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i 

79–954 2013

[H.A.S.C. No. 113–12] 

IMPACTS OF A CONTINUING RESOLUTION 

AND SEQUESTRATION ON ACQUISITION, 

PROGRAMMING, AND THE INDUSTRIAL 

BASE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TACTICAL 

AIR AND LAND FORCES 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

FEBRUARY 28, 2013 
(II) 

SUBCOMMITTEE ON TACTICAL AIR AND LAND FORCES 

MICHAEL R. TURNER, Ohio, Chairman 

FRANK A. LOBIONDO, New Jersey 

JOHN FLEMING, Louisiana 

CHRISTOPHER P. GIBSON, New York 

JON RUNYAN, New Jersey 

MARTHA ROBY, Alabama 

PAUL COOK, California 

JIM BRIDENSTINE, Oklahoma 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

MAC THORNBERRY, Texas 

WALTER B. JONES, North Carolina 

ROB BISHOP, Utah 

LORETTA SANCHEZ, California 

MIKE MCINTYRE, North Carolina 

JIM COOPER, Tennessee 

JOHN GARAMENDI, California 

RON BARBER, Arizona 

DANIEL B. MAFFEI, New York 

JOAQUIN CASTRO, Texas 

TAMMY DUCKWORTH, Illinois 

WILLIAM L. ENYART, Illinois 

PETE P. GALLEGO, Texas 

MARC A. VEASEY, Texas 

JOHN WASON, Professional Staff Member 

DOUG BUSH, Professional Staff Member 

JULIE HERBERT, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2013 

Page 

HEARING: 

Thursday, February 28, 2013, Impacts of a Continuing Resolution and Sequestration on Acquisition, Programming, and the Industrial Base ............... 1 

APPENDIX: 

Thursday, February 28, 2013 ................................................................................. 35 

THURSDAY, FEBRUARY 28, 2013 

IMPACTS OF A CONTINUING RESOLUTION AND SEQUESTRATION ON 

ACQUISITION, PROGRAMMING, AND THE INDUSTRIAL BASE 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Sanchez, Hon. Loretta, a Representative from California, Ranking Member, 

Subcommittee on Tactical Air and Land Forces ................................................ 3 

Turner, Hon. Michael R., a Representative from Ohio, Chairman, Subcommittee on Tactical Air and Land Forces ...................................................... 1 

WITNESSES 

Davis, Lt Gen Charles R., USAF, Military Deputy, Office of the Assistant 

Secretary of the Air Force for Acquisition, U.S. Air Force; and Lt Gen 

Michael R. Moeller, USAF, Deputy Chief of Staff for Strategic Plans and 

Programs, U.S. Air Force .................................................................................... 10 

Shyu, Hon. Heidi, Assistant Secretary of the Army for Acquisition, Logistics 

and Technology, U.S. Department of the Army; and LTG James O. Barclay 

III, USA, Deputy Chief of Staff, G–8, U.S. Army .............................................. 5 

Stackley, Hon. Sean J., Assistant Secretary of the Navy (Research, Development & Acquisition (RDA)), U.S. Department of the Navy; VADM Allen 

G. Myers, USN, Deputy Chief of Naval Operations, Integration of Capabilities and Resources (N8), U.S. Navy; and LtGen John E. Wissler, USMC, 

Deputy Commandant for Programs and Resources, U.S. Marine Corps ......... 7 

APPENDIX 

PREPARED STATEMENTS: 

Davis, Lt Gen Charles R., joint with Lt Gen Michael R. Moeller ................ 68 

Shyu, Hon. Heidi, joint with LTG James O. Barclay III ............................... 42 

Stackley, Hon. Sean J., joint with VADM Allen G. Myers and LtGen 

John E. Wissler ............................................................................................. 53 

Turner, Hon. Michael R. .................................................................................. 39 

DOCUMENTS SUBMITTED FOR THE RECORD: 

Follow-up Written Testimony of LTG James O. Barclay III ........................ 85 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Ms. Sanchez ...................................................................................................... 93 
Page

IV 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Maffei ......................................................................................................... 109 

Mr. Turner ........................................................................................................ 97 
(1) 

IMPACTS OF A CONTINUING RESOLUTION AND SEQUESTRATION ON ACQUISITION, PROGRAMMING, AND THE 

INDUSTRIAL BASE 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, SUBCOMMITTEE ON TACTICAL AIR AND LAND FORCES, 

Washington, DC, Thursday, February 28, 2013. 

The subcommittee met, pursuant to call, at 9:08 a.m., in room 

2118, Rayburn House Office Building, Hon. Michael R. Turner 

(chairman of the subcommittee) presiding. 

OPENING STATEMENT OF HON. MICHAEL R. TURNER, A REPRESENTATIVE FROM OHIO, CHAIRMAN, SUBCOMMITTEE ON 

TACTICAL AIR AND LAND FORCES 

Mr. TURNER. Good morning. We will call to order the hearing of 

the Tactical Air and Land Forces Subcommittee. 

The Tactical Air and Land Forces Subcommittee meets today in 

open session to receive testimony on the impacts of sequestration 

and the continuing resolution, CR, its impacts on acquisition, programming, and the industrial base. 

Before I continue with my opening statement, I want to pause for 

a moment just to say I voted against this mess. And I voted against 

this mess because I thought we would be right here, right where 

we are, with this clock ticking, 14 hours and 15 minutes until sequestration hits in what I believe will be devastating impacts upon 

our national security and our Department of Defense. 

Now, it is noted that there is a pause button there, and I truly 

believe that the President of the United States is the only one who 

can hit that pause button. We need him to come to the table with 

a workable plan. And we certainly are hopeful that once sequestration does hit and the effects that we hear today, that a responsible 

plan will be brought forward in order to set this off. 

I noted that in talking to some of the witnesses before we 

opened, that they thought that perhaps this clock was their opening statement clock, but they don’t get 14 hours for their opening 

statement. 

But I think this demonstrates the fact that it is imminent; it is 

upon us. Today, the panel that we have that will be speaking will 

be the last word on sequestration before we are in the post-implementation of sequestration, before we begin to see its effects. And 

that is why this committee continues its efforts on oversight and 

our detailed examination of the harmful impacts of the continuing 

resolution on sequestration, on the military’s ability to protect national security interests of our Nation. 
2 

We have already heard very candid testimony from the military 

service chiefs during the full committee hearing on February 13th, 

on how these forced budget cuts will be devastating to military 

training and force readiness. 

General Dempsey, chairman of the Joint Chiefs of Staff, stated, 

‘‘We built a strategy last year that we said we can execute and absorb $487 billion. I can’t sit here today and guarantee you that if 

you take another $175 [billion] that that strategy remains solvent. 

. . . What do you want your military to do? If you want it to be 

doing what it is doing today, then we can’t give you another dollar.’’ 

Today, we plan to leverage the information gained from that 

hearing and provide our members with the opportunity to gain a 

better understanding of how the CR and sequestration would impact defense acquisition, programs, projects and activities, and 

their associated industrial bases across the country. 

One of the most tragic aspects of our current situation is that sequestration was never supposed to happen, and there were numerous opportunities to avoid it. 

By laying out the details of the impacts of sequestration, the Department of Defense could have helped us in our education campaign to avoid the catastrophic cuts we are now facing. 

On the eve of sequester, it is my hope that this hearing will aid 

to provide greater clarity concerning the details and levels of risk 

that will be associated with the arbitrary cuts mandated by sequestration on all major defense acquisition programs, including how 

these severe reductions will impact local communities, small businesses and ultimately the military’s ability of meeting the national 

military strategy. 

These details will help to illustrate the depths of these impacts 

and help us make our case to Congress and the Nation. 

And I want to underscore what I just said. The Department of 

Defense has been very slow to provide information, both to Congress and to the Nation, as to what the impacts of these cuts will 

be. Because of that, it has stunted the debate and the conversation 

about how to avoid them, because many of the actual details of 

their effects could not be evaluated and known. 

Ironically, the sequestration conversation has been seated in a 

context of savings and fiscal austerity. However, it seems apparent 

that allowing these cuts to take place would, ultimately, cost our 

country more than it saves, while simultaneously costing jobs. 

Second- and third-tier vendors, mostly small businesses, will be 

affected if these cuts are enacted, many of which are referred to as 

‘‘single points of failure vendors,’’ meaning only one company is 

qualified to provide a particular part. And once that capability is 

lost, it will take significant capital and time to regain that capability. This, in turn, will put people out of work and dramatically 

drive up cost. 

We need to be assured that the Department and the military 

services are conducting the appropriate level of analysis to assist 

the impact of sequester on our industrial base. For example, the 

Army indicates that every procurement program would be affected. 

Quantities would be reduced by 10 to 15 percent, and that these 
3 

mandated sequester reductions affect more than 1,000 companies 

in more than 40 States. 

For the Army alone, over 3,000 vendors will be affected. The 

Army has stated the total economic impact would be approximately 

$15.4 billion, the Marine Corps, $2.4 billion, the Navy is over $20 

billion. I witness the devastating effects of these reactions each 

time that I return home. 

My community, in southwest Ohio, includes Wright-Patterson 

Air Force Base, the home of the Air Force Materiel Command and 

the Air Force Research Laboratory. Recent information provided by 

the Air Force has indicated that over 14,000 civilian employees at 

the base face potential furloughs. 

The base provides cutting-edge research and development, as 

well as real-time intelligence, surveillance, and reconnaissance that 

enhances the lethality and survivability of our warfighters who are 

in harm’s way. Every State is going to be impacted by sequestration. 

As I stated before, I voted against this. And I think, certainly, 

our discussion today will be incredibly important as we try to learn 

the information that will give us the ability to advocate for these 

cuts to be set aside. 

I would like to welcome our distinguished panel of witnesses. 

Representing the Army today, we have Ms. Heidi Shyu, Assistant 

Secretary of the Army for Acquisition, Logistics and Technology. 

We have Lieutenant General James Barclay III, Deputy Chief of 

Staff, G–8. 

Representing the Navy and Marine Corps, we have Mr. Sean J. 

Stackley, Assistant Secretary of the Navy, Research, Development 

and Acquisition, RDA. We have Vice Admiral Allen G. Myers, Deputy Chief of Naval Operations, Integration of Capabilities and Resources; Lieutenant General John E. Wissler, Deputy Commandant 

for Programs and Resources. 

And then representing the Air Force, we have Lieutenant General Michael R. Moeller, Deputy Chief of Staff for Strategic Plans 

and Programs; Lieutenant General Charles R. Davis, Military Deputy, Office of the Assistant Secretary of the Air Force for Acquisition. 

We thank each of you for being here. We appreciate that you 

will, on the House side, be the last word on the effects of sequestration before we are actually implementing sequestration. 

And it is my pleasure to introduce my good friend, and bipartisan 

colleague, Ms. Sanchez. 

[The prepared statement of Mr. Turner can be found in the Appendix on page 39.] 

STATEMENT OF HON. LORETTA SANCHEZ, A REPRESENTATIVE 

FROM CALIFORNIA, RANKING MEMBER, SUBCOMMITTEE ON 

TACTICAL AIR AND LAND FORCES 

Ms. SANCHEZ. Thank you, Mr. Chairman. And as always, it is a 

pleasure to serve with you on this subcommittee. And to the young 

lady and the gentlemen before us, thank you for being here to discuss the effects of sequestration, especially on our second- and 

third-tier suppliers, and the need to have the type of tactical equip-
4 

ment, in particular, that is required to train up our troops and to 

keep our troops out in the field. So I appreciate that. 

Obviously, we have had many hearings on sequestration in the 

Congress. And the fact that we are, you know, less than a day 

away from the trigger of sequestration coming about is—I don’t 

think that this hearing, quite frankly, is going to have an impact 

on what starts tomorrow. I am glad that recently the President 

said that this will be a continuing, ongoing sort of situation, once 

it starts in place, because it really signals to the fact, I hope to the 

American public, that this isn’t a fiscal cliff. This is a concern. And 

the Congress really needs to get back to the table and do its job. 

I think it is a little frustrating—I think it is a little frustrating 

for my colleagues on this committee, myself, too, to really want to 

sit down at the table in a very bipartisan manner and figure out 

where some of these cuts need to be made. The fact that we have 

sequestration is really because many of us in the Congress have 

not been either asked to be at the table, or the people at the table 

who want to be at the table, who can really help to make some of 

these cuts, not just in defense, but in all areas of the budget, much, 

for example, in a sense, to what the Simpson-Bowles report told us 

2 years ago. 

Americans want Washington to tighten their belt. And to do that, 

we need to find waste. We need to find programs that don’t work. 

We need to, maybe, make decisions between several different types 

of programs and decide which one will we invest in for the future, 

and which one do we just not have the resources to do that. 

And I think the people in front of us have—so many of you, I 

mean, although you all look young—believe me—decades of acquisition and procurement and, you know, really understanding how the 

military is one of those operating pieces of the Government that 

works well. 

So, for me, it is a shame when we see sequestration coming, 

whether the program is good or not, whether it has been working 

well or whether people have been under budget, whether they have 

been ahead of time, and say, ‘‘well, we just need to cut 10 percent 

from that.’’ 

And those programs, you know, we all look around, and whatever 

job we have, and we see, you know, some waste or some inefficiencies, and then those programs will be able to say, ‘‘You know, this 

program is not working. This is the piece that we have to eliminate 

from here.’’ 

Quite frankly, that is our job. That is Congress’ job. It is not the 

President’s job. One person cannot sit there and have an eyeball to 

everything, to every first-, and second-, and third-tier situation that 

is going on. 

So I hope that you will give us information so that we can work 

together, if the leadership gives us that ability, from both sides and 

from both Houses, to sit down and really get this done in the right 

way. 

I am more worried, quite frankly, about what comes about on 

March 27th. That is the appropriations process. Now, I have been 

here 17 years. When I first came to the Congress, we actually got 

several appropriation bills passed and put through. Maybe not 

all—at that time, I think it was 13; maybe now it is 12. Maybe not 
5 

all of them, but certainly defense bill was one of those that we were 

able to put through as an appropriations process. 

And you know, especially in the last couple of years, we have 

seen the CR process, over and over and over again, tied to politics 

of who will win the election and maybe we will get a better chance, 

and one side will get more of what they want, and the other side 

will get less or what have you. 

But, you know, now we are just at a 2-month, 4-month, 6-month, 

end-of-the-year CR and the American public doesn’t, in a lot of 

ways, understand what that means. But it basically is a lurch and 

a start, a lurch and a start, a stop and a start, sort of a process 

for all, not just the military, but for all our departments at the 

Federal level. 

So, March 27th comes along, and what type of a CR extension 

will we have? Or will we not have one? I mean, I have a lot of my 

colleagues saying, you know, that they are willing to see the Government shut down. I don’t want to see that happen, because I understand what the impact is to production line. I understand what 

the impact is. I understand the nervousness of our troops and our 

families about what that means. 

And it is not just for the military, but it is our Federal workers. 

I happen to be one of those people that believe that the majority 

of our Federal workers go to work every day wanting to do a good 

job for Americans. And they have already not had raises in the last 

3 or 4 years. Now they are looking at maybe up to 20 percent of 

what, effectively, is a pay cut for them and for their families. And, 

believe me, most of them make a lot less than what you and I 

make, Mr. Chairman. 

So, I hope this hearing will really paint a picture for us of what 

the CR process also will do with respect to our readiness, our ability to do what is one of the number one things our Government 

should do, which is to keep Americans safe and be ready to be out 

there and do this. 

So, I look forward to this hearing, Mr. Chairman. And thank you. 

Mr. TURNER. Thank you, Ms. Sanchez. 

Turning first then to each of our panelists. Secretary Shyu, we 

will begin with you. 

STATEMENTS OF HON. HEIDI SHYU, ASSISTANT SECRETARY 

OF THE ARMY FOR ACQUISITION, LOGISTICS AND TECHNOLOGY, U.S. DEPARTMENT OF THE ARMY, AND LTG JAMES 

O. BARCLAY III, USA, DEPUTY CHIEF OF STAFF, G–8, U.S. 

ARMY 

Secretary SHYU. Thank you, very much. 

Chairman Turner, Ranking Member Sanchez, and members of 

the subcommittee, thank you for the opportunity to testify before 

you today. 

Mr. TURNER. Ma’am, would you please move the microphone closer? 

Secretary SHYU. Okay, how about now? Okay, so I will start over. 

Chairman Turner, Ranking Member Sanchez, and members of the 

subcommittee, thank you for the opportunity to testify before you 

today on the impact of sequestration and a continuing resolution 
6 

and its effects to the Army acquisition programs, as well as the industrial base. 

I will ask that my statement be entered into the record. I would 

like to take this opportunity to highlight some key points. The reality is that the sequestration provision in the Budget Control Act 

would cause sharp reductions in soldier equipment investment. 

Every single piece of soldier equipment under development or in 

production will be affected in the implementation of sequestration 

in some manner. All of our carefully planned timelines for delivering new capability to soldiers will be necessarily delayed. Costs 

to the Army, over the long term, will likely increase. The impact 

will be felt long after this fiscal year. 

As we consider the impacts of these budgetary decisions today, 

the Army’s equipment needs are significant. We are conducting 

combat operations in Afghanistan today. Equipment use over the 

past decade must be reset, while deferred modernization is now in 

need of attention and investment. 

We must also continue to prepare for the uncertain and emerging 

threats of the future, which holds an increasingly complex and less 

predictable environment. 

The fiscal impacts to Army acquisitioning and equipment modernization programs are attributable to the estimated $12 billion 

reduction to the Army’s budget during the remaining months of the 

current fiscal year, using the DOD’s [Department of Defense] planning assumptions for sequestration. 

This incorporates a $6 billion reduction in Army’s operation and 

maintenance accounts, representing approximately 51 percent of 

the total Army’s reduction due to sequestration in fiscal year 2013, 

a significant reduction of about $3 billion in Army procurement accounts, applied equally across over 400 Army programs, and almost 

a billion dollars reduction in RDT&E [Research, Development, Test 

& Evaluation] investment across the Army. 

Every Army acquisition program will be affected by these cuts. 

Schedules for RDT&E-funded programs will be impacted. Procurement programs will be reduced across the board by roughly 9 percent. 

The impacts to the industrial base will be significant. Based on 

our current assessment, impacts of sequestration and the CR could 

result in thousands of jobs lost or not realized, which affects 40 

States and the District of Columbia. 

The almost a billion dollars in reduction to RDT&E accounts may 

result in the closure of some of the DOD’s high-performing computing centers, impacts on grants and partnerships with universities and other affiliated research institutions, and potential loss 

of critical expertise through indiscriminate budget cuts. 

Moreover, the broad effects of sequestration will significantly impact the acquisition workforce. Overall, we anticipate that the 

funding shortfalls will result in a large number of contract changes 

relating to the program quantities and schedule. 

These changes will increase the burden on contracting workforce. 

Contracting personnel, program management, and cost analysts 

who are charged with the responsibility of getting the best value 

for the taxpayer will be potentially subject to a 22-day furlough. 
7 

Compounding our difficulties is the effect of a yearlong CR with 

sequestration on all programs. These impacts include the Army 

being unable to award the multiyear contract for Chinook [CH-47 

heavy-lift helicopter] production; the Army will be unable to commence Paladin PIM [M109 Paladin Integrated Management selfpropelled howitzer] low-rate initial production; reduced Apache helicopter [AH–64 attack helicopter] production quantities in the current fiscal year; and the inability to procure the new common sensor payload for the Gray Eagle [MQ-1C unmanned aircraft system], 

which provides high-definition intelligence, surveillance, and reconnaissance capabilities to our warfighters. 

In closing, the Army will continue to provide soldiers with the 

best equipment available. Their sacrifices deserve no less. We hope 

that the impacts discussed today will summon a renewed dedication to the needs of our force, which has consistently answered the 

Nation’s call for service throughout its history. 

Mr. Chairman, members of the subcommittee, we thank you 

again for your steadfast and generous support of the outstanding 

men and women of the United States Army, its civilians and families. And we look forward to your questions. 

Thank you. 

[The joint prepared statement of Secretary Shyu and General 

Barclay can be found in the Appendix on page 42.] 

Mr. TURNER. Thank you, Secretary Shyu. 

Secretary Stackley. 

STATEMENTS OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE NAVY (RESEARCH, DEVELOPMENT & ACQUISITION (RDA)), U.S. DEPARTMENT OF THE NAVY; VADM 

ALLEN G. MYERS, USN, DEPUTY CHIEF OF NAVAL OPERATIONS, INTEGRATION OF CAPABILITIES AND RESOURCES 

(N8), U.S. NAVY; AND LTGEN JOHN E. WISSLER, USMC, DEPUTY COMMANDANT FOR PROGRAMS AND RESOURCES, U.S. 

MARINE CORPS 

Secretary STACKLEY. Chairman Turner, Ranking Member 

Sanchez, distinguished members of the subcommittee, it is a pleasure to appear before you today to address the impacts of the continuing resolution and sequestration on our Department of the 

Navy acquisition, programming, and industrial base. 

Joining me today are the Deputy Chief of Naval Operations, Vice 

Admiral Myers and the Deputy Commandant, Lieutenant General 

Wissler. 

And with the permission of the subcommittee, I propose to provide a brief statement and submit a separate formal statement for 

the record. 

The Navy-Marine Corps team is this Nation’s expeditionary force 

in readiness, a balanced air-ground naval force, forward deployed 

and forward engaged, performing missions around the globe, on the 

ground in Afghanistan; providing maritime security along the 

world’s vital sea lanes; missile defense in the Mediterranean, the 

Sea of Japan; intelligence, surveillance, and reconnaissance where 

needed, as needed; persistent presence at sea, with an embarked 

Marine force ready to move ashore. 
8 

They are conducting antipiracy patrols, global partnership stations, humanitarian assistance. And they are quietly, reliably on 

patrol, providing strategic deterrence, and all the while training for 

the next deployment, the next operation, the next crisis, the next 

contingency. 

The Department of the Navy’s 2013 budget request, as authorized by this committee, provides the resources needed to meet this 

full range of missions and the overarching defense strategy. It balances the resources required to execute today’s mission against today’s threat and the investment required to execute tomorrow’s 

mission against a future threat. 

The Department greatly appreciates the committee’s work in 

passing the 2013 National Defense Authorization Act. Today, however, we are here to discuss the unfinished work of the Congress, 

as it relates to defense appropriations and the pending sequestration. 

Account by account, program by program, the $170 billion authorized for Navy and Marine Corps by the Armed Services Committee is severely undercut by the shortcomings of the continuing 

resolution and the across-the-board cuts posed by sequestration. 

Further, authorities for the multiyear procurement of 98 MV–22 

aircraft [Osprey medium-lift tilt-rotor aircraft], 10 DDG–51 destroyers [Arleigh Burke class guided missile destroyers], 10 Virginia class submarines [nuclear-powered attack submarines] and 

the near $5 billion worth of savings these multiyear provides, and 

authority to start construction of the next aircraft carrier, John F. 

Kennedy [Ford class aircraft carrier USS John F. Kennedy], to start 

the refueling complex overhaul of the CVN–72 Abraham Lincoln 

[Nimitz class supercarrier USS Abraham Lincoln], these lay idle. 

In terms of the dollar impact of the continuing resolution, now 

about to enter its sixth month, operations and maintenance funding authorized by this committee is reduced by about $4 billion for 

the Department of the Navy. 

Procurement and research and development funding authorized 

by this committee is reduced by about $5 billion; $5 billion in new 

start and multiyear authority lays idle. And with no ability to reprogram under the continuing resolution, in excess of $14 billion of 

the funding authorized by this committee for 2013 falters. 

To these constraints we add the impact of the budget reduction 

imposed by sequestration, approximately $12.9 billion across the 

Navy and Marine Corps. And to these numbers we add the method 

by which it is applied, indiscriminately, line by line, and the timing 

with which it is applied, halfway through the year, thus 

compounding its impact. 

And we are left with stark choices. In fact, absent the ability to 

realign our reduced funding levels in accordance with our priorities, these are not so much choices as they are fait accompli results of a distortion of the budget process which Congress has otherwise faithfully executed in prior years. 

The first impact hits operations, because we operate forward and 

maintain the high state of readiness such operations demand. 

Therefore, when the flow of funds for our operations and maintenance is cut, our operations are cut in real time. 
9 

Thus, the Truman [USS Harry S. Truman supercarrier] Battle 

Group deployment, scheduled this past month, has been canceled, 

and aviation and ship depot maintenance for the third and fourth 

quarters, it is next, affecting as many as 300 aircraft and over 

1,000 engines planned for depot work. 

Training is curtailed, and readiness will follow because of cuts to 

steaming hours and flight hours and maintenance and procurement 

of spare parts, thus impacting next year’s operations and our ability to surge our forces in response to crises. 

Procurement of new weapons systems follows next. Pending determination of whether there will be sufficient funding to execute 

our ship and aircraft and missile and vehicle contracts, decisions 

regarding cancellation, reduction, or delay hang in the balance. 

Thus, the Abraham Lincoln aircraft carrier sits pier-side at Norfolk Naval Base, pending sufficient funding to start her refueling 

complex overhaul at Newport News. The John F. Kennedy, the next 

aircraft carrier, its build plan is in disarray. 

And on factory floors in Tucson, Arizona; and Huntsville, Alabama; Tewksbury, Massachusetts; and Morristown in New Jersey, 

and Amarillo, Texas; and Philadelphia, Pennsylvania; in St. Louis, 

Missouri; Dallas-Fort Worth; Lima, Ohio; Bath, Maine; Groton, 

Connecticut; Quonset Point; Bethpage, New York; St. Augustine, 

Florida; Palmdale, California; and on and on and on, the skilled 

workers at critical defense production facilities across the country 

are bracing for the potential indiscriminate drawdown of our force 

structure, done in a fashion that will defeat the combined efforts 

of the Department and the Congress to improve the affordability of 

our weapons systems, thus irrationally compounding the budget 

challenges we face today. 

Next, modernization; the development of those advance capabilities that are critical to ensuring our future military superiority suffers benign neglect under the compounding impacts of a continuing 

resolution subject to sequestration. 

In total, no less than 15 combat aircraft and unmanned systems 

are at risk, and a bow wave of unfunded requirements for the balance of the aviation program is yet unresolved. 

Three hundred missiles and weapons systems are at risk, cutting 

our inventory at a time when we are striving to restore our weapons to levels called for by the combatant commanders. 

Most milestones tied to developing, testing, and fueling new 

weapons systems will be delayed. Virtually every Marine Corps 

major program is delayed or reduced, from the Joint Light Tactical 

Vehicle to ground/air task-oriented radar, to the Amphibious Combat Vehicle, to the modernization of the current inventory, which 

has weathered 10 years of warfare. 

Greater than 100,000 jobs will be lost across the country as a result of these cuts to Navy-Marine Corps operations and programs, 

first affecting small business and critical suppliers, for they are the 

first to receive orders for many of our contracts. And, in general, 

they are the least prepared to weather the financial storm that is 

about to hit them. 

Meanwhile, about 200,000 dedicated career civil servants face 

the prospects of being furloughed in 2013, impacting current and 

future operations at every military installation and on every fac-
10 

tory floor responsible for the production of weapons, parts, and supplies for our forces. 

Clearly, these examples do not capture the full magnitude, and 

they do not begin to approach the impacts that will result from 

subsequent budget-year reductions. Unabated, the reductions will 

profoundly affect the size and shape and readiness of your Navy 

and Marine Corps, and therefore the roles and missions which they 

are able to perform. 

The Department and the Armed Services Committee share common responsibilities to protect the Nation, to take care of our men 

and women in uniform, and to protect the taxpayer. The course we 

are currently on fails to address these responsibilities in a deliberate way. 

Again, I thank the committee for its work on the 2013 National 

Defense Authorization Act. Our appeal is that Congress complete 

its work on the 2013 budget request with the passage of an appropriations bill, and that this mechanism for addressing the Nation’s 

budget impasse, which was devised to be so unacceptable that it 

would be averted, sequestration, somehow be reversed before we 

are driven to irreversible actions which impair our collective responsibility to provide for the Nation’s defense. 

Thank you. 

[The joint prepared statement of Secretary Stackley, Admiral 

Myers, and General Wissler can be found in the Appendix on page 

53.] 

Mr. TURNER. Secretary Stackley, thank you so much for that very 

good opening statement, and the great examples of not only the 

dangers of sequestration, but also the impacts of you operating 

under a CR. I really do appreciate that. 

General Davis. 

STATEMENTS OF LT GEN CHARLES R. DAVIS, USAF, MILITARY 

DEPUTY, OFFICE OF THE ASSISTANT SECRETARY OF THE 

AIR FORCE FOR ACQUISITION, U.S. AIR FORCE; AND LT GEN 

MICHAEL R. MOELLER, USAF, DEPUTY CHIEF OF STAFF FOR 

STRATEGIC PLANS AND PROGRAMS, U.S. AIR FORCE 

General DAVIS. Mr. Chairman, Ms. Ranking Member, thank you 

very much. And other committee members, I appreciate this opportunity. 

First of all, you will notice right off the bat that I am wearing 

a slightly different uniform than my other Service counterparts 

here as the acting assistant secretary of Air Force for acquisition, 

kind of filling that role. Actually our Secretary, Secretary Donnelly, 

is filling that role. 

Because of a variety of issues, notably climates and challenges 

within the things that are going on within the Department and the 

Air Force, we have not had a confirmed individual for that position 

for 4 years. And it has actually been vacant as an acting for over 

a year. 

So right now, I am speaking on behalf of Secretary Donnelly that 

is filling the role in our Service acquisition executives. So thank 

you for that. 
11 

Joining me is Lieutenant General Mike Moeller, who runs our 

plans and programs. He will be able to talk to a lot of the budget 

issues. 

I am going to talk in a slightly different vein this morning, as 

an acquisition professional, an individual that has spent a lot of 

time testing, flying airplanes, and then running major programs in 

major centers. And I will talk to you a little about what I see going 

on within our acquisition programs at a slightly different level. 

I think our Chief and Secretary have given you a lot of information on the specifics of what is going to happen to our Service. I 

will tell you that, as we notice it start to evolve right off the bat, 

the first thing that gets hit is our small business, and then it goes 

very much to readiness from that point on. 

Our small businesses; we are already seeing that we are about $170 million behind in obligations of where we were this time last 

year, because the first thing that will suffer in this is the operational accounts. You won’t buy computers. You won’t bring that 

individual on to repair the buildings. You won’t bring that individual on to maintain landscape. 

So they start to fall off right off the bat. 

And then our Chief and Secretary talked about how very soon in 

the May timeframe we start losing the combat readiness capability 

of many of our squadrons, which is the core warfighting unit. And 

then the acquisition impacts become very insidious. They do not 

appear devastating in 2013, but I tell you that is just the bow wave 

of what comes in 2014 and 2015, because everything we do not do, 

every piece of equipment we do not plan for in terms of how we 

acquire and sustain, it becomes less capable and less clear on how 

you pursue that path next year. 

So, the one thing I wanted to talk about is the fact that while 

all this is going on, obviously the Nation demands that the United 

States Air Force provide the air superiority and the ability of freedom of movement for all of our troops and all of our joint partners 

all over the world. And it has been over six decades since an enemy 

airplane has shot an American airman, sailor, soldier, anywhere on 

the ground. 

And so one thing that we worry about is how we are able to 

maintain that with an aging fleet. And we will talk about that as 

the questions go. 

We provide the unblinking eye for global intelligence, surveillance, and reconnaissance through space and a variety of other 

means. And we worry about maintaining that aging infrastructure 

in space as time goes on. 

We also have to provide global mobility for any of our joint partners across the world, as well as the wounded ones coming back 

from the theater. And that becomes challenged, notably with new 

programs we are looking at to replace combat rescue helicopters. 

And then, most importantly, we commit to the Nation that we 

will have the ability to strike any target anywhere in the world 

within a very short period of time. And we worry about how we 

modernize the forces to go do that as we go forward. 

And to do those tasks, we ask our acquisition folks and our programmers and program managers to be able to navigate probably 

what is the most complex, chaotic, overregulated, overseen process 
12 

in the world to be able to deliver the combat capability to the Nation. And they do a magnificent job with a significant amount of 

American treasure every year to go do that. 

But, as we go through this process, the thing that worries me 

most is that challenge has become much greater for these individuals as they work through that, because there are so many unknowns. Chairman, as you mentioned, the questions that hang out 

there that bother us. 

Our acquisition program workforce, they fight through these innumerable policies and laws every year to try to deliver the combat 

capability that I said the Nation demands of the United States Air 

Force. 

In the process, we as the leadership in the Department and within the Service demand that they build the most exquisite planned 

schedules, the most detailed cost estimates, the most, if you will, 

exquisite architectures of systems and the systems engineering 

that will deliver them, the technical baselines, the critical paths, 

the test plans, everything that will determine just how the systems 

that we have to meet the requirements of the Nation will perform. 

And as they come to us now in this environment, the challenge 

that we have for all those work force individuals in the side is we 

cannot tell them some of the most basic questions that any type of 

activity demands. We can’t tell them what was their baseline that 

they begin their program from. We can’t tell them what the 

changes will be particularly in sequestration, and the numbers, 

and the percentages and the rules that will imply. We can’t tell 

them where the continuing resolution will allow them to maybe 

transfer funds or not based on how that will evolve. 

So they come to us with the most simple questions to be able to 

keep these programs intact, and we can’t answer them. So what we 

are able to tell them is that everything that they produced, and everything that has been reviewed and on the books now is basically 

invalid, and that they have to go back and try to do all the drills 

and all the ‘‘what if’’ questions again to be able to restructure those 

programs to be able to deliver that capability. 

And so when they come back and tell us that their programs and 

their schedules are not able to be fully fleshed out to the demands 

of the system, we just ask them to do more, and we ask them to 

go back, and we ask them to try one more time. And they do, because that is basically what these people do. 

And while we are sending them back to redo these programs all 

hours of the days and nights and weekends, to be able to make 

sure we are prepared as best we can be to answer the questions 

that will come as soon as the actions hit, we tell them that probably you all have to plan for having 20 percent of your pay cut in 

the remaining period of time. 

And when we have an acquisition work force of about 34,000 

folks, all told, about 24,000 of those are civilians—and I got to tell 

you, the one question I get most whenever we sit down with these 

civilians and ask them, okay, what are your concerns about the furlough, the first question I have gotten—and I have gotten it five 

times—is, can I work during furlough? 

And we have to tell them, no you cannot. It is against the law. 

It is illegal. And then when they come back from those periods, we 
13 

will have asked the military to kind of fill in the gaps and work 

for those individuals that are not there. So the impacts to our programs, our test centers, our acquisition centers will be dramatic. 

We will tell them, we need you to start the exercise again, and 

we can’t tell you what 2014 will look like; we can’t tell you what 

2015 will look like; right now, we can’t tell you what 2013 looks 

like. But we need that program planned so we can try to start determining the impacts to the very critical missions we have to deliver to the Nation from the United States Air Force. And they go 

out and do it again, because that is just what they do. 

So, I thank you for your comments that you made at the beginning. You share very much the concerns I know of our Secretary, 

our Chief, and certainly all members of the Air Force. We would 

be very honored to be able to answer any more questions you have 

related to that. 

And I thank you for the support you have given, not only our collective warriors here, but certainly the United States Air Force. 

Thank you. 

[The joint prepared statement of General Davis and General 

Moeller can be found in the Appendix on page 68.] 

Mr. TURNER. Thank you, General. 

I appreciate your also underscoring the personal affects that sequestration is going to have, because that is something that we 

have to be very mindful of. As you know, we have held a full committee hearing on the issue of the effects of sequestration on readiness, on our men and women in uniform, on our civilian personnel. 

And the picture is bleak, and the stories are absolutely compelling. 

Our hearing topic today is acquisition, programming, and the industrial base. So although we are looking at the issue of acquisition 

programming in the industrial base, we are still very mindful of 

the personal effects and the effects on our men and women in uniform, on our national security. As we have all said in all of our 

comments, this is certainly something that we shouldn’t be doing 

to those who serve our Nation, especially those who serve our Nation in a way to keep us safe. 

General Davis, you were talking about small business, and I am 

going to turn my question to that. 

Secretary Shyu and Secretary Stackley, you also referenced the 

effects on small business. We know that large contractors are certainly going to be affected, but the number of vendors that are 

going to be affected, those down the chain, small businesses, will 

be critically affected. 

And the way that we know that they will be critically affected 

is because they have less resources. They have less ability to shift 

the affects of this onto other assets. And so that puts them in a 

situation that they may actually fail. 

And one of the things that I know that you are aware of, as I 

mentioned in my opening statement, is single-point failure vendors, 

and that is their failure can be our failure, where we currently look 

to in either a system or a program or a project the vendors that 

are down the line and those that have unique capability, are 

uniquely qualified, and that their solvency, their ability to continue 

to operate can affect overall the program. 
14 

We have a concern because obviously that goes to the issue of our 

being able to critically maintain those programs, but also as we are 

trying to maintain domestic production, and the threat that some 

of these operations, some of these critical aspects of our industrial 

base may feel even further pressure to go overseas, or for outsourcing. 

I am going to ask each of you if you similarly share that concern. 

And if you do, if you have an example, or if you are aware of either 

a small business or a single-point failure vendor or a program that 

is subject to perhaps single-point failure as a result of vendor vulnerability, we would greatly appreciate that. 

And before I begin asking you to answer this, and beginning with 

Secretary Shyu, I want to tell you, for all the generals and the admiral who did not give opening statements, at the end of this hearing, I will, as I traditionally did in the Strategic Forces Subcommittee, ask each of the panel members if they have anything 

that they would like to add to the record at the end. 

So each of you will be able to make any additional statement 

that you would like at the end of this. I also will have the record 

open for an additional 5 days, if after you do leave this hearing, 

if you would like to submit in writing any additional comments or 

thoughts that you have that you would like to be included in this 

record. Please feel free to avail yourself of that also. 

But I wanted to give you advance warning before I called on you 

at the end. 

So on the question of single-point vendors and the effect on small 

business, we will begin with Secretary Shyu. 

Secretary SHYU. Thank you very much for the question. This is 

an area that we have significant concerns. As you well know, due 

to the instability of the financial budget, it is very difficult for the 

primes even to do the planning, much less telling them the impacts 

to their immediate suppliers, the second tier, or the third tier, or 

the fourth tier on down. 

And that is the biggest concern that we all have across the 

board. We look at our industrial base impacts continuously, okay? 

We look at not just on the production side. We look at the design 

aspect. We also look at component suppliers as well. 

So, my fear is due to the instability of the current budget environment, it is very, very difficult to tell these companies that is 

multiple layers down, that provides a niche capability, how long 

they can survive the downturn because we don’t have clear visibility in terms of the gap. 

So, that is my biggest concern, sir. 

Mr. TURNER. General Barclay, any comment? 

General BARCLAY. No, sir. 

Mr. TURNER. Secretary Stackley. 

Secretary STACKLEY. Yes, sir. Let me throw some numbers your 

way to try to characterize this a bit. Something north of greater 

than 20 percent of the Department of the Navy’s procurement and 

service contracting goes directly to small business. And of the balance that goes to larger defense contractors, another 20-plus percent goes to small business. 

So in total, small business is our base in terms of our spending, 

either direct or indirect through the defense contractors. They 
15 

bring a cost structure and agility, a degree of innovation that is 

critical to development on the front end, and also response to 

emerging requirements on the back end. So they are core to the 

way we do our business. 

And then let me offer you now some more specific examples. I am 

just going to quickly tick through some of these. First, the Department of the Navy is extremely unique in terms of some of our platforms, specifically nuclear submarines, and nuclear aircraft carriers. We build them at very low rates and no one else does. So the 

components that are assembled into the construction of these critical platforms, much of that industrial base is small business, almost a cottage industry that builds small numbers of critical items. 

We have to work that small business base directly to ensure its 

long-term viability, its health and welfare come all of the ebb and 

flow of the budget cycle. So we maintain a very hands-on relationship with that particular small business. 

Let me shift over to the aviation side. A specific example, there 

is one small business manufacturer in the country that is responsible for the forging, the hobbing and machining of most of the 

rotor heads for all of our rotary programs, one small business manufacturer, a single point of failure. And in fact he is struggling at 

this particular time. 

So we are working closely with our aviation prime contractors to 

ensure that we work with their critical vendor as we work through 

the uncertainty of our programs during this period of time. 

On the R&D [Research and Development] side of the house, we 

have a small business contractor who has brought forward a concept for going beyond what we refer to as ‘‘open systems architecture,’’ in terms of automated test and retest. Extremely innovative, 

our large defense contractors are turning to this one source to figure out how to break down some of the technical barriers in our 

test programs to drive costs out. That small business contractor, 

his cash flow is hurting as a result of the current sequestrationCR uncertainty. 

Further examples abound, but we are working directly with the 

small businesses, through roundtables around the country, as well 

as through our defense contractors, to identify the single points of 

failure and what we need to do near term, long term to ensure they 

are not inadvertently taken down by the current delays and potential cancellations in our contracting. 

Mr. TURNER. Admiral, General, any comments? 

General Davis. 

General DAVIS. Sir, just a couple of points. I will highlight that 

probably just under 40 percent of our Air Force TOA [Total Obligation Authority] falls in the O&M [operations and maintenance] regime, and that is going to be the first thing that will start to drop 

off here very quickly. That is where our biggest challenges are. And 

that is where most of the contracts go to small businesses. 

So anything across our bases and installations where just the 

most routine services generally are all set aside for small businesses. So out of roughly $44 million of O&M, a very large chunk 

of that goes to small businesses to do maintenance on buildings; to 

do military construction, which we have virtually no money for, to 

be able to run the services that operate most of these installations. 
16 

So anything related to any of our O&M accounts, which are certainly going to be the ones to suffer first, will feel the biggest extent of that. 

As I mentioned in the opening statement, we know right now we 

are $170 million behind where we were in small business obligations compared to this point last year, simply because they have 

started pulling back the obligations on O&M because they know 

what is coming, to be able to just keep our fighter squadrons flying 

at a certain level. 

Second part of it kind of goes to what Secretary Stackley was 

mentioning. For us, it really starts with the old mantra, ‘‘for want 

of a nail, the shoe is lost, the horse is lost, the war is lost.’’ Our 

small businesses, the ones I have had experience with over time, 

and the ones that we continually have pop up that surprise us 

when they have a problem—because it does not take long for a 

small business to get in trouble real quickly. 

We have small businesses that basically are responsible for doing 

things like building the fuses for most of our weapons. And it is 

the most challenging thing. It is the most underappreciated thing, 

but it is the one thing that will cause the reliability of our weapons 

to fail instantly. 

We have had some very good success stories and we continue to 

bring these people on. We had a small individual in California once 

that manufactured surfboards. He competed and successfully won, 

and builds a very key component now as a bigger business for our 

joint air-to-surface standoff missile, JASSM [Joint-Air-to-Surface 

Standoff Missile], which is a key component of Global Strike. 

We currently have a woman-owned disadvantaged small business 

that builds the target drones for our training across the Gulf and 

across the Pacific. And it is these weapons, these missiles, these 

drones that provide our crews the ability to employ like in wartime. 

So, as you can see, they are not necessarily the leading edge on 

our weapons, but they are things we cannot execute if they are not 

there. And unfortunately, those would be the first ones to start fall 

off, because we will give up on training. We will give up on those 

areas first to be able to preserve the basic readiness we need for 

the AOR [Areas of Responsibility] and things like that. So we will 

see the fall-off in the small businesses to take hold. And as I mentioned, we are already seeing that to begin. 

So really for us, the capability of the Air Force hinges on, in 

many cases, that nail that we don’t have for the shoe. Then we 

have to wait a year later to figure out just how bad a shape we 

are in to try to go reconstruct part of that industry we don’t have. 

Mr. TURNER. I turn to my ranking member, Ms. Sanchez. 

Ms. SANCHEZ. Thank you, Mr. Chairman. 

Secretary Stackley, I actually would love for you to send over a 

report that shows that 40 percent of Navy acquisition goes to small 

business, because I have this discussion quite a bit, with all respect 

to our Services, with Nydia Velazquez, our ranking member on 

Small Business. And she feels, over time, and I have felt over time 

when I actually see the numbers, that we have really not ever met 

our goals probably in any of the Services with respect to where we 

want a piece of the action going to small business. 
17 

So, I would appreciate in detail any report you have that shows 

me that about 40 percent goes toward small business. 

Secretary STACKLEY. Yes, ma’am. 

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

page 93.] 

Ms. SANCHEZ. That is another subject, but just because you mentioned it, I would love to see that. 

Secretary STACKLEY. Can I clarify here? 

Ms. SANCHEZ. I heard 20–20, but—— 

Secretary STACKLEY. Right. Yes, ma’am. 

Ms. SANCHEZ. Okay. So, let me sort of place this in context because, you know, one of the things that the President has been 

doing is to go around the country and to talk about what sequestration might look like. So let me go down the line, because you have 

all been associated with the military in one way or another for 

quite a while, and ask you, to each of you, and I just would like 

a yes or no answer to this: waste, fraud, standing around, have you 

ever seen it in the workplace? 

Secretary, have you ever seen any waste or fraud or standing 

around or not correctly used resources that the taxpayers put towards the military? Have you ever seen that? 

Secretary SHYU. Yes, ma’am, there is. 

Ms. SANCHEZ. Yes. 

General BARCLAY. Yes, ma’am. 

Ms. SANCHEZ. Yes, of course. 

Secretary STACKLEY. Yes, ma’am. 

Ms. SANCHEZ. Yes. 

Admiral MYERS. Yes, ma’am. 

General DAVIS. Yes, ma’am. 

General MOELLER. Yes, ma’am. 

Ms. SANCHEZ. Okay. You know, when taxpayers sit here and get 

angry about things, they are paying taxes and they are not being 

able to make ends meet or their lifestyle is changing or their quality of life is changing on them. So, you know, they believe that 

there is waste, fraud, abuse and other things going on. And in any 

workplace, you see things where efficiency isn’t at 100 percent for 

whatever reason. 

Here in the Beltway, we have the Pentagon, the largest office 

building in the world. Now, we have Pentagon, which some people 

are calling the ‘‘Pentagon South,’’ another huge office building just 

south of that, that is going to be filled up with more Pentagon contractors and everything to it, so we are definitely growing all of 

this. 

You know, I had a very close person to me who was in the military—I won’t say what Service—who said at the end of the month, 

when they had jet fuel left over, they would go out and burn it 

down, because they were afraid they wouldn’t get the same allocation the next month. 

I have had people tell me—believe me, I sit on planes and people 

recognize who I am, a lot of armed forces people. And they tell me, 

you know, September comes around—October 1st is the first date, 

September comes around, and last month of the fiscal budget for 

the Federal Government, and I have got the ‘‘vultures’’—that is 

what one of them called it—‘‘vultures coming to my door telling me 
18 

I have got to spend down the funds at the end of the month. I need 

new computers; I need new things, even though,’’ he said, ‘‘I just 

got new computers this year. And here I am basically signing away 

contracts or getting things or requisitions or whatever, and I am 

getting more stuff in.’’ 

By the way, this is usually at the lieutenant colonel level or the 

major level where I get these, you know, ‘‘If you would just let me 

cut the budget, Congresswoman, I would know how to do it, at 

least in my area of the Pentagon.’’ 

I say all of this because this is the context on which we are trying to fight for what we need versus what sometimes the taxpayer 

out there thinks is really going on. 

So I think when I look at all of you that you have been in this 

long enough to understand, you know, we need to figure out how 

we get some of this under control. So maybe for, you know, into the 

record, but not directly today, you can give us some suggestions of 

how we get this more in line so that the American taxpayer feels 

confident when we are telling them we have efficiencies, we are effective, even when we have the type of cost overruns that they hear 

about in the newspaper or on the television. 

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

page 94.] 

Ms. SANCHEZ. My question—I am sorry, but I wanted to sort of 

give you an indication of where the taxpayer is coming from. And 

that is why it is hard, politically, for us not to cut. Because they 

do believe there are those inefficiencies, those abuses, et cetera. 

So let’s go to an area; Mr. Turner and I will be making a trip 

to see the F–35 [Lightning II Joint Strike Fighter]. And I have just 

been talking to some of our European allies about their acquisition 

of the F–35. And you know, I have been a strong proponent to do 

one production airplane that can be used across the Services, that 

will, in the long run, we hope, bring down the operation and maintenance and training cost for that production plane. But we have 

had a lot of problems with it. 

And, specifically, recently, we have had the problem of the helmet design, for example. Jitter of images, night vision, acuity 

shortfalls; you know, there is a whole bunch of stuff behind that. 

So, I understand that we are trying to fix those problems so that 

we can make the plane work well. 

Can anybody tell me what sequestration or the CR will do with 

respect to us trying to get that back on schedule and in line so that 

we can provide a top plane for our Services that is going to do what 

we think it should do? 

Secretary STACKLEY. Let me start, ma’am. 

With specific regard to the Joint Strike Fighter, the 2013 budget 

request includes about $2.6 billion for continued research and development and another $6.5 billion for procurement of aircraft 

parts, procurement in support of training, et cetera, et cetera. 

The specific question and issue that you raised with regard to 

helmet-mounted display system, that is one of many ongoing developments associated with that critical capability. When we look at 

continuing resolution, and we look at sequestration, in terms of 

that critical program, our top priority is to keep development on 

track. We have about $5 billion remaining in the FYDP [Future 
19 

Years Defense Program] in terms of development funding to complete the remaining development, correction of technical deficiencies that have been identified thus far, testing and evaluation 

for the program. 

If we don’t keep the development on track, the whole program 

goes off track. So that is our top priority. The team that is in place 

is keeping focused on resolving those technical issues and executing 

the test program that has been laid out to date. And we will continue to work with Congress to weather CR, sequestration. 

Ms. SANCHEZ. Do you believe that either the sequestration or the 

CR will affect that development and that team keeping on? 

Secretary STACKLEY. The answer is yes, if we do not have any 

flexibility to be able to be able to move money to address the priorities within the program. So, for example, the $2.6 billion associated with research and development, the 9 percent across-the-board 

cut associated with sequestration, is going to remove about $250 

million. That is in 2013. Sequestration goes against unobligated 

balances. So, in fact, there is another couple of hundred million dollars across the program that is affected by sequestration. 

What we have got to do is manage cash flow, manage critical 

path, and, hopefully, gain some flexibility to be able to realign 

funding to go after those priorities, so that the development schedule doesn’t delay, doesn’t protract, doesn’t extend and push ultimate fielding of that aircraft to the right. 

Ms. SANCHEZ. And my last little piece to that, if you went the 

way of an alternate helmet design, would you have the flexibility 

as things sit now, if the CR just continued as it was? Or because 

of sequestration, would you have the flexibility to move to an alternate helmet design? 

Secretary STACKLEY. Okay, first I want to be clear. The progress 

on the helmet-mounted display system is good. We see those issues 

as, basically, being retired in due time. However, when they first 

emerged, we did set up an alternative path to have an exit ramp 

from the HMDS [helmet-mounted display system] to a more traditional legacy type of capability. And we are keeping that on track 

for a downstream decision. 

In the face of sequestration and CR, that would be at risk. If we 

do not, as I was describing earlier, have the ability to move funding 

to priorities, then we would be staring at, we have got two efforts, 

but one capability inside of this critical program. If the helmetmounted display system looks like it is going green, then we would 

end up dropping the alternative parallel development. 

Ms. SANCHEZ. Thank you, Mr. Chairman. I have other questions, 

but I will put them in for the record. 

Mr. TURNER. Mr. Bishop. 

Mr. BISHOP. Thank you, Mr. Chairman. 

I suppose, General Davis, this would be addressed to you, or unless you want to defer to one of your colleagues here on the panel. 

I would like to ask a question about nuclear modernization, even 

though I have a hard time saying that word, ‘‘modernization’’—no, 

‘‘nuclear.’’ I just would like to like to ask for the impact of maybe 

the Air Force or the Navy—the impact of sequestration on modernization efforts? Or is there simply, in the base, a lack of funding 

that constricts those modernization efforts in the first place? 
20 

General DAVIS. Sir, I will start, then I will let General Moeller 

kind of come. We just, as of 2 days ago, completed a major review 

down at Air Force Global Strike Command of all their programs, 

their acquisition programs and their issues. 

Mr. BISHOP. Mm-hmm. 

General DAVIS. And so, there are two issues here, as you mentioned. We have significant modernization that we have to undertake now to be able to replace key items in our inventory that will 

reach a service life. And that has to start now. 

We have three or four major programs we are trying to begin 

right now that have some uncertainty as we look at what the budgets will be. We need to replace the gravity-drop B61 [nuclear 

bomb]. We need to replace the air launch cruise missile. We are 

working very hard to replace the aging 60-plus-year-old B–52 

[Stratofortress strategic bomber] with a new bomber that is in our 

program right now. 

And that is just the air-breathing side. If you bring in the complexities of the systems that have to go on that, such as nuclear 

command and control, that, in some cases, is on a single thread 

type of capability right now, we have major other programs that 

need to be started within Global Strike Command, which we do not 

have the ability to do so. 

And then if you work through the missile side of it, our fuses are 

aging out and other issues that we have to deal with. 

So, right now, I will tell you, within the budget there is not the 

capability within our current constraints to be able to do all of 

those programs. So there is very much the debate going on about 

where we begin, where we invest, and which ones we take on next. 

Mr. BISHOP. Maybe before General Moeller starts, I can try and 

narrow the focus a little bit. I do have some concern, at least personally, about our research and development that we are putting 

into the Minuteman III [LGM–30 land-based intercontinental ballistic missile], the ICBMs [intercontinental ballistic missiles], the 

Navy’s D–5 [Trident II fleet ballistic missile], especially when the 

Russians seem to be going into a new generation, regardless, into 

these particular areas. And we don’t even have the money to continue a warm-line funding past 2020. 

Where that takes us in 15 or 20 years, to me, that is a significant 

issue and a frightening issue. And as I understand, you are talking 

about it is not really going to be impacted by sequestration because 

we haven’t put enough money in that—we haven’t put a significant 

amount of money in that funding line in the first place. 

General DAVIS. Sir, I would say that the sequestration impacts 

on our nuclear forces only exacerbate the problem. We have a much 

bigger issue as we try to figure out how we divine the total Air 

Force budget in the future years to be able to meet those needs. 

Mr. BISHOP. General, I cut you off. 

General MOELLER. I can only add just a small piece here, Congressman, in that it is a function of delaying programs and the 

modernization efforts, but it is not an immediate impact. It is, in 

fact, having to determine strategic choices that will affect us in fiscal year 2016 and beyond. 

Mr. BISHOP. Thank you. 
21 

Secretary STACKLEY. Sir, I would like to go ahead, and you 

touched on the Trident Program. The Trident II D–5 life-extension 

program is, in fact, very mature right now. In the 2013 budget request, we have got north of $1.2 billion that we have requested, 

that you have authorized to address 36, 37 weapons in 2013 alone. 

Sequestration, clearly, throttles that back. 

The life-extension program is essential to ensure the continued 

service provided by the D–5 out through the 2042 timeframe. And 

it is closely coupled, not just with the current Ohio [Ohio class ballistic missile submarine] program, but the replacement program, 

which the development is also inside—the funding request is also 

included in the 2013 budget request, which is also throttled. 

Mr. BISHOP. Gentlemen, I appreciate that answer. I have said in 

other venues before, and I truly believe this, if sequestration was 

the first cut we were asking of the military, I wouldn’t really have 

much sympathy for you. But whereas every other area of our Government has been increasing its funding over the past 3 years, the 

military has taken not one, but three cuts. 

So if it hadn’t been for the first or the second cut, which put you 

back almost $11⁄2 trillion in some of these funding areas, this third 

cut is going to be the one that when you talk about doom and 

gloom coming, I actually believe this. 

And I am not skeptical of some of the statements that are coming 

from our military, simply because this happens to be cut number 

three. And so I appreciate—and this is one area in which I would 

have basic concerns of where we will be 20 years from now because 

of the funding decisions we are making right now. 

Mr. Chairman, I have no more time, but I will yield back what 

I don’t have. 

Mr. TURNER. Very good. Thank you. 

Mr. Barber. 

Mr. BARBER. Thank you, Mr. Chairman. And thank you to all of 

the witnesses for being here today. 

I wasn’t here when sequestration was voted in in August of 2011. 

But I tell you this, I wouldn’t have voted for it. As the chairman 

pointed out in his opening remarks, it was a disaster waiting to 

happen. And now we have less than 14 hours before the clock ticks 

down. 

When that vote was taken, I had just returned to work following 

my recovery from the wounds I received on January 8th. And I saw 

the Congress inflict a wound on this country that we thought we 

would heal by now. 

We haven’t, and we have failed in our responsibility to do so. 

Instead, we have squandered, week after week, the time we had 

to deal with this problem, long before we got to 13 hours, 47 minutes and 15 seconds before the sequester kicks in. 

Included in that delay, in that time, we gave ourselves 2 months 

back on January 1st to come to grips with the problem. And we 

failed again. 

Instead, we have put on the floor, time and time again, motions 

to adjourn, going home. I love to go home, but I would much rather 

be here working on this problem with my colleagues on both sides 

of the aisle. 
22 

I voted against all of those adjournments, because we should be 

here, dealing with this issue. 

I grew up in a military family. I have worked for a long time 

with our men and women in uniform, with the civilians who work 

on bases, in garrisons across my district. I work with private companies that are critical to our defense, our national defense. 

And we have absolutely squandered the time we could have 

taken to fix the problems that they are facing. 

There is a morale problem in our military as a result of this uncertainty. There is a morale problem and an uncertainty in the 

economy as a result of our inaction. 

Last Friday, I met with a group of representatives from my district, civilian employees of the Department of Defense, companies 

that provide for our national defense, firefighters, and others. 

And one of my constituents described what we did in a way that 

I think is very apt. He said, ‘‘when Congress approved sequestration, it built a nuclear bomb which it never intended to explode. It 

designed a poison pill it never intended to have us swallow.’’ 

But here we are, now 13 hours, 45 minutes, 21 seconds and 

counting, before the bomb goes off and the pill is ingested. 

It is simply unacceptable that we got to this irresponsible point. 

When I came here last June, I came not as a partisan, but prepared to work across the aisle with anyone who was willing to find 

common ground to resolve this and other critical issues. And I remain here ready to do so. 

My district is home to the Army garrison at Fort Huachuca in 

Cochise County, to the Davis-Monthan Air Force Base in Tucson, 

and just across the line—I claim it as if it was our own—the Air 

National Guard Fighter Wing. These are vital elements in our national defense and in our local economy. 

And my question, Secretary, is for you in regard to the impact 

that sequestration and the continuing resolution will have. You 

made some important points that really struck me. 

In your testimony, you said, for example, that every single piece 

of equipment used by our soldiers will be impacted if sequestration 

goes into effect. And as a result, equipment will not be modernized, 

timelines for delivery will be delayed, and costs will be overrun. 

It is clear to me, at least, from your testimony, that sequestration will not only impact our forces in the next weeks and months, 

but will set them back for years. 

My question is, since it appears in a few short hours, we will be 

allowing sequestration to kick in, we are likely see furloughs in our 

Army, could see losses in operability, how long, in your view, and 

how, in your view, will the economy recover from the $479 billion 

in cuts we have already taken and the further cuts that will take 

effect in this fiscal year? 

Madam Secretary. 

Secretary SHYU. Thank you very much for the question. I think 

your data are correct in terms of the impacts. And that is my biggest fear. The problem is we are facing, with the CR impact today, 

to do programs we can’t start, production rates that were supposed 

to ramp up which we cannot do. There is a program that is in development that we arbitrarily put a ceiling on, so it is going to im-
23 

pact in stretching out our programs and increasing the cost to the 

Army. 

On top of that, now we are having a sequestration, which cuts 

uniformly. It is a buzz saw cut across all the programs. 

So it is a double whammy on the impact of all of our programs. 

So how do we recover from that? You can only recover if you 

have a full understanding of the limitation of the cuts and what 

is going to happen next. If we had a budget and if we know exactly 

what is going to happen this year and future years, we can at least 

start to do the detailed planning. 

But the tremendous uncertainty that we are facing today is posing these challenges, because I can’t tell, as my counterparts have 

already articulated, since each of our programs are being cut, we 

have to rework every single program. 

To understand the long-term impact, it is hard to judge, without 

knowing what is going to happen to the future budgets. 

So I have some significant concerns, sir. 

Mr. BARBER. Well, I think it is well-said. You know, when I was 

at Fort Huachuca a week ago, a week ago tomorrow, I was talking 

to some local businesses. They are not involved in the defense industry, but very much affected by it. 

I talked to a woman who runs a car dealership. And she hasn’t 

had an order for a car in almost a month. And why? Because people don’t know if they are going to have a job or if their job is going 

to be cut by 20 percent. 

Let me just ask one quick question of you, Lieutenant General 

Davis. 

I appreciate your testimony. We have taken, I think, a very irresponsible approach to our fiscal crisis. And just as our constituents—my constituents—could not cut their budget by 10 percent 

without going into foreclosure if they cut their mortgage, or having 

their car repossessed if they cut that, neither can companies nor 

our Department of Defense. 

So I want to ask you, General, how do you build 90 percent of 

an airplane and how do you build 90 percent, in the case of the 

Navy, of a submarine? How do you make these decisions about 

which programs and assets to fund and which to leave behind? 

How will you determine the priorities given the situation we are 

facing, which hopefully still can be reversed in due course. But if 

it does not change, how do you make these decisions? What priorities will you be looking at, from the Air Force perspective moving 

forward, if nothing changes? 

General DAVIS. Yes, sir. I think it starts back where our Chief 

and Secretary have testified, that there are some very key priorities within the United States Air Force, and it starts with modernization. 

We have fighters that are approaching 25 years old, trainers that 

are 40 years old, bombers that are in excess of 30 years old. So we 

have had to take what we have within our current modernization 

budget of roughly $35, $37 billion a year, and try to figure where 

those priorities. Our top three priority programs, the tanker, the 

bomber, the F–35, are about 15 percent of that budget. 
24 

And it is clearly imperative that, again, back to if we are going 

to maintain the missions that you have given the United States Air 

Force, that those have to be modernized. 

So that means that other programs, of lower priority, if we are 

given the flexibility, will have to pay that 10 percent that will drop 

from those programs at some point. 

And it will be very insidious as we go through this. As you take 

10 percent out of the F–35 program, you lose a couple of airplanes 

this year. And then you lose a couple more next year. And then the 

challenge as we go through that program in the outyears, when we 

ramp up production, it gets quite significant numbers. 

So again, it starts with the priorities that the Nation has given 

the Air Force. It starts with how the Chief and Secretary put those 

priorities into play within our budget. And then we go execute the 

programs to meet those, and we decide where we fill in that 10 percent and from what program it comes from. 

And that bottom 20 percent to 30 percent of our modernization 

budget will be the first casualties of those programs. 

Mr. BARBER. General, you just said something I think is very important. You said, ‘‘given the flexibility,’’ you will make decisions in 

a different way than you would without that flexibility. 

Hopefully, the least we could do is give you flexibility. But what 

if it doesn’t happen? What if you don’t get the flexibility? 

General DAVIS. Sir, then, if that is the case, and we have done 

this in many cases in the past, you take a very surgical cut to 

pieces of that program that will move to the next year. 

And then, as we often are asked to do, we tell the program managers, ‘‘tell me how you are going to live with that.’’ And next year, 

we will tell them the same thing, and we will ask them the same 

question. 

So what this means is that these programs that already, as was 

mentioned, somewhat struggle, they struggle even more as you 

push that capability piece out a year or a year or a year, and that 

falls off. 

So you try to target the least important of those capabilities. You 

try to target, as you can, most of the inefficiencies and waste that 

may exist in the programs, because it does. 

But very often, after you do that once or twice, you are now cutting the capability you asked to have in that program to begin 

with. 

So we will do that, and have to do that across the board. And 

that is where the utter inefficiency of the process really takes hold, 

and that is where a lot of the waste occurs, because when you are 

not given the flexibility to manage the budget you have against 

your priorities, it creates extreme inefficiencies, and you lose capability quickly. 

Mr. BARBER. Thank you, General. 

Thank you, Mr. Chairman. 

Mr. TURNER. Mr. Barber, thanks for the questions. 

General Wissler, Secretary Shyu and Secretary Stackley have 

given us a great understanding of the impacts of the CR and sequestration and the overlying/arching issue of the uncertainty of 

the CR and the sequestration, that, in fact, operating in an environment of uncertainty it makes it incredibly difficult for planning. 
25 

The clock that we have that shows that we are now about 13.5 

hours from when sequestration is going to hit, the sequestration 

that was never to happen, doesn’t illustrate effectively that, in fact, 

sequestration is a 10-year program. 

This is the first hit of sequestration that is going to go into place. 

Even if there is a patch for this fiscal year, we are facing this again 

just at the end of the year, with sequestration coming again, and 

then for the next, including this year, 10 in total. 

If sequestration is fully implemented—and there are those who 

say we should just let it sit. You know, I am very mindful of the 

fact that defense spending is less than 18 percent of the overall 

Federal budget, and we are going to have 50 percent of the overall 

cost-cuts fall on less than 18 percent of the budget. 

But if that happens, could you tell us what your procurement 

profile looks like over the next 10 years, assuming that sequestration is fully implemented? 

If it is not just a year after year patch, and the uncertainty that 

we heard from the two secretaries impacted, but actually that the 

cuts are put and left in place, what programs would survive? 

General WISSLER. Mr. Chairman, we have a fairly small procurement budget as it is, so we have already had to take—as a result 

of the previous cuts, we have had to look at all of our investments 

in a portfolio approach. And I will use our tactical vehicle strategy 

as an example of this 10-year problem. 

So, if we look at our tactical vehicle portfolio, we have several 

key pieces in that portfolio that we must have in order for marines 

to be successful on the battlefield, not only today, but in the future. 

Certainly a future capability would be the Amphibious Combat Vehicle, and the ability to preserve our ability to come from the sea 

to place our forces ashore wherever the President decides they need 

to be, in a safe and a combat-effective manner. 

We also have a responsibility to protect our marines as they go 

ashore from the threats that occur on the shore. And our current 

piece of that is our investment in Joint Light Tactical Vehicle. But 

in order to be able to afford a modernization over time in our entire 

tactical vehicle portfolio, we have had to, in a sense, put together 

timing for the investments in Joint Light Tactical Vehicle, Amphibious Combat Vehicle, upgrades and safety upgrades to our seventon truck, our large heavy haulers, as well as our Light Armored 

Vehicles and other members of that portfolio. 

Sequestration, in the 1st year, will cause delays, delays in JLTV 

[Joint Light Tactical Vehicle] that could be as much as 2 years, and 

depending on the second, or the subsequent impacts to that program, could delay Joint Light Tactical Vehicle to a point where we 

won’t be able to buy both Joint Light Tactical Vehicle and Amphibious Combat Vehicle at the same time. 

If that happens, we will have to scale back our purchase on Joint 

Light Tactical Vehicle. Figured into that mix, in the middle, would 

be our Marine Personnel Carrier. We can’t afford to fully invest in 

Amphibious Combat Vehicle for our entire lift requirement. We 

have a requirement to move marines around the battlefield in several of our operations plans and other things around the globe. 
26 

What would happen over time is we would be forced to make a 

decision on an investment, either level of or continued at all, in 

Joint Light Tactical Vehicle or the Marine Personnel Carrier. 

And the reason that we would have to do that is because the Amphibious Combat Vehicle is replacing an amphibious assault vehicle that is now 40 years old, and will be 50 years old by the time 

we start to field those capabilities, a vehicle that doesn’t have right 

now the ability to allow us to do what we need, given the security 

environment that we will operate in with our partners in the 

United States Navy. 

That is the 10-year impact in that. It will cause us to make very 

hard decisions about our portfolio. 

Our program is designed as a 10-year program. We intentionally 

looked at a 10-year investment program so that we could maximize 

our opportunity over time to use our limited assets. So that is how 

that 10-year program will affect us. It will cause us to make some 

very significant decisions, not only in those three vehicles that I 

mentioned specifically, but across our entire portfolio. 

Mr. TURNER. Ranking Member Ms. Sanchez. 

Ms. SANCHEZ. Mr. Chairman, I just wanted to add for the record 

that the sequestration talks we are talking about are on top of the 

cuts that we have all already worked on, these some, depending on 

how you count it, about $487 billion worth of cuts over 10 years, 

having started this past year. 

So it is not like defense hasn’t already taken—started down a 

path of taking its set of cuts. Now, Congress can always, and the 

President together can always reverse some of that, but I should 

note that, for the record, we are already on schedule, and we have 

already begun to do the drawdown of $487 billion cuts to our military services. 

Just wanted to put that on the record. 

Mr. TURNER. Mr. Barber, any closing comments before I offer 

closing comments to the panel? 

Mr. BARBER. Thank you, no, Mr. Chairman. 

Mr. TURNER. Thank you. Well, as I said when I opened this, I 

voted against the this mess, because I believed that we would be 

right here, right where we are, with this clock ticking down, 13 and 

a half hours away from the cuts that were never supposed to happen. 

This obviously is a failure of leadership. But the White House, 

the Senate, and the House have all said these are the cuts that 

shouldn’t happen and wouldn’t happen. And on behalf of, you 

know, the members of this subcommittee, let me tell you how sorry 

we are that we are in this situation and watching the Department 

of Defense and our men and women in uniform be suffering what 

is a process that is egregious, was set up to be irresponsible, and 

certainly needed to be avoided. 

With that, I want to give each of you an opportunity, if you 

would like, to make any closing statements on both the impacts 

and your thoughts as a result of this hearing. 

And I will start with you, Secretary Shyu, if you would like. 

Secretary SHYU. Thank you, Chairman. 

I appreciate the opportunity to testify in front of you today. I 

think the congressmen here certainly fully understand the impact 
27 

of not just what we have already taken in terms of cuts, the significant chunk, but the CR impacts on top of that, and then the addition of the sequestration. So it has been a significant amount of 

turmoil within the building of planning, replanning, and what-ifs. 

This constant turmoil is creating significant impacts on us looking ahead. And this type of instability has tremendous rippling effects, not just on the price, but on the second, third, fourth level 

of tiers of suppliers that we have. 

And in addition to that, it is the unintended consequences of 

folks knowing that they will get a budget cut, they are not going 

to upgrade their kitchens, they are not going to do repairs. There 

is a huge rippling effect that will happen. And you may not see it 

exactly tomorrow, in 13 hours, but it is going to happen as a function of time. 

So, anything you guys can do to help us sort through this mess 

will be sincerely appreciated. 

Thank you. 

Mr. TURNER. General Barclay. 

General BARCLAY. Yes sir, Mr. Chairman. 

Again, thank you for the opportunity to be here today. But to 

clearly state the impacts on the Army, if nothing is done to mitigate the effects of operations under a continuing resolution, the 

shortfalls in our funding of overseas contingency funds and operations, and the enactment of sequestration, the Army will be forced 

to make dramatic cuts to its personnel, its readiness, and its modernization programs, and hence putting our national defense at 

risk. 

And I thank you for the opportunity to submit in writing and we 

will get that to you in the future. 

Thank you, sir. 

Mr. TURNER. Thank you, General. 

Secretary Stackley. 

Secretary STACKLEY. Yes sir, I am going to revert a little bit back 

to my opening statement with a slightly different twist. We recruit 

America’s youth to don the cloth of the Nation. It is incumbent 

upon us to develop and deliver the most capable weapons systems 

we can, to put them in their hands, and to properly train them before we send them over the horizon to defend our Nation’s interests. 

This environment that we are in places that at risk. We owe 

those men and women far better, far greater. We need to go about 

that business. 

Thank you. 

Mr. TURNER. Admiral Myers. 

Admiral MYERS. Chairman Turner, Ranking Member Sanchez, 

members of the subcommittee, for the Navy, the immediate impacts are readiness and training will be significant, the combination of sequestration and a full year of continuing resolution. 

In the long term, without action from Congress to replace sequestration, we will be compelled to dramatically reduce our fleet size, 

limit our ability to support the defense strategic guidance, and unable to fully support the global force management allocation plan 

for our combatant commanders. 
28 

As the Chief of Naval Operations testified to the full committee 

a couple of weeks ago, the important qualities of our naval forces 

are the readiness to respond to crisis, and persistent forward presence. The Navy and Marine Corps are the first responders to crisis 

such as a terrorist attack, military aggression, or a natural disaster. 

Operating forward at the strategic maritime crossroads, such as 

the Straits of Malacca, Hormuz, or Gibraltar, naval forces can contain conflict, deter aggression without escalation, and build partnerships. 

Naval aviation is a critical component to the Navy’s ability to 

carry out our full-spectrum operations. We do everything from delivering humanitarian assistance in disaster relief, at home and 

overseas, to maritime security operations to ensure safe passage of 

commercial vessels, to high-intensity sea control and power projection in a major contingency. 

Helicopters and fixed-wing aircraft operating from nuclear aircraft carriers, large-deck amphibious ships, and shore installations, 

and helicopters operating from cruisers and destroyers, complimented by unmanned aerial vehicles, are key contributors to the 

capabilities of the Navy and Marine Corps. 

The continuing resolution is based on fiscal year 2012 funding 

levels, and therefore includes fewer operating dollars than we proposed and Congress authorized. Extending for the whole year in 

fiscal 2013, the CR would provide the Navy $3.2 billion less in operating and maintenance funds than requested in our fiscal year 

2013 budget. 

In addition we have growth, growth that was unplanned in terms 

of cost for emergent ship repairs and also for increased presence in 

the Arabian Gulf. Adding the combined effect of the continuing resolution, the emerging cost and sequestration, the Navy has an $8.6 

billion shortfall when it comes to operations in maintenance accounts. 

For naval aviation, this shortfall results in reductions in our 

third and fourth quarter aircraft and engine depot maintenance. 

This is going to affect upwards of 327 aircraft that we were expecting to come out of that depot, and over 1,200 engines and engine 

modules. Our maintenance backlog will increase and the work to 

complete critical aircraft end service repair for our F/A–18 [Hornet 

fighter jet] high flight hour inspections is an example of the delays. 

Mr. Stackley talked about furloughs and we are going to be furloughing or planning to furlough upwards of 186,000 civilians. And 

this will also negatively impact our ability to complete our depot 

maintenance repair on aircraft and engines. Our backlogs are going 

to increase. We will have fewer aircraft available for fleet operations and fewer aircraft in the fleet for our fleet replacement 

squadrons, which are training the pilots. 

Looking past fiscal year 2013, the readiness for navy aviation, as 

well as the rest of the fleet, will continue to erode. It is going to 

erode and it is going to be visible with the material condition that 

we expect out on the flight line and on our ships. It is going to also 

show up in the reduction in the expected service life of our ships 

and aircraft. It is going to show up in the reduced proficiency of 
29 

our sailors and their confidence to work on the aircraft and effectively repair them. 

And it is also going to damage the industrial base and increase 

the strain in the operational tempo of our sailors and civilians. We 

are going to have to look very carefully at the new capabilities that 

we are investing in, the things that we know we need to sustain 

the ability to defend this Nation. But we are going to have to fundamentally change the way the Navy is organized, trained, and 

equipped. 

To do that in a comprehensive and a deliberate manner, we have 

got to base our decisions on a careful reevaluation of the defense 

strategic guidance. 

Now, Mr. Stackley referred to the delay of the USS Harry S. Truman deployment. And we have reduced our carrier presence in the 

Gulf. We have reduced a number of deployments, 13 around the 

globe. The reduction and the delay of the Harry S. Truman deployment was all about trying to preserve longer-term and still robust 

naval presence in the Middle East. 

But without action from Congress to avert the combination of sequestration and the reduced discretionary caps, we will be continued to be forced to make hard decisions that are going to result in 

reduced overseas presence. Those decisions are going to reduce our 

ability to respond to crises and reduce our efforts to support vital 

national security missions like counterterrorism and illicit drug 

trafficking. 

Now, the Navy understands the importance of getting our Nation’s fiscal house in order. And our role is to be good stewards of 

the resources. We should accomplish deficit reduction in a coherent 

and a thoughtful manner to ensure that we have the appropriate 

readiness, warfighting capability, and forward presence. And we 

ask that Congress act quickly to pass the fiscal year 2013 appropriations bill and avert sequestration. 

If that proves untenable, we ask for the flexibility to implement 

these reductions carefully and deliberately versus the indiscriminate manner of what is in the law today. 

Thank you for the opportunity to be here. 

Mr. TURNER. Admiral, thank you. 

We are going to pause on closing statements. Ms. Duckworth has 

joined us and I know she has a question. So we will yield 5 minutes to her and then we will conclude with the three of you. Thank 

you. 

Ms. DUCKWORTH. Thank you so much, Mr. Chairman. 

So I continue to be appalled by the continued publication of reports that speak to DOD contracting and acquisition waste. It is 

GAO [U.S. Government Accountability Office] report after GAO report, and even the DOD IG [Inspector General] itself has found extreme waste. 

In 2003, the DOD’s IG showed that $1 trillion that the DOD had 

spent could not be accounted for. More recently, in 2011, the Commission on Wartime Contracting reported that DOD wasted between $9 million to $12 million a day in improperly supervised contracts during wartime. In Iraq alone, between $30 billion to $60 billion was lost to waste and fraud. 
30 

I am concerned especially with sequestration. You know, as 

someone who had to buy my own flight gloves because we did not 

have enough to issue flight gloves to all of our pilots, it bothers me 

that we are wasting this kind of money. 

Ms. Shyu, I know you don’t speak for the entire DOD, but could 

you speak to what the Army might be doing to ensure that their 

practices in terms of acquisition and contracting are better supervised, that you have a better idea of what is going on with the various business lines? I see, for example, that in 2010, the Army was 

spending $119 million annually to lease 3,000 cars at a price tag 

of $40,000 a year in Iraq, and that we have spent $36.3 billion 

alone with KBR. Yet this single contractor could not account for 

$100 million in waste of Government property. 

I am looking at the OIG’s [Office of Inspector General] Web page 

right now, and just this month, the reports include things like ‘‘recovering organization, OCIE [Organizational Clothing and Individual Equipment] equipment from civilians and contractor employees remains a challenge.’’ 

If we are going into sequestration and we are laying off psychiatric nurses at Fort Belvoir who take care of our wounded warriors and furloughing them, what are we doing to take care and ensure that we do a better job of safeguarding the taxpayers’ dollars 

when it comes to contracting and acquisition? 

Secretary SHYU. Representative Duckworth, that is a great question. And first of all, I want to thank you for your service to the 

Army and to this Nation. You personally have sacrificed tremendously and I am incredibly grateful for what you have done. Okay. 

I do want to let you know that one of the key things that we 

have initiated about a year and a half ago is an overall, across-theboard look across contracting in our enterprise procurement review. 

We conduct those reviews. My deputy assistant secretary of procurement conducts the review on a monthly basis. I conduct the review on a quarterly basis. 

We now have visibility across every single command on how we 

are doing in contracting. We have established metrics. We have 15 

set of metrics that we measure ourselves on. And we have the visibility to see how well we are doing within commands. 

And this is relayed up. We have now quarterly meeting with all 

the parts who are really head of contracting within the commands. 

We share lessons learned. We discuss issues and challenges we 

have. 

There has been a tremendous change, I can tell you. As a matter 

of fact, we will be more than happy to come by and brief you on 

all the things that we have been doing the last year and a half to 

improve this. 

Ms. DUCKWORTH. Thank you. I would love to have that meeting 

and I would love to have that meeting with your colleagues in the 

other Services as well. I hope that it sticks. I hope that as we get 

into sequestration, that we are doing everything that we can. You 

know, some of these things are minor, improperly renewed contracts with vending machines on military bases, to the spectacular 

cost overruns of the F–35. 

But we have a force that has a National Guard where 50 percent 

of its Black Hawk helicopters are still alpha models and have been 
31 

in service for a good 30 years. And those aircraft need to be modernized. We need to certainly be modernizing the CH–47s, but we 

can’t do that in a time of budget restrictions if we are continuing 

to waste those dollars. 

So I ask the whole panel to please remember that money is tight. 

We have to go after the fraud and abuse. And I know you are all 

doing the best job that you can, but we in Congress will do our job 

in watching you as you do that as well. 

Thank you. 

Mr. TURNER. Thank you, Ms. Duckworth. 

Continuing, then, with closing statements, General Wissler. 

General WISSLER. Chairman Turner, Ranking Member Sanchez, 

distinguished members of the panel, thank you. 

We have talked a lot today about delays in contracts. We have 

talked about inefficiencies that result from the lack of multiyear 

procurements. We have talked about the potential for cancellations, 

if we look at this in a 10-yearlong piece. 

But what we are really talking about in all of this is a direct impact to readiness and our ability to respond. The United States Marine Corps acts for the United States, if you will, as an insurance 

policy, a capability to respond around the globe when we are called, 

when called on, to that crisis that we may not have planned on; 

to do things like we did in Libya in 2011; to do things like we did 

in the Philippines most recently in humanitarian assistance and 

disaster relief; or Japan before that; or putting people ashore in Afghanistan. 

And that insurance policy is important. And what we will do over 

this extended 10-year period is reduce our investment in that insurance policy. 

Readiness is not a today thing alone. Readiness is both today and 

tomorrow’s readiness. In the Marine Corps, we look at readiness 

across five pillars. We talk about our quality people. We talk about 

unit readiness. We talk about the ability to meet combatant commanders’ demands. We look at it from an infrastructure perspective. We look at it also from the modernization perspective. And I 

talked briefly about modernization impacts earlier in simply our 

ground tactical vehicles. 

But what we will do is we will erode readiness both near and far 

term. And we will continue to have to pay near-term readiness, because of the conflict that we are currently fighting in Afghanistan, 

in order to be ready to do what we have to do today, mortgaging 

our long-term readiness. It will affect every phase and every pillar 

of readiness and it will cause us to reduce that investment in our 

insurance policy. 

And most importantly, it will affect people. And we briefly 

touched on some of the people today in our small businesses, and 

our people who ultimately won’t be able to take the kinds of cuts 

and continue to support us with the tremendous service that they 

provide across a vast array of capabilities, be it small businesses 

that support trailers to the United States Marine Corps, to people 

who are working on very high-tech things like gallium nitride in 

our ground-to-air task-oriented radar. From the very complex to 

the very simple, we will hurt those people, their businesses. 
32 

And more importantly, we will hurt our marines and we will 

hurt our civilian marines. It is already been talked about, furlough. 

But furlough will attack a very real part of readiness. It is not just 

people in the headquarters when we talk about our civilian marines who will go on furlough. Ninety-five percent of the civilian 

marines do not work in the National Capital Region; 95 percent of 

the civilian marines are turning a wrench somewhere fixing a piece 

of equipment, making something ready so that as we bring our 

forces back out of Afghanistan, they can, in fact, execute that pivot 

to the Pacific, that we can rebalance our force to the Pacific to be 

ready to deal with the next, most difficult security problem we 

have. 

In partnership with the Navy, we need to be forward present, 

and we won’t be, because we won’t have the resources to do it. The 

impact to our national strategy will be uncompromising. And then, 

in the end, as we go out and try and maintain this tremendous, 

All-Volunteer Force that has given their life, blood, and treasure 

over the last 10 years of combat, they will return home less 

trained, with a less positive view of what service in the cloth of our 

Nation means. 

And that will, in turn, make it more difficult to recruit the next 

generation of All-Volunteer Force that will continue to keep this 

Nation free. It starts from the very beginning and rolls through all 

of those five pillars to modernization. And, at the end of the day, 

it attacks the very heart of readiness, the readiness of the force 

represented by all the gentlemen and women on this panel, to do 

the things that the Nation expects. 

Thank you, sir. 

Mr. TURNER. Well said, General. 

General Davis. 

General Moeller. 

General MOELLER. Thank you, General Davis. 

Mr. Chairman, thank you, Member Sanchez. Members of the 

subcommittee, thank you very much for the opportunity to speak 

with you today. 

Rather than echo the concerns of the distinguished members of 

the panel, I will simply say that my number one concern, from a 

strategic planning and programming perspective, is the unprecedented levels of uncertainty. 

As we begin the fiscal year 2015 budgeting cycle and look out 

over the next 5 and 10 years, we don’t know where the starting 

point is. We do know that we will have a bow wave of readiness, 

must-pay bills to repair the degradation and readiness that we see 

already. We believe that will take between 2, 3, 4 years, depending 

on the levels of degradation that we see over the course of the next 

year to year and a half. At the same time, we must also continue 

to support combat operations, sustain strategic deterrents, and 

support to the Joint Force anywhere on the globe. 

As we begin this planning cycle, I was talking to one of my civilian programmers who, in fact, will face the threat of furlough coming up. He said, ‘‘this future budget planning is like painting a 

color-by-numbers picture while blindfolded in the back of a C–130 

[Hercules tactical airlifter], flying through a thunderstorm.’’ I think 

that everyone sitting here would echo that. That accurately de-
33 

scribes the level of uncertainty that we face as we look to the future. 

We will have to make tough strategic choices to ensure that the 

Air Force balances competing requirements across our enduring 

contributions of air and space superiority; intelligence, surveillance, 

and reconnaissance; rapid global mobility; global strike; and command and control. 

The bottom line is, in this fiscal crisis environment, we believe 

the choice to preserve readiness will drive us to make tough decisions about slowing the pace of modernization, sustaining capability or capacity, and looking to programs or force structure in 

order to make up the difference. 

Through all this, our unchanging responsibility is to provide the 

world’s most capable Air Force, ready to fly, fight, and win against 

any adversary today and tomorrow. However, in this current fiscal 

environment, the Air Force will be forced to make drastic choices 

that will have both immediate and far-ranging impact on our capability and capacity to provide air and space power effectively across 

the full spectrum of operational requirements. 

Thank you, again, for the opportunity to speak. 

Mr. TURNER. I want to thank all of our panelists for giving us 

a very good understanding of what the impacts of both operating 

under a CR and the effects of sequestration will have on both acquisition in our industrial base. You will be the last word in the 

House of Representatives as sequestration falls into place in approximately 13 hours from now, the cuts that were never intended 

to happen. 

Thank you for your giving us this perspective. And we look forward to your continued dialogue, because without the additional information of what the effects of these cuts will be, we will not be 

able to amass the congressional and the presidential will to offset 

them. So please make that picture as clear as possible, even though 

the full effects won’t be completely known until you are in the middle of implementation. But thank you. 

With that, we will be adjourned. 

[Whereupon, at 10:42 a.m., the subcommittee was adjourned.] 

A P P E N D I X 

FEBRUARY 28, 2013 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 28, 2013 

(39) 

Statement of Hon. Michael R. Turner 

Chairman, House Subcommittee on Tactical Air and Land 

Forces 

Hearing on 

Impacts of a Continuing Resolution and Sequestration on 

Acquisition, Programming, and the Industrial Base 

February 28, 2013 

The Tactical Air and Land Forces Subcommittee meets today in 

open session to receive testimony on the impacts of sequestration 

and the continuing resolution (CR) on acquisition, programming, 

and the industrial base. 

This hearing continues the committee’s extensive oversight and 

detailed examination of the harmful impacts of the continuing resolution and sequestration on the military’s ability to protect national 

security interests of our Nation. We’ve already heard very candid 

testimony from the military service chiefs during the full committee hearing on February 13th of how these forced budget cuts 

would be devastating to military training and force readiness. General Dempsey, the Chairman of the Joint Chiefs of Staff stated, 

‘‘We built a strategy last year that we said we can execute and absorb $487 billion. I can’t sit here today and guarantee you that if 

you take another $175 [billion] that that strategy remains solvent. 

. . . What do you want your military to do? If you want it to be 

doing what it is doing today, then we can’t give you another 

dollar.’’ 

Today, we plan to leverage the information gained from that 

hearing and provide our Members with the opportunity to gain a 

better understanding of how the CR and sequestration would impact defense acquisition programs, projects, and activities and their 

associated industrial bases around the country. One of the most 

tragic aspects of our current situation is that sequestration was 

never supposed to happen and there were numerous opportunities 

to avoid it. By laying out the details of the impacts of sequestration, the Department of Defense could have helped us in our education campaign to avoid the catastrophic cuts we are now facing. 

On the eve of sequester, it is my hope that this hearing will aid 

to provide greater clarity concerning the details and levels of risk 

that will be associated with the arbitrary cuts mandated by sequestration on all major defense acquisition programs, including how 

these severe reductions will impact local communities, small businesses, and ultimately the military’s ability in meeting the national 

military strategy. These details will help to illustrate the depths of 

these impacts and help us make our case to Congress and the 

Nation. 
40 

Ironically, the sequestration conversation has been seated in a 

context of savings and fiscal austerity. However, it seems apparent 

that allowing these cuts to take place could ultimately cost our 

country more than it saves while, simultaneously, costing jobs. 

Second- and third-tier vendors , mostly small businesses, will be affected if these cuts are enacted, many of which are referred to as 

‘‘single points of failure’’ vendors, meaning only one company is 

qualified to provide a particular part, and once that capability is 

lost it will take significant capital and time to regain that capability. This, in turn, will put people out of work and dramatically 

drive up cost. We need to be assured that the Department and the 

military services are conducting the appropriate level of analysis to 

assess the impact of sequester on the industrial base. 

For example, the Army indicates that every procurement program would be affected; quantities would be reduced by 10 to 15 

percent, and that these mandated sequester reductions affect more 

than 1,000 companies in more than 40 States. For the Army alone, 

over 3,000 vendors will be affected. The Army has stated the total 

economic impact would be approximately $15.4 billion; the Marine 

Corps $2.4 billion; the Navy is over $20.0 billion. I witness the devastating effects of these reductions each time I return home. My 

community in Southwest Ohio includes Wright-Patterson Air Force 

Base, the home of the Air Force Materiel Command and the Air 

Force Research Laboratories. Recent information provided by the 

Air Force has indicated that over 14,000 civilian employees at the 

base face potential furloughs despite the fact that the base provides 

cutting-edge research and development as well as real-time intelligence, surveillance, and reconnaissance that enhances the 

lethality and survivability of our warfighters in harm’s way. Every 

State is going to be impacted by sequestration. 

As I’ve stated before, I voted against the Budget Control Act because I knew we would be here today discussing these types of 

harsh consequences that I just covered, and I have been working 

aggressively with my colleagues on this committee and Department 

of Defense to do everything we can to avert these catastrophic effects on our national security. 

I would like to welcome our distinguished panel of witnesses: 

Representing the Army: 

• Ms. Heidi Shyu, Assistant Secretary of the Army for Acquisition, Logistics and Technology; and 

• Lieutenant General James O. Barclay III, Deputy Chief 

of Staff, G-8. 

Representing the Navy and Marine Corps: 

• Mr. Sean J. Stackley, Assistant Secretary of the Navy, (Research, Development & Acquisition (RDA)); 

• Vice Admiral Allen G. Myers, Deputy Chief of Naval Operations, Integration of Capabilities and Resources (N8); and 

• Lieutenant General John E. Wissler, Deputy Commandant for Programs and Resources. 
41 

Representing the Air Force: 

• Lieutenant General Michael R. Moeller, Deputy Chief of 

Staff for Strategic Plans and Programs; and 

• Lieutenant General Charles R. Davis, Military Deputy, 

Office of the Assistant Secretary of the Air Force for Acquisition. 

Thank you all for your service and thank you all for being with 

us today. 
42 

RECORD VERSION 

STATEMENT BY 

HONORABLE HEIDI SHYU 

ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION, LOGISTICS AND 

TECHNOLOGY AND 

ARMY ACQUISITION EXECUTIVE 

AND 

LIEUTENANT GENERAL JAMES O. BARCLAY III 

DEPUTY CHIEF OF STAFF OF THE ARMY, G-8 

BEFORE THE 

SUBCOMMITTEE ON TACTICAL AIR AND LAND FORCES 

COMMITTEE ON ARMED SERVICES 

UNITED STATES HOUSE OF REPRESENTATIVES 

ON IMPACTS OF A CONTINUING RESOLUTION AND SEQUESTRATION ON 

ACQUISITION, PROGRAMMING, AND THE INDUSTRIAL BASE 

FIRST SESSION, 113TH CONGRESS 

FEBRUARY 28,2013 

NOT FOR PUBLICATION UNTIL RELEASED BY 

THE HOUSE ARMED SERVICES COMMITTEE 
43 

Mr. Chairman, Ranking Member Sanchez, and distinguished Members of the 

Subcommittee, thank you for the opportunity to testify today. The fiscal outlook which 

the U.S. Army faces today is dire and, to our knowledge, unprecedented. The Army has 

been in a state of continuous war for nearly twelve years - the longest in our Nation's 

history. Today we have nearly 80,000 Soldiers committed to operations around the 

world with approximately 58,000 in Afghanistan. While the Army is committed to 

providing our Soldiers with the best equipment in the world at the best value possible for 

the taxpayer, tour current fiscal uncertainty due to continuing resolutions and 

sequestration will significantly disrupt our ability to meet these ongoing responsibilities. 

The sequestration provisions in the Budget Control Act of 2011 would cause 

sharp reductions in Soldier equipment investment. Every single piece of Soldier 

equipment under development or production will be affected in the implementation of 

sequestration in some manner. Carefully planned timelines for delivering new 

capabilities to Soldiers will be necessarily extended or delayed; costs to the Army over 

the long term will be increased. These challenges are compounded by the limitations 

imposed under a year-long continuing resolution in the current fiscal year (FY). The 

terms and conditions of the current continuing resolution preclude us from initiating 

needed equipment programs and create significant inefficiency in the Army's ability to 

execute current programs. These combined effects are damaging to the Army's 

enduring commitment to the Soldier and the Army's commitment to prudent stewardship 

of public resources. 

As we consider the impacts of these budgetary decisions today, it is worth noting 

that the Army is still called upon to conduct a spectrum of operations including combat 

) 
44 

in Afghanistan followed by a planned retrograde of equipment and personnel from the 

region next year, presenting significant logistical challenges. Equipment used in combat 

operations must be made available for future use through reset operations, while other 

pressing modernization needs - deferred for years as a result of the Army's wartime 

focus - are now in need of attention and investment. 

Additionally, the Army must continue to prepare for uncertain and emerging 

threats. Looking ahead, we cannot afford to overlook the needs of future Soldiers 

operating in an increasingly complex environment characterized by the proliferation of 

disruptive technologies that hold the potential to complicate future operations. The 

world is growing more complex and less predictable as we confront the impacts of our 

current fiscal uncertainty. 

The disruption to the Army's acquisition and equipment modernization programs 

is first attributable to the estimated $128 reduction to the Army's budget during the 

remaining months of the current fiscal year using the Department of Defense's (DoD's) 

planning assumptions for sequestration. According to our estimates, this will result in a 

planned reduction of $58 in Operations and Maintenance, Army (OMA) accounts for the 

active force and approximately $1B in the Reserve Component operations and 

maintenance accounts. The remaining $68 reduction will be applied equally against 

Army procurement, military construction, and Research, Development, Test and 

Evaluation (RDT&E) investment accounts. As applied to Army equipment programs, we 

face a significant reduction of about $38 in Army procurement accounts and a reduction 

of almost $18 in ROT &E investment applied equally across over 400 Army programs. 

3 
45 

The current FY 2013 Continuing Resolution, in general, funds the Army base 

budget at 2012 levels, which translates to a shortfall of over $6B in the OMA accounts 

relative to the President's Budget submission for FY 2013. This shortfall, combined with 

the effects of sequestration, will significantly hamper operations and readiness across 

the Army. In our investment accounts, the current Continuing Resolution also restricts 

the Army from commencing new programs or initiating planned multi-year contracts and 

planned production quantity increases. Timelines established to meet long-term Army 

and 000 goals, to include auditability of accounts and planned delivery of weapon 

systems and capabilities, are placed at risk by the fiscal environment 

According to current projections within research, development, and acquisition 

accounts, the combined effects of this budgetary predicament stemming from 

sequestration and a continuing resolution could result in thousands of jobs either lost or 

unrealized; affecting 40 states and the District of Columbia. These reductions are 

anticipated to impact over 300 companies doing business with the Army and many in 

the industrial base. To comply with required reductions, particularly in OMA accounts, 

the Army has already initiated planning efforts to furlough up to 251,000 civilians, Army 

wide, for 22 non-contiguous days over the last five months of the fiscal year. 

Implementation of sequestration reductions across the Army will result in 

significant impacts to several Army programs. Procurement programs will experience 

reductions of roughly 9 percent across the board, which will affect several equipment 

programs: 

4 
46 

• The Army will reduce planned FY 2013 production quantities for Apache AH-64; 

resulting in an increase in unit costs due, in part, to fixed costs already incurred 

in conjunction with planned production this year. 

• OH-58 Kiowa Warrior replacement aircraft will be reduced, which exacerbates 

critical shortfalls in a fleet of aging aircraft with the Army's highest operational 

tempo for combat aircraft (329 on hand of a required 368). 

• Under sequestration, the Javelin Missile would see an anticipated price 

increase of 12 percent attributable to reduced quantities from a planned 

quantity of 400. 

The RDT&E accounts will see significant impacts as sequestration cuts are 

implemented across the Army. Every RDT&E program is affected to some extent; 

development programs, developmental testing, and operational testing efforts may be 

curtailed to accommodate reductions in specific programs. Overall, schedules for 

RDT&E programs are anticipated to see an extension in schedule ranging from six 

weeks to 18 months. Specific impacts include the following examples: 

• Army Science & Technology (S&T) research programs will be reduced by over 

$300M; thereby resulting in potential impacts to affected academic institutions 

and industry across all 50 states and the District of Columbia. Up to 280 

civilian personnel could be furloughed and 150 contractors could be terminated 

to accommodate the reductions. The Army risks losing critical expertise in S&T 

research, which is essential to the delivery of future capabilities to the Soldier. 

• Sequestration impacts may result in the closure of some DoD High 

Performance Computing (HPC) Centers. The five existing HPC Centers are 

5 
47 

used across the Department by scientists and engineers in key research and 

development efforts. 

• We will only be able to issue half of our planned new individual Basic Research 

grants to University professors, and will be forced to terminate a number of 

existing grants impacting researchers at approximately 80 academic 

institutions across the country. This will have secondary impacts to graduate 

students and researchers. 

Overall, we anticipate that the funding shortfalls may result in a large number of 

contract changes relating to procurement quantities or schedule. These changes will 

place increased pressure and demands on the largely civilian contracting workforce 

located in Army commands throughout the United States. 

Under current fiscal planning guidance, this workforce is potentially subject to a 

Department-wide furlough for 22 non-contiguous days across the last five months of the 

fiscal year, when ongoing workload associated with contract awards, oversight, closeouts, and related negotiations must compete with modifications caused by sequestration 

for limited staff resources. There will be broad impacts on the Army's ability to make 

timely awards of contracts, provide small business opportunities, and conduct proper 

oversight. 

In addition, the Army plans to cancel 3rd and 4th quarter depot maintenance orders 

to address the shortfalls in OMA under sequestration. Suppliers in the industrial base 

may be impacted by the reduction in Army purchase orders for parts and equipment. 

The reset of 1,000 tactical wheeled vehicles, 14,000 communications devices, and 

6 
48 

17,000 weapons systems in Active and Reserve units may be impacted for three to four 

years following redeployment. 

Army impacts related to a continuing resolution are both widespread and 

immediate, to include the following notable examples: 

• Without statutory authority, the planned CH-47F Chinook multi-year production 

contract cannot be awarded, which provides for cost savings of $810M in the 

procurement of 155 aircraft over five years - a cost avoidance of 19.2 percent. 

Without the multi-year contract, CH-47 will likely encounter a production break in 

June 2013 and a potential two-year delay for renegotiation and re-start of 

production. This results in up to a 30 percent loss of buying power due to unit 

cost increases attributable to single year contracts. Quantity reductions may also 

lead to potential layoffs for the 2nd and 3rd tier suppliers. 

• The Army is unable to start the production of modifications to the Paladin 

Integrated Management (PIM) program to increase reliability and maneuverability 

of this critical combat system. There is insufficient funding under continuing 

resolution rules ($120M of $167M) to complete the RDT&E of the PIM 

Modification program. This will also delay the Army's ability to proceed to Low 

Rate of Initial Production (LRIP) and a planned Milestone C this fiscal year. 

• A new start program affiliated with the Army's auditing Enterprise Resource 

Planning program, the General Fund Enterprise Business System (GFEBS) will 

be delayed. This impact will impair the Army's ability to meet mandated statutory 

auditability requirements and add to the Army's reliance on legacy financial 

systems. 

7 
49 

• The Army will be unable to procure the MQ-1 Grey Eagle new high definition 

common sensor payload in support of Warfighter requirements to provide an 

enhanced high definition critical Intelligence, Surveillance, and Reconnaissance 

capability. A six-month production gap for the air vehicle and associated ground 

equipment is also likely under a continuing resolution, which will result in 

increased unit costs. 

• Under a continuing resolution, the Army is unable to commence competition and 

production of 223 Mid-Tier Networking Vehicular Radios (MNVR), which are key 

to the strategy to provide networked communications to platforms in combat 

operations. 

• Under a continuing resolution, the Army's program for development of the Guided 

Multiple Launch Rocket System (GMLRS) Alternative Warhead faces an RDT&E 

funding shortfall in the current fiscal year which could result in a stop work in July 

2013. Funding shortfalls could result in a 12-24 month delay in reaching a 

decision on Milestone C/Full-Rate Production Decision and Initial Operational 

Capability. As a result, the program will be at risk to field equipment in time to 

replace the GMLRS Dual Purpose Improved Conventional Munitions before the 

000 Cluster Munitions Policy goes into effect in 2019. 

The effects of either sequestration or a continuing resolution are harmful to the 

Army, which renders the prospect of withstanding both impacts together simply 

daunting. As reflected in today's testimony, our analysis shows there will be very real 

impacts to our equipment programs and the industrial base as a result of these fiscal 

challenges. 

8 
50 

However, concern must be reserved for those impacts that cannot be discerned 

within the scope of this current fiscal year. As a professional acquisition workforce, we 

are rightly expected by our fellow citizens to prudently manage public investments in 

materiel in a determined and unyielding pursuit of the Soldier's safety and effectiveness. 

Our emphasis on achieving best value for the taxpayer and mitigating cost escalation 

through sound program management will be largely undone by the budgetary 

uncertainty and dramatic approach to reductions we are about to witness. We remain 

concerned that programs may face unanticipated schedule or cost impacts in the 

out years traced to conditions imposed in the current fiscal year. We also worry that 

risks imposed on the Army's equipment programs will be enlarged or exacerbated by 

similar fiscal challenges that would result from the significant reductions in discretionary 

budget caps in every year from FY 2014 to FY 2021 as a result of the failure to replace 

sequestration with a balanced deficit reduction plan. 

The Army will provide Soldiers with the best equipment available as needed; their 

sacrifice deserves no less. All equipping programs and priorities will be negatively 

affected by the application of sequestration. Likewise the defense industrial base will be 

adversely impacted and critical skill sets will be lost. We hope that the impacts outlined 

today will summon a renewed dedication to the needs of our force, which has 

consistently answered the nation's call for service throughout its history. 

Mr. Chairman, Members of the subcommittee, we thank you again for your 

steadfast and generous support of the outstanding men and women of the United 

States Army, Army Civilians, and their Families. We look forward to your questions. 

9 
51 

The Honorable Heidi Shyu 

Assistant Secretary of the Army 

(Acqnisition, Logistics &Tcchnoiogy) 

lind 

Army Acquisition Executive 

Ms. Ilcidi Shyu. a political appointee. was confirmed as the Assistant 

Sccretar) of the for Acquisition. Logistics and Technology [ASA(AL OJ on September:2 L Prior to this, she \\[-'IS asked to serve [IS the Principal 

Deputy. appointed November 8. 20 I O. and later as the Acting ASA(ALT). 

starting June 'L 20 I I. 

As the ASA (I\I.T\ Ms. Shyu serves as the Army Acquisition Executivc. 

the Senior Procurement Executiye. the Science Advisor to the Secretary of the Army. and the Army's 

Senior Research and official. She also has principal rcsponsibility for all Depm1mcnt of the 

Army malters related to 

\'ls. Shyu leads the execution ofthc Army s acquisition function and the acquisition management s)stem. 

}Ier responsibilities include pr(widing oversight f()r the life cycle management and sustainment of Army 

and from research and development through test and evaluation, acquisition, 

and Ms. Shyu also oversees the Elimination of Chemical Weapons 

she is responsihle !t)£, managing. and evaluating executive 

and managing the Arm)! Acquisition Corps the Army Acquisition VV()r~lurce. 

Strategy for Raytheon Company's 

there. including Corporate 

Director alld 

Vice of Unmanned and Reconnaissance Systems. Senior of 

Vehicles. Senior Director of Joint Strike Fig.h1er OSF). and Director of JSF Integrated 

Radar/Electronic Warfare Scnsors. As Dircctor "nSF An1enna Technologies at Raytheon. Ms. Shyu "as 

for the development of Iight\\l~ighL lO\\'-cosL Tile Acth e Electronically Scanned Antenna 

She also s-ervcd as the Laborat{)ry !'v'Ianager for Electromagnetic Systems. 

Industries and \\'as the 

at Raytheon. iVIs, Shyu seryed as a 

Engineer f()J" thc Joint STARS Self Defense 

began her career at the Hugbes Aircraft Company. 

l'vlanager at Litton 

at Grumman. She 

iVls. Shyu holds a Bachelor of Science Degree in 'vlathematics from the University ofNc\\' Bruns\\' ick in 

Canada. a i'vlaster of Science Degree in rV1athematic:s from the l Jnivcrsity of Toronto, 1'viastcr of Science 

Science (Ekctrical Engineering) from the University ofCaiiforniu. Los 

1he Fngineer Degl'ee from l'eLA. She is also a graduate of the UCLA 

Management Course and the University of Chicago Busincs~ Leadership Program. 

A member of the Air Force Seienti!,c Advisory Board [i'om 2000 to 20 I 0, Ms. Shyu served as the Vice 

Chairman fi·om 2003 to 2005 and as Chairman from 20GS to 2008. 
52 

Lieutenant General James O. Barclay III 

Deputy Chief of Staff, G-8 

Lieutenant General James O. Barclay III became the Deputy 

Chief of Staff. G-8 on 27 July 2012. Prior to assumption of this 

position, he served as the Army's Assistant Deputy Chief of 

Staff, G-3/5/7 United States Army, Washington, DC. 

LTG Barclay received his commission in 1978 from the United 

States Military Academy at West Point in the Armor Branch. He 

is a 1990 graduate of the Army Command and General Staff 

College, where he earned a Master of Military Arts and Sciences 

Degree, and a 1998 graduate of the United States Naval War 

College where he earned a Master of Arts from in National 

Security and Strategic Studies. 

LTG Barclay has held numerous command positions. His command assignments include: 

Commanding General, United States Army Aviation Center of Excellence and Fort Rucker; 

Commander, Aviation Brigade, later Chief of Staff. 4th Infantry Division (Mechanized), Fort 

Hood, Texas and OPERATION IRAQI FREEDOM, Iraq; 3d Battalion, 25th Regiment, redesignated 2d Battalion, 10th Aviation, 10th Mountain Division (Light), Fort Drum. New York; 

and Headquarters and Headquarters Company, 101 st Aviation Battalion, 101 st Airborne 

Division (Air Assault), Fort Campbell. Kentucky. 

Previously. he was the Director, Joint Center for Operational Analysis-Lessons Learned, United 

States Joint Forces Command, SuffOlk, Virginia; Assistant Division Commander (Maneuver). 1st 

Infantry Division, United States Army Europe and Seventh Army, Germany; Assistant Division 

Commander (Maneuver), 42d Infantry Division, OPERATION IRAQI FREEDOM, Iraq; Executive 

Officer to the Commander, Multi-National Force-Iraq, OPERATION IRAQI FREEDOM, Iraq; 

Executive Officer to the Vice Chief of Staff. United States Army. Washington, DC; and Executive 

Officer to the Deputy Chief of Staff. G-8, United States Army, Washington, DC. 

LTG Barclay's awards and decorations include the Distinguished Service Medal. Defense 

Superior Service Medal, the Legion of Merit (with oak leaf cluster), the Bronze Star Medal (with 

oak leaf cluster), the Defense Meritorious Service Medal (two oak leaf clusters), the Meritorious 

Service Medal (with 5 Oak Leaf Clusters), Army Commendation Medal (with oak Leaf Cluster), 

and the Army Achievement Medal. MG Barclay is a Master Army Aviator and has earned the 

Master Aviator Badge, the Senior Army Aviator Badge, and the Army Staff Identification Badge. 

LTG Barclay is a native of Scottsboro. Alabama. He and his wife, Deborah, have three children. 

Mary Margaret; James O. Barclay IV; and William, a Warrant Officer in the United States Army. 
53 

NOT FOR PUBLICATION UNTIL RELEASED BY THE 

HOUSE ARMED SERVICES COMMITTEE 

TACTICAL AIR AND LAND FORCES 

SUBCOMMITTEE 

STATEMENT OF 

HON. SEAN J. STACKLEY 

ASSISTANT SECRETARY OF THE NAVY 

(RESEARCH. DEVELOPMENT AND ACQUISITION) 

AND 

VICE ADMIRAL ALLEN G. MYERS, USN 

DEPUTY CHIEF OF NAVAL OPERATIONS 

INTEGRA TION OF CAPABILITIES AND RESOURCES 

AND 

LIEUTENANT GENERAL JOHN E. WISSLER, USMC 

DEPUTY COMMANDANT FOR PROGRAMS AND RESOURCES 

BEFORE THE 

TACTICAL AIR AND LAND FORCES 

SUBCOMMITTEE 

OF THE 

HOUSE ARMED SERVICES COMMITTEE 

ON 

IMPACTS OF A CONTINUING RESOLUTION AND SEQUESTRATION ON 

DEPARTMENT OF THE NAVY ACQUISITION, PROGRAMMING & INDUSTRIAL BASE 

FEBRUARY 28, 2013 

NOT FOR PUBLICATION UNTIL RELEASED BY 

HOUSE ARMED SERVICES COMMITTEE 

TACTICAL AIR AND LAND FORCES SUBCOMMITTEE 
54 

IMPACTS OF A YEAR-LONG CONTINUING RESOLUTION AND 

SEQUESTRATION TO THE DEPARTMENT OF THE NA VY 

Chairman Turner, Ranking Member Sanchez, and distinguished members of the 

Subcommittee, thank you for the opportunity to appear before you today to discuss the 

year-long Continuing Resolution (CR) and sequestration impacts to the Department of 

the Navy's (DoN) Acquisition Programs, Programming, and the Industrial Base. 

The United States is a maritime nation with global responsibilities. Our Navy and 

Marine Corps' persistent presence and multi-mission capability represent U.S. power 

projection across the global commons. As you are aware, a sequestration order will be 

issued on March I; in addition, a second sequestration due to a breach in the FY 2013 

discretionary caps is scheduled to be ordered on March 27. Sequestration will add to a 

budget shortfall in operating accounts already created by the Continuing Resolution. The 

potential for sequestration and a year-long CR have already altered virtually every aspect 

of DoN planning and our ability to carry out our responsibilities. Without action by 

Congress, a year-long CR and sequestration will have immediate as well as long-term 

negative impacts. [n the near-term, we will be driven to cancel maintenance and training 

that supports current readiness and our operational commitments at home and abroad. 

Long-term, the fiscal challenges will constrain our ability to invest in future capability 

and capacity. In short, if a strict year-long CR and sequestration occur, we will not be 

able to afford in the future the Navy and Marine Corps we have today. 

In March 2012, Navy and Marine Corps leadership testified to this committee about the 

Fiscal Year 2013 budget which was restructured to reflect an updated defense posture as 

the wars in Iraq and Afghanistan wind down with a commensurate reduction of about 

$500 billion over ten-years. The planned 2013 DoN budget request aligned with the new 

strategic guidance for the Department of Defense (000) and provided the DoN with the 

best balance of naval capabilities. 
55 

Currently, the budgetary uncertainty including the CR is driving changes to our force 

posture and operational capability absent any major review of strategic priorities and 

national security objectives. As the Chief of Naval Operations and the Commandant of 

the Marine Corps testitled to the House Armed Services Committee earlier this month, 

there is no question we must get our nation's tlscal house in order. But we should do so 

in a coherent and thoughtful manner to ensure we have the weapon systems necded to 

project powcr and maintain appropriate readiness levels. Unless we change coursc, we 

may, without proper deliberation, dramatically impact our global presence and our 

material readiness (afloat and ashore). Further, we risk damaging the military industrial 

base we depend upon to build and maintain our weapon systems and rely upon to surge to 

meet urgent operational needs. 

A restrictive year-long CR and ninc ycars ofreduccd budgets triggered by sequestration 

will leave ships in ports, aircraft grounded for want of necessary maintenance, reduced 

flying hours, units only partially trained, and a force reset via new acquisition and 

modernization programs delayed, restructured, or canceled. OUf concern is we will not 

have the ready forces when it matters and where it matters most to respond to crisis, 

assure allies, build partnerships, deter aggression, and contain conflict. 

PERSONNEL/ACQUISITION/INDUSTRIAL BASE IMPACTS 

National Economy/Employment Impacts: 

The DoN $7.8 billion dollar sequestration investment reduction would potentially impact 

over 100,000 private sector jobs across the nation considering direct and indirect impacts 

to the economy. 

2 
56 

DoN Personnel Impacts: 

The DoN relies on a 'total force' of military (active and reserve) and civilian personnel to 

execute its mission. While military personnel accounts are exempt from sequestration in 

Fiscal Year 2013, the uncertainty of this year's fiscal action has already had a tangible 

effect on our civilian workforce as well as intangible effects on military personnel. Due 

to the possibility of the current CR being extended to a full year, the Navy has 

implemented an across the board hiring freeze for civilian positions and released many 

temporary employees. The Navy also started planning for civilian furloughs in case 

sequestration and full year CR were to occur. 

Hiring Freeze: We estimate that the hiring freeze has already impacted over 1,000 Navywide vacancies. With an average Navy-wide civilian personnel attrition rate of 

approximately 350 per week, or approximately 18,000 vacancies per year, the impacts to 

the workforce are severe. The Marine Corps, which is not immediately implementing an 

across-the-board hiring freeze because it instituted hiring freezes in 2011 and 2012, is 

limiting expenditures on civilian labor resulting in approximately 400 full-time 

equivalents below 20 I 0 levels. 

Temporary Civilian Employees: In total, the Navy is planning to release more than 650 

temporary civilian employees representing approximately 25 percent of this workforce. 

Furloughs: In accordance with the Office of Personnel Management (OPM) guidance, 

the DoN is continuing to review the implications of sequestration-driven furloughs of up 

to 195,000 civilian employees. Furloughs will affect all fifty states and our 

internationally based workforce. We assess the impact of a 22 work day furlough in the 

latter half ofthis fiscal year will result in an approximate 20 percent pay reduction for 

affected employees during this period. With Congressional Notification provided on 

February 20, 2013, we anticipate furloughs could commence in the April 2013 

timeframe. Consequently, the impacts to the civilian workforce are detrimental not to 

3 
57 

only the affected employees - but to their families, the DoN mission, and local 

economies. 

In addition to thc direct loss of labor hours, the workforce impacts of a year-long CR and 

sequestration will also lead to inefficiencies caused by loss ofleaming; productivity 

losses; cost increases driven by lengthening schedules; incrcased burdens on military 

personnel; and lower morale - all of which translates to reduced readiness. For example, 

the civilian hiring frecze and overtime restrictions in Naval Shipyards have already 

caused non-recoverable impacts to the shipyards' ability to execute many assigned 

workloads and nuclear submarine availabilities while threatening to impact Docking 

Planned Incremental Availabilities for the USS EISENHOWER (CVN 69) and the USS 

JOHN C. STENNIS (CVN 74). 

Major Acquisition Programs 

The combined effects of a full-year CR, including the current prohibition on new starts 

and increases in rates of production, and a reduction of about $8 billion in DoN Fiscal 

Y car 2013 investment accounts due to sequestration arc far reaching - with impacts to 

naval aviation, ground-warfare systems, strike weapons, research & development, 

shipbuilding and the associated support, training, and outfitting required for current and 

future readiness. 

The impact of sequestration in Fiscal Year 2013 would result in a loss of more than $1.0 

billion in aircraft production. The reductions will affect the F-35 Joint Strike Fighter, HI Huey and Cobra Rotary-Wing Aircraft, P-8 Poseidon Maritime Patrol Aircraft. E-2D 

Hawkeye Surveillance Aircraft, Vertical Take-Off Unmanned Aerial Aircraft (VTUAV), 

and the Small Tactical Unmanned Aerial Vehicle production lines. Further, the 

Department would delay the Initial Operating Capability (IOe) ofVTUAV Intelligence, 

Surveillance and Reconnaissance in support of Special Operations Forces. W c also 

expect to see unit price increases in current and future single-year procurements for 

4 
58 

tactical, surveillance, rotary-wing, and unmanned systems. An additional $1.0 billion 

dollar impact will affect aviation supporting elements impacting trainers and simulators, 

stand-up ofthe MV-22 Osprey depot-level maintenance capability, ground support 

equipment, and spare parts for all for all aircraft types/models/series. These supporting 

elements are key contributors to maintaining the readiness of operational aircraft and 

aircrews. 

Examples of the impacts due to a strict year-long CR include the inability to transition to 

an MV-22 multi-year procurement, resulting in approximately $1.1 billion in additional 

program cost to deliver the same number of aircraft; the inability to execute new starts for 

KC-130J, which extends their delivery schedule; delayed development of the multiintelligence sensor causing a one-year delivery delay to MQ-4C Triton unmanned 

aircraft; and delays in fielding radar and infra-red search and track upgrades for F/A-18 

aircraft. 

Current CR restrictions and potential sequestration-driven decreases to naval aviation 

readiness would impact Fleet Replacement Squadrons (rRS), reduce rotary-wing 

readiness in support of swarming boat defense, airborne mine counter-measures and antisubmarine warfare, and cancel aircraft and engine depot inductions in the 3rd/4th quarter 

of Fiscal Year 2013. Depot cancellations jeopardize planned aircraft modernization, 

mission system software capability improvements, fatigue-life management, depot 

support, and our flight hour program. 

Aviation depot maintenance is critical to the long-term health of the force and our ability 

to meet mission tasking for both the Navy and Marine Corps. The combined impacts of 

full-year CR restrictions and sequestration on the operation and maintenance of Navy 

aircraft will be to degrade mission readiness, both to our Carrier Air Wings and other 

critical tactical helicopter and maritime patrol aircraft. The cancelling of depot engine 

and engine module inductions during the 3rd/4th quarter will impact engine and engine 

module inventories necessary for flight-line aircraft, spare parts, and war-time reserve. 

S 
59 

Similarly, Marine Corps readiness will be degraded. Beyond twelve-months, we project 

impact to all Marine Corps home-station fixed-wing units. Specifically, USMC FI A-18 

fixed-wing squadrons will have, on average. approximately only five oftwelve assigned 

aircraft on the ramp due to aviation depot shutdowns. Causing further concern is that an 

extended CR. combined with sequestration, could impact our 'next-lo-deploy' and some 

deployed forces. Across the DoN, there will be a total of327 aircraft and over 1,200 

engine modules that will miss induction in the 3'd/4'h quarter of Fiscal Year 2013 due to 

CR and sequestration, with several years required to recover the backlog. If the forecast 

impacts were to occur, we would not be able to recover in a timely manner, even if 

funding were restored. 

Our flight hour program is critical to maintaining our near-term ability to safely and 

effectively meet tasking. Decreasing flight hours raises the risk to flight safety and 

aircrew proficiency. For example, in non-deployed Marine Corps F I A-18 squadrons, 

pilots will average seven flight hours per month, well below the historically proven 

average of fifteen flight hours per pilot required to maintain safe night and minimum 

aircrew proficiency. 

The entirety of the Marine Corps Fiscal Year 2013 ground material modernization 

investment is only $2.5 billion, comprising 12 percent of the baseline budget. Further 

reductions in ground investment accounts, although proportional to the other services in 

terms of a percentage reduction. will have disproportional impact on Marine Corps 

modernization and readiness, particularly after a decade of increased operational tempo. 

The impending sequestration will cause a cut of over $850 million dollars and delay 

efforts of multiple ground programs directly impacting delivery of future capabilities. 

Examples include reduced procurement and installation of safety and force protection 

modification kits on both the Medium Tactical Vehicle Replacement and Logistics 

Vehicle System Replacement trucks which will decrease overall fleet capability. 

Program delays to the Amphibious Combat Vehicle will result in the Marines being 

6 
60 

required to operate and maintain the already 40-year old Assault Amphibious Vehicle for 

at least the next decade. 

Due to sequestration our weapons and ammo procurement accounts will be reduced by 

approximately $450 million dollars. Impacts will occur to sea-strike and sea-shield 

weapons procurement that include a reduction of over 200 air-launched weapons for airto-air and air-to-ground combat; more than 50 sea-launched weapons, including our 

H'ont-line, deep-strike land-attack weapons; and nearly all of our ammo and direct attack 

munitions accounts. Since many of our weapons programs are already at minimum 

sustaining rates, further quantity reductions will jeopardize the supplier base and drive 

higher unit production costs. Additionally, we will reduce procurement of acoustic 

device countermeasure systems impacting ship torpedo defense and reduce systems 

engineering and technical assistance oversight of our Mobile User Objective System 

(MUOS). 

Early research, development, test and evaluation is integral to weapon system 

development. These efforts will be impacted by sequestration, resulting in reductions 

totaling more than $1.6 billion dollars. Cuts will occur in university research initiatives, 

applied research, in-house laboratories, and the research and development for major 

acquisition programs. Acquisition program impacts include: 

• Delays in Joint Strike Fighter at-sea testing due to postponement of required ship 

modifications, air-ship integration activities, and reduced progress on development 

of a deployable Autonomous Logistics Information System; 

• A two-year delay in the MQ-4/Triton Unmanned Air System; 

• Delays in CH-53K development; and 

• Delays in the Multi-Stage Supersonic Target impacting completion of operational 

testing for Nuclear Aircraft Carriers, Standard Missile-2, Rolling Airframe 

Missile, Evolved Sea Sparrow Missile, Ship Self Defense System, Littoral Combat 

Ship, Amphibious Assault Ships (LHA), and DDG 1000. 

7 
61 

All of these delays drive cost increases into the programs and result in less capability 

delivered for each defense dollar spent. 

Sequestration will impact our nuclear aircraft carrier force structure and the one-year CR 

impacts contract awards for carrier refueling. Specifically, the current CR would delay 

the contract award for the next Ford Class carrier, JOHN F. KENNEDY (CVN 79) and 

sequestration would further slow construction. which would result in a delivery delay. 

Currcnt CR funding limitations would delay the completion of Nuclear Refueling 

Complex Overhaul (RCOH) for USS THEODORE ROOSEVELT (CVN 71). the start of 

RCOHs for USS ABRAHAM LINCOLN (CVN 72), and the de fueling ofUSS 

ENTERPRlSE (CVN 65). Given the short time available between sequential dry-docks, 

thc CVN 72 and CVN 65 delays will also likely cause day-for-day impacts to the followon CVN 73 RCOlI. The CVN 72 and CVN 73 delays ,vill not be recoverable. 

Industrial Base 

Sequestration's shadow engenders large unccrtainties for the DoN as a whole and in 

particular our defense industrial base. We have observed prior disruptions to industry 

resulting in a loss of talent, a loss ofleaming, and a reduction to quality. 

As Secretary Panetta has stated, sequcstration also puts at risk a defcnse strategy 

established, in part, to ensure the United States maintains its industrial base and is not 

driven to contract with overseas companies to keep its technological edge. 

For the DoN, sequestration will impact all 50 states ~ from prime contractors, to the 

supplier base, and to the scientific, engineering, and technical services sectors. 

Assuming a nine-percent sequestration reduction for the March 1 and March 27 potential 

orders combined. we project industry contract awards will be reduced by approximately 

$6.7B in Fiscal Year 2013. 

8 
62 

Delayed weapon system production and cancelled maintenance and repair will 

immediately impact aircraft, missilc, and land system manufacturers and our military 

industrial supplier base. The projected loss of work in Fiscal Year 2013 alone will 

further stress smaller businesses that provide supplics and services to major 

manufacturers which havc already been negatively impacted due to thc general 

downward trend in defense spending. Many small businesses, which are often the solesource for aircraft, missile, and land-system components, may be driven to shut down if 

meaningful disruptions to planned workload occur. Once these companies, their 

engineers and skilled workers move on to other work, they are hard and sometimes 

impossible to reconstitute, even if our national security requires it. With many weapon 

systems already at minimum sustaining rates and extended production runs, we are 

continually faced with the challenges of parts obsolescence that will be further 

exacerbated by sequestration and year-long CR disruptions. 

What cannot be measured is the percentage of the supplier base that has decided, or will 

decide, that it is no longer in their economic best interests to participate in the defense 

sector due to business base uncertainties driven by frequent CRs, sequestration, and the 

prospect of nine years of continuing budget uncertainty. When suppliers determine that 

they can no longer rely on future work, or conclude that the regulatory and contractual 

environment is unavailing to a reasonably predictable business base, they will adapt and 

may tum to other economic sectors. 

SUMMARY 

We ask that Congress act quickly to eliminatc the threats posed by sequestration and a 

year-long CR by developing a coherent, balanced approach to deficit reduction that 

addresses our national security interests. The Department requests Congress pass a Fiscal 

Year 2013 Defense Appropriations bill and eliminate sequestration. If that course of 

action proves untenable, we request Congress at least act quickly to modify the CR to 

help us get the funds in the correct accounts, and allow for new starts, rate increases, and 

9 
63 

quantity variations that address our Fiscal Ycar 2013 CR-related readiness shortfalls and 

acquisition requirements. Such actions related to the CR; however, will do little to 

mitigate the significant cuts required by sequestration. 

We understand the importance of resolving our fiscal challenges to ensure our nation's 

security and future prosperity and look forward to working with Congress to ensure our 

Navy and Marine Corps remain the world's preeminent maritime and expeditionary 

force. 

10 
64 

Assistant Secretary of the Navy 

(Research, Development and Acqnisition) 

7/28/2008 - Present 

The Honorable Sean J. Stackley 

Sean J. Stackley assumed the duties of assistant secretary of the Navy (ASN) (Research, 

Development & Acquisition (RDA» following his confirmation by the Senate in July 2008. 

As the Navy's acquisition executive, Mr. Stackley is responsible for the research, 

development and acquisition of Navy and Marine Corps platforms and warfare systems 

which includes oversight of more than 100,000 people and an annual budget in excess of 

$50 bmion, 

Prior to his appointment to ASN (RDA), Mr. Stackley served as a professional staff 

member of the Senate Armed Services Committee. During his tenure with the Committee, 

he was responsible for overseeing Navy and Marine Corps programs, U.S. Transportation 

Command matters and related policy for the Seapower Subcommittee. He also advised on 

Navy and Marine Corps operations & maintenance, science & technology and acquisition 

policy. 

Me Stackley began his career as a Navy surface walfare officer, serving in engineering 

and combat systems assignments aboard USS John Young (DO 973). Upon completing his walfare qualifications, he was 

designated as an engineering duty officer and served in a series of industrial, fleet, program office and headquarters assignments in 

ship design and construction, maintenance, logistics and acquisition policy. 

From 2001 to 2005, Mr. Stackley served as the Navy's LPO 17 program manager, with responsibility for aU aspects of procurement 

for this major ship program. Having served earlier in his career as production officer for the USS Arleigh Burke (DOG 51) and 

project Naval architect overseeing structural design for the Canadian Patrol Frigate, HMCS HaUfax (FFH 330), he had the unique 

experience of having performed a principal role in the design, construction, test and delivery of three first-of-class warships. 

Me Stackley was commissioned and graduated with distinction from the United States Naval Academy in 1979, with a Bachelor of 

Science in Mechanical Engineering, He holds the degrees of Ocean Engineer and Master of Science, Mechanical Engineering from 

the Massachusetts Institute of Technology. Mr. Stackley earned certification as professional engineer, Commonwealth of Virginia, in 

1994. 
65 

United States Navy 

Biography .. 

Vice Admiral Allen G. Myers 

Deputy Chief of Naval Operations, 

Integration of Capabilities and Resources (NS) 

A 1978 graduate of the U.S. Air Force Academy and a northern Virginia native, 

Vice Adm. Myers most recently served as commander, Naval Air Forces from 2010 

to 2012, leading naval aviation during its centennial celebration. Prior to that, he 

completed two tours in Washington, as director, Warfare Integration/Senior 

National Representative (OPNAV NSF), and director, Air Warfare Division (OPNAV 

N8S). He also served as commander, Carrier Strike Group Eight, commanding 

Expeditionary Strike Force 5th Fleet, Combined Task Force 50 and 152, and the 

Eisenhower Carrier Strike Group during an extended deployment in support of 

Operations Iraqi Freedom and Enduring Freedom 2006/2007. Myers has also 

previously served in flag tours as the senior military assistant to the secretary of 

the Navy and deputy director for Requirements, Assessments Division (OPNAV 

N81D). 

He also commanded USS Kitty Hawk (CV 63), the Navy's forward deployed naval 

forces aircraft carrier, in Yokosuka, Japan, and USS Sacramento (AOE i), which 

deployed to the Western Pacific and Persian Gulf with the Constellation Battle Group, and was awarded the Battle "E" 

and eNO Safety "8" under his command. He also commanded Fighter Squadron (VF) 32, flying F~14 Tomcats aboard 

USS Dwight D. Eisenhower (CVN 69) while deployed to Bosnia and the Persian Gulf. The squadron also was awarded 

the Battle HE", the Clifton Award and the Fleet Fighter Adversary Readiness Program Trophy under his command. 

Prior squadron and sea tours include: VF-143, VF~14, VF~101 and VF~103. Tours ashore have also included: executive 

assistant to commander U.S. Fleet Forces; Organizational Policy Branch chief in the StrategiC Plans and Policy 

Directorate, J~5, Joint Staff; deputy executive assistant to the chief of naval operations; chief staff officer, Fighter Wings 

Atlantic; and deputy special assistant to the chief of naval personnel for flag officer matters. He holds master's degrees 

in National Security Affairs from the Naval War College and Salve Regina University. 

Myers is currently assigned as deputy chief of Naval Operations, Integration of Capabilities and Resources in 

Washington 

During his career he has accumulated more than 3,600 flight hours and over 900 arrested !andings. Decorations 

include: Distinguished Service Medal; Defense Superior Service Medal; Legion of Merit (eight awards); Meritorious 

Service Medal (two awards); Air Medal; Joint Service Commendation Medal; Navy and Marine Corps Commendation 

Medal (two awards) and Navy and Marine Corps Achievement Medal (two awards), in addition to various campaign and 

unit awards. 
66 

Lieutenant General John E. Wissler 

Deputy Commandant for Programs and 

Resources 

Lieutenant General Wissler is currently serving as Deputy 

Commandant for Programs and Resources. Headquarters. 

U.S. Marine Corps, Washington DC. 

Lieutenant General Wissler was born at Camp Pendleton, 

California and raised across the country, settling in 

Brooklyn Park, Minnesota. He graduated with honors from 

the United States Naval Academy with a Bachelor of 

Science in Ocean Engineering and was commissioned a 

Second Lieutenant on 7 June 1978. 

Lieutenant General Wissler's command assignments began 

with service commanding landing support (shore party) 

and combat engineer platoons, completing two 31 st 

Marine Amphibious Unit (MAU) deployments to the Western Pacific and Indian Ocean. 

He deployed with MAU Service Support Group (MSSG) 31 with the MSSG Landing 

Support Platoon supporting OPERATION EAGLE CLAW in the Persian Gult: and next 

commanded the Battalion Landing Team 3/3 Combat Engineer platoon. Lieutenant 

General Wissler also served as the Executive Officer, Engineer Company, Brigade 

Service Support Group, 1 st Marine Brigade. His next command assignments occurred in 

1 st Combat Engineer Battalion, I st Marine Division, where he served as Commanding 

Officer for Headquarters and Service Company, "B" Company, and Engineer Support 

Company; deploying to Honduras with "B" Company and 2d Battalion 5th Marines as 

part ofthe I MEF Air Contingency Battalion. Field Grade command assignments began 

with service as the Executive Officer, Marine Wing Support Squadron 172, Marine Wing 

Support Group (MWSG) -17, 1 st MAW, Okinawa, Japan; and continued with his 

assignment as Commanding Officer, 2d Combat Engineer Battalion, 2d Marine Division. 

Lieutenant General Wissler commanded twice as a Colonel, commanding 2d 

Transportation Support Battalion, 2d Force Service Support Group (FSSG), which served 

as the nucleus of Task Force Pegasus, providing operational and tactical level battlefield 

distribution capabilities in support ofI Marine Expeditionary Force during Operation 

Iraqi Freedom during the liberation ofIraq; and as Commander, 2d FSSG Forward, II 

MEF Forward (MNF-W) for Operation Iraqi Freedom (OIF) 04-06. General Officer 

command assignments have included Commanding General, 2d FSSG (Fwd) and 2d 

Marine Logistics Group, II MEF; Deputy Commanding General, MNF-W during OIF 09; 

Deputy Commanding General, II MEF; and Commanding General, 2d Marine 

Expeditionary Brigade. 
67 

Lieutenant General Wissler's staff assignments include Facilities Maintenance Officer for 

Marine Corps Recruit Depot (MCRD), San Diego; Battalion Operations Officer, 1st 

Combat Engineer Bn; Commandant of the Marine Corps' Amphibious Plans Study 

Group in support of Operation Desert Stoml; Marine Corps Aide to the President from 

July 1991 to August 1993 serving Presidents George H.W. Bush and Bill Clinton; 

Operations Officer and Executive Officer for MWSG-17, 1st MAW; Division Engineer, 

2d Marine Division, II MEF; Deputy Director and Director, Strategic Initiatives Group, 

Plans, Policies & Operations Department, Headquarters, U. S. Marine Corps where he 

headed the War Room for General James L. Jones, 32d Commandant of the Marine 

Corps; Assistant Chief of Staff, G-3, 2d FSSG; and Senior Military Assistant to the 

Deputy Secretary of Defense (The Honorable Gordon England). While serving the 

Deputy Secretary of Defense, at the request of the Vice Chainnan of the Joint Chiefs of 

Staff, Lieutenant General Wissler deployed to Iraq for two months in support of the Joint 

Forces Command Enabling Force Study that preceded "The Surge." 

Lieutenant General Wissler has completed the Amphibious Warfare School non-resident 

program while in the Special Education Program; graduated with honors and was 

identified as a Distinguished Graduate at the Air Force Institute of Technology (AFIT), 

receiving a Master of Science in Industrial Engineering and being awarded the AFIT 

Commandant's award for exceptional thesis research; is a distinguished graduate from the 

Marine Corps Command and Staff College Resident Program; completed the Armed 

Forces Staff College (now Joint Forces Staff College) at Norfolk, Virginia; and served as 

a Commandant of the Marine Corps and Federal Executive Fellow at The Brookings 

Institution in the Foreign Policy Studies Branch. 
68 

DEPARTMENT OF DEFENSE 

PRESENTATION TO TIlE 

HOUSE ARMED SERVICES COMMITTEE 

SUBCOMMITTEE ON TACTICAL AIR AND LAND FORCES 

U.S. HOUSE OF REPRESENTATIVES 

SUBJECT: Impact of a Continuing Resolution and Sequestration on Acquisition. Programming, 

and the Industrial Base. 

STATEMENT OF: Lt Gen Charles R. Davis 

Military Deputy, Office of the 

Assistant Secretary of the Air Foree (Acquisition) 

Lt Gen Michael R. Moeller 

Deputy Chief of Staff. Strategic Plans and Programs 

28 February 2013 

NOT FOR PUBLICATION UNTIL RELEASED BY 

HOUSE ARMED SERVICES COMMITTEE 

SUBCOMMITTEE ON TACTICAL AIR AND LAND FORCES 

U.S. HOUSE OF REPRESENTATIVES 
69 

2 

Introduction 

The combination of sequestration in fiscal ycar (FY) 2013 reduced discretionary budget 

caps in FY 2014-2021, and a possible year-long continuing resolution (CR), will have 

devastating effects on United States Air Force readiness, modemization efforts and the support 

for the military and civilian workforce. As directed by the Deputy Secretary of Defense, we 

have started intensifying our planning for longer-term budgetary uncertainty, including potential 

sequestration in March. However, the totality of all the unknowns-FYI3-18 baselines, CR 

transfer authorities, new start mles, quantity increases etc.-make all our planning efforts little 

more than an exercise in futility. The Air Force has already implemented a series of pm dent 

measures to help mitigate our current fiscal year budget risks; however, planning tt)r 

sequestration and other fiscal constraints have already dismpted our strategic planning efforts 

and this event will cause short-term and long-term effects that will adversely affect the Air Force 

today and years into the future. In addition to the difficulties of operating under a year-long 

continuing resolution, sequestration would produce an estimated $12.4 billion top-line budget 

reduction for the Air Force. These reductions and restrictions, along with the mitigation efforts 

we unilaterally implemented to lower our FY13 spending profile, affect all accounts and have a 

compounding negative effect over time. Coupled with an FY13 $1.8 billion estimated shortfall 

in overseas contingency operations (OCO) funding because of higher than expected operating 

costs in theater, these constraints have already disrupted current operations and pose severe longterm consequences. 
70 

3 

Impacts on Acquisition 

The single largest impact of sequestration and CR wllmowns is the very serious impact 

they have on the meticulous acquisition cost and schedule planning mandated in numerous 

public laws and DoD policy. The increasing inefficiency makes it difficult, ifnot impossible for 

our program managers to do their job. 

Sequestration cuts to Air Force modernization investments, which under the law must be 

applied equally at the program, project, and activity level, will impact everyone of the Air 

Force's acquisition programs. For example, the F-35A low rate initial production would see 

reductions of up to five aircraft from the requested 19 in FYI3. Such potential reductions drive 

up unit costs-resulting in FY14 production funding shortfalls-they also delay follow-on 

software and flight testing. Test and evaluation delays could increase total test costs across all 

programs, and delay delivery of critical capability to U.S. servicemen and women in the field at a 

time when these capabilities are planned to be the cornerstone of our post-Afghanistan ability to 

refocus our efforts. 

One of the more crippling near-tenn impacts of sequestration is that the roughly 9% 

across the board cuts will remove all funding reserved to manage risk from every program. 

More specifically, our program managers will lose virtually all of their resources to address 

emerging technical issues and any development or test discoveries. We will lose the resources to 

fix any issues that were not part of the original program baseline. 
71 

Each ofthesc long-tenn investment account disruptions negate thousands of man-hours 

spent on planning, implementing, and managing complex programs intended to best balance the 

efficiency of taxpayer dollar expenditure with the effectiveness of capability creation to fulfill 

the Defense Strategic Guidance. Inflicting a sledgehammer blow to the planned execution of 

these programs through sequestration harms both aspects of that precious balance. And over 

time, taxpayer dollars will have to be spent to address the contract re-structures and time-delay 

inefficiencies that sequestration will induce, while delivery delays of validated capabilities 

infused with perishable technologies will only reduce our already-shrinking advantage over 

potential adversaries. 

Many of the adverse impacts of sequestration to Air Force operations are aggravated by 

the fact that we are still operating under a continuing resolution. now five months into the fiscal 

year. The absence of a final FY13 appropriations bill thrusts each military Service into a 

planning purgatory of sorts, clouding near- and long-term fiscal programming with a fog of 

ambiguity, and placing dozens of acquisition programs at risk, particularly those requiring "new 

start" and "quantity increase" approvals. The President's Budget requested multiple new start 

RDT &E projects at a cost of over $200M. These new projects affect programs such as C-5 

(WeatherlRadar), B-2 (Common VLF Receiver Increment I), F-15 (Eagle Passive/Active 

Warning Survivability System), F-35 and Space Based Infrared System (Space Modernization 

Initiative). All of our new starts are delayed until we receive an appropriations bill or anomaly 

approving them. 

4 
72 

A year-long continuing resolution coupled with sequestration will create significant 

impacts on our weapon system program strategies, cost and schedules, and we will be unable to 

mitigate even the most significant of impacts in investment accounts. Significant changes will 

be required across the FYDP to our current modernization programs, delaying much needed 

capability to the warfighter. 

Impacts on Programming 

5 

Despite the challenges we face in this dynamic fiscal environment, the Air Force remains 

committed to developing and implementing a program that focuses on maintaining readiness 

levels for our forces to support Combatant Commanders in their assigned operational missions. 

However, the combined effects of the continuing resolution and sequestration have induced an 

unprecedented level of uncertainty into the Air Force Strategic Planning and Programming 

process. This unpredictability will also introduce a high level of risk to our ability to maintain 

Air Force unique capabilities and capacity levels necessary to implement the Defense Strategic 

Guidance. Sequestration will severely strain this commitment to readiness and will require a 

comprehensive review of DoD's Jan 2012 strategy. Moreover, complying with the discretionary 

cap reductions in FY 2014 - 2021 pursuant to sequestration provisions in the Budget Control Act 

will require the Air Force to make trade-offs between maintaining readiness and the pace of 

modernization. These choices will, most likely, require force structure cuts to meet the full range 

of our national security responsibilities. Bottom line, in this fiscal crisis environment, we believe 

the choice to preserve readiness will require the Air Force to get smaller. 
73 

6 

Secretary Panetta stated in a recent interview that if those out year cap reductions are 

allowed to stand, he would have to throw the country's current national defense strategy "out the 

window." From an Air Force perspective, we will have to address a revised defense strategy 

based on a post-sequester budget environment. This will require tough strategic choices to 

ensure the Air Force balances competing requirements across our enduring contributions -- Air 

and Space Superiority; Intelligence, Surveillance, and Reconnaissance; Rapid Global Mobility; 

Global Strike: Command and Control. 

If sequestration occurs, we will also face many difficult challenges in planning and 

programming for future budget years. To build future year requests, the Air Force uses a formal 

and deliberate process that conducts an analysis of the strategic and fiscal environment, projects 

impacts, prioritizes requirements for the next five-ten years, and then applies resources to meet 

these priorities_ Even during times ofrelative stability, this is a complex task requiring months 

of effort by hundreds of Total Force Airmen, both military and civilian, across the Air Force. 

In this period of unprecedented uncertainty, by contrast, we cannot begin to make 

informed estimates that serve as the baseline for the next budget year's process_ The turbulence 

is already damaging our strategic processes that historically infuse elements of planning stability 

to meet future resourcing requirements_ For example, the Air Force is prepared to take actions in 

FYI3 to reduce flying hours, weapon system sustainment, and engine repairs. We understand 

these actions will negatively affect the Air Force in FY14 and create a "bow-wave" of bills that 

requires a response during the future year program development process. But with so many 

"unknowns," developing a realistic and reliable program is all but impossible. 
74 

Our unchanging goal is to provide the most capable Air Force possible against any 

potential adversary ... today and tomorrow. However, in a continuing resolution and 

sequestration environment, the Air Foree will be forced to make drastic choices that will have 

both immediate and far-reaching impact on our capability and capacity to provide air and space 

power effectively across the full spectrum of operational requirements. 

Impacts on lndustrial Base 

7 

As the Air Force makes these difficult and drastic changes, we will drive corresponding 

changes in the nation's aerospace industrial base that produces our warfighting capabilities. Just 

as the combined impacts of continuing to operate undcr sequestration and the continuing 

resolution drive uncertainty into Air Force planning, the impacts of this untimely pairing carry 

over into the plans of each and every company in the network of industrial base suppliers 

supporting the Air Force. While the disruptions to the detailed planning and execution of the Air 

Force's complex investmeut and modernization programs, such as the F-35 and KC-46, would be 

significant, the impacts to the industrial base grow in magnitude as the reductions cascade down 

through the network of companies that support each program. 

When Air Force procurement, even at current levels, is compared against the global 

market for commercial aircraft, engines and avionics, it becomes clear that the Air Force is, by 

most measures, a small customer. The prime contractors and the top tiers of subcontractors who 

provide complete systems, such as engines and avionics, have the financial capability andlor 
75 

8 

commercial demand for products to accommodate, however disruptive, the lower levels of 

production and other adjustments, such as changes in workforce, that will result from the 

imposition of a sequestration-driven budget. However, there is much more uncertainty 

associated with the capability of the smaller, more specialized companies in the lower tiers of the 

industrial base to successfully transition to sequestration levels of production. At these lower 

tiers, our ability to accurately forecast is hampered by our lack of visibility. However, there is 

general agreement on the potential courses of action, all of which would be problematic. Some 

may decide to just close their doors while others may decide to exit the Air Force market and no 

longer maintain the technical expertise and status as qualified sources. In either case, the costs 

associated with finding and qualifying new sources will further complicate an already complex 

situation. 

In addition to the impact on the industrial base supporting Air Force procurement, there is 

the impact on the organic industrial base sustaining the current fleet. Sequestration will. in the 

near term, slow the flow of aircraft into our depots; for the remainder of FYI3, this represents an 

almost 113 reduction in workload. The lack of work, coupled with furloughs for the civilian 

workforce, will have longer term impacts: creation of an increasing backlog of vital maintenance 

and repair work with a commensurate reduction in the materiel readiness of broad sections of the 

Air Force fleet; and the high likelihood of severe and negative effects on the productivity of the 

workforce. The reduction in depot work also has a hugely problematic business impact on the 

Air Force Capital Working Fund. Even with cost control measures, the reduced depot level of 

activity may not generate sufficient funds to sustain depot activity with a positive balance. 
76 

Conclusion 

The dire effects of sequeslration and potential of a year-long continuing resolntion that 

drive continued budgetary uncertainty, make clear the national imperative for a return 

predictable and stable environment. 

Should sequestration and a year-long continuing resolution occur, the Air Force will be 

forced to take actions that would be devastating. Although we will make every effort to 

minimize the impact of sequestration to readiness and force modernization, each of those areas 

will experience painful, palpable, and ultimately expensive disruptions. At a time when Air 

Force readiness is long-overdue for vital reconstitution, our fleet is aging, and our force is at its 

smallest since its inception, we find ourselves in the untenable position of forcing further risk to 

our Nation's detense by sacrificing elements of three keys to the effective provision of 

airpower-Ainnen, readiness, and modernization. 

9 
77 

LIEUTENANT GENFRAL CIIARLLS R. [)A VIS 

BIOGRAPHY 

UNITED STATES AIR FORCE 

LIEUTENANT GENERAL CHARLES R. DAVIS 

Lt. Gen. Charles R. Davis is the Military Deputy, 

Office of the Assistant Secretary of the Air Force 

for Acquisition, the Pentagon, Washington, D.C. He 

is responsible for research and development, test, 

production, and modernization of Air Force 

programs worth more than $40 billion annually. 

General Davis was commissioned in 1979 from the 

U.S. Air Force Academy as a distinguished 

graduate with a bachelor's degree in chemistry. His 

assignments include flying duties in the T-38, F-15, 

A-7, F-117A and F-16. He has also served on the 

Air Staff under the Director of Air Force Test and 

Evaluation. The general led divisions in both the F16 and F-15 program offices, served as Director of 

the F-15 and Flight Training System Program 

Offices, and was the Joint Primary Aircraft Training 

(T -6A) System Program Director. The general 

commanded the 410th Flight Test Squadron, F117A Combined Test Force and 412th Test Wing. 

He also served as Program Executive Officer for 

the F-35 Lightning II Program Office. 

As the Commander, Air Armament Center, and the Air Force Program Executive Officer for Weapons, Air 

Force Materiel Command, Eglin AFB, Fla., he oversaw development, acquisition, testing, deployment and 

sustainment of all air-delivered weapons. He also directed and conducted test and evaluation of U.S. and 

allied air armament, navigation and guidance systems and command and control systems. Prior to his current 

position. Gen Davis was the Commander, Electronic Systems Center, Hanscom Air Force Base, Mass. and 

the Air Force Program Executive Officer for Command, Control, and Communications Infrastructure and 

Networks. His duties encompassed the acquisition of command and control and combat support information 

systems for the Air Force comprising more than 12,000 people located at six sites throughout the United 

States while managing more than $5 billion in programs annually in support of the Air Force and joint and 

coalition forces. 

General Davis is an experimental test pilot with more than 3,400 flying hours in 53 types of aircraft. 

EDUCATION 

1979 Distinguished graduate, Bachelor of Science degree in chemistry, U.S. Air Force Academy, Colorado 

Springs, Colo. 

1983 Distinguished graduate, Squadron Officer School, Maxwell AFB, Ala. 

1984 Marine Corps Command and Staff College, by correspondence 

1986 Air Command and Staff College, by correspondence 

1988 Distinguished graduate, Experimental Test Pilot Course, U.S. Air Force Test Pilot School, Edwards 

AFB, Calif. 

1991 Master of Science degree in mechanical engineering, California State University, Fresno 

1995 Distinguished graduate, Master of Science degree in national resource management, Industrial College 

of the Armed Forces, Fort Lesley J. McNair, Washington, D.C. 

1997 Program Manager Course, Defense Systems Management College, Fort Belvoir, Va. 
78 

LIEUTENANT GENERAL CHARLES R. DA VIS 

2004 United States - Russia Security Program, John F. Kennedy School of Government, Harvard University, 

Cambridge, Mass. 

ASSIGNMENTS 

1. July 1979 - August 1980, student, undergraduate pilot training, Williams AFB, Ariz. 

2. August 1980 - March 1983, T-38 instructor pilot, flight scheduler, and squadron standardization and 

evaluation officer, 97th Flying Training Squadron, Williams AFB, Ariz. 

3. March 1983 - July 1984, assistant executive officer to the Inspector General, 82nd Flying Training 

Headquarters, Williams AFB, Ariz. 

4. July 1984 June 1987, F-15 pilot, flight commander, Chief of Scheduling, and weapons and tactics officer, 

48th Fighter Interceptor Squadron, Langley AFB, Va. 

5. June 1987 - June 1988, student, U.S. Air Force Experimental Test Pilot Course, U.S. Air Force Test Pilot 

SchOOl, Edwards AFB, Calif. 

6. June 1988 - February 1989, A-7 and T-38 experimental test pilot, 6512th Test Squadron, Edwards AFB, 

Calif 

7. February 1989 - May 1991, F-16 experimental test pilot and assistant operations officer, 6516th Test 

Squadron, Edwards AFB, Calif. 

8. May 1991 May 1992, F-16 experimental test pilot and test systems safety officer, Safety Directorate, Air 

Force Flight Test Center, Edwards AFB, Calif 

9. May 1992 - March 1994, Chief, Tactical Air to Air Systems Policy and Programs Division, Air Force Test 

and Evaluation Directorate, Headquarters U.S. Air Force, Washington, D.C. 

10. March 1994 - August 1994, executive to the Director, Air Force Test and Evaluation Directorate, 

Headquarters U.S. Air Force, Washington, D.C. 

11. August 1994 - June 1995, student, Industrial College of the Armed Forces, Fort Lesley J. McNair, 

Washington, D.C. 

12. June 1995 - July 1997, Commander, 410th Flight Test Squadron, F-117A Combined Test Force, Air 

Force Plant 42, Palmdale, Calif. 

13. July 1997 - November 1998, Chief, F-16 Combat Air Force Programs, F-16 System Program Office, 

Aeronautical Systems Center, Wright-Patterson AFB, Ohio 

14. November 1998 - July 1999, Director, Development and Acquisition, F-15 SPO, ASC, Wright-Patterson 

AFB, Ohio 

15. July 1999 - April 2001, Director, Flight Training SPO, ASC, Wright-Patterson AFB, Ohio 

16. May 2001 - April 2003, Director, F-15 SPO, Warner Robins Air LogistiCS Center, Robins AFB, Ga. 

17. April 2003 - June 2004, Commander, 412th Test Wing, Edwards AFB, Calif. 

18. June 2004 - July 2006, Deputy Program Executive Officer, Joint Strike Fighter Program, Arlington, Va. 

19. July 2006 - May 2009, Program Executive Officer, F-35 Lightning II Program Office, Arlington, Va. 

20. May 2009 - August, 2011, Commander, Air Armament Center, and the Air Force Program Executive 

Officer for Weapons, Air Force Materiel Command, Eglin AFB, Fla. 

21. Sept. 2011 - May 2012, Commander, and Program Executive Officer for Command and Control and 

Combat Support, Electronic Systems Center, Air Force Materiel Command, Hanscom AFB, Mass. 

22. May 2012 - present, Military Deputy, Office of the Assistant Secretary of the Air Force for Acquisition, the 

Pentagon, Washington, D.C. 

SUMMARY OF JOINT ASSIGNMENTS 

1. June 2004 - July 2006, Deputy Program Executive Officer, Joint Strike Fighter Program, Arlington, Va., as 

a colonel and brigadier general 

2. July 2006 - May 2009, Program Executive Officer, F-35 Lightning II Program Office, Arlington, Va., as a 

brigadier general and major general 

FLIGHT INFORMATION 

Rating: Command pilot 

Flight hours: 3,431 hours 

Aircraft flown: F-15, F-16, F-117A, A-7, T-38, and 48 other aircraft types 

MAJOR AWARDS AND DECORATIONS 

Distinguished Service Medal 

Defense Superior Service Medal with oak leaf cluster 

Legion of Merit with oak leaf cluster 

Meritorious Service Medal with three oak leaf clusters 

Aerial Achievement Medal with three oak leaf clusters 
79 

LIE(: lENANT GENERAL CHARLES R. 1M VIS 

Air Force Commendation Medal 

Air Force Achievement Medal 

Combat Readiness Medal 

OTHER ACHIEVEMENTS 

1980 Distinguished graduate, undergraduate pilot training 

1985 Top graduate and top academic student. F-15 Fighter Training Unit 

EFFECTIVE DATES OF PROMOTION 

Second Lieutenant May 30, 1979 

First Lieutenant May 30, 1981 

Captain May 30, 1983 

Major June 1. 1990 

Lieutenant Colonel March 1, 1994 

Colonel Sept. 1, 1998 

Brigadier General Oct. 1. 2005 

Major General Dec. 20. 2007 

Lieutenant General Sept. 1. 2011 

(Current as of May 2012) 
80 

1111' 11'-;,\'-; I (;LNFRAI \lIClIAI:L It \lOEI.I.LR 

BIOGRAPHY 

UNITED STATES AIR FORCE 

LIEUTENANT GENERAL MICHAEL R. MOELLER 

Lt Gen, Michael R Moeller is Deputy Chief of Staff for Strategic Plans and Programs, Headquarters U,S, Air 

Force, Washington, D,C, In support of the Chief of Staff and Secretary of the Air Force, General Moeller 

leads the development and integration of the Air Force's long-range plans and the five-year, $604 billion U,S, 

Air Force Future Years Defense Program to ensure the Air Force's ability to build and employ effective air, 

space and cyber forces to achieve national defense objectives 

General Moeller received his commission from the U,S, Air Force Academy in 1980, He has held multiple 

flying assignments as an aircraft commander and instructor pilot He has commanded at the squadron and 

group levels and served as the commander of the 2nd Bomb Wing and 379th Air Expeditionary Wing, His 

staff experience includes tours with the Secretary of the Air Force Staff Group and in the Checkmate Division 

on the Air Staff; in the Plans and Policy Directorate of the Joint Staff; as the Deputy Director for Plans and 

Programs at Air Combat Command; as the Director of Strategy, Plans and Policy for U,S, Southern 

Command and as the Director of Strategy, Plans and Policy for U,S, Central Command, He also served as 

the executive assistant to the Vice Director of the Strategic Plans and Policy Directorate on the Joint Staff 

and to the Air Force Assistant Vice Chief of Staff, 

Prior to his current assignment, the general was the U,S, Security Coordinator, Israel-Palestinian Authority, 

US, Department of State, Tel Aviv, IsraeL General Moeller is a command pilot with more than 4,440 flying 

hours and 670 combat hours for operations Desert Storm, Enduring and Iraqi Freedom, 

EDUCATION 

1980 Bachelor of Science degree in geography, U,S, Air Force Academy, Colorado Springs, Colo, 

1984 Squadron Officer School, Maxwell Air Force Base, Ala, 

1984 Master's degree in aeronautical science and technology, Embry-Riddle University, Daytona Beach, Fla, 

1993 Air Command and Staff College, Maxwell AFB, Ala, 

1994 Master's degree in airpower art and science, School of Advanced Airpower Studies, Maxwell AFB, Ala, 

1996 Joint Staff Officer Course, Armed Forces Staff College, Norfolk, Va, 

1999 National Defense Fellow, Center for StrategiC and International Studies, Washington, D.C 

2005 National Security Leadership Course, Maxwell School of Citizenship and Public Affairs. Syracuse 

University, NY. 

2012 Leadership at the Peak, Center for Creative Leadership, Colorado Springs, Colo 

ASSIGNMENTS 

1, June 1980 June 1981, student, undergraduate navigator and electronic warfare training, Mather AFB, 

Calif 

2 July 1981 November 1981, student, B-52 combat crew training, Castle AFB, Calif 

3, December 1981 May 1984, electronic warfare officer. 416th Bomb Wing, Griffiss AFB, N.Y. 

4 June 1984 - June 1985, student, undergraduate pilot training, Columbus AFB. Miss. 

5, July 1985 - November 1985, student, B-52 combat crew training, Castle AFB, Calif 

6 December 1985 - August 1988, B-52 co-pilot and aircraft commander. 416th Bomb Wing, Griffiss AFB, 

NY. 

7. September 1988 - September 1989, Air Staff Training officer, Secretary of the Air Force Staff Group, 

Headquarters U,S, Air Force, Washington, D.C. 

8, September 1989 - August 1990, B-52 aircraft commander and instructor pilot, 42nd Bomb Wing, Loring 

AFB. Maine 

9. August 1990 - March 1991, B-52 mission and flight commander, 4300th Provisional Bomb Wing, 

Southwest Asia 

10. April 1991 - June 1992, Chief, Combat Tactics, 42nd Bomb Wing, Loring AFB, Maine 
81 

LIEUTENANT GENERAL MICHAEL R. MOELLER 

11. July 1992 - June 1993, student, Air Command and Staff College, Maxwell AFB, Ala. 

12. July 1993 - June 1994, student, School of Advanced Airpower Studies, Maxwell AFB, Ala. 

13. July 1994 - March 1995, Chief, Strategy Branch, Checkmate Division, Deputy Chief of Staff for Plans and 

Operations, Headquarters U.S. Air Force, Washington, D.C. 

14. April 1995 - June 1997, executive assistant to the Vice Director, and strategic planner and action officer, 

Strategy Division, Strategic Plans and Policy Directorate, Joint Staff, the Pentagon, Washington, D.C. 

1S. July 1997 - May 1999, Commander, Sth Operations Support Squadron, Minot AFB, N.D. 

16. June 1999 - May 2000, National Defense Fellow, Center for Strategic and International Studies, 

Washington, D.C. 

17. June 2000 - July 2001, executive officer to the Assistant Vice Chief of Staff, Headquarters U.S. Air Force, 

Washington, D.C. 

18. August 2001 - December 2001, Commander, 7th Operations Group, Dyess AFB, Texas 

19. December 2001 - May 2002, Commander, 40Sth Expeditionary Operations Group, Southwest Asia 

20. May 2002 - September 2003, Commander, 7th Operations Group, Dyess AFB, Texas 

21. September 2003 - February 2004, Vice Commander, Sth Bomb Wing, Minot AFB, N.D. 

22. February 2004 - September 200S, Commander, 2nd Bomb Wing, Barksdale AFB, La. 

23. September 200S September 2006, Deputy Director of Plans and Programs, Headquarters Air Combat 

Command, Langley AFB, Va. 

24. September 2006 - July 2008, Director, Strategy, Policy and Plans (JS), Headquarters USSOUTHCOM, 

Miami, Fla. 

2S. July 2008 - July 2009, Commander, 379th Air Expeditionary Wing, Southwest Asia 

26. July 2009 - Oct 2010, Director, Strategy, Plans and Policy (JS), Headquarters U.S. Central Command, 

MacDil1 AFB, Fla. 

27. October 2010 - October 2012, U.S. Security Coordinator, Israel-Palestinian Authority, U.S. Department of 

State, Tel Aviv, Israel. 

28. October 2012 - present, Deputy Chief of Staff, Strategic Plans and Programs, Headquarters U.S. Air 

Force, Washington, D.C. 

SUMMARY OF JOINT ASSIGNMENTS 

1. April 1995 - June 1997, executive assistant to the Vice Director, and strategic planner and action officer, 

Strategy Division, Strategic Plans and Policy Directorate, Joint Staff, the Pentagon, Washington, D.C., as a 

major and lieutenant colonel 

2. September 2006 - July 2008, Director, Strategy, Policy and Plans (J5), Headquarters USSOUTHCOM, 

Miami, Fla., as a brigadier general 

3. July 2008 - July 2009, Commander, 379th Air Expeditionary Wing, and Installation Commander, Southwest 

Asia, as a brigadier general 

4. July 2009 - Oct 2010, Director, Strategy, Plans and Policy (J5), Headquarters U.S. Central Command, 

MacDili AFB, Fla., as a major general 5. October 2010 - October 2012, U.S. Security Coordinator, IsraelPalestinian Authority, Tel Aviv, Israel, as a lieutenant general 

MAJOR AWARDS AND DECORATIONS 

Defense Distinguished Service Medal 

Defense Superior Service Medal with oak leaf cluster 

Legion of Merit with oak leaf cluster 

Distinguished Flying Cross 

Bronze Star with oak leaf cluster 

Defense Meritorious Service Medal with oak leaf cluster 

Meritorious Service Medal with two oak leaf clusters 

Air Medal with oak leaf cluster 

Joint Service Commendation Medal 

FLIGHT INFORMATION 

Rating: Command pilot 

Flight hours: More than 4,400 

Aircraft flown: B-1, B-S2, KC-135, RC-13S, E-8, E-3, C-130, C-21, T-37 and T-38 

EFFECTIVE DATES OF PROMOTION 

Second Lieutenant May 28, 1980 

First Lieutenant May 28, 1982 

Captain May 28, 1984 
82 

LIEU I r,NAN I fir.NtRAL MICilAt'L R ,rylOELLER. 

Major Nov. 1, 1991 

Lieutenant Colonel Nov. 1, 1996 

Colonel March 1, 2001 

BrigadIer General July 3, 2007 

Major General April 2, 2010 

Lieutenant General oct. 7. 2010 

(Current as of January 2013) 
DOCUMENTS SUBMITTED FOR THE RECORD 

FEBRUARY 28, 2013 

(85) 

Follow-up Written Testimony of LTG James O. Barclay III, USA 

Mr. Chairman, Ranking Member Sanchez, and distinguished Members of 

the Subcommittee, thank you for the opportunity to present this written 

testimony as a continuation of my appearance on 28 February. The Army's 

leadership understands the gravity of our Nation's current fiscal situation; 

however, we also understand that Sequestration poses a significant risk to our 

Forces today and into the future. I would like to address Army efforts in saving 

taxpayer dollars through modernization efficiency; the impacts of the Continuing 

Resolution (CR) and Sequestration upon multi-year contracts; the decade-long 

effects that Sequestration will have on our modernization programs and 

planning the future Army budget. 

Efficiencies/Multi-Year Procurement 

During the hearing, the committee expressed the perception that the 

Department of Defense (000), like all large institutions, can do more to prevent 

fraud, waste, and abuse, and be a good steward of taxpayer dollars. Army 

leaders concur wholeheartedly and feel strongly that efficient use of taxpayer 

dollars to equip the Soldier on the battlefield is not just fiscally smart, but 

needed now more than ever. During the past 12 years, Congress has been 

extremely generous supporting Soldiers on the ground in Iraq and Afghanistan. 

Today, our Warfighters are better equipped than ever with the tools they need 

to fight and win. 

As we draw down our presence in Afghanistan, our focus will shift to 

reinvigorating the training base and finding even more efficient ways to man, 

train, and equip our Army, maximizing the value of constrained resources. 
86 

Preventing and eliminating areas of fraud, waste, and abuse must and will be a 

part of our continuing efforts to mold America's Army for the future. 

To accomplish this, the Army is taking steps to increase the efficiency of 

its modernization programs. We will set smaller procurement objectives to 

allow the flexibility to insert new technologies as they become available; align 

threshold requirements with mature I non-developmental technologies to reduce 

program risk; evaluate investments based on affordability and cost 

effectiveness to determine if the projected reduction in risk or capability gap 

warrants the investment; minimize developmental costs and timelines to 

increase the probability that programs reach production; reduce sustainment 

costs by divesting older systems or niche capabilities; employ efficiency reviews 

to integrate capabilities; and use multi-year procurement programs to achieve 

the best cost per unit. While these measures were developed with cyclical 

funding downturns in mind, the current CR and Sequester will make their 

execution more difficult due to the magnitude and inflexibility of the cuts. 

One success story in gaining efficiencies, not only in terms of operational 

impact, but also in cost savings is the Army's Network Integration Evaluation 

(NIE). This process tests network and non-network systems through the handson participation of Soldiers. These Soldiers conduct combat-related operations 

in varying landscapes simulating the current threat environment. In terms of 

efficiencies, NIE saves by informing requirements early-on in the process, 

aligning previously disparate programs of record, integrating systems prior to 

deployment, and providing avenues for industry to bring in mature capabilities 

for evaluation. We estimate the testing cost avoidance of each evaluation to be 

2 
87 

between $8 million and $14 million. CR and Sequestration will put an efficient 

program such as NIE at risk. 

Other modernization efforts, such as pursuing a Joint Venture with the 

Marine Corps in Joint Light Tactical Vehicle (JL TV), and leveraging a multiplatform capability in the Ground Combat Vehicle (GCV), represent the Army's 

commitment to the judicious use of taxpayer money. The Army will continue to 

gain efficiencies through its modernization efforts. 

When possible, the Army makes modernization programs more efficient, 

effective, and less costly by applying a multi-year procurement schedule. 

Providing contractors and vendors the ability to forecast their production 

schedules makes them more efficient. This in turn allows vendors to pass their 

savings onto the Army by providing their products and services at a lower 

overall cost. A multi-year procurement schedule also stabilizes the contractor 

workforce and reduces the cost and time needed to create contracts on an 

annual basis. In the case of the CH-47, multi-year production provided for a 

projected cost savings of $810 million over a five-year period. This represents 

a cost avoidance of 19.2 percent. 

Sequestration and a CR undermine these efficiencies. Drastic, programwide cuts resulting from Sequestration will ultimately increase the price of every 

Army procurement and modernization program, compounding the monetary 

constraints imposed upon both the Army and our industrial base partners. The 

end state would be a less-modernized force at an increased cost - an inefficient 

and wasteful use of taxpayer dollars. 

3 
88 

The Decade-Long Effect 

The effects of Sequestration upon the Army's program and 

modemization strategy are not just immediate, but will last into the next decade. 

The Army will look to balance these reductions across our readiness, 

manpower, and capital investment accounts to provide a capable and ready 

Force. With a decreased budget, savings must initially come from the 

readiness and capital investment accounts, devastating the modernization 

program. 

Inflexible and severe budget restrictions may cause procurement 

objectives to fall below what is required to sustain production lines or impede 

the ability to surge for contingency operations. The resultant quantity 

restrictions will result in price increases that may render systems unaffordable. 

As less cost effective programs are terminated and production lines are closed, 

capability gaps grow larger, with little to no ability to ramp up production or 

mitigate the risk posed by these gaps. 

Budget restrictions may also force the Army to divest older systems and 

niche capabilities to reduce maintenance costs, without procuring sufficient 

replacement quantities. This not only imposes risk in equipping and training the 

force, but when combined with the aforementioned capability gaps, results in a 

less capable, less trained, less effective force in the out years. 

A significant portion of the Army budget is dedicated to our people; 

however, it takes time to realize savings from manpower. Programmatic 

realities demand that in the long term, the Army must balance cuts across end 

strength as initial savings come mostly from readiness and capital investment 

accounts. The Army may have to reduce an additional 100,000 personnel 

4 
89 

across the Active Component, Army National Guard, and U.S. Army Reserve. 

This is additive to the 89,000 personnel the Army is already reducing due to the 

Budget Control Act of 2011. Cuts to personnel of this magnitude send the 

wrong message to the Soldiers, Civilians, and Families who have sacrificed so 

much over nearly twelve years of war. Future recruits and their Families will 

see that after our Army asks them to serve and sacrifice for the Nation during 

war, they cannot count on their country to reciprocate during peace. 

Impacts to training, such as curtailing 80 percent of training for all ground 

forces and cancelling all but one of our brigade-level training center rotations for 

non-deploying forces, will begin to manifest immediately; others compound over 

time. For example, at the U.S. Army Aviation Center of Excellence (USAACE), 

Sequestration will result in a reduction of approximately 37,000 flight hours. By 

the end of this fiscal year, there will be a backlog of over 500 students, which 

will take over two years to reduce. At end of FY14, the backlog will grow to 

over 1,000 students. To cope with reduced funding, USAACE will be forced to 

slash contracts, reducing the number of instructor pilots and maintenance 

technicians - a process that is already underway. Sequestration and CR 

compound this problem over time. Over the next decade, the problem becomes 

dramatically more expensive as the number of pilots awaiting training grows 

exponentia lIy. 

Initially, the backlog and reduction in training will result in a shortage of 

junior aviator leadership in our Combat Aviation Brigades. As the shortfall in 

training continues, the gap of aviators will grow to the mid-grade ranks. This 

has a lasting and direct impact upon the readiness of our Aviation formations. 

5 
90 

The Army will always strive to be a good steward of the taxpayer dollar. 

We will continue to find efficiencies in our modernization programs, leveraging 

efficient processes and Joint/multi-role platforms, while simultaneously seeking 

multi-year procurements that bring down the cost per unit. Despite our best 

efforts, the combined effect of the CR and Sequestration undermines these 

endeavors. The result is lasting, not just on the current fiscal year, but for the 

next decade and beyond, putting every one of the Army's major investment 

priorities in jeopardy. While the Army requests the authority to move funding 

within and across appropriations, even that option is insufficient to avert 

significant risk to readiness and will force us to reconsider the Army's ability to 

execute the Defense Strategic Guidance. 

Mr. Chairman, Members of the Subcommittee, I thank you again for your 

unwavering support of the men and women of the United States Army, Army 

Civilians, and their Families. It is an honor for me to serve this great Nation and 

to stand alongside those who have sacrificed so much over the past decade of 

war. 

6 
WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

FEBRUARY 28, 2013 

(93) 

RESPONSES TO QUESTIONS SUBMITTED BY MS. SANCHEZ 

Secretary STACKLEY. In examining the small business industrial base that supports the DON, we identify small business opportunities in two categories, inaccessible and accessible small business markets. The inaccessible small business markets are those where the prime contractor small business industry capacity and capability to perform is insufficient or non-existent and provides less than 1 percent 

of the required effort. Examples of this market, within the Navy, include nuclear 

and non-nuclear shipbuilding, submarine production, guided missile production, and 

military aircraft manufacturing among others. Across the Federal marketplace, of 

the thousands of product service code areas approximately 200 fall into this category. In Fiscal Year 2012, the DON awarded contracts totaling $85.69 billion. Of 

this, $25.85 billion was in the inaccessible small business marketplace. 

The accessible small business marketplace was $59.41 billion. Small business was 

awarded $13.32 billion or 22.22 percent of these awards which was the reference 

point I used during my remarks. When including both the inaccessible and accessible small business markets, small business attainment for the DON was 15.59 percent. The Navy is committed to maximizing accessible small business market opportunities and has exceeded 20 percent in this area for the past four (4) years as illustrated in the table below. 

In 2012, the Department of Defense (DOD), as reported by the U.S. Small Business Administration (SBA), achieved a small business subcontracting performance 

of 35.2 percent. This only accounts for first tier small business subcontractors. Small 

business also plays critical supply chain roles at the second, third and fourth tier 

of many of our contracts. The current available subcontract reporting system however, does not specifically breakout each service component’s share of the aforementioned report because many of our largest prime contractors have multiple contracts 

with each service. An example of this would be Lockheed Martin and the Joint 

Strike Fighter (F–35) program which is providing this advanced fighter jet to both 

the Department of the Navy and the Air Force and under the provisions of the Comprehensive Subcontracting Program (CSP) reports one summary small business subcontracting report to DOD. These large prime contractors dominate the inaccessible 

small business market I previously described and it is through these and many 

other subcontracting opportunities where small business continues to provide critical support to our programs. I am very confident that the 20 percent figure I spoke 

of as Navy’s share within subcontracting is a conservative figure especially when 

we account for second through fourth tier small business subcontractors not reflected in the figures captured in DOD’s report to the SBA. [See page 16.] 

Department of the Navy Accessible Small Business Market Performance 

FY2009–FY2012 

Fiscal Year Total DON 

Awards 

Total Small 

Business 

Awards 

Total Small 

Business 

Percentage* 

Small Business 

Accessible Market 

Percentage 

2012 $85.69B $13.3B 15.59% 22.22% 

2011 $92.3B $14.2B 15.41% 23.97% 

2010 $79.7B $14.1B 14.61% 28.47% 

2009 $87.8B $13.8B 17.57% 26.60% 

*including inaccessible market areas 
94 

Secretary STACKLEY. But, it is vital to note that a one word response does a great 

disservice to the hundreds of thousands of service members, Government civilians, 

and contractors who work tirelessly to support our Nation’s defense. While each of 

us may be aware of rare occurrences of the type you mention, our responsibility is 

to take action and we do—just witness the Navy’s recent action to pursue prosecution of those who violated the public trust in Rhode Island and Southern California. 

I, for one, can count one hundred fold the times I’ve seen both military and civilians 

standing watch, standing tall, working impossibly long hours to ensure we are 

spending the budget authorized and appropriated by Congress in the most responsible way possible. For every suggestion of waste or fraud, I can give you many examples of innovative savings and extraordinary efforts of our people to be responsible stewards of the taxpayer’s money. Moreover, as you know, we have been working for the last three years to pursue further efficiency efforts instigated by Secretary Gates and Secretary Panetta. The implication that elimination of waste or 

abuse or further efficiencies can make a serious dent in the impacts of the shortfalls 

associated with the continuing resolution or sequestration is totally false. [See page 

18.] 

Admiral MYERS. But I would like to echo Secretary Stackley’s response and emphasize that the Navy takes very seriously the responsibility of being good stewards 

of the taxpayer’s money, and our 2013 budget submission makes best use of our resources while still meeting the requirements of the defense strategic guidance. [See 

page 18.] 

General WISSLER. I concur with Secretary Stackley’s and VADM Myers’ responses. 

The Marine Corps values every dollar entrusted to us in order to be the Nation’s 

expeditionary force in readiness. Any abuse of this trust is not tolerated in the Marine Corps. We are proud of our reputation as the ‘‘frugal force’’ and don’t tolerate 

actions at any level that run counter to this moniker. Our FY 2013 budget submission is ‘‘what we need,’’ not simply what we want, and we are committed to the precise application of those resources to meet the defense strategic guidance. [See page 

18.] 
QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

FEBRUARY 28, 2013 

(97) 

QUESTIONS SUBMITTED BY MR. TURNER 

Mr. TURNER. How would the Army’s planned growth of an additional combat aviation brigade be impacted by this current budget uncertainty? 

Secretary SHYU. To comply with the Budget Control Act of 2011, the Army continues to plan the drawdown to 490,000 Active Component spaces and assess our 

force structure today to achieve the right force mix for required missions. The 4th 

Infantry Division Combat Aviation Brigade (the additive CAB) remains programmed 

in the force and the Army remains committed to activating the CAB at Fort Carson 

with the Brigade Headquarters, General Support Aviation Battalion, and Aviation 

Support Battalion in April 2013, and the Assault Helicopter Battalion and two Attack Battalions in the summer of 2014. 

Mr. TURNER. How did the Army determine that 1,100 companies (over a third of 

the critical vendor industrial base) were in moderate to high risk of bankruptcy? 

Secretary SHYU. Our initial assessment in February showed that sequestration and the continuing resolution could result in the loss of over $7.1 billion, 17,800 job 

across over 200 programs impacting 39 States and DC. As we adapt to a rapidly 

shifting fiscal environment, in the current year and beyond, we will continue to 

closely monitor projected impacts to the industrial base. 

Mr. TURNER. If the continuing resolution is in place for a full year, what impact 

does this have on execution of the Joint Light Tactical Vehicle program? 

Secretary SHYU. The JLTV Joint Program Office has made substantial progress 

in streamlining the program timeline, and both the Army and Marine Corps remain 

fully committed to the program. The Engineering and Manufacturing Development 

(EMD) Phase of the program is proceeding well, and the Department is making 

every effort to keep it on schedule in order to meet the proposed Milestone C and 

Low Rate Initial Production contract award in Fiscal Year 2015 (FY15), despite sequestration. A continuing resolution in FY14 would reduce the U.S. Army’s FY14 

program by an additional $18 million, beyond the program reductions already taken 

as a result of sequestration and Congressional marks in FY13. Due to the cumulative program budget reduction effects, the program office would no longer observe 

potential non-EMD vendor tests, including Limited User Tests. Also the test schedule would have to be extended, since a majority of FY14 Funds are for testing. This 

will likely delay the Milestone C decision and Low Rate Initial Production award 

until later in FY16. 

Mr. TURNER. Are any PPAs exempt from sequestration and on what grounds? 

Secretary SHYU and General BARCLAY. No Procurement, Research, Development, 

Test & Evaluation, or Military Construction PPAs (Programs, Projects or Activities) 

are exempt from sequestration. 

Mr. TURNER. How will the CR and sequestration impact your major defense acquisition programs and will these reductions require a change in national military 

strategy? 

Secretary SHYU and General BARCLAY. With the President’s signature on the Fiscal Year 2013 (FY13) Consolidated and Further Continuing Appropriations Act, 

2013, on March 26, the continuing resolution is no longer in place. As such statements related to a full year continuing resolution no longer apply and will not be 

addressed in this response. The primary impacts of the sequestration related to 

FY13 across our Major Defense Acquisition Programs will be to cause inefficiencies 

in program execution and resultant higher cost to the taxpayer for those programs. 

Our programs still in development will experience delays to planned schedules, 

which will extend the length of programs. Extending programs leads to higher development costs than originally planned. For our procurement programs, the primary impacts in FY13 will be: quantity reductions resulting in increased unit price, 

delayed equipment fielding; delays to cost savings initiatives that will increase the 

cost to sustain our systems when fielded; and impacts to future readiness due to 

deferring obsolescence and reliability upgrades. Additionally, our ability to effectively plan programs into the future is adversely impacted because of the continued 

uncertainty of future budget top lines and because of an FY14 budget that does not 

fully consider the impact of the late FY13 appropriation and sequestration 

reductions. 
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From our perspective, the sequestration reductions in FY13 will not require a 

change in the national military strategy. 

Mr. TURNER. Please describe how the effects of sequestration differ for major defense acquisition programs in different stages of development and fielding? For example, would it be less disruptive for programs still in development, which are primarily based on a level of effort, than those in production? 

Secretary SHYU and General BARCLAY. In general, the earlier a program is in the 

acquisition lifecycle, the less disruptive funding reduction is likely to be in the near 

term. However, if system engineering is reduced and the program is not re-planned, 

then this will pose much greater risk to the program in follow-on phases. Unless 

the program is responding to an Urgent Operational Need Statement, most early 

contractual efforts are based on some type of cost type contract vehicle, in which 

the Government and the contractor share in the risk. Later in development, contract 

vehicles for operational testing or for fielding efforts become more fixed price oriented in general, where the contractor takes on more risk than the Government 

side. 

For example, a program that is pre-Milestone B is more likely to absorb changes 

in funding than a post-Milestone B program, once a program baseline has been established. As we continue to assess the impacts of sequestration, a significant concern is whether funding reductions result in a Nunn-McCurdy statutory breach or 

its equivalent for a Major Automated Information System program. These results 

would significantly affect the Army’s ability to field equipment for Soldiers. Under 

sequestration, reductions to programs in procurement would likely result in reductions to procurement quantities, which increase unit costs. Such reductions may result in a production line break or other industrial base impacts—particularly to second and third tier vendors—and delayed deliveries of systems to the Warfighter. 

Mr. TURNER. Will the potential effects of sequestration differ for major defense acquisition programs using different contract types and acquisition strategies (fixedprice v. cost-reimbursement; multiyear procurement v. annual procurement)? 

Secretary SHYU and General BARCLAY. The effects of sequestration on major defense acquisition programs depend on a range of factors, to include the program’s 

acquisition strategy, life cycle phase, and contract type. Contract types are selected 

to fit the profile of each program and must comply with governing law and policy. 

Generally, modifications to fixed-price and multiyear contracts may require renegotiation and may result in cost penalties, which results in much less flexibility as 

the Army implements funding reductions. 

Long-term sequestration cuts are generally likely to increase the schedule for delivery under fixed-price contracts. As a result, total development cost or the cost of 

each individual production article may increase. Delays may ultimately delay the 

fielding of equipment to the Warfighter. 

Fiscal Year 2013 sequester impacts to annually funded programs will result in: 

1) extension of planned multiple year schedules and 2) increased estimated life cycle 

cost, which takes into account reduced contract quantities and disruptions to 

planned events on each program’s schedule. The cost to field will increase as the 

timelines for delivery are drawn out as a result of funding reductions. 

Mr. TURNER. Would large numbers of fixed price or multiyear procurement contracts need to be renegotiated due to sequestration? 

Secretary SHYU and General BARCLAY. Where possible, programs have taken precautions to avoid significant renegotiation of procurement contracts due to sequestration in Fiscal Year 2013. For example, the multiyear production contract for the 

Tube Launched, Optically-Tracked, Wire-Guided Missile was affected by sequestration reductions this year. The Army was able to internally reprogram funds to avert 

impacts to the multiyear contract and maintain projected cost savings. In other instances, the Army uses quantity-range-option pricing on fixed-price contracts. While 

this has not avoided the increased unit prices associated with lower quantities, it 

has maintained flexibility to address sequestration reductions without renegotiations. 

With the estimated cuts for FY13 and anticipated reductions in FY14, some 

multiyear contracts may have to be renegotiated absent relief. For example, Program Executive Office Ground Combat Systems has three Acquisition Category 1D 

programs that are either fixed-price or cost-plus incentive fee type contracts that 

were awarded as incrementally funded contracts spanning multiple years. Contract 

plans for each are being revised to account for reduced work in the next year as 

a result of a reduction in planned funding. Work is being adjusted for the next several years within a revised schedule. Any change made to incentive fee contracts 

must include a review of the incentives to ensure that such measures are not inadvertently implicated due to a revision in contract scope. 
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Mr. TURNER. Please provide details on the major defense acquisition programs 

that would experience any delays in fielding needed capabilities to the warfighter 

as a result of the effects of sequestration and yearlong CR? 

Secretary SHYU and General BARCLAY. Sequestration reduces the amount of Second Destination Transportation (SDT) funding, which inhibits the ability of the 

Project Managers (PMs) to ship vehicles. Resolution would require adjusting/realigning the distribution schedules to ship the systems later to minimize PM risks, although potentially delaying delivery of vehicles to the Warfighter. Delays include: 

• Assault Breacher Vehicle currently being fielded to Korea could be delayed beyond June or July 2013 • Stops shipment of Abrams Tanks and Bradleys from Fort Hood to the Fielding 

sites (impacts Initial Fielding of M1A2 SEP to the 155th Mississippi Army National Guard (ARNG) and includes the Korea and Germany Rotational sets) • Stops shipment of National Guard Equipment from their home station Maneuver Area Training and Equipment Site to Gowan Field/Camp Shelby for New 

Equipment Training (NET) this Summer—Impacts 155th and 116th ARNG • Stops shipment of Abrams/Bradley spares to keep the unit’s authorized stockage 

list at 100 percent during NET—Impacts both the 155th Fielding/NET and 

116th NET 

The following examples of potential delays in fielding needed capabilities to the 

Warfighter are driven by sequestration: 

• Delay six Lightweight Counter Mortar Radar (LCMR) systems to two Brigade 

Combat Teams (BCTs). 

• Delay one Counter Fire Radar system to one BCT. 

• Delay fielding one Sensor Command and Control Shelter required for counterrockets, artillery, and mortars (C–RAM) for one battalion. 

• Loss of 32 Modern Man-stations for the Patriot Modifications program. 

• Loss of 3 AH–64 Apache Remanufactured aircraft. 

• Loss of 1 AH–64 Apache New Build aircraft. 

• Loss of 2 AH–64 Apache Radar Electronics Units and subsequent overall unit 

cost increase for remaining quantity. 

• The fielding decision for Release 2 of the Distributed Common Ground SystemArmy (DCGS–A) will be delayed six months and only Army Force Generation 

(ARFORGEN) units would be equipped with the latest version of DCGS–A. 

Mr. TURNER. What measures will you take to mitigate the impact of sequestration 

on counter-IED efforts that could potentially diminish the Department’s flexibility 

and increase risks to rapidly respond to unanticipated requirements? 

Secretary SHYU and General BARCLAY. The Army is assessing funding for counterIED efforts in accordance with the priorities established by the Combatant Commands and the Army Service Component Commands. Additionally, the Warfighter 

Senior Integration Group, chaired by the Deputy Secretary of Defense, provides Office of Secretary of Defense level synchronization, prioritization and oversight not 

only for counter-IED efforts, but all requirements that need rapid response by Department of Defense. This is the means by which the Army will ensure any impact 

of sequestration is balanced against operational requirements and fiscal realities. 

This process allows senior Army leaders visibility, flexibility and access to a variety 

of means to address and minimize the impacts of budgetary challenges upon any 

requirement. 

Mr. TURNER. How will you make cuts to major defense acquisition programs without forcing them into a Nunn-McCurdy breach? Should Congress modify the requirements that currently apply when a Nunn-McCurdy breach occurs? 

Secretary SHYU and General BARCLAY. We do not anticipate any Nunn-McCurdy 

breaches to our Major Defense Acquisition Programs and Major Automated Information System programs in Fiscal Year 2013 as a result of the reduction attributable 

to sequestration this year. However, in subsequent years whether or not a Program 

will incur a Nunn-McCurdy breach will not be a significant factor in selecting Programs for reductions. Cuts will be distributed on a requirements basis with cost implications and collateral costs (e.g. cancellation costs or breakage to other Programs) 

being factors. 

Exempting the Department from Nunn-McCurdy reporting responsibilities caused 

by CR or sequestration would be beneficial in reducing Program workloads. 

Mr. TURNER. How would sequestration and a yearlong CR scenario impact your 

ability to fund weight reduction initiatives for personnel protection equipment? How 

would this impact the PPE industrial base, e.g. body armor, night vision devices, 

and other critical warfighter equipment? 

Secretary SHYU and General BARCLAY. Sequestration may affect ongoing development efforts regarding soft armor ballistic fibers and hard armor ballistic plates. 
100 

The Soldier Protection System program entry into the Engineering Manufacturing 

and Development phase could be delayed up to one year. 

There is no immediate impact to the Industrial Base for ongoing procurement and 

fielding of head, eye, pelvic, torso armor, and other personal protective equipment. 

Funding is currently at the minimum sustaining rate for maintaining two qualified 

armor vendors in hard and soft armor solutions. Further funding reductions may 

place the Army’s ability to maintain competition (and expertise) at risk. 

Projected Fiscal Year 2013 orders from the Army do not support minimum 

sustainment rates for two vendors for night vision image intensification tubes. Further funding decreases from sequestration may stress image intensification tube 

manufacturing and ultimately drive up system costs if competitive pressure is lost 

due to the loss of one vendor. However, the Office of the Secretary of Defense ‘‘Report to Congress on the Assessment of Industrial Base for Night Vision Image Intensifier Sensors’’ completed in September 2012 concluded that Warfighter readiness 

would not be negatively impacted if the industrial base was further reduced. 

Mr. TURNER. How would sequestration and a yearlong CR scenario impact the 

V–22 program? Would there be impacts to the V–22 industrial base? 

Secretary STACKLEY. Sequestration will reduce the program’s available funding 

(FY13 and prior year unobligated funds) by approximately 10 percent although the 

exact percentage has not yet been determined. As a result, the following efforts will 

be deferred: 1) life cycle cost reduction and obsolescence initiatives (potentially 

grounding aircraft due to unavailability of parts), 2) incorporation of reliability and 

other improvements to production aircraft through FY 2014 (resulting in lost savings in operations and support costs), 3) procurement of peculiar training equipment 

(adding significant costs due to in-aircraft training), 4) engineering development of 

reliability and other improvements until FY 2014 (further deferring savings in operations and support costs), and 5) standing up depot repair capability (which would 

improve readiness and reduce costs). If there was a yearlong CR without anomaly 

language to permit the planned multiyear contract to be awarded, the nearly $1 billion in savings assumed in the FYDP would not be realized. 

The impact to the V–22 industrial base has been minimized in FY 2013 with the 

plan to definitize the follow-on multiyear procurement contract in May. The amount 

of future year budget reductions for the program has not yet been determined so 

those impacts, including impacts to the V–22 industrial base, cannot be addressed 

at this time. 

Mr. TURNER. How would sequestration and a yearlong CR scenario impact your 

ground combat and tactical vehicle strategy? What programs will be delayed or impacted by this budget uncertainty? 

Secretary STACKLEY. Sequestration and the continued budget uncertainty will 

have varying impacts on each of our Ground Combat and Tactical Vehicle programs. 

While the specific impact on each program will not be known until the Marine Corps 

receives the final FY 2013 appropriation and future year appropriations become 

more predictable, we anticipate schedule delays, reduced acquisition objectives, postponed modernization and upgrades, and subsequent cost increases due to delayed 

programs and decreased procurement quantities. In the case of the Joint Army/Marine Corps Joint Light Tactical Vehicle (JLTV) program, the initial operational capability (IOC) may be delayed by one year with the full operational capability (FOC) 

may be delayed by two years. This also slows the procurement plan and leaves a 

shortfall in the inventory which will need to be addressed at the end of the FYDP. 

That delay, in turn, risks the procurement of the Marine Corp Amphibious Combat 

Vehicle (ACV) as the Marine Corps strives to align their procurement strategy and 

optimize the cost for each major program. Other potential impacts include the delayed procurement of safety and performance modifications for Medium Tactical Vehicle Replacement (MTVR) and Logistics Vehicle Systems Replacement (LVSR), delayed upgrades on the M1A1 tank, and the delay or cancellation of engineering 

change proposals to Light Armored Vehicle (LAV) further compromising the Marine 

Corp’s amphibious capability while increasing maintenance costs while awaiting the 

systems’ replacement by the ACV. 

Mr. TURNER. What programs do the Marine Corps anticipate it will have to cancel 

or extend due to the budget uncertainty? 

Secretary STACKLEY. While the Marine Corps has not cancelled or extended any 

programs as a result of the FY 2013 budget decisions, the uncertainty associated 

with FY 2014 and outyear budgets will require the Marine Corps to continually review and adjust their program plans consistent with the changing budget environment. Decreasing budgets within ongoing acquisition programs will necessarily lead 

to a review of each program’s ability to execute approved cost, schedule and performance parameters. Programs such as JLTV, P–19 Firetruck replacement, 
101 

G/ATOR and CAC2S could all see schedules extended depending on future year 

budget decisions. 

Mr. TURNER. If the continuing resolution is in place for a full year, what impact 

does this have on the execution of the Marine Personnel Carrier and Joint Light 

Tactical Vehicle program? 

Secretary STACKLEY. With the enactment of HR933, the risk of a full year continuing resolution has been eliminated. The Marine Corps is committed to executing 

these programs as planned, but both the Marine Corps Personnel Carrier (MPC) 

and the Joint Light Tactical Vehicle (JLTV) programs will continue to be under 

budgetary pressure resulting from future year budget uncertainty. 

Mr. TURNER. Are any PPAs exempt from sequestration and on what grounds? 

Secretary STACKLEY and Admiral MYERS. Original OMB guidance directed O&M 

program, project, and activity (PPA) detail to be at the Appropriation level and Investment to be at the Line Item level of detail. MILPERs accounts were excluded 

from sequestration. 

To date, no exclusions have been made for sequestration with the exception that 

the Navy expects to receive guidance from the Director of National Intelligence 

(DNI) that classified efforts will not be subject to furlough. The Navy may have classified efforts in its Operation and Maintenance accounts that are predominantly civilian personnel efforts that may not be able to take an assigned sequestration cut 

without causing a furlough. In these cases, the DON will have to exempt portions 

of these sequestration cuts to classified programs and take the cuts elsewhere. Once 

the Navy has processed all of the impacts to H.R 933 and then applied sequestration 

impacts, we will know more definitively if any classified efforts required relief. 

Mr. TURNER. How will the CR and sequestration impact your major defense acquisition programs and will these reductions require a change in national military 

strategy? 

Secretary STACKLEY and Admiral MYERS. Sequestration and the continued budget 

uncertainty will have varying impacts on each of the Department of the Navy’s programs. While the specific impact on each program will not be known until the Department receives their final FY2013 appropriation including sequestration allocations and future year appropriations become more predictable, we anticipate schedule delays, reduced acquisition objectives, postponed modernization and upgrades, 

and the subsequent cost increases due to delayed programs and decreased procurement quantities. In addition, certain programs will require restoration of funds in 

future years in order to deliver end items. The strategic impact of any program adjustments and future program affordability will need to be considered as part of the 

SECDEF initiated review of the Department’s Strategic Planning Guidance. 

Mr. TURNER. Please describe how the effects of sequestration differ for major defense acquisition programs in different stages of development and fielding? For example, would it be less disruptive for programs still in development, which are primarily based on a level of effort, than those in production? 

Secretary STACKLEY and Admiral MYERS. The effects of sequestration vary depending on a program’s stage of development and fielding, but also vary from program to program. Sequestration impacts to some naval programs in the development stage will result in loss of capability, while other naval programs will experience a delay in delivery. Most of Navy’s development work is tied directly to acquisition programs of record, consequently, reductions in the development stage will potentially have an impact on their production schedules and costs. 

Mr. TURNER. Will the potential effects of sequestration differ for major defense acquisition programs using different contract types and acquisition strategies (fixedprice v. cost-reimbursement; multiyear procurement v. annual procurement)? 

Secretary STACKLEY and Admiral MYERS. Yes, if sequestration remains in place, 

limited funds could cause the Department to reduce the products and/or services 

being purchased on existing contracts. Limited funds forces the Department to 

prioritize all its requirements, including mission critical programs, then determine 

how much money it has available for those programs. 

From a strict contractual obligation perspective, some types of contract vehicles 

provide the Department with more flexibility than others. Given current regulatory 

requirements, the Department has more flexibility with existing Cost Reimbursement, Indefinite Delivery, Indefinite Quantity (IDIQ) and ‘‘Requirements’’ contracts, 

because they provide the Department with maximum flexibility in avoiding hard 

budget limits. Typically cost reimbursement contracts provide greater flexibility 

than firm fixed price contracts. Through a higher level review, the Department, 

through ASN(RDA), may choose to limit obligations on the cost reimbursement contracts thereby effectively ‘‘stretching out’’ performance and/or contract schedules to 

match limited funds. The amount of the Department’s obligation under a ‘‘Require-
102 

ments’’ contract is the dollar value of each order actually placed under that contract. 

IDIQ contracts have obligation values at the guaranteed minimum amounts and increase only as individual task orders or delivery orders are placed by the Government. While these types of contracts have flexibility, the end result is still less supplies or services for the Government. The amount of obligations under a ‘‘firm fixed 

price’’ contract is the face value of the contract that is fully funded at contract 

award. The Department has less flexibility with existing fixed price contracts, but 

can choose, if it is deemed necessary, to re-negotiate established pricing based on 

its decision to de-scope quantity, capability and breadth of contract performance. 

The Department may also choose to not exercise and or re-negotiate any contract 

options for future supplies and or services. The multiyear contract provides the least 

amount of flexibility for the Department in this sequestration environment. Unlike 

annual contracts, obligations under a multiyear contract must follow the established 

contract terms and conditions to avoid any cancellation payment arrangements established in the contract. 

The actual or potential effects on each program are specific to each program, 

lifecycle phase, funding profile, and contract type, to name a few issues. Each program would be required to assess the impact individually to provide the potential 

effects. 

Mr. TURNER. Would large numbers of fixed price or multiyear procurement contracts need to be renegotiated due to sequestration? 

Secretary STACKLEY and Admiral MYERS. The Navy does not anticipate renegotiating large numbers of fixed price or multiyear procurement (MYP) shipbuilding or 

aviation contracts due to sequestration in FY 2013. No major previously awarded 

fixed price shipbuilding or aviation contracts will require deobligation of funds. Additionally, no current shipbuilding or aviation MYP’s will need to be renegotiated. 

The Marine Corps has not cancelled or extended any programs as a result of the 

FY 2013 budget decisions and does not have any MYP contracts. 

The Navy’s shipbuilding and aviation MYP’s requested in the President’s Budget 

for FY 2013 (the Block IV VIRGINIA Class FY14—FY18 MYP, the DDG 51 

ARLEIGH BURKE Class destroyer FY13–FY17 MYP, and V–22 FY13–17 MYP) 

were authorized in the FY 2013 National Defense Authorization Act (NDAA) and 

approved in the Appropriations Act. 

While the Department of the Navy has not renegotiated any major defense acquisition contracts to date as a result of the FY 2013 budget decisions, the uncertainty 

associated with FY 2014 and outyear budgets will require the Department to continually review and adjust program plans consistent with the changing budget environment. Adjustments to these program plans may require renegotiation of procurement contracts. However, the Department of the Navy will strive to minimize the 

number of these renegotiations to maintain the best value for the limited resources. 

Mr. TURNER. Please provide details on the major defense acquisition programs 

that would experience any delays in fielding needed capabilities to the warfighter 

as a result of the effects of sequestration and yearlong CR? 

Secretary STACKLEY and Admiral MYERS. Sequestration and the continued budget 

uncertainty will have varying impacts on each of the Department of the Navy’s programs. We anticipate schedule delays, reduced acquisition objectives, postponed or 

cancelled modernization and upgrades, together with subsequent cost increases due 

to delayed programs and decreased procurement quantities. The impact on specific 

programs will not be known until the Department completes a strategic management review of DOD strategy, posture and investments and as future year appropriations become more predictable. 

Mr. TURNER. What measures will you take to mitigate the impact of sequestration 

on counter-IED efforts that could potentially diminish the Department’s flexibility 

and increase risks to rapidly respond to unanticipated requirements? 

Secretary STACKLEY and Admiral MYERS. The Navy, as the Single Manager for 

Joint Service Explosive Ordnance Disposal (EOD) Technology and Training, and as 

Single Manager for Joint Service Counter-RCIED Electronic Warfare (CREW) has 

responsibilities to all four military Services for executing counter-IED efforts. The 

Navy continues to support two significant programs that support JS C–IED capabilities: JCREW and Advanced EOD Robotic System (AEODRS). 

The JCREW program of record is supported in the current budget and future 

technical insertions will allow us to respond to unanticipated requirements across 

the FYDP. The modular design of the JCREW counter-IED system will allow rapid 

technology insertion of upgrades to meet emerging RCIED threats. 

The Advanced EOD Robotic System is the future JS EOD robot that will meet 

EOD requirements for safe standoff from IEDs and other unexploded ordnance. This 

system is also being designed in a modular, open architecture to easily allow tech-
103 

nology insertion to address emerging counter-IED requirements for the EOD 

community. 

Counter-IED efforts continue to hold high priority, and where budget lines are 

shared, reductions under sequestration will focus on lower priority areas where possible. As is the case with all urgent needs that arise within the execution year, the 

Department of the Navy will seek to reprogram funds from lower priority projects 

or seek assistance from OSD to meet funding requirements for urgent needs. 

For those ongoing counter-IED efforts, we are reviewing our critical path activities 

and schedules in anticipation of furlough of Government employees. Where necessary, we are modifying scheduled events to account for non-availability of key 

Government personnel due to Government furlough, while still achieving program 

milestones. Additionally, we have already reduced all travel and non-essential training and slowed all obligations to maximum extent in order to conserve funding in 

anticipation of the budget reductions due to the sequestration. 

Mr. TURNER. How will you make cuts to major defense acquisition programs without forcing them into a Nunn-McCurdy breach? Should Congress modify the requirements that currently apply when a Nunn-McCurdy breach occurs? 

Secretary STACKLEY and Admiral MYERS. Whether or not a Program will incur a 

Nunn-McCurdy breach will not be a significant factor in selecting Programs for reductions. Cuts will be distributed on a requirements basis with cost implications 

and collateral costs (e.g. cancellation costs or breakage to other Programs) being factors. Exempting the Department from Nunn-McCurdy reporting responsibilities 

caused by CR or sequestration would be beneficial in reducing Program workloads. 

Mr. TURNER. How would sequestration and a yearlong CR scenario impact the 

procurement of F–35Cs and F–35Bs? Would lower procurement numbers affect the 

strike fighter shortfall? 

Secretary STACKLEY and Admiral MYERS. The Department of the Navy is working 

closely with the F–35 Program Office and the Under Secretary of Defense for Acquisition, Technology and Logistics to assess the impacts of sequestration on the F–35 

program. Currently, the Department is investigating the balance between preserving the development program and maintaining capabilities of Block 2B, Initial 

Warfighting Capability; support and sustainment for all delivered aircraft; preserving production efficiencies and production capacity; and aircraft procurement. 

However, it is probable that sequestration reductions will reduce the number of 

F–35B and F–35C within FY 2013 Low Rate Initial Production (LRIP) 7 quantities, 

thereby increasing unit recurring flyaway costs for all services and partner procurements. We will see a decrease in investment in tooling, redesign for diminishing 

manufacturing sources and out of production parts, and cost reduction initiatives. 

Furthermore, if a furlough of Government workers were to occur and the shutdown 

of military airfields on weekends were to occur, it would significantly slow the execution of the F–35 flight testing and subsequent fielding of capability. 

The Navy actively manages the strike fighter shortfall to minimize impacts in 

each execution year. The projected strike fighter shortfall is a compilation of a number of factors including legacy usage, meticulous management of fatigue life, and 

F–35 procurement. Delays in the F–35 procurement will aggravate challenges in 

meeting inventory requirements. 

Mr. TURNER. Would sequestration and a yearlong CR affect life extension programs for F/A–18s and AV–8Bs resulting in a higher strike fighter shortfall this 

year or in the years ahead? 

Secretary STACKLEY and Admiral MYERS. Yes. Sequestration will have an effect 

in the short term and is expected to exacerbate the long term strike fighter shortfall. Sequestration will cause delays in depot inductions and High Flight Hour inspections which will negatively impact the ability to source Navy and Marine Corps 

squadrons. 

Mr. TURNER. Are any PPAs exempt from sequestration and on what grounds? 

General WISSLER. No Programs, Projects Activities contained within any investment appropriation are exempt from sequestration. Only military personnel accounts have been exempted. 

Mr. TURNER. How will the CR and sequestration impact your major defense acquisition programs and will these reductions require a change in national military 

strategy? 

General WISSLER. In the near-term, sequestration should not have a negative impact to our ground combat and tactical vehicle strategy. These reductions were mitigated by current and prior year assets. 

In the long-term, sequestration will have a negative impact on our warfighting investment portfolio, including several critical vehicle modernization and sustainment 

programs. We have mitigated some of the impact by prioritizing and sequencing our 
104 

investments. For example, we are investing in the Joint Light Tactical Vehicle now 

because it is the most mature capability, followed by investment in the Amphibious 

Combat Vehicle program. These measures, however, cannot fully mitigate the negative effects of sequestration. Our High Mobility Multipurpose Wheeled Vehicle 

(HMMWV), Assault Amphibious Vehicle (AAV), Light Armored Vehicle (LAV), and 

tank modification programs, which are critical to maintaining the operational availability of these vehicles, will likely be slowed significantly. Critical survivability and 

mobility upgrades to the AAV and LAV fleets will be delayed. These delays will ultimately impact our ability to provide Marines with ready, relevant and capable combat systems. 

Mr. TURNER. Please describe how the effects of sequestration differ for major defense acquisition programs in different stages of development and fielding? For example, would it be less disruptive for programs still in development, which are primarily based on a level of effort, than those in production? 

General WISSLER. Sequestration will be disruptive during every phase of the acquisition process. Examples of these disruptions include: 

• Slowing the development and procurement of acquisition programs, increasing 

the total life cycle program cost. 

• Slowing the sundown process on legacy systems, which will ultimately drive up 

current operation and support costs. Sequestration would require investment to 

replace obsolescent parts for legacy systems which are no longer available in the 

market place, further driving up sustainment costs. 

• Investments in new technologies designed to improve efficiencies, such as fuel 

efficiency, lightweight armor, and information technology consolidation, would 

be delayed, negating their corresponding savings and capabilities. 

• Initiatives to increase buying power in all phases of the acquisition process will 

likely be negated by schedule slips. 

• Contraction of the small business industrial base is likely to occur as larger 

firms keep more work in house. 

Mr. TURNER. Will the potential effects of sequestration differ for major defense acquisition programs using different contract types and acquisition strategies (fixedprice v. cost-reimbursement; multiyear procurement v. annual procurement)? 

General WISSLER. Major Defense Acquisition Programs (MDAPs), like any other 

program, would be affected by sequestration. Firm-Fixed Price (FFP) contracts 

would already be fully funded, but options may need to be re-negotiated to buy a 

lesser quantity. Under Indefinite Delivery Indefinite Quantity (IDIQ) contracts, the 

Marine Corps would buy fewer items. This may require a program extension in 

order to buy the total Approved Acquisition Objective (AAO) if additional funding 

is received. Cost type contracts are incrementally funded. If the funding falls short, 

the contract would have to be modified to either extend the schedule or de-scope the 

statement of work. 

Mr. TURNER. Would large numbers of fixed price or multiyear procurement contracts need to be renegotiated due to sequestration? 

General WISSLER. The Marine Corps is not executing any ground multiyear contracts, and any current Firm-Fixed-Priced (FFP) contracts are already fully funded. 

However, any FFP options will have to be reviewed on a case-by-case basis. 

Mr. TURNER. Please provide details on the major defense acquisition programs 

that would experience any delays in fielding needed capabilities to the warfighter 

as a result of the effects of sequestration and yearlong CR? 

General WISSLER. There is no impact of a continuing resolution given the President’s signing of the FY13 DOD appropriations bill. 

Potential long-term sequestration impacts specific to Marine Corps programs 

include: 

• Ground Air Task Oriented Radar (G/ATOR) (ACAT 1C) 

• Delays Initial Operational Capability (IOC) of Block 2 software (SW) counter 

battery development and delays start of Block 4 SW Air Traffic Control development 

• Transition to gallium nitride (GaN) at risk which would negatively impact cost, 

i.e. ‘‘should-cost’’ 

• Reduced system procurements increases production cost, scheduled to end in 

FY20, into FY21 

• Industrial Base: Potential impacts to the GaN supplier base when G/ATOR 

funding is taken in context with other DOD investment reductions in advanced 

radar technologies 

• Common Aviation Command and Control System (CAC2S) (ACAT 1AM) 

• Negative impact on Limited Deployment Unit (LDU) production, and testing 

• Delays Full Deployment and stretches completion of procurement into FY19 
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• Joint Light Tactical Vehicle (JLTV) (ACAT 1D) 

• Delays USMC IOC, Milestone (MS) C, and Full Operational Capability (FOC) 

• Extends USMC procurement past currently scheduled attainment of Approved 

Acquisition Objective (AAO) 

• Army sequestration impacts may contribute to Marine Corps delays 

Mr. TURNER. What measures will you take to mitigate the impact of sequestration 

on counter-IED efforts that could potentially diminish the Department’s flexibility 

and increase risks to rapidly respond to unanticipated requirements? 

General WISSLER. Countering IEDs will remain a priority for the Marine Corps. 

Inherent flexibilities provided under the Budget Control Act will allow the Marine 

Corps to mitigate impacts to CIED programs in FY13 by using available prior and 

current year funding. However, we will not have these same flexibilities in FY14. 

Prioritization and risk reduction decisions on counter-IED efforts in the long term 

will be made in the context of the discretionary cap reductions in the Budget Control Act and their impact on the Marine Corps’ entire procurement portfolio and associated priorities. 

Mr. TURNER. How will you make cuts to major defense acquisition programs without forcing them into a Nunn-McCurdy breach? Should Congress modify the requirements that currently apply when a Nunn-McCurdy breach occurs? 

General WISSLER. Efforts to major defense acquisition programs without forcing 

them into a Nunn-McCurdy breach would include: 

• Reductions to other programs in order to preserve capability provided by Major 

Defense Acquisition Programs (MDAPs) would have to be made based on the 

Service’s priorities and flexibility provided to the Department for the application 

of sequestration. 

• For current MDAPs the Service may de-scope capability to maintain costs within the current Acquisition Program Baseline. 

The Marine Corps recommends language that would recognize the unusual circumstances of MDAP breaches due to sequestration and authorize the Marine Corps 

to restructure and re-baseline in order to establish a new Acquisition Program 

Baseline. 

Mr. TURNER. Would sequestration and a yearlong CR affect life extension programs for F/A–18s and AV–8Bs resulting in a higher strike fighter shortfall this 

year or in the years ahead? 

General WISSLER. Sequestration will cause a fiscal and operational environment 

of ‘‘haves and have-nots’’—the F–35 is no exception. Reducing the funding of the 

F–35 program will impact the development of the combat capabilities the Marine 

Corps needs from the aircraft and/or limit the number of aircraft and related equipment needed to meet operational requirements. For the Marine Corps Air Ground 

Task Force, the Nation’s force in readiness, overall integrated aviation capabilities 

will be degraded in terms of overall survivability, tactical agility, and strategic flexibility due to a diluting of capabilities from a decrease in procurement, sustainment, 

and operational funding. 

Mr. TURNER. How would sequestration and a yearlong CR scenario impact your 

ground combat and tactical vehicle strategy? What programs will be delayed or impacted by this budget uncertainty? 

General WISSLER. In FY13, sequestration should not have a negative impact to 

our ground combat and tactical vehicle strategy. These reductions were mitigated 

by current and prior year assets. 

In the long-term, sequestration will have a negative impact on our warfighting investment portfolio, including several critical vehicle modernization and sustainment 

programs. We have mitigated some of the impact by prioritizing and sequencing our 

investments. For example, we are investing in the Joint Light Tactical Vehicle now 

because it is the most mature capability, followed by investment in the Amphibious 

Combat Vehicle program. These measures, however, cannot fully mitigate the negative effects of sequestration. Our High Mobility Multipurpose Wheeled Vehicle 

(HMMWV), Assault Amphibious Vehicle (AAV), Light Armored Vehicle (LAV), and 

tank modification programs, which are critical to maintaining the operational availability of these vehicles, will likely be slowed significantly. Critical survivability and 

mobility upgrades to the AAV and LAV fleets will be delayed. These delays will ultimately impact our ability to provide Marines with ready, relevant and capable combat systems. 

Mr. TURNER. What programs do the Marine Corps anticipate it will have to cancel 

or extend due to the budget uncertainty? 

General WISSLER. If sequestration were fully implemented, the Marine Corps 

would have to assess every program. Sequestration will cause interruptions during 

program acquisition that increases the total program cost, as schedules slip and 
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delays result in longer contracts, loss of efficiencies, negative impacts on development and production schedules, program restructures and potentially cause NunnMcCurdy breaches. In procurement, existing contracts will have to be renegotiated 

which will prevent the Marine Corps from receiving Economic Order Quantity 

pricing. 

The Marine Corps will also have to sustain legacy systems longer than planned, 

which will ultimately drive up current operation and support costs. We will have 

to shift our attention to developing and replacing obsolescent parts for legacy systems that are no longer available in the market place, which will shift the workforce 

to a focus of reengineering old and inefficient technology (e.g. sustaining 5 legacy 

radar systems will cost more than employing one new Ground/Air Task Oriented 

Radar (G/ATOR)). Finally, technologies designed to improve efficiencies (fuel, lightweight armor, etc.) will have to be postponed, preventing the Marine Corps from 

reaping planned savings while simultaneously driving up costs due to the use of 

older, more expensive technologies. 

Mr. TURNER. If the continuing resolution is in place for a full year, what impact 

does this have on the execution of the Marine Personnel Carrier and Joint Light 

Tactical Vehicle program? 

General WISSLER. With the enactment of the FY13 DOD Appropriations Bill, the 

risk of a full year continuing resolution has been eliminated. Both the Marine Corps 

Personnel Carrier (MPC) and the Joint Light Tactical Vehicle (JLTV) programs will 

continue to be under budgetary pressure resulting from future year budgetary 

uncertainty. 

Mr. TURNER. According to the Commandant’s planning guidance, the Marine 

Corps seeks to develop an expeditionary force capable of forcible entry to support 

the National Military Strategy during emerging conflicts and instabilities. The guidance also indicates that the Marine Corps desires to be a ‘‘middle-weight force . . . 

light enough to get there quickly, but heavy enough to carry the day upon arrival, 

and capable of operating independent of local infrastructure.’’ 

How would sequestration and a yearlong CR scenario affect this planning guidance? What additional risks would the Marine Corps have to assume given this 

budget uncertainty? 

General WISSLER. Despite the effects of sequestration, the Marine Corps will do 

everything in our power to protect enduring U.S. global interests that underpin our 

prosperity. We will meet our responsibilities for rapid response to crises wherever 

they may occur. Still, the Marine Corps’ ability to execute our expeditionary crisis 

response role is based upon one word—READINESS. This requires trained Marines, 

ships at sea, and aircraft in the air. These assets are the foundation of our forward 

deployed and rotational forces. Without them, not only will our forces become hollow 

and unable to respond as we are accustomed to, but we will make enduring national 

interests hollow as well. Insufficient maintenance and operating resources may limit 

the presence of Marines forward, and therefore the ability to intervene when our 

citizens, diplomats, allies or interests are threatened. We will be able to respond to 

crisis as a nation, but our response options will be limited, and our response times 

dramatically slowed. The risk of small-scale crises escalating is increased without 

forces that can rapidly contain them at their lowest levels. Without ready amphibious ships and well-trained Marine units, there will be less engagement with allies 

and partners, leading to decreased deterrence for small scale conflict. Without ready 

Marines, our Nation will forfeit a primary political-military tool that helps to protect 

U.S. interests, prevent conflict, and enable our joint forces in war. 

Mr. TURNER. What impacts would be associated with the Procurement, Marine 

Corps account? 

General WISSLER. Potential sequestration reductions distributed across the Procurement, Marine Corps (PMC) appropriation by line item will have long-term impacts including: 

• Operational Impacts 

Æ Delayed Initial Operational Capability/Full Operational Capability (IOCs/ 

FOCs) 

Æ Unaffordable Approved Acquisition Objectives (AAOs) 

Æ Reduced procurements (resulting in less equipment) 

Æ Delayed reconstitution and reset 

• Cost 

Æ Increased total cost due to decreased competition (i.e. anticipate a reduction 

in industrial base and small businesses) 

Æ Increase unit costs (due to decrease in number of units procured) 

Æ Contract termination costs (when applicable) 
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• Performance/Capabilities 

Æ Postpone modernization/upgrade (resulting in reduced system performance) 

Æ Reduced trade space . . . compromised requirements (resulting from the program being no longer affordable) 

Æ Reduced collective Marine Air Ground Task Force (MAGTF) capabilities 

Æ Retention of legacy solutions 

• Schedule 

Æ Longer production timelines due to phasing of dollars 

Æ Delayed reconstitution and reset 

Æ Delayed fielding 

Æ Delayed technology refresh 

Mr. TURNER. Are any PPAs exempt from sequestration and on what grounds? 

General DAVIS and General MOELLER. Apart from the President’s exemption of 

military personnel accounts, there are no PPAs exempt from sequestration. 

Mr. TURNER. How will the CR and sequestration impact your major defense acquisition programs and will these reductions require a change in national military 

strategy? 

General DAVIS and General MOELLER. The Air Force has only addressed the impacts for FY13. Sequestration cuts to Air Force modernization investments, if applied at the program, project, and activity level as planned, impact every one of the 

Air Force’s acquisition programs. For example, the F–35A low rate initial production 

would see reductions of at least two aircraft from the requested 19 in FY13. Such 

potential reductions not only drive up unit costs—resulting in FY14 production 

funding shortfalls—they also delay follow-on software and flight testing. While the 

disruptions to the detailed planning and execution of the Air Force’s complex investment and modernization programs, such as the F–35 and KC–46, would be significant, the impacts to the industrial base grow in magnitude as the reductions cascade down through the network of companies that support each program. 

The current SECDEF-directed Strategic Choices and Management Review will determine if the impacts of sequestration will require any change to the current Defense Strategic Guidance, and in turn, the National Military Strategy. At a minimum, reductions associated with sequestration will drive the need to prioritize 

within and among the National Military Objectives (Counter Violent Extremism, 

Deter and Defeat Aggression, Strengthen International and Regional Security, and 

Shape the Future Force). As a result, the Air Force has already implemented a series of prudent measures to help mitigate current fiscal year budget risks; however, 

sequestration and other fiscal constraints have already disrupted strategic planning 

efforts and this will cause short-term and long-term effects that will adversely affect 

the Air Force today and for years into the future. These significant fiscal constraints 

require creative and innovative approaches to ensure the Air Force continues to play 

an integral role with Joint and interagency partners as we work together to meet 

national security responsibilities. 

Mr. TURNER. Please describe how the effects of sequestration differ for major defense acquisition programs in different stages of development and fielding? For example, would it be less disruptive for programs still in development, which are primarily based on a level of effort, than those in production? 

General DAVIS and General MOELLER. In general, regardless of program size, programs in earlier stages of their lifecycle have more flexibility to adjust to changes 

in funding by adjusting requirements. Programs nearly complete with development 

or with less-flexible (i.e. fixed-price type) contracts have fewer options to mitigate 

sequestration, which may lead to impacts such as schedule delays or increased costs. 

Mature programs in production with better defined unit costs and production rates 

also have less flexibility to respond to cuts, potentially forcing quantity reductions 

and unit cost increases. 

Mr. TURNER. Will the potential effects of sequestration differ for major defense acquisition programs using different contract types and acquisition strategies (fixedprice v. cost-reimbursement; multiyear procurement v. annual procurement)? 

General DAVIS and General MOELLER. Regardless of contract type, the effects of 

sequestration could drive a descope in program requirements, delays to performance, or termination. While cost-reimbursement type contracts may provide more 

flexibility and quickness to react to changes than fixed-price type contracts; both require modification. For both annual and multiyear procurements, reductions in the 

required number of items or level of service could result in increased unit prices. 

In the case of multiyear procurement, reductions could result in a Government 

breach of contract if the requirements fall below a minimum commitment in the 

contract. 
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Mr. TURNER. Would large numbers of fixed price or multiyear procurement contracts need to be renegotiated due to sequestration? 

General DAVIS and General MOELLER. The Air Force is carefully managing our 

multiyear and large fixed price development, production and sustainment contracts 

to avoid breaks in production or service. Smaller fixed price agreements at the installation-level are the most vulnerable. 

Mr. TURNER. Please provide details on the major defense acquisition programs 

that would experience any delays in fielding needed capabilities to the warfighter 

as a result of the effects of sequestration and yearlong CR? 

General DAVIS and General MOELLER. Sequestration cuts to Air Force modernization investments, if applied at the program, project, and activity level as planned, 

impact every one of the Air Force’s acquisition programs. For example, the F–35A 

low rate initial production would see reductions of at least two aircraft from the requested 19 in FY13. Such potential reductions not only drive up unit costs—resulting in FY14 production funding shortfalls—they also delay follow-on software and 

flight testing. 

Mr. TURNER. What measures will you take to mitigate the impact of sequestration 

on counter-IED efforts that could potentially diminish the Department’s flexibility 

and increase risks to rapidly respond to unanticipated requirements? 

General DAVIS and General MOELLER. The Air Force has largely absorbed sequestration of FY13 funding in ways which avoid impacts to operational capabilities supporting Counter-IED efforts in Afghanistan. Key ISR support such as U–2 Dragon 

Lady, MQ–1 Predator, MQ–9 Reaper, MC–12 Liberty, and Blue Devil Block 1 will 

not have their support to Counter-IED efforts impacted by sequestration. Likewise, 

sustainment of crucial EOD equipment will not be impacted by sequestration. However, sequestration funding reductions will impact the Dismount Detection Radar 

(DDR) development effort; which is being mitigated by delaying delivery of two systems and foregoing some risk reduction testing in lieu of cancelling this important 

capability solution. Although the Air Force is developing and has fielded considerable flexibility in its capabilities, sequestration reductions leave no unallocated 

funding available to rapidly respond to unanticipated Counter-IED requirements 

that cannot be addressed with current systems. 

Mr. TURNER. How will you make cuts to major defense acquisition programs without forcing them into a Nunn-McCurdy breach? Should Congress modify the requirements that currently apply when a Nunn-McCurdy breach occurs? 

General DAVIS and General MOELLER. In all likelihood, the Department will need 

to make cuts to defense acquisition programs that may cause Nunn-McCurdy 

breaches. The Department may be declaring critical breaches on dozens of programs, some from terminations, but many others to the original and current baselines established in the pre-sequestration era. As a result, the required certifications 

and milestone re-approvals may overwhelm OSD and Service personnel. At this 

time we do not recommend modifying Nunn-McCurdy requirements. 

Mr. TURNER. How would sequestration and a yearlong CR scenario impact the 

procurement of F–35Cs and F–35Bs? Would lower procurement numbers results in 

a future strike fighter shortfall? 

General DAVIS and General MOELLER. The Air Force is procuring F–35A aircraft 

and is not procuring F–35B or F–35C aircraft. The Department of the Navy is procuring these versions of the Joint Strike Fighter. 

Mr. TURNER. Would sequestration and a yearlong CR affect life extension programs for F–15s, F–16s, and A–10s resulting in a higher fighter shortfall this year 

or in the years ahead? 

General DAVIS and General MOELLER. F–15: The F–15 does not have a formal 

service life extension program. Scheduled, periodic Programmed Depot Maintenance 

(PDM), which is performed on each F–15 approximately every 6 years, is used to 

repair known service life issues. 

Sequestration will remove 2 (of 75) aircraft from the PDM schedule in FY13. 

These 2 aircraft will be rescheduled for FY14. While this reduction will not cause 

a drastic reduction in aircraft availability or any immediate groundings, it will 

cause a cascade of PDM deferrals. Without additional funding, there will be a ripple 

effect causing at least 1 aircraft from FY14 to be pushed to FY15. The Air Force 

has not yet determined any additional impact of sequestration in the outyears. 

F–16: The F–16 is currently in the Research, Development, Test & Evaluation 

phase of the Legacy Structural Life Extension Program (SLEP). This program will 

extend the certified service life of 300 F–16 aircraft from 8,000 Equivalent Flight 

Hours (EFH) to 10,000 EFH. This translates to an extension of the F–16 service life 

by approximately 8 years in order to provide a viable F–16 fleet until replaced by 

the F–35. 
109 

Sequestration will not have a significant impact on the F–16 SLEP in FY13. The 

program is currently in full scale durability testing as part of the RDT&E phase, 

and fielding of SLEP aircraft will not occur until 2018. The Air Force has not yet 

determined the impact of sequestration in the outyears. 

A–10: The A–10 does not have a formal service life extension program. The 

A–10 Wing Replacement Program (WRP) exists to replace the legacy wings with a 

structurally enhanced form, fit, and function replacement wing that will not need 

inspection for 10,000 flying hours, and will keep the A–10 flying through 2035. 

Sequestration will not have a significant impact on the A–10 WRP in FY13. Congress provided additional funds to maintain the A–10 force structure, and there is 

sufficient funding to procure the maximum number of wings specified in the WRP 

contract. The Air Force has not yet determined the impact of sequestration in the 

outyears. 

Note: As a result of the Consolidated and Further Continuing Appropriations Act 

for 2013, there is no impact to the F–15, F–16, or A–10 programs resulting from 

a yearlong CR. 

Mr. TURNER. What effects could sequestration and a yearlong CR have on the 

military aviation industrial base? 

General DAVIS and General MOELLER. Sequestration is driving significant reductions in Air Force expenditures within an extremely short period of time. These reductions in Air Force spending will negatively impact the industrial base network 

of suppliers on which the Air Force depends for the parts, supplies, and services 

needed to sustain our operational capabilities and infrastructure. The Air Force is 

concerned not only with the impacts but also by the fact that the reductions that 

cause these impacts reduce the ability to mitigate them. 

As part of Air Force actions to immediately reduce spending, the Air Force will 

be flying fewer hours, conducting fewer training exercises, reducing the flow of aircraft into depot maintenance, and deferring maintenance on facilities and equipment. These operational reductions translate immediately into less demand for 

parts, supplies, and services. This rapid and dramatic change in Air Force expenditures challenges our suppliers. For large suppliers with a diverse customer base, the 

consequences may be barely noticeable, no more than a ripple in their financial 

flows. For smaller suppliers whose primary customer is the Air Force, the consequences may be extremely significant, even resulting in a calamitous drop in their 

financial flow that threatens the viability of their company. In a March 13, 2013 

article, Bloomberg reported that an index of 18 small- to mid-size defense contractors has fallen 7.3 percent this year while a corresponding index of the top 10 defense contractors has risen 6.6 percent. 

QUESTION SUBMITTED BY MR. MAFFEI 

Mr. MAFFEI. I represent Hancock Air National Guard Base in Syracuse, NY. Hancock has approximately 400 full-time employees of which 280 are DOD civilians and 

120 Active Guard reservists. This means approximately 70 percent of the base’s fulltime staff will be furloughed in the coming months. Is that percentage on par with 

other similar Air National Guard units or is Hancock more severely impacted than 

other units? Can you also address any other impacts on acquisition, programming 

that sequestration may have on the MQ–9 Reaper training mission at Hancock Air 

Base? 

General DAVIS and General MOELLER. Furloughs if implemented will be in accordance with the SECAF Fiscal Year 2013 Sequestration Guidance Memorandum dated 

11 Mar 2013 and NGB guidance for Administrative Furlough dated 1 March 2013, 

provided by NG–J1–TN. Based on this guidance it is likely that all Air Technicians 

will be furloughed for some yet-to-be-determined number of days between now and 

the end of this fiscal year, with very few exceptions. Air National Guard full-time 

workforce consists of 62% Title 32 civilian employees overall. The 174 ATKW fulltime force structure is consistent with the ANG full-time force structure. 

There will be no foreseeable acquisition impact at Hancock Air National Guard 

Base as the acquisition process is complete for the MQ–9 RPA mission performed 

by the 174th FW. 

The Air Force is still working to determine and minimize the impacts of sequestration upon operations. 

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