trying to figure out 

what exactly to do in Okinawa, if you could consider perhaps more 

marines going to Guam and also not just rotational but on a permanent basis. 

And, believe me, I understand. We rolled this plan out I think 

6 years ago. It was going to cost $10 billion, and then there were 

all kinds of demands, and it wound up being $23 billion to move 

into Guam, which was completely unacceptable. And the people in 

Guam are going to have to work with you to get those costs under 

control, but I just hope you will consider the fact that there is still 

more capability there to move some of those marines to Guam if 

we can perhaps get a more cooperative reception about how to 

make the finances work. So I hope you will consider that as you 

go forward with the Pacific plan. 

Secretary PANETTA. Thank you very much for that. 

We are—you know, we very much view this as an opportunity to 

try to really give us a chance to reposture our force in the Pacific. 

Guam is a very important part of that. Believe me, it is something 

we are seriously looking at, and we are trying to work with the 

Japanese to try to get this done. This thing has been around for 

15 years, and nothing has happened, and the time has come to try 

to get this resolved, and that is what we are trying to do. 

Mr. SMITH. Thank you, Mr. Secretary. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

And we haven’t had a chance to talk about this, but my thinking 

is really evolving on this whole Guam issue. And we are talking 

about reducing the marines by 20,000. Maybe one way to do that 

would be to just bring the marines that we take out of Okinawa, 

bring them to Camp Pendleton or some—bring them home and 

maybe leave some prepositioned equipment in place or something. 

I think when we are talking about the tremendous cuts that we 

have to make then we are going to have to really look at that seri-
17 

ously, because this is just escalating, and we may be able to solve 

two problems instead of one. 

Mr. Bartlett. 

Mr. BARTLETT. There is obviously no wild enthusiasm in Congress for additional BRAC rounds for two reasons. Every one of 

those facilities is in somebody’s district. It might be yours that gets 

gored. And, secondly, we really do not save any money in the short 

term because of the cleanup. 

You know, we have been on some of these bases for a hundred 

years. Our families have lived there. Our kids have played there. 

And we are making the statement that these are second-class citizens, because they can live and play in a place that really isn’t 

even good enough to give away. 

I know the law may require us to do this environmental cleanup, 

but I think we make the laws here in Congress, and we could 

change that law. If the local community doesn’t want the facility, 

we will plant some trees and lock the gate and come back in a hundred years and cut the trees; and by that time, whatever the environmental problem was, it will undoubtedly be much less. 

If we force you to keep open infrastructure that you don’t need, 

clearly, this impacts what you can do in personnel, in modernization, and in R&D [Research and Development]. Would you tell us 

for the record how much more you could do in personnel, modernization, and R&D if we could close these facilities without the 

obligatory cleanup? 

[The information referred to can be found in the Appendix on 

page 99.] 

Mr. BARTLETT. I have a question, General Dempsey. If you ask 

our combatant commanders what they would like more, it is always 

ISR. So it is appropriate that the new defense strategy cites intelligence, surveillance, and reconnaissance as one of the capabilities 

‘‘critical to our future success.’’ 

Yet the DOD [Department of Defense] budget request for fiscal year 2013 is approximately $1 billion, or 25 percent, less than fiscal 

year 2012 for ISR programs. Each of the Services is terminating a 

major ISR program in the fiscal year 2013 budget request: the 

Army’s enhanced medium-altitude reconnaissance and surveillance 

system, the Navy’s medium-range maritime unmanned aerial system, and the Air Force’s Block 30 Global Hawk unmanned aerial 

system. 

In the case of the Global Hawk, 18 aircraft will be placed in storage. Nine of these are currently deployed and supporting combat 

command operations. Would you please explain what appears to be 

a real conflict between the new strategy and fiscal year 2013 budget investment decisions? 

General DEMPSEY. I will, sir. Thanks for asking. 

First of all, you are right that combatant commanders—and I 

was one—have an insatiable—literally, that word by that definition—an insatiable appetite for ISR. What we have learned over 

the course of the last 10 years is that certain of those platforms— 

I mean, once you procure them, you begin to recognize both the 

limit of their—the expansiveness or limitations of their capabilities. 

And what you see reflected in our budget is a look across all of the 

various components of this thing called ISR to determine which 
18 

ones are actually delivering the best value—meaning the best possible intelligence, surveillance, and reconnaissance capabilities at 

the best value. At the best business case, if you will. 

And so, for example, the Block 30 Global Hawk has fundamentally priced itself out of our ability to afford it when the U–2 [Dragon Lady high-altitude reconnaissance aircraft] gives, in some cases, 

a better capability and, in some cases, just a slightly less capable 

platform. So what you are seeing there is our ability to eliminate 

redundancy, to continue to invest in the best value, and to avoid 

at every possibility redundancy that fundamentally is too expensive. 

Mr. BARTLETT. Secretary Panetta, with the delay in the F–35 

[Lightning II fifth-generation multirole fighter] aircraft program, 

what steps have you directed the Air Force, the Army, and the Marines to take to maintain the necessary fighter inventory until the 

F–35 can be procured in numbers to replace legacy fighter fleets? 

Secretary PANETTA. We have ensured, obviously, that we maintain our full fighter force in place—and obviously it continues to require upgrades. We are prepared to make those upgrades as necessary. 

Our goal here is to develop the fifth-generation fighter. We think 

that is absolutely essential. And F–35s are coming off the production line. They continue to be tested. Frankly, the tests are going 

pretty well. We have got to do some software tests on all three 

models. 

I just took the STOVL [short take-off vertical landing] off of probation because it had five problems that Secretary Gates had identified that put it on probation. It has been able to deal with all five 

problems, and now we are looking at the software aspects. So this 

plane is on path to hopefully coming into full production within the 

next few years. 

Mr. BARTLETT. Thank you very much. 

The CHAIRMAN. Thank you. 

Mr. Reyes. 

Mr. REYES. Thank you, Mr. Chairman. 

First and foremost, Mr. Secretary, thank you for coming to El 

Paso and covering a few of the issues that you have covered with 

the committee here this morning. 

I have got two areas that I would like for both you and General 

Dempsey to focus on. 

The first one deals with the reaction to the request for another 

possible BRAC from our allies abroad. And I know you have had 

a chance, since first asking for that authority, to go out and talk 

to at least some of our allies; and so I am curious if you could share 

that with the committee. 

And then the other issue—and then I will give you the rest of 

my time—the other issue is the Administration is fixing to launch 

yet another effort of troops in New Mexico and Arizona. And I am 

concerned that not only is that very expensive but it puts our 

troops in a questionable position. Because they are not trained for 

law enforcement. They are trained for combat. And I would appreciate it if you would comment on this latest effort to deploy troops 

in New Mexico and Arizona. 
19 

As I understand it from the information that I have, it is against 

the ultra light vehicles that the cartels are using. But there are 

certainly better ways to do that than a full force presence in 

those—in those two areas. 

So if you would cover that, I would yield the rest of my time to 

both of you. 

Secretary PANETTA. Congressman, let me address the first part 

of your question; and then I will have General Dempsey comment 

on the second part. 

On the first part of the question, we are—and we have been— 

looking at infrastructure abroad very carefully. Because, obviously, 

if we are going to look at infrastructure in this country, we are obligated to look at infrastructure abroad. 

We are going to be taking down two brigades in Europe. That 

will impact on infrastructure there. We have already closed in the 

period of the last I guess 6 to 7 years 100 bases in Europe. We are 

probably looking at probably 23 additional bases that we will be 

looking at as well. So that we are, as a result of drawing down our 

forces there, looking at what savings we can make in infrastructure 

in that arena. 

General DEMPSEY. Congressman, on the issue of use of troops on 

the border, you know, we went down that path to meet an immediate need several years ago; and every year we review our posture 

in that regard. And we have seen it all along as an interim strategy, a transitional strategy, and one that could ultimately be replaced by technical means, whether it is ISR in the military sense 

or other surveillance capabilities available on the commercial market. 

So we understood when we began this, our role filling that immediate need. We are eager, actually, to partner and are partnered 

with Department of Homeland Security, with the FBI [Federal Bureau of Investigation], with State and local governments. We do exercise it periodically, but I am not eager to have that become a core 

competency of the uniformed military. 

Mr. REYES. And it is important to note that this is a very expensive proposition when you deploy troops and especially when we 

have already built up the border patrol to over 21,000 agents. 

I was just last week in Nogales, Arizona—Tucson and Nogales, 

Arizona. And speaking to the people there, they comment on the 

fact that everywhere that they are we have border patrol agents. 

So I am really at a loss to understand why we would want to deploy troops at a time when we are trying to save money. That is 

a very expensive proposition. 

The border is a safe environment in spite of all the rhetoric that 

we hear politically. So I would hope that we could rethink that if 

at all possible at a time when we are trying to save money. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Thornberry. 

Mr. THORNBERRY. Thank you, Mr. Chairman. 

Mr. Secretary, let me just add a couple of brief facts to some conversation that you have already had this morning. 

One is that the President instructed the Pentagon in the spring of 2011 to look for $400 billion in savings in the Defense budget. 
20 

Now that was before your time, and it was before General 

Dempsey’s time. But any notion that the $487 [billion] sprung out 

of Congress just from the Budget Control Act spontaneously in 

some way is obviously not true. It was under way long before we 

ever got that that point. 

The second point I wanted to throw out is a little more specificity 

on BRAC. By the way, I have supported every round of BRAC since 

I have been in Congress. But the 2005 round of BRAC will not even 

break even until 2018, according to GAO [Government Accountability Office]. That means for 13 years it is going to cost more 

money to have BRAC than it would if you didn’t have BRAC. 

And so having the Pentagon suggest two more rounds when it 

will aggravate the budget situation for 13 years, or at least a decade, leaves me scratching my head a little bit. And I think it is important to put a little more specificity. It doesn’t even break even 

for a decade, which I think is problematic. 

But, General Dempsey, another thing that leaves me scratching 

my head these days is the reports that the military and the Administration are looking at substantial cuts to our nuclear deterrent. 

Under START [Strategic Arms Reduction Treaty], we are going to 

end up with about 1,500 weapons. If the reports are right, there 

is consideration of cutting that 80 percent down to, say, 500, just 

for rounding, and that is being generous. 

It seems to me if we end up with 500 nuclear weapons and country A has a couple hundred, that all the incentive in the world is 

for them to catch us, because it is not that far and not that hard 

for them to do. So I would appreciate your best professional military judgment on whether cuts of 80 percent in our nuclear stockpile really are good for the national security of the United States. 

General DEMPSEY. I won’t comment on the 80 percent figure, 

Congressman. What I will say is that what has been reported is 

the CliffsNotes version—not that you would ever understand what 

CliffsNotes are from your personal education—but it is the 

CliffsNotes version of what is a very comprehensive set of discussions internal to the military with the national security staff on 

what is our next negotiating strategy notably with Russia. And the 

status quo, by the way, is always an option and one that is in play. 

So at this point, sir, I would just—I would encourage you not to 

become too concerned with the media reports of what is a very comprehensive process. 

Mr. THORNBERRY. Well, I do become very concerned, partly because it does nothing but encourage other countries to advance 

their nuclear program. If they see that we are going to come down 

from 1,500 to some number in the low to middle hundreds, it does 

nothing but encourage our enemies and discourage our friends. And 

the result of that is more nuclear weapons programs all across the 

world, which would seem to me to be something that we would not 

want to have happen. 

So I get very concerned if our military takes seriously any notion 

that we can—can even begin to approach reductions on that scale. 

I am worried about where we are with the last round of START, 

but much less something that goes to that level concerns me very 

much. 
21 

Mr. Secretary, let me ask one last thing. Vice President Biden 

has said that the Taliban is not our enemy, and I have a quote 

here says—that supports that. 

Do you agree—do you believe that the Taliban is our enemy in 

Afghanistan? And if they are not our enemy, can we leave a secure 

and stable Afghanistan without addressing the Taliban and their 

safe havens in Pakistan? 

Secretary PANETTA. The Taliban, as you know, Congressman, is 

a very broad group. Our primary enemy in that part of the world 

is Al Qaeda. And the Taliban elements, the terrorist elements that 

support Al Qaeda are also our enemy. And there are some elements, obviously, of the Taliban that support Al Qaeda; and those 

are the ones that we have been targeting. 

Mr. THORNBERRY. Can we leave a safe and secure Afghanistan 

without dealing with those elements of the Taliban that support Al 

Qaeda? 

Secretary PANETTA. I think—our goal is to make sure that they 

never again can establish a safe haven in Afghanistan from which 

to conduct attacks on this country, and that remains our primary 

goal. 

The CHAIRMAN. Mr. Reyes—I mean, Mr. Andrews. Excuse me. 

Mr. ANDREWS. Thank you, very much, Mr. Chairman. I would 

like to hear Mr. Reyes ask more questions. 

But I want to thank General and Mr. Secretary, Secretary Hale 

for your service to our country and particularly, Secretary Panetta 

and Mr. Hale, your accessibility to members of this committee and 

the Congress. It is refreshing, and you have been the most accessible leaders of the Defense Department I have ever encountered, 

and I am very grateful for that. 

I also wanted to thank you, Mr. Secretary, for your comment on 

page 3 of your written testimony about the very personal priority 

you put on achieving audit readiness for the Department. My 

friend and colleague, Mr. Conaway, has taken a lead on this issue. 

He wrote it into law in an effort he and I worked on together, and 

he has very diligently led a panel of this committee to try to 

achieve that reality. 

All the discussions we are having this morning and are going to 

have in the next couple of months may be based on false data if 

we don’t have good financial statements. So I think—you know, 

this is a boring topic that doesn’t make headlines, but it is absolutely critical to an intelligent discussion of the hard financial 

choices we have in front of us. So I thank you for your very personal investment in that issue. 

And I did want to get to a more controversial question now. 

Despite some of the rhetoric, which I think corresponds to the 

year on the calendar, the budget proposal that you have submitted, 

if I understand it, for every $100 that we spent in the core Defense 

budget last year we are going to spend $99 in fiscal year 2013; and 

for every hundred people we had in uniform, at least authorized to 

be in uniform, we are going to have $99. So I think before we get 

too excited about what the 1-year budget means we have got to understand that. 

I do share with Mr. Smith and I think with you an understanding of the difficult political realities of the BRAC process but 
22 

the necessary decisions that must be made, and I wonder if you 

could outline for us what some of the strategic tradeoffs would be 

if we don’t do the BRAC process. You know, you have been through 

it. I have been through it. I think everybody on the committee has, 

one way or another. Tell us what happens if we bend to the easy 

decision and not do BRAC. What do we give up in that trade-off? 

Secretary PANETTA. I mean, look, you all know this. The Defense 

Department budget is made up of only so many parts. I have identified the areas that involve savings that we can focus on, and we 

put everything on the table. Those parts are efficiencies, whatever 

we can do to try to eliminate waste and cut down on bureaucratic 

overhead, and there is a lot of that. But, you know, we have added 

about $60 billion in savings in that area. 

The second area, obviously, is force structure. And that means 

that—you know, that involves cutting personnel out of the force; 

and we have already targeted about a hundred thousand reduction 

in both the Army and the Marine Corps. 

Thirdly, modernization, weapons, procurement areas, and there 

we have gone after significant savings. We still have to, obviously, 

maintain technology and weapons systems that are key, but we 

have put on hold some of the areas that we think we can achieve 

some savings. We have gone after cost effectiveness. We have gone 

after affordability and tried to deal with some of those areas as 

well in terms of savings. And then the last area is compensation, 

which involves the pay and benefits for our military. 

Okay. So if infrastructure is part of the force structure reduction 

savings, and let’s assume we don’t do any infrastructure savings 

and yet we still have to come up with additional savings, where are 

you going to go? 

Mr. ANDREWS. Right. I think it is fair to say that if we don’t do 

infrastructure then there is only three places to look—— 

Secretary PANETTA. That is right. 

Mr. ANDREWS [continuing]. The compensation for the troops and 

their families and the civilian employees, tools and weapons that 

we need to defend the country, or other strategic priorities about 

what we can do around the world. 

I mean, I was involved in a piece of litigation against BRAC that 

went to the United States Supreme Court. I have been through this 

one. But I also understand that we won’t cut that infrastructure 

without the BRAC; and, as difficult as it is, I frankly would encourage you to ask for that new authorization and would like to work 

with you to support it. Not because I like BRAC, but because I 

even greater dislike the alternatives to it. 

I thank you for your time and testimony this morning. 

The CHAIRMAN. Thank you. 

Mr. Jones. 

Mr. JONES. Mr. Chairman, thank you very much. 

And, Mr. Secretary, I might be the only Republican on the committee to say thank you for your recent decision about bringing our 

troops out in 2013. This has been a great interest and concern to 

me. 

I have Camp Lejeune Marine Base in my district, Cherry Point 

Marine Air Station. That is what my question will deal with. You, 

being an elected official, served in the House I think with my fa-
23 

ther a few years ago, Walter Jones senior. You know better than 

any of us here, or as good as any of us, that politics is local. There 

is no question about it. 

I have Cherry Point Marine Air Station in my district. I also 

have the depot in my district. And so it brings the question that 

Mr. Bartlett was asking you about, the F–35, and of course at 

Cherry Point, because of the depot, the interest in the F–35B. And 

knowing that at one point in a discussion I had a few months ago 

there was a thought that maybe at some point in time as this F– 

35 becomes on line and becomes a reality that there might be eight 

squadrons going down to Cherry Point. 

Well, I realize in this very difficult budget year and none of us 

know what we would like to see today might not be a possibility 

tomorrow. So if you would expand a little bit more on how you feel 

that the progress has been made on the F–35 and knowing that 

you believe that we do need a strong fighter system in our country, 

if you would elaborate just a little bit more on that, I would appreciate it. 

Secretary PANETTA. Thank you, Congressman. 

You know, the only way the United States remains the strongest 

military power in the world is to keep developing new generation 

fighters that have the technologies and capabilities that we are 

going to need in the future. And I had the opportunity to go to Pax 

River and see the development that is behind the F–35 and actually sit in there and look at the technology that is involved. I mean, 

we are talking about spectacular technology that would be part of 

this plane in terms of stealth capabilities and also targeting capabilities. And it is the next-generation fighter. It is what we are 

going to need. 

And, very frankly, the countries are all lined up waiting for this 

plane because they know how good it is going to be; and that is 

why we have got to keep it on track. 

We can have three variants. I cannot go into defending all the 

decisions that were made before I became Secretary, but three 

variants is not an easy process. It means you have to look at a lot 

of different questions that arise depending on the capabilities that 

you are trying to design in each area. But, nevertheless, each of 

those is important. We need a Navy plane, we need a Marine plane 

that can lift, as the STOVL will, and, obviously, we need an Air 

Force plane. So those are the key ingredients. 

My view is, you know, based on what—because I came into this 

pretty skeptical about where this thing was. I looked at the facts. 

I looked at the testing that is going on. I looked at the production 

rates that are out there. I am convinced that we can deal with the 

final problems that are there, largely software issues that we have 

got to face. 

We are producing these planes even as we speak, but they are 

continuing to be tested. My goal is, working with the industry, to 

make sure that any changes here now can be as cost efficient as 

possible. That is what I worry about. I don’t want big changes in 

these planes, because that will ramp up the cost real fast. So the 

real challenge right now is to keep these costs under control as we 

resolve the final issues involved with this plane. But I am convinced we are going to be able to put that in place. 
24 

Mr. JONES. Mr. Secretary, thank you for that answer. 

I have spent almost 10 years trying to clear the names of two 

marine pilots, John Brow and Brooks Gruber, who crashed the V– 

22 in Arizona on April the 8th. Nineteen marines were burned to 

death. And I appreciate what you said when you said you wanted 

to make sure that the manufacturer of this plane have it ready and 

no hidden problems like they found with the vortex ring state that 

brought that plane down. 

And I am hopeful that the Marine Corps will give the two wives 

who have requested a paragraph to make it clear that their husbands were not at fault, and I hope that I won’t have to come to 

you at some point in time and show you the evidence that we have 

accumulated over 10 years that the pilots knew nothing about how 

to react to vortex ring state that night. 

So I do appreciate your answer and thank you again for your 

leadership of our country; and, General Dempsey, thank you as 

well. And may God continue to bless our men and women in uniform. 

And with that, Mr. Chairman, I will yield back, because I had 

a little bit of extra time before they started the clock. 

The CHAIRMAN. Thank you. 

Mrs. Davis. 

Mrs. DAVIS. Thank you. 

And thank you, Mr. Secretary and General Dempsey, for going 

out of your way and really talking about the fundamental element 

of this new strategy, which I think is our people; and ensuring that 

keeping faith with our soldiers, our sailors, our airmen, and marines and their families particularly remains a top priority. 

Mr. Secretary, as we think of this process and move forward of 

changing our force structure and reducing personnel end strength 

over the next few years, what are we doing to ensure that we retain a spectrum of experience and knowledge across the Services 

and specialties? And, within that package, what is your greatest 

concern? 

Secretary PANETTA. Let me yield to General Dempsey on that, 

because he has been very involved in how we approach the retention of some of these mid-level officers. 

General DEMPSEY. I will hearken back to my time as the Chief 

of Staff of the Army, because that is the issue that the service 

chiefs are grappling with the Secretary’s guidance. 

But one of the things we did back in the 1990’s is, when we separated soldiers we did so—and I said soldiers but servicemen in general—when we separated them, we were separating them too 

quickly. We actually had reduction in force boards that sat specifically to tell people to go. But we could do that, because we were 

passing them into a pretty good economy. Maybe one would even 

argue a booming economy back in those years. And we were no 

longer in conflict. 

The big difference about what we are doing right now is that 

those other assumptions I just mentioned are not any longer valid. 

We are passing people into a struggling economy. We are still in 

conflict and likely to remain in conflict. So what we are doing as 

service chiefs is taking a look at how do we, first of all, pace this. 
25 

And to the question, by the way, that is related to BRAC, if you 

fix too many variables on us—if you, for example—there is some 

physics involved—if you fix the variable called infrastructure and 

if we are kind of maxed out in terms of literally physical ability to 

pass people out of the service in a dignified way, it doesn’t leave 

us many levers to pull in the middle. It is operations maintenance, 

training, and equipment. 

That is why we are concerned about BRAC, and it is also why 

we are concerned about the pace at which we separate people. Now 

once we settle in on the pace—and we have—then we look internal 

to our systems. We have any number of personnel policies, promotion rates, accession rates; we have evaluation reports, board 

processes. But to the extent that we can use the existing processes 

to identify the highest performing personnel, keep them, encourage 

them, continue to develop them, we will be in good shape. To the 

extent that this is accelerated on us, if it is accelerated, then we 

get into a position where we are forcing people out; and at that 

point I won’t be able to sit here and guarantee you that we are 

going to be keeping the right people. 

Mrs. DAVIS. Do you see—is part of that discussion really formalizing longer periods of time between the eligibility for promotion and the promotion among noncommissioned and commissioned officers? 

General DEMPSEY. It is a great point and one which we—it is a 

Rubik’s cube, to tell you the truth. We twist it and turn it. In some 

ways, you want to accelerate promotions, because it is an incentive 

for especially the highest performing personnel to see that they 

have a great deal of potential and that that potential is being fulfilled. On the other hand, it has the other effect that you just described. 

So, you know, I would use a somewhat overused word probably, 

but I think it is a matter of finding the balance between—let’s call 

it talent management and then managing the personnel system to 

treat people with dignity and respect but also reshape the Force. 

Mrs. DAVIS. I really appreciate that. I think there are concerns. 

There should be concerns that, for many of the men and women 

who are serving, that the fact that they would be leaving the Services faster perhaps than they had ever imagined means that we 

have to put a lot more resources into that transition period and 

really ensuring that they have the skills and talents necessary. 

And are we looking at that in terms of a whole different kind of 

preparation as they leave? It is almost a preparation as they come 

in so that they are leaving in a different manner. 

Secretary PANETTA. You asked what worries me the most—and, 

frankly, that is one of the issues I worry about the most. 

As we draw down over these next 5 years, we are going to be 

putting another 12,000 or more out, you know, bringing them back. 

And, right now, the system is clogged. It doesn’t work as efficiently, 

frankly, as it should. And we have got to do a better job of being 

able to take these young men and women that come out and give 

them the counseling, give them the education benefits, give them 

the jobs, give them the support systems that they absolutely have 

to have in order to be able to reestablish themselves in the communities. Otherwise, we are going to be dumping them in these com-
26 

munities, no jobs, no support; and that is why we have high unemployment now among our veterans, is that that is exactly what is 

happening. We have got to change that. 

Mrs. DAVIS. Thank you. 

The CHAIRMAN. Thank you. 

Mr. Forbes. 

Mr. FORBES. Thank you. 

Mr. Secretary, your schedule only allows me 5 minutes for questions, so I am going to try to be concise and help you be concise 

in your answers. 

But you made a statement that this will be a test of whether reducing the deficit is about talk or action. I just want to be clear. 

We welcome a conversation with you or the President about serious 

deficit reduction. We wish we could have had it before the President pushed through an $800 billion stimulus package that many 

of us believed was ill advised or a health care bill that is putting 

a lot of our employers out of business. 

But be that as it may, we want to reduce the deficit; we just 

don’t want to do it on the backs of the men and women who are 

fighting for this country every day. 

And to answer the ranking member’s question he put before us: 

What wouldn’t you have voted for? I wouldn’t have voted for that 

$800 billion stimulus package which contains almost twice what 

these cuts were, and I would repeal the health care bill tomorrow. 

But let’s look at the approach of how we got here. And wouldn’t 

you agree that if we had been more responsible in handling our 

budget as a Federal Government that the better approach would 

have been for us to have developed a national strategy—Department of Defense to develop a national strategy to defend the country, to be able to discuss exactly what we needed for that strategy, 

to determine what the resources would be in order to meet that 

strategy, and then come to Congress and say this is what we need 

to do in order to do that job to defend the country? Wouldn’t you 

have agreed that that would have been a better approach? 

Secretary PANETTA. Congressman, a better approach—and I say 

this not so much as Secretary of Defense but as a former OMB [Office of Management and Budget] Director and chairman of the 

House Budget Committee—the better approach would have been 

for Congress, both Republicans and Democrats and the President, 

to sit down and develop a comprehensive deficit reduction package. 

Mr. FORBES. Mr. Secretary, I understand that. But I am talking 

about, as far as the strategy, wouldn’t it have been a better approach to have done it in the manner that I just delineated? 

Secretary PANETTA. That would have been nice, but we were 

mandated to up come up with a $487 billion reduction. 

Mr. FORBES. I understand that. But wouldn’t that have been the 

better approach? 

Secretary PANETTA. Of course. 

Mr. FORBES. Okay. And then point in fact, as you mentioned, 

that is not the approach that we took. What we did was to give you 

$487 billion of cuts, and then you were forced to create a strategy 

that worked within the parameters of those cuts; is that correct? 

Secretary PANETTA. That is right. 
27 

Mr. FORBES. And then, based on that, Mr. Secretary, isn’t it true 

that it would be virtually impossible for you or anybody else testifying on behalf of this budget to delineate for us the portion of that 

strategy that was driven by these budget cuts versus the portion 

of the strategy that was driven by security changes around the 

world? 

Secretary PANETTA. I don’t think you have to make a choice between fiscal discipline and national security. I really don’t. 

Mr. FORBES. Mr. Secretary, I am just trying, because of my 5 

minutes—isn’t it true, though, that, as you said, you were forced 

to have $487 billion of cuts. You worked a strategy that worked 

within those parameters. But isn’t it virtually impossible for you or 

anyone else to tell us what portion of that strategy was driven by 

that $487 billion of cuts versus just security changes that took 

place around the world? 

Secretary PANETTA. As I said, we would have been required to 

look at a change in strategy under any circumstances because of 

the drawdowns that were taking place. This is not just a deficit reduction. 

Mr. FORBES. I understand that. I understand that. And we have 

two different components. We have security changes that would 

have had strategy change and we have budget cuts that would 

have caused it. But isn’t it true that you cannot delineate between 

those two? 

Secretary PANETTA. Well, they were both involved in determining 

our strategy. 

Mr. FORBES. Exactly. Now, you also mentioned that this was imposed on you by law. I know I have heard you state before this 

would not have been the figure you would have picked, the $487 

billion. Is that true? 

Secretary PANETTA. That is for sure. 

Mr. FORBES. I wouldn’t have picked that, and I didn’t vote for 

that figure. 

But you have had a lot of discussions with the President. You 

heard Mr. Thornberry say the President came out and said he 

wanted $487 billion of cuts before the strategic cut was taking 

place. In your discussions with the President in looking at the 

strategy, at any time has the President ever voiced to you the fact 

that he thought this $487 billion of cuts was too much? 

Secretary PANETTA. I think the President understood that this 

was not going to be easy and that there would be risk involved in 

doing it. 

Mr. FORBES. I understand. That is not my question. Did the 

President ever voice to you the fact that he felt this $487 billion 

in cuts was too much? 

Secretary PANETTA. He felt, as I did, that Congress and the 

President had gone forward with this Budget Control Act and we 

were obligated to fulfill it. 

Mr. FORBES. And had he—you disagree with that figure. I disagree with that figure. Had the President disagreed with that figure, could he not have put any of those cuts back in the budget 

that he had just presented to Congress? 
28 

Secretary PANETTA. I think the President shared your concern, 

which is what do we do about reducing the deficit. That was the 

only thing that was worked out by Congress on a bipartisan basis. 

Mr. FORBES. Did he put any of those cuts back into this budget? 

Any of the cuts made, did he roll them back and say that was too 

much, I am going to put them back in the budget? 

My time is up. Thank you, Mr. Chairman. 

Secretary PANETTA. I don’t think he could have done that without the support of Congress. 

The CHAIRMAN. Thank you. 

Mr. Langevin. 

Mr. LANGEVIN. Thank you, Mr. Chairman. 

Mr. Secretary, General, thank you for being here today and your 

testimony, your tireless service to our Nation. We are all grateful. 

I want to focus on two important areas in the budget and priorities for me: Virginia Class submarine and I also want to talk 

about cybersecurity. Mr. Secretary, as you know, the Virginia Class 

submarine is a model procurement program; and we are only now 

beginning to reap the rewards of an aggressive cost-management 

effort and a consistent two-boat-per-year funding level. 

The proposed delay of one of these subs from fiscal year 2014 to 

outside the FYDP [Future Years Defense Program] I believe could 

disrupt these gains and incur significant extra costs. How did the 

Department come to this decision and how does the Department 

propose to mitigate the military risks, the monetary costs, and the 

workforce challenges generated by the shift? 

Obviously, the Virginia Class submarine is a program that has 

come in on time and under budget because of the efficiencies that 

we gain from bloc buys and bringing stability to the supply chain; 

and I am concerned this delay is going to cost us in these areas. 

Second, as you know, I have been a long and staunch supporter 

and advocate for increased investments in cybersecurity; and I am 

pleased to see the continued escalation of the attention being paid 

to cybersecurity and the projected $18 billion in funding from fiscal 

year 2013 to fiscal year 2017. 

Mr. Secretary and General, how does the proposed budget address these threats and the vulnerabilities that we face in the 

cyber arena? And I know you talked a bit about this today, but I 

would like to expound on that. And in the event of a large-scale 

cyber attack, how resilient are our power grids and military bases? 

Obviously, our military bases in many ways are dependent on 

the critical infrastructure of our electric grids that is owned and 

operated by the private sector; and if they go down our military 

bases and their ability to function are vulnerable. What efforts are 

we doing to make them resilient and have some of their own power 

to provide backup, if necessary? 

General DEMPSEY. If I could, Congressman, I will talk cyber; and 

then I will ask Mr. Hale to talk about submarines; is that right? 

We are very concerned about cyber. You know, we talk about 

what is new in the world in terms of threats over the last 10 years 

or emerging. For us, it is emerging capabilities. It is special operating forces, it is cyber, and it is ISR. Those same capabilities are 

also becoming available to our adversaries. And in the case of cyber 

in particular we have been acting to prepare ourselves in terms of 
29 

our vigilance on our systems and our defensive mechanisms, and 

we have got—as you know, we stood up CYBERCOM [U.S. Cyber 

Command]. We have got a cyber strategy. 

But we remain vulnerable; and we are trying, through a series 

of tabletop exercises and conversations with the national security 

staff as well on the Senate side now notably, we are trying to determine the next steps. And there is legislation pending sponsored 

by Senators Lieberman, Collins, Rockefeller, and then a Feinstein 

amendment to that that is a very good and important first step in 

providing the kind of information-sharing and expanding—for potentially the first step in expanding protections beyond the dot-mil 

domain for all the reasons you suggest. 

But make no mistake about it. There is controversy—and plenty 

of it—around this issue because of the Department—we are the Department of Defense. There is the Department of Homeland Security, FBI. So there are authorities to be considered. And we are 

working through all of that. What I am suggesting to you is that 

the current legislation pending is a good first step. 

Secretary HALE. In terms of the Virginia Class submarine, which 

is I think what you are referring to, we are planning to buy nine 

in this FYDP. A year ago, we were planning to buy 10; and we will 

buy 2 a year in this FYDP, except for fiscal year 2014 we will buy 

1. So it is an affordability decision, frankly. The submarine fits into 

our strategy, and we will certainly continue to buy. But we were 

looking, frankly, to ways to comply and be consistent with the 

Budget Control Act. 

Secretary PANETTA. I was asked this question yesterday. And, 

you know, if there are cost efficiencies that can be achieved here 

that allow us to do this with savings and in a more cost-effective 

way, we are prepared to look at that. 

Mr. LANGEVIN. I have additional questions, but my time is coming to an end. I would just reiterate the importance, obviously, of 

the Virginia Class submarine program. I am concerned about its 

delay, and it is going to wind up costing us I believe in both our 

workforce if we are not careful and also the efficiencies—— 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. LANGEVIN. With that, I yield back. 

The CHAIRMAN. Mr. Wilson. 

Mr. WILSON. Thank you, Mr. Chairman. 

Thank you all for being here today. 

And I share the concern of Chairman Buck McKeon. The American people need to know this, that what is being proposed is a reduction of 80,000 personnel in the Army, 20,000 marines, 10,000 

personnel of the Air Force. I am truly concerned at a time of war 

that we would have these reductions which I think is going to put 

American families at risk, those serving in the military and the 

American public at large. And it just—I just find it inconceivable. 

Every day we read about another threat to our country of instability around the world. 

Additionally, Mr. Secretary, I know that you are having to make 

tough choices and in particular, though, I identify with veterans. 

I served 31 years in the Army, and I am just grateful for my service and the commitment and dedication and commitments to veterans, too, from and to. But I am very concerned that the Adminis-
30 

tration is proposing cost increases on health care for military retirees, and these are extraordinary. For TRICARE Prime that a proposal for fiscal year 2013 increases enrollment fees between 30 and 

78 percent. Over 5 years, the enrollment fees would increase between 94 and 345 percent. 

How can we justify such increases when really commitments 

were made to the people who have made such a difference in protecting our freedoms? 

General DEMPSEY. Let me answer that, if I could, Congressman. 

You know, when we said that in order to rebalance this military 

of ours—and, by the way, you know, I don’t want to let it pass entirely that I don’t share your concern. But I will tell you that I am 

responsible to this Nation to do a risk assessment on the size of 

the force against the strategy, and my assessment is that the budget we have proposed and the force structure we are building toward 

is adequate to meet the needs of the Nation. If I didn’t, I would 

tell you. 

In terms of compensation, the TRICARE enrollment fees of which 

you speak haven’t been adjusted since the mid-’90s. They are an 

anachronism in terms of any other health care program. And I 

don’t ever accept, by the way, the comparison of military benefits 

to civilian because of what we ask our uniformed military to do. 

On the other hand, we cannot any longer allow our paid compensation health care—and, as you know, we are going to look at 

retirement at some point in the out-years—we simply can’t allow 

that to keep growing. As the Chief of Staff of the Army I knew that 

if my manpower costs exceeded 45 percent, I would break the Army 

because I wouldn’t have the money to invest in the other things I 

have to invest in. We are close, and now is the time to act, and that 

is why we have taken this action. 

Mr. WILSON. And my concern would be that we should be providing more—that this is not the burden. 

Additionally, Mr. Secretary, last year, the former governor of 

Maine, John Baldacci, was hired to review military health care. I 

understand that he has completed his report. Could you provide 

the committee a copy? 

Secretary PANETTA. I will be happy to. 

Mr. WILSON. Has his report in any way influenced the Defense 

budget reforms? 

Secretary PANETTA. I am sure—I believe it has, but, frankly, I 

have not reviewed it myself. But let me get back to you on that and 

provide you a copy of that. 

Mr. WILSON. And, additionally, I would like to know the salary 

paid and then the supporting costs for his services. 

Secretary PANETTA. Sure. 

[The information referred to can be found in the Appendix on 

page 99.] 

Mr. WILSON. And, in conclusion, I want to thank both of you. You 

have raised a great concern about sequestration, the risk to the 

American people. What do you recommend that we do? And in particular I am very hopeful that of course you would support the very 

progressive and very positive legislation of Chairman Buck 

McKeon. 
31 

Secretary PANETTA. I have indicated my concerns about sequestration. I would just urge you to work on a bipartisan basis to develop an approach that can pass the Congress that would de-trigger 

sequestration. 

Mr. WILSON. And the consequence of sequestration? 

Secretary PANETTA. It would be devastating. You take another $500 billion out of this Defense budget, the strategy I just presented you I would have to throw out the window. 

Mr. WILSON. And indeed, Mr. Secretary, I have been very positive about your service, because I know sincerely you believe this. 

But we have got the get the message out. Just the word ‘‘sequestration’’ puts people to sleep. So please be the Paul Revere I know. 

Thank you very much. 

General DEMPSEY. Congressman, I forgot to thank you for your 

31 years of service. Thank you. 

The CHAIRMAN. Ms. Bordallo. 

Ms. BORDALLO. Thank you, Mr. Chairman; and I would like to 

welcome Secretary Panetta and General Dempsey. I appreciate the 

Administration’s continued focus on the Asia-Pacific region and 

that DOD intends to press forward with the buildup of Guam. 

Thank you, gentlemen. 

The DOD recently announced a changed realignment plan for 

Guam. What is the rationale for changing the implementation plan 

with Japan? What prompted these decisions? What is the benefit 

of the proposed realignment? To what extent did the passage of the 

Budget Control Act play in these changes? And can you also elaborate on the strategic importance of keeping marines forward-deployed? How is this necessary to keep our treaty agreement with 

Japan? 

Mr. Secretary. 

Secretary PANETTA. Congresswoman, first and foremost, let me 

indicate that no decisions have been made with regards to what exactly that realignment will be. We are in discussions with Japan. 

Ms. BORDALLO. I understand. 

Secretary PANETTA. We are trying to make decisions. This is an 

issue, as you know, that has been out there for a long time; and 

we just think it is time to try to get it done and to try to resolve 

it. And Japan has been very helpful and cooperative in trying to 

work with us in that effort, and we will continue to keep you informed. Because, obviously, it affects your home area; and we want 

to make sure that you know what we are thinking about before we 

actually make any final decisions here. 

It is important to try to try to keep that presence forward. My 

view is that we need a Marine presence that is forward. I do not 

want to draw that Marine presence back to this country. I think 

it has to be forward in the Pacific. We are trying to be innovative 

in the way we are doing that. The approach that we are taking in 

Australia is an example of the kind of rotational presence that we 

think can make sense. We are talking to the Philippines about 

doing the same thing. 

But the bottom line is that we want to maintain the Marine force 

forward presence in the Pacific. That is an essential element of our 

strategy. 

Ms. BORDALLO. Thank you. 
32 

Another question I have: When the Japanese see the updated 

plans from DOD and identify the reduced number of marines coming, will they reduce the overall funding that they were going to 

supply for the buildup? Will this lead to reduction in support for 

civilian infrastructure that is needed to support the military population on Guam? If the Japanese do reduce their funding commitment, how will the Department ensure that the infrastructure 

needs continue to be addressed? 

Secretary PANETTA. That is also one of the things we are discussing. 

As you know, one of the elements here is the development of a 

new Futenma air facility; and it is an expensive process because it 

involves environmental permits that have to be obtained. It is a 

very expensive project. But, at the same time, they have been very 

generous in saying that whatever moves have to be made they will 

support—they will give us a lot of the funds to try to support that. 

That continues to be a part of our conversation; and, as I said, 

I am very pleased with the attitude that the Japanese are taking. 

Ms. BORDALLO. So you don’t think there will be any reduction at 

this point? 

Secretary PANETTA. No. 

Ms. BORDALLO. Mr. Secretary, Deputy Secretary Carter certified 

in writing—and I know this question has been asked before I arrived by Congressman Bartlett—he certified in writing to Congress 

that the Global Hawk system was essential to national security. 

Global Hawk was $220 million cheaper per year to operate than 

the U–2. The decision to pull 18 Global Hawk Block 30 aircraft out 

is shortsighted, in my opinion. 

Your recommendation to terminate Block 30 is a complete reversal of your decision. Can you explain how an asset can be critical 

to national security and then less than 1 year later be terminated? 

And can you answer how the Air Force will compensate for the loss 

of this capability? 

Secretary PANETTA. I am going to have General Dempsey speak 

to that. 

But, look, we are very committed to unmanned systems. We 

think that is the future. But, at the same time, we have to make 

judgments about which ones are most cost-effective; and I think 

that was behind the decision here. 

General DEMPSEY. Yes, ma’am. And we are flying four other 

variants of Global Hawk. This is not about Global Hawk. It is 

about Global Hawk Block 30, and it has become too expensive relative to other capabilities we have. 

Ms. BORDALLO. All right. And I have one final question, if I 

could. 

The fiscal year 2012 NDAA [National Defense Authorization Act] 

requires that DOD meet five requirements in order to spend Government of Japan funding that is currently sitting unobligated to 

the U.S. Treasury. Now this is a matter of great concern in our 

community. What steps is DOD taking to meet these five requirements? 

Secretary HALE. It is part of the overall discussions. We need to 

arrive at—we need to arrive at an agreement with Japan, and we 

need some—— 
33 

The CHAIRMAN. Mr. Hale, the gentlelady’s time has expired. 

Could you take that one for the record for her please? Thank you. 

[The information referred to can be found in the Appendix on 

page 100.] 

The CHAIRMAN. Mr. Turner. 

Mr. TURNER. Thank you, Mr. Chairman; and, gentlemen, thank 

you for being here. 

Secretary Panetta, I want to thank you for our meeting last week 

with Congressman Andrews where we discussed the issue of national standards for custody rights for our service members. We 

asked you to affirm Secretary Gates’ and DOD’s policies supporting 

a national standard. 

As you know, unbelievably, across the country there are Federal 

law court judges that will take custody away from our servicemen 

based upon their time away serving their country. This committee 

has been very active on this issue, every member of the committee 

having endorsed the national standard, the House having passed 

five times a national standard. We would appreciate your support 

and advocacy to assist us in making that law. 

Secondly, I appreciate your statement on the Budget Control Act 

and the issues of sequestration. It is a thing—you know, as we look 

to sequestration I think the American public does not know the 

great risk that could be imperiling our military. Your statements 

on it are important. That is one of the reasons I voted against the 

Budget Control Act, so we would not have this gambling with our 

military security. 

Mr. Secretary, as you know, I am the chairman of the Strategic 

Forces Subcommittee. Nuclear weapons fall under my category. I 

have three questions, two for you and one for the General concerning that. 

Mr. Secretary, as you know, your predecessor, Secretary Gates, agreed to transfer some $5.7 billion to the National Nuclear Security Administration for specific purposes that were articulated in 

this document, which I ask to be included in the record, that was 

to govern the transfer of these billions to the National Nuclear Security Administration. 

[The information referred to can be found in the Appendix on 

page 92.] 

Mr. TURNER. I would ask if you would characterize the Depart- ment of Defense level of comfort with how the initial $5 billion 

tranche has been spent. For example, where did DOD’s $1.2 billion 

go that it gave to the NNSA [National Nuclear Security Administration] to begin construction on the plutonium replacement facility 

known as CMRR [Chemistry and Metallurgy Research Replacement Facility]? And how about the funding for the W–76 warhead 

which is again delayed in the NNSA budget this year, seemingly 

without regard to the Navy’s need for this warhead? 

And, secondly, Mr. Secretary, you kindly, in a correspondence in 

November, responded to the chairman and myself requesting that 

we receive briefings on the nuclear war plan; and you had indicated that you would agree to reinstitute those briefings with our 

committee. 

[The information referred to can be found in the Appendix on 

pages 89–91.] 
34 

Mr. TURNER. They have not commenced, and we are afraid it 

might be stuck in the bureaucracy of DOD. We would appreciate 

your assistance there. 

General, with respect to Congressman Thornberry’s question on 

the proposed 80-percent cut to our nuclear arsenal, you indicated 

that these were just proposals or plans that were being reviewed 

and it might be premature for discussing them. But I would like 

your input on the initiation of where these are coming from. 

Because it is our understanding that the President has asked to 

consider an 80-percent cut going to a warhead inventory of somewhere around 300. If you could confirm that the Administration is 

in fact the one that is initiating, that this is not just coming from 

somewhere arbitrary within the bureaucracy, that would be helpful, also. 

Mr. Secretary. 

Secretary PANETTA. If I could comment on your last question, 

this was all part of a nuclear posture review that was mandated 

by law and that the Administration began that process of going 

through the review. And the second step was basically, you know, 

how do we now implement the review that was taking place? 

So it kind of followed that procedure, and there are a number of 

options that are being discussed. And, as the General has pointed 

out, one of those options is maintaining the status quo; and no decisions have been made. This has been something that has been 

part of a process for discussion within the national security team 

and remains there at this point. 

As you know, reductions that have been made, at least in this 

Administration, have only been made as part of the START process 

and not outside of that process; and I would expect that that would 

be the same in the future. 

With regards to your question on the funding issue, let me ask Bob Hale to respond to that. That is the $5.7 [billion]. 

Secretary HALE. We are working closely with NNSA. I think 

there are concerns on our part, theirs, too. There has been some 

cost growth that it sounds like you are aware of. But they are fully 

committed to meeting our needs, and we are trying to work with 

them. These are important programs, and we need to carry forward 

with them. 

I think I will try to provide you more detail for the record. 

[The information referred to can be found in the Appendix on 

page 99.] 

Secretary HALE. But I can tell you that we have a nuclear weapons council that meets regularly with NNSA representatives as 

well as ours, and they are deeply engaged in these issues. 

Mr. TURNER. But you do have concerns; correct? 

Secretary HALE. Yes. 

Secretary PANETTA. Finally, let me commend your leadership on 

the adoption issue. We did have a chance to discuss it. I share the 

concern that you raised. I think it does need to be addressed. You 

have been successful at passing it in the House side. It doesn’t 

seem to come out of the Senate. And I think the one thing I indicated to you is I want to work with you to see if we can actually 

try to get something done on this issue this year. 

The CHAIRMAN. Thank you. 
35 

Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman, and thank you to the 

witnesses. 

Secretary Panetta, again, I want to thank you for visiting the 

Groton shipyard. Back in November, you had a chance to climb on 

board the Mississippi and the North Dakota, which is under construction, as well as really a pretty extraordinary town hall with 

the workers on the pier there where you very eloquently described 

the value of the industrial base to our national security. 

In light of that, I just—to follow up on Mr. Langevin’s questions, 

the Mississippi, which was christened just a few weeks later, had come in $64 million under budget, 12 months ahead of schedule; 

and there is no question that the momentum of two subs a year, 

which took 20 years to get us up to that pace, is achieving savings. 

That block for contract shift—which, by the way, that is the third 

time it has been changed, not the second time, Mr. Hale—there is 

no question that, in terms of materials management, in terms of 

workforce management, in terms of layoffs, which is inevitably 

going to flow from that shift, is going to result in costs. And I guess 

the question is, you know, did you include that in your FYDP in 

terms of the costs of that dip in production which, again, we are 

seeing real results now in terms of savings because of the higher 

production rate. 

Secretary HALE. So far as I know, the FYDP is fully funded. I hear your point, if they take $487 billion out of the budget, and we 

tried to do it in a way consistent with our strategy, but we had to 

do it. And this is one of the issues raised with the Navy to discuss 

with them. And they would have preferred not to do it, so would 

we, but it is where it is. It is a fiscal ’14 decision. We will get another chance to look at it in light of current fiscal realities. 

Mr. COURTNEY. Well, the strategy, of course, which was articulated at the outset today, clearly focuses on Asia-Pacific, and you 

can’t have an effective strategy without a strong undersea fleet. 

Thank you for saying that you are willing to continue to work on 

this. 

Secretary HALE. We will take a look at it as the Secretary—— 

Mr. COURTNEY. The long-term effect in terms of the fleet size will 

be decades. 

Secretary PANETTA. Now, you know, I was very impressed with 

what I saw in Groton. I don’t want to lose those skills. I don’t want 

to lose those abilities. I want to maintain that kind of industrial 

base. So we will continue to do whatever we can to work with you 

to see what we can do to try to reduce those costs in the future. 

Mr. COURTNEY. Thank you, Mr. Secretary. 

I would also want to go back to Mr. Thornberry’s point about the 

2005 BRAC, which, again, I respect the fact that you have deep, 

profound personal experience in terms of what you went through 

in your time in Congress. But some of us have our own experience 

as well. I served on the Readiness Subcommittee for the last 5 

years. We have been following the 2005 BRAC like a box score in 

terms of its results. It cost about twice as much as was predicted; 

and, as Mr. Thornberry said, the net savings are still years away. 

And, you know, obviously, we all get sort of pinned as being sort 

of looking at our own backyard when this issue gets discussed, but 
36 

I think there is a legitimate question here, particularly with the 

fact that we have got to deal with the Budget Control Act caps. You 

know, how you do this in terms of not costing money in the short 

term? 

I mean, the answer we have gotten so far from Dr. Carter and 

yourself is that it is zero in terms of projected savings for the plan 

that was submitted there. So, you know, zero minus zero equals 

zero. 

I mean, if we don’t do it—I mean, it just doesn’t—it is a nullity 

in terms of trying to achieve the Budget Control Act targets; and, 

frankly, I think that is a very big threshold question which the Department has to answer before I think there is going to be any willingness to look at this thing at all. 

Secretary PANETTA. You know, I mean, I hear what you are saying; and the 2005 costs are—frankly, you know, it is just unacceptable the way that process ultimately worked out in terms of how 

much it cost us. On the other hand, obviously, in the long run it 

will produce some savings. 

I guess what I would suggest to you is that, you know, we have 

been through three BRAC rounds. There are some lessons to be 

learned here. If we are going to do another BRAC round, as we 

have recommended, perhaps we need to do it in a way that tries 

to acknowledge some of the lessons learned here to make sure that 

we achieve the savings that we have to achieve as part of the 

BRAC process. Maybe that is a better way to approach this issue. 

Mr. COURTNEY. Well, it is my understanding that we are going 

to see language sometime in March in terms of the proposal. And, 

again, there is going to be a high degree of skepticism for those of 

us who, again, have been tracking the overall results of the last 

round. And certainly I know you have gotten mixed comments here 

today, but I just want to at least share, certainly for some of us, 

this is a real problem. 

And I yield back. 

The CHAIRMAN. The committee will take a 5-minute break and 

reconvene at 5 minutes after, and Mr. Kline will be next. 

[Recess.] 

The CHAIRMAN. The committee will come to order. 

The chair recognizes Mr. Kline. 

Mr. KLINE. Thank you, Mr. Chairman. 

Thank you, gentlemen, for being here, for your testimony, for 

your extraordinary service to our country. 

I very much appreciated, General Dempsey, your testimony. You 

mentioned that the families have stood with us, talking about our 

men and women in uniform and stressing the importance of keeping faith with the true source of our strength, that is our people. 

And it is in that line, in that vein, Mr. Secretary, that I want 

to raise a subject that I have raised in the past in this committee. 

And that is the subject with the sort of convoluted name of the 

Post-Deployment Mobilization Respite Absence program, PDMRA; 

and although the name is a little convoluted, it is pretty straightforward. 

DOD enacted this program back in January of 2007 with the express purpose of taking care of our troops, recognizing that we have 

men and women deployed for extraordinarily long periods of time 
37 

and rewarding them with this program so that they could spend 

more time with those families, the families that have stood with us 

and so that we could keep faith with our men and women in uniform and their families. 

This program has been in effect and running, doing what it is 

supposed to do, easing stress on our men and women in uniform, 

rewarding the families. And then on October 1st of 2011, the Department came out with a new policy. And it came out with this 

policy—of course, it affects the soldiers who are deployed today to 

Kuwait or Afghanistan, changing the number of days that you can 

get as a reward for extended periods of service; and you could have 

a negative impact of over 3 or 4 weeks, in some cases, because of 

this new policy. 

And so I am—I understand the Department is perfectly allowed 

to make policy changes, but I am very concerned that it looks like 

there is no provision for grandfathering those that are overseas 

now. We have a part of a brigade combat team of the famous Red 

Bulls out of Minnesota and surrounding states that are over in Kuwait right now, and there is a lot of confusion about what the policy is going to be. 

I think it is important that we keep faith, that we not change 

things around during the middle of a deployment and so we don’t 

have our soldiers sitting over there wondering, and their families 

wondering, what this policy is going to be. 

So I have a question for you, Mr. Secretary, is will you grandfather this new policy so that the soldiers that are deployed now 

get what they thought they were going to get when they deployed? 

It applies to all, but I am particularly talking about members of 

the Guard and Reserve who are making decisions based on these 

sorts of policies. 

So if you know that answer, I would take it now. If you don’t, 

I would take it for the record. 

[The information referred to can be found in the Appendix on 

page 100.] 

Mr. KLINE. I actually sent you a letter a month ago, January 

18th, to be exact, requesting the answer to this. And I understand 

from talking to staff that that is in the works, and I am going to 

get an answer. 

But I just think it is really, really important that we keep that 

faith and that we not change policy and we not have that kind of 

an impact on our men and women in uniform. 

So that is my first question. 

Secretary PANETTA. Congressman, if I could just respond to that. 

We are looking at that program. It is an important program, and 

I am looking at the implications of what happened with the policy 

change to determine whether or not we should make any adjustments. I am not going to make any promises to you, but I will assure you that I will take a hard look at that before we get you the 

answer. 

Mr. KLINE. Please do. And I would just reiterate that, in my 

opinion, from where I am sitting looking at my own experience and 

talking to many of my constituents and many people in Minnesota, 

who have been really impacted by these deployments, the Red 

Bulls had the longest combat deployment of any unit, Active, Re-
38 

serve, National Guard, any Service; and so I just think it is really, 

really important that we keep faith with those men and women. 

Now I have another really quick question. I know you have answered this before, but I see that we are talking—and I think, General Dempsey, you mentioned that we are looking at—or the Secretary—both of you talked about modifying the retirement system 

for our men and women in uniform. And I just want to underscore 

again that any such changes will not affect those already serving; 

is that correct? 

Secretary PANETTA. Our position, strong position here is that all 

those that are currently serving would be grandfathered in under 

the present system. As the Commission reviews future changes, 

they are not going to be affected. 

Mr. KLINE. Thank you. 

My time has expired, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Loebsack. 

Mr. LOEBSACK. Thank you, Mr. Chair. 

Before I say anything else, I do want to, I guess, concur with Mr. 

Kline. We have Iowans who are in that Red Bull group as well, and 

we have many of the very same concerns in Iowa when it comes 

to the Guard and Reserve. 

And I do want to thank both of you—or all three of you—for your 

service. 

At the outset, I just want to quote from the defense strategy 

when it states that ‘‘the concept of reversibility, including the vectors on which we place our industrial base, our people, our ActiveReserve Component balance, our posture, and our partnership emphasis is a key part of our decision calculus.’’ 

The strategic guidance also states that DOD will ‘‘make every effort to maintain an adequate industrial base.’’ 

I strongly believe that a critical part of our industrial base is, in 

fact, organic based, our arsenals, certainly our ammunition plants 

and our depots. They provide, I believe, a critical function of our 

readiness and our ability to supply our troops in the event that we 

have another conflict. We are drawing down now but in the event 

that we have future conflicts. 

We have got to maintain, I think, the capabilities of the organic 

industrial base to respond to future contingencies—there is no 

doubt about it—and allow for reversibility highlighted in the strategy. And I strongly believe that the Department must ensure that 

this organic manufacturing base be preserved but that it be actively supported. 

Secretary Panetta, Chairman Dempsey, has the Department actively engaged the military services to develop a plan to sustain 

our organic industrial base, including our organic manufacturing 

capabilities? And, if so, what is that plan? 

Secretary PANETTA. Well, that is part and parcel of the whole 

strategy here, which is to maintain that industrial base that you 

talked about. And the industrial base, I think, does include the 

areas you have just defined. We need to have that as part of our 

ability to be able to mobilize and to be able to reverse any steps 

we have taken in order to be prepared for the future. 

We are looking at a broad strategy here as to how best do we 

do this to make sure that, as we fund the industrial base, we do 
39 

it in ways that obviously are cost savings but at the same time 

maintain those areas in place. It is sometimes not an easy balance. 

But my goal is, I do not want to put anybody out of business in 

that area. I think we need to have it, and we are going to do everything we can to ensure that they are around. 

Mr. LOEBSACK. Thank you. 

General Dempsey. 

General DEMPSEY. I can assure you, Congressman, that as the 

service chiefs have briefed me on their plans they have also briefed 

the Secretary, and it is always part of the conversation. 

Mr. LOEBSACK. Thank you. 

The strategic guidance also states that ‘‘the challenges facing the 

United States today and in the future will require that we continue 

to employ National Guard and Reserve forces.’’ 

I guess I have a couple of questions related to that. 

Both Secretary Panetta and Chairman Dempsey, can you explain 

what role DOD’s total force policy will play in implementing the 

new strategic policy across each of the Services? And can you explain further how the total force policy will be implemented in light 

of the proposed force reductions among the Services? And, within 

that, how will the experience and readiness of the Operational Reserve be maintained? 

That is a big question, I understand, and kind of a series of questions. 

General DEMPSEY. Yes, sir, it is a very big question and one that 

is a work in progress. 

What we are taking a look at is—it is fundamentally how we balance Active, Guard, and Reserve. And then within that a subset is, 

as you balance the Force, how much is of it is operational, that is 

to say, ready to go today and how much is strategic, ready to go 

in 30 days, 6 months, or a year. 

And as the service chiefs come and appear before you, they are 

doing that work within their rotational schemes. Every Service has 

a rotational scheme; and they will be able to articulate what portions of each of those components need to be available in those bins 

now, 30 days, 60 days, a year. May not be able to give you the details, but that is what we are working toward. 

Mr. LOEBSACK. All right. 

Mr. Secretary. 

Secretary PANETTA. It is really essential here. We have learned 

a great deal over the last few years in our ability to make the fullest use of the Reserve and the Guard. I mean, if you go out to the 

battlefield you can’t tell the difference between National Guard 

units and Active Duty. They are out there doing exactly the same 

thing, and they are getting tremendous experience, they are getting 

tremendous capabilities. I want to be able to continue that capability so that they are ready to go. And, you know, the Services are 

working on plans to make sure that we have that kind of rotational 

ability. 

Mr. LOEBSACK. I just want to echo that. Our Guard and Reserve 

have been absolutely fantastic, not just in Iowa and Minnesota but 

throughout the country; and they have done a great job in their 

operational roles, not just strategic. 

Thank you very much to all of you. 
40 

Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. I appreciate the gentleman’s concern for the 

workforce, and I would encourage you to look at my bill. Because 

they are going to be making layoffs, you know, planning for next 

January’s sequestration, that could be avoided if we could fix that 

problem now. 

Mr. Rogers. 

Mr. ROGERS. Thank you, Mr. Chairman. I am on your bill, by the 

way; and I share the gentleman from Iowa’s concerns. I have spoken repeatedly in recent months with General Stein and General 

Dunwoody about this very issue. 

And I am sad to see General Dunwoody retire, by the way. She 

is a class act. 

But one of the thing she has assured me is that you all are determined to not get caught like we were caught off guard going into 

Iraq and Afghanistan and Iraq when it came to our depots’ capabilities. And I believe we have heard General Stein when they say 

that. 

Then I look at the budget that has just been proposed and I look 

at depot funding for 2013 and it’s 82 percent of last year, and last 

year the majority of the funding was in OCO [Overseas Contingency Operations]. This year, none of it. Reset was a little better. 

Ninety-three percent of last year all of this funding last year and 

this year is OCO. The numbers for depot maintenance for the Army 

Reserve is 57 percent of last year, for the National Guard is 64 percent of last year. 

And my question is, if we want to make sure we are ready for 

the next—and, by the way, obviously, we are still in a war and we 

have other theaters threatening. Why has depot maintenance been 

cut so much and why is there no funding in the traditional reset 

accounts? 

General Dempsey. 

General DEMPSEY. Yes, sir, I mean, the demand is going down. 

Yes, we remain in conflict, but in Iraq we went from 50,000 a year 

ago down to roughly 300 uniform personnel now. I mean, when 

that demand goes down, so, too, does the demand signal back into 

the depots. Although, as you correctly point out, there will be a period of residual recapitalization and retrofit and so forth. 

But some of what you see reflected there, this wasn’t done as a 

budget drill. It was based upon the demand signal and how we 

have to take action immediate—but let me ask Mr. Hale to comment. 

Secretary HALE. I think some of what you are seeing is, as we 

shift funding from OCO to the base, as the Iraq war ended, some 

of those units, some went to Afghanistan but some are coming 

home, and we need to get their funding back in the base budget. 

That is some of what is driving those trends. 

And then, as General Dempsey said, we are seeing lower requirements in some cases because the tempo of operations will be lower 

when we are out of Iraq. 

Mr. ROGERS. Yes. Those are just much larger percentages of reduction. Just quickly, you know, we still have some real significant 

reset demands that I understand in maybe ’14 and ’15 we may see 
41 

some larger reductions, but those are awfully sharp hills to go off 

this again. 

Secretary HALE. Again, to my knowledge, reset is a difficult 

issue, and it is hard to predict, and it is hard to know exactly when 

their equipment will be available. We are very mindful that we 

need to fix or repair this equipment that is coming out of Iraq and 

that will come out of Afghanistan, and we will do everything we 

can to work with you. I think we have $9.3 billion, if my memory 

serves me right, for reset in fiscal ’13 budget. There is a lot of 

money in there, and we are trying to do our best to make sure it 

works. 

Mr. ROGERS. Is it your plan to do the reset in our depots, all of 

it? 

Secretary HALE. Well, it is a combination. In some cases, equipment is so bad we have to replace it. But where it is fixable, yes, 

we will be in the depots. 

Mr. ROGERS. All of the reset will be done in our depots. 

Secretary HALE. Yes. 

Mr. ROGERS. Great. 

While the Army is downsizing, this decrease in depot maintenance seems to be a little severe, given that we are still in Afghanistan. Do you envision a flattening off of this? 

Again, I go back to when I was first here right when we went 

into Afghanistan and Iraq, and it was 18 months before we were 

really up and running like we should have been. I am concerned 

that this downsizing you all plan to continue it, rather than reach 

a plateau and make sure that we are ready with this depot infrastructure. Give me some reassurance that we are not going to keep 

the—— 

Secretary PANETTA. Well, my whole point here is that we have 

to be ready to mobilize and surge quickly, and I want to be able 

to have the facilities I need in order to do that. That is one of the 

requirements I basically made to the service chiefs and all of them 

to make sure that we have the base on which, if we have to go, 

we have got them and they are in place. Closing those facilities is 

going to hurt us. And so my point is, let’s try to do what we can 

to maintain what we need in order to mobilize quickly. 

Mr. ROGERS. And that is what I am looking for, reassurance. 

These numbers, you are confident that with these cuts you are still 

going to be able to maintain that core capability—— 

Secretary PANETTA. That is correct. 

Mr. ROGERS [continuing]. If we need—in the event we are in 

North Korea or Iran 6 months from now. 

Secretary PANETTA. Yes, absolutely. 

General DEMPSEY. And with these numbers I share the Secretary’s confidence and commitment he just made to you. Sequestration cannot make that commitment. 

Mr. ROGERS. I agree. It can never happen. 

I have got some more questions. My time is up, and I will just 

submit those for the record. 

Thank you, gentlemen, for your service. 

The CHAIRMAN. Thank you very much. 

Ms. Tsongas. 
42 

Ms. TSONGAS. Thank you, Mr. Chairman; and thank you all for 

your testimony. It is quite an array of issues you have to deal with, 

so I give you great credit for being so responsive to all our questions. 

I just wanted to note that past testimony before this committee 

has rightly noted that our Nation’s fiscal crisis represents a threat 

to our national security. As Secretary of State Hillary Clinton and 

former Secretary of Defense Bob Gates have both noted, our rising 

debt has implications for both our influence around the world and 

our ability to project strength. 

To that end, I commend the diligence with which you have prepared the Department’s strategic guidance, along with the fiscal 

year 2013 budget, which was shaped by that guidance. In the initial round of cuts that has been required by the Budget Control 

Act, a ranking member noted—Ranking Member Smith rightly 

noted that it is a decrease in the increase. And we actually had a 

witness last week—sorry, I can’t remember his name but—who 

said that a strategy without fiscal constraint is not a strategy. So 

I think that forces have combined to create a strategy that acknowledges the constraints we deal with but also the world in 

which we live. 

You also noted that—as you are doing this, you noted the fundamental importance of keeping faith with our military personnel. So 

I am going to go to an issue that we have discussed before. 

In your last appearance before the committee, Secretary Panetta, 

we talked about the fact that the military’s rate of sexual assault 

among service members is much too high. In 2010, there were 

2,670 reported sexual assaults in the military. By the Pentagon’s 

own estimate, 13 percent of sexual assaults are reported. And in 

your last testimony you committed, despite budget austerity measures, to absolutely work to confront sexual assault, to encourage 

survivors to come forward, and to continue to fund programs that 

prevent it. 

As we restructure the Force in the coming year, this is a problem 

we must continue to work to address. As we all know, a climate 

of trust is fundamentally important to how our military operates; 

and failure to address it truly does erode that climate. 

In January of this year, you publicized policy, some mandated by 

the fiscal year 2010 NDAA, giving victims who report a sexual assault an option to quickly transfer from their unit in order to remove them from the proximity of an alleged perpetrator. You stated that the DOD would require the retention of written records of 

sexual assault for a period of 50 years to make it easier for service 

members to claim veterans benefits. 

You also announced that $9.3 million would be spent on training 

to give rape investigations and prosecutions more teeth to provide 

service members with the protections they deserve. 

I want to thank you for all your efforts and your commitment to 

sexual assault prevention and response, and I am particularly encouraged by the near doubling of the Department’s budget request 

for the Sexual Assault Prevention and Response Office for fiscal 

year 2012. 

You have many, many tools now in your tool chest that didn’t 

exist in prior years, but these policies will only prove effective if we 
43 

make sure that military commanders and leaders at every level are 

aware of these policies and are able to appropriately respond to it. 

We must make sure that every person that a rape survivor could 

turn to is ready to appropriately respond to protect that service 

member. And we have been learning, as people have been coming 

to our office, that some of these changes are not making themselves 

known on the ground. 

Lower level leadership is the key to changing the culture in the 

military that has allowed this problem to exist for far too long, and 

that is why I am encouraged to hear that you have acknowledged 

that you are conducting an assessment on how the military trains 

commanders and leaders. Still, we have much work to do. 

So my question, Secretary Panetta, is, going forward, how do you 

see this coming together to continue to create a continued strategic 

approach, institutionalizing prevention of and response to sexual 

assault, making sure that all levels of the military are aware of the 

tools in the toolbox and how—and guidance in their response? 

And I left you very with little time. If I have to take an answer 

for the record, I will. 

Secretary PANETTA. Thank you, Congresswoman. Thank you for 

your leadership on this issue. This is very important to me. 

I think we have to take steps to make sure that we have a zero 

tolerance with regard to sexual assault. And you know the problems. All of the steps you outlined, that I presented, we are pushing on every one of those fronts to make sure that we do everything 

possible to try to limit sexual assaults. 

I have got—the final thing is really what you mentioned, which 

is we have got to get our command structure to be a lot more sensitive about these issues, to recognize sexual assault when it takes 

place, and to act on it, not to simply ignore it. That is one of the 

important things. 

Ms. TSONGAS. Thank you, and we will follow up in future hearings. Thank you. 

The CHAIRMAN. Mr. Franks. 

Mr. FRANKS. Well, thank you, Mr. Chairman. 

Gentlemen, thank you for being here, General Dempsey, Secretary Panetta, Mr. Hale. 

Secretary Panetta, I guess, first of all, I would like to echo the 

concerns of Mr. Thornberry regarding the Administration’s consideration or potential proposal of reducing our nuclear—our strategic 

nuclear inventory by as much as 80 percent. I mean, I have to suggest to you I consider that reckless lunacy. And your response, in 

all deference to you, sir, was really a nonresponse; and it did little 

to assuage my concerns. 

And I just have to tell you for the record, given the need for a 

broad umbrella that America represents to the world in terms of 

our nuclear deterrent, given the importance of being able to demonstrate in the mind of any enemy, even those that are not altogether sound, of our overwhelming capability to respond and overwhelm any aggression on the part of someone with nuclear capability, I just want to go on record as saying that there are many 

of us that are going to do everything we possibly can to make sure 

that this preposterous notion does not gain any real traction. 
44 

So, with that said, let me shift gears and ask you a question related to missile defense. 

As you know, homeland defense is listed as the first policy priority in the Ballistic Missile Defense Review; and, furthermore, the 

ground-based midcourse defense system is currently the only proven missile defense system that protects the U.S. homeland from 

long-range ballistic missile attacks. And yet, with that said, the fiscal year ’13 budget request is $250 million less than was enacted 

in fiscal year ’12, which is a follow-on to a decrease of $180 million 

in fiscal year ’11. 

Now, the budget cuts to these systems makes it very clear to me 

that the Administration is willing to diminish our only system that 

protects—our only prudent system that protects our homeland from 

long-range ballistic missiles. And, furthermore, the budget request 

increases funds for several of the European Phased Adaptive Approach systems which, to the casual observer, might indicate that 

the Administration has actually subordinated protecting the continental U.S. from ballistic missiles to that of protecting Europe. 

Now, unless you or your Department or this Administration has 

assessed that the threat to our homeland from long-range ballistic 

missiles has declined such that GMD [Ground-Based Midcourse Defense] is no longer the critical system we all thought it was or unless somehow the Administration’s commitment to protecting the 

homeland has in some way declined, I guess I am in the middle of 

a conundrum here, Mr. Secretary. 

And so my question is this: Would you explain, in your mind, in 

the policy of the Department, whether GMD is indeed a critical 

system to protect our national security? And, if so, how does this 

rather specific and direct cut to these systems reflect that commitment? 

Secretary PANETTA. First and foremost, Congressman, I obviously 

share your concern that we have to do everything possible to protect our homeland; and, for that reason, we maintain the full nuclear deterrent here and in the triad. Every aspect of the triad is 

maintained, because I believe that is extremely important to our 

ability to protect our homeland. 

With regard to the specific decision on the funds there, even 

though it is less than what we have provided, the fact is that it 

meets our needs in terms of upgrading the missile system that we 

have. You know, our missile system is in place, it is ready to go, 

it is effective. We are not going to reduce that effectiveness in any 

way here. 

The sole point here is to try to do what we can to, obviously, 

achieve some savings but at the same time make sure that it 

doesn’t impact on our readiness. And I can assure you that nothing 

in this budget impacts on our ability to respond and protect this 

country under the nuclear deterrent. 

Mr. FRANKS. Well, Mr. Secretary, I don’t doubt for a moment 

your commitment to this country. I would just suggest to you that 

the policies that we are hearing here should alarm us all. 

And with that, Mr. Chairman, I yield back. 

The CHAIRMAN. Thank you. 

Ms. Pingree. 

Ms. PINGREE. Thank you very much, Mr. Chair. 
45 

Thank you all for your time today, your testimony, and for your 

service to this country. 

Secretary Panetta, I truly appreciate hearing the steps that the 

DOD has taken towards a sustainable defense budget and how it 

correlates to the President’s new strategic guidance. With emphasis 

placed on the need to keep the agile and flexible military force, I 

will be interested to hear in the future how the force structure will 

serve those needs. Specifically, the Navy already has agility built 

into its force, which would help support strategic targeted operations. 

In addition to reevaluating our strategy after 10 years of war, I 

do believe that we must continue to provide our service members 

and their families the support that they need, and I am pleased to 

hear you speaking about that today. We truly need to keep our 

promise to the honorable men and women who have earned their 

benefits. I am also pleased to hear that it is a priority of yours. 

And I was very pleased with the testimony of my colleague, Ms. 

Tsongas, that it is a priority of yours and General Dempsey to take 

care of our military as well as addressing military sexual trauma; 

and I agree with her that there is still a great deal that needs to 

be done in regards to that. 

I want to talk a little bit about Afghanistan. The deaths of bin 

Laden, Anwar al-Awlaki, and the elimination of much of Al Qaeda’s 

leadership, are testament to the success and effectiveness of the 

small, rapid missions instead of the nation-building missions of the 

past. The emphasis, based on a lily pad strategy, will help us continue to address our national security priorities as well as draw 

down unnecessary troop levels in Europe, for example. 

Secretary Panetta, I was pleased to hear you announce a few 

weeks ago that the drawdown from Afghanistan would begin as 

early as mid-2013. Although I appreciate accelerating the drawdown slightly, I would like to hear more about the number of 

troops that will be withdrawn in 2013, as well as the schedule set 

for the pace of withdrawal of the 68,000 troops who will remain. 

As a long-standing opponent of the war, I also have serious concerns that the lessons learned from Iraq are not being implemented 

fully in Afghanistan. As the DOD attempts to rein in costs, I am 

puzzled why contracting in Afghanistan has not been more closely 

scrutinized, especially since many of the contractors overlap in both 

Iraq and Afghanistan. 

The Special Inspector General for Iraq Reconstruction has highlighted over half a billion dollars, $640 million to be exact, that 

could be used more effectively elsewhere and almost a third, $217 

million, of which were payments to contractors for reimbursements 

that were not supported by any documentation. 

For example, Inspector General Stuart Bowen specified that an 

audit of Anham LLC, which has contracts in both Afghanistan and 

Iraq totaling almost $4 billion, revealed they overbilled DOD by at 

least $4.4 million for spare parts, including $900 for a switch valued at $7.05. 

Now I know I have asked a lot here today and there is a limited 

amount of time available, but let me ask a couple of questions; and 

if you are able to discuss it, that would be great. If not, I will take 

the answers for the record. 
46 

My questions are: What steps have been taken to implement the 

lessons learned from Iraq in the case of Afghanistan? Has it been 

successful and what more can we do at this time of the important 

budget-cutting that is currently going on? 

Secretary PANETTA. Congresswoman, there is no question that a 

lot of lessons were learned in Iraq; and many of those lessons are 

being applied in Afghanistan. 

I think the good news is that 2011 was really kind of a turning 

point. In 2011, the level of violence went down. We weakened the 

Taliban significantly. More importantly, the Afghan Army really 

came into its own operationally. It started really being effective in 

terms of providing security. 

We have gone through several tranches of areas where we are 

transitioning to Afghan security and governance. The second 

tranche, which we just have gone through and announced, when we 

complete that over 50 percent of the population will be under Afghan security and Afghan control. We are going to continue those 

tranches through 2012 as well as into 2013. 

In 2013, our goal is that, when the final tranche is completed, 

that the Afghans will take the lead with regards to combat operations and we will be in a support mode. Although we will be combat ready, we will basically be operating in support through the remainder of 2014. 

We are on track now, according to Lisbon, to be able to draw 

down with our ISAF forces by the end of 2014; and then the discussion will be what kind of enduring presence we have there. 

But bottom line is I think we are on the right track with regard 

to completing our mission in Afghanistan. 

Ms. PINGREE. Thank you. 

The CHAIRMAN. Thank you, Mr. Secretary. 

Mr. Conaway. 

Mr. CONAWAY. Thank you, Mr. Chairman; and, gentlemen, thank 

you for your long service and your demonstrated patience this 

morning with being here. 

Leon, I want to add my comments to what Rob Andrews said. 

Thank you for your forward lean on the audit issue and sustaining 

an audit, property resourcing that. You and Bob Hale and your 

team, the ripples that your comments have made and the efforts 

that have gone forward since October I have seen them felt all 

down through the organization, which is where it has got to get 

done. So thank you for that, and I appreciate it. 

We still don’t know yet from General Allen—you said yesterday 

to the Senate—how we are going to bring home the 23,000 that are 

scheduled this year. I am just worried that your comments of the 

last few weeks were a little premature. I don’t think anybody says 

it has gotten a whole lot safer in the east of Afghanistan. 

And I understand the glowing comments you were just making 

about the Afghan Army. Concern that fighting season in 2013 is 

split by Ramadan and that we would have our folks in a position 

to allow something to go on in the second half right after Ramadan, 

the last half of that fighting season in 2013, is counterproductive 

to what we are trying to get done. 

Can you help me understand—I am in a position to have some 

information on intelligence as to what is going on, and it did not— 
47 

I was a bit shocked with your comments, because it is not marrying 

up with the evidence I had at that point in time from things improving on the ground that rapidly to—and since then that questions of certain folks you should know just makes your—maybe you 

were misquoted or maybe overstated with respect to that, but I am 

concerned that we—— 

And then one final question. 

Secretary PANETTA. Sure. 

Mr. CONAWAY. Rumors more recently that even more accelerated 

drawdowns are going on, and the question yesterday in the Senate 

was that no decision was made. Does that imply that those conversations are, in fact, going on within the Administration separate 

and apart from what General Allen is telling you and the commanders on the ground are telling you? That would be of great concern to us if these are political decisions being driven within the 

White House for whatever reason, that they would start having 

those conversations. Can you help me understand what is going on 

there? 

Secretary PANETTA. Yes, first and foremost, after 40 years, I am 

never responsible for any headlines on any article that involves 

comments that you make. 

My comments were perfectly in line with our commitments under 

Lisbon. And to prove it, all of the defense ministers in the last 

meeting I attended, all of them concur in the same strategy, which 

is we are in together and out together by 2014, and we are all following exactly the same process here. We are doing the tranches. 

We are doing the transition to Afghan authorities. 

Obviously, we are watching it closely to make sure that it is 

working. So far, it is working. The Afghan Army is doing a great 

job. We have got to continue to put them in place. We have got to 

make sure that they are able to achieve security. 

Everything is conditions-based when you are in war. That is a 

bottom line here. So we are going to be tracking this very carefully 

as we go through that process. 

With regards to the decisions, obviously, we are in the process 

of how do we draw down to 23,000 the surge, and General Allen 

will present a plan to General Dempsey within a few months to be 

able to show how that will be accomplished. 

And then, beyond that, frankly, no decisions have been made, because we are looking at the situation on the ground, what we are 

going to need in order to achieve the mission that we are all interested in achieving. 

Mr. CONAWAY. So we are still set on what the mission is and no 

instructions to change the battle plan to reflect lower levels of 

American troops beyond the 68,000. None of that is in the works 

or pushing forward at all. 

Well, thank you for that. 

One minor—one issue with respect to the budget, I think it was 

also a $600 million decrease in defense funding because of the 

switch—or adding $600 million for green energy or renewable energy efforts, that is a cut to defense spending. It is not your core 

mission. You know, we are going to pay—and Secretary Mabus is 

bragging on the—paying $15 a gallon for jet fuel to fly F–18s as 

a demonstration project, I guess; and it just makes no sense in 
48 

these kinds of budgetary constraints that we would pay $15 a gallon. 

And even if you ramp that industry up as good as it is going to 

get, you are going to be paying twice for that blend of algae and 

fossil fuels over just what straight fossil fuel is. So I am not real 

keen on spending that $600 million. I think you could find a better 

place to spend $600 million in defending this country, as opposed 

to demonstration projects that might not yield the benefits that we 

want. 

So, again, I appreciate your long service to our country. 

I yield back. 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. Critz. 

Mr. CRITZ. Thank you, Mr. Chairman. 

Secretary Panetta, General Dempsey, Secretary Hale, thanks so 

much for being here. Thank you for your service to this country. 

Secretary Panetta, the Air Force recently announced force structure changes in light of the new national defense strategy. These 

changes include major aircraft reductions above combat and mobility forces and announced the closing of an Air Reserve station in 

Pittsburgh, Pennsylvania, outside of BRAC process. 

The base serves 1,400 Active Reserve and Guard units of both 

Navy and Air Force and has tens of millions of dollars appropriated 

for improvements. Can you tell me if the decision to close the base 

was made in coordination with your office or with other stakeholders and how many other bases are being identified for unilateral Department of Defense closure outside of the BRAC process? 

Secretary PANETTA. Congressman, I really recommend that you 

ask the chief of the Air Force that question. Because the decision 

to make that decision was in his hands as part of the strategy here 

that was being implemented to kind of fulfill the strategic goals 

that we were after. So on that specific decision I would recommend 

you ask him that question. 

Mr. CRITZ. Okay, thank you. And it plays actually into a larger 

role. Because, as you know and are aware, that the Air Force’s restructuring plan proposes a reduction of 65 C–130 tactical 

airlifters, getting us to a total fleet projection of 318 aircraft. Part 

of that is because we are going to be lowering the Army to a structure of about 490,000 members. My concern is that pre-9/11 the 

Army was at about 480,000, so very similarly sized, and we had 

530 C–130 tactical airlifters. And I am just curious as to the Air 

Force’s new restructuring plan isn’t realistic, given previous demands for tactical airlift and future demands in this new strategy. 

Can you elaborate on any of this, the Secretary or General 

Dempsey? 

General DEMPSEY. I cannot elaborate on that specific issue except to say that the collaboration between the Air Force and the 

Army on their lift requirements, that has been accomplished, and 

you will have both of them here at some point in the future. 

Mr. CRITZ. Right. Yes. 

General DEMPSEY. But, you know, this is about accounting rules. 

So if you have X number of airborne brigades, how much lift do you 

need; X number of ground combat brigades, how much lift do you 
49 

need? And those accounting rules have been adjusted over time 

based on lessons learned. 

Do you want to add anything. 

Secretary HALE. Well, I would add that C–130s are important to 

us, but all our studies show we have too many, frankly. And so 

what you are seeing is adjusting in tough budget times to go down 

to what we believe are the minimum requirements that meet our 

wartime needs. 

Mr. CRITZ. Yes, well, and part of my concern is that we are actually adding, I guess, duties to the Air Force’s C–130, because they 

are going to be doing the C–27J lift as well. 

And just as a sort of general idea, I look at the C–27J, it was 

going to be sort of a pickup truck, and a C–130 might be more like 

a tractor trailer truck. And I am just curious if the C–130 going 

to be able to get into the same airports as the C–27 and is it really 

a cost savings? Or are we going to start saying, well, we can’t get 

into these places, so we are going to up the tempo for the Chinooks 

to do what the C–130s can’t do? 

I guess my question is long-term. This is a short-term savings. 

Is it also a long-term savings? Have we looked at the 20-, 30-year 

life cycle of these aircraft? 

Secretary PANETTA. I think they have looked at the long-term 

savings that would be achieved here. I mean, part of the goal in 

developing our strategy was obviously to ensure that we had not 

only agility and ability to deploy quickly but that what we were 

using was multimission and designed to accomplish a series of missions, not just one. And the problem with that one aircraft was that 

it was kind of single-mission oriented. 

Mr. CRITZ. Right. 

Secretary PANETTA. And that is why I think the Air Force recommended that we move towards that choice of the C–130s. 

Mr. CRITZ. Okay, I am a little suspicious. I have just heard from 

some of my Army friends that they like the greens, they like the 

same uniform in the aircraft above them, and it makes them a little more comfortable. 

General DEMPSEY. That shocks me, Congressman, for the record. 

Mr. CRITZ. My last question, in a very short amount of time, is 

we have used the National Guard at a level in the last 10 years 

in OIF [Operation Iraqi Freedom] and OEF [Operation Enduring 

Freedom] that we have never seen in the past. The future defense 

plan, does it maintain that same tempo of use of National Guards, 

or are we going to see—and I don’t want to say diminishing, but 

much less use of National Guard in forward operations? 

General DEMPSEY. What we do, sir, is we respond to the demand. 

So as the combatant commanders put a demand on the system, the 

service chiefs meet it. The answer to your question is we will have 

Active Component and notably Guard and Reserve in an 

ARFORGEN [Army Force Generation] cycle that meets the demand. If the demand goes down, there will be fewer demanded. 

Mr. CRITZ. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. Mr. Wittman. 

Mr. WITTMAN. Thank you, Mr. Chairman. 

And Secretary Panetta, General Dempsey, Secretary Hale, thank 

you so much for joining us today and thank you for your service. 
50 

Secretary Panetta, I want to begin with you and go back to some 

of the statements you made about this effort of budget reductions 

being driven by strategy and ask you this: I know that part of that 

strategy is an increased operational capability and presence in both 

the Middle East and the Asia-Pacific. Within that context, we are 

looking now about an additional SSN [nuclear-powered attack submarine] being moved outside of FYDP; and we know that in that 

particular theater, especially the Asia-Pacific, the SSN is a very 

frequently utilized asset. 

Also, we are going to be pushing the SSBN(X) [Ohio replacement 

ballistic missile submarine] 2 years further down the road, so it is 

not going to be operational or deployable until at least the 2020s. 

And we are going to have a significant period of time where we 

have a reduced number of ballistic missile submarines in a time 

where we know that is a very critical element to our nuclear triad. 

Looking at those things strategically and where we are reemphasizing our efforts, that seems to be counter to that. 

And I would ask this: With that in mind, have we looked at and 

can you tell me—from the perspective of China, can you tell me 

how many subs they are building per year and how many submarines they will have in fiscal year ’17 and beyond, just to have 

a comparison as to where we are going to be strategically? 

General DEMPSEY. If I could, Congressman, we should take that 

one for the record and make it in a classified setting. 

[The information referred to can be found in the Appendix on 

page 101.] 

Mr. WITTMAN. Okay, very good. 

Secretary PANETTA. Clearly, our goal here was to not only maintain but to strengthen our presence in the Pacific. That is the reason, frankly, we maintained 11 carriers. The Navy assures me that 

we have more than adequate submarine fleet to be able to accompany our forces there. We have delayed the Ohio class based on 

costs and trying to make sure that we could control those cost overruns as we went through the process, but I can assure you are we 

are still committed to getting that online. 

Mr. WITTMAN. Another issue, too, there with our fleet as we are 

looking at the reduction in the size of the fleet, you talk about the 

seven cruisers that are going to be brought out because of the cost 

of modernizing them to a BMD [Ballistic Missile Defense] platform. 

But you are also looking, too, at a fleet that has been really 

pushed. We are talking about maintenance that has been put off. 

So many ships, as far as their Ao, their operational availability, is 

really being pushed. 

If we are looking at that in a strategy that denotes more challenges there in the future, especially with our naval capability— 

and just having been to an exercise, a Bold Alligator, and looking 

at our operational capability within the Marine Corps that is necessitated by ships, and looking also at our amphibious ship decline 

in numbers, I would ask, too, how are we going to reconcile that 

with operational availability, with ship availability based on backlog of maintenance and our L class ships essentially going down, 

yet we are going to be emphasizing that capability as part of our 

strategy? How do we fix or how do we address that—what I see as 

a conflict? 
51 

General DEMPSEY. If I could take a shot at that one, Congressman, you are talking about a specific single Service. In this case, 

you are talking about the Navy. 

I mentioned in my opening comment we really need to think 

about this as a joint force; and what we are doing as service chiefs 

and as joint chiefs is looking at our war plans and determining how 

we meet the demands of the war plans innovatively, differently, 

creatively, and integrate those capabilities that we did not have 10 

years ago. 

So while it might seem that the Navy, actually, as part of this 

Joint Force has actually benefited from this new strategy as it has 

shifted to the Pacific, but it hasn’t been without cost to them at all. 

And the entire Joint Force has to be appreciated to understand 

how we meet the needs of the Nation in terms of the new strategy. 

Mr. WITTMAN. Sure. I certainly appreciate that. 

I guess my concern is, is that with that reemphasis in those 

areas and looking at this new strategy, while I understand the 

cross capability that is there, it still appears to me, though, as 

where we are going to be calling on our Navy. In many instances, 

the capacity and capability there is going to be pushed to the absolute maximum. 

We look at the number of MEBs [Marine Expeditionary Brigades] that can be deployed and the things that we are asking our 

folks in the Marine Corps and the Navy to do in a joint atmosphere. It seems to me that they are going to be pushed in a situation where it may not be the most challenging of situations, where 

we say, wow, we can’t do all the things that we need to do. 

So my concern is that if this is indeed being driven by strategy— 

and, Mr. Secretary, you spoke of increased risk—my question is, is 

are these scenarios, is it an acceptable risk? In your mind, is it an 

acceptable risk? 

Secretary PANETTA. Well, I think it is an acceptable risk. We are 

going to be maintaining 285 ships. We have got 285 ships now. We 

will have 285 ships in 2017. In that next 5-year period our hope 

is to increase the fleet to 300 ships. So our goal is to try to make 

sure that we have a flexible, deployable, and capable Navy that is 

out there. 

The CHAIRMAN. Thank you. 

Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman; and thank you, Mr. 

Secretary and General Dempsey, for being here today. 

I know that the development of a new strategy and related 

changes in the budget requests were very difficult undertakings, 

and some of the responses that I have heard from some on the committee to your work has been unfounded criticism. There is no way 

a 1-percent reduction of the Pentagon’s base budget from 2012 to 

2013 could mean the difference between the world’s greatest military and a hollowed-out force; and under the Administration’s proposal, the DOD base budget will remain essentially constant between 2013 and 2017, after adjusting for inflation. 

I believe there is room for additional savings in the Department’s 

budget, and those may very well come when we can get some clean 

accounting statements. And I am glad to know that that time period, Mr. Secretary, you have moved up to 2014, I believe, right? 
52 

And I share your concern about and your opposition to across-theboard cuts that would be mandated by sequestration. 

But before I ask any questions, I would like to ask a couple of 

things. Last October, there were records that I requested, and 

those records were not submitted until last week. Can you be more 

prompt after this hearing with supplying any records or answers 

that are requested? 

Secretary PANETTA. Congressman, I was not aware of that. But, 

in the future, if you make a request for documents and you don’t 

get them in an expedited way, I wish you would call me and let 

me know; and we will make sure you get them in time. 

Mr. JOHNSON. All right. Thank you. 

And also in that regard, Mr. Secretary, a DOD report on rare 

earth elements was due in June of 2011; and it has not been completed as of yet. And we were also promised an interim report in 

December, but we have received no interim report. Can this be gotten to us quickly? 

Secretary HALE. That one is an interagency coordination. I know 

it is late. I am told it will be very soon. 

Mr. JOHNSON. Thank you. Any timeframe? 

Secretary HALE. I don’t have a specific time. Let’s get back to you 

with more specifics. 

[The information referred to can be found in the Appendix on 

page 101.] 

Mr. JOHNSON. All right. Thank you. 

Secretary PANETTA. My legislative aide is saying a couple of 

weeks. We hope that will be in that period. 

Mr. JOHNSON. All right. Thank you. That is great. 

Mr. Secretary, I am concerned that the pivot to the Asia-Pacific 

increases the risk of an increasingly adversarial military competition with China, and that is not in either country’s best interests. 

How do we execute this new strategy without beginning a new Cold 

War? And I might add that I definitely see a need for us to reposition our thinking in terms of the Asia-Pacific region. 

Secretary PANETTA. I just had this discussion with the vice president of China yesterday. We are—you know, we are a Pacific 

power. They are a Pacific power. And while we have had our differences, the fact is we have some common concerns that we need 

to confront. 

One is nuclear proliferation in that area, and it is as much a concern to China as it is to us. 

Secondly, it is the whole issue of ensuring that trade routes and 

commerce flows freely in that area. That is another area that we 

have a joint concern. 

Thirdly, we have humanitarian needs in that area that we need 

to respond to, and they are as much concerned about that as we 

are. Area after area, there are some common areas that we have 

concerns that will help us improve the regional cooperation in that 

area. That is the kind of relationship we would like to have with 

China, and that is what we hope to develop. But in order to do that 

we have to do that from a position of strength, and that is why we 

have to maintain our presence in the Pacific. 

Mr. JOHNSON. Thank you, Mr. Secretary. 

The CHAIRMAN. Thank you. 
53 

Mr. Hunter. 

Mr. HUNTER. Thank you, Mr. Chairman. 

Thank you all for your service and your time. 

Let me start with this. This is a quote from Secretary Perry and 

General Shalikashvili, Chairmen of the Joint Chiefs of Staff under 

President Clinton: 

‘‘A dramatic reduction in the threat allowed for a significant reduction in the size of our military forces. The most obvious benefit 

of reductions in force and support structure was a reduction in the 

defense budget. This peace dividend—I am quoting—this peace dividend, amounting to about $100 billion a year, has been a major 

contributor to the balanced budget that our country now enjoys. 

The question, of course, is did the Nation pay too high a price for 

this benefit? In particular, was the capability of the military forces 

reduced to the extent that they cannot adequately protect American national interests? Our answer to that question is an emphatic 

no.’’ 

A year and a half later, terrorists murdered about 3,000 Americans and off we went to war. And, as Secretary Rumsfeld said, we 

went with the Army we have, not the one that we wanted or 

wished for. 

I would like to know in general, how do you differentiate yourself 

from these two leaders in that time who were presiding over what 

they would not call—but we look back and see—was a hollowing 

out of the military? 

General DEMPSEY. Well, I differentiate from them because I 

think we each face our own different circumstances. 

I mean, you know, I mentioned earlier in response to another 

question that the fiscal reality of the ’90s is different than the fiscal reality of this decade. And it seems to me that, as others have 

testified, that we can only remain a global power if we have got 

that balance, the aggregate of diplomatic, economic, and military 

power. And what you are seeing us do is try to reconcile a different 

set of circumstances from any—from any of our predecessors and 

to ensure that we do form a strategy and map the budget to it, as 

opposed to just reacting to budget cuts. And I can only assure you 

we did that and that this will have to be seen as having been effective or not over time. 

Mr. HUNTER. Thank you, General. 

Okay, moving on then, let me hit on to a few other things in no 

particular order here. 

One of the main points of the budget is calling for more capability in the Guard and Reserve. Yet the NGREA, that is National 

Guard Reserve Equipment Account, is zeroed out in this budget. 

There is no request for NGREA at all when we are going to put 

more on the backs of our Guard and Reserve. 

The National Guard Reserve Modernization account, reduced by 

44 percent. 

Navy Reserve over the next 5 years goes down by 9,000 sailors 

based on current capability, even though in 5 years we will have 

LCS [Littoral Combat Ship] and a lot of different programs, more 

UAVs [unmanned aerial vehicles], Fire Scouts, which we will then 

need to get them back for and that will be more expensive, shortsighted. 
54 

Air Force is reducing, it looks like, two Active and five Reserve 

squadrons. It should be the other way around, just from our point 

of view, kind of common sense. If you are there to save money, you 

look at these Reserve and National Guard air squadrons. They are 

the ones that pulled a lot of weight in Iraq and Afghanistan. 

I think Chairman Kline had a statement on that matter. It just 

doesn’t make sense, two Active, five Reserve, when you could support a lot more Reserve for the cost of one Active. 

Drones and technologies, we are to ask for half as many Reapers. 

Even though we say the strategy is so that we could rely more on 

technology, we are reducing Reapers in half. We are reducing the 

number of Global Hawks. We cancelled the Navy’s next generation 

of UAV because the Fire Scout can do the job. That is all fine if 

your argument wasn’t that we are going to rely more on this type 

of technology, but then you cut it at the same time. That doesn’t 

make sense to me. 

Third, Asia-Pacific. We fund ship repair at 100 percent, which we 

all know is about 80 percent of what it really needs. You still have 

ships going out that are not even close to being capable to do their 

job. 

You cut seven cruisers—it looks to me like we cut seven cruisers 

so that we could fund 100 percent of 80 percent of the Navy’s 

needs, if that makes sense, meaning you cut seven cruisers so that 

you can—we don’t want to have to fix the things that are expensive 

to fix, so we just let them go. That is what is happening here. 

Navy refuses to down select on the LCS. That is Congress’ problem as well as DOD’s, in my opinion. We should be able to at least 

down-select on an LCS. I don’t care which one it is. You can’t train 

for the same class. You are training different sailors to work on two 

different ships, different logistical tails, different modules—or same 

modules but different command decks inside. You are going to have 

to have sailors get trained for two totally different things. 

And, lastly, something that I noticed, the joint light tactical vehicle, you are going to have contracts going out in June of this year. 

Ford came to us and said, hey, if you prolong this a year, Ford will 

get involved and save you hundreds of millions of dollars; and we 

said no. 

There are some major problems with this budget. My main point 

is this: The strategy and the budget contradict each other. They do 

not go hand in hand, they don’t fit, and it looks to me like the 

things that we are trying to accomplish are not going to be paid 

for. 

Anyway, that is my opinion; and I am sticking to it. 

Thank you, Mr. Chairman. Thank you, gentlemen, again for your 

service. I appreciate it. Thanks for what you are doing and for coming in here with it. 

General DEMPSEY. Thanks for reading the thing. Obviously, you 

studied it quite a bit. 

The CHAIRMAN. The gentleman’s time has expired. Will you 

please answer those questions for the record? 

General DEMPSEY. We would be happy to. 

[The information referred to can be found in the Appendix on 

page 101.] 

The CHAIRMAN. Ms. Hochul. 
55 

Ms. HOCHUL. Thank you, Mr. Chairman. Thank you for joining 

us today and for your service to our country. 

Certainly I echo some of these sentiments, because we are concerned about the need to cut costs. That is the great challenge that 

faces you, and we appreciate the stress that you are under to accomplish this. However, it does seem that the more cost-effective 

way to approach it is to continue standing Reserve and Guard 

units in a stronger capacity than has been announced thus far. 

So we are asking for your consideration. As a representative of 

the Niagara Falls Air Reserve Station, we are expected to, if all 

goes according to, as projected, to lose 16 percent of the Nation’s 

Guard. That is a big hit for an area like ours. 

And as you were talking I took to heart what you said, Mr. Secretary, about the need to have jobs when our veterans come home. 

My part of the country sends a lot of people to war, and they come 

back to our area and the jobs are just not there. So we treasure 

these jobs as well as the proximity we have to the border of Canada. 

We believe that you will certainly understand the need to ensure 

that we have a continued mission, if not the C–130s that the Guard 

currently has but another mission to fall in its place; and that is 

very important for a variety of reasons. 

But, again, what you have said about our military security being 

linked to our economic security and our industrial base and our 

manufacturing, do you envision a policy or what are your thoughts 

on a policy whereby, using our limited Department of Defense procurement dollars, do we actually give preferences to domestically 

produced materials? Is that something under consideration? Is that 

something that you think would help our jobs situation back home, 

to shore up our economy and our industrial base as well, sir? 

Secretary PANETTA. Well, let me begin by saying you can’t view 

the Defense Department budget as a jobs program. I know there 

are jobs that are dependent on it. I know we care an awful lot 

about the people that work under our Department. But the bottom 

line is, what do we need in order to get the best defense for this 

country and where can we get it? 

And, frankly, we do look at the U.S. industrial base as supplying, 

frankly, the biggest part of that. Why? Because I can’t rely on—I 

don’t want to rely on foreign suppliers for that. I have got to rely 

on U.S. suppliers in the event that we have a crisis and we have 

got to respond. 

Ms. HOCHUL. I agree with you 100 percent. 

And I would like your comments added, sir. 

General DEMPSEY. Yes, thanks. Thank you, ma’am. 

Just on this Active, Guard, and Reserve issue, we have really got 

to be clear—I mean, the Active is Active because they are full-time, 

24/7/365; and we fund them to be full-time so that they can be the 

most responsive for us. The Guard and Reserve, if they were fulltime, if they were ready on the same timeline, would cost exactly 

the same thing. 

But yet, you know, on occasion we will be told the Guard and Reserve are cheaper. They are, because we only employ them for X 

number of days a year. Once you bring them in and you want them 

to serve for 365, the fully encumbered costs are identical. The ques-
56 

tion for the Nation that we are trying to answer is how much Active, because you need them right now, how much Guard and Reserve, and then, within that, how many of them do you need within 

30 days, 180 days, or a year? 

So, believe me, we want to do what is best for the Nation, but 

this is not a—you know, the Active, Guard, Reserve, it is not a dichotomy, it is a trichotomy, has to be handled very carefully, or we 

will talk ourselves into something that won’t deliver when we need 

it to deliver. 

Ms. HOCHUL. And I take that to heart. But I want to get back 

to the Secretary’s comments. Is there anything that this Congress 

can do to assist in your stated goal, which I share, that we can do 

for more our industrial base, our local manufacturing, and, again, 

our national security, as opposed to relying on manufactured items 

from countries that may turn on us and may not end up being our 

friends. Is that something we can work on together? Because I 

think that is important. 

Secretary PANETTA. Yes, absolutely. I would have no problem 

working with you on that aspect, because I want to be able to turn 

to our base in this country when we have to respond and mobilize. 

Ms. HOCHUL. Thank you very much. 

Mr. Chairman, I yield back the balance of my time. 

The CHAIRMAN. Thank you. 

Mr. Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Gentlemen, I appreciate you hanging around just for my questions. 

General, you spoke about the ISR capabilities. I represent Robins 

Air Force Base, and we have the JASORS [Joint Advanced Special 

Operations Radio System] there. And it is not appropriate here, but 

I would like to get some information to you. There is a very efficient way to increase the capabilities of that unit and those planes 

that would, I think, be a significant cost savings, so I will provide 

that information for all of you. I will work my staff to your staff. 

I will tell you I did not vote for sequestration. I represent Robins 

Air Force Base. As I said, I am from Georgia. We have Fort 

Benning. We have Fort Gordon. We have Fort Stewart. We have 

Moody Air Force Base. We have King’s Bay. 

I also, as the chairman would tell you, that I am one of the ones 

that did not sign the letter saying no cuts to the military. I recognize that we are going to have to have some reductions. 

What I see happening, though, through the communities that 

have such a large military industrial base, is the fear between sequestration and the talk of BRAC. It is disrupting businesses, 

whether it is an entrepreneur that wants to build a restaurant or 

a city who is trying to determine what sewer capacity they need 

or water capacity or other types of infrastructure they need. It is 

I think in the end causing us more unemployment because of that 

uncertainty. 

Zell Miller was one of Georgia’s governors and was a U.S. Senator. And one of the things that he did—and he received some criticism for it when he did it, but in the end it worked—he went 

through a process called redirection where he asked every agency 

to deliver—the agency head was to deliver the 5 percent that they 
57 

would cut. It wasn’t up to any of the elected officials. The agency 

heads delivered the 5 percent that they would cut. 

So your base commander could deliver the 5 percent that they 

would take out, and then they were allowed to present back to a 

command where they would put 21⁄2 percent of that. The net result 

of that was a 21⁄2 percent reduction and spending and, quite honestly, a more efficient agency. 

And so, as somebody who has come from a State appropriations 

committee—and Secretary Panetta and General and Comptroller, I 

know that you all have more experience than I do with these 

issues—but that is something that we did see that worked. 

I would also like to say, Mr. Secretary, there are 89 of us that 

are freshmen Republicans. We would very much enjoy a discussion 

with the President. That is something that we are not allowed. I 

wish we could. I wish that that was said about us working together 

could happen, and obviously that means that you have those meetings. 

But I would ask, as we talk about these cuts, you know, there 

is no discussion of cutting food stamps. We are talking about cutting veterans’ benefits. You know, there is not talk of cutting housing programs or other things. I mean, the things that have been 

outlined to us are cuts to the military. And we need your help. 

I mean, when Fox News and CNN are on—and I watch Fox, I 

will tell you—but CNN is a Georgia company and—I mean, we 

need you out there talking about the damage that sequestration is 

going to do to national security, to our economy, the military industrial complex. 

Those people work. My people at Robins want to get up in the 

morning and go to work and have a job. They want to build an airplane. 

So I would just ask that we are going to do everything we can 

to have your back, and we need you out there outlining the damage 

that can be done for us. 

Secretary PANETTA. Congressman, thank you for those comments; and, obviously, I will continue to talk about the impact that 

sequester would have. And I agree with you. Just having the shadow of that out there is of tremendous concern to communities 

across the country, to industries across the country, and is something that we really have to try to get rid of. 

But just to—bottom line here is we were handed a number for 

defense reductions. We stepped up to the plate. We met our obligations to try to do this in a way that would still preserve for us an 

effective force to deal with the threats. But you can’t balance the 

budget on the backs of defense, either. 

Mr. SCOTT. Absolutely. 

Secretary PANETTA. You have got to look at every other area in 

the budget in order to deal with the deficits that we are confronting; and I just hope Congress ultimately makes the decision, 

along with the President, to do that. 

Mr. SCOTT. And, Mr. Secretary that is the statement that we 

need to hear over and over and over from those of you at the DOD 

and our military leaders. You can’t balance the military budget on 

the backs of the military. 

Thank you so much. 
58 

The CHAIRMAN. Thank you for waiting to get your question out 

there. 

Thank you very much, Mr. Secretary, General, Mr. Hale. We appreciate your being here, appreciate the work you are doing. 

This hearing is now at an end. 

[Whereupon, at 1:15 p.m., the committee was adjourned.] 
A P P E N D I X 

FEBRUARY 15, 2012 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 15, 2012 

(63) 

Statement of Hon. Howard P. ‘‘Buck’’ McKeon 

Chairman, House Committee on Armed Services 

Hearing on 

Fiscal Year 2013 National Defense Authorization 

Budget Request from the Department of Defense 

February 15, 2012 

Thank you for joining us today as we consider the President’s fiscal year 2013 budget request for the Department of Defense. 

To put this budget in context, it is critical to examine the strategy that has informed its submission. At the outset, I want our witnesses to know that I appreciate the hard work that went into the 

development of the strategy. It is no small effort to completely revise a strategy one year after the submission of the Quadrennial 

Defense Review and less than 3 months after the submission of a 

budget request. 

However, I do have serious concerns about the trajectory that the 

new strategy puts us on. Although this strategy is framed as making the military more ‘‘nimble’’ and ‘‘flexible,’’ it is not clear how 

slashing the armed forces by over 100,000 during a time of war, 

shedding force structure, and postponing modernization makes that 

so. The President must understand that the world has always had, 

and will always have a leader. As America steps back, someone 

else will step forward. 

We have now heard multiple times that the strategy drove the 

budget—and not the other way around. I suppose this starts with 

the President’s call to slash at least $400 billion from defense last 

April, in advance of any strategic review. 

An honest and valid strategy for national defense can’t be founded on the premise that we must do more with less, or even less 

with less. Rather you proceed from a clear articulation of the full 

scope of the threats you face and the commitments you have. You 

then resource a strategy required to defeat those threats decisively. 

One does not mask insufficient resources with a strategy founded 

on hope. 

Furthermore, the President’s new defense strategy ‘‘supports the 

national security imperative of deficit reduction through a lower 

level of defense spending.’’ The Administration appears committed 

to ensuring the military is the only sector of the Federal Government to meaningfully contribute to deficit reduction. Simultaneously, the budget proposes additional spending by diverting ‘‘savings’’ from declining war funding to domestic infrastructure spending. 
64 

How can you ‘‘save’’ by not spending money that wasn’t in the 

budget to begin with? This is a cynical gimmick that once more ensures our military—and only our military—is held responsible for 

what little deficit reduction this budget represents. 

White House Chief of Staff Jack Lew said ‘‘the time for austerity 

is not today.’’ Ask the 124,000 service members who will have to 

leave the military how they feel about that. 

The President’s budget is a clear articulation of his priorities. 

The President’s budget asks the men and women in uniform who 

have given so much already to give that much more, so that the 

President might fund more domestic programs. The President 

claimed that the budget would rise every year, but ignores the fact 

that this request is $46 billion less than what he said he needed 

last year and more than $5 billion less than what was appropriated 

for fiscal year 2012. Furthermore, despite the new strategy’s goal 

of pivoting to Asia, a theater where naval assets and airlift are decisive, the budget calls for retiring 9 ships, removes 16 more from 

the new construction plan, and cuts our airlift fleet by hundreds. 

This isn’t the only place where the President’s public statements 

and missions seem to diverge. We cannot neglect the war. The 

President was committed to a counterinsurgency strategy in 2009, 

yet inexplicably—and certainly not based on the advice of his commanders—announced our withdrawal date and to pull out the 

surge forces before the end of the next fighting season. Mr. Secretary and Chairman Dempsey, before the President makes another announcement about troop withdrawals, I implore you to 

heed our commanders’ advice. We are seeing success. Let’s not 

make a decision to pull some of the remaining 68,000 troops, before 

we see what happens this fighting season. Let’s wait to reassess 

any more force-level decisions until the end of the year. 
65 

Statement of Hon. Adam Smith 

Ranking Member, House Committee on Armed Services 

Hearing on 

Fiscal Year 2013 National Defense Authorization 

Budget Request from the Department of Defense 

February 15, 2012 

Mr. Chairman, thank you for holding this hearing. I would like 

to thank our witnesses, the Secretary of Defense, Leon Panetta, 

and the Chairman of the Joint Chiefs of Staff, General Martin 

Dempsey, for appearing here today. Both of them have long and 

distinguished careers on behalf of our Nation. 

Earlier this year, the President released the findings of a strategic review, which clearly articulated the global threat environment, and presented a broad strategy to address those threats moving forward. The budget released earlier this week supports that 

strategy by ensuring that our military has the tools and resources 

necessary to deter, confront, and defeat threats wherever they may 

emerge. This is the right way to develop a defense budget—generate a coherent strategy, and then provide resources to fund that 

strategy. 

I have consistently said that we can rationally evaluate our national security strategy, our defense expenditures, and the current 

set of missions we ask the military to undertake and come up with 

a strategy that enhances national security by spending taxpayer 

dollars more wisely and effectively. I believe the fiscal year 2013 

defense budget meets that goal. 

This budget is also fully consistent with the funding levels set by 

the Budget Control Act passed by Congress. Although I did not 

support this act, many members of the House Armed Services Committee did, Congress passed it, and the Department of Defense has 

submitted a budget that complies with the congressionally mandated funding levels. 

Over the last few years, our military has put together a significant string of foreign policy successes, including the death of bin 

Laden, Anwar al-Awlaki, the elimination of much of Al Qaeda’s 

leadership, the end of the war in Iraq, and supporting the uprising 

in Libya. The budget lays out a strategy that will enable the 

United States to build on those successes and confront the threats 

of today as well as in the future. 
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DOCUMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 15, 2012 

(89) 
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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

FEBRUARY 15, 2012 

(99) 

RESPONSE TO QUESTION SUBMITTED BY MR. BARTLETT 

General DEMPSEY. The cost of cleanup has gone down significantly from the 

BRAC rounds of 1990s to the latest round because we have been conducting ongoing 

remediation of environmental hazards on the installations. We are obligated to remediate the property regardless of whether the base is closed or not. Therefore, 

these costs are not offsets to the savings generated by BRAC closures. 

Additional detail: BRAC is a process that does not have a predetermined outcome. 

Using statutory selection criteria that emphasize military value and a force structure plan looking out 20 years, DOD must complete a comprehensive review before 

it can determine which installations should be realigned or closed. The list of closures is then reviewed by an independent Commission that can (and has in the 

past) altered the list. Its review includes holding public hearings and visiting various sites. The commission’s review results in a list of closures and realignments 

that are sent to the President and are subject to review by Congress. It is this thorough process that produces the list of installations that DOD will close. [See page 

17.] 

RESPONSE TO QUESTION SUBMITTED BY MR. WILSON 

Secretary PANETTA. Relative to Dr. Baldacci, he was tasked to review the military 

health system for opportunities to improve care and reduce costs. He was also asked 

to lead one of the site review teams evaluating the processes inherent in the Disability Evaluation System (DES) for our wounded warriors. Dr. Baldacci completed 

a confidential summary of his observations prior to his departure in March 2012. 

USD (P&R) would be happy to meet with you and discuss his observations. 

In this position, Mr. Baldacci received an annual salary of $165,300. [See page 

30.] 

RESPONSE TO QUESTION SUBMITTED BY MR. TURNER 

Secretary HALE. Of the $5.7 billion transferred in FY 2011 for the National Nuclear Security Administration (NNSA) Future Years National Security Programs for 

FY 2011–2016, only funds provided in FY 2011 and FY 2012 (approximately $1.5 

billion prior to enactment adjustments) were applied to the NNSA defense weapons 

programs. The Department of Defense (DOD) cannot now clearly identify the application of this funding in FY 2013 and beyond. 

You asked specifically about the Chemistry and Metallurgy Research Replacement 

(CMRR) construction project and the W76 life extension program (LEP). Modernizing the U.S. strategic nuclear enterprise as a whole is a key national security priority. The decision to defer the CMRR was a difficult one, but was made to permit 

critical warhead life extension programs to move forward in the newly constrained 

fiscal environment. This tradeoff was approved by the Nuclear Weapons Council 

after careful review. Moreover, the DOD’s independent Uranium Processing Facility 

(UPF)/CMRR study concluded that if funding limits constrained parallel construction of the two facilities, then phased construction would be a prudent alternative 

approach, with UPF construction beginning first. 

The DOE’s FY 2013 budget proposes to defer construction of the CMRR for at 

least 5 years while meeting the plutonium requirements by using existing facilities 

in the nuclear complex which avoids $1.8 billion of costs from FY 2013 to FY 2017. 

The W76 LEP was fully supported in the FY 2012 and FY 2013 budget years. 

However, the FY 2013 budget out-year profile stretches out the W76 LEP completion by 3 years still meeting the DOD requirements. 

We are currently working with NNSA to restructure the entire portfolio of work 

driven by the DOD requirements to match the out-year funding available in the 

NNSA FY 2013 President’s budget. It is hoped that the resulting plan will alleviate 

all of our concerns. [See page 34.] 
100 

RESPONSE TO QUESTION SUBMITTED BY MR. KLINE 

Secretary PANETTA. The Department does not plan to grandfather currently mobilized/deployed units. The revised PDMRA accrual rates continue to provide members 

required to deploy/mobilize beyond established thresholds with an adequate number 

of administrative days for respite upon return home. Members also accrue 30 days 

of leave per year, and each Service also provides members with a reintegration period upon the unit’s return home prior to full demobilization. 

Changes to the PDMRA program resulted from a comprehensive review of the 

program requested by the former Chief of Staff of the Army. The program revisions: 

simplified a difficult to understand and administer program by replacing graduated 

accrual rates with set accrual rates based on deployment/mobilization location; 

eliminated the 4-day per month accrual rate, which resulted in some members receiving excessive administrative absence days off for respite; and, enhanced equity 

in the PDMRA benefit between Active Component and Reserve Component members 

by focusing the benefit on deployment/mobilization locations. The program changes 

were fully vetted and supported by the Military Departments, each of which continues to support the changes. I mention this to let you know that the decision to 

change the program was not taken lightly. 

The revised PDMRA accrual rates continue to provide Reserve Component (RC) 

members required to deploy/mobilize beyond established thresholds with a reasonable number (up to 24 days per year) of administrative absence days for respite. 

Members deployed to Iraq or Afghanistan may accrue up to 24 PDMRA days per 

year. Members deployed to Combat Zone Tax Exclusion (CZTE) areas may accrue 

up to 24 PDMRA days per year, provided the Military Department Secretary has 

designated the area as a 2-day per month PDMRA accrual location. Most RC members deployed to a CZTE areas also receive: Government-funded transportation to 

their leave destination under the Rest and Recuperation (R&R) Leave Program 

(members deployed to Iraq or Afghanistan also receive 15 administrative absence 

days under the Non-chargeable R&R Leave Program); $680 in monthly compensation (Family Separation Allowance- $250, Hazard Duty Pay- $225, Hostile Fire Pay- 

$100, Per Diem- $105); tax free military pay under the CZTE benefit; 30 days of 

leave per year; and a reintegration period upon the unit’s return home prior to full 

demobilization. When viewed with regard to all benefits and compensation provided, 

RC members continue to be adequately compensated under the revised PDMRA program. Accordingly, the Department does not plan to exempt Reserve Component 

members deployed or mobilized prior to October 1, 2001 from the PDRA program 

changes. 

As a point of clarification, the revised PDMRA accrual rates only apply to that 

portion of an ongoing deployment/mobilization that occurs on or after October 1, 

2011. Previous PDMRA accrual rates apply to that portion of an ongoing deployment or mobilization that occurred prior to October 1, 2011. The Department’s implementation of the PDMRA change on October 1, 2011, ensures members serving 

side-by-side receive the same benefit, and provides equity between Service members 

with regard to PDMRA. Grandfathering the benefit would perpetuate the disparate 

treatment of Service members with regard to PDMRA. [See page 37.] 

RESPONSE TO QUESTION SUBMITTED BY MS. BORDALLO 

Secretary HALE. We have begun discussions with the Government of Japan focused on adjustment to the number of marines relocating to Guam as part of our 

effort to achieve a more geographically distributed, operationally resilient and politically sustainable force structure in the region. The Department continues to study 

the requirements for a smaller force on Guam which meets the PACOM Commander’s operational requirements, and the Commandant of the Marine Corps requirements for training and quality of life in the Pacific Region. These efforts will 

delink the movement of marines to Guam and resulting land returns south of 

Kadena from progress on the Futenma Replacement Facility. Additionally, we expect to provide the independent assessment of the U.S. force posture in East Asia 

and the Pacific region by late June, in accordance with Section 346 of the FY 2012 

National Defense Authorization Act. Master planning efforts and assessments of the 

impacts to Guam’s civilian infrastructure will take place once the size and type of 

Marine units are finalized and will require the following: detailed facility planning; 

base master planning; a bilateral agreement on cost sharing; and appropriate environmental impact analysis. [See page 33.] 
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RESPONSE TO QUESTION SUBMITTED BY MR. WITTMAN 

General DEMPSEY. [The information referred to is classified and retained in the 

committee files.] [See page 50.] 

RESPONSE TO QUESTION SUBMITTED BY MR. HUNTER 

General DEMPSEY. Based on the new strategy, we prepared a budget that strikes 

an appropriate and necessary balance between succeeding in today’s conflicts and 

preparing for tomorrow’s. The hard choices we made to develop this balance were 

directly informed by the new strategic guidance, and account for real risks and real 

fiscal constraints. Although the budget represents responsible investment in our national security, the trade-offs were tough and the choices were complex. 

I am an advocate of looking beyond this particular budget submission, out to 

2020. The merits of our choices should be viewed in the context of an evolving security environment and a longer-term plan for the joint force. [See page 54.] 

RESPONSE TO QUESTION SUBMITTED BY MR. JOHNSON 

Secretary HALE. An interim report on rare earth was provided to Congress on August 18, 2011 and a final report was provided March 9, 2012. Together, they address 

the issue of assessing the rare earth material supply chain and the availability of 

material versus demand from the defense industrial base. [See page 52.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

FEBRUARY 15, 2012 

(105) 

QUESTION SUBMITTED BY MR. SMITH 

Mr. SMITH. The FY2012 National Defense Authorization Act included a requirement for the Department to report on the cost-benefit, return on investment, and 

long-term payback of LEED and other green building rating systems. It also included a prohibition on using funds for LEED Gold or Platinum certification unless 

the Secretary of Defense provided Congress with a notification stating the cost-benefit and demonstrated payback for such a decision. Following passage of the FY2012 

NDAA, a Navy statement, cited by the Federal Times claims ‘‘the Navy is moving 

ahead with its plan to certify all of its buildings as LEED Gold by the end of fiscal 

2013.’’ Please provide the committee with an update on the Department’s plans to 

meet the reporting requirement included in the FY2012 NDAA, including a general 

framework and scope of the study, whether the Department is planning on meeting 

with interested outside parties to solicit input, and whether the Department intends 

to perform this report internally or whether it will be contracted out. In addition, 

is the Department or any of the Services, moving forward with a LEED-only policy 

or are other green building rating systems or alternative approaches being considered? 

Secretary PANETTA. The report on cost-benefit, return on investment, and longterm payback of LEED and other green building rating systems affects all the Services. Office of the Deputy Under Secretary of Defense for Installations and Environment (DUSD I&E) has been provided recommendations on the path forward and 

outside party assistance. 

Navy’s policy is that ‘‘All applicable/certifiable types of building projects (vertical 

construction) must be registered with USGBC (or equivalent) and have the required 

submittal documentation to meet the required LEED silver level rating (or equivalent).’’ NAVFAC has maintained a commitment to meeting the Guiding Principles 

for High Performance and Sustainable Buildings established through Executive 

Order (EO) 13423 and the expanded requirements in EO 13514. Navy is developing 

a High Performance Building Standard which incorporates cost effective features of 

ASHRAE 189.1. ASHRAE 189.1 is a commercially recognized whole building design 

consensus standard for high performing buildings which provides performance and 

prescriptive requirements in site sustainability, water use, energy efficiency, renewable energy, indoor environmental quality, building impact on the atmosphere, materials, and resources. The High Performance Building Standard will automatically 

make all new construction and major renovation projects achieve the equivalent of 

LEED Silver certification. 

QUESTIONS SUBMITTED BY MR. WILSON 

Mr. WILSON. The Afghan National Security Force budget request has been cut by 

50% and has been justified by a reduction in the need for front-loaded costs, such 

as equipment and facilities. That is understandable, but a reading of the budget request also shows a 55% reduction in funds from $1.1B to $500M for ‘‘training and 

operations’’ allocated to the Ministry of Interior forces which includes the Afghan 

National Police. How can such a significant cut not have a serious impact on the 

critical police training effort as it only increases in importance to both U.S. plans 

and to the Afghan people’s security? 

Secretary PANETTA. The Afghan National Security Forces (ANSF), including the 

Afghan National Police (ANP), are growing in capability. It is this growth in capability which in fact is reducing the costs to develop the ANP. Growth in capability 

is covered by two distinct phases: ‘‘Build ANP’’ capabilities and ‘‘Sustain ANP’’ capabilities. During fiscal year 2012, the ANP is on track to achieve their planned end 

strength of 157,000 personnel. Once they achieve their target end strength, the ANP 

enters into the ‘‘Sustain’’ phase in fiscal year 2013 and subsequently would reduce 

their requirement for initial entry training to focus on sustaining the force level. Another projected savings is based upon the Afghans assuming a greater role in the 

overall training mission in fiscal year 2013 and thus significantly reducing DOD’s 

reliance upon mentor and trainer contracts to meet these needs. The ANP is growing in overall strength and in capability, including the capability to train new re-
106 

cruits. This process will be reflected in both their operating and generating forces. 

For clarification, the funding decrease for training and operations for the ANP is 

from $l.l billion in fiscal year 2012 to $570 million in fiscal year 2013 for a reduction 

of 48 percent. 

Mr. WILSON. The Afghan National Security Force budget request has been cut by 

50% and has been justified by a reduction in the need for front-loaded costs, such 

as equipment and facilities. That is understandable, but a reading of the budget request also shows a 55% reduction in funds from $1.1B to $500M for ‘‘training and 

operations’’ allocated to the Ministry of Interior forces which includes the Afghan 

National Police. How can such a significant cut not have a serious impact on the 

critical police training effort as it only increases in importance to both U.S. plans 

and to the Afghan people’s security? 

General DEMPSEY. The Afghan National Security Forces (ANSF) fund was designed to quickly develop Afghan infrastructure, satisfy equipment requirements, 

and accelerate training, with most significant investments made in previous years. 

We now have the infrastructure, equipment, and police force in place and the reduced ANSF funding request is a reflection of that fact. 

The training and operations budget reductions reflect the ongoing transition of 

training workload from the Combined Security Transition Command—Afghanistan 

(CSTC–A) to the Ministry of Interior (MoI). As the MoI begins taking on more of 

the training workload, a variety of training savings will be realized, including a reduced contracted trainer requirement, consolidated specialized training, and literacy 

training requirements. 

QUESTION SUBMITTED BY MR. LANGEVIN 

Mr. LANGEVIN. In a time of unprecedented deficit reduction, I am concerned we 

are not making progress towards improving energy efficiency of DOD facilities and 

incorporating new technologies into these efforts. How is the Department leveraging 

current and previous investments in science and technology to maximize returns on 

investment? 

Secretary PANETTA. The Department of Defense (DOD) facility energy strategy is 

designed to reduce costs and improve the energy security of our fixed installations. 

It has four elements: reduce the demand for traditional energy through conservation 

and improved energy efficiency; expand the supply of renewable and other distributed (on-site) generation sources; enhance the energy security of our installations 

directly (as well as indirectly, through the first two elements); and leverage advanced technology. 

As you noted, one of the ways DOD can lower its energy costs and improve its 

energy security is by leveraging advanced technology. Technology has been DOD’s 

comparative advantage for 200 years, as evidenced by the military’s leadership in 

the development of everything from interchangeable machine made parts for musket 

production to the Internet. This advantage is no less important when it comes to 

facility energy. 

To leverage advanced technology relevant to facility energy, three years ago, the 

Department created the Installation Energy Test Bed, as part of the existing Environmental Security Technology Certification Program. The rationale is straightforward. Emerging technologies offer a way to cost effectively reduce DOD’s facility 

energy demand by a dramatic amount (50 percent in existing buildings and 70 percent in new construction) and provide distributed generation to improve energy security. Absent outside validation, however, these new technologies will not be widely 

deployed in time for us to meet our energy requirements. Among other problems, 

the first user bears significant costs but gets the same return as followers. These 

barriers are particularly problematic for new technologies intended to improve energy efficiency in the retrofit market, which is where DOD has the greatest interest. 

As the owner of 300,000 buildings, it is in DOD’s direct self-interest to help firms 

overcome the barriers that inhibit innovative technologies from being commercialized and/or deployed on DOD installations. We do this by using our installations 

as a distributed test bed to demonstrate and validate the technologies in a realworld, integrated building environment. Projects conduct operational testing and assessment of the lifecycle costs of new technology while addressing DOD-unique security issues. For example, the Test Bed is doing a demonstration of an advanced control system that could increase boiler efficiency by five percent; if the technology 

proves out, DOD can deploy it on thousands of boilers and see a meaningful energy 

savings. More generally, by centralizing the risk and distributing the benefits of 

new technology to all DOD installations, the Test Bed can provide a significant return on DOD’s investment. 
107 

The Test Bed has about 70 projects underway in five broad areas: advanced 

microgrid and storage technologies; advanced component technologies to improve 

building energy efficiency, such as advanced lighting controls, high-performance 

cooling systems and technologies for waste heat recovery; advanced building energy 

management and control technologies; tools and processes for design, assessment, 

and decision making on energy use and management; and on site energy generation, 

including waste-to-energy and building integrated systems. 

QUESTION SUBMITTED BY MR. TURNER 

Mr. TURNER. Secretary Panetta, during our Oct 13 hearing last year, you said: 

‘‘With regards to reducing our nuclear arena, I think that is an area where I don’t 

think we ought to do that unilaterally, we ought to do that on the basis of negotiations with the Russians and others to make sure we are all walking the same path.’’ 

 Do you still believe, as you stated to this committee last year, that U.S. nuclear 

force reductions should not be unilateral? 

 Can you tell us anything about press reports that the nuclear guidance review 

currently under way in the Administration, in response to President Obama’s 

direction contained in PPD–11, compelled the Administration to review only 

three scenarios for future U.S. nuclear force postures: (1) 1100 to 1000 deployed 

warheads; (2) 800 to 700 deployed warheads; and (3) 400 to 300 deployed warheads? 

Secretary PANETTA. I will reiterate that we have gone through a nuclear review 

and presented options to the President, but these options are in no way unilateral. 

As stated in the Nuclear Posture Review (NPR), the United States intends to pursue further reductions in nuclear weapons with Russia. The Department’s NPR follow-on analysis of deterrence requirements and force postures will help identify the 

force levels needed to support these objectives and any potential risks. The completion of this analysis is necessary to inform the formulation of any future arms control objectives involving our strategic nuclear stockpile. 

QUESTIONS SUBMITTED BY MS. BORDALLO 

Ms. BORDALLO. Please explain how DOD’s budget, with respect to the civilian 

workforce, is not a continuation of Secretary Gates’ arbitrary constraints on civilian 

direct hire full-time equivalents? 

Secretary PANETTA. While the DOD’s FY 2013 budget request reflects a continuation of the direction to hold civilian full-time equivalents to FY 2010 levels, DOD 

Components requested and received exceptions to those levels for recognized workload increases. In the aggregate, U.S Direct Hires are declining by 7,367 from FY 

2012 to FY 2013. The reduction is in the reimbursable program (12,194) which is 

partially offset by an increase in the direct program. The direct program increases 

by 4,827 for critical workload requirements supporting the National Guard and Reserves; the acquisition, audit and contract management communities; and medical 

readiness programs. 

Ms. BORDALLO. How does the DOD’s budget request reconcile with legislative language set forth in Division A, Section 8012 of Consolidated Appropriations Act of 

2012 (P.L. 112–74), which states that ‘‘ . . . during fiscal year 2012, the civilian personnel of the Department of Defense may not be managed on the basis of any endstrength, and the management of such personnel during that fiscal year shall not 

be subject to any constraint or limitation (known as an end-strength),’’ and more 

specifically, that the fiscal year 2013 budget request be prepared and submitted to 

the Congress as if this provision were effective with regard to fiscal year 2013? 

Secretary PANETTA. The DOD budget request complies with section 8012 of the 

Consolidated Appropriations Act of 2012 (P.L. 112–74). Defense civilian personnel 

are not managed on the basis of end strength. The Defense budget is managed 

based on executive and legislative guidance, strategic plans, resource levels, workload, and mission requirements. As required by the Congress, the DOD documents 

the civilian personnel levels supported in the budget request in the OP–8 exhibit. 

The OP–8 reflects the specific funding for civilian personnel, as well as the number 

of full-time equivalents (FTEs) and end strength. 
108 

Ms. BORDALLO. President Obama has made reducing reliance on contractors and 

rebalancing the workforce a major management initiative of his Administration. 

Does the Department’s FY13 budget request and reductions in the civilian workforce 

reflect an opinion that the Department has achieved an appropriately balanced 

workforce? 

Secretary PANETTA. The Department’s ‘‘sourcing’’ of functions and work between 

military, civilian, and contracted services must be consistent with workload requirements, funding availability, readiness and management needs, as well as applicable 

laws and statute. The fiscal year 2013 budget request, and associated civilian workforce reductions, reflects our best judgment today and represents a carefully coordinated approach based on the Department’s strategy and policy that balances operational needs and fiscal reality. The Department remains committed to meeting its 

statutory obligations to annually review missions, functions, and workforce composition, including reliance on contracted services, and to ensure the workforce is appropriately balanced and aligned to our most critical priorities. 

Ms. BORDALLO. In FY10, the Department added 17,000 new positions as a result 

of insourcing contracted services. Can you tell us what that number was in FY2011? 

And to what extent will insourcing continue to be a workforce shaping tool? 

Secretary PANETTA. In fiscal year 2011, DOD organizations reported that they established nearly 11,000 civilian positions as a result of insourcing contracted services. The Department remains committed to meeting its statutory obligations to annually inventory and review contracted services and identifying those that are no 

longer required or are inappropriately aligned to the private sector. Insourcing remains a very effective and critical tool for the Department to rebalance its workforce, realign inherently governmental and other critical work to Government performance (from contract support), and, in many instances, to generate resource efficiencies. 

Ms. BORDALLO. The Department’s budget request overview included discussion of 

improved buying power and how acquisitions are managed. To what extent does the 

Inventory of Contracts for Services impact these improvements and management of 

the Total Force? 

Secretary PANETTA. The Department began its Better Buying Power initiative in 

2010 to improve the way the Department acquires defense goods and services. The 

Inventory of Contracts for Services is one data source used to help the Department 

improve the stewardship of our resources allocated to contracted services and helps 

ensure efficiency through better management. This includes improving accountability and visibility into the level of effort associated with contracted services, 

maximizing competition, conducting spend analyses, and rationalizing the Department’s supplier base. With regards to Total Force management, the post submission 

review of the annual Inventory of Contracts for Services is used to inform workforce 

planning through assessing economies of scale or scope, identify potential areas of 

risk and overreliance on contracted services, and identify opportunities for efficiencies. This includes reviewing the nature or way the contract is administered as 

well as the organizational environment within which it is being performed. Additionally, the Inventory of Contracts for Services will identify areas to strengthen 

contract oversight and assist in the preparation of budget justification materials and 

spending analyses. 

Ms. BORDALLO. The Department requested emergency relief from the Paperwork 

Reduction Act in order to move forward, after 4+ years of non-compliance, with the 

Inventory of Contracts for Services. However, OMB has failed to act on that request. 

What is the impact to the Department’s progress, and the fiscal implications, of not 

getting the emergency filing approved? 

Secretary PANETTA. As of early April, the Department has not received the emergency waiver to the Paperwork Reduction Act (PRA) as requested from OMB in December 2011 and is proceeding with the full PRA filing process that will take an 

additional 2–3 months. While the Department continues to press forward and will 

submit the annual Inventory of Contracts for Services (ICS) in June as required by 

statute, this submission will include contractor full time equivalents (CFTE) calculated from obligated dollar amounts and an Army factor derived from data reported by their contractors, as opposed to on actual direct labor hours as required 

by statute. Without the emergency waiver to the PRA as requested, the Department 

is delayed by at least 1 more year to demonstrably improve the ICS, and at least 

2 years from full compliance with the fiscal year 2011 NDAA changes to section 

2330a of title 10 requiring that CFTE be calculated based on direct labor hours and 

other data collected from private sector providers. 
109 

Until the PRA waiver is granted, the Department cannot take steps to modify 

statements of work to collect the required data. Most DOD Components had planned 

to begin modifying statements of work this fiscal year. As a result of the delay, contracts will likely not begin being modified until fiscal year 2013, resulting in a delay 

until fiscal year 2014 of the first real data collection. 

While the fiscal implications are challenging to quantify, they do exist and are related to Components’ ability to improve planning for increasingly scarce resources. 

Delays in collecting direct labor hours prevent the Department from getting an accurate accounting of the level of effort for contracted services, which would facilitate 

assessing those services using a common unit of measure, full-time equivalents. 

Without this level of fidelity, making value-based decisions and trade-offs by distinguishing between direct labor hours supporting the mission and indirect costs, overhead, and other costs is adversely impacted. For example, the Army, which has had 

the necessary PRA waiver in place for over 5 years, has found that approximately 

half of all Army contract dollars in the base budget go to non-labor costs, such as 

overhead and profit, rather than direct execution of mission and workload. Such increased fidelity has enabled the Army to more appropriately realign limited resources to its more pressing priorities. 

Ms. BORDALLO. The Department says it is still looking at where it is most costeffective to insource. However, if the Department is holding to FY10 civilian levels 

and in fact, if this budget further reduces the civilian workforce, how can DOD organizations insource if it is more cost-effective? 

Secretary PANETTA. The Department remains committed to its statutory obligations under title 10 to annually review contracted services and ensure that they are 

being performed in the most cost-effective manner possible. While the overall civilian workforce is reduced in the FY13 budget request, insourcing remains a viable 

tool to realign workload from the private sector and deliver services using Government civilians while providing the best value to taxpayers. While the Department 

has directed organizations to maintain civilian authorizations, with certain exceptions at FY10 levels, DOD organizations may insource contracted services that meet 

the necessary criteria by absorbing work into existing Government positions by refining duties or requirements; establishing new positions to perform contracted services by eliminating or shifting equivalent existing manpower resources (personnel) 

from lower priority activities; or on a case-by-case basis, requesting an exception. 

Ms. BORDALLO. What if the work is found to be inherently governmental or otherwise should be performed by civilians, instead of contractors? What flexibility is 

there to immediately convert that work to civilian performance without having to 

ask permission to add civilians or reduce staffing in other equally important missions? 

Secretary PANETTA. The Department remains committed to its statutory obligations under title 10 to annually review contracted services and ensure appropriate 

performance of functions that are inherently governmental, closely associated, or 

otherwise exempted from private sector performance (to mitigate risk, ensure continuity of operations, build internal capability, meet and maintain readiness requirements, etc). Contracted services that meet the necessary criteria should be immediately divested, if of low priority, or insourced to Government performance. 

Where appropriate, DOD organizations may immediately insource by absorbing 

work into existing Government positions by refining duties or requirements; establishing new positions to perform contracted services by eliminating or shifting equivalent existing manpower resources (personnel) from lower priority activities; or on 

a case-by-case basis, requesting an exception. In order to ensure increasingly constrained resources are allocated appropriately and with consideration for organizational mission priorities, the Department is currently assessing the process by which 

the civilian workforce is administered in order to increase management flexibilities 

at the mission level. 

Ms. BORDALLO. The FY12 NDAA capped contract spending for FYs 12 and 13 at 

FY10 levels. And the Congress directly linked that cap to the civilian personnel cap. 

In FY10, the Department requested just over $60 billion for contract services. In 

this budget, you requested around $70 billion. But you’ve reported to the Congress 

that your spending in FY10 was actually upwards of $100 billion, and by some estimates nearly $200 billion. Since you cannot obligate more than approximately $60 

billion this fiscal year, what is the Department going to stop doing? What work is 

going to cease? Or will you increase civilian personnel—which may be more costeffective since you’re seeking the most cost-effective mix? 
110 

Secretary PANETTA. The FY 2012 NDAA cap applies to the base budget for contract services for all appropriations except Military Construction (MILCON); Research, Development, Test and Evaluation (RDT&E); and medical care entitlements 

provided by private care providers. The Department’s base budget request in FY 

2010 that establishes the cap is $67 billion. Actual execution for FY 2010 for the 

accounts included in the cap was $113 billion, but includes contract services funded 

in the Overseas Contingency Operations (OCO). The Department does not distinguish base obligations from OCO obligations in the accounting systems. The FY 

2012 enacted base budget for contract services is below the cap by $1.7 billion after 

adjusting for civilian personnel growth and shifts from the OCO to base budget 

(both adjustments are allowed in the FY 2012 NDAA). The FY 2013 base budget 

request is below the cap by $0.5 billion. 

Ms. BORDALLO. The GAO recently reported that DOD contributes nearly $3.3 billion to defense contractor pension plans, hidden as overhead charges in contracts. 

Surely this is a more ripe area for savings than considering retirement reform for 

military personnel or asking our dedicated civilian workforce to continue to bear the 

brunt of budgetary reductions? 

Secretary PANETTA. Pensions are a major cost for Department of Defense (DOD) 

contractors and a significant factor in attracting and retaining the caliber of workers 

we need them to have to be able to perform on DOD contracts. The Department is 

significantly increasing its audit, contract pricing, cost accounting, and contract 

oversight capability by increasing the capacity and capability of the Defense Contract Audit Agency and the Defense Contract Management Agency. DOD is challenging all costs throughout the Department to include contractor costs of our acquisition programs. We have specialized audit and actuarial teams monitoring and 

evaluating pension costs for reasonableness and accuracy. 

Generally, DOD contractors are following the lead of commercial contractors by 

reducing and controlling pension costs using defined contribution plans in place of 

the more expensive and volatile defined benefit plans. However, contractor pension 

costs for older defined benefit plans will increase over the next 5 to 7 years, even 

if the plans have been scaled back or are not allowing new entrants. This is due 

to the Pension Protection Act, which increased the annual minimum funding requirement to ensure pension plans are funded sufficiently. 

Ms. BORDALLO. What assurances can you give the Committee that as widespread 

civilian reductions are occurring across the military departments work is not shifting illegally to contract performance? 

Secretary PANETTA. Reductions in the civilian workforce are correlated to workload and mission prioritization. The Department is committed to ensuring that 

workload associated with civilian reductions does not shift to contract but is eliminated or realigned to other civilians. On December 1, 2011, the Under Secretary of 

Defense for Personnel & Readiness issued guidance to the Department reiterating 

the statutory prohibition on conversion of work to contracts. This guidance-directed 

vigilance in preventing the inappropriate conversion of work to contract performance, particularly as the Department adapted to declining budgets and operating in 

a constrained fiscal environment. Specifically, managers and Commanders were reminded of their obligations to preclude such illegal shifting of work as they implemented the results of organizational assessments, continued to assess missions and 

functions in terms of priority, and revisited both their civilian and military force 

structures. Through the use of our ongoing communications with national labor 

leadership, the Department has been able to look into allegations of improper workload shifts and, if justified, take corrective actions. 

In addition, the DOD has established an internal, multilevel governance process 

for monitoring implementation of all efficiencies, to include those resulting in civilian workforce reductions. Any issue, such as illegal shifting of work, can be addressed via this governance process for adjudication. If circumstances warrant, an 

exception request to increase the civilian workforce to meet workload requirements 

can be made. 

Long-term, as the Department makes improvements to its Inventory of Contracts 

for Services, as required by title 10, we will have increased visibility and accountability into such contracts. Specifically, improvements currently under way will enable the Department to more accurately identify contracted level of effort based on 

direct labor hours and associated data. This increased fidelity into contracted services will serve as another critical tool for the Department to monitor and preclude 

possible workload realignment. 
111 

Ms. BORDALLO. There was a lot of discussion last year about the ‘‘exceptions’’ to 

the FY10 civilian levels Secretary Gates mandated. Please provide a detailed list of 

all exceptions across the Department approved to date and the reason for those exceptions, as well as those exceptions across the Department that have been requested but not approved, and the justification for such. 

Secretary PANETTA. The list of exceptions approved by the Deputy Secretary of 

Defense and the adjustments approved by the Deputy Secretary of Defense in the 

FY 2013 budget request are provided below. 
112 
113 

Ms. BORDALLO. The Department identified over $60 billion in additional savings 

being generated during next 5 years through measures such as streamlining of support functions, consolidating I.T. enterprise services, rephasing military construction 

projects, consolidating inventories, and reducing service support contractors. Of that 

$60 billion, how much is associated with civilian personnel and how much is associated with service support contractors? 

Secretary PANETTA. Many of the initiatives comprising the $60 billion in additional savings encompass reductions to civilian personnel and/or service support contractor requirements. For example, savings of $10 billion resulted from reducing the 

civilian pay raise, and approximately $1 billion was saved by the Army adjusting 

the civilian workforce to reflect the military end strength reduction. The Department also has a specific initiative to reduce service support contractors by $1 billion 

across the next 5 years. 

Ms. BORDALLO. Based on your answer above, is that ratio appropriate given the 

large scale reductions in the civilian workforce that resulted from last year’s budget 

and considering that contracted services have grown at a rate of 150% over the past 

decade while the civilian workforce increased at a much more moderate rate? 

Secretary PANETTA. Over the past decade (FY 2003 to FY 2013), our budget for 

civilian payroll costs has grown by approximately 60 percent whereas budgeted contract services have only grown by approximately 40 percent. The Department employs a total workforce management concept whereby we strive to maintain the 

proper balance of military, civilian and contractor workforces. DOD sourcing of functions and work among military, civilian, and contracted services must be consistent 

with workload requirements, funding availability, readiness and management needs, 

as well as applicable laws and regulations. 

Ms. BORDALLO. Do you believe that workforce sourcing decisions involving nonappropriated fund employees, where work is being outsourced, should be subject to 

the same stringent cost analysis requirements that are applicable under title 10 provisions to appropriated fund employees? 

Secretary PANETTA. Across the Department, non-appropriated fund (NAF) resources that support operations such as exchanges and morale, welfare, & recreation 

programs are administered in an economical, efficient, and business-like manner. To 

that end, contracts using NAF must be executed in a manner that best serves the 

NAF instrumentality in a fair, equitable, and impartial manner. DOD Components 

are required to establish and maintain systems necessary to ensure individual fiduciary responsibility for properly using NAF resources and preventing waste, loss, or 

unauthorized use of such funds. While the provisions requiring cost analyses for outsourcing of work delineated in title 10 do not specifically apply to NAF employees, 

the Department is committed to making sure, consistent with its policies regarding 

NAF instrumentalities, that any sourcing decisions related to NAF activities are fiscally advantageous to the Department and the commands/installations they support. 

Our efficient and business-like NAF system enables the Department to continue to 

deliver the services and fiscal outcomes necessary to sustain our NAF programs 

which directly support our entire military community. 

Ms. BORDALLO. The Air Force recently briefed members of the House about largescale reductions in the civilian workforce. How is the Department, specifically your 

staff, ensuring that those reductions are well-reasoned and based on workload and 

necessity, factoring in risk and cost, as opposed to simply implementing a mandated 

civilian personnel level? 
114 

Secretary PANETTA. The Air Force conducted a focused strategic review of the entire Air Force civilian workforce to evaluate the high-priority mission areas and determine where positions needed realignment. The Air Force examined the full spectrum of operations—from base-level to headquarters—to develop a wide range of efficiency initiatives to streamline and right-size the organization and management 

staffs, ultimately to forge a leaner, more effective Air Force. The Air Force followed 

Secretary of Defense guidance from Resource Management Directive 703, focusing 

reductions in overhead and support areas while minimizing the impact to functions 

and to aircraft operations and maintenance, acquisition excellence, and the nuclear 

enterprise. As part of that review, the Air Force had to make tough decisions on 

which areas to resource in order to provide the Nation with the capabilities that it 

requires. 

Specific missions that are identified by the Air Force for growth include intelligence, surveillance, and reconnaissance (ISR); the nuclear enterprise; and acquisition excellence. The effect on the civilian workforce at individual installations depends to a large degree on which missions are located at a particular location. Other 

factors in the decisionmaking process included the number of encumbered positions 

versus vacancies, the funding source for the civilian positions (operations and maintenance, depot maintenance activity group, and acquisition demonstration), and the 

impact of lost intellectual capital at the installation level. 

Ms. BORDALLO. What processes are in place to ensure the workload associated 

with reductions being made in the civilian workforce is in fact ceasing, as opposed 

to being absorbed by other labor sources such as contractors or military personnel? 

Secretary PANETTA. Reductions in the civilian workforce are correlated to workload and mission prioritization. The Department is committed to ensuring that 

workload associated with civilian reductions does not shift to other sectors of the 

Total Force, such as military or contract performance. 

To that end, on December 1, 2011, the Under Secretary of Defense for Personnel 

& Readiness issued guidance to the Department reiterating the statutory prohibition on conversion of work to contracts. This guidance directed vigilance in preventing the inappropriate conversion of work to contract performance, particularly 

as the Department adapted to declining budgets and operating in a constrained fiscal environment. Specifically, managers and Commanders were reminded of their 

obligations to preclude such illegal shifting of work as they implemented the results 

of organizational assessments, continued to assess missions and functions in terms 

of priority, and revisited both their civilian and military force structures. 

Additionally, on March, 2, 2012, the Under Secretary of Defense for Personnel & 

Readiness issued guidance to the Department regarding the use of ‘‘borrowed’’ or 

‘‘repurposed’’ military manpower. This guidance is intended to ensure that amidst 

declining operational tempos for our military personnel and, as civilian reductions 

associated with efficiencies are implemented, military personnel are not inappropriately utilized, particularly in a manner that may degrade unit readiness. 

Through the use of our ongoing communications with national labor leadership, 

the Department has been able to look into allegations of improper workload shifts 

resulting from civilian workforce reductions and, if justified, take corrective actions. 

In addition, the DOD has established an internal, multilevel governance process for 

monitoring implementation of all efficiencies, to include those resulting in civilian 

workforce reductions. Any issue, such as inappropriate shifting of work, can be addressed via this governance process for adjudication. If circumstances warrant, an 

exception request to increase the civilian workforce to meet workload requirements 

can be made. 

Ms. BORDALLO. Recently this committee heard of an instance in which, because 

of budget reductions, a janitorial services contract had been eliminated. As a result, 

professional civilian personnel have been advised by management that they are now 

responsible for trash removal and bathroom cleaning—services previously provided 

by contract. Surely the quest for efficiency is not intended to divert people from 

their core missions or result in them working in filthy conditions. Yet, this is how 

the reductions which DOD claims are so well-reasoned are being executed in the 

field. Was any workforce analysis conducted to inform these reductions or were they 

the result of a ‘‘salami slice’’ approach across all elements of the Department? 

Secretary PANETTA. The reductions in the Department’s workforce, both civilian 

and contract support, are correlated to workload and based on mission/function 

prioritization, reflecting the changes in the Department’s strategy and force structure. The Department has established an internal, multilevel governance process for 

monitoring implementation of all efficiencies and associated budget reductions. Occurrences such as the above, if accurately described, are the exception, not the 

norm, and the Department is committed to using its established governance processes to prevent such adverse impacts. 
115 

Ms. BORDALLO. What recourse, in a particular year of execution, does a manager 

or Commander have if he or she wishes to insource a contract in order to achieve 

fiscal savings? 

Secretary HALE. The Department remains committed to its statutory obligations 

under title 10 to annually review contracted services and ensure that they are being 

performed in the most cost-effective manner possible. Where appropriate, DOD organizations may immediately insource by absorbing work into existing Government 

positions by refining duties or requirements; establishing new positions to perform 

contracted services by eliminating or shifting equivalent existing manpower resources (personnel) from lower priority activities; or on a case-by-case basis, requesting a Deputy Secretary of Defense (DSD) exception to their existing civilian levels. 

Several exceptions have been granted by the DSD for recognized workload that is 

appropriately performed by Government civilians. To ensure increasingly constrained resources are allocated appropriately and with consideration for organizational mission priorities, the Department is currently assessing the process by which 

the civilian workforce is administered in the year of execution. 

Ms. BORDALLO. To what extent was the decision to hold across-the-board civilian 

levels, without commensurate across-the-board constraints on contracts, informed by 

cost and risk assessments? 

Secretary HALE. The FY 2013 budget request extended two initiatives that were 

initiated in the FY 2012 budget request to balance the workforce with mission priorities. The initiative to hold civilian FTE levels at the FY 2010 level and the direction 

to reduce service support contractors that provide staff support by 10 percent. Both 

initiatives are associated with ongoing organization assessments and mission 

prioritization in an effort to streamline business process and reduce administrative 

workload. Overall, funding for contract support services is reduced in FY 2013 by 

almost 3 percent. The FY 2013 base budget reflects a total of $131.9 billion for contract support services for all appropriations (excluding Military Construction), which 

is $3.9 billion (3 percent) below the FY 2012 enacted budget of $135.8 billion. The 

amount of funding for civilian direct hires (both U.S. and Foreign Nationals) declines $70 million from $76.560 billion in FY 2012 to $76.490 billion in FY 2013. 

The reduction in civilian funding is less than 0.1 percent. The Department will continue to monitor the implementation of both initiatives to ensure actions are taken 

to minimize program risk. 

Ms. BORDALLO. We’ve heard a lot about decreases and reductions in contracted 

services, yet when we look at the figures and talk to the field, what is evident is 

that reductions in contracts are very narrowly defined and limited to only a miniscule subset of what the Department actually purchases in terms of services. Why 

has the Department chosen to levy across-the-board reductions to only military E/ 

S and civilian personnel without considering wholesale reductions to more expensive 

contractors? 

Secretary HALE. The FY 2013 budget reflects a balanced workforce that decreases 

spending on military end strength, civilian personnel, and spending for contract 

services. It reflects our best judgment today and represents a carefully coordinated 

approach based on the Department’s strategy and policy that balances operational 

needs and fiscal reality. Proposed reductions in military end strength are linked to 

declines in our current overseas commitments; revised strategy, posture and operational planning; and changes to our force structure. Similarly, the proposed reductions in civilian personnel and contracted services are predominantly associated 

with ongoing organizational assessments and mission prioritization in an effort to 

reduce administrative workload. The funding for contract support services declines 

by a higher rate (3 percent) from FY 2012 to FY 2013 than the funding for civilians 

(less than 0.1%). Contracted services are a key enabler of the warfighter and a 

source of overall infrastructure operations, and in many instances provide cost-effective support. The Department remains committed to meeting its statutory obligations to annually review services provided by contract, ensuring that they are 

aligned to our most pressing priorities and continue to be the most cost-effective 

means of delivering such support. 

QUESTION SUBMITTED BY MR. LOEBSACK 

Mr. LOEBSACK. I am concerned about changes to the community pharmacy program under TRICARE proposed in the FY13 budget request. When TRICARE beneficiaries have a child who is sick and needs a prescription immediately, they should 

not have to pay even more than they already do to go to their local pharmacy, especially because using mail order in that case isn’t an option. Interaction with a pharmacist has many benefits, including cost savings given that poor medication adher-
116 

ence results in $290 billion in waste annually. I think the ongoing use of local pharmacies by TRICARE beneficiaries bears out the importance of direct access to a 

pharmacist. How is DOD preserving this relationship between the patient and their 

local pharmacist and ensuring that TRICARE beneficiaries are able to receive prescriptions they need immediately without being forced to pay more when mail order 

isn’t an option? 

Secretary PANETTA. Under the FY13 budget proposal TRICARE beneficiaries will 

continue to have the option of filling prescriptions at a military treatment facility 

pharmacy, a retail network pharmacy, through TRICARE Pharmacy Home Delivery 

or a non-network retail pharmacy. We fully recognize the role of community pharmacies in many aspects of healthcare, however the mail order option is less expensive than retail for both TRICARE beneficiaries and the Government, and provides 

24/7 access to a registered pharmacist. Compared to other national and Federal 

health plans, the DOD pharmacy benefit remains the most generous and robust in 

coverage. Even with the recent copay increase and proposed FY13 copay changes, 

the DOD beneficiaries have minimal out-of-pocket costs for all medications, including acute medications obtained through retail pharmacies. 

Over the last few years, Department of Defense (DOD) has made significant efforts to control rising pharmacy benefit costs. The strategies and efforts pursued 

have been drawn from private sector best business practices, national trends, Congressional mandates, professional consultants, and independent studies. Each effort 

has had an effect in controlling the rise in pharmacy costs. Based on recent analysis 

of prescriptions maintenance medications filled for DOD, the data show mail order 

drugs are more cost-effective than purchasing them from a drugstore, the brand 

name standardized market basket cost per 90-day supply was 19% lower at either 

mail order or military pharmacies, compared to the retail pharmacy network. 

Under the budget proposal, the vast majority of drugs will continue to be available from retail pharmacies. Only non-formulary drugs, which are relatively few, 

will no longer be generally available at retail. However, there is always an alternative drug in the same drug class on the uniform formulary and available at retail. 

A broad range of Medication Management Therapy (MTM) services are provided 

through DOD. MTM is a component of the Patient Center Medical Home (PCMH) 

model which is being implemented throughout the Military Services Treatment Facilities. The PCMH model enables clinical pharmacists to contribute to the 

healthcare team through services focused on medication management in improving 

patient clinical outcomes while lowering total healthcare costs. In addition, the 

Managed Care Support Contractors, through their Case Managers and disease management programs, are also engaged in improving beneficiary outcomes for conditions that account for high cost drug expenditures. 

QUESTIONS SUBMITTED BY MR. CONAWAY 

Mr. CONAWAY. How will your ability to become audit-ready be affected by the current strategy or manpower changes and do you anticipate the need for additional 

resources once the FIAR plan has been revised to meet your expedited goals? 

Secretary PANETTA. An appropriate level of personnel, training, tools, and support 

is being targeted to achieve auditable financial statements, and the Department 

plans to spend $300 million to $400 million a year (excluding resources to implement Enterprise Resource Planning Systems) over the next 6 years on improving 

business operations and achieving auditable financial statements. The Department 

has reported that the resources and plans were in place to meet the previous 2017 

goal. 

The Department of Defense is committed to achieving audit readiness for the 

Statement of Budgetary Resources (SBR) in 2014. Today we face very tight budgetary limits and the Department has carefully scrutinized requests from Components for additional funding to meet the accelerated SBR goal. Where appropriate, 

the Department has included those requirements in out Fiscal Year 2013 budget requests. 

Mr. CONAWAY. The Department should include objective and measurable criteria 

regarding FIAR-related goals in its senior personnel performance plans and evaluations. Performance evaluated on the basis of such criteria should be appropriately 

rewarded or held accountable. Evaluated performances should be documented and 

tracked to measure progress over time. How will senior leadership across the DOD 

be held accountable for audit preparedness in their specific departments? 

Secretary PANETTA. In October 2011, I directed that achieving auditable financial 

statements will be an ‘‘all hands’’ effort across the Department. Leadership commitment from the highest level is setting the tone and priority for audit readiness. 
117 

Auditability is a goal that every commander, every manager, and every functional 

specialist must understand and embrace to improve efficiency and accountability 

within the Department. 

The Service Secretary and Chief of Staff for each Military Service have committed 

to achieving specific near-term goals in support of their plans for achieving 

auditable financial statements. I have reviewed these commitments and plans and 

am holding civilian and military senior leaders from across the Department accountable for progress against those plans. Senior executives, both financial and functional, now have audit goals in their individual performance plans and we are working to include them in General and Flag Officer performance plans as well. Their 

performance against their plans will be assessed each year during their annual appraisal. This helps ensure those under their leadership are getting the message that 

better control over financial assets has a big effect on mission success, and everyone 

has a part to play. 

Mr. CONAWAY. Last year, I was very impressed with your leadership in moving 

the audit-ready SBR deadline up to 2014. In that same vein, do you believe we can 

find more efficiencies/better business practices to alleviate the burden of budget-reduction on our troops? How do you plan to continue this strategy? 

Secretary PANETTA. Our streamlined approach to achieve improved financial information and audit readiness focuses efforts on first improving information that DOD 

uses to manage: budgetary information and count and location of mission-critical assets. Improving budgetary information provides more visibility of budgetary transactions, resulting in more effective use of resources; provides for operational efficiencies through more readily available and accurate cost and financial information; 

and improves fiscal stewardship by ensuring funds appropriated, expended, and recorded are reported accurately, reliably, and timely. Improving mission-critical asset 

information provides more reliable and accurate logistics supply chain and inventory 

systems; improves our ability to timely acquire, maintain, and retire assets; allows 

for more effective utilization of assets; provides better control over assets preventing 

their misuse, theft, or loss; and reduces unnecessary reordering. The acceleration of 

both of these goals should result in efficiencies that allow resources to be reallocated 

to mission requirements. The strategy complements our ongoing emphasis on increased resource stewardship and cost consciousness. 

Mr. CONAWAY. During several of your press statements and speaking engagements, you have said that we cannot break faith with those who serve but the President is asking for an independent commission to study military retirement. What 

type of research has the DOD conducted regarding the effects of changing the retirement system would have on recruiting and retention of quality service members? 

Secretary PANETTA. As part of its vigorous, internal review, the Department has 

contracted with RAND–NDRI, a recognized expert, to use its Active and Reserve dynamic retention and cost model, to model and analyze the impact on recruiting and 

retention of various military retirement system alternatives. While many in the private sector, and elsewhere, have suggested alternatives to the current military retirement system, few of these alternatives have undergone rigorous modeling or 

analysis. The Department is committed to ensure any proposal it develops is sound 

and does not harm the Department’s ability to recruit and retain the future force. 

Secretary Panetta has also made clear that current members will be grandfathered; 

for those who serve today, there will be no changes in retirement benefits. 

In addition to this ongoing review, the Administration and the Department recommended Congress establish an independent commission to review military retirement, and if enacted, the Department will provide the Commission significant input. 

Mr. CONAWAY. The Department should include objective and measurable criteria 

regarding FIAR-related goals in its senior personnel performance plans and evaluations. Performance evaluated on the basis of such criteria should be appropriately 

rewarded or held accountable. Evaluated performances should be documented and 

tracked to measure progress over time. How will senior leadership across the DOD 

be held accountable for audit preparedness in their specific departments? 

General DEMPSEY. In October 2011, Secretary Panetta directed that achieving 

auditable financial statements will be an ‘‘all hands’’ effort across the Department. 

The highest levels of leadership are setting the tone and priority for audit readiness. 

Auditability is a goal that every commander, every manager, and every functional 

specialist must understand and embrace to improve efficiency and accountability 

within the Department. 

The Service Secretaries and Chiefs have committed to achieving specific near 

term goals in support of their plans for achieving auditable financial statements. 

Both Secretary Panetta and Deputy Secretary Carter have reviewed these commitments and plans and are holding senior leaders across the Department, both civilian 
118 

and military, accountable for progress against those plans. Financial and functional 

senior executives now have audit goals in their individual performance plans and 

annual evaluations and we are working to include them in General and Flag Officer 

performance plans. 

QUESTIONS SUBMITTED BY MR. WITTMAN 

Mr. WITTMAN. As we move to enable the ANSF and ALP to take the lead on combat operations in Afghanistan, how are we calculating the risk that the plan could 

fail and we will once again have to retake the lead in combat operations planning 

and execution? Last March we were briefed by General Petraeus that progress in 

Afghanistan was ‘‘fragile and reversible.’’ 

What has changed in the last 11 months that makes us so sure that the ANSF 

and the Afghan government are capable of countering the Taliban and the terrorist 

networks along the border region with Pakistan? Last year the Chairman of the JCS 

testified before us that, ‘‘We cannot allow the Taliban to reorganize and reconstitute 

as they did in 2004 and 2005, regain their oppressive influence over the Afghan people, and once again provide safe haven to Al Qaeda.’’ What is the chance that the 

Taliban regains their foothold and provides a safe haven to Al Qaeda? This safe 

haven and enabling provided by the Taliban is the environment that allowed 9/11 

to be planned and executed. Would you classify our progress in Afghanistan as stable and irreversible? 

Secretary PANETTA. Over the past 11 months, we have significantly reduced the 

Taliban’s capabilities, while increasing the size and ability of the Afghan National 

Security Forces (ANSF) as they begin the transition process. ANSF and Coalition 

operations focused on the south and southwest of Afghanistan have decreased the 

Taliban’s ability to support the insurgency. The process of transitioning the security 

lead to the ANSF is progressing, with more than half of the population in Afghanistan living in areas that have begun the transition process. Over the last 12 

months, the ANSF have not only increased their ranks by more than 55,000 personnel, but they have also greatly increased their capabilities. Although risk has decreased, risk still exists, particularly due to Pakistan sanctuaries and the slow pace 

of improved governance and development in Afghanistan. DOD continues to review 

these risks through our quarterly assessment processes. We expect the ANSF, in 

partnership with their U.S. and Coalition partner forces, to continue to make gains 

over the next year that will ensure the transition of lead for security to the ANSF 

by the end of 2014 in accordance with the NATO Lisbon Summit goal. 

Mr. WITTMAN. Secretary Panetta, in this budget plan we are purchasing 2 Virginia Class SSNs and we are moving one SSN out of the FYDP. We are delaying 

the start of SSBN(X) by 2 years. SSBN(X) will not realistically be operational and 

deployable until the 2020s. Do you know how many submarines the Chinese are 

putting to sea this year and the total they have planned between now and FY17? 

Secretary PANETTA. We expect the People’s Liberation Army Navy will have 63 

submarines by the end of 2012, and 75 submarines in their order of battle by 2017. 

Additional details may be available by separate cover. 

Mr. WITTMAN. Secretary Panetta, we are shifting our focus and strategy to increased operations and increased presence in the Asia-Pacific and the Middle East. 

This increase in presence is already resulting in an increase in deployment lengths 

and an increase in the frequency of deployments for our Navy. Our surface combatants, carriers, and submarines have routinely deployed to support cyclic combat operations and contingency operations around the globe for 10 straight years. 

Basic maintenance has been pushed to the right over the past 10 years and our 

fleet is in desperate need of routine shipyard availabilities and maintenance work. 

Couple this problem with the fact that among other early decommissioning plans, 

we are decommissioning 7 Aegis cruisers that are between 20–25 years old. 

The fact is this new strategy is juxtaposed against a fleet that is decreasing in 

size, while the fleet’s tasking is being increased. How do we expect to increase our 

presence and project power effectively in the Pacific and Indian Oceans with a fleet 

that is currently at 284 ships with no realistic plan of growing to 313 ships? Is a 

313-ship fleet still the goal? If we accept the risk of a smaller fleet with increased 

responsibilities, how do we ensure that fleet is built to last and capable of an increased workload without compromising operations and maintenance standards? 

Secretary PANETTA. The Navy has long played a pivotal role in providing presence 

and reassurance to our allies and partners in the Asia-Pacific (AP) region. It has 

also provided deterrence against those who seek to threaten U.S. and allied security 

interests. To build upon the approximately 50 ships that currently operate daily in 

the AP region, the Department of the Navy will rebalance its fleet resources towards 
119 

the Pacific. The Navy will look to homeport a greater number of ships on the Pacific 

coast in coming years as well as forward-deploy Littoral Combat Ships in Singapore 

on a rotational basis. Marines and their associated lift will rotate through Australia 

on a regular basis. 

The presence provided by the Navy’s forward deployed ships will be augmented 

by the routine deployment of U.S.-based Pacific ships to the AP region. The Navy’s 

presence in the AP region will complement and be complemented by the array of 

exercises, operations and forward presence provided by the other Services. 

The Department of Defense seeks to build the fleet to 300 ships but a number 

of factors will affect that calculus, including cost, readiness, and risk. For the 

present, the current ship inventory is judged to be sufficient to provide the requisite 

capability and capacity to achieve the direction of the Department’s new strategic 

guidance. The Department is also committed to ensuring the Nation has a ready 

fleet that is prepared to fight and win at sea. To aggressively grow a fleet that is 

not properly resourced to maintain the highest state of training and readiness has 

the strong potential to create a hollow force. The Department is committed to ensuring that does not occur. 

To achieve the expected end of service life for the fleet’s vessels, the Department 

of the Navy has undertaken specific initiatives. Large surface combatants, the Aegis 

cruisers and destroyers, are having their cyclic response plan adjusted from a 27- 

month cycle to a 32-month cycle. This will align the maintenance cycle of the large 

surface combatants with the aircraft carrier with which they are associated and will 

protect planned shipyard maintenance. The Department of the Navy will also continue its fleet modernization program to upgrade combat systems, communications, 

and engineering capabilities. These investments will provide the fleet with more 

ready and capable warships. The Department is also closely working with the Department of the Navy to fund ship and aircraft maintenance to ensure that all necessary maintenance is funded within the baseline budget request. 

Mr. WITTMAN. Mr. Secretary, what are the U.S. strategic objectives in Afghanistan? What level of capability will the Afghan National Security Forces need to possess in order to achieve these objective as they take the lead in security operations 

in 2014? Specifically, how many Afghan National Army kandaks and equivalent 

units of the Afghan National Police will need to be independent or effective with 

advisors in order for U.S. forces to move to a primarily advisory role? 

Secretary PANETTA. Our core goals are to disrupt, dismantle, and defeat Al Qaeda, 

and prevent Afghanistan from ever again becoming a safe haven that could threaten 

the United States or our Allies and partners, and to deny the Taliban the ability 

to overthrow the Afghan Government. The Afghan National Security Forces (ANSF) 

are critical to achieving and sustaining our core goals in Afghanistan. The ANSF 

are on track to take the security lead in Afghanistan by the end of2014. The degree 

to which kandaks can operate independently is one measure of effectiveness of the 

ANSF; however, our ability to adjust roles and achieve our goals is also based on 

other factors, such as the enemy threat situation, the degree of governance and development, and progress against corruption. As such, we have not designated a specific number of independently operating kandaks as a metric for determining when 

our forces can transition from combat to advisory operations in Afghanistan. 

Mr. WITTMAN. As we move to enable the ANSF and ALP to take the lead on combat operations in Afghanistan, how are we calculating the risk that the plan could 

fail and we will once again have to retake the lead in combat operations planning 

and execution? Last March we were briefed by General Petraeus that progress in 

Afghanistan was ‘‘fragile and reversible.’’ 

What has changed in the last 11 months that makes us so sure that the ANSF 

and the Afghan government are capable of countering the Taliban and the terrorist 

networks along the border region with Pakistan? Last year the Chairman of the JCS 

testified before us that, ‘‘We cannot allow the Taliban to reorganize and reconstitute 

as they did in 2004 and 2005, regain their oppressive influence over the Afghan people, and once again provide safe haven to Al Qaeda.’’ What is the chance that the 

Taliban regains their foothold and provides a safe haven to Al Qaeda? This safe 

haven and enabling provided by the Taliban is the environment that allowed 9/11 

to be planned and executed. Would you classify our progress in Afghanistan as stable and irreversible? 

General DEMPSEY. The best way to address your concerns is to discuss what we 

will do to provide long-term support to the ANSF and the Afghan government in 

order to prevent extremists from re-establishing a foothold in Afghanistan. We continue to work with the Afghan government on the establishment of a long-term strategic partnership in order to provide a framework for our bilateral cooperation in 

the areas of security, economic and social development, and institution building. 
120 

This will ensure that the United States will be able to target terrorism and support 

the development of a sovereign Afghan government that defeats our common enemies. 

Mr. WITTMAN. As Village Stability Operations and the Afghan Local Police Program expands we have seen increasing numbers of U.S. Special Operations Forces 

operating in remote and isolated areas. As key enablers shift to training and advising the ANSF, or drawing down to support the reduction to 68,000 troops, how are 

we mitigating the risk to SOF in remote areas? How do you plan to maintain sufficient key enablers such as MEDEVAC, intelligence support, and logistics? 

General DEMPSEY. The force disposition that will reflect the 68K troop strength 

is still being developed. The plan may affect Special Operation Force’s (SOF) ability 

to remain in some areas of Afghanistan as coalition force disposition will likely 

change. Since over 50% of the logistics support for VSO/ALP SOF units comes from 

the Regional Commands and Battle Space Owners, SOF can expect that in some 

cases supply lines will become longer. However, US SOF have routinely operated 

in remote areas of Afghanistan for a considerable time. The number of SOF units 

operating in remote areas has grown with the expansion of the VSO/ALP program 

and this expansion is not without risk. The expansion so far has been commensurate with our ability to resupply, enable, and ensure that force protection considerations have not been degraded. MEDEVAC capabilities in support of current SOF 

footprint conducting VSO/ALP are within prescribed timelines of SECDEF policy. 

Whenever a quick reaction force is required to add additional forces to a threatened 

VSO/ALP site, SOF-partnered forces such as the Afghan Commandos, Afghan National Army Special Forces or the Afghan Partner Units are dispatched to the VSO/ 

ALP location to mitigate any threat. 

QUESTIONS SUBMITTED BY MR. HEINRICH 

Mr. HEINRICH. Secretary Panetta, I am deeply concerned, and I know a number 

of my colleagues are as well, about the budget cuts to small satellite programs such 

as Operationally Responsive Space (ORS) and the Space Development and Test Directorate in fiscal year 2013. 

The FY13 budget seeks to repeal the establishment of the ORS program office and 

eliminate already marginal investments in small satellite programs. Given the increasingly competitive environment in space and the high cost of procuring traditional, multibillion dollar satellites, I fear these cuts are penny-wise and pound-foolish. Specifically, the FY13 Defense Budget Overview proposes a ‘‘restructure of the 

Operationally Responsive Space (ORS) program in order to provide more responsive 

and timely space capabilities to the warfighter,’’ yet the funding request in the ORS 

budget line was $0. 

How is the elimination of the ORS office that is responsible for spearheading this 

effort consistent with providing ‘‘more responsive and timely space capabilities to 

the warfighter’’? 

How does DOD intend to continue its support of the concept and mission without 

any resources dedicated to this effort? 

Secretary PANETTA. The fiscal year 2013 budget request terminates the Operationally Responsive Space (ORS) Program Office, but not our commitment to 

achieving the goals of ORS. Responsive and resilient space capabilities are still critical to protecting our ability to operate effectively in space. As the National Security 

Space Strategy notes, ensuring U.S. capabilities are developed and fielded in a timely, reliable, and responsive manner is critical for national decisionmakers to be able 

to act on time-sensitive and accurate information and for military forces to be able 

to plan and execute effective operations. To that end, we will incorporate the ORS 

efforts, principles, and activities into the Air Force Space and Missile Systems Center (SMC) Program Offices and fund integration of ORS concepts into the SMC 

through existing programs. This will ensure resilient, survivable, flexible, and responsive capabilities are considered in all future space programs, not merely in one 

discrete program office. 

Mr. HEINRICH. As you know, the ORS–1 imaging satellite was launched in June 

2011 in response to an urgent requirement from the Commander of USSTRATCOM 

in support of CENTCOM. 

It is my understanding that ORS–1 has met and exceeded CENTCOM’s expectations. 

Can you speak a little more on what the warfighter’s response has been to this 

reconnaissance asset? 
121 

If the ORS mission has been realigned into other programs, how much funding 

is being allocated for this mission? How does DOD plan to use commercial capabilities, including hosted payloads in FY13? 

General DEMPSEY. Yes, CENTCOM has been satisfied with the performance of 

ORS–1 to date. The capabilities of ORS–1 and associated applications continue to 

grow. The operational program is fully funded through the design life of the satellite. 

The ultimate goal for ORS is to incorporate the ORS concepts into the broader 

space mission. As part of the transition, the Air Force Space Command’s Space and 

Missile Systems Center (SMC) will be the direct recipient of ORS residual activities. 

While the Air Force is still working the specific details, the intent is to explore alternatives including partnerships with other nations, commercial firms, and international organizations; as well as alternative U.S. Government approaches such as 

cross-domain solutions, hosted payloads, responsive options, and other innovative 

solutions. To support these efforts, $10.0 million has been transferred from ORS to 

the following programs: Advanced EHF Milsatcom, Global Positioning System III— 

Operational Control Segment, Space Based IR System—High, Space Control Technology, and Technology Transition. 

QUESTIONS SUBMITTED BY MR. OWENS 

Mr. OWENS. Secretary Panetta, you propose with this budget to reduce the number of Army Brigade Combat Teams (BCTs) by eight, with two coming from Europe. 

How far along is the Department in determining which U.S.-based BCTs will be 

drawn down, and when might your analysis of these decisions be made available 

to Members of Congress, Commanders at U.S.-based installations and the general 

public? Will Members or home installations have the opportunity to weigh in before 

these decisions go into effect? 

Secretary PANETTA. The Army is considering a number of potential options, but 

no final decisions have been made as to which U.S.-based BCTs will be drawn down. 

An announcement on specific force structure actions is expected sometime before, 

or in conjunction with, submission of the FY14 President’s Budget in early February 

2013. The Army will develop a plan that will provide detailed information regarding 

the draw down and address notification of affected congressional districts and Army 

installations prior to the decision going into effect. 

Mr. OWENS. Secretary Panetta, it should come as no surprise that your request 

for additional BRAC authorizations has been met with some resistance from Members of Congress, including myself. I do appreciate General Odierno’s recent statements that closures of major installations are not in the works, and I believe many 

of us are willing to work with the Department if there is unused or otherwise excess 

real-estate on your books. Giving the Department carte blanche to begin a process 

for closing installations, however, is not something I for one am open to considering. 

I have concerns not only for major installations here in the U.S., but also for the 

costs generally associated with a BRAC request. Can you give us a range of the potential costs for a BRAC round, and are there any details available on where the 

money to pay for such an effort would come from? 

Secretary PANETTA. The costs of a potential BRAC round will not be understood 

until after the formal review process is complete. The Department must develop its 

recommendations, have them reviewed by the independent BRAC Commission, forwarded by the President to Congress, and if Congress does not enact a joint resolution disapproving the recommendations, the Department can develop budget estimates of the costs. 

The Department is committed and legally obligated to follow the normal internal 

budget deliberation process to determine the source of funds for implementation 

costs. As BRAC is a key priority, the Department will apply the resources necessary 

to support both a robust and thorough BRAC analysis and an efficient and effective 

implementation process. BRAC has an upfront cost, but it begins generating savings 

almost immediately, and those savings will partially offset its initial costs. Moreover, BRAC will generate recurring savings far in excess of the upfront investment. 

Mr. OWENS. Secretary Panetta, affordability is the underlying premise of the F– 

35 program—yet this budget proposes for the 4th year in a row a flat production 

rate of 30 aircraft per year; in your opinion, what can be done in the near term to 

help drive down costs and ensure an efficient ramp rate to make certain the F–35 

program will be affordable in the long term? 

Secretary PANETTA. The Department is reducing costs in the near term by keeping production low to mitigate the cost risks from concurrent production and testing. 

Concurrency is a transitory issue, and those risks will progressively decline as the 
122 

program nears the completion of development and testing. Additionally, the Department is managing production costs through the transition from cost type to fixedprice-type contracts, which began with the Low-Rate Initial Production (LRIP) Lot 

4 contract. In LRIP Lot 5, the Government’s cost risk is being mitigated by transferring some responsibility for concurrency cost to the prime contractor. The LRIP Lot 

6 and 7 contracts will implement an event-based contracting strategy that buys aircraft quantities based upon development and test progress. This strategy provides 

a means to control the production rate, which will be informed by demonstrated development performance against the 2012 plan and concurrency cost risk reduction. 

These steps will control near-term costs while ensuring that aircraft procured will 

last their required service life, come with the required mission capability, and have 

a reduced need for post-production modifications. 

Production efficiencies are not entirely postponed to the future even when production quantity remains level under this staged production approach. Beyond cost reduction from improved learning in touch labor that this approach will generate, 

quality improvements are expected to reduce current scrap, rework, and repair 

costs. Process and performance improvements across the supplier base in material 

and overhead accounts are expected to reduce costs as well. Improved timely incorporation of test-discovered changes in the production configuration will deliver jets 

that require fewer post delivery modifications. These coupled aspects should result 

in real affordability gains each year as production contracts are negotiated on a 

basis of expected improvements accordingly. 

Mr. OWENS. Secretary Panetta, can you speak to the importance of international 

participation to controlling costs on the F–35 program? 

Secretary PANETTA. International participation is very important in controlling 

costs because the production of additional aircraft reduces aircraft unit costs for all 

the participating nations. The F–35 program continues to be the Department of Defense’s largest cooperative program, with eight Partner countries participating 

under Memorandums of Understanding for System Development and Demonstration 

and for Production, Sustainment and Follow-on Development. The eight Partner 

countries are Australia, Canada, Denmark, Italy, The Netherlands, Norway, Turkey, 

and the United Kingdom. All the Partners recently met, and each expressed its continued commitment and support for the program. Currently, Partner and U.S. buys 

are projected to total 697 and 2,443 aircraft, respectively. 

In addition to the cooperative partners, there is strong Foreign Military Sales interest. In 2010, Israel signed a letter of agreement to purchase 19 F–35A variants 

for $2.75 billion, with deliveries scheduled to begin in 2016. Israel plans to purchase 

an additional 56 F–35As in the future. In December 2011, Japan selected F–35 

using a competitive process. On February 1, 2012, Japan signed a $6-million agreement to conduct F–35 studies. Japan is expected to sign an agreement to purchase 

the first 4 of a planned acquisition of 42 Conventional Take-Off and Landing F–35A 

aircraft by June 2012. Deliveries will begin in 2016. 

Mr. OWENS. General Dempsey, the F–35 program has been restructured a number 

of times—three times in the past three years. I just want to confirm for the record 

that the requirement to develop and field an affordable, 5th-generation multirole 

strike fighter remains. Is that correct? 

General DEMPSEY. Yes, the Department is committed to the JSF program of 

record that includes all three variants. We have slowed procurement in order to 

complete more testing and minimize concurrency issues before buying significant 

quantities. 

QUESTIONS SUBMITTED BY MR. RUPPERSBERGER 

Mr. RUPPERSBERGER. As semiconductor manufacturing continues to move offshore, 

particularly to China and Taiwan, it can be expected that there will be a rise in 

counterfeit chips. This is especially concerning because they are used in critical information systems and weapons systems. How does the Department plan to ensure 

that the U.S. Government has a reliable source for leading-edge technology and 

manufacturing for its military systems? Is there a long-term plan to deal with this 

issue? 

Secretary PANETTA. There is a multitiered effort within the Department of Defense (DOD) to address Counterfeiting. It starts with an acquisition program assessing program risk and the consequence to the system if the system, a subsystem, assembly, or an individual item is counterfeited or incorporated by a DOD Prime or 

sub-tier supplier into a higher level system. Those identified as being at-risk then 

require assignment of a level of traceability implemented through Quality Assurance procedures at the Prime, sub, and any DOD-direct suppliers for each at-risk 
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item. Depending on the level of risk, suppliers may be required to document the authenticity of the item on the low end, perhaps for the use of qualified suppliers, or 

at the high end, procure only from a trusted source. The goal is to leverage the management of critical application items, including critical safety items and mission-critical components. This management process is already well defined and applies 

strong controls for the identified parts. The risks typically considered fall into the 

areas of Technical, Program, and Cost. As part of risk assessment and mitigation, 

DOD Program Managers are required to document the risk of counterfeits and their 

countermeasures in either their Program Protection Plan or their Systems Engineering Plan. The Department advocated this approach to the Office of Management and 

Budget’s Intellectual Property Enforcement Coordinator’s (IPEC) Federal AntiCounterfeiting Working Group, as the chair of its Risk and Traceability Teams. 

With IPEC, DOD will lead the development of a Federal Acquisition Guide on Identification and Mitigation of Counterfeit Risk. 

Specific DOD steps are: 

 Anti-Counterfeit policy (DOD Instruction) is in development  In the interim: 

 More than 2,000 personnel have been trained in counterfeit detection and 

mitigation.  DOD representatives participate in industry groups that have written anticounterfeit standards to be approved by the association membership.  Code has been developed within the Department’s primary system for tracking non-conforming material, the Product Quality Deficiency Reporting system that enables Components to tag suspected counterfeit items, for further 

investigation. 

These initial steps are part of a comprehensive anti-counterfeiting program that 

will extend from system development to counterfeit material disposal over the next 

3 years. 

Mr. RUPPERSBERGER. The Defense Science Board (DSB) Task Force on High Performance Microchip Supply Report dated February 2005 included a recommendation 

(#5) that stated ‘‘Developing cost-effective technology for the design and fabrication 

of low-production-volume, leading-edge technology ASICs will require the combined 

efforts of DOD, the semiconductor industry, and semiconductor fabrication equipment suppliers’’ and ‘‘DDR&E should now take another look at ASIC production and 

formulate a program to address barriers to low- to medium-volume custom IC manufacturing.’’ Based on the DSB Report recommendation, has the DOD developed any 

plans for an alternative, more flexible approach to manufacturing trusted, low-volume, leading-edge microelectronics? 

Secretary PANETTA. Yes. The Department recognizes that leading-edge Application-Specific Integrated Circuit (ASIC) manufacturing technology resides in the global commercial sector and that the number of companies with the right capabilities 

is decreasing. The DSB Report supported the Department’s need for low-volume access to leading-edge ICs. Since 2004, the Department partnered with the National 

Security Agency to gain economies of scale by aggregating ASIC demands. A contract was competitively awarded to a commercial firm to serve as a leading-edge, 

trusted ASIC foundry for a 10-year period to ensure access to leading-edge technology over a long term. This program has resulted in thousands of trusted ICs delivered to defense and national security programs. A trusted accreditation process 

was established, through which more than 50 industrial firms are accredited as 

trusted suppliers of IC technologies. The combination of the Trusted Foundry contract and the trusted supplier network provides DOD and its contractors with a rich 

set of technologies and options. 

The Department is now in the process of formulating plans for the next 10 years. 

Numerous options are under study, including a short-term extension of the current 

arrangement and a recompetition for long-term sources of trusted IC manufacturing. 

Our plans will depend on the competitive marketplace to decrease costs and increase the array of technology options available to DOD. We are working with industry to outline a plan that will provide the Department with the flexible access 

to the widest array of trusted ASIC technologies available. We anticipate this plan 

will be complete late FY 2012 for implementation in FY 2013 and will be incorporated into the Department’s Program Protection Plan. 

Mr. RUPPERSBERGER. We understand that DOD and Air Force seek to on-ramp 

New Entrant competitors for national security space launch. As you know, I strongly support competition in space launch which will reduce costs to the taxpayer, according to an extensive Government Accountability Office review. How will DOD 

and the Air Force off-ramp from a block buy contract with ULA to enable New Entrants to compete? 
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Secretary PANETTA. Since the Government Accounting Office report was released, 

several steps have been taken to certify New Entrants. First, the New Entrant Certification Strategy was signed by the Air Force, the National Reconnaissance Office, 

and National Aeronautics and Space Administration (NASA), and released in October 2011. The document defines the coordinated certification strategy for commercial 

New Entrant launch vehicles. The certification strategy is anchored on NASA’s existing model. Second, the United States Air Force Launch Services New Entrant 

Certification Guide was signed and released in October 2011. The Guide provides 

a risk-based approach the Air Force will use to certify the capability of potential 

New Entrant launch companies for Evolved Expendable Launch Vehicle (EELV) 

missions. The Guide lists the criteria any New Entrant must meet in order to 

launch a high-value operational satellite. 

To facilitate the certification of potential new entrants, the Air Force has identified two missions that providers may bid on—the Space Test Program (STP)—2 and 

the Deep Space Climate Observatory (DSCOVR) missions. These non-National Security Space (NSS), EELV-class missions have a higher risk tolerance and will provide 

an opportunity for the potential new entrant to prove their capability for certification. Once a New Entrant is certified, launch services not covered under the FY13 

Block Buy could be competed. When the Phase I Block Buy expires and New Entrants are certified, we will have a full and open competition for launch services. 

Mr. RUPPERSBERGER. The Air Force has indicated that it has asked United 

Launch Alliance to fill out a matrix of what price they would charge for 6 to 10 

boosters per year, across a range of 3 to 5 years, in order to determine a pricing 

‘‘sweet spot’’ for ULA booster cores in a block buy procurement. How does the Department of Defense and the Air Force intend to independently assess whether the 

pricing is fair and reasonable? If the Air Force determines that the ‘‘sweet spot’’ is 

10 booster cores per year for 5 years because this is the largest quantity order, how 

does it intend to allow New Entrants to compete? 

Secretary PANETTA. The Department of Defense and the Air Force are committed 

to fostering competition while ensuring the reliability and capability of New Entrants desiring to participate in fulfilling National Security Satellites launch requirements. 

Part 1: The Air Force will independently develop price estimates based upon certified cost and pricing data, as well as independent cost estimates. The Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) 

have committed to full participation in the Evolved Expendable Launch Vehicle 

(EELV) proposal evaluation and negotiation activities, thereby ensuring the final 

cost of space launch services represents the best value to the Government. 

Part 2: The Air Force and the Department of Defense see competition as a critical 

element of our long-term efforts to reduce launch costs. The new EELV acquisition 

strategy, set to begin in FY13, entails an evaluation of an economic order quantity 

of EELV booster cores, covers contract periods ranging from 3 to 5 years, and encompasses a quantity range of 6 to 10 booster cores per year. By examining a range 

of contract options and terms for EELV procurement, and by examining progress by 

New Entrants in the coming months, the Air Force will be well-positioned to balance 

the rate and commitment decision with our fundamental priorities: operational requirements, price, budget and enabling competition. Once a New Entrant is certified, launch services not covered under the FY13 Block Buy could be competed. 

When the Phase I Block Buy expires and New Entrants are certified, we will have 

a full and open competition for launch services. 

QUESTIONS SUBMITTED BY MR. SCHILLING 

Mr. SCHILLING. The strategic guidance states the DOD will have a key element 

focused on investments in technology and new capabilities as well as the capacity 

to grow, adapt and mobilize as needed. Does this mean you will be ensuring that 

our organic base, including arsenals and depots, will be properly utilized and 

workloaded to ensure our capabilities to meet future threats is kept warm? 

Secretary PANETTA. The Department agrees it is essential for national defense 

that we maintain depot maintenance and the arsenal organic capabilities that enable our forces to respond to mobilization, national defense contingency situations, 

and other emergency requirements. In addition to the formal processes and reporting requirements required by 10 U.S.C. § 2464, 10 U.S.C. § 2466, and 10 U.S.C. 

§ 2476, the Office of the Assistant Secretary of Defense for Logistics and Materiel 

Readiness oversees programs and initiatives designed to support our Nation’s organic industrial base. 
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Mr. SCHILLING. How does the DOD view its working capital bases like Arsenals? 

These are the most cost-effective part of our Army’s flexible industrial base as they 

do not cost taxpayers large pots of money, but instead encourage public-private partnerships that help our economy. 

Building on that, I have been aware of a study that has been going on to address 

the organic base in the future. When will that plan be released and what is your 

plan for the organic base in the future? 

Secretary PANETTA. As operational requirements are reduced in Iraq and Afghanistan, workloads in all Army organic industrial base (OIB) facilities are projected to 

decline at moderate rates. Throughout this period and beyond, the Army’s Depots 

and Arsenals will continue to be designated as Centers of Industrial and Technical 

Excellence (CITE) for maintenance and repair; for example, Pine Bluff Arsenal is 

CITE for chemical and biological defense equipment and the Army’s manufacturer 

of white and red phosphorus, incendiary, illumination and color smoke ammunition 

rounds. 

To mitigate reductions in Overseas Contingency Operations (OCO) funded work 

at Army OIB facilities, the Army Materiel Command’s TACOM Life Cycle Management Command worked with its commercial partners, Army Program Executive Offices (PEOs), Program Management Offices (PMOs), and the Army’s OIB activities 

to highlight the Army’s OIB capabilities and identify opportunities for the Arsenals 

to partner with commercial firms to meet future PEO/PMO requirements. For example Rock Island Arsenal (RIA) is partnering with Sivyer Steel Corporation, a company that operates a foundry that has expertise in casting, molding, core making 

and machining. RIA and Sivyer anticipate that this partnership will yield the production of competitively priced, high quality castings. The partnership will also reduce lead time, and yield an increased workload for the foundry. 

The Army’s strategy for ensuring that the Army’s OIB remains viable and relevant include: investment in new technology, training and plant equipment at the 

same rate that the Army modernizes its weapon systems; identifying and aligning 

core competencies and workloads to support current and future surge requirements; 

investment to maintain ‘‘state-of-the-art’’ capabilities and quality of work environment standards; and prioritizing funding to achieve the desired end state—viable 

and relevant OIB facilities. 

Mr. SCHILLING. You brought up the important point that we will have a large 

number of veterans entering the system. 

What specifically do you plan to do to help them transition back into the civilian 

world? 

General DEMPSEY. Currently, all Services provide mandatory Pre-Separation 

Counseling and voluntary DOL Transition Assistance Program Workshops, VA benefits briefings and Individualized Coaching opportunities to assist Service members 

as they transition out of the military. In August 2011, the President called on the 

Department of Defense (DOD) and Veterans Affairs (VA) to lead a Task Force with 

the White House economic and domestic policy teams and other agencies, including 

the Department of Labor (DOL), to develop proposals to maximize the career readiness of all Service members. This DOD Employment Initiative Task Force is one element of the President’s comprehensive plan to reduce Veteran unemployment and 

to ensure all of America’s Veterans have the support they need and deserve when 

they leave the military, look for a job, and enter the civilian workforce. 

This task force is reviewing transition programs that are currently being offered 

within DOD, VA and DOL and expects to implement a new training and services 

delivery model to help strengthen the transition of our Service members from military to civilian life in Spring of 2012. The model will establish the framework for 

ensuring Service members (of both Active and Reserve Components) meet a set of 

career readiness standards prior to transition to civilian life. These standards will 

be sub-divided into employment, technical training, and education. They will ensure 

Service members depart the military career-ready with a meaningful set of ‘‘tools’’ 

that will position them to achieve desired transition outcomes. 

Mr. SCHILLING. I do not want to see the issues that veterans from Vietnam who 

suffered from Agent Orange exposure come back around to our most recent veterans. 

Will you be working with the Department of Veterans Affairs to ensure that those 

who are leaving DOD will get the care they need to address issues like exposure 

to depleted uranium? 

General DEMPSEY. The Department of Defense (DOD) and Department of Veterans Affairs (VA) are actively engaged in several important efforts to ensure exposure-related information is shared between our departments. Any confirmed exposures which involved clinical care or assessment are recorded in the Service mem-
126 

bers’ medical records, and these records are available to the VA. In addition, the 

post-deployment health assessment and post-deployment health reassessment are 

made available to the VA health care providers. These assessments are filled out 

by every Service member following deployment and include self-reported exposures. 

To further enhance our collaboration, the Departments recently signed a data transfer agreement (DTA) allowing the 2-way sharing of embedded fragment analysis 

data, including data on individuals with retained DU fragments. 

The Departments are working towards an overarching exposure-related DTA that 

will permit the sharing of all occupational and environmental exposure-related data. 

Also under way are efforts to create Individual Longitudinal Exposure Records 

(ILERs). Once developed, ILERs will capture a wide variety of exposure-related data 

from a number of different sources that will link that information to Service members over the course of their military careers. This information will be available to 

DOD and VA health care providers, and it promises to improve the quality of health 

care. It will also ensure more timely and accurate adjudication of exposure-related 

claims and access to Service-connected benefits. 

For the past two decades, DOD has been working closely with the VA on concerns 

related to depleted uranium (DU) exposures. To date, neither the DOD nor VA have 

identified any illnesses in DU-exposed Service members or Veterans that have been 

linked with those exposures. The DOD and VA continue to study DU exposures and 

ensure any Service members or Veterans that may be at risk are periodically monitored. The Military Services continue to identify Service members with documented 

exposures and refer them to the VA so they have the opportunity to be included in 

the VA’s DU Follow-up Program. Only 10 Service members with DU exposure have 

been identified resulting from duty in Iraq or Afghanistan. (See http:// 

www.publichealth.va.gov/exposures/depleteduranium/followupprogram.asp) 

QUESTIONS SUBMITTED BY MR. SCOTT 

Mr. SCOTT. Do you support or oppose lifting the ban on U.S. flag and general officers from visiting Taiwan? Besides Taiwan, what other countries are U.S. flag and 

general officers banned from visiting? 

Secretary PANETTA. As a matter of policy and consistent with the policy stated 

in the Taiwan Relations Act, we review and consider, in coordination with the U.S. 

Department of State, travel by U.S. flag and general officers to Taiwan on a caseby-case basis; there is no ban on such travel. In addition, we will continue to support the practice of sending retired flag and general officers to Taiwan to serve in 

a mentorship capacity as part of our robust program for defense and security engagement with the armed forces of Taiwan. 

Mr. SCOTT. Do you support or oppose lifting the ban on U.S. flag and general officers from visiting Taiwan? Besides Taiwan, what other countries are U.S. flag and 

general officers banned from visiting? 

General DEMPSEY. Having retired general and flag officers visit Taiwan assists 

Taiwan and aids our ability to assess Taiwan’s defense needs accurately. We will, 

therefore, continue the practice of sending retired flag officers to Taiwan to facilitate 

improving Taiwan’s defense capabilities. Visitors have included Admiral (ret) Blair, 

Admiral (ret) Natter, Lieutenant General (ret) Gregson, and Lieutenant General 

(ret) Leaf. They have all spent weeks mentoring senior Taiwan flag officers to include attending the Han Kuang exercises. We will continue to send our best and 

our brightest to assist Taiwan with its defense. 

QUESTIONS SUBMITTED BY MRS. ROBY 

Mrs. ROBY. In your written testimony you discussed how the Department of Defense’s plan includes reducing our forces that ‘‘we must help our veterans find education opportunities, meaningful employment, and first class heath care.’’ You also 

go and say that this not ‘‘exclusive responsibility of the Services or veterans organizations.’’ 

What is the plan of the Department both internally and across other Federal 

agencies to ensure that military personnel transitioning out of the military are 

equipped with the necessary training and education to obtain employment? 

I am particularly concerned since the unemployment rate for young Iraq and Afghanistan veterans is 22% and for wounded veterans is 41%. 

Secretary PANETTA. The Department of Defense, in collaboration with our partners from the Department of Labor, helped develop a TAP Employment Workshop 

Redesign to create experiential, effective and enduring solutions for successful tran-
127 

sition from military to civilian life and employment. In August 2011, the President 

created a task force led by the DOD and VA and supported by agencies including 

the Department of Labor (DOL), Department of Education (DoEd), Small Business 

Administration, and the Office of Personnel Management (OPM) to develop proposals to maximize the career readiness of all Service members. In coordination 

with our partners, DOD’s role involves implementing and sustaining a comprehensive plan to ensure all transitioning Service members have the support they need 

and deserve when they leave the military. The President also directed reforms to 

our transition assistance programs to ensure that every Service member receives 

the training, education, and credentials needed to successfully transition into the civilian workforce or to pursue higher education. We are working with our partners 

to develop program and services, fully aligned with the ‘‘VOW to Hire Heroes Act 

of 2011,’’ to give Service members a comprehensive set of transitioning tools, skills, 

and support mechanisms as they complete their service to our Nation. We will deliver an implementation plan for these programs and services to the President in 

spring 2012. 

Mrs. ROBY. In your written testimony you discussed how the Department of Defense’s plan includes reducing our forces that ‘‘we must help our veterans find education opportunities, meaningful employment, and first class heath care.’’ You also 

go and say that this not ‘‘exclusive responsibility of the Services or veterans organizations.’’ 

What is the plan of the Department both internally and across other Federal 

agencies to ensure that military personnel transitioning out of the military are 

equipped with the necessary training and education to obtain employment? 

I am particularly concerned since the unemployment rate for young Iraq and Afghanistan veterans is 22% and for wounded veterans is 41%. 

General DEMPSEY. In August 2011, the Department of Defense (DOD)/Veterans 

Affairs (VA) Employment Initiative Task Force was created, encompassing DOD, 

VA, the White House economic and domestic policy teams and other agencies, including the Department of Labor (DOL), to develop proposals to streamline current 

programs and maximize the career readiness of all Service members. This Task 

Force is reviewing transition programs that are currently being offered within DOD, 

VA and DOL and expects to implement a new training and services delivery model 

to help strengthen the transition of our Service members from military to civilian 

life in Spring of 2012. 

The model will establish the framework for ensuring Service members (of both Active and Reserve Components) meet a set of career readiness standards prior to 

transition to civilian life. These standards will be sub-divided into employment, 

technical training, and education. They will ensure Service members depart the 

military career-ready with a meaningful set of ‘‘tools’’ that will position them to 

achieve desired transition outcomes. 

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