```

[Senate Hearing 114-204, Part 3]
[From the U.S. Government Publishing Office]

                                               S. Hrg. 114-204, Pt. 3

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2016 AND THE FUTURE YEARS DEFENSE PROGRAM

=======================================================================

                                HEARING

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1356

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2016 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               ----------                              

                                 PART 3

                    READINESS AND MANAGEMENT SUPPORT

                               ----------                              

                      MARCH 11, 25; APRIL 22, 2015
                      
                      
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        

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                      COMMITTEE ON ARMED SERVICES

                     JOHN McCAIN, Arizona, Chairman

JAMES M. INHOFE, Oklahoma            JACK REED, Rhode Island
JEFF SESSIONS, Alabama               BILL NELSON, Florida
ROGER F. WICKER, Mississippi         CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          JOE MANCHIN III, West Virginia
DEB FISCHER, Nebraska                JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas                 KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota            RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa                     JOE DONNELLY, Indiana
THOM TILLIS, North Carolina          MAZIE K. HIRONO, Hawaii
DAN SULLIVAN, Alaska                 TIM KAINE, Virginia
MIKE LEE, Utah                       ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina       MARTIN HEINRICH, New Mexico
TED CRUZ, Texas

                   Christian D. Brose, Staff Director

               Elizabeth L. King, Minority Staff Director

                                 ______

            Subcommittee on Readiness and Management Support

                 KELLY AYOTTE, New Hampshire, Chairman

JAMES M. INHOFE, Oklahoma            TIM KAINE, Virginia
DEB FISCHER, Nebraska                CLAIRE McCASKILL, Missouri
MIKE ROUNDS, South Dakota            JEANNE SHAHEEN, New Hampshire
JONI ERNST, Iowa                     MAZIE K. HIRONO, Hawaii
MIKE LEE, Utah                       MARTIN HEINRICH, New Mexico

                                  (ii)

                            C O N T E N T S

                              ----------                              

                             march 11, 2015

                                                                   Page

Military Construction, Environmental, Energy, and Base Closure 
  Programs.......................................................     1

Conger, John C., Performing the Duties of Assistant Secretary of 
  Defense, Energy, Installations and Environment.................     5
Hammack, Hon. Katherine G., Assistant Secretary of the Army, 
  Installations, Energy and Environment..........................    23
McGinn, Hon. Dennis V., Assistant Secretary of the Navy, Energy, 
  Installations and Environment..................................    32
Ballentine, Hon. Miranda A. A., Assistant Secretary of the Air 
  Force, Installations, Environment and Energy...................    39

Questions for the Record.........................................    69

                             march 25, 2015

The Current State of Readiness of U.S. Forces....................    75

Allyn, General Daniel B., USA, Vice Chief of Staff, U.S. Army....    79
Howard, Admiral Michelle J., USN, Vice Chief of Naval Operations, 
  U.S. Navy......................................................    88
Paxton, General John M., Jr., USMC, Assistant Commandant, U.S. 
  Marine Corps...................................................    94
Spencer, General Larry O., USAF, Vice Chief of Staff, U.S. Air 
  Force..........................................................   102

Questions for the Record.........................................   131

                             april 22, 2015

Reform of the Defense Acquisition System.........................   163

Shyu, Hon. Heidi, Assistant Secretary of the Army for 
  Acquisition, Logistics, and Technology.........................   165
Stackley, Hon. Sean J., Assistant Secretary of the Navy for 
  Research, Development and Acquisition..........................   169
LaPlante, Hon. William A., Assistant Secretary of the Air Force 
  for Acquisition................................................   176

Questions for the Record.........................................   204

                                 (iii)

 

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2016 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              

                       WEDNESDAY, MARCH 11, 2015

                           U.S. Senate,    
                  Subcommittee on Readiness
                            and Management Support,
                               Committee on Armed Services,
                                                    Washington, DC.

MILITARY CONSTRUCTION, ENVIRONMENTAL, ENERGY, AND BASE CLOSURE PROGRAMS

    The subcommittee met, pursuant to notice, at 2:32 p.m. in 
room SH-216, Hart Senate Office Building, Senator Kelly Ayotte 
(chairman of the subcommittee) presiding.
    Committee members present: Senators Ayotte, Rounds, Ernst, 
Kaine, Hirono, and Heinrich.

      OPENING STATEMENT OF SENATOR KELLY AYOTTE, CHAIRMAN

    Chairman Ayotte. Good afternoon. Today, the Readiness and 
Management Support Subcommittee meets to receive testimony on 
military construction, facility sustainment, environmental and 
energy programs of the Department of Defense. Senator Kaine and 
I look forward to working with you very much this Congress, as 
we have the opportunity of leading this important subcommittee 
of the Armed Services Committee.
    We are joined today by Mr. John Conger, who is performing 
the duties of Assistant Secretary of Defense for Energy, 
Installations and Environment; the Hon. Katherine Hammack, 
Assistant Secretary of the Army for Installations and 
Environment; the Hon. Dennis McGinn, Assistant Secretary of the 
Navy for Energy, Installations, and Environment; and the Hon. 
Miranda Ballentine, the Assistant Secretary of the Air Force 
for Installations, Environment and Energy.
    We look forward to hearing your testimony, and I, 
certainly, appreciate Mr. Conger being here since he is a 
Granite Stater. It is always great to see you.
    Well-maintained, modern Department of Defense installations 
play an essential role in maintaining the readiness of our 
Armed Forces. Military construction (MILCON) projects are not 
just buildings. They are the homes and barracks in which our 
soldiers, sailors, airmen, and marines live. They are the 
facilities where servicemembers and our skilled Department of 
Defense (DOD) civilians work, train, conduct maintenance and 
support operations. That is why we must not shortchange 
military construction or facilities sustainment, restoration, 
and modernization funding.
    The Department of Defense has proposed a budget for 2016 
that includes $8.4 billion for military construction, including 
family housing, and $10.6 billion for facility sustainment, 
restoration, and modernization.
    I look forward to discussing this request in detail.
    I will also be interested in hearing from our witnesses 
about the impact on these programs of a potential return to 
defense sequestration. We need a defense budget based on our 
National security interests and the threats we face, not an 
arbitrary budget that is based on caps, which ignore the fact 
that the foremost responsibility of the Federal Government is 
to protect the American people.
    I look forward to working in a bipartisan way with the 
members of this committee to address defense sequestration.
    Before I turn to my ranking member and we hear from the 
witnesses, I would like to address some military construction 
issues that are important to New Hampshire and our National 
Guard and my constituents who work at the Portsmouth Naval 
Shipyard.
    I had the opportunity to welcome recently the Air Force 
Chief of Staff, General Welsh, to Pease Air National Guard Base 
last month, where we discussed ongoing preparations for the KC-
46A. In anticipation of the arrival of the KC-46A, I am very 
pleased that the $41.9 million in military construction 
projects at Pease Air National Guard Base that we authorized 
last year in the 2015 National Defense Authorization Act (NDAA) 
are moving ahead.
    More specifically, the projects will modernize the aircraft 
ramp refueling system, reconfigure the airfield's parking apron 
and taxi lanes, and expand and upgrade two aircraft hangars 
that are on track.
    I am also is very pleased that the department is requesting 
$2.8 million for fiscal year 2016 to upgrade the flight 
simulator at Pease to allow our pilots to train for the bedding 
of the KC-46A.
    While there is very positive MILCON progress for New 
Hampshire, in terms of the Air National Guard, I continue to be 
troubled by the condition of New Hampshire Army National Guard 
readiness centers, and I know that we've talked about this in 
our meetings. This is a trend that I know is reflected across 
the country.
    However, the condition of readiness centers in New 
Hampshire is particularly unacceptable. The average condition 
index of New Hampshire Army National Guard readiness centers is 
poor, 64 out of 100, and ranking New Hampshire 51 out of 54 
States and territories evaluated nationwide.
    The Manchester Readiness Center was constructed in 1938. It 
does not comply with building code standards, as well as life, 
health, safety, and antiterrorism force protection standards.
    Members of the New Hampshire Army National Guard and 
servicemembers like them around the country deserve better, and 
I am pleased that the department is finally requesting funding 
for the New Hampshire Army National Guard vehicle maintenance 
shops in Hooksett and Rochester for 2017, as well as readiness 
centers in Pembroke and Concord for 2018 and 2020, 
respectively.
    Considering the poor state of New Hampshire Army National 
Guard facilities, it is essential that these projects not be 
postponed and that they stay on schedule.
    I also look forward to addressing the MILCON situation at 
Portsmouth Naval shipyard, which is the Navy center of 
excellence for fast attack submarine maintenance, 
modernization, and repair. I also look forward, with the 
ranking member, to talking about and having hearings about the 
importance of our shipyards.
    I would like to get an update on the P-266 structural shops 
consolidation reprogramming from all of you. I look forward to 
discussing two other military construction projects that I 
understand have been delayed from fiscal year 2016 to 2018, and 
that is the P-309 crane rail and P-285 barracks.
    Finally, the department is once again seeking authority for 
another round of base realignment and closure, or BRAC, a BRAC 
round, despite the cost and inefficiencies associated with the 
2005 BRAC round. That round is conservatively estimated to have 
cost $35 billion and has been the subject of much discussion 
and criticism.
    Even after acknowledging the shortcomings of the 2005 
round, the Department continues to request the same legislative 
framework. I remain opposed to BRAC and do not want to give the 
department the open-ended authority to pursue another BRAC 
round that has the potential to incur significant upfront costs 
when we do not have the room in our budget in the next few 
years to afford many of the fundamental readiness issues that 
we need to address.
    I thank our witnesses for being here and for all that you 
do for our country, and I would like to turn it over to my 
ranking member, Senator Kaine from Virginia.

                 STATEMENT OF SENATOR TIM KAINE

    Senator Kaine. Thank you, Madam Chairwoman. Thank you all 
for your service and for being here today, and also to all of 
our colleagues who are joining us for this important 
discussion. The hearing is to receive testimony on military 
construction, environmental, energy, and base closure programs, 
as we look at the defense authorization request for fiscal year 
2016 and Future Years Defense Programs. These are important 
topics, and let me just address a couple of them, getting right 
to it.
    Madam Chair, I do look forward to working with you. This 
committee is really a good one in the Senate because we have 
such a tradition of bipartisanship. That doesn't mean we don't 
have differences of opinion, because these are tough issues. We 
are going to have differences of opinions on many issues. But 
we work in a bipartisan way, and I know that that is the way 
this subcommittee will operate.
    On the military construction side, as the chairwoman 
indicated, the budget is $8.4 billion. The good news is that is 
$1.5 billion higher than fiscal year 2015. That is good, but in 
historical perspective, the MILCON requests that were forwarded 
to the DOD in the early 2000s to Congress averaged about $20 
billion a year.
    The budget request for facility sustainment, restoration, 
and modernization is trending positively, 81 percent of the 
requirement necessary to keep facilities in good working order 
would be met by this request, up from 65 percent last year. 
That is positive, but that would suggest, even if we met the 
request, 20 percent of our needs would remain unfunded. That 
can lead, over time, to degradation of facilities that our 
servicemembers live and work in, higher costs to address 
deficiencies, to do repairs, and to ultimately need to replace 
the infrastructure sooner than you otherwise would have to if 
you were maintaining it at an optimal level.
    On the energy side, the DOD is the largest energy user in 
government, and it continues to make significant operational 
investments in fiscal year 2016. This is a statistic that kind 
of stunned me when I came across it. During Operation Iraqi 
Freedom, 20 percent of all casualties came from units having to 
protect resupply convoys, of which 70 percent to 80 percent of 
resupply was for water and fuel. So the energy, fuel, water 
issues are critical.
    There shouldn't be anything politically divisive about 
investments that enhance combat capabilities, save lives, 
increase energy security, and reduce the logistical burdens 
that can lead to insecurity. The Navy invests in more efficient 
hull coatings, stern flaps, and bow bulbs that allow ships to 
stay out an extra week and use fuel more efficiently. This 
results in a longer presence at sea without intrusive 
maintenance.
    I continue to support these smart investments and urge my 
colleagues to do the same.
    One success story in the last years has been the tremendous 
drop in the per unit cost for purchases of biodiesel. Even 
between 2012 and today, we have seen a drop in the per gallon 
costs from the $12 range to the $3.50 range, with more positive 
developments to come.
    I am encouraged to see that climate change adaptation 
roadmap last year, because the DOD is the environmental 
stewards of tens of thousands, hundreds of thousands of acres 
of land in the U.S. for decades, and are some of the most 
forward-thinking stewards of these land resources.
    Virginia understands very, very well that weather events 
have severe consequences on the operation of our military. Mr. 
Conger was with us this summer in Hampton Roads in August, when 
we held a community-wide discussion about the effects of sea 
level rise and its critical impact on a number of Virginia 
bases, including the largest naval base in the world, the 
Norfolk Naval Base and Langley Air Force Base.
    The Norfolk Naval Shipyard experiences today floods on a 
regular basis, deploys over 10,000 sandbags along with a 
floodwall and a super-floodwall under its destructive weather 
plan. There are plans at this space to build an additional 
8,000-foot floodwall to protect the shipyard and its drydock 
from the effects of sea level rise.
    These are not tomorrow issues. They are today issues.
    Underpinning all these, as the chairwoman ably stated, is 
the need to remove budget caps wisely and to, thus, reduce the 
threat of sequestration.
    In a hearing yesterday in the full committee, I said, as 
somebody who has done a lot of budgets in the private sector 
and public sector, sequestration violates every last budget 
principal that any wise public or private sector manager would 
embrace.
    There isn't any reason that we should just keep drifting 
along on this path when we have the capacity to change it. That 
is something that, as both a Budget and Armed Services 
Committee member, I want to work on.
    The tools that have allowed the Department of Defense to 
weather the first few years of sequestration, the budget 
storms, the furloughs, the government shutdowns, the 
uncertainty, those tools, largely, the easy tools have been 
used. So there were unobligated balances that have now been 
used, and other tools that are not so easy to come by as a 
shock absorber. So if the budget caps remain in place, the DOD 
will be forced to sacrifice much needed investments in 
facilities, energy, and environmental cleanup. Readiness seems 
to take the most significant hit.
    So what your views are on these issues are critical.
    Finally, I will just say a word about BRAC. I have been 
involved in BRAC from many different sides of the aisle. As a 
mayor, as a governor in the 2005 round, lieutenant governor and 
governor, working on BRAC issues. While I, certainly, 
understand the need to periodically rationalize base 
infrastructure, just like we analyze what weapons system makes 
sense, or should there be changes to the personnel, we have to 
look at all the assets on the table, especially at a time when 
we have a significant budget deficit and debt.
    I have had questions about the BRAC process, whether it is 
the best way to do that very thing. As the chairwoman 
indicated, while we wouldn't necessarily assume that 2005 would 
be precisely analogous, nevertheless, the 2005 BRAC round was 
not a cost-saver. It was a cost increase that significantly 
exceeded the budget at that time. We have, I think, some 
legitimate worries about whether it would be the same.
    So we look forward to hearing your views on those going 
forward as well.
    Senator Ayotte, thanks for calling this hearing.
    For the witnesses, thanks for your service, and we look 
forward to your testimony. I know all members will have 
significant questions.
    Thanks very much.
    Senator Ayotte. Thank you so much, Senator Kaine.
    I would like to call Mr. Conger for his testimony. Thank 
you.

STATEMENT OF JOHN C. CONGER, PERFORMING THE DUTIES OF ASSISTANT 
  SECRETARY OF DEFENSE, ENERGY, INSTALLATIONS AND ENVIRONMENT

    Mr. Conger. Thank you very much. Chairwoman Ayotte, Ranking 
Member Kaine, distinguished members of the subcommittee, I 
appreciate the opportunity to be here to discuss the 
department's fiscal year 2016 request for energy, 
installations, and environment.
    My written statement addresses the budget request in 
detail. So instead of summarizing it, I would like to raise 
just two topics for you to consider as we enter today's 
discussion.
    First, we cannot contemplate the budget request without 
considering the context of the Budget Control Act of 2014 (BCA) 
caps. The department submitted a budget request that was $35 
billion higher than the caps, $38 billion higher than last 
year. Forcing us to adhere to these caps will have 
reverberations across the budget.
    The President's Budget request includes a significant 
increase for facilities over last year's request, nearly $2 
billion in MILCON and $2.5 billion in facilities, sustainment, 
and recapitalization. Legislation will be required to provide 
relief from the Budget Control Act caps, like the relief 
provided by the Bipartisan Budget Act a couple years ago.
    If you must adhere to the BCA caps, Congress will have to 
cut $35 billion from this request and will, certainly, have to 
consider cutting funds from the request for facilities.
    On this note, I would like to recognize the strong support 
of this committee, of Chairman McCain, of Senator Reed, and 
appreciate the fact that they have already advocated a higher 
budget figure to the Senate Budget Committee.
    The second issue I wanted to raise was BRAC. It should be 
no surprise that we are again requesting authority to conduct a 
BRAC round. As we deal with this constrained budget 
environment, considerable force structure decreases since 2005, 
we must look for ways to divest excess spaces and to reduce the 
cost of supporting our smaller force structure.
    I wanted to make a few key points about BRAC as we go into 
today's discussion.
    First, the Army and the Air Force have done analyses, 
indicating 18 percent and 30 percent excess capacity already. I 
will note that the Army's analysis is based on a figure of 
490,000 soldiers, not the projected 450,000. This aligns with 
our prediction, based on the analysis we performed in 2004. 
There is clearly enough excess to justify another BRAC round.
    Second, partially in response to Congress' urging, we 
conducted a BRAC-like review of European facilities, delivered 
to Congress in January 2015, which we project will save more 
than $500 million annually, once implemented.
    I am happy to take questions on that when we enter into the 
discussion.
    Third, in this budget environment, a new round of BRAC must 
be focused on efficiencies. I know BRAC 2005 was unpopular, 
expensive, and not necessarily the way that this committee 
would want to see a BRAC handled. But the recommendations from 
that round were not necessarily designed to save money. That 
was the problem.
    We did an analysis of those recommendations and found that 
roughly half of the recommendations would pay back in less than 
7 years. From the outset, that was the intent. From the outset, 
the intent was for the other half to have either no payback at 
all or to payback in more than 7 years.
    If you look at the planned efficiency recommendations, 
those cost $6 billion and pay back $3 billion a year in 
perpetuity. That shows that when we want to save money, we do.
    The other recommendations, the ones that were more 
transformational in nature, that were never intended to save 
money, cost $29 billion and save $1 billion a year. So 
successfully, we don't save money when we are not trying to.
    So the point is that if we wanted to hold an efficiency 
BRAC round that mirrors the success of the 1990s, we can.
    The new issue that has been raised during this year's 
discussions the chair mentioned earlier, is that we can't 
expect Congress to pass our legislative proposal because it 
mirrors the 2005 legislation. I understand the reality that no 
matter how many times the administration asserts that a future 
BRAC round will be about cost savings, Congress may want more 
than just our assurance.
    Let me be clear, we are open to a discussion on this point. 
I would like to solicit your suggestions as to changes in the 
BRAC legislation that would make it more acceptable. I would 
offer that Congressman Smith from the House Armed Services 
Committee introduced a proposal last year that puts more 
constraints on what we might do in execution of BRAC 
recommendations.
    I would note that, in last year's defense authorization 
bill, there was a cost cap placed on the Guam relocation that 
we were told to spend no more than this amount, you have no 
more authority than this. A model like that would be worth 
discussion.
    There are a number of things we can do. We are not 
necessarily wedded to the original proposal. We want to have a 
conversation about this.
    So with that, let me yield back. I appreciate your time and 
look forward to your questions.
    Senator Ayotte. Thank you, Mr. Conger.
    [The prepared statement of Mr. Conger follows:]
                 Prepared Statement by Mr. John Conger
                              introduction
    Chairman Ayotte, Ranking Member Kaine and distinguished members of 
the subcommittee: Thank you for the opportunity to present the 
President's fiscal year 2016 budget request for the Department of 
Defense programs supporting energy, installations, and the environment.
    In my testimony, I will focus first on the budget request. As you 
will note, the Administration's budget includes $8.4 billion for 
Military Construction (including family housing), and $10.6 billion for 
Facility Sustainment and Recapitalization. These are both significant 
increases from last year, increases made possible because the total 
defense budget request is $35 billion more than the Budget Control Act 
cap for fiscal year 2016. It allows a significant reduction in 
facilities risk from last year, but if we are compelled to return to 
the budget caps, we will undoubtedly need to accept more risk in 
facilities. As I have said in the past, facilities degrade more slowly 
than readiness, and in a constrained budget environment, it is 
responsible to take risk in facilities first.
    My testimony will also address the environmental budget. This 
budget has been relatively stable, and we continue to show progress in 
both our compliance program, where we've seen a decrease in 
environmental violations, and in cleanup, where 82 percent of our 
39,000 sites have reached Response Complete. We remain on track to meet 
our goals of 90 percent Response Complete in 2018, and 95 percent in 
2021.
    Given the merger between the Installations & Environment office and 
the Operational Energy Plans and Programs office into the new, combined 
Energy, Installations & Environment office, this testimony will also 
address both Operational and Facilities Energy budgets, though these 
are not as explicitly broken out in the budget request in the same way 
many of the facilities and environmental accounts are. I will address 
the Operational Energy Budget Certification in my testimony, though the 
formal certification report will follow separately.
    In addition to budget, I will also highlight a handful of top 
priority issues--namely, the Administration's request for BRAC 
authority, European consolidation efforts, the status of the movement 
of Marines from Okinawa to Guam, an overview of our energy programs, 
and climate change.
   fiscal year 2016 budget request--military construction and family 
                                housing
    The President's fiscal year 2016 budget requests $8.4 billion for 
the Military Construction (MILCON) and Family Housing Appropriation- an 
increase of approximately $1.9 billion from the fiscal year 2015 budget 
request (see Table 1 below). This increase recognizes the Department's 
need to invest in facilities that address critical mission requirements 
and life, health, and safety concerns, while acknowledging the 
constrained fiscal environment. In addition to new construction needed 
to bed-down forces returning from overseas bases, this funding will be 
used to restore and modernize enduring facilities, acquire new 
facilities where needed, and eliminate those that are excess or 
obsolete. The fiscal year 2016 MILCON request ($6.7 billion) includes 
projects in support of the strategic shift to the Asia-Pacific, 
projects needed to support the realignment of forces, and projects to 
take care of our people and their families, such as unaccompanied 
personnel housing, medical treatment facilities, and schools.
    Despite the slight increase in this year's budget request, the DOD 
Components continue to take risk in the MILCON program in order to 
decrease risk in other operational and training budgets.
    While the Department's fiscal year 2016 budget request funds 
critical projects that sustain our warfighting and readiness postures, 
taking continued risk across our facilities inventory will degrade our 
facilities and result in the need for significant investment for their 
repair and replacement in the future. Our limited MILCON and Family 
Housing budget for fiscal year 2016 leaves limited room for projects 
that would improve aging workplaces, and therefore, could adversely 
impact routine operations and the quality of life for our personnel.

           TABLE 1. MILCON AND FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2015 VERSUS FISCAL YEAR 2016
                                            [in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from Fiscal  Year 2015
                    Category                        Fiscal Year     Fiscal Year  -------------------------------
                                                   2015  Request   2016  Request      Funding         Percent
----------------------------------------------------------------------------------------------------------------
Military Construction...........................           4,859           6,653           1,794             37%
Base Realignment and Closure....................             270             251            (19)            (7%)
Family Housing..................................           1,191           1,413             222             19%
Chemical Demilitarization.......................              39               0            (39)          (100%)
NATO Security Investment Program................             200             120            (80)           (40%)
                                                 ---------------------------------------------------------------
    Total.......................................           6,559           8,437           1,878             29%
----------------------------------------------------------------------------------------------------------------

                         military construction
    We are requesting $6.7 billion in the military construction account 
(note the difference between that and the military construction 
appropriation which includes items like Base Realignment and Closure 
(BRAC) and Family Housing). While this represents a nearly 37 percent 
increase from our fiscal year 2015 request, this level of funding is 
still significantly less than historic trends prior to the Budget 
Control Act. This fiscal year 2016 military construction funding 
request addresses routine requirements for construction at enduring 
installations stateside and overseas, and for specific programs such as 
the NATO Security Investment Program and the Energy Conservation 
Investment Program. In addition, we are targeting MILCON funds in three 
key areas as discussed immediately below.
    First and foremost, our MILCON request supports the Department's 
operational missions. MILCON is key to supporting forward deployed 
missions as well as implementing initiatives such as the Asia-Pacific 
rebalance, European Infrastructure Consolidation, and cyber mission 
effectiveness. Our fiscal year 2016 budget request includes $50 million 
for construction of an airlift ramp and taxiway at Agadez, Niger; $90 
million for construction of a pier replacement and ship maintenance 
support facility in Bahrain; and $94 million for the second phase of a 
Joint Intelligence Analysis Complex Consolidation at Royal Air Force 
Croughton, United Kingdom. The budget request also includes funding to 
support bed-down of new missions, such as $72 million for three 
projects to support arrival of F-35C squadrons at Naval Air Station 
Lemoore, California; $69 million for three projects to support arrival 
of F-35A squadrons at Nellis Air Force Base, Nevada; $37 million for a 
KC-46A Depot Maintenance Dock at Tinker Air Force Base, Oklahoma; $126 
million for a Live-Fire Training Range Complex at Joint Region 
Marianas, Guam; $221 million for two projects supporting an Aegis 
Ashore Missile Defense Complex at Redzikowo Base, Poland; $37 million 
for Literal Combat Ship Support Facilities at Naval Base San Diego, 
California; and $86 million for a Joint Operations Center to support 
U.S. Cyber Command at Fort Meade, Maryland.
    Second, our fiscal year 2016 military construction budget request 
includes $376 million to replace or modernize ten DOD Education 
Activity (DODEA) schools that are in poor or failing physical 
condition, a reduction compared to the fiscal year 2015 request of 
$394.4 million. The projects included in our fiscal year 2016 budget 
request, four of which are at enduring locations overseas, support the 
Department's plan to replace or recapitalize more than half of DODEA's 
schools over the next several years, but at a slower pace to improve 
execution and to allow time for DODEA to assess the impact of pending 
force structure changes. The recapitalized or renovated facilities, 
including a $55 million replacement elementary school at West Point, 
New York, are intended to be models of sustainability and will provide 
a modern teaching environment for the children of our personnel.
    Third, the fiscal year 2016 budget request includes $673 million 
for seven projects to upgrade our medical treatment and research 
facilities, to include $122 million for a behavioral health/dental 
clinic at Schofield Barracks, Hawaii and $124 million for replacement 
of a medical/dental clinic at Marine Corps Air Station Kaneohe Bay, 
Hawaii. The request also includes $85 million for the fifth increment 
of the Rhine Ordnance Barracks Hospital Replacement, Germany; $239 
million for the seventh increment of the Fort Bliss Hospital 
Replacement, Texas; and $62 million for the fourth increment of the 
Ambulatory Care Center at Joint Base San Antonio, Texas. Our fiscal 
year 2016 request focuses on medical infrastructure projects that are 
crucial to ensure that we can deliver the quality healthcare our 
service members and their families deserve when stationed stateside and 
during overseas deployments.
    One final note on the MILCON request--while the fiscal year 2016 
Overseas Contingency Operations (OCO) budget request includes $789 
million to continue the President's European Reassurance Initiative 
(ERI) to provide temporary support to bolster the security of our North 
Atlantic Treaty Organization allies and partner states in Europe, the 
request includes no ERI military construction funding.
                    family and unaccompanied housing
    A principal priority of the Department is to support military 
personnel and their families and improve their quality of life by 
ensuring access to suitable, affordable housing. Service members are 
engaged in the front lines of protecting our national security and they 
deserve the best possible living and working conditions. Sustaining the 
quality of life of our people is crucial to recruitment, retention, 
readiness and morale.
    Our fiscal year 2016 budget request includes $1.4 billion to fund 
construction, operation, and maintenance of government-owned and leased 
family housing worldwide as well as to provide services to assist 
military members in renting or buying private sector housing (see Table 
2 below). Included in this request is $61 million for the second phase 
of new construction family housing at Camp Walker, South Korea, and $20 
million for replacement family housing at Rock Island Arsenal, 
Illinois.
    Most government-owned family housing is on enduring bases in 
foreign countries now that the Department has privatized the vast 
majority of our family housing in the United States. Our request does 
not include funding for oversight of privatized housing because we will 
utilize cost savings in fiscal year 2015 to cover our fiscal year 2016 
expenses. However, we anticipate requesting funding for oversight of 
privatized housing in future budget requests. The requested fiscal year 
2016 funding will ensure that U.S. military personnel and their 
families continue to have suitable housing choices.

                TABLE 2. FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2015 VERSUS FISCAL YEAR 2016
                                            [in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from  Fiscal Year 2015
                    Category                        Fiscal Year     Fiscal Year  -------------------------------
                                                   2015  Request   2016  Request      Funding         Percent
----------------------------------------------------------------------------------------------------------------
 
Family Housing Construction/Improvements........--------------95-------------277-------------182------------192%
Family Housing Operations & Maintenance.........           1,094           1,136              42              4%
Family Housing Improvement Fund.................               2               0             (2)          (100%)
                                                 ---------------------------------------------------------------
    Total.......................................           1,191           1,413             222             19%
----------------------------------------------------------------------------------------------------------------

    The Department also continues to encourage the modernization of 
Unaccompanied Personnel Housing (UPH) to improve privacy and provide 
greater amenities. In recent years, we have heavily invested in UPH to 
support initiatives such as BRAC, global restationing, force structure 
modernization, and the Navy's Homeport Ashore initiative. The fiscal 
year 2016 MILCON budget request includes $360 million for construction 
and renovation projects that will improve living conditions for Active 
Duty trainees and unaccompanied personnel, to include $68 million for 
Marine Corps bachelor enlisted quarters at Kaneohe Bay, Hawaii, and $71 
million for an Air Force dormitory at Joint Base San Antonio, Texas.
    The Military Services completed its Military Housing Privatization 
Initiative (MHPI) award phase in fiscal year 2013 with award of the 
final three Air Force MHPI projects, bringing the total privatized 
inventory to about 205,000 housing units. The new challenge will be to 
manage the government's interests in these privatized projects to 
ensure they continue to provide quality housing for their expected 
lifespan.
    Families choosing to live in privatized housing typically pay their 
Basic Allowance for Housing (BAH) as rent which serves as the primary 
revenue stream for the MHPI project. BAH rates in 2015 have been 
updated to incorporate two changes to the computation BAH. First, 
renter's insurance was eliminated from the 2015 Basic Allowance for 
Housing rate computation. Second, based on recent amendment of section 
403(b)(3) of title 37, United States Code, by the fiscal year 2015 
National Defense Authorization Act, a member cost-sharing element 
(i.e., out-of-pocket expense) of 1 percent of the national average 
monthly cost of adequate housing was introduced into the housing 
allowance rates. As a result, the Military Departments will review 
their housing projects and implement necessary changes to the rental 
arrangements to ensure the continued quality of privatized housing, and 
to ensure that residents of privatized housing bear out-of-pocket 
expenses similar to military families living on the local economy.
              facilities sustainment and recapitalization
    In addition to new construction, the Department invests significant 
funds in maintenance and repair of our existing facilities. Sustainment 
represents the Department's single most important investment in the 
condition of its facilities. It includes regularly scheduled 
maintenance and repair or replacement of facility components--the 
periodic, predictable investments that should be made across the 
service life of a facility to slow its deterioration, optimize the 
Department's investment, and save resources over the long term. Proper 
sustainment retards deterioration, maintains safety, preserves 
performance over the life of a facility, and helps improve the 
productivity and quality of life of our personnel.
    The accounts that fund these activities have taken significant cuts 
in recent years. Recognizing that too much risk has been endured in 
maintaining their facilities, the Military Departments increased 
Facility Sustainment commitments in fiscal year 2016. The fiscal year 
2016 DOD budget request includes $6.4 billion of Operations and 
Maintenance (O&M) funding for sustainment of our real property, 
representing 81 percent of the requirement based on the Facilities 
Sustainment Model (FSM).

       TABLE 3. SUSTAINMENT AND RECAPITALIZATION BUDGET REQUEST, FISCAL YEAR 2015 VERSUS FISCAL YEAR 2016
                                            [in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from  Fiscal Year 2015
                    Category                        Fiscal Year     Fiscal Year  -------------------------------
                                                   2015  Request   2016  Request      Funding         Percent
----------------------------------------------------------------------------------------------------------------
 
Sustainment (O&M)...............................-----------6,429-----------8,022-----------1,593-------------25%
Recapitalization (O&M)..........................           1,616           2,563             946             59%
                                                 ---------------------------------------------------------------
    Total.......................................           8,046          10,585           2,539             32%
----------------------------------------------------------------------------------------------------------------

    For fiscal year 2016, the Department's budget request includes 
nearly $8.0 billion for sustainment and $2.6 billion for 
recapitalization (see Table 3 above) in Operations & Maintenance 
funding. The combined level of sustainment and recapitalization funding 
($10.6 billion) reflects a 32 percent increase from the fiscal year 
2015 President's Budget (PB) request ($8.0 billion), but still reflects 
an acceptance of significant risk in DOD facilities. In fact, the 
request supports average DOD-wide sustainment funding level that 
equates to 81 percent of the FSM requirement as compared to the 
Department's goal to fund sustainment at 90 percent of modeled 
requirements.
    Recent and ongoing budget constraints have limited investment in 
facilities sustainment and recapitalization to the point that 24 
percent of the Department's facility inventory is in ``poor'' condition 
(Facility Condition Index (FCI) between 60 and 79 percent) and another 
6.5 percent is in ``failing'' condition (FCI below 60 percent) based on 
recent facility condition assessment data. The Department ultimately 
will be faced with larger bills in the out-years to restore or replace 
facilities that deteriorate prematurely due to funding constraints.
    In an effort to better track--and limit--the risk we were accepting 
in our facilities, we issued policy in fiscal year 2014 that reiterates 
DOD's goal to fund sustainment programs at 90 percent or higher of the 
Facility Sustainment Model requirement; establishes 80 percent as the 
minimum inventory-wide Facility Condition Index goal for each Component 
to meet annually for the facilities they manage; and directs Components 
to develop mitigation plans for their failing facilities (those with an 
FCI below 60 percent) to ensure that we have a strategy to improve the 
condition of our real property inventory in the coming years. Component 
mitigation plans could address failing facility conditions through 
repair, replacement, mothballing, or demolition. To complement these 
goals, we've issued policy to standardize inspections and ensure that 
all of the Services are measuring their facility condition the same 
way.
        fiscal year 2016 budget request--environmental programs
    The Department has long made it a priority to protect the 
environment on our installations, not only to preserve irreplaceable 
resources for future generations, but to ensure that we have the land, 
water and airspace we need to sustain military readiness. To achieve 
this objective, the Department has made a commitment to continuous 
improvement, pursuit of greater efficiency and adoption of new 
technology. In the President's fiscal year 2016 budget, we are 
requesting $3.4 billion to continue the legacy of excellence in our 
environmental programs.
    The table below outlines the entirety of the DOD's environmental 
program, but I would like to highlight a few key elements where we are 
demonstrating significant progress--specifically, our environmental 
restoration program, our efforts to leverage technology to reduce the 
cost of cleanup, and the Readiness and Environmental Protection 
Integration (REPI) program.

             TABLE 4: ENVIRONMENTAL PROGRAM BUDGET REQUEST, FISCAL YEAR 2016 VERSUS FISCAL YEAR 2015
                                            [in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                   Change from  Fiscal Year 2015
                     Program                        Fiscal Year     Fiscal Year  -------------------------------
                                                   2015  Request   2016  Request      Funding         Percent
----------------------------------------------------------------------------------------------------------------
 
Environmental Restoration.......................-----------1,105-----------1,108---------------3------------0.3%
Environmental Compliance........................           1,458           1,389            (69)          (4.7%)
Environmental Conservation......................             381             389               8            2.1%
Pollution Prevention............................             119             102            (17)         (14.3%)
Environmental Technology........................             172             200              28           16.3%
BRAC Environmental..............................             264             217            (47)         (17.8%)
                                                 ---------------------------------------------------------------
    Total.......................................           3,499           3,405            (94)          (2.7%)
----------------------------------------------------------------------------------------------------------------

                       environmental restoration
    We are requesting $1.3 billion to continue cleanup efforts at 
remaining Installation Restoration Program (IRP--focused on cleanup of 
hazardous substances, pollutants, and contaminants) and Military 
Munitions Response Program (MMRP--focused on the removal of unexploded 
ordnance and discarded munitions) sites. This includes $1.1 billion for 
``Environmental Restoration,'' which encompasses active installations 
and Formerly Used Defense Sites (FUDS) locations and $217 million for 
``BRAC Environmental.'' While the amount of BRAC Environmental funds 
requested is nearly 18 percent less than the 2015 request, this amount 
will be augmented by $135 million of land sale revenue and prior year, 
unobligated funds. These funds coupled with the $217 million request 
brings the total amount of BRAC Environmental funding to $352 million 
DOD will invest in fiscal year 2016, a 33 percent increase over the 
fiscal year 2015 request. These investments help to ensure DOD 
continues to make steady progress towards our program goals. We remain 
engaged with the Military Departments to ensure they are executing 
plans to spend all remaining unobligated balances.

                                     TABLE 5: PROGRESS TOWARD CLEANUP GOALS
  Goal: Achieve Response Complete at 90% and 95% of Active and BRAC IRP and MMRP sites, and FUDS IRP sites, by
                                         FY2018 and FY2021, respectively
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                                          Status as of the   Projected Status   Projected Status
                                                               end of         at the end of      at the end of
                                                              FY 2014            FY 2018            FY 2021
----------------------------------------------------------------------------------------------------------------
Army...................................................                89%                96%                97%
Navy...................................................                78%                88%                94%
Air Force..............................................                76%                90%                95%
DLA....................................................                88%                96%                96%
FUDS...................................................                79%                90%                96%
    Total..............................................                82%                92%                96%
----------------------------------------------------------------------------------------------------------------

    By the end of 2014, the Department, in cooperation with state 
agencies and the Environmental Protection Agency, completed cleanup 
activities at 82 percent of Active and BRAC IRP and MMRP sites, and 
FUDS IRP sites, and is now monitoring the results. During fiscal year 
2014 alone, the Department completed cleanup at over 1,000 sites. Of 
the roughly 39,000 restoration sites, almost 31,500 are now in 
monitoring status or cleanup completed. We are currently on track to 
meet our program goals--anticipating complete cleanup at 96 percent of 
Active and BRAC IRP and MMRP sites, and FUDS IRP sites, by the end of 
2021.
    Our focus remains on continuous improvement in the restoration 
program: minimizing overhead; adopting new technologies to reduce cost 
and accelerate cleanup; refining and standardizing our cost estimating; 
and improving our relationships with State regulators through increased 
dialogue. All of these initiatives help ensure that we make the best 
use of our available resources to complete cleanup.
    Note in particular that we are cleaning up sites on our active 
installations in parallel with those on bases closed in previous BRAC 
rounds--cleanup is not something that DOD pursues only when a base is 
closed. In fact, the significant progress we have made over the last 20 
years cleaning up contaminated sites on active DOD installations is 
expected to reduce the residual environmental liability in the 
disposition of our property made excess through the BRAC process or 
other efforts.
                        environmental technology
    A key part of DOD's approach to meeting its environmental 
obligations and improving its performance is its pursuit of advances in 
science and technology. The Department has a long record of success 
when it comes to developing innovative environmental technologies and 
getting them transferred out of the laboratory and into actual use on 
our remediation sites, installations, ranges, depots and other 
industrial facilities. These same technologies are also now widely used 
at non-Defense sites helping the nation as a whole.
    While the fiscal year 2016 budget request for Environmental 
Technology overall is $200 million, our core efforts are conducted and 
coordinated through two key programs--the Strategic Environmental 
Research and Development Program (SERDP--focused on basic research) and 
the Environmental Security Technology Certification Program (ESTCP--
which validates more mature technologies to transition them to 
widespread use). The fiscal year 2016 budget request includes $66 
million for SERDP and $33 million for ESTCP for environmental 
technology demonstrations, with an additional $20 million requested 
specifically for energy technology demonstrations.
    These programs have already achieved demonstrable results and have 
the potential to reduce the environmental liability and costs of the 
Department--developing new ways of treating groundwater contamination, 
reducing the life-cycle costs of multiple weapons systems, and 
improving natural resource management.
    This past year, the Air Force has deployed a full scale robotic 
laser depainting system at Hill AFB that is the culmination of a 
substantial, multi-year investment by SERDP, ESTCP, and the Air Force 
Research Laboratory. The system is currently operational and offers a 
more environmentally sustainable method to perform essential 
maintenance on the F-16, decreasing processing time from seven days to 
three and increasing the mission availability of the aircraft. 
Additionally, the new process reduces the amount of hazardous waste 
generated from 2000 pounds per F-16 aircraft using previous processes 
to less than one pound using the new system--all while generating 
approximately 70 percent savings in per unit costs and decreasing 
associated labor from 400 hours per aircraft to just 100 hours. A 
second system is planned for the C-130, and similar results are 
expected. This technology truly represents a win-win for the 
environment and the mission.
    Looking ahead, our environmental technology investments are focused 
on the Department's evolving requirements. This year, we expect to 
complete the demonstrations of revolutionary new technology that allows 
us to discriminate between hazardous unexploded ordnance and harmless 
scrap metal without the need to dig up every object and we're moving 
out aggressively to transition the technology to everyday use. We will 
continue our investments in technologies to address the challenges of 
contaminated groundwater sites where no good technical solutions are 
currently available, and we'll seek out innovative ways to address 
munitions in the underwater environment. Lastly, we'll continue our 
efforts to develop the science and tools needed to meet the 
Department's obligations to assess and adapt to climate change, and 
we'll continue the important work of reducing future liability and 
life-cycle costs by eliminating toxic and hazardous materials from our 
production and maintenance processes.
         environmental conservation and compatible development
    To maintain access to the land, water and airspace needed to 
support our mission needs, the Department continues to successfully 
manage the natural resources entrusted to us--including protecting the 
many threatened and endangered species found on our lands. DOD manages 
approximately 25 million acres containing many high-quality and unique 
habitats that provide food and shelter for over 520 species-at-risk and 
over 400 that are federally listed as threatened or endangered species. 
That is 9 times more species per acre than the Bureau of Land 
Management, 6 times more per acre than the United States Fish and 
Wildlife Service (USFWS), 4.5 times more per acre than the Forest 
Service, and 3.5 times more per acre than the National Park Service. A 
surprising number of rare species are found only on military lands--
including more than ten listed species and at least 75 species-at-risk.
    The fiscal year 2016 budget request for Conservation is $389 
million. The Department invests these funds to manage its imperiled 
species as well as all its natural resources in an effort to sustain 
the high quality lands our service personnel need for testing, training 
and operational activities, and to maximize the flexibility our 
servicemen and women need to effectively use those lands. Species 
endangerment and habitat degradation can have direct mission-
restriction impacts. That is one reason we work hard to prevent species 
from becoming listed, or from impacting our ability to test and train 
if they do become listed.
    As a result of multiple law suits, the United States Fish and 
Wildlife Service (USFWS) entered into a court-approved agreement in 
2011 that requires USFWS to make decisions about whether to list 251 
species that are ``candidates'' for listing as threatened or endangered 
under the Endangered Species Act by 2016. Of the 125 found on or 
adjacent to military lands, the Department determined 37 of them--if 
USFWS listed and designated critical habitat on DOD lands--could have 
significant or moderate potential to impact military readiness at 
locations such as Yakima Training Center and Joint Base Lewis-McChord 
(JBLM). Furthermore, 12 of those 37 species were identified to have the 
greatest potential to significantly impact military actions. So far, 
USFWS has listed 119 of those 251 species, at least 47 of which are on 
our lands. To minimize actual and potential mission impacts, these 
installations have increased monitoring for these species, incorporated 
appropriate management strategies into their Integrated Natural 
Resource Management Plans, and--when needed--are working with USFWS to 
avoid critical habitat designations and to ensure that listed species 
conservation is consistent with military readiness needs.
    Our focus has been on getting ahead of any future listings. In 
2011, I tasked the Military Departments to ensure our management plans 
adequately address all listed and candidate species to avoid critical 
habitat designations. All but two of our plans now adequately address 
these species, and we have successfully avoided critical habitat for 
all these candidate species where USFWS has made listing decisions.
    We make investments across our enterprise focused on threatened or 
endangered species, wetland protection, and protecting other natural, 
cultural and historical resources, but we cannot continue to manage 
these resources in isolation. Instead, we are working with partners 
across the fence line to expand our conservation activities off-
installation and promote compatible land uses around our installations 
and ranges. I want to highlight one particularly successful and 
innovative program that is advancing these innovative partnerships--the 
Readiness and Environmental Protection Integration (REPI) Program. 
Included within the $389 million for Conservation, $60.3 million is 
directed to the REPI Program. The REPI Program is a cost-effective tool 
to protect the nation's existing training, testing, and operational 
capabilities at a time of decreasing resources. In the last 12 years, 
REPI partnerships have protected more than 356,000 acres of land around 
80 installations in 28 states. In addition to the tangible benefits to 
testing, training and operations, these efforts have resulted in 
significant contributions to biodiversity and recovery actions 
supporting threatened, endangered and candidate species.
    Under REPI, the Department partners with conservation organizations 
and state and local governments to preserve buffer land and sensitive 
habitat near installations and ranges. Preserving these areas allows 
the Department to avoid much more costly alternatives such as 
workarounds, restricted or unrealistic training approaches, or 
investments to replace existing test and training capability. 
Simultaneously, these efforts ease the on-installation species 
management burden and reduce the possibility of restricted activities, 
ultimately providing more flexibility for commanders to execute- their 
missions.
    The REPI Program supports the warfighter and protects the taxpayer 
because it multiplies the Department's investments through unique cost-
sharing agreements. Even in these difficult economic times, REPI is 
able to directly leverage the Department's investments at least one-to-
one with those of our partners, effectively securing critical buffers 
around our installations for half-price.
    In addition, DOD, along with the Departments of the Interior and 
Agriculture, announced the Sentinel Landscapes Partnership to protect 
large landscapes where conservation, working lands, and national 
defense interests converge--places defined as Sentinel Landscapes. The 
Sentinel Landscapes Partnership further strengthens interagency 
coordination and provides taxpayers with the greatest leverage of their 
funds by aligning federal programs to advance the mutually-beneficial 
goals of each agency. The pilot Sentinel Landscape project at Joint 
Base Lewis-McChord (JBLM) helped USFWS avoid listing a butterfly 
species in Washington, Oregon, and California, citing the ``high level 
of protection against further losses of habitat or populations'' from 
investments made by Joint Base Lewis-McChord's REPI partnership on 
private prairie lands in the region. These actions allow significant 
maneuver areas to remain available and unconstrained for active and 
intense military use at JBLM.
            fiscal year 2016 budget request--energy programs
    Unlike the Department's Military Construction and Environmental 
Remediation programs, where the budget request includes specific line 
items, our energy programs are subsumed into other accounts. The 
following sections describe the Energy portion of the budget request. 
Further discussion of energy follows in the highlighted issues section.
                           operational energy
    There is no explicit request for Operational Energy. Fuel is not 
separately budgeted, but instead is part of multiple operational 
accounts. We can track previous years' fuel expenditures, and know that 
we spent approximately $14 billion on fuel in fiscal year 2014. 
However, investments in how the Department uses operational energy are 
spread across multiple appropriations, and are detailed in the 
Department's annual budget certification report, which assesses the 
alignment of the President's Budget with the goals of the DOD 
Operational Energy Strategy.
    The Department of Defense budgeted approximately $1.6 billion in 
fiscal year (FY) 2016 and $10.9 billion over the five-year Future 
Defense Plan (FYDP) on operational energy initiatives. Although the FY 
2016 budget request maintains approximately the same funding levels as 
FY 2015, the overall FY 2016-20 FYDP funding includes an increase of 
approximately $2 billion over FY 2015-19 FYDP funding. The increase 
largely results from increases in Army and Air Force operational energy 
funding over the FYDP.
    Approximately 92 percent of Department spending on operational 
energy initiatives focuses on reducing demand, while the remainder 
addresses energy supplies and adapting the future force. Specific to 
energy demand, the Services are investing in an array of innovations 
designed to improve the endurance, resilience, and agility of Joint 
operations. For instance, the Army is investing in vehicle power train 
technology, improved batteries and solar chargers for individual 
Soldier equipment, and more efficient generators. The Navy is pursuing 
hybrid electric propulsion for the DDG-51 class destroyers that will 
increase time on station, and aviation simulator upgrades that will 
allow more training to occur in simulators, reducing the amount of fuel 
and aircraft maintenance needed to support the Naval Flight Hour 
program. Marine Corps investments include tactical vehicle fuel 
efficiency and improvements in expeditionary base camp initiatives. The 
Air Force is pursuing a range of improved operational practices for the 
airlift and tanker fleet, as well as mid-life engine upgrades (KC-135 
Engine Upgrade) and wholly new propulsion programs (Adaptive Engine 
Technology Development) that increase range, payload, and/or endurance.
    The full certification report, which will be provided to Congress 
in the near future, will provide a more comprehensive assessment of the 
alignment of these operational energy initiatives in the fiscal year 
2016 President's Budget with the goals of the Operational Energy 
Strategy.
                           facilities energy
    As with Operational Energy, there is no explicit request for 
Facilities Energy--utilities expenditures are included in the Base 
Operations O&M request. We can track actual expenditures, and we spent 
$4.2B on Facilities Energy in fiscal year 2014. Energy efficiency 
initiatives are found either as part of construction or sustainment 
budgets. Moreover, the preponderance of renewable energy initiatives 
that the Services pursue involve third party investments and power 
purchase agreements that result in electricity bills that are less than 
or equal to historical prices.
    The Department's fiscal year 2016 budget request includes 
approximately $700 million for investments in conservation and energy 
efficiency, most of which will be directed to existing buildings. The 
majority ($550 million) is in the Military Components' operations and 
maintenance accounts, to be used for sustainment and recapitalization 
projects. Such projects typically involve retrofits to incorporate 
improved lighting, high-efficiency HVAC systems, double-pane windows, 
energy management control systems, and new roofs. The remainder ($150 
million) is for the Energy Conservation Investment Program (ECIP), a 
Military Construction account used to implement energy efficiency, 
water conservation and renewable energy projects. Each individual ECIP 
project has a positive payback (i.e. Savings to Investment Ratio (SIR) 
> 1.0) and the overall program has a combined SIR greater than 2.0. 
This means for every dollar we invest in ECIP, we generate more than 
two dollars in savings.
    The Military Component investments include activities that would be 
considered regular maintenance and budgeted within the Operation and 
Maintenance accounts for Facilities Sustainment, Restoration, and 
Maintenance activities. The risk that has been accepted in those 
accounts will not only result in fewer energy projects, but failing to 
perform proper maintenance on our buildings will without question have 
a negative impact on our energy usage. In plain terms, upgrades to air 
conditioning systems will not reduce energy usage as projected if the 
roof is leaking or the windows are broken. Sequestration and BCA budget 
cuts to the Department's facilities energy program have negatively 
impacted the DOD's ability to meet mandated energy intensity reduction 
goals. The DOD projects the Department will catch up and begin meeting 
its energy intensity reduction goals in fiscal year 2019.
    In addition to retrofitting existing buildings, we continue to 
drive efficiency in our new construction. We are implementing a new 
construction standard for high-performance, sustainable buildings 
issued by my office last year, which will govern all new construction, 
major renovations, and leased space acquisition. This new standard, 
which incorporates the most cost effective elements of commercial 
standards like ASHRAE 189.1, will accelerate DOD's move toward 
efficient, sustainable facilities that cost less to own and operate, 
leave a smaller environmental footprint, and improve employee 
productivity.
                           highlighted issues
Base Realignment and Closure
    Given the state of the budget and the fact that we demonstrated we 
can save money by closing and realigning facilities in Europe, the 
Administration is once again requesting the authority from Congress to 
conduct a BRAC round.
    Many members of Congress have stated that the Government as a whole 
could more efficiently use its resources. We absolutely agree. BRAC is 
an objective, proven, and effective means of doing just that. The 
Deputy Secretary, the official responsible for the efficient management 
of the Department, has been clear on this. Last fall he said ``[The] 
first place we should look at is our basing infrastructure.'' He went 
on to talk about how large private companies would not retain excess 
capacity. Reiterating the need for BRAC, he said; ``in this time of 
constrained resources, I just don't understand why we are hamstringing 
ourselves. [M]aintaining that extra capacity is a big problem for us 
because it is wasteful spending, period. It is the worst type of 
bloat.''
    Getting at this bloat is why the goal for BRAC remains focused on 
efficiency and savings.
    We believe the opportunity for greater efficiencies is clear, based 
on three basic facts that have not changed over the last year:

      In 2004, DOD conducted a capacity assessment that 
indicated it had 24 percent aggregate excess capacity;
      In BRAC 2005, the Department reduced only 3.4 percent of 
its infrastructure, as measured in Plant Replacement Value--far short 
of the aggregate excess indicated in the 2004 study;
      Force structure reductions subsequent to that analysis--
particularly Army personnel (from 570,000 to 450,000 or lower), Marine 
Corps personnel (from 202,000 to 182,000 or lower) and Air Force force 
structure (reduced by 500 aircraft)--point to the presence of 
additional excess.

    A new BRAC round will be different than BRAC 2005, where we 
incurred significant costs by forwarding recommendations that did not 
promise significant savings. That said, in BRAC 2005, we also included 
many recommendations that returned the initial investment in less than 
7 years. These ``efficiency'' recommendations cost $6 billion and 
resulted in $3 billion in annual savings. (The ``transformation'' 
recommendations cost $29 billion and return $1 billion in annual 
savings.)
    We project that a new efficiency-focused BRAC round will save about 
$2 billion a year after implementation with costs and savings during 
the six year implementation being a wash at approximately $6 billion. 
Our projection is based on the efficiency rounds of the 1990s.
    In addition to being a proven process that yields savings, BRAC has 
several advantages that we have outlined before in our testimony. I 
want to highlight a few of these:

      BRAC is comprehensive and thorough--all installations are 
analyzed using certified data aligned against the strategic imperatives 
detailed in the 20-year force structure plan
      The BRAC process is auditable and logical which enables 
the Commission to conduct an independent review informed by their own 
analysis and testimony of affected communities and elected officials
      The Commission has the last say on the Department's 
recommendations--being fully empowered to alter, reject, or add 
recommendations
      The BRAC process has an ``All or None'' construct which 
prevents the President and Congress from picking and choosing among the 
Commission's recommendations; thereby insulating BRAC from politics
      The BRAC process imposes a legal obligation on the 
Department to close and realign installations as recommended by the 
Commission by a date certain; thereby facilitating economic reuse 
planning by impacted communities; and grants the Department the 
authorities needed to satisfy that legal obligation.

    While we are certainly open to some changes to the legislatively 
designed BRAC process that has remained essentially the same for each 
of the last four BRAC rounds, we should be careful about altering the 
fundamental principles of the process, particularly those that I 
outlined above.
    For example, Congressman Adam Smith circulated an amended version 
of the BRAC authorization last year, proposing several changes to the 
BRAC process. His bill required a certification that the new round 
would primarily focus on eliminating excess infrastructure; it required 
emphasis on the cost criteria as well as military value; it required 
all recommendations to be completed more quickly--within five years 
rather than six; and it required master plans that would constrain the 
execution of recommendations and limit cost growth. Taken together, the 
intent is clear: the Smith proposal is designed to create cost and 
business case constraints on the BRAC process from the outset--
unfortunately while several aspects of that proposal would 
fundamentally alter key aspects of what makes BRAC work: the priority 
given to military value; insulation from politics; and the legal 
obligation to implement the recommendations together with the 
authorities needed to satisfy that legal obligation--the proposal 
advances a constructive discussion of BRAC authorization.
    While not in the context of BRAC, recent legislation authorizing 
the Department to proceed with the relocation of Marines to Guam 
imposed a cost cap on the overall program in an effort to underscore 
cost consciousness and limit the Department's fiscal exposure.
    We would welcome discussion on mechanisms to limit cost and 
emphasize savings in future BRAC rounds. Ultimately, we recognize the 
reality that no matter how many times the Administration asserts that a 
future BRAC round will be about cost savings, Congress may want more 
than just our assurance.
    Whatever changes we discuss, the key is maintaining the essence of 
the BRAC process: treating all bases equally, all or none review by 
both the President and Congress, an independent Commission, and a clear 
legal obligation to implement all of the recommendations in a time 
certain together with all the authorities needed to accomplish 
implementation (specifically MILCON).
                 european infrastructure consolidation
    Past and ongoing force structure changes, a changing security 
environment, and our tough fiscal climate provided the Department a 
catalyst to undertake a comprehensive review of the infrastructure 
requirements necessary to support U.S. forces and their missions in and 
around Europe. The actions resulting from this comprehensive review of 
our European infrastructure will allow us to create long-term savings 
by eliminating excess infrastructure without reducing our operational 
capabilities. In other words, operationally we will continue to do 
everything we currently do--but at a lower cost.
    The Department has been reducing its European footprint since the 
end of the Cold War. Generally, infrastructure reductions have been 
proportional to force structure reductions, but prior to our European 
Infrastructure Consolidation (EIC) effort we hadn't taken a holistic, 
joint review of our European infrastructure. In response to our recent 
requests for Base Realignment and Closure (BRAC) authority, Congress 
made it clear that it wanted DOD to do so.
    To analyze our European infrastructure we used a process very 
similar to the proven U.S. BRAC process. We looked at capacity, 
requirements, military value, cost, and at the diplomatic dynamics 
involved with each action. As we consolidate our footprint, the 
infrastructure remaining in place will continue to support our 
operational requirements and strategic commitments, but we will not 
need as many support personnel (military, civilian, and host nation 
employees) to maintain a reduced infrastructure. We did not contemplate 
changes that reduced operational force structure or warfighting 
capability--that was a fundamental constraint of the analysis.
    The largest action resulting from the EIC analysis is our return of 
RAF Mildenhall to the United Kingdom. Approximately 3,200 U.S. 
personnel from RAF Mildenhall will be re-stationed elsewhere. This move 
will be partially offset by the addition of about 1,200 personnel that 
will support the F-35s being stationed at nearby RAF Lakenheath. Both 
of these events will occur in the 2018-2021 timeframe.
    Including the initial adjustments announced last April and the 
final actions announced in January, the Department will realize more 
than $500 million in annual recurring savings once all actions are 
fully implemented--all while maintaining the same operational 
capability. This is in addition to the more than $600 million in annual 
savings resulting from previously announced Army divestitures of 
Bamberg and Schweinfurt that were validated through the EIC process--
divestitures directly associated with the recent force structure 
reductions in Europe.
    Although detailed implementation planning is still underway, 
initial estimates indicate these actions will require approximately 
$800 million to construct facilities at receiving sites. The vast 
majority of these construction requirements support divesting RAF 
Mildenhall (construction likely beginning in fiscal year 2017) and 
consolidation of our joint intelligence analysis facilities at RAF 
Croughton, with $93 million for the second of three phases included in 
this year's budget request.
    These recommendations will be executed over the next several years, 
but that does not mean that everything will remain static in Europe 
while these changes occur. There were consolidations made before EIC 
and there will undoubtedly be future basing actions. However, the 
holistic review we conducted over the last two years allows us to 
redirect resources currently supporting unneeded infrastructure and 
apply them to higher priorities, thus strengthening our posture in 
Europe.
    Although we continually seek efficiencies as we manage 
installations worldwide, the Department does not conduct this degree of 
comprehensive analyses of its infrastructure on a regular basis. That's 
one of the reasons we have requested BRAC authority from Congress to do 
a review of our U.S. installations. In this fiscal environment it would 
be irresponsible of us not to look for such savings.
                rebasing of marines from okinawa to guam
    The movement of thousands of Marines from Okinawa (and elsewhere) 
to Guam is one of the most significant re-basing action in recent 
years. We appreciate Congress' support in lifting restrictions on the 
relocation. Removal of these restrictions will allow us to move forward 
on this essential component of our rebalance to the Asia-Pacific 
region, resulting in a more geographically dispersed, operationally 
resilient, and politically sustainable posture in the area. As a U.S. 
territory, Guam offers strategic advantages and operational 
capabilities that are unique in the region. Presence in Guam is a force 
multiplier that contributes to a force posture that reassures allies 
and partners and deters aggression.
    We understand Congress' concerns regarding both the cost and 
feasibility of the previous plan. Now, after much effort, we have a 
unified position on an executable plan. It is affordable, has fewer 
effects on Guam (peak population, power demand, and water demand are 
all reduced significantly), and is de-linked from progress on the 
Futenma Replacement Facility on Okinawa, yet preserves Japan's 
commitment to fund a substantial portion of the relocation. The new 
plan stations a smaller and more rotational force on Guam (85,000 
Marines/1,300 dependents) leaving 811,500 Marines on Okinawa. The new 
plan, similar to the previous plan, requires Japan to contribute $3.1 
billion (all in cash) of the estimated $8.7 billion total cost (in 
fiscal year 2012$).
    In addition to the $3.1 billion the Government of Japan has 
committed to construction on Guam, it is committing approximately $12 
billion to relocation efforts on Okinawa, including approximately $7-8 
billion for Okinawa consolidation and approximately $4-5 billion for 
the Camp Schwab replacement for Marine Corps Air Station Futenma.
    The Department has begun executing the Guam Master Plan in earnest 
and we expect only minor adjustments going forward. The Department 
plans to execute more than half a billion dollars of combined U.S. and 
Japanese funds in fiscal year 2016. Specifically, in fiscal year 2016, 
the Department is requesting $126 million for the Known Distance Live-
Fire Training Range at the Northwest Field of 0ersen. We appreciate the 
fiscal year 2015 authorization and appropriation of $50.7 million for 
construction of Ground Support Equipment shops and Marine Wing Support 
Squadron Facilities at Andersen's North Ramp.
    The relocation effort will reach a critical milestone in 2015, as 
the Department will complete the Supplemental Environmental Impact 
Statement (SEIS) associated with the modified plan and issue a Record 
of Decision. That document will reflect the significantly reduced 
strain that will be imposed on Guam as a result of a much smaller--and 
much slower--transition.
    The long-term effects of the earlier plan's greater number of 
Marines and their families, larger footprint, need for additional land 
in the vicinity of the culturally important Pagat Cave (for the live--
fire range), and the large number of imported workers necessary to meet 
the 2014 construction deadline fueled opposition. The new plan 
addresses most of these concerns through a smaller, more rotational 
number of Marines with less effect on the island; no requirement for 
additional land; a ``preferred alternative'' for the live-fire range at 
existing Andersen Air Force Base (AAFB) property; and a longer timeline 
needing far fewer imported workers. Additionally, in August 2014, the 
Department of Navy revised its planning to take advantage of existing, 
but underutilized, family housing at AAFB that needs recapitalization--
a more cost- effective joint USMC/Air Force solution that further 
reduces our planned footprint.
    The table below from the SEIS highlights some of the key 
differences between the original and revised plans:
      
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
      
    In parallel with the effort on the SEIS, the Department called a 
formal meeting of the Economic Adjustment Committee on July 29, 2014 to 
begin an assessment of ``outside-the-fence'' requirements. The EAC's 
work is important as the earlier plan required significant investment 
due to the build-up's effects on Guam's fragile infrastructure. Nearly 
$1.3 billion was previously identified in water and wastewater 
investments following the Navy's 2010 Record of Decision. Japan was to 
provide $740 million in financing for these investments with the 
Department providing the balance.
    However, because the new plan significantly reduces the effect on 
Guam's infrastructure and because Guam itself has upgraded some of its 
infrastructure, ``outside-the-fence'' requirements are expected to be 
significantly less. At its formal meeting on July 29, 2014, the EAC 
empowered teams of member agencies to identify required actions, their 
costs, and a timeline for outside- the- fence investments for those 
requirements specifically identified in the Navy's Final SEIS as being 
necessary to mitigate effects on the Territory. The plans and reports 
from these efforts will comprise the content for the final 2014 NDAA 
Section 2822 report (the ``EAC Implementation Plan'') to Congress. The 
EAC Implementation Plan is to be issued no later than the Department of 
the Navy's Record of Decision later this year.
    We understand the concerns about spending funds for ``outside-the-
fence'' projects, but the Department intends to seek funding only for 
those projects required by the SEIS to address impacts of the build-up. 
The President's fiscal year 2016 budget requests an additional $20.0 
million for work necessary to repair Guam's civilian water and 
wastewater infrastructure and remedy deficiencies that could affect the 
health of DOD personnel. This effort is aligned with the water and 
wastewater investments identified as part of the Guam SEIS and the 
parallel EAC analysis. A more detailed--and complete--cost estimate 
will be included in our Report to Congress later this year.
                   operational and facilities energy
Merger of the Energy, Installations, and Environment Organizations
    In the fiscal year 2015 National Defense Authorization Act, 
Congress directed the merger of the Assistant Secretary of Defense for 
Operational Energy Plans and Programs and the Deputy Under Secretary of 
Defense for Installations and Environment, creating a new Assistant 
Secretary of Defense for Energy, Installations and Environment, 
mirroring the organizational structure of the Services.
    Without question, the operational and facilities facets of the 
Department's energy programs have much in common. First, they 
principally focus on the ability of the Department to carry out its 
missions. Both at installations and in combat platforms, energy is a 
critical resource and vulnerability across the full range of military 
operations. As an enabler, energy availability and resilience define 
the capabilities of weapons platforms, facilities and equipment. In 
addition, energy remains a substantial expense that competes with other 
investments in people and equipment. The drive to protect taxpayer 
dollars, especially in this budget environment, compels us to pursue 
cost-effective measures that increase energy efficiency and reduce our 
cost of operations.
    The management strategies are similar also. Both heavily emphasize 
energy efficiency and reduction in demand, but also include recognition 
of the need to diversify supply. Energy security is a common theme, and 
while that means different things to different people, here it means 
the need for assured access to energy, during both combat and day-to-
day operations. Finally, they look to the future and note the important 
role that technology investments play in setting the groundwork for the 
future force.
    While there are many similarities in approach, fuels, the dominant 
manifestation of operational energy, and electricity, the primary 
medium of facilities energy, are fundamentally different and involve 
very different communities and programs within the Department of 
Defense. I'd like to highlight a few topics in each area.
Operational Energy
    Within the operational energy portfolio, most of our efforts to 
date reflected the imperatives of operations in Afghanistan and Iraq, 
and focused on mitigating the risks of supplying energy to distributed 
contingency bases in an environment characterized by desert conditions 
and irregular adversaries. Looking ahead, we recognize that the 
Department's rebalance to the Asia-Pacific will mean a shift in our own 
operational energy initiatives to reflect a broader set of missions, 
equipment, and threats. I believe we must focus on the energy 
implications of air and sea operations supported from a mix of 
permanent and contingency locations in both the United States and other 
host countries.
    Over the long run, including energy considerations early in the 
force development process offers the largest opportunities to increase 
capability, reduce risk, and mitigate costs. We have continued to 
enhance the role of operational energy in Service Title X wargames that 
influence future organization, training, and equipment. Operational 
energy played a role in wargames led by each of the Services and the 
Defense Logistics Agency over the past year, and we anticipate this 
trend to continue in fiscal year 2016.
    The Department also continues to advocate the importance of 
developing and acquiring platforms that are energy supportable and 
operationally effective in contested environments. Achieving this goal 
will rely on the consistent and appropriate use of the Energy Key 
Performance Parameter (KPP) in new programs. During 2014, we worked 
with the Joint Staff J-4 to refine the Energy KPP instructions in the 
Joint Capabilities Integration and Development System (JCIDS) Manual to 
improve the quality and use of energy supportability analyses. By 
analyzing the energy performance and supportability early in the 
requirements and acquisition process, the Department is provided the 
opportunity to make informed decisions with regard to operational 
energy.
    Using the new guidance, ASD (EI&E) and Joint Staff J-4 continued to 
assess the role of the Energy KPP compliance in new and updated 
systems, including LHA(R), TAO(X), Amphibious Combat Vehicle (ACV) and 
KC-46A aerial tanker. For example, with ASD (EI&E) and Joint Staff 
direction, the USMC is using a future wargame to analyze the 
operational ability of the LHA(R), the largest of the Amphibious 
Assault Ships, to support the F-35B Joint Strike Fighter (JSF). OASD 
(EI&E) and Joint Staff also are working with the Services to determine 
whether the planned fleet of air and sea refuelers--TAO(X) and KC-46A--
are sufficient to meet the energy needs of the future force.
    As the Department considers additional initiatives to address the 
demand for operational energy, I anticipate future attention to how 
adaptations to air and sea platforms can improve our operational 
capability and decrease risks. Changes in operational practices, 
improvements in supporting routing, maintenance, and on-board energy 
management systems, and mid-life upgrades each represent significant 
opportunities for improvement.
Facilities Energy
    Where operational energy is most often a characteristic of 
warfighting platforms, the use of electricity, natural gas and other 
utilities is a fundamental characteristic of the nearly 300,000 
buildings DOD owns and operates. The very nature of the problems are 
different, both in complexity and risk. Delivery of fuel to a forward 
operating location or an aircraft carrier in the Pacific Ocean is 
fundamentally different than tapping into the commercial electric grid. 
As such, fiscal considerations can take a more prominent role in 
facilities energy decisions. For example, energy efficiency projects 
are prioritized, in large part, by return on investment.
    This also leads us to emphasis on third-party financing. For 
example, the Services have increased their focus on third-party 
financing tools, such as Energy Savings Performance Contracts (ESPCs) 
and Utility Energy Service Contracts (UESCs), to improve the energy 
efficiency of their existing buildings. With these tools private energy 
firms or utility companies make energy upgrades to our buildings and 
are paid back over time using utility bill savings. While such 
performance-based contracts have long been part of the Department's 
energy strategy, since 2012 the Department has significantly increased 
our efforts in response to the President's Performance Contracting 
Challenge issued in Dec 2011 and extends to 2016 and beyond.
    In addition, most renewable energy projects we pursue are financed 
by private developers. DOD's authorities for renewable energy--
particularly the ability to sign power purchase agreements of up to 30 
years--provide incentives for private firms to fund the projects 
themselves, and can also provide a strong business case that they are 
able to offer DOD lower energy rates than are being paid currently. In 
addition, both Congress and the President have established renewable 
energy goals that motivate us to pay closer attention to these 
opportunities.
    As a result, the Military Services have stepped up their efforts to 
develop robust renewable energy programs with a goal to deploy a total 
of 3 gigawatts of renewable energy by 2025.
    Within the last three years, the Department has more than doubled 
the number of renewable energy projects in operation with over 800 
megawatts in place today. The Military Departments are developing a 
number of new renewable energy projects, anticipating that all these 
will be operational by fiscal year 2020. These planned projects will 
provide approximately 2 gigawatts of additional renewable energy, 
enough to power 400,000 American homes. The Army recently completed a 
number of large renewable energy projects, including Fort Drum, NY (28 
MW Biomass) and Fort Huachuca, AZ (18 MW Solar PV), and the Air Force's 
large solar project at Davis-Monthan Air Force Base came online in 
fiscal year 2014 (16.4 MW Solar PV). In addition, the Navy has 
innovatively partnered with utilities across the U.S. to construct 
large renewable energy projects to power multiple Navy bases at once, 
with over 380 MW being procured in California and the East Coast.
                       climate change adaptation
    Climate change continues to be a priority for the Department. Both 
the 2010 and 2014 Quadrennial Defense Review (QDR) discussed that the 
impacts associated with a changing climate present a threat to DOD's 
national security mission. I know there is interest in Congress on this 
issue, and many would like to ensure we do not take significant risks 
in response to climate projections. I would suggest that not only are 
we not taking such risks, but we are working to minimize the risks 
posed by future climate changes through prudent planning and analysis.
    First, it is important to understand that DOD looks at climate 
change impacts through the lens of its mission. In the QDR, we refer to 
climate change as a ``threat multiplier'' because it has the potential 
to exacerbate many of the challenges we are dealing with today--from 
infectious disease to terrorism.
    My focus, however, is on installations and infrastructure. Sea-
level rise results in degradation or loss of coastal areas and 
infrastructure, as well as more frequent flooding and expanding 
intrusion of storm surge across our coastal bases. Facilities and 
transportation infrastructure are already impacted by thawing 
permafrost and melting sea ice around our Alaskan installations. The 
changing environment increases the threat to 400 threatened or 
endangered species our installations are home to, leading to increased 
probability of training and operating restrictions. Increased high-heat 
days impose limitations on what training and testing activities our 
personnel can perform. Decreasing water supplies and increased numbers 
of wildfires in the Southwest may jeopardize future operations at 
critical ranges.
    Our warfighters cannot do their jobs without bases from which to 
fight, on which to train, or in which to live when they are not 
deployed. When climate effects make our critical facilities unusable, 
that is an unacceptable impact.
    Even without knowing precisely how the climate will change, we can 
see that the forecast is for more sea level rise; more flooding and 
storm surge on the coasts; continuing Arctic ice melt and permafrost 
thaw; more drought and wildfire in the American Southwest; and more 
intense storms around the world. DOD is accustomed to preparing for 
contingencies and mitigating risk, and we can take prudent steps today 
to mitigate the risks associated with these forecasts. These range from 
the strategic (DOD's Arctic Strategy) to the mundane (ensuring backup 
power and computer servers are not in basements where facilities are 
facing increased flood risk). In 2014, we released the updated DOD 
Climate Change Adaptation Roadmap, which outlines our strategy for 
responding to climate change across the Department.
    The Military Services have conducted initial studies that indicate 
critical installations in the West could run out of water within 
decades. Not only do we need to begin reducing this risk today, but we 
need to comprehensively review our installation footprint to identify 
similarly vulnerable installations. We are conducting a screening level 
assessment of all DOD sites world-wide to identify where we are 
vulnerable to extreme weather events and tidal anomalies today. This 
assessment will be completed later this year and will inform the 
Military Services more comprehensive assessments of individual site 
adaptation needs.
    Given the projected increases in major storm events, we've 
conducted a review of power resilience. We did a comprehensive review 
of installations to ensure critical capabilities have been identified, 
and have back-up power resources that have been tested and will work 
when there is a significant outage.
    We have reviewed Department-level directives, instructions and 
manuals to identify where considerations of climate change should be 
incorporated. We are continuing to update those policies and programs 
that provide the foundation of the Department's actions to ensure we 
are considering the effects of a changing climate on our investments 
and actions. It's not necessarily exciting to change a master planning 
policy, but when we decide to build on higher ground, it reduces the 
risk to those new facilities and is a wiser use of taxpayer funds.
    Our research continues on the effects of thawing permafrost on our 
Alaskan infrastructure, Southwestern extreme heat, Gulf and Atlantic 
coast sea level rise risks, and water issues in the Pacific islands.
    In conclusion, our goal is to increase the Department's resilience 
to the impacts of climate change. To achieve this goal, we are dealing 
with climate change by taking prudent and measured steps to reduce the 
risk to our ability to conduct missions.
                               conclusion
    Thank you for the opportunity to present the President's fiscal 
year 2016 budget request for DOD programs supporting installations, 
energy, and the environment. As I have outlined above, our request is 
significantly more than last year because the total defense budget 
request is $35 billion more than the Budget Control Act cap for fiscal 
year 2016. That translates into a significant reduction in facilities 
risk from last year, but if we are compelled to return to the budget 
caps, that reduction in risk will evaporate.
    We appreciate Congress' continued support for our enterprise and 
look forward to working with you as you consider the fiscal year 2016 
budget.

    Senator Ayotte. Ms. Hammack?

STATEMENT OF HON. KATHERINE G. HAMMACK, ASSISTANT SECRETARY OF 
        THE ARMY, INSTALLATIONS, ENERGY AND ENVIRONMENT

    Ms. Hammack. Chairwoman Ayotte and Ranking Member Kaine, 
and other members of the committee, thank you for the 
opportunity to talk about the Army's fiscal year 2016 budget 
for military construction, Army family housing, environmental, 
and energy.
    To lay the framework, the velocity of instability around 
the world has increased, and the Army is now operating on 
multiple continents simultaneously in ways unforeseen a year 
ago. Although we believe we can meet the primary missions of 
the Defense Strategic Guidance today, our ability to do so has 
become tenuous.
    Fiscal challenges brought on by the Budget Control Act 
strain our ability to bring into balance readiness, 
modernization, and end strength. Even as demand for Army forces 
is growing, budget cuts are forcing us to reduce end strength 
and base support to dangerously low levels.
    We face a mismatch between requirements and resources. 
Although, in 2016, the Army is asking for a 26 percent increase 
from 2015 in military construction, family housing, and base 
closure activities, our budget request is a 33 percent 
reduction from fiscal year 2014, and a 55 percent reduction 
from fiscal year 2013.
    So as force structure declines, we must right-size the 
supporting infrastructure. We must achieve a balance between 
the cost of sustaining infrastructure and Army readiness, 
because degraded readiness makes it more difficult for us to 
provide for the common defense.
    The BCA increases risk for sending insufficiently trained 
and underequipped soldiers into harm's way, and that is not a 
risk that this Nation should accept.
    We need a round the base closure and realignment in 2017. 
Without a BRAC, the realized cost savings from a BRAC, the only 
alternative is to make up for shortages in base funding by 
increasing risk and readiness.
    We did conduct a facility analysis, like Mr. Conger talked 
about, based upon our 2013 audited real property, and 
determined that excess facility capacity is 18 percent at a 
force of 490,000.
    As Army force structure declines even further, excess 
capacity is going to grow. We must size and shape the Army 
facilities for the forces that we support.
    The European infrastructure consolidation review addressed 
excess capacity in Europe. For the Army, an investment of $363 
million results in annual savings of $163 million, which is 
less than a 3-year payback. Our focus was to reduce capacity, 
not capabilities.
    We are facing critical decisions that will impact our 
capabilities for the next decade. It is important that we make 
the right decisions now.
    Without the savings from a BRAC round, the risk is that our 
installations will experience larger cuts than would otherwise 
occur. We look forward to working with Congress to ensure the 
Army is capable of fulfilling its many missions.
    So on behalf of soldiers, families, and civilians, and the 
best Army in the world, thank you for the opportunity to be 
here today. I look forward to your questions.
    Senator Ayotte. Thank you, Secretary Hammack.
    [The prepared statement of Ms. Hammack follows:]
             Prepared Statement by Ms. Katherine G. Hammack
                              introduction
    Chairman Ayotte, Ranking Member Kaine, and Members of the 
Committee, on behalf of the Soldiers, Families, and Civilians of the 
United States Army, thank you for the opportunity to present the Army's 
fiscal year 2016 military construction (MILCON) and installations 
programs budget request.
    The Army installation management community is committed to 
providing the facilities necessary to enable a ready and capable Army. 
The President's fiscal year 2016 MILCON budget request supports a 
regionally-engaged Army in a fiscally-constricted environment.
    We ask for the Committee's continued commitment to our Soldiers, 
Families, and Civilians and support for the Army's MILCON and 
installations programs.
                                overview
    The President's fiscal year 2016 budget requests $1.6 billion for 
Army MILCON, Army Family Housing (AFH), and Base Closure Accounts 
(BCA). This request represents 1.3 percent of the total Army budget 
request. Of this $1.6 billion request, $743 million is for Military 
Construction, Army; $197 million is for Military Construction, Army 
National Guard; $114 million is for Military Construction, Army 
Reserve; $493 million is for AFH; and $30 million is for BCA.
    The Army's facility investments are focused on supporting necessary 
training, maintenance, and operations facilities. These investments 
take into consideration the fiscal landscape we are facing as a Nation, 
which is influenced by the Budget Control Act of 2011, the Bipartisan 
Budget Agreement of 2013, and the strategic shift to realign forces 
toward the Asia/Pacific theater.
                          army force structure
    Fiscal reductions required by current law, and outlined in the 2014 
Quadrennial Defense Review, have put the Army on a path to shrink our 
active component end
    strength and corresponding force structure a second time from a 
peak of 570,000 in fiscal year 2010, to 450,000 by fiscal year 2017. 
This is a total reduction of 120,000 active component Soldiers, 
approximately 22 percent. If sequestration level cuts are imposed in 
fiscal year 2016 and beyond, the Army may have to reduce our end 
strength and corresponding force structure to 420,000 Soldiers by 
fiscal year 2019. This is a cumulative reduction of 150,000 Soldiers, 
approximately 26 percent.
    These reductions will affect every installation in the Army. The 
Army must retain our adaptability and flexibility so we can continue to 
provide regionally-aligned and mission-tailored forces in support of 
national defense requirements. Failing to maintain the proper balance 
between end-strength, readiness, and modernization will result in a 
``hollow'' Army. The Army is already reducing our active component from 
45 Brigade Combat Teams (BCTs) to 32 by the end of fiscal year 2015.
    When we evaluated our initial force structure reductions from 
570,000 to 490,000 Soldiers, we conducted a Programmatic Environmental 
Assessment (PEA), which was prepared in accordance with the National 
Environmental Policy Act (NEPA). The PEA analyzed potential 
environmental impacts that could result from the force reductions, 
including socioeconomic impacts at specified population loss 
thresholds. Since the Army's active component end-strength and 
corresponding force structure will decline further than 490,000 to 
450,000 by fiscal year 2017, the Army initiated a supplemental PEA 
(SPEA) analysis in February 2014 to analyze additional potential 
population loss scenarios that accounted for the impacts of full 
sequestration and Budget Control Act funding levels in fiscal year 2016 
and beyond. Following publication of the SPEA, the Army is in the 
process of conducting approximately 30 community listening sessions at 
all Army installations with military and civilian populations of 5,000 
or more. The community listening sessions give communities an 
opportunity to contribute feedback that will be taken into 
consideration by Army leaders before decisions are made on force 
structure reductions for specific installations.
                       facility capacity analysis
    As the Army reorganizes to address these reductions, we must gauge 
the facility capacity and facility mix that we require to support a 
ready and resilient Army. We have begun conducting a facility capacity 
analysis to determine how much excess capacity will be created at the 
aggregate or enterprise level by the decrease in our end strength and 
corresponding force structure.
    We have conducted programmatic analyses of real property needed to 
support an end-strength and corresponding force structure of 490,000 
active component Soldiers. Results show that with 490,000 active 
component Soldiers, we will have nearly 18 percent excess capacity 
across our worldwide installations, totaling over 160 million square 
feet of facilities that could be repurposed to serve a wide variety of 
other uses (including satisfying other Army facility requirements). 
Inside the United States, excess capacity ranges between 12 and 28 
percent, depending on facility category group, with an average of 
approximately 18 percent.
    The Army estimates it costs $3 per square foot each year to 
maintain underutilized facilities. Accordingly, it costs the Army over 
$480 million a year to operate and sustain worldwide excess capacity. 
Additional excess capacity will be created when the active component 
shrinks further, necessitating incremental facility capacity analyses
    In January 2013, the Secretary of Defense directed a thorough 
review of European infrastructure requirements. This effort is 
consistent with the Congressional direction communicated in the fiscal 
year 2014 National Defense Authorization Act. In May 2014, the first 
set of decisions resulting from the European Infrastructure 
Consolidation (EIC) analysis was released. The Secretary of Defense 
approved 22 actions, 13 of which were Army actions. Many of these 
actions had been underway prior to EIC, yet they were formally 
reevaluated and found to be wholly consistent with the intent of EIC: 
to reduce excess infrastructure and associated operating costs, without 
sacrificing operational capabilities.
    In January 2015, the Department of Defense announced 26 additional 
decisions, 20 of which were Army actions, which resulted from a 
rigorous analytic method that adapted elements of the Base Closure and 
Realignment (BRAC) process to an overseas environment. This analysis 
included a Capacity Analysis, a Military Value Analysis, and a 
structured Scenario Development and Evaluation process. The Army is now 
nearing completion of fully developed and coordinated business plans to 
ensure these decisions are implemented between 2016 and 2020, in a 
manner that conforms to the Secretary of Defense's guidance and 
achieves both the projected savings and infrastructure reductions.
    The 33 Army EIC actions will significantly reduce our 
infrastructure in Europe at a considerably faster pace than previously 
envisioned. They are projected to yield Annual Recurring Savings of 
$163 million by fiscal year 2021 after implementation costs of $358 
million are incurred between fiscal year 2014 and 2020.
    The use of BRAC methods and tools to evaluate our European 
infrastructure was helpful in building expertise and proficiency that 
will help prepare the Army for a future BRAC Round. Moreover, the rigor 
of the analysis helped to demonstrate that DOD has reduced, or 
identified for reduction, all that it can overseas, and must now seek 
reductions within the United States, for which new BRAC authority is 
essential. This authority is needed to eliminate excess, balance 
infrastructure and force structure, and operate within projected fiscal 
constraints. DOD and the Army have the tools and authorities needed to 
identify and reduce our excess capacity overseas. Inside the United 
States, however, the best and proven method to address excess 
infrastructure, in a cost-effective, transparent, and equitable manner, 
is through the BRAC process.
    Our evaluation of European infrastructure followed the BRAC 
analytic methods and laid the foundation for the next round of BRAC. 
BRAC is a proven, fair, and cost effective process; the savings have 
been validated by the Government Accountability Office (GAO). Similar 
to our EIC effort, the Army is committed to a future BRAC round that is 
focused on efficiency and consolidation rather than transformation.
    The Army needs BRAC to achieve savings of a sufficient magnitude to 
prevent the deterioration of our critical infrastructure. As the Army's 
end-strength and force structure decline alongside available funding, 
hundreds of millions of scarce dollars will be wasted in maintaining 
underutilized buildings and infrastructure. Trying to spread a smaller 
budget over the same number of installations and facilities will 
inevitably result in rapid declining conditions of Army facilities.
    The Army has used existing authorities to vacate leased space and 
move from temporary buildings into permanent buildings. For example, at 
Fort Campbell, Kentucky, when the Fourth BCT of the 101st Airborne 
Division was inactivated, it resulted in 228 facility reallocation 
moves affecting 5 different Brigades. At the end of the process, Fort 
Campbell vacated and removed 91 relocatable buildings consisting of 
over 200,000 square feet.
    As laudable as the Fort Campbell efficiency measures have been, 
however, the stark budgetary reality is that modest savings from these 
prudent efficiency measures cannot substitute for the significant 
savings of a new BRAC round. The cost of running a garrison is 
relatively fixed, regardless of whether the supported population is 
reduced by 10, 20, or 40 percent. The Army must continue to evaluate, 
balance, and right-size the diverse and extensive supporting 
infrastructure that enables our effective fighting forces. BRAC is the 
only proven authority that allows the Army to achieve this balance, 
reduce costs, and achieve the necessary savings.
    For many communities near our installations, BRAC is better than 
proceeding with the reduction of force structure and excess capacity 
under current law. It provides the impacted communities a chance to 
conduct comprehensive redevelopment planning with federal resources to 
assist them. It also can provide the community additional property 
conveyance options. Neither the Army nor the supporting communities 
benefit from retaining underutilized installations that are 
unaffordable for the Army with diminished economic benefit to the 
community.
                   facility investment strategy (fis)
    As the Army shapes the Force of 2025 and Beyond through a series of 
strategic initiatives, the Installation Management Community continues 
to focus on providing quality, energy-efficient facilities in support 
of the Army Leadership priorities.
    The FIS provides a strategic framework that is synchronized with 
the Army Campaign Plan (ACP); Total Army Analysis; and the Planning, 
Programming, Budgeting & Execution (PPBE) to determine capital 
investment needed to sustain Army facilities at installations and Joint 
Service bases across the country. The FIS is a cost-effective and 
efficient approach to facility investments that reduces unneeded 
footprint, saves energy by preserving efficient facilities, 
consolidates functions for effective space utilization, demolishes 
failing buildings, and uses appropriate excess facilities to eliminate 
off-post leases.
    FIS uses MILCON funding to replace failing facilities and build out 
critical facility shortages; Operation and Maintenance (O&M) funding to 
address the repair and maintenance of existing facilities; O&M 
Restoration and Modernization (R&M) funding to improve existing 
facility quality; O&M Sustainment funding to maintain existing 
facilities; and Demolition and Disposal funding to eliminate failing 
excess facilities. Focused investments from MILCON and O&M funding 
support facilities grouped in the following categories: Redeployment/
Force Structure, Barracks, Revitalization, Ranges, and Training 
Facilities. The fiscal year 2016 budget request implements the FIS by 
building out shortfalls for unmanned aerial vehicle units, Army Cyber, 
initial entry training barracks, selected maintenance facilities, and 
reserve component facilities. Additional departmental focus areas 
include Organic Industrial Base and Energy/Utilities.
                    fiscal year 2016 budget request
                      military construction, army
    The fiscal year 2016 Military Construction, Army (MCA) budget 
requests an authorization of $609 million and appropriations for $743.2 
million. The appropriations request includes $134.2 million for 
planning and design, minor military construction, and host nation 
support. The MCA program is focused on the MILCON categories of Army 
Cyber, Barracks, Revitalization, Ranges and Training Facilities, and 
Other Support Programs.
    Of the $743.2 million, $90 million will be spent on Army Cyber. The 
fiscal year 2016 MCA budget requests a Command and Control Facility for 
the recently-established Army Cyber Command (ARCYBER) and Joint Forces 
Headquarters Cyber at Fort Gordon, Georgia.
    Of the $743.2 million, $56 million will be spent on Barracks. As 
part of the Army's continued investment in barracks, the fiscal year 
2016 MCA budget provides for one project to complete a Reception 
Barracks Complex at Fort Sill, Oklahoma, which includes 254 barracks 
spaces and company operations facilities for Initial Entry Training 
(IET) Soldiers during their in-processing.
    Of the $743.2 million, $397.6 million will be spent on 
Revitalization. As part of the Army's Facility Investment Strategy, the 
Army is requesting eight projects to address failing facilities and/or 
critical facility shortfalls to meet the unit mission requirements. 
Projects include the $43 million Homeland Defense Operation Center at 
Joint Base San Antonio, Texas; a $70 million Waste Water Treatment 
Plant at West Point, New York; a $37 million Instruction Building at 
Joint Base Myer-Henderson Hall, Virginia; a $85 million Powertrain 
Facility (Infrastructure/Metal) at Corpus Christi Army Depot, Texas; a 
$98 million replacement of Pier 2 at the Military Ocean Terminal 
Concord, California; a $7.8 million Physical Readiness Training 
Facility at Fort Greely, Alaska; a $5.8 million Rotary Wing Taxiway at 
Fort Carson, Colorado; and a $51 million Vehicle Maintenance Shop at 
Grafenwoehr Training Area, Germany.
    Of the $743.2 million, $65.4 million will be spent on Ranges and 
Training Facilities. These funds will be invested to construct a Non-
Commissioned Officer (NCO) Academy at Fort Drum, New York ($19 million) 
as well as two new Training Support Facilities. These facilities are 
located at Fort Sill, Oklahoma ($13.4 million) and Fort Lee, Virginia 
($33 million) to meet Program of Instruction (POI) training 
requirements for Soldiers, Non-Commissioned Officers and Junior 
Officers undergoing Military Occupational Specialty training.
    Of the $743.2 million, $134.2 million will be spent on Other 
Support Programs. This includes $73.2 million for planning and design 
of MCA projects, $36 million for the oversight of design and 
construction of projects funded by host nations, and $25 million for 
unspecified minor construction.
               military construction, army national guard
    The fiscal year 2016 Military Construction, National Guard (MCNG) 
budget requests an authorization of $132.1 million and appropriations 
for $197.2 million. The appropriations request includes $35.3 million 
for planning and design and minor military construction and $29.8 
million for previously-authorized projects at Dagsboro, Delaware ($10.8 
million) and Yakima, Washington ($19 million). The MCNG program is 
focused on the readiness centers, maintenance facilities, training 
facilities, ranges and barracks.
    Of the $197.2 million, $88.3 million will be spent on Readiness 
Centers. The fiscal year 2016 budget request includes five readiness 
centers: Palm Coast, Florida ($18 million); Easton, Maryland ($13.8 
million); Salem, Oregon ($16.5 million); Richmond, Virginia ($29 
million); and Camp Hartell, Connecticut ($11 million). The readiness 
centers include new facilities as well as expansions/alterations to 
existing facilities. The projects primarily address space shortfalls 
and replacement of obsolete facilities. In one case, the project will 
eliminate the need to continue leasing a facility. The new readiness 
centers will enhance the Army National Guard's readiness to perform 
state and federal missions.
    Of the $197.2 million, $26.7 million will be spent on Maintenance 
Facilities. Three National Guard maintenance shops are included in the 
request. The Dagsboro, Delaware facility ($10.8 million) addresses 
shortfalls in interior space, privately-owned vehicle parking, and 
military vehicle parking. A project in North Hyde Park, Vermont ($7.9 
million) adds space to an existing facility that only has 22 percent of 
the required space. One final addition/alteration project is located in 
Reno, Nevada ($8 million) and will address space shortfalls and 
modernize the existing facility.
    Of the $197.2 million, $16 million will be spent on Training 
Facilities. At Fort Indiantown Gap, Pennsylvania, a new training aids 
center ($16 million) replaces a deteriorated World War Two-era facility 
and other temporary storage.
    Of the $197.2 million, $11.9 million will be spent on Ranges. The 
Army National Guard's request contains four range projects. Two range 
projects are located in Salina, Kansas and consist of an automated 
combat pistol/military police firearms qualification course ($2.4 
million) and a modified record fire range ($4.3 million). Both of these 
ranges are necessary in order to meet current training range criteria 
and achieve the required throughput. The range project at Camp Ravenna, 
Ohio, a modified record fire range ($3.3 million), will provide needed 
capacity for unit training. In Sparta, Illinois a basic firing range 
($1.9 million) will address the lack of this type of facility in south 
central Illinois.
    Of the $197.2 million, $19 million will be spent on Barracks 
facilities. At Yakima, Washington, a new transient training barracks 
($19 million) addresses a shortfall in space and quality.
    Of the $197.2 million, $35.3 million will be spent on Other Support 
Programs. The fiscal year 2016 Army National Guard budget request 
includes $20.3 million for planning and design of future year projects 
and $15 million for unspecified minor military construction.
                  military construction, army reserve
    The fiscal year 2016 Military Construction, Army Reserve (MCAR) 
budget requests an authorization of $88.2 million and appropriations 
for $113.6 million. The appropriations request includes $16.1 million 
for planning and design and minor military construction and $9.3 
million for a previously-authorized project at Starkville, Mississippi.
    Of the $113.6 million, $97.5 million will be spent on 
Revitalization. The fiscal year 2016 Army Reserve budget request 
includes five projects that build out critical facility shortages and 
replace and modernize failing infrastructure and inefficient facilities 
with new operations and energy efficient facilities. The Army Reserve 
will construct three new reserve centers in Riverside, California; 
MacDill AFB, Florida; and Starkville, Mississippi that will provide 
modern training classrooms, simulations capabilities, and maintenance 
platforms that support the Army force generation cycle and the ability 
of the Army Reserve to provide trained and ready soldiers for Army 
missions when called. The Starkville, Mississippi project was 
authorized in the fiscal year 2015 National Defense Authorization Act, 
but no funds were appropriated. In Conneaut Lake, Pennsylvania the Army 
Reserve, through the Defense Access Road Program, will improve an 
access road leading to an Army Reserve Local Training Area and 
maintenance facilities. The request also includes a new vehicle 
maintenance facility at Orangeburg, New York.
    Of the $113.6 million, $16.1 million will be spent on Other Support 
Programs. The fiscal year 2016 Army Reserve budget request includes 
$9.3 million for planning and design of future year projects and $6.8 
million for unspecified minor military construction to address 
unforeseen critical needs.
                          army family housing
    The Army's fiscal year 2016 AFH budget requests $493.2 million for 
construction and housing operations worldwide. The AFH inventory 
includes 10,614 government-owned homes, 4,984 government-leased homes, 
and 86,077 privatized-homes. The Army has privatized over 98 percent of 
on-post housing assets inside the United States. All Army overseas 
Family housing quarters are either government-owned or government-
leased units.
    Of the $493.2 million, $85.8 million will be spent on Operations. 
The Operations account includes four sub-accounts: management, 
services, furnishings, and a small miscellaneous account. Within the 
management sub-account, Installation Housing Services Offices provide 
post housing, non-discriminatory listings of rental and for-sale 
housing, rental negotiations and lease review, property inspections, 
home buying counseling, landlord-tenant dispute resolution, in-and-out 
processing housing assistance, and assistance with housing 
discrimination complaints and act as a liaison between the installation 
and local and state agencies. In addition, this account supports remote 
access to housing information from anywhere in the world with direct 
information or links to garrison information such as schools, 
relocation information, installation maps, housing floor plans, photo 
and housing tours, programs and services, housing wait list 
information, and housing entitlements.
    Of the $493.2 million, $65.6 million will be spent on Utilities. 
The Utilities account includes the cost of delivering heat, air 
conditioning, electricity, water, and wastewater support for owned or 
leased (not privatized) Family housing units.
    Of the $493.2 million, $75.2 million will be spent on Maintenance 
and Repair. The Maintenance and Repair account supports annual 
recurring projects to maintain and revitalize AFH real property assets 
and is the account most affected by budget changes. This funding 
ensures that we appropriately maintain the 10,614 housing units so that 
we do not adversely impact Soldier and Family quality of life.
    Of the $493.2 million, $144.9 million will be spent on Leasing. The 
Army Leasing program is another way to provide Soldiers and their 
Families with adequate housing. The fiscal year 2016 budget request 
includes funding for 575 temporary domestic leases in the US, and 4,409 
leased units overseas.
    Of the $493.2 million, $22 million will be spent on Privatization. 
The Privatization account provides operating funds for the Army's 
Residential Communities Initiatives (RCI) program portfolio and asset 
management and government oversight of privatized military Family 
housing. The need to provide oversight of the privatization program and 
projects is reinforced in the fiscal year 2013 National Defense 
Authorization Act, which requires more oversight to monitor compliance, 
review, and report performance of the overall privatized housing 
portfolio and individual projects.
    In 1999, the Army began privatizing Family housing assets under the 
Residential Communities Initiative (RCI). All scheduled installations 
have been privatized through RCI. RCI Family housing is established at 
44 locations--98 percent of the on-post Family housing inventory inside 
the United States. Initial construction and renovation investment at 
these 44 installations is estimated at $13.2 billion over a 3-14-year 
initial development period (IDP), which includes an Army contribution 
of approximately $2 billion. All IDPs are scheduled to be completed by 
2019. From 1999 through 2013, our RCI partners have constructed 31,935 
new homes and renovated another 25,834 homes.
    Of the $493.2 million, $99.7 million will be spent on Construction. 
The Army's fiscal year 2016 Family Housing Construction request is for 
$89 million for new construction, $3.5 million for construction 
improvements and $7.2 million for planning and design. The Army will 
construct 38 single Family homes at Rock Island Arsenal, Illinois to 
support Senior Officer and Senior Non-Commissioned Officer and 
Families. These new homes enable the Army to fully address the housing 
deficit and to eliminate dependency on leased housing. The Army will 
construct 90 apartment quarters on Camp Walker in Daegu, Korea to 
replace aged and worn out leased units to consolidate Families on post.
                       base closure account (bca)
    BRAC property disposal remains an Army priority. Putting excess 
property back into productive re-use, which can facilitate job 
creation, is important to the communities in which they are located.
    The Army's portion of the fiscal year 2016 BCA budget request 
totals $29.7 million. The request includes $14.6 million for caretaker 
operations and program management of remaining properties and $15.1 
million for environmental restoration efforts. In fiscal year 2016, the 
Army will continue environmental compliance and remediation projects at 
various BRAC properties. The funds requested are needed to keep planned 
environmental response efforts on track particularly at legacy BRAC 
installations including Fort Ord, California and Pueblo Chemical Depot, 
Colorado. Additionally, funds requested support environmental projects 
at several BRAC 2005 installations including Riverbank Army Ammunition 
Plant, California; Fort Monmouth, New Jersey; Fort Monroe, Virginia; 
and Umatilla Chemical Depot, Oregon. The current estimated cost to 
complete all BRAC environmental cleanup requirements is $957 million 
over a period of approximately 30 years.
    When the Army sells excess BRAC property, proceeds go back into our 
Base Closure Account to fund remaining Army environmental and 
maintenance requirements on our BRAC sites. Sales of Army BRAC property 
at substantially fair market value help protect programs that support 
Active, Guard, and Reserve installations.
    In total, the Army has disposed of almost 225,000 acres (76 percent 
of the total acreage disposal requirement of 297,000 acres), with 
approximately 72,000 acres (24 percent) remaining. The current goal is 
for all remaining excess property to be conveyed by 2023. Placing this 
property into productive reuse helps communities rebuild the local tax 
base, generate revenue, and, most importantly, replace lost jobs.
    There is life after BRAC for defense communities. BRAC-impacted 
communities have leveraged planning grants and technical assistance 
from the DOD Office of Economic Assistance (OEA), as well as BRAC 
property disposal authorities, to adjust in ways that are often not 
possible outside the BRAC process. There are many instances of how BRAC 
property has been put to new uses; below are three examples.
    At Fort Monmouth, transferred property is now in productive re-use. 
During November 2014, CommVault, a data protection and information 
software company moved its global headquarters to a portion of the 
former Fort Monmouth. CommVault moved 500 existing employees and 400 
new employees into the new 275,000 square foot facility less than two 
years after the Army conveyed a 55 acre parcel to the public 
development authority in consideration for an Economic Development 
Conveyance under BRAC law CommVault officials anticipate 2,000 
additional employees will be hired upon completion of a 650,000 square 
foot addition to the 55 acre campus. The company's decision to re-
locate and expand at its new location is a major step to establish a 
technology hub on the former Fort Monmouth.
    At Fort Gillem, Kroger, one of the world's largest grocery 
retailers, will open a one million square foot state-of-the-art 
distribution center on 253 acres at the former Fort Gillem, creating 
120 new jobs and investing more than $175 million into the former Army 
and Air Force Exchange Service (AAFES) distribution facility over the 
next five years. The new jobs will include warehouse, security, 
transportation management, engineering and facilities management 
positions. The community anticipates 1,500 new jobs over the next two 
years and revenues to support critical services for the residents of 
Forest Park. Like Ft Monmouth, the Army conveyed this property to the 
Local Redevelopment Authority as an Economic Development Conveyance, 
receiving $15 million at closing with an additional $15 million in 
structured payments over the next seven years.
    The third BRAC example is the US Army Reserve Center #2 in Houston, 
Texas. This six acre site, including more than 15,000 square feet, was 
conveyed in August 2012 to the City of Houston under a Department of 
Justice Public Benefit Conveyance (PBC) for use as a police department. 
This type of re-use is common across the country whenever the Army 
closes a Reserve Center.
                                 energy
    The Army is improving our installation energy use and 
sustainability efforts. In fiscal year 2016, the Installation Energy 
budget total is $1.68 billion. This budget total includes $45.8 million 
from the DOD-wide MILCON appropriation for the Energy Conservation 
Investment Program (ECIP), $150.1 million for the Energy Program/
Utilities Modernization Program, and $1.48 billion for Utilities 
Services. The Army conducts financial reviews, business case and life 
cycle cost analysis, and return on investment evaluations for all 
energy initiatives.
    Of the $1.68 billion, $45.8 million will be spent on the Energy 
Conservation Investment Program (ECIP). The Army invests in energy 
efficiency, on-site small-scale energy production, and grid security 
through the DOD's appropriation for ECIP. In fiscal year 2014, the DOD 
began conducting a project-by-project competition to determine ECIP 
funding distribution to the Services. In fiscal year 2016, the Army 
received $45.8 million for seven projects, including six energy 
conservation projects and one renewable energy project.
    Of the $1.68 billion, $150.1 million will be spent on Energy 
Program/Utilities Modernization. Reducing consumption and increasing 
energy efficiency are among the most cost-effective ways to improve 
installation energy security. The Army funds many of its energy 
efficiency improvements through the Energy Program/Utilities 
Modernization program account. Included in this total are funds for 
energy efficiency projects, the Army's metering program, modernization 
of the Army's utilities, energy security projects, and planning and 
studies. In addition, this account funds planning and development of 
third party financed renewable energy projects through the Office of 
Energy Initiatives (OEI). The OEI currently has 14 projects completed, 
under construction, in the procurement process, or in the final stages 
before procurement with a potential of over 400 Mega Watts (MW) of 
generation capacity. Power purchased in conjunction with OEI projects 
will be priced at or below current or projected installation utility 
rates.
    Of the $1.68 billion, $1.48 billion will be spent on Utilities 
Services. The Utilities Services account pays all Army utility bills 
including the repayment of Utilities Privatization (UP), Energy Savings 
Performance Contracts (ESPCs), and Utilities Energy Service Contracts 
(UESCs). Through the authority granted by Congress, ESPCs and UESCs 
allow the Army to implement energy efficiency improvements through the 
use of private capital, repaying the contractor for capital investments 
over a number of years out of the energy cost savings. The Army has the 
most robust ESPC program in the Federal government. The ESPC program 
has more than 200 Task Orders at 78 installations, representing $1.68 
billion in private sector investments, and over 370 UESC Task Orders at 
47 installations, representing $583 million in utility sector 
investments. We have additional ESPC projects in development, totaling 
over $300 million in private investment and $60 million in development 
for new UESCs. From December 2011 through December 2014, under the 
President's Performance Contracting Challenge, the Army executed $725 
million in contracts with third-party investment using ESPCs and UESCs.
                              environment
    The Army's fiscal year 2016 budget provides $1.1 billion for 
Environmental Programs in support of current and future readiness. This 
budget supports legally-driven environmental requirements under 
applicable Federal and State environmental laws, binding agreements, 
and Executive Orders. It also promotes stewardship of the natural 
resources that are integral to our capacity to effectively train our 
land-based force for combat.
    This budget maintains the Army's commitment to acknowledge the past 
by restoring Army lands to a useable condition and by preserving 
cultural, historic and Tribal resources. It allows the Army to engage 
the present by meeting environmental standards that enable Army 
operations and protect our Soldiers, Families, and communities. 
Additionally, it charts the future by allowing the Army to 
institutionalize best practices and technologies to ensure future 
environmental resiliency.
             sustainment/restoration & modernization (r&m)
    This year's fiscal year 2016 sustainment funding is $2.9 billion or 
80 percent of the DOD Facilities Sustainment Model (FSM) requirement 
for all the Army components. Due to this lower level of sustainment 
funding, we are accepting a level of risk in degraded facilities due to 
deferred maintenance. Our facility inventory is currently valued at 
$299 billion.
    In keeping with the FIS, the Army continues to invest in facility 
restoration through O&M R&M currently budgeted for $562 million. Our 
focus is to restore trainee barracks, enable progress toward energy 
objectives, and provide commanders with the means of restoring other 
critical facilities. The Army's demolition program has been increased 
by 46 percent to $42.2 million, which increases the rate at which we 
are removing failing excess facilities. Facilities are an outward and 
visible sign of the Army's commitment to providing a quality of life 
for our Soldiers, Families, and Civilians that is consistent with their 
commitment to our Nation's security.
                        base operations support
    The Army's fiscal year 2016 Base Operations Support (BOS) request 
is $9.2 billion in support of leadership's commitment to provide 
quality of life to our Soldiers, Civilians, and Families that is 
commensurate with their service. The fiscal year 2016 BOS funding 
request represents a 10 percent reduction compared to fiscal year 2014 
full year execution (including OCO authorized in support of Base 
Budget). It should be noted that the fiscal year 2016 BOS budget 
reflects a 6 percent increase above the fiscal year 2015 BOS-enacted 
level ($8.7 billion), demonstrating senior leadership's desire to 
address installation readiness. Although the Military and Civilian 
workforce is being reduced, the number of installations remains the 
same. Balancing the BOS funding across 154 installations world-wide 
stresses the Army's ability to provide a safe training environment and 
a respectable quality of life on our installations. The Army will 
continue to be fiscally challenged to meet the demands of our 
installation communities.
    The Army remains committed to our Family programs and continues to 
evaluate these services in order to maintain relevance and 
effectiveness. Ensuring the resiliency of our Soldiers and Families is 
the priority of programs such as Army Substance Abuse Program, Soldier 
Family Assistance Centers, and Suicide Prevention.
    Given fiscal realities, the Army continues to evaluate programs to 
fully optimize resources by eliminating redundant or poorly performing 
programs and making tough decisions to adjust service levels and then 
manage expectations. We continue to seek internal efficiencies/
tradeoffs as our fiscal environment forces the internal realignment of 
BOS funds to support these Army priorities.
    Budget uncertainties are producing real life consequences in 
training and installation readiness, as well as the local community. 
Current funding requires installations to scale back or cancel service 
contracts that employ people in local communities and requiring 
installations to work with commanders to use special duty assignments 
to support installation services and programs (e.g., installation 
security, transportation, vehicle and range maintenance, POL and Ammo 
handling).
    Without a reduction in the number of installations, the Army will 
be forced to sacrifice quality of life programs at the expense of 
maintaining excess capacity. The cumulative effect of funding 
reductions over the years harm the overall quality of life on our 
installations and adjoining communities as the Army realigns our 
Military and Civilian population and reduces supporting service program 
contracts across the garrisons.
                  intergovernmental support agreements
    The Army is implementing an overarching strategy to incorporate 
Intergovernmental Support Agreements (IGSAs) as authorized in the 
fiscal year 2013 NDAA, Section 331 (codified as 10 U.S.C. Sec.  2336). 
The clarification included in the fiscal year 2015 NDAA facilitates the 
Army's ability to enter and participate in public-public partnerships. 
The Department of the Army issued an Execution Order to Army Commands 
in August of 2013 with initial guidance. Installations have identified 
96 IGSA concepts, three of which have been submitted to Army 
headquarters for approval. These initial proposals will assist the Army 
to develop a standardized process for identifying, evaluating and 
approving IGSAs. Further guidance is being developed from the 
clarifications provided last year.
                               conclusion
    The Army's fiscal year 2016 installations management budget request 
is a balanced program that supports the Army as we transition from 
combat and supports our Soldiers, Families, and Civilians while 
recognizing the current fiscal conditions.
    The Army's end-strength and force structure are decreasing 
consistent with the 2014 QDR. At 450,000 active component Soldiers, we 
have evidence that the Army will have well over 18 percent excess 
capacity. The Army needs the right tools to right size our capacity. 
Failure to reduce excess capacity will divert hundreds of millions of 
dollars per year away from critical training and readiness functions.
    The European Infrastructure Consolidation Assessment (EIC) has been 
extremely successful. It shows that the combination of our Army BRAC-
based Infrastructure Analysis and the already robust strategic plans 
effort of the U.S. Army in Europe prepare us to meet the challenges of 
the future. The European Infrastructure Consolidation results 
demonstrate the Army's commitment to seek greater efficiencies and 
ensure we are focusing resources where they can have the greatest 
effect. The resulting actions ensure, even in the context of a 
challenging fiscal environment, that we are ready and able to defend 
U.S. interests and meet our commitment to our Allies now and in the 
future.
    BRAC is a proven and fair means to address excess capacity. BRAC 
has produced net savings in every prior round. On a net $13 billion 
investment, the BRAC 2005 round is producing a net stream of savings of 
$1 billion a year. In this case, BRAC 2005 is producing a 7.7 percent 
annual yield. That is a successful investment by any definition. A 
future round of BRAC is likely to produce even better returns on 
investment. We look forward to working with Congress to determine the 
criteria for a BRAC 2017 round.
    Thank you for the opportunity to appear before you today and for 
your continued support for our Soldiers, Families, and Civilians.

    Senator Ayotte. Secretary McGinn?

STATEMENT OF HON. DENNIS V. McGINN, ASSISTANT SECRETARY OF THE 
          NAVY, ENERGY, INSTALLATIONS AND ENVIRONMENT

    Mr. McGinn. Chairman Ayotte, Ranking Member Kaine, members 
of the committee, I would like to start my testimony by noting 
the tragic loss overnight of 11 patriotic Americans in the Gulf 
of Mexico, 4 Army National Guard, 7 marines. We send our 
thoughts and prayers to their families, and hope that they find 
solace in the fact that the loss of their loved ones was in the 
service of our country.
    The world events of last year and the first part of this 
year demonstrate the complex and unpredictable nature of our 
times. From the rise of the Islamic State, an emboldened 
Russian Federation, outbreak of the Ebola virus, the Navy and 
Marine Corps team has been on station forward as America's 
first responders, operating around the clock and around the 
world.
    Our installations provide the backbone of support for our 
maritime forces, enabling that forward presence. Our Nation's 
Navy and Marine Corps team must have the ability to sustain and 
project power, effect deterrence, and provide humanitarian 
assistance in disaster relief whenever, wherever, and for 
however long needed to protect the interests of the United 
States and our allies.
    Yet, fiscal constraints introduce additional complexity and 
challenges as our department strives to strike the right 
balance between resources, risk, and strategy.
    The President's Budget request for fiscal year 2016, while 
supporting the 2014 Quadrennial Defense Review, requests $13.3 
billion to operate, maintain, and recapitalize our Department 
of the Navy shore infrastructure.
    This is a welcome increase of $1.5 billion from amounts 
appropriated in fiscal year 2015, but remains below the DOD 
goal for facilities sustainment.
    On the question of risk and reduced investment, we are 
funding the sustainment, restoration and, modernization of our 
facilities at a level to arrest the immediate decline in the 
overall condition of our most critical infrastructure. By 
deferring less critical repairs, especially for nonmission-
critical items, we acknowledge that we are allowing certain 
facilities to degrade.
    However, this budget has us headed back in the right 
direction. Last year's budget risks would lead, if continued, 
to rapid degradation of overall shore establishment readiness, 
if continued into the future.
    I will look forward to working with you to sustain the 
warfighting readiness and quality of life for the U.S. Navy and 
Marine Corps, the most formidable expeditionary fighting force 
the world has ever known.
    Thank you for the opportunity to testify, and I look 
forward to your questions.
    Senator Ayotte. Thank you, Secretary McGinn.
    Please know, as a committee, that we offer our condolences 
as well to the families and to those lost by the marines.
    Mr. McGinn. Thank you.
    Senator Ayotte. Thank you.
    [The prepared statement of Mr. McGinn follows:]
                 Prepared Statement by Dennis V. McGinn
    Chairman Ayotte. Ranking Member Kaine, and members of the 
Subcommittee, I am pleased to appear before you today to provide an 
overview of the Department of the Navy's (DON's) investment in its 
infrastructure and energy programs.
                      toward a more secure future
    The world events of 2014 demonstrate the complex and unpredictable 
nature of our times. From the rise of the Islamic State, an emboldened 
Russian Federation, and the outbreak of the Ebola virus, the Navy-
Marine Corps team has been on station as America's ``first 
responders'', operating around the clock and around the world. Our Navy 
and Marine Corps must be manned, trained, and equipped to deter and 
respond to geo-political crises and natural events wherever, whenever, 
and however they occur.
    Our installations provide the backbone of support for our maritime 
forces, enabling their forward presence. Last year's budget, while 
conforming to the spending caps imposed by the Bipartisan Budget Act of 
2013, would lead to rapid degradation of shore establishment readiness 
if continued into the future. In contrast, the DON's President's Budget 
request for fiscal year 2016 (PB 2016) makes progress toward achieving 
a more sustainable investment profile, with increases of 50 percent in 
military construction funding and nearly 30 percent in the Facilities 
Sustainment, Restoration and Modernization accounts, while continuing 
to manage risk in shore infrastructure investment and operations. This 
increased funding enables the Department to meet the 6 percent 
statutory investment in our shipyards, aviation fleet readiness 
centers, and depots and will accomplish the deferred critical 
maintenance on other facilities. We're making investments in safety and 
quality of life projects, too, but this progress assumes the Department 
will not be held to the discretionary budget caps.
                    investing in our infrastructure
    Overview  In fiscal year 2016, the Department is requesting $13.3 
billion in various appropriations accounts, an increase of $1.5 billion 
from amounts appropriated in fiscal year 2015 to operate, maintain and 
recapitalize our shore infrastructure. These investments will enable 
the Department to support the three pillars upon which the 2014 
Quadrennial Defense Review (QDR) is based: protect the homeland, build 
security globally; project power and win decisively. Figure 1 provides 
a comparison between the fiscal year 2015 enacted budget and the PB 
2016 request by appropriation.
      
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              Figure 1: DON Infrastructure Funding by Appropriation

    We continue to accept risk in shore infrastructure by prioritizing 
life/safety issues and efficiency improvements to existing 
infrastructure, focusing on the repair of only the most critical 
components of our mission critical facilities, and by deferring less 
critical repairs, especially for non-mission-critical facilities.
    Protecting the Homeland  Together, the Navy and Marine Corps will 
invest over $250 million domestically in military construction funds to 
upgrade or modernize utilities and critical infrastructure that will 
ensure continuity of operations in the event of man-made or natural 
disasters. In Georgia at Kings Bay, the Navy would upgrade the 
electrical distribution and supporting communications network that 
haven't been substantially modified since 1997. At its logistics base 
in Albany, the Marine Corps will replace an aging and degraded heating 
and ventilation system that has exceeded its useful life. In Washington 
State, a $34 million project would complete the waterfront restricted 
area at Naval Submarine Base, Bangor, ensuring the security of our 
strategic weapons arsenal.
    We're making investments to protect and be good stewards of our 
natural environment, too. At its Recruit Depot in Parris Island, South 
Carolina, the Marine Corps will construct additional safety berms at 
its ranges to retain expelled rounds and thereby protecting the 
adjacent sensitive wetlands from copper and lead contamination. At the 
Naval Magazine in Indian Island, Washington, the Navy will provide 
shore power to an ammunitions pier, replacing leased generators that 
now run under operationally limiting air permits. Unrelated to the 
broader issue of rebalancing forces to the Asia-Pacific Region, the 
Navy will correct deficiencies in the storm water and waste water 
systems in Guam, resolving an outstanding Notice of Violation issued by 
the Environmental Protection Agency.
    Building Global Security  The fiscal year 2016 budget request 
supports global security by strengthening our international 
partnerships and enhancing our defense posture abroad. Fulfilling the 
U.S. commitment to our NATO allies regarding the Phased Adaptive 
Approach to European ballistic missile defense, we will construct an 
interceptor site in Redzikowo, Poland, complementing the one we're 
building in Romania. We have enduring interests in the Middle East and 
the Gulf region. In Bahrain, the pier replacement and ship maintenance 
support facility projects included in this budget request will enable 
our forces to respond swiftly to emerging threats.
    We will also continue to rebalance our force structure to the Asia-
Pacific region and this budget request includes funding to support the 
arrival of new aviation assets to Marine Corps Base Kaneohe, Hawai'i 
and Japan. Additionally, the DON budget request provides $126 million 
to construct a live-fire training range complex in Guam that will 
support current and future training needs of the Marine Corps and our 
allied partners. Finally, DOD, through its Office of Economic 
Adjustment, is requesting an additional $20 million to supplement the 
amount of $106 million previously appropriated--and the associated 
authority-- to continue improvements to Guam's civilian water and 
wastewater infrastructure necessary to support the Marine relocation.
    Guam, and the relocation of Marines to that island, remains an 
essential part of the United States' larger Asia-Pacific strategy of 
achieving a more geographically distributed, operationally resilient 
and politically sustainable force posture in the region. The Department 
appreciates the removal of the restrictions from the National Defense 
Authorization Act for fiscal year 2014, as well as the language in 
section 2822 in the National Defense Authorization Act for fiscal year 
2015 permitting the Navy to enter into a Refuge agreement with the U.S. 
Fish and Wildlife Service. Together, these provisions will allow us to 
move forward on the essential Guam component of our Pacific force 
laydown plan.
    Last July we provided Congress with our revised Guam Master Plan. 
Under this plan, also referred to as ``the distributed laydown,'' 
approximately 5,000 Marines and 1,300 dependents will come to Guam 
versus the original plan that had considered approximately 8,600 
Marines and 9,000 dependents. The estimated cost, scope, and schedule 
for the military construction and Government of Japan funded projects 
necessary to carry out the revised plan were detailed in the Guam 
Master Plan. In the next year the Government of Japan will commit $176 
million to construct a Driver Convoy Course and a complex for Urban 
Terrain Range Operations at Anderson AFB South. To date, we have 
received in our Treasury almost $1 billion in Japanese funding toward 
completion of the relocation. This in itself is indeed a strong 
statement of the Japanese commitment to the relocation.
    Projecting Power  The advanced capabilities of our ships and 
aircraft help make us the most effective expeditionary fighting force 
in the world and these weapons systems and platforms require facilities 
and infrastructure capable of supporting them. The fiscal year 2016 
budget request will provide hangars and mission control facilities to 
accommodate our increasing deployment of and dependence on unmanned 
aerial systems such as the Navy's Triton and the Marine Corps' 
``Blackjack.'' As the Navy continues its transition from the Orion P-3 
maritime patrol aircraft to the Poseidon P-8s, we will build hangars 
and other necessary facilities to enable their deployment to Hawai'i 
and Sigonella, Italy. Finally, the Navy will construct supporting 
facilities for the Littoral Combat Ships homeported in San Diego, 
California and Mayport, Florida. Together, these investments will 
increase our ability to collect intelligence, and conduct surveillance, 
reconnaissance and targeting--extending our reach and enabling us to 
prevail in anti-access and area-denial regions.
                        investing in our people
    Overview  The strength of our Navy-Marine Corps team lies not only 
in advanced weaponry or faster, stealthier ships and aircraft. Our 
naval forces derive their greatest strength from the Sailors and 
Marines who fire the weapon, operate and maintain the machinery, or fly 
the plane, and from the families and civilians supporting them. We 
continue to provide the best education, training, and training 
environments available so our forces can develop professionally and 
hone their warfighting skills. Providing quality of life is a 
determining factor to recruiting and retaining a highly professional 
force. To this end, we strive to give our people access to high-quality 
housing, whether government-owned, privatized, or in the civilian 
community, that is suitable, affordable, and located in a safe 
environment.
    Training and Education  Of the $1.7 billion request for military 
construction, the Navy and Marine Corps together have programmed almost 
$190 million in operational and technical training facilities, 
including the live-fire training range complex in Guam. Of the 
remaining projects, the majority support aviation training for a 
variety of manned and unmanned aircraft, including the Joint Strike 
Fighter, E-2D Hawkeye, KC-130 tankers, MH-60 and CH-53 helicopters, and 
the Triton. Finally, the Marine Corps will construct a Reserve Center 
that will support the training requirements of an amphibious assault 
unit that is relocating from Little Creek to Dam Neck, Virginia.
    Unaccompanied Housing  The Navy plans to make $117.6 million in 
operations & maintenance-funded repairs to its bachelor housing 
inventory, focusing on the barracks in the worst condition. This is a 
three-fold increase over the amount of funds programmed in fiscal year 
2015. Additionally the Navy's budget request includes two projects that 
will recapitalize inadequate (Q4) barracks at Naval Air Station 
Pensacola, Florida and at Naval Air Station, Patuxent River, Maryland. 
The Marine Corps completed programming of its substantial investment in 
unaccompanied housing in fiscal year 2012, although several are in 
various stages of construction. The arrival of new aviation squadrons 
at Marine Corps Base Hawai'i will increase personnel base loading and 
in response, the fiscal year 2016 budget request includes funds to 
construct a new barracks and improve our Marines' quality of life.
    Family Housing  The Department continues to rely on the private 
sector as the primary source of housing for Sailors, Marines, and their 
families. When suitable, affordable, private housing is not available 
in the local community, the Department relies on government-owned, 
privatized, or leased housing. The fiscal year 2016 budget request of 
$370 million supports Navy and Marine Corps family housing operation, 
maintenance, and renovation requirements. Of this amount, $11.5 million 
will revitalize government owned homes at Marine Corps Air Station 
Iwakuni, Japan and Wallops Island, Virginia. The budget request also 
includes $260.2 million for the daily operation, maintenance, and 
utilities expenses of the military family housing inventory.
    To date, over 62,000 Navy and Marine Corps family housing units 
have been privatized through the Military Housing Privatization 
Initiative. As a result, the Department has leveraged its resources to 
improve living conditions for Sailors, Marines, and their families. The 
Department has programmed $28.7 million to provide oversight and 
portfolio management to ensure the Government's interests in these 
public/private ventures remain protected and quality housing continues 
to be provided to military families.
    Safety Workforce Initiative  The safety workforce reform initiative 
is already in progress supporting over 750,000 personnel serving the 
Department in diverse, complex and evolving missions across the globe. 
The Naval Safety program is pressing forward on two key fronts: people 
and technology. To do this, the Department is recruiting, hiring and 
developing its safety professionals to ensure we employ the right 
people at the right place at the right time. Concurrently, we are 
expanding our global online training resources to ensure the Naval 
Safety workforce exceeds best practices found throughout industry.
    Steps toward expanding the knowledge base of our safety workforce 
have yielded positive results. During fiscal year 2014 global online 
safety training increased 65 percent from previous years with savings 
in administrative costs and the equivalent of 1,720 workdays of 
productivity gained. The same was true for the Annual Joint Safety 
Professional Development Conference (PDC). As a result of the fiscal 
year 2013 sequester, we offered the PDC as a ``virtual'' conference. 
``Web'' attendance doubled actual attendance over previous years, with 
an approval rating reaching 97 percent, and an overall cost savings to 
the government in excess of $2.2 million.
    Finally, the Department is in the process of acquiring a system of 
commercial off-the-shelf information technology tools that will 
revolutionize our tireless fight to reach our objective of zero 
mishaps--the only ethically acceptable goal if we are to keep faith 
with our magnificent Sailors and Marines. The Risk Management 
Information initiative comprises a streamlined mishap reporting system, 
data base consolidation, state-of-the-art analytical innovations, and 
sophisticated data collection and distribution capabilities that will 
allow us to ascend above explaining mishaps after the fact and begin 
predicting and preventing them before they occur.
                         managing our footprint
    Overview  It has long been a basic tenet that the Department of 
Defense should own or remove from public domain only the minimum amount 
of land necessary to meet national security objectives. The Department 
is grateful for the Congressional land withdrawals during 2013 and 
2014. These withdrawals allow the Department to continue vital testing 
and training in California at China Lake, Twentynine Palms, and the 
Chocolate Mountains Range. The fiscal year 2016 budget request includes 
funds to modernize and expand the Townsend Bombing Range in Georgia. 
This project will allow pilots based on the East Coast to train using 
precision guided munitions without having to travel to the Bob Stump 
Training Complex in Arizona and California.
    Base Realignment and Closure (BRAC)  The Department of the Navy 
fully supports the Administration's request to authorize a single round 
of BRAC in 2017. The BRAC process continues to offer the best 
opportunity to objectively assess and evaluate opportunities to 
properly align our domestic infrastructure with our evolving force 
structure and laydown. Under previous BRAC efforts, the Navy has been 
able to realize approximately $4.4 billion in annual recurring savings.
    We appreciate the support of the Congress in providing additional 
fiscal year 2015 funds for environmental cleanup at BRAC properties. 
For fiscal year 2016, the Department has programmed $157 million to 
continue cleanup efforts, caretaker operations, and property disposal. 
By the end of fiscal year 2014, we disposed of 93 percent of our excess 
property identified in previous BRAC rounds through a variety of 
conveyance mechanisms with approximately 12,710 acres remaining. Of the 
original 131 installations with excess property, the Navy only has 17 
installations remaining with property requiring disposal. Here are 
several examples of what we were able to achieve last year:
    In the San Francisco Bay Area, the Department completed the 
transfer of 624 acres at Naval Station Alameda to the Department of 
Veterans Affairs under a no-cost transfer that will ultimately support 
an outpatient clinic, a National Cemetery, and office space. The 
Department also completed radiological surveys of over 700 residential 
housing units at Naval Station Treasure Island, most of which are under 
lease to the City of San Francisco. Additionally, the Department and 
the Treasure Island Development Authority signed a Development 
Conveyance that will allow initial property transfers to begin in 
fiscal year 2015.
    We reduced our overall number of BRAC installations by four last 
year completing final disposals at Naval Support Activity New Orleans, 
LA, Naval Air Station Cecil Field, FL, and Navy/Marine Corps Reserve 
Centers in Akron, OH, and Reading, PA.
    The balance of the property at the remaining installations will be 
disposed as we complete our environmental remediation efforts, which we 
project will cost $1.1 billion (fiscal year 2016 and beyond) with 
nearly 50 percent of the costs attributed to long-term operations and 
monitoring of remedies already in place. The major program cost drivers 
are low-level radiological waste and munitions cleanup.
    Although cleanup and disposal challenges from prior BRAC rounds 
remain, we continue to work with regulatory agencies and communities to 
tackle complex environmental issues and provide creative solutions to 
support redevelopment priorities, such as Economic Development 
Conveyances with revenue sharing.
    Compatible Land Use The Department of the Navy has an aggressive 
program to promote compatible use of land adjacent to our installations 
and ranges, with particular focus on limiting incompatible activities 
that affect the Navy and Marine Corps' ability to operate and train, 
and protecting important natural habitats and species. This includes 
the Air Installation Compatible Use Zones Studies and Range Air 
Compatible Use Studies that are provided by Installations to nearby or 
adjacent communities to encourage development compatible with 
installation and range operations in their comprehensive development 
plans. A key element of the program is Encroachment Partnering, which 
involves cost-sharing partnerships with States, local governments, and 
conservation organizations to acquire interests in real property 
adjacent and proximate to our installations and ranges.
    The Department is grateful to Congress for providing funds for the 
DOD Readiness and Environmental Protection Integration (REPI) Program. 
Since 2005, DON has acquired restrictive easements on approximately 73 
thousand acres around Navy and Marine Corps installations. We are 
poised to purchase restrictive easements over additional lands using 
funds appropriated this year for the REPI program and are developing 
projects for future funding.
                       protecting our environment
    Overview  The Department is committed to environmental compliance, 
stewardship and responsible fiscal management that support mission 
readiness and sustainability, investing over $1 billion across all 
appropriations to achieve our statutory and stewardship goals. The 
funding request for fiscal year 2016 is about 1.7 percent more than 
enacted in fiscal year 2015, as shown in Figure 2:
      
    
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                Figure 2: DON Environmental Funding by Program

    The Department continues to be a Federal leader in environmental 
management by focusing our resources on achieving specific 
environmental goals, implementing efficiencies in our cleanup programs 
and regulatory processes, proactively managing emerging environmental 
issues, and integrating sound policies and lifecycle cost 
considerations into weapon systems acquisition to achieve cleaner, 
safer, more energy-efficient and affordable warfighting capabilities.
    Partnering for Protection  In fiscal year 2016 we will focus on 
environmental planning for at-sea training in the Pacific Northwest and 
the Gulf of Alaska, and on Combined Joint Military Training in the 
Marianas Islands. The Department has been partnering with the National 
Marine Fisheries Service (NMFS) over the past two years to improve the 
regulatory process and reduce the cost of obtaining authorizations for 
at-sea testing and training. We are exploring mutually agreeable 
recommendations with NMFS which could reduce the time and cost of 
preparing environmental planning documentation and securing permits, 
while ensuring the continued protection of marine mammals.
    We are also leading Federal efforts in the Pacific islands to 
standardize and implement biosecurity plans for military actions. The 
importance of effective biosecurity is demonstrated by the recent 
infestation of the Coconut Rhinoceros Beetle in Hawai'i. The 
Department, in cooperation with U.S. Department of Agriculture and 
State of Hawai'i, has taken important steps to help eradicate this 
destructive insect that was initially discovered at the International 
Airport and quickly spread to Joint Base Pearl Harbor-Hickam. The 
Department is also partnering with the State of North Carolina and non-
governmental organizations on recovery of the Red Cockaded Woodpecker 
and expanding training capabilities at Marine Corps Base Camp Lejeune, 
and with the Bureau of Ocean Energy Management on sharing marine mammal 
science on the east coast. Working together we can save money and 
achieve better results.
                      fueling combat capabilities
    Overview  The Department of the Navy's Energy Program has two 
central goals: (1) enhancing Navy and Marine Corps combat capabilities, 
and (2) advancing energy security afloat and ashore. Partnering with 
other government agencies, academia and the private sector, we strive 
to meet these goals with the same spirit of innovation that has marked 
our history--new ideas delivering new capabilities in the face of new 
threats.
    Enhancing Combat Capabilities  Our naval forces offer us the 
capability to provide presence--presence to deter potential conflicts, 
to keep conflicts from escalating when they do happen, and to take the 
fight to our adversaries when necessary. Presence means being in the 
right place, not just at the right time, but all the time; and energy 
is key to achieving that objective. Using energy more efficiently 
allows us to go where we're needed, when we're needed, stay there 
longer, and deliver more firepower when necessary.
    Improving our efficiency and diversifying our energy sources also 
saves lives. During the height of operations in Afghanistan, we were 
losing one Marine, killed or wounded, for every 50 convoys transporting 
fuel into theater. That is far too high a price to pay. Reducing demand 
at the tip of the spear through energy efficiency and new technologies 
takes fuel trucks off the road.
    Improving Energy Security and Resilience   We need to make smart 
investments to ensure our shore installations stay up and running 
because installations, like our shipyards, are central to our forward 
operations. That means maintaining and upgrading our utility 
infrastructure and getting smarter about how we're using electricity. 
It means managing our electricity demand to reduce stress on the 
electric grid and decrease outages. It means investing in technologies 
like advanced storage, fuel cells, and solar panels so we increase our 
resilience in the face of natural events or future threats like cyber 
attacks that affect the electric grid.
    In 2014, the Department executed an agreement through our Renewable 
Energy Program Office to buy renewable energy produced from a 17 
megawatt solar array located across three Navy and Marine Corps 
installations in Hawai'i. That agreement includes the ability for us to 
draw power from the solar panels even when the grid goes down. Not only 
does this project enhance our energy security, it will save us money on 
our electric bills, too. We also awarded a $13 million Energy Savings 
Performance Contract for Webster Field, an outlying annex of Naval Air 
Station Patuxent River in southern Maryland. The contract will provide 
for ground source heat pumps, lighting retrofits, and various other 
energy conservation measures that are projected to virtually eliminate 
the need for shore fossil fuel, reducing energy consumption by 38 
percent in the first year of performance.
    More recently, we entered into a lease with Duke Energy for just 
over 80 acres on Camp Lejeune for development of 17 megawatts of 
renewable electric power for the North Carolina grid to meet renewable 
portfolio standards. Electricity will be made available to meet the 
base's contingency energy requirements under the agreement.
    Strategic Investments to Fuel the Future  As we look to the future, 
we have to make smart investments that preserve operational 
flexibility. The private sector, including major airlines like United 
and Cathay Pacific, is diversifying its fuel supply through the use of 
alternative fuels. Our program to test and certify emerging alternative 
fuels is critical for us to keep pace with those developments and 
maintain interoperability with the private sector.
    Under a Presidential Directive, the Department of the Navy has also 
worked with the Departments of Energy and Agriculture to promote the 
growth of a domestic biofuel industry. In September 2014, the 
Department of Defense, under the authority provided by the Defense 
Production Act (DPA), provided funds to three companies supporting the 
construction and commissioning of biofuel refineries to produce cost 
competitive, drop-in biofuels. The total of $210 million in government 
commitments to those companies is expected to be matched by nearly $700 
million in private investment. The three refineries are planned to have 
a combined annual production capacity of more than 100 million gallons 
of advanced drop-in alternative fuel.
    It is important to point out that neither Defense Logistics Agency 
(DLA) Energy (through which the Navy buys operational fuels) nor the 
Navy is under any obligation to purchase alternative fuels from any 
company--including the three that received DPA awards. In fact, Section 
316 of the fiscal year 2015 NDAA requires that drop-in alternative 
fuels be cost competitive with traditional fuels (unless waived by the 
Secretary of Defense). That requirement is consistent with DOD and DON 
policy.
                               conclusion
    Our Nation's Navy-Marine Corps team operates globally, having the 
ability to project power, effect deterrence, and provide humanitarian 
aid whenever and wherever needed to protect the interests of the United 
States. The Department's fiscal year 2016 request supports critical 
elements of the 2014 Defense Quadrennial Review by making needed 
investments in our infrastructure and people; preserving access to 
training ranges, afloat and ashore, and promoting energy resiliency and 
security.
    Thank you for the opportunity to testify before you today, I look 
forward to working with you to sustain the war fighting readiness and 
quality of life for the United States Navy and Marine Corps, the most 
formidable expeditionary fighting force in the world.

    Senator Ayotte. Secretary Ballentine?

STATEMENT OF HON. MIRANDA A. A. BALLENTINE, ASSISTANT SECRETARY 
    OF THE AIR FORCE, INSTALLATIONS, ENVIRONMENT AND ENERGY

    Ms. Ballentine. Chairwoman Ayotte, Ranking Member Kaine, 
and esteemed members of the subcommittee, I am honored to 
testify before you today.
    First, thank you for your support in 2014 and 2015, in 
giving the Air Force much-needed relief from untenable 
sequestration levels.
    In my first 143 days on the job, but who's counting, I have 
learned that the Air Force installations are simply too big, 
too old, and too expensive to operate. There are really only 
two ways to make installations more affordable and more viable. 
You can spend more money, or you can make them cost less. 
Today, I am asking the Senate to help us do both.
    On the spend-more side of the equation, the Air Force's 
President's Budget 2016 $1.6 billion MILCON request and $3.2 
billion facilities sustainment, restoration, and modernization 
request would allow us to begin to chip away at the backlog of 
infrastructure projects that have contributed to the 
degradation of combat readiness.
    BCA-level funding of facilities budgets could cut hundreds 
of millions of dollars from facilities projects and would force 
the Air Force to make hundreds of no-win decisions between all-
important infrastructure projects, and could have sober impacts 
to mission readiness.
    On the cost-less side of the equation, the Air Force is 
accelerating every tool in the toolkit, including enhanced-use 
leases, energy service performance contracts, power purchase 
agreements, and community partnerships.
    Additionally, the Air Force has completed an updated 
parametric infrastructure capacity analysis using real property 
data in both current and future force structure plans. We 
replicated the approach used in 1998 and 2004, as approved by 
both the Government Accountability Office (GAO) and Congress. 
The Air Force currently has about 30 percent excess 
infrastructure capacity.
    Thus, the Air Force strongly supports the Office of the 
Secretary of Defense's (OSD) request that Congress allow us to 
comprehensively, transparently align infrastructure to 
operational needs through a BRAC authorization.
    Nothing about BRAC is easy, and congressional leaders have 
shared three very specific concerns that I believe can be best 
summarized as communities, dollars, and mission. So let me 
address very briefly, from the Air Force perspective, and, of 
course, we can talk further in the question section of the 
hearing.
    So first, communities, I have heard concerns that base 
closures are simply too economically difficult for affected 
communities. Air Force communities are some of our greatest 
partners and supporters. Only BRAC authority provides 
communities an avenue to engage in the process, as well as 
access to economic support, if they are affected by BRAC. A 
non-BRAC hollowing of bases does not.
    Second, dollars, Congress rightly wants to ensure that the 
savings of BRAC justify the costs. The 2005 BRAC round cost the 
Air Force $3.7 billion and saves the Air Force $1 billion every 
single year. We completed it on time and under budget.
    In the business world, where I come from, that is a good 
deal.
    Third, mission, some have expressed concerns that today's 
force structure may be too small and, therefore, question the 
wisdom of rightsizing infrastructure to current force 
structure. Let me assure you that infrastructure decisions are 
driven by military value and then shaped by budgetary 
realities.
    Like in prior BRAC rounds, the military requirements in the 
analysis will be set by operational planners. The BRAC process 
will be used to ensure that we have the right infrastructure in 
the right places to support the right force structure to meet 
the mission.
    Taken together, improved MILCON and the facilities 
sustainment, restoration, and modernization (FSRM) budgets, 
plus BRAC, and the range of other tools and programs I 
mentioned make me optimistic that we can restore Air Force 
installations to the place they need to be.
    Chairwoman Ayotte, Ranking Member Kaine, and esteemed 
members of the committee, thank you again for the opportunity 
to represent America's airmen today, and I ask for your full 
support of the Air Force's fiscal year 2016 requests, and look 
forward to your questions.
    [The prepared statement of Ms. Ballentine follows:]
           Prepared Statement by Ms. Miranda A. A. Ballentine
                              introduction
    The Air Force's fiscal year 2016 President's Budget (PB) sets us on 
the path to fully meet the Quadrennial Defense Review through strategy-
based long-term resourcing decisions. This budget submission is rooted 
in necessity and is based upon our long-term strategy and vision to 
provide ready installations, resilient environmental infrastructure, 
and reliable energy, directly supporting the Secretary and Chief of 
Staff of the Air Force's three priorities of balancing today's 
readiness with tomorrow's modernization, taking care of our people, and 
making every dollar count to help ensure we can maintain and field a 
credible and affordable future force.
    The Air Force's fiscal year 2016 PB sets us on a path to provide 
the Air Force America deserves. However, even at the fiscal year 2016 
PB level, the Air Force remains stressed to meet the defense strategy. 
If sequestration funding levels return in fiscal year 2016, the Air 
Force will not be able to meet the defense strategy, nor sustain its 
asymmetric advantage over potential peer competitors. Additionally, 
these levels will cause continued degradation of infrastructure and 
installation support. The AF would expect a reduction in Military 
Construction funding resulting in reduced support to COCOMs, reduced 
funding to upgrade the nuclear enterprise and support new weapons 
systems beddown, and elimination of permanent party dormitories from 
the fiscal year 2016 budget request. Additionally, the AF would expect 
similar reductions in fiscal year 2016 facility sustainment, 
restoration and modernization funding, forcing AF priority on day to 
day facility maintenance at the expense of much needed facility 
repairs.
    Our unequalled security, economic, and political advantages, 
depends on investment in an Air Force that is able to easily succeed 
against any competitor, in any environment. In order to ensure a 
trained and ready force, along with the facilities and support to 
maintain the capabilities required to engage in a full range of 
contingencies and threats, at home and abroad, the Air Force needs to 
make smart investments in its installations through military 
construction (MILCON) and facility sustainment, and maintain strong 
environmental and energy focused programs.
                             installations
    Ready installations are an integral part of ensuring a ready Air 
Force. The Air Force views its installations as foundational platforms 
comprised of both built and natural infrastructure which: (1) serve as 
the backbone for Air Force enduring core missions--it delivers air, 
space and cyberspace capabilities from our installations; (2) send a 
strategic message to both allies and adversaries--they signal 
commitment to our friends, and intent to our foes; (3) foster 
partnership-building by stationing our Airmen side-by-side with our 
Coalition partners; and (4) enable worldwide accessibility when our 
international partners need our assistance, and when necessary to repel 
aggression. Taken together, these strategic imperatives require us to 
provide efficiently operated, sustainable installations to enable the 
Air Force to support the Quadrennial Defense Review.
    In its fiscal year 2015 President's Budget request, the Air Force 
attempted to strike the delicate balance between a ready force for 
today with a modern force for tomorrow while also recovering from the 
impacts of sequestration and adjusting to budget reductions. To help 
achieve that balance, the Air Force elected to accept risk in 
installation support, MILCON, and facilities sustainment in fiscal year 
2015. However, in its fiscal year 2016 request, the Air Force begins to 
ameliorate the impacts of that risk by increasing funding for 
installations in all three of the areas noted above.
    In total, the Air Force's fiscal year 2016 PB request is $1.9 
billion more than our fiscal year 2015 President's Budget request and 
contains $4.8 billion for MILCON, facility sustainment, restoration and 
modernization, as well as another $331 million for Military Family 
Housing operations and maintenance and $160.5 million for Military 
Family Housing Construction. For sustainment, it requests $2.4 billion; 
for restoration and modernization, $850 million; and for military 
construction, it requests $1.59 \1\ billion. At these levels, the Air 
Force funds Facilities Sustainment to 80 percent of the OSD modeled 
requirement. The increase in MILCON begins to revitalize infrastructure 
recapitalization while maintaining support to Combatant Commander 
(COCOM) requirements, weapon system beddowns, the nuclear enterprise, 
and provides equitable distribution of $ 203.7 million to the Reserve 
components.
---------------------------------------------------------------------------
    \1\  $1.59B is the Total Force funding request including Active, 
Guard and Reserve
---------------------------------------------------------------------------
                               readiness
    The Air Force fiscal year 2016 PB request seeks to balance 
readiness for today's fights, while also modernizing our infrastructure 
for the future. The Air Force's fiscal year 2016 budget proposes 
investments in infrastructure to support the Quadrennial Defense Review 
and Combatant Commanders' stated readiness needs in the following 
areas: nuclear defense operations (NDO); space; cyberspace; 
intelligence, surveillance and reconnaissance (ISR); and the Asia-
Pacific theater.
    Our fiscal year 2016 PB supports Nuclear Enterprise priorities and 
includes three projects, totaling $144 million. With this budget 
submission, the Air Force intends to provide a new state-of-the-art 
Weapon Storage Facility at FE Warren AFB which consolidates 22 aging 
facilities (some of which have been in service since the 1960s), 
achieving a 19 percent reduction in facility footprint while addressing 
security and operational inefficiencies through recapitalization. The 
2016 program also includes investment to revitalize the Malmstrom AFB, 
Montana, Tactical Response Force Alert Facilities as well as the 
Whiteman AFB, Missouri, Consolidated Stealth Operations and Nuclear 
Alert Facility. Together, these projects will consolidate scattered 
installation functions, provide adequately sized and configured 
operating platforms, as well as reduce critical response times to 
generate alert sorties.
    As previously mentioned, ``Making every dollar count'' is one of 
the Secretary and Chief of Staff of the Air Force's priorities. 
Consistent with this, the Air Force focused on fiscal year 2016 space, 
cyberspace, and ISR investments. These target areas account for two 
space, two cyber, and four ISR projects in the proposed fiscal year 
2016 PB, totaling $172 million. The Air Force continues its multi-year 
efforts to construct the U.S. Cyber Command Joint Operations Center at 
Fort Meade, Maryland; strengthen its space posture through information 
and communication facilities; and enhance ISR readiness with remotely 
piloted aircraft facilities, intelligence targeting facilities, as well 
as digital ground stations.
    Consistent with Quadrennial Defense Review, the Asia-Pacific 
Theater remains a focus area for the Air Force where it will make an 
$85 million investment in fiscal year 2016 to ensure our ability to 
project power into areas which may challenge our access and freedom to 
operate, and continue efforts to enhance resiliency. Guam remains one 
of the most vital and accessible locations in the western Pacific. For 
the past nine years, Joint Region Marianas-Andersen AFB has 
accommodated a continuous presence of our Nation's premier air assets, 
and will continue to serve as the strategic and operational center for 
military operations in support of a potential spectrum of crises in the 
Pacific.
    To further support Pacific Command's strategy, the Air Force is 
committed to hardening critical structures, mitigating asset 
vulnerabilities, increasing redundancy, fielding improved airfield 
damage repair kits and upgrading degraded infrastructure as part of the 
Asia-Pacific Resiliency program. In 2016, the Air Force plans to 
construct a hardened Wing Installation Control Center to sustain Guam's 
remote operations, ensure resiliency with the Dispersed Maintenance 
Spares and Storage Facility, and continue our efforts to upgrade Guam's 
South Ramp Utilities, supporting a Continuous Bomber Presence, Tanker 
Task Force, Theater Security Packages, and Global Hawk beddown. The Air 
Force also wraps up its development of the Pacific Regional Training 
Center (PRTC) by constructing a permanent road to support facilities 
located at Northwest Field. This Regional Training Center will enable 
mandatory contingency training and enhance the operational capability 
to establish, operate, sustain, and recover a 'bare base' at forward-
deployed locations, and foster opportunities for partnership building 
in this vitally important area of the world.
    This year's Presidential budget request also includes $252 million 
for additional COCOM requirements extending beyond NDO, space, 
cyberspace, ISR, and the Asia-Pacific theater. The Air Force continues 
with phase two of the U.S. European Command Joint Intelligence Analysis 
Center Consolidation at RAF Croughton, United Kingdom while supporting 
six other COCOMs. Our total fiscal year 2016 COCOM support makes up 21 
percent of the Air Force's MILCON program.
                             modernization
    Additionally, the fiscal year 2016 PB request includes 
infrastructure investments to support the Air Force's modernization 
programs, including the beddown of the F-35A, KC-46A, and the 
Presidential Aircraft Recapitalization efforts. The Air Force's ability 
to fully operationalize these new aircraft depends not just on 
acquisition of the planes themselves, but also on the construction of 
the planes' accompanying hangars, training facilities, airfields and 
fuel infrastructures funded within this fiscal year 2016 budget.
    This year's President's Budget request includes $54.5 million for 
the beddown of the KC-46A at four locations. This consists of $10.4 
million at Altus AFB, Oklahoma, the Formal Training Unit (FTU); $4.3 
million at McConnell AFB, Kansas, the first Main Operating Base (MOB 
1); $2.8 million at Pease International Tradeport Air National Guard 
Base (ANGB), New Hampshire, the second Main Operating Base (MOB 2); and 
$37 million at Tinker AFB, Oklahoma, for KC-46A depot maintenance.
    This request also includes $198.3 million for the beddown of the F-
35A at five locations, consisting of $69 million at Nellis AFB, Nevada; 
$56.7 million at Luke AFB, Arizona; $26.9 million at Hill AFB, Utah; 
$37 million at Eielson AFB, Alaska; and $8.7 million at Eglin AFB, 
Florida.
    In preparation for the Presidential Aircraft Recapitalization 
acquisition, the Air Force's 2016 budget request also accounts for the 
planning and design requirements essential to this future beddown. In 
total, our fiscal year 2016 modernization program is a balanced 
approach ensuring critical infrastructure requirements meet mission 
needs and operational timelines.
                                 people
    During periods of fiscal turmoil, we must never lose sight of our 
Airmen and their families. Airmen are the source of Air Force airpower. 
Regardless of the location, the mission, or the weapon system, our 
Airmen provide the knowledge, skill, and determination to fly, fight 
and win. There is no better way for us to demonstrate our commitment to 
service members and their families than by providing quality housing on 
our installations. We are proud to report that as of September 2013, 
the Air Force has privatized its military family housing (MFH) at each 
of its stateside installations, including Alaska and Hawaii. To date, 
the Air Force has awarded 32 projects at 63 bases for 53,240 end-state 
homes.
    The Air Force continues to manage approximately 18,000 government-
owned family housing units at overseas installations. Our $331 million 
fiscal year 2016 Military Family Housing Operations and Maintenance 
(O&M) sustainment funds request allows us to sustain adequate units, 
and our $152 million fiscal year 2016 request for MFH MILCON funds 
allows us to upgrade and modernize older homes to meet the housing 
requirements of our Airmen, their families and the Joint service 
members the Air Force supports overseas.
    Similarly, our focused investment strategy for dormitories enables 
the Air Force to remain on track to meet the DOD goal of 90 percent 
adequate permanent party dorm rooms for unaccompanied Airmen by 2017. 
The fiscal year 2016 President's Budget MILCON request includes four 
dormitories at Offutt AFB, Nebraska; Ellsworth AFB, South Dakota; Altus 
AFB, Oklahoma; and Joint Base San Antonio, Texas. With your support, we 
will continue to ensure wise and strategic investment in these quality 
of life areas to provide modern housing and dormitory communities. More 
importantly, your continued support will take care of our most valued 
asset, our Airmen and their families.
              european infrastructure consolidation (eic)
    The United States remains committed to NATO and our presence in 
Europe. The Air Force has invested heavily in its European 
infrastructure in the last several years in order to ensure it is ready 
and able to defend U.S. interests and meet its commitment to our Allies 
now and in the future. At the same time, in the context of a 
challenging fiscal environment, the Department of Defense recently 
sought greater infrastructure efficiencies in Europe and to ensure it 
was focusing resources where they can have the greatest effect.
    Two years ago, the Secretary of Defense directed a European 
Infrastructure capacity analysis to provide the basis for reducing 
long-term expenses through footprint consolidations, while retaining 
current and projected force structure. Under OSD direction, the Air 
Force used previously established Base Realignment and Closure (BRAC) 
processes to analyze the infrastructure capacity of 128 total sites, 
including six Main Operating Bases and six Forward Operating Sites in 
Europe.
    In January 2015, the Secretary of the Defense approved the results 
of the European Infrastructure Consolidation (EIC) process. This 
process produced eight consolidation opportunities. These opportunities 
will eliminate excess infrastructure capacity, consolidate missions, 
and produce savings without reducing force structure. In the United 
Kingdom, the Air Force will divest of RAF Mildenhall, and will 
consolidate intelligence and support activities from RAF Alconbury and 
RAF Molesworth to RAF Croughton. The Air Force also reaffirmed previous 
decisions to streamline operations at Moron Air Base, Spain, and Lajes 
Field, Portugal, and returned four small unused facilities back to 
their respective host nations.
    The Air Force European Infrastructure Consolidation opportunities 
will require approximately $1.1 billion (fiscal year 2016--fiscal year 
2021) to implement, but will enable the Air Force to save $315 million 
a year, while still maintaining our readiness and responsiveness 
capabilities in Europe. Most of the implementation costs will be funded 
through previously programmed European Infrastructure Consolidation 
funding.
    The EIC ensures Air Force installations in Europe are right-sized 
and in the right location. Our capability in Europe, along with our 
ability to meet commitments to Allies and partners, is not diminished 
by these actions. The Air Force is maintaining sufficient 
infrastructure in Europe to support six Combatant Commands, the North 
Atlantic Treaty Organization, and U.S. strategic allies through 
permanently stationed forces, additional rotational forces, and 
contingency requirements. The EIC adjustments will allow the Air Force 
to address emerging concerns in Europe and elsewhere, by focusing 
resources on critical operational support infrastructure.
    We have consulted closely with our allies on our specific plans and 
the broader security picture. These consolidations, force realignments, 
and new deployments were validated through the EIC and other processes 
and approved by the Secretary of Defense, in full coordination with the 
U.S. State Department, and after discussions with the host nations.
                       closures and realignments
    Building on the success of the European Infrastructure 
Consolidation process, the Air Force strongly supports DOD's requests 
for an fiscal year 2017 BRAC round in the United States.
    In fiscal year 2015 budget discussions, Congress requested that the 
Services update their analyses of CONUS infrastructure capacity based 
upon current infrastructure data and current force structure 
projections.
    The Air Force has completed a high-level capacity analysis, 
comparing current infrastructure capacity to projected force structure 
and mission requirements. The results of the analysis indicate the Air 
Force has approximately 30 percent excess infrastructure capacity. \2\ 
This excess capacity results from decreases in Air Force personnel and 
force structure outpacing reductions in infrastructure. Since our last 
round of BRAC in 2005, the Air Force has 50,000 fewer personnel and 500 
fewer aircraft in its planned force structure.
---------------------------------------------------------------------------
    \2\ The 30 percent excess infrastructure capacity estimate was 
calculated using the same approved methodology that has been employed 
to measure excess infrastructure prior to previous rounds of BRAC.
---------------------------------------------------------------------------
    Since the last congressionally directed round of BRAC in 2005, the 
Air Force has worked diligently to identify new opportunities and 
initiatives to enable it to maximize the impact of every dollar. We 
have demolished excess infrastructure, recapitalized our family housing 
through privatization, unlocked the fiscal potential of under-utilized 
resources through leasing and partnerships, and reduced our energy 
costs. All of which have paid dividends. But these efforts are not 
enough to allow us to continue to fund infrastructure we do not need 
and pale in comparison to the savings that can be achieved with BRAC 
authorities.
    Despite our best efforts and innovative programs, the Air Force 
continues to spend money maintaining excess infrastructure that would 
be better spent recapitalizing and sustaining our weapons systems, 
training to improve readiness, and investing in the quality of life 
needs of its Airmen. The Air Force continues to face hard choices 
between modernization and operational combat capability, and sustaining 
installation platforms used to conduct its missions. The Air Force 
recognizes that it achieve its greatest savings when fully divested of 
unneeded infrastructure, and therefore it strongly supports DOD's 
requests for another round of BRAC; specifically an efficiency BRAC 
focused on reducing the Air Force's 30 percent excess infrastructure 
capacity and ultimately reducing the demand on resources.
                             environmental
    Within its environmental programs, the Air Force continues to 
prioritize resources to, 1) ensure a resilient environmental 
infrastructure to support its mission and its communities; 2) comply 
with legal obligations; and 3) continuously improve. The fiscal year 
2016 PB seeks a total of $862 million for environmental programs. This 
is $57 million less than last year due to sustained progress in 
cleaning up contaminated sites and efficiencies gained through 
centralized program management. By centrally managing its environmental 
programs the Air Force can continue to strive for compliance with all 
applicable laws, while applying every precious dollar to its highest 
priorities first, increasing flexibility to select standardized 
solutions, when appropriate, to complex environmental issues. Further, 
its environmental programs are designed to provide environmental 
stewardship to ensure the availability of air, land and water necessary 
to provide ready installations and ensure military readiness.
                       environmental restoration
    The Air Force fiscal year 2016 PB request seeks $425 million in 
Environmental Restoration funding for cleanup of both current 
installations and those closed during previous BRAC rounds. The Air 
Force established its restoration program in 1984 to clean-up former 
hazardous waste disposal sites on these installations. The Air Force's 
focus has been on completing investigations and getting remedial 
actions in place, to reduce unacceptable risk to human health and the 
environment in a prioritized manner consistent with environmental law. 
Ultimately, the Air Force seeks to make real property available for 
mission use at its non-BRAC installations, or for transfer and reuse at 
its BRAC installations. We believe this balanced approach continues to 
simultaneously serve our mission needs, our statutory requirements, and 
our stakeholders' interests.
    With more than 8,100 restoration sites at its non-BRAC 
installations, and more than 5,200 sites at our BRAC installations, the 
Air Force has made progress over time in managing this complex program 
area. In addition to regulatory and mission requirements, the DOD has 
committed to restoration program execution goals to help ensure an 
acceptable pace is maintained in program execution. While Air Force 
BRAC restoration sites are on-track to meet the next DOD milestone to 
have response complete at 90 percent of the Installation Restoration 
Program (IRP) sites by the end of fiscal year 2018, its non-BRAC 
restoration sites are currently projected to fall 5 percent short of 
this goal, but are expected to meet DOD milestones by fiscal year 2020.
    Since recognizing in early 2011 the need to improve its process in 
order to close the gap toward meeting this goal, the Air Force has 
implemented policy and formulated a contracting strategy specifically 
to improve its performance. Since a large component of its cleanup 
program relies on expertise acquired under contracts, this policy 
emphasized performance-based contracts that reward increased use of 
innovative technologies and cleanup strategies that consider the total 
life cycle cost of getting remedies in place and sites cleaned up. At 
Kirtland AFB, New Mexico, utilizing performance base contracting, we 
are continuing our efforts to remediate the clean-up of the fuel spill 
at the bulk fuels facility. Although this effort will encompass several 
years, we developed our clean-up strategy in concert with state and 
local officials, and are already seeing positive results.
    The Air Force's policy and performance-based contracting strategy, 
aligned with federal environmental laws and regulation has generated 
substantial improvements, but work still remains in order to meet DOD 
goals for non-BRAC installation cleanup. With this approach, the Air 
Force is finding better solutions and cleaning up sites faster with 
lower projected lifecycle costs. The Air Force expects performance and 
progress to accelerate over the next year, while continuing to meet 
federal, state and other stakeholder requirements.
                         environmental quality
    The Air Force's fiscal year 2016 PB request seeks $437 million in 
Environmental Quality funding for environmental compliance, 
environmental conservation, pollution prevention, and environmental 
technology investments. With this request, the Air Force provides a 
resilient environmental infrastructure and continues to strive for in 
compliance with environmental laws in order to remain good stewards of 
the environment. The Air Force has instituted a standardized and 
centralized requirements development process that prioritizes its 
environmental quality program in a manner that minimizes risk to 
Airmen, the mission and the natural infrastructure. This balanced 
approach ensures the Air Force has ready installations with the 
continued availability of land, air, and water resources at its 
installations and ranges so it can train and operate today and into the 
future.
    The environmental compliance program focuses on regulatory 
compliance for our air, water, and land assets. Examples of compliance 
efforts include: more detailed air quality assessments when analyzing 
environmental impacts from Air Force activities; protecting its 
groundwater by improving management of its underground and aboveground 
storage tanks; and minimizing waste through source reduction. At 
overseas installations, the Air Force takes prompt action to remediate 
environmental contamination when there are substantial impacts to human 
health, or when such remediation is mandatory arising from a binding 
international agreement to which the United States is a party.
    The Air Force remains committed to a robust environmental 
conservation program in fiscal year 2016. Prior appropriations allowed 
the Air Force to invest in conservation activities on its training 
ranges, providing direct support to mission readiness. The conservation 
program in fiscal year 2016 builds on the efforts of past years to 
continue habitat and species management for 115 threatened and 
endangered species across 45 Air Force installations. This year's 
budget request also provides for continued cooperation with other 
agencies, like the U.S. Fish and Wildlife Service, to provide effective 
natural resources management and to manage risk from wildland fires 
through coordinated planning and incident response and the application 
of prescribed fire techniques. The Air Force has also published formal 
guidance to the field on improving and sustaining tribal relations 
which supports the unique trust relationship the U.S. Government has 
with tribes and emphasizes aspects of the Air Force's mission that may 
affect tribes.
    The Air Force remains committed as good environmental stewards 
complying with legal requirements, reducing risk to our natural 
infrastructure, and honing its environmental management practices to 
ensure the sustainable management of the resources it needs to fly, 
fight, and win now and into the future.
                            energy security
    Reliable energy is a common thread that runs through each of the 
five core missions of the Air Force and serves as a cornerstone to 
ensure the Air Force can provide the Nation with Global Vigilance, 
Global Reach, and Global Power. To meet its energy needs, the Air Force 
is leveraging sound business practices and making prudent investments 
in energy conservation and alternative sources of energy to enable its 
warfighters and improve energy surety. These investments are crucial to 
ensure the Air Force has the energy where and when it is needed to 
conduct the military missions that protect core national interests.
    Energy security means, ``having assured access to reliable supplies 
of energy and the ability to protect and deliver sufficient energy to 
meet mission essential requirements.'' To enhance energy's contribution 
to mission assurance, the Air Force is focused on four priorities:

    1)  Improve resiliency to ensure the Air Force has the ability to 
recover from energy interruptions and sustain the mission,
    2)  Reduce demand through operational and logistical efficiencies 
and new technologies, without losing mission capabilities,
    3)  Assure supply by diversifying the types of energy and securing 
the quantities necessary to perform its missions, and
    4)  Foster an energy aware culture by increasing the Airmen's 
understanding of energy and its impact to the mission.

    There are risks from depending solely upon traditional energy 
supplies, as global access and costs are impacted by demand growth, 
natural disasters, accidents, terrorism, and political instability. In 
addition to fossil petroleum fuels, Air Force installations are heavily 
dependent on the commercial grid. These dependencies expose core 
mission support functions to external threats and can jeopardize 
effectiveness. To address those dependencies, the Air Force is 
mitigating risks by identifying alternate sources of energy where 
appropriate, building in redundancies where direct mission support 
requires it, and identifying where and for how long it needs to ensure 
it has the ability to operate. This requires an energy security posture 
that is robust, resilient, and ready. In short, energy security enables 
the warfighters, expands operational effectiveness, and enhances 
national security.
                             budget impact
    The Air Force is the largest single consumer of energy in the 
federal government. As energy costs increase and budgets decrease, 
energy places greater pressure on the Air Force budget. In fiscal year 
2014, the Air Force spent almost $9 billion on fuel and electricity, 
with over 85 percent of those costs dedicated to aviation fuel. That $9 
billion represented over 8 percent of the total Air Force budget, and 
it could have been an even larger amount. As a result of the energy 
efficiencies the Air Force has put in place in its aviation and 
facilities programs, the Air Force avoided over $2.5 billion in energy 
costs last year.
    As part of its institutional effort to utilize energy to sustain an 
assured energy advantage, the Air Force is requesting over $416 million 
for targeted operational energy initiatives in fiscal year 2016. This 
includes $26 million for energy improvements to the legacy fleet and 
$212 million for materiel acquisition and energy research, development, 
test and evaluation (RDT&E) opportunities. The Air Force does not 
specifically budget for facility energy projects; it funds facility 
energy projects using facility sustainment, restoration, and 
modernization funding based on Air Force priorities.
    The Air Force recognizes the value of the financial resources made 
available for investments. To ensure it is making the best use of 
taxpayer dollars, the Air Force corporate structure requires strong 
evaluations based on sound business case analyses, with a particular 
focus on return on investment and payback period. Every action taken by 
the Air Force to improve its energy security and efficiency is well 
researched and executed to provide the greatest impacts in support of 
the Air Force mission.
                    energy resiliency and continuity
    The first priority is mission success, and this includes what is 
best from an energy perspective to make sure we have energy when and 
where we need it to achieve the Air Force mission. Energy security is 
key to mission assurance. In order to reach and maintain energy 
security the Air Force must be energy resilient, and the Air Force has 
taken the first step by analyzing the energy requirements of its weapon 
systems and identifying the risks related to energy use. Resiliency 
occurs by expanding energy supply through improved efficiencies and 
reduced demand, diversifying the energy sources the Air Force can use, 
and mitigating energy security risks from disruptions. As the Air Force 
looks to improve efficiency, it understands that every megawatt of 
power it avoids using on its bases is one megawatt that it does not 
need to replace in a disruption.
    Energy security is more than ``efficiency;'' it translates to 
productivity and mission effectiveness. Using energy as a strategic 
advantage allows the Air Force to fly farther, stay on station longer, 
transport more cargo, and accomplish its mission more effectively. The 
Air Force is continually looking to increase mission effectiveness 
through increased productivity and efficiency.
                    efficiency and demand reduction
    The Air Force is focused on reducing its energy footprint across 
all operations. Since 2003, the Air Force has reduced both its total 
facility energy and its facility energy intensity--the amount of energy 
used per square foot in a facility--by over 22 percent. At this time, 
the Air Force is on track to reduce its facility energy intensity by 
37.5 percent by 2020 from 2003 baseline data, meeting the goals 
outlined by Congress and the President.
    While the Air Force has made considerable progress to reduce its 
energy consumption and increase its energy diversity, there is still 
more to do. The Air Force is pursuing Energy Savings Performance 
Contracts (ESPC) and Utility Energy Service Contracts (UESC) to fund 
energy conservation projects. Since fiscal year 2012, the Air Force has 
awarded approximately $107 million in ESPCs and UESCs. In 2015 the Air 
Force expects to award up to $232 million in such contracts.
    The Air Force's aviation fleet is composed of nearly 5,000 aircraft 
that consume over two billion gallons of jet fuel every year. At 85 
percent, aviation fuel represents the largest share of the Air Force's 
energy bill. To address this, the Air Force has a goal to improve the 
aviation energy efficiency, which it defines as productivity per 
gallon, of its fleet by 10 percent by 2020. The Air Force faces a 
challenge, as many of the material solutions require significant 
upfront investments with long-term paybacks. However, making flying 
operations more productive is not just about material solutions, but 
also implementing changes is how the Air Force flies. For example, last 
year, the 97th Air Mobility Wing at Altus Air Force Base, Oklahoma, 
instituted five scheduling and airspace utilization initiatives that 
contributed to increased training efficiency. These changes produced 
$64 million in savings and a 5 percent reduction in Average Mission 
Duration, without reducing the number of missions flown or student 
training accomplished time. These innovations, improvements, and plans 
happen because the Air Force is fostering an energy-aware culture 
within the Air Force that empowers Airmen to take a smart approach to 
energy to better complete their mission.
                          assurance of supply
    The Air Force is looking to improve its energy security and 
diversify its energy supply through the increased use of renewable 
energy. In fiscal year 2014, almost six percent of the electrical 
energy used by the Air Force was produced from renewable sources, and 
the amount of renewable energy used by the Air Force continues to 
increase every year. Moving forward, the Air Force's goal is to develop 
1,000 megawatts of renewable energy capacity on its installations by 
2025 by capitalizing on underutilized land to develop those projects. 
By the end of fiscal year 2014, the Air Force had 287 renewable energy 
projects on 97 sites, either installed, in operation, or under 
construction across a wide variety of renewable energy sources, 
including wind, solar, geothermal, and waste-to-energy projects. These 
projects, which are typically owned and operated by private industry, 
have increased energy production on Air Force installations by over 50 
percent from 2013 to 2014.
    This year, the Air Force is planning projects that are expected to 
provide over 73 megawatts of capacity, with another 100 megawatts 
planned for fiscal year 2016. A prime example is the development and 
construction of the Air Force's largest solar project, a 19.0 megawatt 
(MW) array at Nellis AFB, NV. Combined with the existing 14.2 MW solar 
photovoltaic (PV) array, renewable energy will account for 38 percent 
of energy usage at Nellis. This comes only a short time after the Air 
Force unveiled a 16.4 MW solar PV array at Davis-Monthan AFB, AZ. The 
Davis-Monthan array, which was developed through a public private 
partnership, will provide approximately 35 percent of the base's 
electricity requirements and is expected to reduce base utility costs 
by about $500,000 annually.
    The Air Force is also committed to diversifying the types of energy 
and securing the quantities necessary to perform its missions, both for 
near-term benefits and long-term energy security. The ability to use 
alternative fuels in its aircraft provides the Air Force with both 
increased flexibility and capability concerning the types of fuels 
available for use. The entire Air Force fleet has been certified to use 
two alternative aviation fuel blends--one of these is generated from 
traditional sources of energy and one generated from biobased 
materials. The Air Force chose these fuels based on an evaluation of 
market conditions and discussions with commercial partners. Should 
another alternative fuel process become viable in the future, the Air 
Force will evaluate how to proceed at that time.
                               conclusion
    The Air Force made hard strategic choices during formulation of 
this budget request. The Air Force attempted to strike the delicate 
balance between a ready force for today with a modern force for 
tomorrow while also recovering from the impacts of sequestration and 
adjusting to budget reductions. Our fiscal year 2016 PB request begins 
the recovery of installation and infrastructure investments necessary 
to meet the defense strategy. The return of sequestration level funding 
will halt this recovery. We also must continue the dialogue on right-
sizing our installations footprint for a smaller, more capable force 
that sets the proper course for enabling the Defense Strategy while 
addressing our most pressing national security issue--our fiscal 
environment.
    In spite of fiscal challenges, we remain committed to our Service 
members and their families. The privatization of housing at our 
stateside installations and continued investment in Government Housing 
at overseas locations provide our families with modern homes that 
improve their quality of life now and into the future. We also maintain 
our responsibility to provide dormitory campuses that support the needs 
of our unaccompanied Service members.
    Finally, we continue to carefully scrutinize every dollar we spend. 
Our commitment to continued efficiencies, a properly sized force 
structure, and right-sized installations will enable us to ensure 
maximum returns on the Nation's investment in her Airmen, who provide 
our trademark, highly valued airpower capabilities for the Joint team.

    Senator Ayotte. Thank you, Secretary Ballentine.
    I want to thank all of you. I would just start, as I 
mentioned in my opening statement, Secretary McGinn, I wanted 
to follow up, which I had raised in the full Armed Services 
Committee yesterday, about the reprogramming requests for the 
shipyard, on the P-266 structural shops consolidation, which we 
believe actually can save some money because it is, 
unfortunately, falling apart at the moment.
    Mr. McGinn. Madam Chairman, I noted the exchange that you 
had yesterday in the hearing with Admiral Greenert and his 
taking the question for the record. We will be working with 
Admiral Greenert and his staff to provide you the details.
    Let me assure you, though, that we recognize the tremendous 
value of Portsmouth, especially in the great work they are 
doing keeping our attack submarines out there and ready, and 
coming out of the yard on budget or under budget, and faster 
than planned. That is absolutely essential.
    As far as that particular project, we recognize that it 
will in fact, in the long run, save money and it will provide a 
much better platform, if you will, to continue the great work 
that is done at Portsmouth.
    We are in the process of doing a reprogramming request, 
which will be coming to the Congress to make sure that the 
dollars lineup with the requirements for the actual military 
construction project.
    Additionally, I had a good telephone call with Captain Bill 
Carroll up at Portsmouth yesterday. I wanted to find out from 
him on the ground exactly what other either MILCON projects or 
other things are going on. They have a really nice, as you 
know, energy savings record.
    Senator Ayotte. Yes. They are saving a tremendous amount of 
energy and money by what they have been trying to do.
    Mr. McGinn. They are. We want to work with them to do that 
even more through energy savings performance contracts, a steam 
decentralization project, and to make sure that they have the 
right kind of platform to take care of those great boats.
    Senator Ayotte. Great, and thank you.
    Since we are on the topic of Portsmouth, I do have two 
other areas that are being delayed, and that is P-285. That is 
a situation where we have barracks there for our sailors who 
have a hot-water distribution system that is beyond repair and 
doesn't meet safety standards, and a fire suppression system 
that isn't fully operational. So you can imagine, in terms of 
safety, why we are a little worried about that.
    Mr. McGinn. Sure.
    Senator Ayotte. So that one has been delayed, and it has 
been delayed from 2015 to 2018. So that is one, if I can get a 
follow-up on, I would appreciate.
    Mr. McGinn. Right.
    [The information referred to follows:]

    Fiscal constraints and competing priorities have caused the 
Department to defer some Military Construction projects in our 2016 
budget request, including P285 to replace Building 191 at Portsmouth 
Naval Shipyard. Thank you for bringing to our attention your concerns 
with the quality of Building 191 as living quarters for our junior 
Sailors. Navy leadership is aware of the historical issues with this 
facility, and problems have been addressed by shipyard leadership as 
they have been discovered and reported. As a matter of practice, the 
shipyard assigns Sailors to other, more modern, living quarters on base 
whenever possible.
    The Navy is committed to providing our Sailors with the highest 
quality living conditions possible. To that end, on June 5, the Navy 
vacated Building 191 and all Sailors are now housed in more modern 
barracks on base. If shipyard loading requires more unaccompanied 
housing that other Portsmouth barracks can provide, we may berth 
Sailors out in town.
    We will continue to carefully evaluate P285 as part of our annual 
budget process. Thank you for your continued support of our people and 
the quality of work and life at Portsmouth Naval Shipyard.

    Senator Ayotte. Then the other one would be in terms of the 
P-309, which is a portal crane. This is one where the crane 
that is used has some problems and capacity restrictions, which 
limit efficiencies in drydocking. In fact, there is an estimate 
that we lost 6 days a year of operational availability for this 
crane. That one has been delayed from 2016 to 2018 or 2019.
    So those two, if you can let me know why they have been 
delayed? Obviously, the longer we delay these things, we miss 
money savings. I understand the fiscal challenges we are 
facing, but--
    Mr. McGinn. Right. I will be sure to get back to you on 
those in detail.
    [The information referred to follows:]

    The Naval Shipyards are essential to meet operational requirements, 
and we are committed to sustaining, recapitalizing and modernizing 
shipyard infrastructure. In fact, we have invested more than $240 
million to repair and modernize the infrastructure at Portsmouth Naval 
Shipyard since 2012.
    But fiscal constraints and competing priorities have caused the 
Department to defer some Military Construction projects in our 2016 
budget request, including P309 to improve portal crane capability at 
Portsmouth Naval Shipyard. The Navy has been able to accomplish some 
repairs to the wharf infrastructure in the interim using the Navy's 
restoration and modernization program.
    We will continue to carefully evaluate and prioritize proposed 
military construction projects with all other competing requirements in 
future budget submissions as we balance risk across the Department. It 
is our goal to provide the greatest warfighting readiness and 
capability with the limited resources available.

    Senator Ayotte. Excellent. Appreciate it.
    I wanted to follow up, I know there has been a lot of 
discussion among all of you on this issue of BRAC. Let me just 
make clear up front, I continue to be opposed to BRAC. But I do 
want to understand where we are, in terms of the language that 
the department has submitted to us on BRAC. It is identical, 
essentially, to the 2005 language. So you can understand why 
Congress says that wasn't exactly what we thought in terms of a 
BRAC round focused on cost.
    But just so that we all understand, for the committee, what 
kind of infrastructure does the department think needs to be 
reduced?
    By service area, I know, Secretary Ballentine, you talked 
about the Air Force. Can you give us more specificity, in terms 
of whether we are talking about ranges, warehouses, barracks, 
industrial facilities? Because this, obviously, I think, is 
important for us to have a better understanding of what types 
of facilities you are thinking about.
    I also would like to understand which services are you 
seeking a BRAC round for.
    For example, as far as I understand, Secretary McGinn, the 
Navy doesn't have excess capacity right now.
    Mr. McGinn. I wouldn't go so far as to say we don't have 
excess capacity. We would use a BRAC round as what I would call 
a stress test, to make sure that we have the right balance 
between our force structure and our base infrastructure. The 
advantage of it is that it is very disciplined. It is data-
driven, analytical. We would use the results prudently.
    One of the reasons that our need for BRAC is less 
compelling is because we did so much since the very first one 
in 1991. We closed 56 major installations, completely closed 
them down, over 250 smaller installations or facilities.
    So our balance is fairly good right now. But we would not 
want to avoid a BRAC. We would use it to our advantage.
    Senator Ayotte. I think you have already testified about 
what the Air Force excess capacity is, 20 percent.
    Ms. Ballentine. Thirty percent excess infrastructure 
capacity at this time. I would be happy to go through in more 
detail specifically what we looked at.
    The parametric-level capacity analysis doesn't allow us to 
really get to the fine-grained detail that a full comprehensive 
capacity analysis that we would do through the BRAC structure 
would allow us to do.
    But in the parametric capacity analysis, we look at nine 
specific types of infrastructure, which I would be happy to 
list for you now, or provide you for the record.
    Senator Ayotte. I think it would be helpful, just because I 
don't want to hold up my colleagues here, but I think it is 
important for the committee that we understand what you are 
requesting of us.
    I, certainly, think that we need some specificity. I 
understand that is the purpose of undertaking this kind of 
round, but just a sense of what kind of excess capacity you 
think for the service areas.
    So if that could be provided to the committee, I think it 
would be very helpful.
    Ms. Ballentine. Absolutely.
    [The information referred to follows:]

    Ms. Ballentine. The Air Force headquarters-level parametric 
capacity analysis considered nine broad categories comparing simple 
ratios relating capacity to force structure and determined the Air 
Force has approximately 30 percent excess infrastructure capacity. The 
categories include:

      Reserves Parking Apron
      Air National Guard Parking Apron
      Education & Training Parking Apron
      Small Aircraft Parking Apron
      Large Aircraft Parking Apron
      Education & Training Classroom Space
      Depot Labor
      Space Operations
      Product Centers, Laboratories and Test & Evaluation 
Facilities.

    Ms. Hammack. Only a comprehensive BRAC analysis can determine the 
exact nature or location of potential excess. For the Army we know we 
have excess infrastructure. The Army did an internal review of real 
property in 2014 and found an average of 18 percent excess with a range 
of between 12 percent and 28 percent by building type. This was at an 
active component force structure of 490,000 Soldiers. As the Army's 
force structure is reduced further below 490,000, Army excess capacity 
will grow.
    Significant savings are only achieved when lower military value 
installations are closed and remaining missions are consolidated into 
excess capacity at higher military value installations. Most 
installation costs are Base Operations Support (BOS)--salaries, service 
contracts, and utilities. These expenses do not decrease in a 1:1 ratio 
when a building is demolished or the installation population is reduced 
by 10, 20, or even 40 percent. This is why BRAC is crucial to reducing 
the total cost of excess capacity.

    [Prepared question submitted to Mr. McGinn by Senator 
Ayotte:]

    Question: What kind of infrastructure does the department think 
needs to be reduced?
    Answer: The Department of Navy would use the BRAC authorization 
process to ensure our infrastructure is optimally aligned to support 
the force structure and the associated mission capability requirements. 
Although we have not analyzed our overall excess capacity in detail 
since BRAC 2005, we believe the best way to fairly and accurately 
evaluate excess capacity within the Department of Navy is to conduct a 
functional analysis following the BRAC process using certified data 
that collects detailed information from each base across a broad array 
of metrics and compares the information against required force 
structure capabilities and the infrastructure requirements for new 
weapons system platforms.

    Senator Ayotte. Let me just note again, my going-in 
position is that I am opposed to BRAC, but I would like this 
information. You have spent a lot of time testifying about it. 
I think that all of us should have the opportunity to have more 
details on what kind of facilities you think are excess, what 
it is by branch and represented, and what kind of cost-savings 
you think can be achieved from it.
    Thank you.
    [The information referred to follows:]

    Only a comprehensive BRAC analysis can determine the exact nature 
or location of potential excess. For DOD as a whole we know we have 
excess infrastructure. Our 2004 parametric study found 24 percent 
excess while BRAC 05 only produced a 3.4 percent reduction in plant 
replacement. More recently the Army and Air Force's internal parametric 
reviews have found 18 and 30 percent excess respectively.

    Senator Kaine. Thank you to the witnesses.
    A number of topics, on the sequestration point, you have 
all testified to the challenges that would result if the budget 
caps were imposed as-is. I think the statistic I thought was an 
interesting one is an improvement this year so that we meet 81 
percent of the requirements necessary to keep our facilities in 
good working order, which is better than last year. But that is 
at the President's proposed 2016 budget level.
    So if we take $35 billion out of the DOD budget, because of 
the budget caps, then you are not at 81 percent. I don't know 
exactly the portion of that you would absorb, but you would be 
back down into the 65 percent or less. That imposes risks on 
the men and women who are working and serving in these 
facilities.
    Am I basically following your testimony?
    Mr. Conger. That is pretty much it. We don't have a 
specific BCA-level budget that we have the developed. But the 
BCA caps are not dissimilar from last year's budget request. So 
it is probably instructive as to the puts and takes, the trade-
offs that we had to consider.
    Senator Kaine. I want to focus on some of the climate 
issues. Mr. Conger, I alluded to them in my opening.
    You were a panelist at a bipartisan symposium that I called 
this summer with three other Members of Congress, Congressman 
Scott, Congressman Wittman, Congressman Rigell, two Democrats, 
two Republicans. We had bipartisan mayors.
    We held a hearing on sea level rise affecting our military 
installations in Hampton Roads. We held it on a Wednesday 
morning in August, the worst possible time to get a good crowd. 
We had 500 people who showed up who were very concerned about 
this issue. You were good enough to be a panelist, to help us 
think this through.
    Hampton Roads has embraced sort of an all-of-government 
approach where we have the installations, main DOD, the 
Pentagon, but also municipal governments, local planning 
councils, elected officials, businesses, the Chambers of 
Commerce. What are the virtues of that kind of all-of-
government approach to looking at resilience planning for 
military installations?
    Mr. Conger. So in order to answer that question, let me ask 
sort of give you the 10,000-foot level and swoop in.
    We look at climate change as a risk, a risk to be 
considered along with other risks as we contemplate. We can't 
just look at it--climate doesn't recognize the borders of the 
installation. There are things that will happen inside the 
installation that we have to incorporate this risk into, 
placing MILCON projects, developing natural resource plans, et 
cetera.
    But there are some things that happen outside the fence 
line. What about utilities provided by the local community that 
we are going to count on? The fact that many of our 
servicemembers and their families live off-base? How does that 
affect our ability to operate if there is a flood or other 
event?
    So it is absolutely necessary to, A, work with other 
Federal agencies, the Department of Transportation, the Federal 
Emergency Managment Agency (FEMA), et cetera, as we think about 
the long-term planning for a particular area. But it is also 
important to deal with local municipalities. We do this anyway.
    Climate change aside, all the people here at this table, 
all of the folks inside the services who work at the base 
level, work with their local municipalities on any number of 
issues. Long-term planning in a climate-affected environment, 
whether you're worried about drought or you're worried about 
sea level rise or frequent flooding, you have to have those 
conversations with the planners from the municipalities.
    Senator Kaine. There is a tool that Virginia has found 
particularly helpful, REPI, which I think stands for readiness 
and environmental protection initiative.
    Mr. Conger. REPI.
    Senator Kaine. REPI, which pairs DOD funds with private 
funds from the Nature Conservancy or other organizations to 
help deal with encroachment-type issues.
    What are some of the examples of the ways that 
installations have used REPI funds to help them protect the 
integrity of operations on the installations?
    Mr. Conger. Sure. REPI tends to be focused on the partial 
levels. Is there an increase in buffers that we need close to a 
base? Are there conservation areas that the local natural 
resources advocates are interested in spending money on, as 
well as the Defense Department needing that land to be 
preserved as buffer, holding off development near an 
installation?
    That serves our interest, because we are being selfish 
about this. It serves the natural resources constituencies, the 
non-governmental organizations' (NGOs') interests. So we 
essentially partner. We share the cost.
    So we get a half-price buffer project, and they get a half-
price conservation project. So it is more bang for the buck, as 
it were.
    Senator Kaine. Secretary McGinn, in my opening statement, I 
just referred to what I thought I remembered about a pretty 
amazing drop in purchase costs. Secretary of the Navy Mabus, I 
hear him talking about the Green Fleet, the big Green Fleet 
trying to find alternative energy, much like nuclear was an 
alternative to diesel and petroleum, to look at green 
biodiesel.
    My understanding is, and it is hard to compare all 
contracts, apples to apples, I know. But in 2012, when we did 
green biodiesel purchases, we were paying up to $12 a gallon. 
We are now involved in purchase contracts that are in the $3.40 
a gallon range because of innovation that has driven down the 
cost of biodiesel.
    Am I getting that right, essentially, on the order of 
magnitude?
    Mr. McGinn. You are, Senator. In fact, it is even lower 
than $3.50. It is the result of a demand signal that is pretty 
strong, clearly, one from the Department of Navy, but also one 
from the civilian aviation industry as well.
    We view the diversification of our transportation fuel 
portfolio as really critical to our future national security. 
It is not something that may make a difference next year or 
even the year after that, but if you look 5, 10, or 15 years 
down, there is a tremendous imbalance between availability of 
supply and demand in the world's transportation and energy 
market.
    So we think that in addition to being much more energy 
efficient, and you cited bulbous bows and coatings and other 
means by which we are trying to squeeze as much fight out of 
every unit of fuel we can, that we have a diversification of 
supply.
    The industry is responding by scaling up and getting those 
economies of scale that are driving the prices down. We are 
working very closely with the Defense Logistics Agency on 
solicitations for mixes of petroleum and biofuel blends. But we 
are not going to pay a premium. We aren't going to buy anything 
that isn't cost-competitive.
    Senator Kaine. Great. Thank you for that.
    Thank you, Madam Chair.
    Senator Ayotte. Senator Rounds?
    Senator Rounds. Thank you, Madam Chair.
    I was the Governor of South Dakota during the 2005 BRAC 
round. Ellsworth Air Force Base began on the BRAC list.
    The challenge that we faced was literally trying to provide 
accurate data, and making sure that the data that we could 
provide would be considered by the BRAC commission.
    Ultimately, it was, and we were successful in getting the 
Ellsworth Air Force Base off the closure list.
    But in doing so, we found that there were issues within 
BRAC that we thought didn't adequately allow for consideration 
of critical needs long term for our country. That was the basis 
upon which we challenged the placing of Ellsworth in the first 
place.
    With that in mind, I would just like to go through a couple 
real quick questions on this. Honestly, the first thing, and I 
agree with you, Madam Chair. I come with a dislike for the BRAC 
process to begin with, so this is going to be a case of 
convincing me that it is the right thing to do.
    The first thing I look at is you provide an estimate 
upfront of $2 billion per year savings with the implementation 
with a $6 billion cost, which clearly would suggest that there 
is a BRAC list, which has already been developed and ready to 
go. Or if not, how can you come up with those numbers upfront 
as a fair estimate?
    Second of all, and this would be to Mr. Conger, we 
understand the negatives of excess capacity in scoring 
installations in a future BRAC. But can you tell us some of the 
most positive qualities you would be looking for in an 
installation's infrastructure, in terms of military value and 
readiness?
    Mr. Conger. Okay, let me take your first question first.
    Senator Rounds. Sure.
    Mr. Conger. Where did the numbers come from? It is a 
reasonable question, and we don't have any sort of a list 
already in the hopper. What we did was we looked at previous 
BRAC rounds, in particular the ones from the 1990s. We looked 
at the efficiency recommendations from the 2005 round, the ones 
that were designed to save money. We said all right, if we were 
to reduce 5 percent of our infrastructure, which is not an 
unreasonable number considering the numbers that we have heard 
today, the 18 percent, the 30 percent, the 24 percent figure 
that we had in 2004, and we only reduced 3.4 percent in that 
the BRAC round.
    So given that 5 percent projection, and the behavior and 
the spend pattern of previous rounds, we estimated what we 
would end up with, what that 5 percent reduction would yield 
us. That was where we got the $2 billion in recurring savings. 
It is also where we got the $6 billion of input costs.
    Senator Rounds. A SWAG?
    Mr. Conger. An estimate based on previous performance.
    Senator Rounds. So in the 2005 round, I presume that those 
who were there at that time and the actual closures that 
occurred, and this was the first round in a number of years, 
was that the low-hanging fruit?
    Mr. Conger. I am not sure that I would characterize low-
hanging or not low-hanging. We obviously went through a long 
process, at that time. Since you were the governor at the time, 
you know how painful that can be, and we respect that. It is 
painful at the base level.
    We ask for certified data to answer a huge number of 
questions. We don't assume the data that is in databases is 
correct. We collect it all and get it certified at the 
beginning of the round.
    There is an assessment that is done where you find the 
excess capacity, where you assess military value, and you try 
to make sure that the bases that you recommend closing are the 
ones with the lowest military value. Those numbers change over 
time.
    Senator Rounds. So let's slide back in again. Tell us some 
of the most positive qualities that you would be looking for in 
an installation's infrastructure, in terms of military value 
and readiness.
    Mr. Conger. So those questions are defined by each of the 
services going into the round. They are not OSD-dictated. So 
each of the services will have a different set of priorities, a 
different set of questions that they ask.
    Frankly, recently we went through, I will call it a Euro 
BRAC round, and used the BRAC process. We practiced the BRAC 
process and developed those kinds of questions.
    I would defer to my colleagues to talk to the priorities, 
how they value military value in that. That is probably going 
to be the most instructive.
    Senator Rounds. That is fair. I would then ask Secretary 
Ballentine, for bases with flying missions, will an 
installation's proximity to a quality aerial training range be 
one of those positive features that you will be looking for, 
not only in terms of the BRAC analysis but when evaluating 
beddowns for new missions, particularly when considering 
savings in fuel costs?
    Ms. Ballentine. So all of those details would be developed 
by the operators and then taken into account by the 
installations folks. I would say that we are incredibly 
grateful to the South Dakota congressional delegation (codel) 
for the great partnership that we have in developing the Powder 
River Training Complete (PRTC) training range, which is going 
to be an excellent national resource for us.
    But precisely how the military value will be assessed will 
be developed by the operators as we go through the process.
    Senator Rounds. Okay.
    Secretary Ballentine, once again, in 2005, the BRAC, during 
that process, the Air Force deviated on criteria, which was 
used to evaluate a base, from the three previous BRACs. A point 
system was used in 2005 to determine the ability of a base to 
receive other missions, versus whether the military value of a 
base warranted its retention.
    As a future BRAC would deal less with transformation and 
more with closure, has the Air Force determined the criteria 
that it would use for the next BRAC round? I am hearing you say 
no.
    Ms. Ballentine. No, not at this time.
    Senator Rounds. Thank you.
    Ms. Ballentine. You're welcome.
    Senator Ayotte. Senator Heinrich?
    Senator Heinrich. Thank you, Madam Chair.
    Assistant Secretary Ballentine, as you know, and we talked 
a little bit about this just before the hearing, Kirtland Air 
Force Base in Albuquerque, NM, has been mired with a fuel spill 
that now literally dates back decades.
    For too long, the cleanup of the spill has been fraught 
with delays and very little discernible progress. The result of 
these missteps has been that there has been a crisis of trust 
between the community and Kirtland Air Force Base.
    But frankly, under your leadership and that of Ms. Kathleen 
Ferguson, Mr. Mark Correll, and Dr. Adria Bodour, things are 
now moving in the right direction, and that trust is being 
restored.
    We are now seeing all the stakeholders work together in 
moving forward to meet some very aggressive deadlines in the 
coming months. I want to say I can't thank you enough for this 
progress. But this progress would not be possible without 
funding and leadership.
    Therefore, I ask, does the Air Force remain committed to 
the funding necessary to ensure cleanup and commit to keeping 
the Air Force Civil Engineers Center's project leader Dr. Adria 
Bodour, who has done a remarkable job at the helm? So I would 
just ask, I guess my question is, will the Air Force continue 
to provide the funding necessary to ensure that this cleanup 
gets to completion? Can you ensure that the strong leadership 
that we are now seeing will remain in place?
    Ms. Ballentine. Sir, first of all, I thank you for your 
appreciation, and will be sure to pass it on to my team.
    Senator Heinrich. Please.
    Ms. Ballentine. I, personally, can take very little credit. 
They had started this process well before I arrived. But I 
assure you that I will continue the focus. We will continue the 
funding. We are really excited about the robust interim 
measures we have put in place. I agree with you 100 percent 
that Dr. Bodour is doing a fabulous job. I will see you in 
June, when we cut the ribbon on that first extraction well.
    Senator Heinrich. I look forward to it. This is an issue 
that has drug on far too long. Having been frustrated in the 
past, I just really want to see the current progress and what 
has become a very positive working relationship be the norm 
moving forward. So thank you.
    I was also very pleased to see $12.8 million in the budget 
request for some much-needed MILCON at Kirtland Air Force Base 
regarding our space facilities.
    Kirtland Air Force is home to the Air Force research labs, 
space vehicles directorate, operationally the space and the 
space test program. Some of our Nation's most advanced space 
research and development (R&D) occurs there at Kirtland.
    But in the past, one of the challenges is that that work is 
performed in 11 substandard, inadequate, obsolete facilities 
that are literally spread over miles and miles of what is a 
very large Air Force installation.
    Can you talk a little bit about what value this new 
facility would bring to the Air Force's overall space programs?
    Ms. Ballentine. Yes, sir. You have hit the nail on the 
head, that nuclear, space, and cyber are key priorities for 
Secretary James and Chief Welsh. We just simply cannot have a 
21st-century space platform when we are operating out of 1960s 
vintage buildings. So we are quite excited about the $12-plus 
million MILCON project at Kirtland, which will allow us to test 
and develop space components and bring us to a 21st-century 
space program.
    Senator Heinrich. Great. Thank you.
    With that, I want to also take a moment and thank Assistant 
Secretary Conger and Assistant Secretary Hammack for all of 
your work, your time, your engagement, trying to deal with some 
of the challenges revolving around New Mexico's electrical 
transmission needs. I would say that your efforts ensured that 
we can pursue energy independence, the jobs that come with it, 
but also while protecting the truly unique testing and training 
assets at White Sands Missile Range.
    With that, I would just segue into this issue that we have 
been talking about regarding a potential BRAC round. I come 
with my own doubts about that process. I guess what I want to 
understand is, when you say excess infrastructure, how do we 
judge that? Can you give us some sort of concrete examples of 
what would be excess infrastructure in the current environment?
    I don't mean a specific location, so much as something that 
we wouldn't use. How would you judge what is excess?
    Also, finally, going back to Ms. Ballentine, would the 
proximity for things like ground to infinity airspace to an Air 
Force installation or uniqueness of testing facilities be part 
of that decision-making?
    Mr. Conger. Let me try and hit the first two parts of your 
question first, and then pass to Miranda.
    We measure excess in a couple different ways. When we do 
these sort of big picture capacity analyses, we are looking at 
different types of infrastructure, planes per apron space, 
ships per pier space, et cetera, in trying to see whether our 
bases are more empty than they once were and whether we think 
there is trade space to do a more comprehensive analysis.
    When we do the capacity analysis within the actual BRAC 
round, it is based on much more granular data. We go out to 
each base and ask all these detailed questions. The best way to 
look at how that is going to work is to look at our European 
analysis that we just did, where we searched out excess at each 
of those installations in Europe. In so doing, we were able to 
identify different scenarios of where we might be able to fit 
missions that are at one location in another.
    Those are the scenarios that we analyze in more detail, 
once we have identified what they are based on the excess and 
the actual military value of those installations.
    When we analyze those scenarios, we look at the business 
case, but we also look at the operational impacts. We want to 
find a scenario where we are simply being able to do the same 
thing for less money. We don't want to reduce our operational 
capability.
    Now I will pass to Miranda for the specific question you 
asked her.
    Ms. Ballentine. I think Secretary Conger described the 
parametric-level capacity analysis well. So at the Air Force, 
again, we use nine broad categories. So you can imagine what we 
do, looking at a simple ratio of a particular type of capacity. 
So say small aircraft parking aprons to force structure of 
small aircraft, and apply a ratio based on 1989 levels, using 
the same process we have used in the prior parametric capacity 
analyses.
    Now we would be able to get into much finer-grained detail 
when we do a comprehensive analysis.
    30 percent excess infrastructure capacity does not mean 30 
percent excess bases. It doesn't even mean 30 percent excess 
infrastructure. It just means capacity of the infrastructure. 
So how much of that we would actually consolidate, close, move, 
we wouldn't be able to identify until we go through that 
comprehensive analysis, identifying what those operational 
needs and priorities are.
    Senator Heinrich. I want to thank you, Madam Chair.
    Obviously, all of us are somewhat skeptical about BRAC. I 
think we should be equally skeptical about seeing our bases 
hollowed out, and that kind of reinforces for all of us why we 
need to fix the sequestration mess that we find ourselves in. 
Thank you.
    Senator Ayotte. Senator Ernst?
    Senator Ernst. Thank you, Madam Chair.
    Thank you to our guests today for your time and testimony. 
I do appreciate this.
    This is a difficult issue. Any time we face BRAC, there is 
a lot of trepidation in our communities that go through this, 
not only with BRAC but also with the changing needs of the 
military. We have had a mission transformation within the Iowa 
Air Guard. Just recently, actually, this last weekend, I did 
have the honor of attending an activation ceremony.
    We had a fighter wing that has now become focused on 
intelligence, surveillance, and reconnaissance (ISR). Their 
mission has changed. We don't have the fighter jets any longer. 
But we do have a much more technologically-based mission.
    So, Ms. Ballentine, if you would, please, the MILCON budget 
request for our Air National Guard notes the improvement of the 
Air Operations Group beddown site at the Des Moines 
International Airport. The justification data report that had 
been submitted to Congress last year, according to that, the 
building where this unit will be housed did not have the 
required communication, security systems, or backup and standby 
power required to support the new ISR mission.
    I am pleased to see that it has been included in the 
budget. It is being allocated and that this beddown sight will 
support a national defense mission in my home State.
    So what I would like to ask is, does this MILCON budget 
request provide enough for this group to be mission-ready in 
Des Moines? How critical is this group site to the Air Force 
and to our National security?
    Ms. Ballentine. Thanks, ma'am.
    I can tell you that ISR is in demand like never before. 
When the Secretary and Chief go out and ask our combatant 
commanders what they need, what they hear is ISR, ISR, ISR. 
This is a community that is under pressure in terms of the 
number of airmen we have doing the job, and the Secretary and 
Chief are really spending a lot of time to get this community 
healthy to meet the demand.
    I am going to have to get back to you on all the specific 
details that you asked about those particular projects. I will 
say that we work very hard to make sure that we have total 
force equity in our MILCON budgets and make sure that the Guard 
and Reserve have their fair share of MILCON and FSRM as we go 
through the year.
    So I will get back to you on the specific details that you 
asked about. But, of course, we would be sure to be trying to 
fund projects to the extent that they are necessary to meet the 
mission.
    [The information referred to follows:]

    Des Moines Air Guard Station has been selected as a beddown site 
for an Cyber Protection Squadron (CPT) to conduct cyber operations. In 
fiscal year 2014 the installation lost its 24-PAA F-16 mission and 
began conversion to an Cyber Protection Squadron as well as a Remotely 
Piloted Aircraft (RPA) Mission Control Element (MCE), and an 
Intelligence Targeting Group. The installation is configured to support 
fighter aircraft and requires significant work to convert the 
installation to the security and operational support needed for the new 
missions. A design study has identified building 430 as the most 
suitable location for these new missions. Facility conversion for RPA/
MCE and Intelligence Targeting Group are being executed in a project 
authorized and appropriated in fiscal year 2015.
    This fiscal year 2016 project requests authority and funding 
necessary to provide the facilities necessary to enable the CPT to 
reach full operational capability.
    This group represents part of a constellation of ANG Cyber 
Operations units which are part of the National Guard Bureau's 
contributions to the nationwide Cyber Mission Force construct managed 
by United States Cyber Command. Cyber security is a critical tenet of 
United States national security.

    Senator Ernst. Okay. Thank you very much. I appreciate 
that.
    Ms. Ballentine. You're welcome.
    Senator Ernst. Definitely an exciting transformation, 
again, a lot of trepidation with these airmen as they 
transition from their known unit into something that is totally 
new, much more technologically advanced. But in the course of 
their training over the past year, they are seeing long-term 
sustainability with this type of mission and unit. We are proud 
to have it located in Iowa. Thank you.
    I will look forward to having the responses back.
    I would like to hop back to Mr. Conger, if you could assist 
me with this one.
    Something that Senator Heinrich had mentioned earlier with 
the environmental spills that occur out there. It is my 
understanding that there are POL spills, petroleum, oils, and 
lubricant spills, that occur. Whether they are large or small 
or other types of environmental accidents, when they occur 
caused by U.S. troops in certain European nations, then the 
U.S. Government pays a very, very hefty penalty in those 
situations.
    If you are familiar with that, could you please explain 
that process? Maybe how much the government has expended in 
cleaning up some of these spells and the fines associated with 
that?
    Mr. Conger. So in general, our cleanup activities in 
foreign nations are governed by specific Status of Forces 
Agreements (SOFAs). I am not familiar with the fines you are 
referring to. I am under the impression that, generally, we 
don't conduct cleanup activities that don't have a direct 
threat to human health and the environment on the bases that we 
reside in overseas.
    But recognizing that I am not fully apprised to the answer 
this question, why don't I take it for the record, and get you 
a more formal answer.
    Senator Ernst. I would, certainly, appreciate that.
    [The information referred to follows:]

    It is DOD policy to plan, prevent, control, and report spills of 
hazardous substances and POL. It is also DOD policy to provide for a 
prompt, coordinated response to contain and remediate spills when they 
occur.
    The U.S. Government does not pay fines and penalties to any 
European nation for spills. DOD does pay claims for environmental 
damage to the property of host nation landowners under Article VIII of 
the North Atlantic Treaty Organization (NATO) Status of Forces 
Agreement (SOFA). The NATO claims process is a long-established process 
in which the U.S. pays a share of each approved claim and the host 
nation pays a smaller share (e.g., 75 percent/25 percent). The nations 
covered by the NATO SOFA (such as Germany) are generally excluded from 
filing such claims on their own behalf because of inter-governmental 
waiver provisions contained in the agreement. However, this exclusion 
does not usually cover local municipalities and local water 
authorities. Our primary expenditure for environmental claims is for 
pollution that migrates from our installations to adjacent property or 
water sources.

      Army has spent $1.8M on POL spill claims in Europe during 
2012-14.
      Navy has not paid any claims for environmental damage 
since 2013.
      Air Force has spent $1.9M in Europe for spill response 
since 2009.

    I would like to go back, also, Ms. Hammack, very briefly, I 
am running out of time.
    Energy and sustainability, you have done a lot of hard work 
in this area, and I do appreciate that. Your part in 
establishing the Army's NetZero program, which seeks to 
minimize energy use on Army installations and offsets any 
remaining use with renewable energy, can you just please give 
us a very quick update on where you stand with that project?
    Ms. Hammack. Thank you very much, Senator Ernst.
    It has been a very successful program, and so we have 
expanded it to all Army installations because we found it is a 
cost-effective means of allocating limited resources to ensure 
that we don't put renewable energy on an inefficient building. 
We want to be able to look at efficiency first.
    We are using a lot of energy savings performance contracts, 
leveraging private-sector money, not taxpayer money, so that 
when the energy savings are achieved, we pay the contractor 
back out of the energy savings. Sometimes we will be able to 
put renewable energy in there.
    The intention is to get all of our installations more 
resilient so that they are using less energy. They are able to 
make more out of renewable energy. So that we are able to 
standby and serve this Nation, the State, in case of a natural 
disaster or otherwise.
    So the NetZero program is working great, both on energy and 
water efficiency projects, too.
    Senator Ernst. That is fantastic. I commend you on that.
    Thank you so much, Madam Chair.
    Senator Ayotte. Thank you.
    I have some follow-up questions, and wanted to ask, we have 
submitted to you, Secretary McGinn--there are all kinds of 
questions for you to follow up. It is great.
    Mr. McGinn. My staff will be very pleased.
    Senator Ayotte. I know they will be.
    A number of questions about security personnel at our 
shipyards. In fact, I was meeting with some of the management 
at our shipyard today in Portsmouth.
    One of their concerns is that it is taking them too long to 
hire security personnel, and that by the time they train the 
personnel, given where they are in the classification system, 
they are training them and then losing them fairly quickly. So 
I think this is probably not just an issue at Portsmouth but 
maybe an issue elsewhere, at all of our facilities.
    So we are, obviously, in light of the tragedy that we 
experienced on September 16 of 2013 at the Washington Navy 
Yard, all of us want to make sure that we have proper security 
at our military installations. So I wanted to follow up on 
that. If you have any comments on that or if that is one you 
want to take for the record? I saw Secretary Hammack shaking 
her head as well.
    Mr. McGinn. We recognize that we need to do a better job at 
recruiting, training, and retaining our security personnel, 
civilian personnel. We are doing a review with the commander of 
Naval Installations Command, which the headquarters is located 
in the Navy Yard, taking a look at the attrition, if you will, 
of the security personnel.
    I will be happy to share with you the results of that 
review, as we go forward. But we recognize that we have to 
create an attractive career-enhancing pathway for folks in that 
critical area of discipline. We will make sure we do that, make 
sure that the pay and compensation and training opportunities 
are commensurate with responsibilities.
    Senator Ayotte. Excellent. Thank you.
    Mr. Conger, I know Senator Ernst asked you and I think 
Senator Heinrich as well, about environmental cleanups. I 
think, unfortunately, all of our States have some of those.
    Let me just applaud the Department's efforts and impressive 
progress. In New Hampshire, 83 percent of our sites have been 
cleaned up, including Pease, Manchester, Rochester, New Boston, 
Concord, Langdon, and on Mount Washington. We really treasure 
our beautiful environment in New Hampshire, as we do across the 
country.
    I understand that there are 32 remaining sites in New 
Hampshire. Obviously, we want to get them all cleaned up. If 
you can give me an update, this is one you can take for the 
record, give me a project date of completion of what you 
estimate in terms of when we might get to these other 
unfinished projects. I would appreciate it.
    Mr. Conger. You bet. We have that information. We will be 
able to get it to you.
    Senator Ayotte. Fantastic. Thank you.
    [The information referred to follows:]

    The table below identifies the remaining 32 cleanup sites in New 
Hampshire. This information is based on the end of fiscal year 2014 
Knowledge Based Corporate Reporting System (KBCRS) data submitted by 
the Military Components.

 
----------------------------------------------------------------------------------------------------------------
                                                                                               Project response
          DOD component            Installation name       Site name         Current phase    complete date (FY)
----------------------------------------------------------------------------------------------------------------
Air Force.......................  New Boston........  Former WWTP (Bldg   Study.............               2017
                                                       130 & 121).
Air Force.......................  Pease AFB.........  Burn Area-1.......  Cleanup...........               2016
Air Force.......................  Pease AFB.........  Burn Area-2.......  Cleanup...........               2015
Air Force.......................  Pease AFB.........  FDTA-2............  Cleanup...........               2019
Air Force.......................  Pease AFB.........  PFC-FDTA-2........  Study.............               2044
Air Force.......................  Pease AFB.........  LFTS..............  Cleanup...........               2017
Air Force.......................  Pease AFB.........  Bldg 222..........  Cleanup...........               2015
Air Force.......................  Pease AFB.........  Bldg 227..........  Cleanup...........               2018
Air Force.......................  Pease AFB.........  Bldg 234..........  Cleanup...........               2018
Air Force.......................  Pease AFB.........  BFSA..............  Cleanup...........               2016
Air Force.......................  Pease AFB.........  Bldg 119..........  Cleanup...........               2017
Air Force.......................  Pease AFB.........  Bldg 120..........  Cleanup...........               2015
Air Force.......................  Pease AFB.........  OJESTS............  Cleanup...........               2017
Air Force.......................  Pease AFB.........  Communications      Cleanup...........               2018
                                                       Bldg #22 Solvent
                                                       release.
Air Force.......................  Pease AFB.........  Plume 13/14.......  Cleanup...........               2017
Air Force.......................  Pease AFB.........  Plume 41..........  Cleanup...........               2015
Air Force.......................  Pease AFB.........  Pumphouse 2.......  Cleanup...........               2016
Air Force.......................  Pease AFB.........  Motor Pool (site    Cleanup...........               2015
                                                       72).
Air Force.......................  Pease AFB.........  Bldg 136 Self Help  Cleanup...........               2016
                                                       Fac (Site 81).
Air Force.......................  Pease AFB.........  Flightline          Cleanup...........               2020
                                                       refueling System
                                                       (FLRS) plumes.
Air Force.......................  Pease AFB.........  Bldg 113..........  Cleanup...........               2020
Air Force.......................  Pease AFB.........  Bldg 226..........  Cleanup...........               2015
Air Force.......................  Pease ANG NH......  Former OWS at Bldg  Study.............               2021
                                                       157.
Air Force.......................  Pease ANG NH......  OWS (1) Removal     Study.............               2021
                                                       pending at Bldg
                                                       260.
Air Force.......................  Pease ANG NH......  OWS (2) Removal     Study.............               2021
                                                       pending at Bldg
                                                       260.
Air Force.......................  Pease ANG NH......  Former drum         Study.............               2015
                                                       storage area at
                                                       Bldg 253.
Air Force.......................  Pease ANG NH......  Former USTs at      Study.............               2020
                                                       Bldg 145.
Air Force.......................  Pease ANG NH......  Former USTs/pump    Study.............               2020
                                                       island/OWS/former
                                                       lubrication bay.
Army............................  Cold Regions        Former TCE And      Study.............               2051
                                   Research And        Fuel Oil USTs.
                                   Engineering Lab.
Army............................  Cold Regions        Research Ice Well.  Study.............               2051
                                   Research And
                                   Engineering Lab.
Army............................  Cold Regions        Open Storage Area.  Study.............               2051
                                   Research And
                                   Engineering Lab.
FUDS............................  Grenier Mil AF....  Former Grenier      Cleanup...........               2016
                                                       Landfill PRP.
----------------------------------------------------------------------------------------------------------------

    Secretary McGinn, I wanted to ask you about a project in 
California. This is one that was a $44 million water project 
that is going to provide water from Camp Pendleton to the 
community of Fallbrook, California. One of the issues that I 
would like some clarification on is that it appears that the 
benefits to the Department of Navy, it is just not clear to me 
how much benefit the Department of Navy gets.
    The authority that was granted to the Secretary of the 
Interior for the construction only allows Navy to reimburse 
costs of the project that the Secretary and Secretary of Navy 
determine reflects the extent to which the Department of Navy 
benefits from the project.
    So what portion of the water from the project will be used 
by the Department of Navy, versus how much will the State of 
California or the City of Fallbrook and the Department of 
Interior be investing?
    Mr. McGinn. It has a very detailed background that goes to 
water rights and usage, making sure that we are looking at 
future demand and doing that in as a water-conserving way as we 
possibly can.
    Senator Ayotte. You can appreciate where we don't want to 
build municipal water projects, but we want to help the Navy.
    Mr. McGinn. Exactly. Out great marines and sailors at 
Pendleton need that.
    We will provide you a briefing on that project as well and 
provide you the rationale and the numbers, and what exactly our 
costs are, what our expected benefits are.
    Senator Ayotte. Excellent.
    I, certainly, appreciate, this has been one of the ongoing 
issues that has been from Congress to Congress, the issue of 
Guam.
    Secretary McGinn, the Department is requesting an 
additional $20 million through the Office of Economic 
Adjustment to add to the already provided $106 million to 
upgrade the civilian water and wastewater infrastructure on 
Guam, so lest California think that I am picking on them.
    The Department does not provide the same level of support 
for other local community infrastructure where we have forces, 
as I understand it.
    So how much is the Government of Guam investing in its 
infrastructure? What will be the marines use of the water and 
wastewater, versus the residents of Guam, because obviously, 
our focus is on our marines as well? One of the issues, I 
think, actually, to include in this is the element of housing. 
As I understand it, there are some additional questions on 
housing and how much that is going to cost.
    So could you help us understand what the analysis is to 
determine the number of accompanied versus unaccompanied 
personnel stationed on Guam? This has been a continuous issue, 
I know, from Congress to Congress.
    Mr. McGinn. I think we are in a pretty good position 
compared to past years.
    First of all, the footprint of marines on this relocation 
to Guam is much lower. It will be a total of about 5,000 
marines, and about two-thirds of them will be unit-deployed 
marines, so we will have Permanent Change of Station marines 
with about 1,300 dependants that will be relying on the 
infrastructure for support there.
    Since last year, we have worked closely with our colleagues 
in the Air Force to locate the family housing at Anderson. That 
provides benefit to us. It provides benefit to the Air Force 
personnel who are based there.
    We are also looking very, very hard at what is driving 
housing costs there. Obviously, it is a remote location, parts, 
labor, et cetera, market conditions.
    I would, on the first part of your question, like to defer 
to Mr. Conger. He has done a great job in leading the effort by 
the Department on this economic adjustment business. So I 
recommend John provide some insight.
    Mr. Conger. Sure. Briefly, the outside-the-fence 
initiatives--water and wastewater as the preponderance of the 
effort--are driven by requirements to mitigate the impact that 
we are going to have on the island by introducing additional 
personnel and the stress on their utility system.
    The challenge is getting the Environmental Impact Statement 
(EIS) approved through the intraagency, and there are certain 
things that the island of Guam had not been in compliance with. 
So as a consequence, we are stressing an already stressed 
system.
    That said, I think that what Secretary McGinn alluded to 
earlier, in the sense that we have significantly reduced our 
footprint, therefore, we have significantly reduced our impact.
    Because we are going from a situation where we have gone 
from 9,000 marines and roughly the same number of dependents to 
5,000 marines and about 1,300 dependents, the impact is much 
smaller. The housing area is much smaller. The cantonment area 
is much smaller. The impacts are much smaller.
    We are finishing up the Supplemental Environmental Impact 
Statement (SEIS) now, but in conjunction, the Economic 
Adjustment Committee, which is an interagency group, is 
analyzing those impacts that are identified in the Supplemental 
Environmental Impact Statement, and repricing everything.
    We have gone from, in 2010, where we had a $1.3 billion 
program that was required by the EIS, in order to accommodate 
the much larger plan, to a figure that is closer to $200 
million or $300 million. The down-scoping has been dramatic.
    We will have final numbers to the committee this late 
spring, early summer. Obviously, any one of those outside-the-
fence projects that is required will have to get individual 
approval here.
    So we recognize that. We are going to get you the 
information. But I think it is a good-news story, the 
requirement dropping significantly. But it is all about the 
impacts that we are having, by the influx of marines.
    Senator Ayotte. Thank you.
    Senator Kaine?
    Senator Kaine. Thank you, Madam Chairwoman.
    Two other items of inquiry. In response to one of my 
questions, but also to one of my other colleagues, I heard a 
little bit from the Navy side and from the Army side about 
operational energy investments, power purchase contracts, 
energy conservation. But I haven't heard from my Air Force 
witness.
    I know the Secretary Ballentine came out of the private 
sector at Walmart, where your company was one of the real 
innovators in energy savings on the private sector side. Could 
you talk a little bit about what the Air Force is doing in this 
area to reduce energy usage, promote efficiency, and, 
ultimately, reduce costs?
    Ms. Ballentine. Yes, thanks for the opportunity.
    So like our sister services, energy assurance is critical 
to mission assurance at the Air Force. Energy really is the 
backbone for all parts of our mission. It launches every 
sortie, propels every space launch, and powers every bit of our 
base infrastructure. So energy is absolutely critical to what 
we do.
    As we look to build energy resilience in the face of 
potential supply disruptions, as we look to build diversity of 
our energy supply, and as we look to reduce energy demand, we 
have to do all of that in the face of this constrained budget 
environment that we have all been talking about today.
    So while in the past, the Air Force has invested more of 
our own money in energy reduction programs, we really are 
shifting our strategy pretty dramatically to accelerate the use 
of the energy savings performance contracts.
    On the renewable energy side, we have about 300 renewable 
energy projects at about 100 different locations, all of which 
meet or beat utility prices today. We just completed our 
largest solar installation to date, 16.4 MW at Davis-Monthan 
Air Force Base in Arizona.
    That project is pretty exciting. During peak sunlight, it 
is producing over 100 percent of the base's power. On average, 
day and night, it is about 35 percent of the base's power, and 
saves that base $500,000 a year.
    So those are exactly the kind of projects that we are 
looking at, bringing those electrons closer to home, saving 
money, building in some flexibility and resilience.
    Senator Kaine. Great. Thank you very much.
    Mr. Conger, back to the BRAC question. I think we have all 
expressed our concerns about BRAC, but we also understand that 
excess capacity has a cost. If you have to pay for that cost, 
it may come out of something else that could challenge you.
    So I want to ask you to really educate me about non-BRAC 
means for dealing with excess physical capacity. You used the 
example in your opening statement, and I think alluded to it 
once or twice, about the European study that was done, that you 
viewed as like a test BRAC.
    DOD did that, reached some conclusions about savings, and 
has been able to implement and has a pretty good fix on what 
savings would be.
    Is there any bar in law right now, if Secretary Carter says 
to all the service chiefs, I want you to tell me what your 
excess capacity is, and in your best military judgment, tell me 
what reductions you would make in your infrastructure in order 
to eliminate that excess capacity.
    I recognize that BRAC sets up a procedure that leads to an 
up or down vote, et cetera. But there is nothing in law that I 
know, but I could be wrong about this, that would bar the DOD 
from doing that kind of study about domestic installations and 
even forwarding recommendations to Congress that would be part 
of our debate, just like when you forward recommendations to us 
about personnel practices, end-force strength, or weapons 
systems.
    Am I right about that, that if the DOD wanted to forward 
recommendations not as part of a BRAC, but just based on best 
military judgment, the DOD would be able to do that?
    Mr. Conger. So the answer is, ``yes, but.'' Yes, of course, 
the Secretary of Defense can ask for that study, and, of 
course, we will do what he tells us to do.
    But the quandary you are putting yourself in is when you 
contemplate a future possibility of BRAC, where you adhere to 
the principle of treating all bases equally, you have just set 
up a dynamic where we can't do that because we have pointed 
out, ``Now I have a secret list,'' as Senator Rounds was 
alluding to earlier.
    We don't want to have that secret list, because it 
obviously makes people nervous.
    There are examples, specific examples in the past several 
years where there have been proposals that have come up here 
for consideration, and have ultimately been unsuccessful: the 
reductions at Eielson Air Force Base, the closure at Pittsburgh 
that didn't end up happening.
    There are things that have been proposed and ultimately 
rejected. It is not a recipe for a successful enterprise to go 
up and do onesie-twosie types of things, because they generally 
don't succeed.
    You are personally familiar with what happened with the 
Joint Forces Command, but that was not a base closure, right? 
The location for most of those individuals was technically part 
of Norfolk Naval Station. So, as a consequence, you weren't 
closing a base, you were reducing one. So, therefore, it didn't 
come under the same restrictions.
    There are restrictions as far as what we can and cannot 
propose.
    Senator Kaine. But I use that one as kind of a good example 
of how I think the process could work right. There was the 
proposal to close that joint operation. Now, it wasn't a full 
base closure because it was assigned under the umbrella of 
another. But that was huge and, in the area, extremely 
unpopular. It wasn't subject to the BRAC requirements.
    Everybody pulled together after that proposal was made and 
tried to make a case to the Pentagon, look, if you completely 
close this, you are actually going to be doing the wrong thing 
because you are going to need to re-create it somewhere else. 
The Pentagon at the time considered the advocacy by the 
congressional delegation. I wasn't part of it at the time, but 
I was governor.
    They considered the advocacy and concluded, you know what, 
you are right. We ought to close a lot of it, but there are 
aspects of it that should be maintained. Everybody walked away 
thinking, well, we didn't get everything we wanted, but we made 
our case, and a good decision was made.
    That was not a BRAC but it was sort of an iterative process 
where the DOD made a proposal, and folks said we don't like it, 
we think we you ought to look at it in a different way. In that 
dialogue, a synthesis was reached that was neither the thesis 
or antithesis. But now we have moved on and it seems to be 
working.
    I get your point. The DOD makes everybody nervous, if they 
think the DOD has the secret list or if the DOD is compiling 
the secret list. But you make everybody nervous when you do a 
BRAC, because as soon as you do a BRAC, every last community in 
the United States has to hire lobbyists and lawyers. Even if 
there is no danger that that installation actually is going to 
be closed or downsized at all, you have to do that. That is the 
burden that the mayors are in.
    You have to, because everybody else is, hire lobbyists and 
lawyers. There is this massive, collective check written out of 
public treasuries from States and localities to the lobbyist 
and lawyer community to make the case.
    Then we go through the whole process and there is a 
recommendation. I always just thought, well, gosh, I trust the 
military leadership to make the best recommendation they can. 
You guys are used to making recommendations that we follow 75 
percent of them and don't follow 25 percent.
    If you do it on personnel and you do it on weapons, and if 
you do it on everything else, you could do it on installations. 
Yes, we would battle about it, and I would fight to protect my 
thing, and somebody else would fight to protect theirs, and you 
probably would get 75 percent of what you proposed. On the 
other 25 percent, you might not get it 100 percent, but there 
would be some iterative discussions like there was on the Joint 
Forces Command in Norfolk.
    So I think we can't sit up here and say we want you to 
solve it. We have to solve our deficit problem, but we can't 
cut anything. We would be hypocritical to say that.
    But I think those of us who have had experience with BRAC, 
we found it to be an unwieldy way to come at what is always 
going to be difficult. But the DOD always has it in its 
province at least make recommendations to us about excess 
capacity that we then take into the political realm and put on 
our shoulders. We are going to be held accountable for 
decisions, as we ought to be. Our voters want us to be 
accountable.
    So it is messy, but I am not sure it is any messier, and it 
may ultimately be closer in terms of accountability, than the 
way the BRAC processes have been done.
    That is sort of my critique.
    Mr. Conger. I respect your viewpoint, and I understand 
where you are coming from.
    In the past, before BRAC was invented, there were base 
closures. They were often criticized for their political 
nature. If one party was in charge, then the other party would 
worry that theirs were being targeted for political reasons. 
This is in apolitical process.
    It is an analytical process. It is very number-crunch 
intensive. The recommendations that come out have all that 
analysis baked into them.
    I would hope that at least there is some faith that it is 
not just finger in the wind.
    Senator Kaine. We have faith in the way you did it, 
separate and apart from the BRAC. We would know the 
recommendations the Pentagon would make to us would not be 
based on this or that party, or this or that committee chair.
    Now, we might get into a little bit of that up here, and 
our voters would kind of understand that, and they would either 
punish us or reward us. But we would have faith that you would 
use the right analytical tools separate and apart from a BRAC 
process.
    That is the way you guys would come at it, in my view. I 
mean, I would have that expectation.
    Anyway, I made my point. I hear your critique. This 
discussion is going to continue. But I didn't leave it just 
saying, no, you can cut costs everywhere, but we don't want you 
to cut excess infrastructure costs.
    Obviously, we have to figure out a way to save on 
infrastructure. It is just what is the best way to save on 
infrastructure.
    Senator Ayotte. I have a few questions that I will just 
submit for the record.
    Senator Ayotte. But in wrapping this up, I appreciate what 
Senator Kaine is saying. I mean, let's face it, in some ways, 
BRAC was created as a copout, so that somehow we wouldn't have 
to make these decisions. Well, we are making these decisions 
every day, when it comes to important decisions. That is what 
we get elected to do.
    Where I disagree a little bit, Mr. Conger, I think there is 
a lot of politics to BRAC, too. So we are never going to remove 
politics from any of this process, because it is the nature of 
a democracy and elected officials.
    So I appreciate what my ranking member had to say here, 
because I think, in some ways--I wasn't here when BRAC was 
created, but it is almost like it was to insulate us from 
having to make hard decisions, and that is what we get elected 
to do on behalf of our constituents.
    Mr. McGinn. Kind of like sequester.
    Senator Ayotte. Exactly.
    Mr. McGinn. The same kind of copout logic.
    Senator Ayotte. Yes, that is a good analogy. Absolutely, 
Secretary McGinn. A very good analogy.
    Well, thank you all for being here today and for what you 
do for the country. We really appreciate it.
    [Whereupon, at 4:01 p.m., the subcommittee adjourned.]

    [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Mike Lee
                                  brac
    1. Senator Lee. Mr. Conger, Secretary Hammack, Secretary McGinn, 
and Secretary Ballentine, the Department of Defense (DOD) has asked for 
a round of base reconstruction and closure (BRAC) for 2017 to reduce 
excessive infrastructure and facilities. How does your Service 
determine when a facility or infrastructure becomes excessive or 
surplus and what are some of the more general characteristics of the 
facilities and infrastructure in your services that believe it would be 
more cost effective to dispense with?
    Mr. Conger. Each of the Military Departments has procedures in 
place to determine whether an individual asset should be declared 
excess to its needs, and a screening process for subsequently assessing 
whether that asset is surplus to the needs of all DOD Components. If a 
mission has more assets than required, or some of its assets are not 
sized or configured properly (e.g., the hangar ceiling is not high 
enough for the aircraft), the extra assets are then assessed for 
adaptive reuse by other missions or other DOD Components that require 
space. Assets not required are declared surplus and are disposed of 
through the General Services Administration.
    For DOD as a whole we know we have excess infrastructure. Our 2004 
parametric study found 24 percent excess while BRAC 05 only produced a 
3.4 percent reduction in plant replacement. More recently the Army and 
Air Force's internal parametric reviews have found 18 and 30 percent 
excess respectively.
    While the process for disposing of individual assets is generally 
workable on a single installation, the Department believes that given 
the large excess, BRAC is the only fair, objective, and proven process 
for undertaking a comprehensive review of installations and assets to 
determine how to best reconfigure our infrastructure to reduce this 
excess.
    Ms. Hammack. The Army's mission requirements and force structure 
decisions drive its infrastructure and facility needs. Facilities and 
infrastructures become excess or surplus when they exceed existing or 
projected Army requirements due to decreasing force structure or 
mission changes, or when they cannot be cost-effectively repurposed or 
converted for other valid Army requirements.
    Facilities and infrastructure become more cost effective to 
dispense with when they can no longer be economically repaired, or the 
required capability exists at another location where facilities and 
infrastructure cost less to maintain and functions can be transferred 
or consolidated to better meet mission requirements.
    Most existing excess capacity in the Army is actually under-
utilized capacity, not empty buildings. Buildings can accommodate a 
given level of personnel and functions as designed. When force 
structure is cut, those buildings have fewer personnel working in them. 
The population of a building can be reduced by 10 percent, 20 percent, 
or even 40 percent but facility maintenance and utility costs do not 
decline in a linear or 1:1 ratio because the cost of maintaining a 
building is somewhat inelastic to changes in population. The whole 
building needs a certain level of heat, cooling, and maintenance 
regardless of whether there are 60 persons or 100 persons in the 
building. As a result, the cost of underutilized buildings accounts for 
much of the Army's carrying cost of excess capacity.
    The Army has existing tools to dispose of excess buildings or 
property outside of the BRAC process, but those tools cannot produce 
the same kinds of substantial recurring savings as a BRAC. The reason 
is that the same relatively inelastic relationship between population 
and buildings is also applicable to installations themselves. If an 
installation's population is reduced by 10, 20, or even 40 percent, the 
garrison costs will not decrease in a 1:1 ratio. The garrison still has 
to provide the same set of installation services (fire/police, housing, 
child care, garbage removal, IT support, landscaping, etc). These 
services require a relatively fixed overhead or workforce regardless of 
whether they are serving 12,000 or 20,000 Soldiers and Families. Only 
by closing the lowest military value installations, and realigning the 
remaining required functions into the under-utilized space of our 
higher military value installations, can we realize substantial 
savings.
    Mr. McGinn. The Navy determines an asset (facility or 
infrastructure) to be excess through the identification of facility 
requirements for the missions on the installation and the comparison of 
those requirements to the existing assets on the installation. The 
assets are also assessed to determine how well they support the 
mission. If a mission has more assets than required, or some of its 
assets are not sized or configured properly (e.g. the hanger ceiling is 
not high enough for the aircraft), then these assets are further 
evaluated for adaptive reuse by other missions on the installation that 
require space. If adaptive reuse is not feasible, then the asset is 
declared excess and reported to GSA for potential reuse outside of DOD 
or a declaration of surplus enabling the service to move forward with 
disposal.
    The assets which are most cost effective to dispose of are 
typically those in very poor condition generating a high sustainment or 
restoration cost to repair. Additionally, if these assets are not well 
utilized due to their condition or configuration and the mission is not 
highly dependent on them, then relocation of the current functions and 
disposal of the facility is normally less expensive than repair or 
restoration.
    Ms. Ballentine. The Air Force has determined approximately 30 
percent excess infrastructure capacity, based on a comparative review 
of categories such as parking apron as a function of aircraft or total 
facilities square footage as a function of personnel for specific types 
of installation. More specific infrastructure and costing analysis 
would be performed upon authorization of a new round of Base 
Realignment and Closure (BRAC).
    The primary savings generated from a BRAC would come from the 
complete divestiture of infrastructure, personnel, and support 
resources for entire installations. Reduction in infrastructure 
footprint and lowered sustainment costs from a partially closed 
installation pale in comparison to the savings from a fully closed 
installation. Closing one base and fully divesting infrastructure at 
that installation would save considerably more than closing one-third 
of the infrastructure on three different installations. Therefore the 
Air Force would seek to consolidate its force structure and reduce 
infrastructure through base closures as the most cost effective means 
to achieve infrastructure savings.

    2. Senator Lee. Mr. Conger, Secretary Hammack, Secretary McGinn, 
and Secretary Ballentine, how do you determine that it becomes more 
cost-efficient to dispense with a facility or infrastructure than to 
keep in for potential future use?
    Mr. Conger. DOD has several options when dealing with obsolete, 
inefficient or underutilized support infrastructure, including 
renovation, conversion, shuttering, divesture and demolition. When 
determining what option to pursue, the Defense Components consider such 
factors as the asset's facility condition, configuration, size, 
location, facility capacity at that location, current mission 
requirements, funding and funding authority. An engineering analysis is 
conducted to determine if it is cost effective to repair or replace the 
asset for a current or new mission. If the Military Service cannot 
identify a reuse for a particular asset and the underlying land is 
essential for future military requirements, the Military Department 
will likely identify the asset for demolition versus declaring it 
excess or surplus.
    Ms. Hammack. In general, facilities and infrastructure become more 
cost effective to dispose when they can no longer be economically 
repaired, cannot be cost-effectively repurposed or converted for other 
valid Army requirements, or the required capability exists at another 
location where facilities and infrastructure cost less to maintain and 
functions can be transferred or consolidated to better meet mission 
requirements.
    The Army has existing tools to dispose of excess buildings or 
property outside of the BRAC process, but those tools cannot produce 
the same kinds of substantial recurring savings as a BRAC. The reason 
is there is a relatively inelastic relationship between population and 
buildings, and the cost of running the installations themselves. If an 
installation's population is reduced by 10, 20, or even 40 percent, or 
several buildings are demolished by 100,000 or 200,000 square feet, the 
garrison costs will not decrease in a 1:1 ratio. The garrison still has 
to provide the same set of installation services (fire/police, housing, 
child care, garbage removal, IT support, landscaping, etc). These 
services require a relatively fixed overhead or workforce regardless of 
whether they are serving 12,000 or 20,000 Soldiers and Families. Only 
by closing the lowest military value installations, and realigning the 
remaining required functions into the under-utilized space of our 
higher military value installations, can we realize substantial 
savings.
    Mr. McGinn. The Shore Facilities Planning System (SFPS) is the 
Navy's tool that enables a five year planning process that analyzes: 
the facilities needed to perform assigned missions; existing facilities 
and their condition; existing facility uses; and how to achieve 
efficient facility utilization, thus minimizing facility footprint. 
Through the SFPS the analysis of future mission, base loading and asset 
condition are factored in to develop site specific solutions to 
successfully acquire, maintain, optimally utilize and/or dispose of 
shore assets. Longer term facility requirements including 
infrastructure investment and divestment are addressed during 
installation master planning efforts consistent with Unified Facilities 
Criteria # 2-100-01 Installation Master Planning of 15 May 2012.
    Ms. Ballentine. Through the BRAC process, the Air Force seeks to 
eliminate infrastructure capacity that exceeds both current and future 
force structure requirements. The Air Force does not seek to eliminate 
excess infrastructure capacity that it deems necessary for future use.
    Likewise, the Air Force is seeking an ``efficiency BRAC'' that 
implements scenarios that will pay for themselves as quickly as 
possible and continue to provide savings forever.
              conventional vs. alternative energy sources
    3. Senator Lee. Mr. Conger, Secretary Hammack, Secretary McGinn, 
and Secretary Ballentine, the cost of petroleum-based energy products 
have decreased sharply with the drop in oil prices over the past year. 
Is your Service able to fully take advantage of the lower costs for 
these conventional fuels while having to maintain statutory and 
regulatory alternative fuel standards?
    Mr. Conger. Statutory and regulatory alternative fuel standards 
only apply, if at all, to the Defense Department's non-tactical vehicle 
(NTV) fleet, the great majority of which is comprised of conventionally 
fueled vehicles. The DOD is taking advantage of lower fuel costs at 
refueling stations on or near military installations.
    Bulk fuel for operational purposes is not subject to statutory or 
regulatory requirements mandating the use of alternative fuels. In 
addition, the Department will make bulk purchases of alternative fuels 
for operational purposes only if such alternative fuels are cost 
competitive with conventional fuels and qualified as compatible with 
DOD's existing equipment and infrastructure.
    Ms. Hammack. Statutory and regulatory alternative fuel standards 
only apply, if at all, to the Defense Department's non-tactical fleet 
(NTV) fleet, the great majority of which is comprised of conventionally 
fueled vehicles. The DOD is taking advantage of lower fuel costs at 
refueling stations on or near military installations.
    Bulk fuel for operational purposes is not subject to statutory or 
regulatory requirements mandating the use of alternative fuels. In 
addition, the Department will make bulk purchases of alternative fuels 
for operational purposes only if such alternative fuels are cost 
competitive with conventional fuels and qualified as compatible with 
DOD's existing equipment and infrastructure.
    Specific Army addition: In regards to the Non-Tactical Vehicle 
Fleet the Army has reduced total consumption of petroleum in the NTV 
fleet by 38.4 percent since fiscal year 2005. These savings have come 
through a combination of vehicle downsizing and significant increases 
in vehicle fuel efficiency.
    Mr. McGinn. Statutory and regulatory alternative fuel standards 
only apply, if at all, to the Defense Department's non-tactical fleet 
(NTV) fleet, the great majority of which is comprised of conventionally 
fueled vehicles. The DOD is taking advantage of lower fuel costs at the 
pump at refueling stations on or near military installations.
    Bulk fuel for operational purposes is not subject to statutory or 
regulatory requirements mandating the use of alternative fuels. In 
addition, the Department will make bulk purchases of alternative fuels 
for operational purposes only if such alternative fuels are cost 
competitive with conventional fuels and qualified as compatible with 
DOD's existing equipment and infrastructure.
    Ms. Ballentine. Statutory and regulatory alternative fuel standards 
only apply, if at all, to the Defense Department's non-tactical vehicle 
(NTV) fleet, the great majority of which is comprised of conventionally 
fueled vehicles. The DOD is taking advantage of lower fuel costs at 
refueling stations on or near military installations.
    Bulk fuel for operational purposes is not subject to statutory or 
regulatory requirements mandating the use of alternative fuels. In 
addition, the Department will make bulk purchases of alternative fuels 
for operational purposes only if such alternative fuels are cost 
competitive with conventional fuels and qualified as compatible with 
DOD's existing equipment and infrastructure.

    4. Senator Lee. Mr. Conger, Secretary Hammack, Secretary McGinn, 
and Secretary Ballentine, how are you working to take advantage of 
these lower costs and save funding?
    Mr. Conger. The price for the bulk of DOD fuel purchases is set by 
The Office of the Secretary of Defense, Comptroller (OUSD (C)) in 
coordination with the Defense Logistics Agency as a set of Standard 
Fuel Prices (SFP) for various products worldwide. The SFP provides 
budgetary stability for the Services and Defense Agencies by absorbing 
commodity market price volatility through a revolving fund known as the 
Defense Wide Working Capital Fund (DWWCF). The SFP is not a marketplace 
price. When prices rise, the increase in costs is absorbed by the 
DWWCF; when prices fall, the DWWCF replenishes that cash. In each 
budget cycle, the DWWCF's previous year's operating result and the 
projected cash balance are taken into consideration and prices are 
adjusted to return gains or recoup losses.
    Recent decreases in petroleum prices worldwide are reflected in a 
decrease of the SFP for various products for fiscal year 2014.
    The Department will continue to monitor the DWWCF cash balances in 
execution to determine possible fiscal year 2015 adjustments. Such 
adjustments may include funding for emerging Departmental requirements, 
in accordance with reprogramming rules established by Congress; 
increasing or decreasing standard fuel prices to provide resources to 
the DWWCF or the operating forces; and maintaining an adequate cash 
corpus to address future market volatility.
    Ms. Hammack. The price for the bulk of DOD fuel purchases is set by 
The Office of the Secretary of Defense, Comptroller (OUSD (C)) in 
coordination with the Defense Logistics Agency as a set of Standard 
Fuel Prices (SFP) for various products worldwide. The SFP provides 
budgetary stability for the Services and Defense Agencies by absorbing 
commodity market price volatility through a revolving fund known as the 
Defense Wide Working Capital Fund (DWWCF). The SFP is not a marketplace 
price. When prices rise, the increase in costs is absorbed by the 
DWWCF; when prices fall, the DWWCF replenishes that cash. In each 
budget cycle, the DWWCF's previous year's operating result and the 
projected cash balance are taken into consideration and prices are 
adjusted to return gains or recoup losses.
    Recent decreases in petroleum prices worldwide are reflected in a 
decrease of the SFP for various products for fiscal year 2014.
    The Department will continue to monitor the DWWCF cash balances in 
execution to determine possible fiscal year 2015 adjustments. Such 
adjustments may include funding for emerging Departmental requirements, 
in accordance with reprogramming rules established by Congress; 
increasing or decreasing standard fuel prices to provide resources to 
the DWWCF or the operating forces; and maintaining an adequate cash 
corpus to address future market volatility.
    Mr. McGinn. The fiscal year 2015 standard fuel price (SFP) for the 
Department of Defense was reduced by $18.48 per barrel effective 
February 1, 2015, from $155.40 to $136.92, reflecting the reduced 
market cost experienced to date. The Department continues to monitor 
the market and may obtain additional adjustments, either through its 
pricing mechanism or through other means, if the Working Capital Fund 
(WCF) cash balance rises above the target cash balance range for 
operations.
    The Department's fuel pricing system establishes the SFP, a budget 
lead-time in advance, to ensure reliable prices wherever and whenever 
operating forces require aviation, maritime, or other fuels around the 
world.
    The Department will continue to monitor the WCF cash balances in 
execution to determine possible fiscal year 2015 adjustments. Such 
adjustments may include funding for emerging Departmental requirements, 
in accordance with reprogramming rules established by Congress; 
increasing or decreasing standard fuel prices to provide resources to 
the WCF or the operating forces; and maintaining an adequate cash 
corpus to address future market volatility.
    Ms. Ballentine. The price for the bulk of DOD fuel purchases is set 
by The Office of the Secretary of Defense, Comptroller (OUSD (C)) in 
coordination with the Defense Logistics Agency as a set of Standard 
Fuel Prices (SFP) for various products worldwide. The SFP provides 
budgetary stability for the Services and Defense Agencies by absorbing 
commodity market price volatility through a revolving fund known as the 
Defense Wide Working Capital Fund (DWWCF). The SFP is not a marketplace 
price. When prices rise, the increase in costs is absorbed by the 
DWWCF; when prices fall, the DWWCF replenishes that cash. In each 
budget cycle, the DWWCF's previous year's operating result and the 
projected cash balance are taken into consideration and prices are 
adjusted to return gains or recoup losses.
    Recent decreases in petroleum prices worldwide are reflected in a 
decrease of the SFP for various products for fiscal year 2014.
    The Department will continue to monitor the DWWCF cash balances in 
execution to determine possible fiscal year 2015 adjustments. Such 
adjustments may include funding for emerging Departmental requirements, 
in accordance with reprogramming rules established by Congress; 
increasing or decreasing standard fuel prices to provide resources to 
the DWWCF or the operating forces; and maintaining an adequate cash 
corpus to address future market volatility.
                                 ______
                                 
                Questions Submitted by Senator Tim Kaine
                            excess capacity
    5. Senator Kaine. Mr. Conger and Secretary Hammack, I am concerned 
that DOD's proposed BRAC authorization language does not include 
protections against the type of implementation cost growth that we 
experienced in the 2005 BRAC round--estimated by the Government 
Accountability Office (GAO) to be 67 percent over budget.
    How much excess infrastructure would an additional BRAC round be 
designed to eliminate? In other words, would it be the intent of DOD to 
maintain some excess for unforeseen requirements?
    Mr. Conger. In making our $2 billion savings projections for a 
future BRAC round, the Department conservatively assumed a small 
reduction of five percent in plant replacement value. This is based on 
70 percent of the 1993/1995 efficiency focused rounds. Because BRAC 
2005 only eliminated 3.4 percent of the 24 percent aggregate excess 
capacity identified in the 2004 BRAC Capacity Analysis, significant 
excess at the aggregate level should remain after a future round. 
Through execution of prior BRAC rounds, and as verified in a 1999 
study, the Department has demonstrated that it will retain within the 
U.S. installation infrastructure sufficient difficult-to-reconstitute 
assets to respond to surge, accommodate a significant reconstitution of 
the force, and support all forces, including those currently based 
outside the United States. Furthermore, the selection criteria 
specified in the language, specifically criteria one and three, capture 
the concept of surge capacity as they are currently drafted. Criterion 
one requires the Department to consider ``current and future'' mission 
capabilities and criterion three assesses the ``ability to accommodate 
contingency, mobilization and future total force requirements.''
    Ms. Hammack. The Army has completed a capacity analysis which 
indicates that we have about 18 percent excess capacity with an Active 
Component Army force structure of 490,000. That equates to about 160 
million square feet. The Army will assess all excess infrastructure to 
determine any need for possible retention based on current or projected 
mission requirements, force structure and stationing decisions, and 
contingency requirements.
    A future round of BRAC would be an efficiency BRAC intended to 
produce significant recurring savings through the development of BRAC 
scenarios that provide relatively quick returns on investment. The Army 
looks forward to discussing BRAC authorization language that ensures 
expected savings. Generating savings measured in hundreds of millions 
of dollars per year simply cannot be accomplished by taking a few 
buildings at each installation and demolishing them, finding another 
paying tenant to cover its upkeep, or transferring the underlying 
property to the local community. A considerable portion of the Army's 
excess capacity is scattered and dispersed across many thousands of 
buildings at many dozens of CONUS Army installations. The best and 
proven way to realize substantial savings and also reduce excess 
infrastructure, is to close lower military value installations, and 
realign the remaining required functions into the under-utilized space 
of our higher military value installations.
    The goal of a future BRAC round is not to reduce the excess 
capacity to zero, or even to reduce it by a specific percentage. There 
will always be some amount of excess capacity. Some excess is retained 
to accommodate unforeseen future and/or surge requirements. The type of 
assets the Army typically tries to retain even if mathematically 
excess, are training ranges, maneuver space, and certain other types of 
infrastructure that are extremely difficult, expensive, and/or lengthy 
to reconstitute. Infrastructure that is relatively easy to expand or 
utilize more heavily, like barracks spaces or administrative buildings, 
is where the Army tends to be more comfortable divesting.
                  alternative base closure authorities
    6. Senator Kaine. Mr. Conger and Secretary Hammack, given the 
concerns about the 2005 BRAC round, I am interested in learning more 
about alternative means to reduce excess infrastructure. DOD's fiscal 
year 2016 budget materials state ``The need to reduce unneeded 
facilities is so critical that, in the absence of authorization of a 
new round of BRAC, the administration will pursue alternative options 
to reduce this wasteful spending.''
    In the absence of a BRAC authorization, what alternative tools are 
available to DOD to eliminate excess infrastructure?
    Mr. Conger. As far as using other authorities, the Department only 
has authority to undertake a BRAC round if Congress authorizes it to do 
so. However, budget cuts require exploring any and all authorities 
Congress has provided to eliminate wasteful infrastructure. The 
Department has not yet decided which options we will pursue if Congress 
does not provide BRAC authority.
    Ms. Hammack. At present, the Army has about an 18 percent excess 
capacity at the 490,000 active component force structure level. This 
equates to about 160 million square feet, or an average carrying cost 
of about $480 million dollars per year. The Army has existing tools to 
dispose of excess buildings or property outside of the BRAC process, 
but those tools cannot produce the kinds of substantial recurring 
savings from BRAC. The Army assesses its excess infrastructure to 
determine any need for possible retention based on current or projected 
mission requirements, force structure and stationing decisions, and 
contingency requirements. As alternative options to eliminate excess 
infrastructure, truly unneeded facilities can be reduced through 
transfer, sale, disposal, demolition, abandoning in place, or setting 
the facility in an inactive status.
    A future round of BRAC would be an efficiency BRAC intended to 
produce significant recurring savings. Generating savings measured in 
hundreds of millions of dollars per year simply cannot be accomplished 
by taking a few buildings at each installation and demolishing them, 
finding another paying tenant to cover its upkeep, or transferring the 
underlying property to the local community. A considerable portion of 
the Army's excess capacity is scattered and dispersed across many 
thousands of buildings at many dozens of CONUS Army installations. The 
best and proven way to realize substantial savings and also reduce 
excess infrastructure, is to close lower military value installations, 
and realign the remaining required functions into the under-utilized 
space of our higher military value installations.
    The alternatives to BRAC are not as advantageous to local 
communities. BRAC legislation authorizes the Department to work with 
communities to develop closed bases productively. Technical, planning, 
and grant assistance is made available to redevelop excess property. By 
contrast, under existing authorities, installations that experience 
deep force structure reductions become ghost towns both on the base and 
in the community as we are restricted in realignment and closure 
options.

    [Whereupon, at 4:12 p.m., the subcommittee adjourned.]

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2016 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              

                       WEDNESDAY, MARCH 25, 2015

                                U.S. Senate
                      Subcommittee on Readiness and
                                Management Support,
                                Committee on Armed Services
                                                    Washington, DC.

             THE CURRENT STATE OF READINESS OF U.S. FORCES

    The subcommittee met, pursuant to notice, at 2:34 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Kelly 
Ayotte (chairman of the subcommittee) presiding.
    Committee members present: Senators Ayotte, Rounds, Kaine 
and Shaheen.

      OPENING STATEMENT OF SENATOR KELLY AYOTTE, CHAIRMAN

    Senator Ayotte. I'm going to call this hearing to order.
    Very much want to thank our distinguished witnesses who are 
here before us today who have so admirably served our Nation.
    This hearing of the Subcommittee on Readiness and 
Management Support will be the second hearing of the year to 
receive testimony on the current readiness of our military 
forces.
    I want to thank my Ranking Member, Senator Kaine, for his 
continued leadership on defense issues and his eagerness to 
work together in a bipartisan manner for the sake of our 
national security.
    We are joined this afternoon with a very distinguished 
panel. We are here with General Daniel Allyn, Vice Chief of 
Staff of the Army; Admiral Michelle Howard, Vice Chief of Staff 
of Naval Operations; General John Paxton, Vice Commandant of 
the Marine Corps; and General Larry Spencer, Vice Chief of 
Staff for the Air Force.
    Again, I don't think we can say enough about what a 
tremendous group of leaders that we have testifying before this 
committee today. I cannot think of a more important hearing 
topic for this committee than the readiness of our Armed 
Forces.
    The preeminent responsibility of the Federal Government is 
to provide for the common defense. In order to fulfill this 
foundational responsibility of our Government, Congress has 
been explicitly charged, in Article 1, Section 8, of the 
Constitution, with the authority and responsibility to raise 
and support armies, and provide and maintain the Navy. We have 
to begin with an objective assessment of our national security 
interests and the threats that we're facing around the world. 
We then should determine what defense capabilities and 
capacities we need in order to protect our interests against 
likely threats. That is how you develop a defense budget that 
keeps America safe.
    Unfortunately, that's not what we have been seeing with the 
impact of sequester in Washington. Rather than a reality-based, 
strategy-based defense budgets, we are seeing that the impact 
of sequester is deeply disconnected from the many threats that 
we face around the world right now. In fact, in testimony 
before the Armed Services Committee earlier this year, the 
Director of National Intelligence (DNI), James Clapper, I think 
summed up the current situation very well. He said, ``In my 50-
plus years in the intelligence business, I don't know of a time 
that has been more beset by challenges and crises around the 
world. As these threats have grown in complexity and severity, 
the defense budget cuts have created a growing and troubling 
gap between the military we need and the military our national 
security interests require. The consequences of failing to 
address this are grave.''
    It's easy for us in Washington to lose sight of the real-
world consequences of our decisions. We all know that the 
readiness of our forces is something that we don't often see, 
but we'll know right away if it's not there, given what we ask 
of our men and women of uniform.
    When we send our fellow citizens into harm's way, they rely 
on us to provide them with the best possible training and 
equipment so that they can accomplish their missions and return 
home safely. I think not only do we have a constitutional 
obligation to do so, we have a moral obligation to do so. I 
know the witnesses before me appreciate that better than 
anyone.
    That's why I look forward to continuing to work across the 
aisle with people like my Ranking Member to address the 
sequestration, because we do need to come up with a bipartisan 
solution to this in the long term so that we can make the right 
decisions today by our men and women in uniform and to ensure 
that we are prepared to face the grave threats that, 
unfortunately, are unfolding around the world.
    Before I go to my Ranking Member, you know, I know that 
many of my colleagues right now are having a meeting with 
President Ghani, the President of Afghanistan, who just 
finished a joint address to the Congress. Having been present 
for that address, I think that he, the President, first of all, 
made very clear the gratitude that the leader of Afghanistan 
has for the sacrifices that our men and women in uniform have 
made to help ensure the security of Afghanistan. But, what we 
also heard is what a difference our men and women in uniform 
have made in Afghanistan, and appreciate the difference we have 
made throughout the world, and particularly when he talked 
about the freedom with which he believes women should have in 
Afghanistan and the fact that, before our presence in 
Afghanistan, not one girl went to school.
    So, I want to bring this up, because we need to understand 
there is no other leader in the world like the United States of 
America. If we do not continue to invest in the best military 
in the world, then we will not be prepared for the challenges 
we face, but also the world will be a much worse place and a 
much more dangerous place without our assistance.
    I want to--in that regard, I wanted to mention, since we 
have the President of Afghanistan here, that there has been a 
report, unfortunately, that today there were 6 people killed 
and more than 30 wounded in a suicide bombing in Kabul, right 
near the presidential palace. So, I think it reminds us that 
dangers still remain there, and that they remain many places 
around the world. So, your testimony today is so important.
    I would like to turn this over to my Ranking Member.

                 STATEMENT OF SENATOR TIM KAINE

    Senator Kaine. Great. Thank you, Madam Chair.
    I echo your comments. It's good to work together on these 
issues. We have a bipartisan working relationship and, I think, 
a common understanding of the dangers of sequester.
    Could they just give us the budget for 15 minutes, just the 
two of us, and--we can hammer this out.
    Senator Ayotte. We could do it.
    [Laughter.]
    Senator Ayotte. We really could work this out.
    Senator Kaine. Let me start with the thank you that 
Chairman Ayotte was talking about with respect to the speech 
from the Afghan President this morning. If you were--I wish you 
were there. I hope you watched it. It should make you feel 
really proud. You know, it made me feel proud on your behalf, 
but you should feel proud, and you should feel proud for your 
folks, because the notion of a country--I'll just pick one 
statistic--that's gone from a 44-year-old life expectancy to a 
61- or 62-year-old life expectancy in 15 years, I mean, it--
there's just no precedent in human history for that. I have 
been doing my back-of-the-envelope calculation. Seventeen years 
of human life multiplied by 30 million Afghans is 510 million 
years of human life. That's what the U.S. has enabled them to 
achieve, because they didn't have a functioning health system, 
and it was a whole lot of non-governmental organizations (NGOs) 
who came in and helped set it up, but they couldn't set it up 
if the security situation didn't enable them to. So, the U.S. 
and partners, working together with the Afghan people, have 
created a situation where, violence notwithstanding, challenges 
notwithstanding, kids are in school, there's a new sense of 
optimism and hope, people are living longer. As the President 
said, for the kids that are in school, their parents thank you. 
For the people who are living longer, their children thank you. 
He did that in a very poetic way that was really special.
    So, look, but it also means that the work doesn't end. You 
can't stop the investment. We've got to continue the 
partnership. That partnership demands a military that's ready.
    We've had a series of hearings--this is the second one of 
this subcommittee, but others--where we've talked about 
sequester. Madam Chair, we had one this morning in the Seapower 
Subcommittee, where this was the testimony. The Seapower 
hearing this morning, chaired by Senator Wicker and Ranking 
Member Hirono, dealt with the naval and marine aviation 
platforms. That was the hearing. But, they were talking about 
the triple whammy of sequester. So, here's the triple whammy of 
sequester on this kind of component of readiness. Sequester and 
budget caps slows down the ability to purchase new platforms. 
So, since we can't purchase the new platforms we need, let's 
extend the life of existing platforms, let's take planes that 
were meant to fly 6,000 hours and make them fly 10,000 hours. 
Well, to do that, you've got to do a lot of maintenance. Since 
the planes weren't supposed to fly after 6,000 hours, you find 
a whole lot of challenging maintenance problems with planes 
that have been in saltwater environments, corrosion because of 
saltwater, or have been in desert environments, corrosion 
because of sand--so then there's a whole lot of extra depot and 
maintenance demand that we didn't necessarily plan for. Oh, by 
the way, because we furloughed a whole lot of employees and 
stuff, and great aviation mechanics can get jobs elsewhere, 
we're down about 10 percent of what we need in the workforce.
    So, sequester stopped us on the--slowed us on the new 
purchases. Sequester is imposing significant extra demands on 
the maintenance of these aircraft. Sequester is driving away 
some of our workforce. Yet, we are supposed to, nevertheless, 
do the mission that the Nation demands. Then you add to it the 
Chairwoman's comment from DNI Clapper, ``This is the most 
complex strategic set of challenges we see,'' readiness is not 
happening in a vacuum. Readiness is happening after our 
military has been at Operational Tempo (Ops Tempo) for 15 
years. That, in and of itself--forget about sequester--that has 
a readiness challenge to it.
    So, you combine 15 years of Ops Tempo and a complex 
strategic environment and the budgetary challenges of caps and 
across-the-board cuts and furloughs and then sort of the 
uncertainty, ``Is Congress going to fix it, or not?'' and you 
can see why we have such a huge budgetary challenge that we 
have to resolve.
    Retired General Mattis, at a hearing earlier this year, 
said, ``No foe could wreak such havoc on our security as 
mindless sequestration is achieving.'' No foe could wreak such 
havoc on our security as mindless sequestration is achieving.
    If a large-scale conflict were to occur in the near future, 
Armed Forces would not have enough ready forces to respond to 
the Combatant Command (COCOM) requirements, we'd likely suffer 
additional casualties as a result. We've had that testimony.
    So, this has been like an alarm bell that's just been 
ringing, you know, on our table next to us. Your testimony, 
combined testimony, has been like the alarm bell's been 
ringing, ringing, ringing, ringing, ringing. There just has to 
be a moment where we take a step to turn off the alarm and 
adjust to a better path. In the fiscal year 2014 and 2015 
budget, we were able to find a way to reduce the impact of 
sequester--not eliminate it, cut it in half. It may be pie in 
the sky to think we could eliminate it. But, we ought to be 
finding significant sequester relief, whether it's depot 
maintenance or extra plane hours or the effect on the workforce 
that furloughs create, in terms of morale for people who have 
other opportunities. All these are significant.
    That's what we'll be hearing about during the testimony 
today. I look forward to working with my colleagues trying to 
find, based on your testimony, and based on your--you know, 
giving us the stories and the anecdotes we need to convince our 
colleagues, I look forward to trying to find a better path.
    With that, thank you, Madam Chair.
    Senator Ayotte. Thank you, Senator Kaine.
    I would like to first call on General Allyn, the Vice Chief 
of Staff for the Army.
    Thank you, General.

STATEMENT OF GENERAL DANIEL B. ALLYN, USA, VICE CHIEF OF STAFF, 
                       UNITED STATES ARMY

    General Allyn. Thank you, Chairman Ayotte, Ranking Member 
Kaine, Senator Rounds, distinguished members of the 
subcommittee. Thank you for the opportunity to testify on the 
readiness of your United States Army.
    On behalf of our Secretary, The Honorable John McHugh, and 
our Chief of Staff, General Ray Odierno, I thank you for your 
support and demonstrated commitment to our soldiers, Army 
civilians, families, and veterans.
    There are over 140,000 soldiers committed around the globe, 
partnered with our allies, in response to increasing 
instability across Europe, the Middle East, Africa, and the 
Pacific, continuing the mission in Afghanistan, and reacting to 
humanitarian crises. The velocity of instability is increasing, 
as you have all stated; and now is not the time to drastically 
reduce our capability or capacity. The Army needs Congress to 
provide adequate, consistent, and predictable funding.
    Today, only 33 percent of our brigades are ready, when our 
sustained readiness rate should be closer to 70 percent. The 
fiscal year `15 enacted funding for our Army is $5.1 billion 
less than what we had in fiscal year 2014 and challenges 
commanders and leaders across our Army to sustain hard-fought 
gains in our readiness. We are funded to achieve just enough 
readiness for immediate consumption, but are unable to generate 
the readiness required to respond to an unknown contingency.
    While the fiscal year 2015 budget constrains training, we 
remain committed to our Combat Training Center rotations to 
develop leaders and build unit readiness. We accept risk in 
home-station training to conserve resources for these Combat 
Training Center rotations. The result of this approach is that 
we expect our units to arrive at our Combat Training Centers 
not fully ready for these complex training scenarios and, 
therefore, unable to derive the full benefit of this training.
    Under the President's Budget in fiscal year 2016 (PB-16), 
our goal is to increase regular Army brigade combat team 
readiness closer to 70 percent, allowing us to balance force 
requirements while maintaining surge capability. But, we need 
consistent resources to get there.
    Sequestration will undermine readiness, ultimately putting 
soldiers' lives and our mission success at risk, and it will 
increase significantly the involuntary separation of officer 
and noncommissioned officer leaders who have steadfastly served 
their country through the last 13 years of war. Sequestration 
will also severely impact our ability to maintain our 
installation readiness and protect the industrial base, both 
key components to maintaining a readiness--a ready force. It 
will cut essential funds from military construction, 
sustainment, restoration, and modernization on our 
installations. Sequestration will degrade the industrial base's 
ability to sustain the life-cycle readiness of warfighting 
equipment while also maintaining the capability to surge to 
meet future demands.
    To achieve our required readiness level in fiscal year '16, 
we need Congress to support all the cost-saving measures the 
Army has proposed. These include compensation reform, a new 
round of Base Realignment and Closure, and the Aviation 
Restructure Initiative (ARI). Aviation restructure eliminates 
700 aircraft from the Active component and 111 from the Guard 
and Reserve, but increases our readiness and saves $12 billion. 
If the Army does not execute ARI, we will incur additional 
costs buying aircraft and performing maintenance, at the 
expense of modernizing our systems and maintaining readiness 
for our heroic aviators.
    The Army remains committed to protecting our most important 
resource: our soldiers, civilians, and families. We build 
leaders of character and trusted professionals who provide an 
environment where every member of our great Army is treated 
with dignity and respect, supported by essential soldier and 
family programs. We will protect our most vital programs, but 
sequestration-driven budget cuts affect every facet of our 
Army.
    I thank you again for your steadfast support of the 
outstanding men and women of the United States Army. I look 
forward to your questions.
    Thank you.
    [The prepared statement of General Allyn follows:]
               Prepared Statement by General Daniel Allyn
                              introduction
    Chairman Ayotte, Ranking Member Kaine, distinguished Members of the 
Subcommittee, thank you for the opportunity to testify on the readiness 
of your United States Army. On behalf of our Secretary, the Honorable 
John McHugh, and our Chief of Staff, General Raymond Odierno, I would 
also like to thank you for your support and demonstrated commitment to 
our Soldiers, Army Civilians, Families, and Veterans.
    We live in a dangerous world and the Leadership of the United 
States Army is committed to ensuring our Army is ready. The 
accelerating insecurity and instability across Europe, the Middle East, 
Africa and the Pacific, coupled with the continued threat to the 
homeland and our ongoing operations in Afghanistan, remain a 
significant focus for our Army. The Islamic State in Iraq and the 
Levant's (ISIL) unforeseen expansion and the rapid disintegration of 
order in Iraq and Syria have dramatically escalated conflict in the 
region. In Europe, Russia's intervention in Ukraine violates 
international law and threatens to undermine the post-World War II 
security architecture. Across the Asia-Pacific, China's lack of 
transparency regarding its military modernization efforts raises 
concerns with the United States and our allies, and the continuing 
development of North Korea's nuclear and missile programs contributes 
to instability. The rate of complex-humanitarian requirements and the 
unpredictable nature of disaster relief missions heighten the level of 
uncertainty we face around the world, along with constantly evolving 
threats to the homeland. With the velocity of instability increasing 
around the world and the threat of terrorism growing rather than 
receding, now is not the time to drastically reduce capability and 
capacity that would occur under prolonged sequestration level-funding.
    As the Chief of Staff of the Army stated in his testimony, there is 
a growing divide between the emerging geopolitical realities and the 
Budget Control Act's (BCA) arbitrary funding mechanism. The Army budget 
has decreased in nominal terms every year since 2011. Yet today, the 
Army is as globally engaged as ever, with more than 140,000 Soldiers 
deployed, forward stationed, and committed worldwide. We are training 
alongside our allies and partners to help them develop professional and 
capable armies. At home, we are supporting civil authorities while 
defending our critical networks against cyber attacks. Yet prolonged 
funding at BCA levels prevents us from appropriately balancing 
readiness, modernization and end strength, and threatens to make the 
Army a hollow force. Under sequestration-level funding, the Army will 
be unable to meet its current target for regaining full-spectrum 
readiness by fiscal year 2023.
    Our Nation requires a trained and ready Army prepared to rapidly 
deploy, fight, sustain itself and win decisively against complex state 
and non-state threats in diverse, austere environments, rugged terrain 
and urban megacities. Readiness is measured at both the service and 
unit level. Service readiness incorporates installations and the 
critical ability of the Army to provide requisite capabilities in 
support of the Joint Force in sufficient capacity to execute the 
missions required by combatant commands. Unit readiness is the 
combination of personnel, materiel and supplies, equipment and 
training, that, when properly balanced, enables immediate and effective 
application of military power.
    To ensure readiness now and in the future, the Army needs Congress 
to provide adequate, consistent and predictable funding. The Army 
supports the President's Budget as meeting the required funding and 
needed reforms to fulfill our responsibilities defined in the Defense 
Strategic Guidance. One critical assumption in the President's Budget 
request is that Congress will enact critical cost saving measures we 
have proposed. These include compensation reform, sustainable energy 
and resource initiatives, a new round of Base Realignments and Closure 
(BRAC), and the Aviation Restructure Initiative (ARI). We ask Congress 
to support these initiatives because without the flexibility to manage 
our budgets to achieve the greatest capability possible, we will be 
forced to make even steeper reductions to manpower, modernization, and 
training across the Total Army.
Current State of Readiness
    Thirteen years of sustained counterinsurgency-focused operations 
have degraded the Army's ability to conduct operations across the 
entire spectrum of war. In fiscal year 2011, the Army began a multi-
year transition to rebuild core readiness and build capability to 
conduct Decisive Action for Unified Land Operations. The speed and 
scale of the funding reductions mandated under sequestration in fiscal 
year 2013 curtailed this transition plan by forcing the Army to absorb 
the majority of the cuts within the operations and training accounts. 
This resulted in tiered readiness of units as opposed to broad gains 
across the force.
    Last year the Chief of Staff of the Army testified that only two of 
our Brigade Combat Teams, the Army's basic warfighting unit, were fully 
ready for decisive action operations. Since then, we have trained 13 
BCTs to that standard (other CTC rotations were mission-specific for 
deploying units) thanks to funding provided in the 2013 Bipartisan 
Budget Agreement (BBA). However, of those 13 BCTs, we have consumed the 
readiness of nine to support on-going operations. At prolonged 
sequestration-level funding, the Army will be unable to train units 
quickly enough to outpace, or even meet demand.
    With the support of Congress, the Army executed $126.2 billion for 
base budget purposes in fiscal year 2014 to begin rebuilding readiness 
lost during sequestration in fiscal year 2013. Though known and 
predictable, the fiscal year 2015-enacted level of $121 billion is $5.1 
billion less than fiscal year 2014, and is challenging Commanders 
across the Army to sustain our hard-earned readiness. To operate under 
this budget, we are significantly reducing key installation services, 
individual training events, and modernization to such an extent as to 
jeopardize future readiness and quality of life. For example, Logistics 
Readiness Centers were underfunded by $350 million in fiscal year 2015, 
which covers funding for dining facilities, contract operations at ammo 
supply points, central issue facilities, maintenance, laundry and dry 
cleaning operations. In addition to the effect on Soldier quality of 
life, these cuts force Commanders to divert Soldiers from training to 
perform logistics tasks.
    The President's Budget request for fiscal year 2016 increases 
readiness funding above fiscal year 2015 levels, which is critical to 
sustain and improve the readiness of the force. While the reduced 
fiscal year 2015 budget will reduce overall training, we remain 
committed to CTC rotations to develop leaders and build unit readiness. 
fiscal year 2015 plans fund 19 CTC rotations: two for deploying BCTs 
and 17 decisive action rotations (15 Active Army and two Army National 
Guard). fiscal year 2016 will continue this level of CTC exercises.
    We are improving Training Support Systems to enable more realistic 
home station training, increase collective training proficiency and 
enhance operational readiness for contingencies across the globe; 
however, funding constraints in fiscal year 2015 impede our ability to 
maximize home station training goals. We accepted risk in home station 
training to conserve resources for units to continue to conduct 
training at the CTCs. This resulted in units arriving at the CTCs not 
yet ``fully ready'' for these complex training scenarios, and therefore 
unable to derive the full benefit of the training. Although the Army 
attempts to mitigate the impacts on training readiness, we must 
continue to implement the Contingency Force model of fiscal year 2015 
in order to maintain readiness for the 24 of 60 BCTs that will receive 
sufficient funding to conduct training at CTCs and home station. The 
remaining 36 BCTs will train only to Individual/Crew/Squad resourcing 
levels. The President's Budget request for fiscal year 2016 allows the 
Army to increase training readiness to battalion-level across the 
active Component force and to platoon-level in the Reserves. Lower 
funding levels will not allow us to achieve this balanced readiness.
    Our aim is to provide tough, realistic multi-echelon home-station 
training using a mix of live, virtual and constructive methods that 
efficiently and effectively build Soldier, leader and unit competence 
over time. Training will integrate the unique capabilities of the 
Light, Medium and Heavy forces, as well as the capabilities of 
Conventional and Special Operations Forces. Training centers including 
the Joint Multinational Readiness Center in Germany will increase our 
interoperability with Allies. Our goal is to achieve a high level of 
readiness for 70 percent of our Active Component BCTs compared to the 
current 33 percent, allowing the Army to balance Combatant Command 
force requirements while maintaining surge capability--but we need 
consistent resources to get there.
    We are also increasing funding for our individual and institutional 
training. Funding increases focus on leader development, entry-level 
training and flight training. The unpredictable nature of human 
conflict requires leaders ready to lead in close combat and to 
understand the operational and strategic environment, including its 
socio-economic, cultural and religious underpinnings. Junior leaders 
will frequently confront ethical dilemmas, with resultant decisions 
that have strategic impacts. Our leaders must demonstrate the 
competence and professional values necessary to achieve operational and 
strategic mission success.
    However, sequestration in fiscal year 2016 would mortgage the 
functional skills and training of individual Soldiers. Sequestration 
will force the Army to further reduce Specialized Skill Training by 
over 85,000 seats (65 percent drop) and fund only the most critical 
courses. This will reduce readiness as Soldiers will lose proficiency 
on their individual tasks. These reductions include 900 fewer graduate 
flight school seats, resulting in unfilled and unqualified pilot 
positions throughout the force. We would continue to emphasize leader 
development by protecting Professional Military Education, minimizing 
cuts to about 10 percent.
    The Army continues to make progress at integrating the unique 
capabilities of each of its components to support the needs of the 
Combatant Commanders. As part of the Army's Total Force Policy, the 
U.S. Army Forces Command is leading the way by partnering Guard and 
Reserve divisions and brigades with Active Army peer units. The Army is 
also piloting a program to assign Guard and Reserve personnel directly 
to Active Army corps and division headquarters. For example, the 
Reserve Component rapidly provided support capabilities to Operation 
United Assistance in Liberia to augment and replace elements of the 
initial Active Component response. We fight as a Total Army, and each 
component has a unique role. We must also draw down as a Total Army--
Active, Guard, and Reserve--in order to maintain the correct balance 
between capacity and readiness.
    As we transition from combat operations in Afghanistan, our Army is 
focused on the ability to rapidly deploy forces around the world in 
order to meet the needs of our Combatant Commanders. To do this, we 
enhanced prepositioned equipment sets and created activity sets to 
support operations in Europe, the Pacific and around the world. 
Activity sets are prepositioned arrays of equipment that enable U.S. 
regionally-aligned forces and multinational partners in Europe to train 
and operate. We have also reinvigorated our Emergency Deployment 
Readiness Exercise program and enhanced the en route mission command 
capability of our Global Response Force. The President's Budget request 
provides sufficient capability to respond in each Geographical 
Combatant Command's area of responsibility.
    The Army continues to be a good steward of the resources returning 
from operations in Afghanistan. In 2014, the Army efficiently 
synchronized equipment retrograde out of theater. Redeployment and 
retrograde operations remain on schedule; however, the Army continues 
to forecast a need for reset funding for three years after redeployment 
of the last piece of equipment from theater. In addition, we identified 
almost $2 billion of potential requirement reductions in Contractor 
Logistics and Training Support. These and other changes allowed the 
Army to increase the capability of its prepositioned stocks program 
without an increase in associated costs.
    Finally, during this period of drawdown, the Army is reorganizing, 
realigning and restructuring forces. The Brigade Combat Team 
reorganization enhances brigade combat power by adding a third maneuver 
battalion to 38 BCTs by the end of fiscal year 2015 and reducing the 
total number of BCTs to 60 (32 Active Army and 28 Army National Guard) 
in the Total Force. This effort decreases the number of headquarters 
units and personnel without negatively affecting the number of 
operational battalions.
    Since May 2014, we have been developing a sustainable force 
generation and readiness model to account for the new, volatile, 
strategic operating environment and the need to remain regionally-
engaged under budgetary and force-sizing realities. The Sustainable 
Readiness Model (SRM) will provide force generation policies and 
processes that optimize the readiness of the force and balance the 
Army's steady state missions, contingency response capability, and 
available resources. We cannot predict the specific events that will 
cause the next surge in demand for Army forces, but history suggests it 
will come sooner than we expect. The SRM will better enable the future 
smaller force to sustain readiness at optimal levels over time.
    One critical assumption in the President's Budget request is that 
Congress will enact necessary compensation reform and force structure 
initiatives. We fully support the modest reforms to pay raises, health 
care and other benefits that have been proposed. Without these reforms, 
savings assumptions we have included in our planning will not be 
realized, placing increasing pressure on further end strength 
reductions and reducing funding needed to sustain readiness.
Future Readiness: The Army Operating Concept
    While we are most concerned about the BCT's short-term effects on 
readiness, we are keenly focused on the long-term readiness of the 
Total Force to meet future demands. As such, we developed a new Army 
Operating Concept (AOC), ``Win in a Complex World.'' The AOC provides 
an intellectual framework for learning and for applying what we learn 
to future force development under Force 2025 and Beyond. The foundation 
of the Army Operating Concept is our ability to conduct joint combined 
arms maneuver. The Army Operating Concept endeavors to build a force 
capable of operating alongside multiple partners, able to create 
multiple dilemmas for our adversaries, while giving our Senior Leaders 
multiple options and synchronizing and integrating effects from 
multiple domains onto and from land. Recognizing the changing world 
around us, the Army Operating Concept envisions an Army that is 
expeditionary, tailorable, scalable and prepared to meet the challenges 
of the global environment. The Army Operating Concept sets the 
foundation upon which our leaders can focus our efforts and resources 
to maintain strategic and operational flexibility to deter and operate 
in multiple regions simultaneously--in all phases of military 
operations--to prevent conflict, shape the security environment, and 
win wars now and in the future.
    It is imperative that our Army adapts to the future joint operating 
environment, one that consists of diverse enemies that employ 
traditional, irregular and hybrid strategies which threaten U.S. 
security and vital interests. Through a dedicated ``Campaign of 
Learning'' under Force 2025 Maneuvers, we will assess new capabilities, 
force designs, and doctrine to ensure the readiness of our future 
force. We are focusing our innovation efforts in this Campaign of 
Learning to address the 20 Army Warfighting Challenges identified in 
the Army Operating Concept. The Army Warfighting Challenges are 
enduring first-order problems, and solving them will improve combat 
effectiveness. They range from shaping the Security Environment, to 
countering Weapons of Mass Destruction, to conducting Space and Cyber 
Operations, to Integrating and Delivering Fires, to Exercising Mission 
Command. The Army Operating Concept represents a long-term, cost-
effective way to enhance readiness, improve interoperability and 
modernize the force.
Installation Readiness
    In order to partially mitigate the severe impacts of sequestration-
level funding on training readiness, the Army will be forced to take 
significant risk with installation readiness. Installation maintenance 
has been underfunded since 2011 which impacts efficiency and readiness. 
Sequestration in fiscal year 16 would cut essential funds for military 
construction, sustainment, restoration and modernization on our posts, 
camps and stations. The President's fiscal year 2016 budget funds 79 
percent of the OSD Facility Sustainment Model requirement. Under 
sequestration the Army would only be able to fund 62 percent of needed 
repairs, limiting repairs to those needed for life, health, and safety. 
Restoration and modernization accounts would be underfunded as well. 
Without relief from sequestration 20 percent of the Army's 
infrastructure will remain in substandard condition and approximately 
100,000 maintenance orders will be deferred each month. Recovery from 
unfilled maintenance requests will take at least 2-3 years if fully 
funded and ultimately will affect morale, retention, and readiness.
    A return to sequestration-level funding will result in a $1 billion 
decrease to base operations support, requiring installations to 
eliminate jobs and scale back or cancel service contracts that employ 
people in local communities. We will have to increase further our 
reliance on Soldiers to support basic installation functions in order 
to provide a safe training environment and adequate quality of life. 
These include access control point manning by MTOE units, manning ammo 
and fuel handling points, and conducting essential range maintenance. 
These requirements pull Soldiers away from important training and 
ultimately detract from readiness. We will also reduce contract funding 
for a number of quality-of-life services such as custodial services, 
waste collection, and grounds maintenance.
    It is important to highlight the need for another round of Base 
Realignment and Closure (BRAC). We simply have too much surplus 
infrastructure and will have even more as we continue to downsize. We 
are already in the process of separating nearly 152,000 Soldiers from 
the Total Army by fiscal year 2018, and sequestration would force us to 
separate another 60,000 by fiscal year 2020--for a total reduction of 
212,000. In addition, we have reduced over 50,000 Civilians from these 
same installations. Without a BRAC and the realized cost savings, the 
only alternative is to make additional cuts in training, manpower and 
modernization to make up for shortages in installation funding. We have 
reduced all that we can from our overseas bases, and are now reducing 
personnel at U.S. installations. We expect excess facility capacity 
will be about 18 percent Army-wide by late fiscal year 2015.
Industrial Base
    The Industrial Base consists of Government-owned (organic) and 
commercial industry and is designed to be readily available to 
manufacture and repair items during both peacetime and national 
emergencies. The current financial uncertainty of sequestration, 
combined with the cuts in Army force structure, is driving workload 
down. Over 4,500 employees within the organic industrial base (OIB) 
have already lost their jobs due to budget uncertainty and declining 
workloads since fiscal year 2013, and the Army has deferred $323 
million of depot maintenance from fiscal year 2013 into fiscal year 
2015. The highly skilled industrial base workforce serves an enduring 
mission, and provides critical capabilities in support of our National 
defense today, while also preparing for the threats of tomorrow. 
Sequestration will result in insufficient resources to complete 
critical depot maintenance and will continue to degrade the industrial 
base's ability to sustain the life-cycle readiness of war-fighting 
equipment while also maintaining the capability to surge to meet the 
demands of future contingency operations.
    Should sequestration-level funding return in fiscal year 2016, 
furloughs, overtime restrictions and hiring freezes will again 
negatively impact the OIB productivity, workforce availability and 
capability. In order to mitigate the loss of critical skill sets and 
ensure the OIB is ready for the next contingency, the Army requires 
consistent and predictable funding. We also need to carryover workload 
to keep production lines functioning between fiscal years.
    The Army is taking several actions to reshape the OIB to support 
the Army of 2025 and beyond, to include assessing OIB capabilities and 
capacities and effectively aligning them to planned workloads. We are 
not sustaining aging systems that are planned for divesture within the 
next five years, and we are continuing reset and sustainment of our 
modernized platforms. This strategy will enable the Army to sustain and 
modernize our most capable fleets, while accomplishing our Title 10 
requirements to sustain the core depot and critical manufacturing 
capabilities necessary to fight and win the Nation's wars.
Aviation Restructure Initiative
    One of our most important reforms is the Aviation Restructuring 
Initiative (ARI), which we continued in fiscal year 2015. Our current 
aviation structure is unaffordable, so the Army's plan will avoid $12 
billion in costs and saves an additional $1 billion annually if we 
fully implement ARI. We simply cannot afford to maintain our current 
aviation structure and sustain modernization while providing trained 
and ready aviation units across all three components. Our comprehensive 
approach through ARI will ultimately allow us to eliminate obsolete 
airframes, sustain a modernized fleet, and reduce sustainment costs.
    Through ARI, we will eliminate nearly 700 aircraft from the active 
Component, while removing only 111 airframes in the Reserve Component. 
A byproduct of ARI is the reduction in the number of Active Duty Combat 
Aviation Brigades from 13 to 10. ARI eliminates and reorganizes 
structure, while increasing capabilities in order to minimize risk to 
meeting operational requirements within the capacity of remaining 
aviation units across all components. If the Army does not execute ARI, 
we will incur additional costs associated with buying aircraft and 
structure at the expense of modernizing current and future aviation 
systems in the Total Force.
    The Army notes the establishment by Congress of a National 
Commission on the Future of the Army and ARI specifically, and is fully 
committed to working with the Commission as it fulfills its charter.
Army Cyber
    Network dominance and defense is an integral part of our National 
security, and the Army is focused on providing increased capability to 
the Joint Force. Investment in cyber capability and readiness is a top 
priority, and we are working to improve requirements and resourcing 
processes to ensure that they are agile enough to rapidly translate 
innovative concepts into realized capabilities. Army readiness includes 
cyber readiness.
    We are aggressively manning, training and equipping cyber mission 
teams and established a new cyber branch to help recruit, train and 
retain cyber Soldiers. The Army has grown from zero Cyber teams in 
fiscal year 2013 to 24 Army Cyber Mission Teams today at Initial 
Operating Capability (IOC). By the end of fiscal year 2016, we will 
have 41 Cyber Mission Teams. The Army has established the Cyber Center 
of Excellence at Fort Gordon, GA, to serve as our focal point to drive 
change across the Army. This is a Total Force effort--Active, National 
Guard, and Reserve--and through our Reserve Components we will leverage 
the professional expertise within the civilian population to build 
greater capacity, expertise, and flexibility across DOD, Federal, 
state, and private sector activities. We recently established a full-
time Army National Guard Cyber Protection Team (CPT) that is training 
to conduct network defense. We will create three more Army National 
Guard CPTs in fiscal year 2016.
    We must make prudent investments in our cyber infrastructure, 
including facilities, networks and equipment to ensure a capable force. 
Network modernization is critical to the success of Army operations 
across all domains, and the Army is fully integrated into the build-out 
of the Joint Information Environment (JIE). JIE efforts will enhance 
the defensibility of our networks while providing global access for the 
joint force. However, sequestration-level funding in fiscal year 2016 
will reduce network funding by almost $400 million and defer critical 
scheduled IT infrastructure upgrades at three major installations, 
reducing the Army's warfighting capability and its ability to protect 
itself against cyber attacks.
Essential Investments: People and Equipment
  Soldiers, Families and Army Civilians
    Army Professionalism and the resilience of those who serve--
Soldiers, their Families and Army Civilians--are directly linked to the 
Readiness of our Force. That is why we must develop and sustain a 
system of capabilities and services that are designed to mitigate the 
unique challenges of military life, foster life skills, strengthen 
resilience, and promote a strong and ready Army. As Army leaders, we 
continue to express our enduring commitment to those who serve, 
recognizing that attracting and retaining highly-qualified individuals 
in all three components is critical to readiness. Two of our key 
efforts, the Army's Ready and Resilient Campaign (R2C) and Soldier for 
Life, exist to ensure we are taking care of our most precious resource: 
our people, throughout Army life and beyond.
  Ready and Resilient Campaign
    We will make every effort to protect our most important Soldier and 
Family programs, but budget cuts are ultimately affecting every facet 
of the Army. To ensure we maintain our focus on our most invaluable 
resource: our people, we continue to develop a Ready and Resilient 
Army. A Ready and Resilient Army is composed of resilient individuals, 
adaptive leaders and cohesive teams that are committed to the Army 
professional ethic and capable of accomplishing a range of operations 
in environments of uncertainty and persistent danger. We are developing 
a comprehensive system that empowers Army Commanders and Leaders to 
improve Leader engagement and early Leader intervention. We are taking 
a more holistic look at negative behaviors and their correlation in 
order to better target training, tools and resources with more emphasis 
placed on resilience and prevention skills to reduce incidents of 
escalated negative behavioral outcomes.
    We continue to provide resilience and performance enhancement 
training to Soldiers, Families and Army Civilians through Comprehensive 
Soldier and Family Fitness. To date, we have trained more than 26,000 
Master Resilience Trainers Army-wide who are taking these skills back 
to their formations. We have established an online assessment and self-
development platform where Soldiers, their Families and Army Civilians 
can, in their own time, confidentially take action to improve their 
overall health and resilience.
    We are also emphasizing the importance of sleep, physical activity, 
and nutrition. The Performance Triad is a comprehensive plan to improve 
readiness and increase resilience through health initiatives and 
leadership engagement. Sleep, activity and nutrition are key actions 
that influence overall health.
    Personal Readiness is critical to mission readiness. Those who 
serve must have the physical, psychological, social, emotional and 
spiritual preparedness to achieve and sustain optimal performance in 
supporting the Army mission.
Soldier for Life
    Soldier for Life (SFL) is a program that drives a change in 
mindset. We encourage the SFL mindset through senior leader and 
installation engagements, and focused training curriculum. We want 
individuals to understand from their entry day in the Army that they 
will receive the tools to succeed throughout their service lifecycle--
``Once a Soldier, always a Soldier . . . a Soldier for Life!'' As they 
return to civilian life, Soldiers will continue to influence young 
people to join the Army and, along with retired Soldiers, will connect 
communities across the Nation with its Army.
    As we reduce the Army's end strength, we owe it to our Soldiers and 
their Families to facilitate their transition to civilian life. The 
Army supports continuum of service initiatives to help in this effort 
by communicating the benefits of continued service in the Reserve 
Components. Additionally, the ``Soldier for Life'' Program connects 
Army, governmental and community efforts to facilitate the successful 
reintegration of our Soldiers and Families back into communities across 
the Nation through networks in employment, education and health. Our 
pre- and post-retirement services ensure those who served become and 
remain leaders in their community. For example, we have developed 
strong relationships with government, non-government and private sector 
entities to include direct collaboration with the Departments of 
Veterans Affairs, Labor, and the Chamber of Commerce to bring 
employment summits to installations worldwide.
  sexual harassment / assault response and prevention (sharp) program
    Trust between Soldiers, between Soldiers and Leaders, between 
Soldiers, their Families and the Army, and between the Army and the 
American people is fundamental to readiness. Sexual assault and sexual 
harassment undermine that trust.
    Across the Army, we are committed to maintaining momentum in Army 
SHARP and making further advances along our five lines of efforts: 
Prevention, Investigation, Accountability, Advocacy and Assessment. In 
the last year, our efforts along the Prevention Line of Effort resulted 
in actions such as consolidating SHARP training under TRADOC and 
Initial Entry Training and Professional Military Education to increase 
the quality and accessibility of our prevention tools. Our 
Investigation Line of Effort showed advances in Special Victim 
capabilities and Trial Counsel Assistance Programs. The Accountability 
Line of Effort had successes through our Special Victim Investigation 
and Prosecution capability and through tools such as Command Climate 
Surveys and Commander 360 degree assessments. Our Advocacy Line of 
Effort resulted in initial indicators of progress in establishing SHARP 
resource centers for over 12 installations. We continue to see interim 
progress along our Assessment Line of Effort as noted in the 2014 
``Department of Defense Report to the President of the United States on 
Sexual Assault Prevention and Response.''
    Recent statistics outlined in the 2014 ``DOD Report to the 
President'' indicate a decrease in unwanted sexual contact in fiscal 
year 2014 compared to fiscal year 2012. Within the Army, survey-
estimated rates of unwanted sexual contact for the past year decreased 
significantly for active duty women (4.6 percent), compared to fiscal 
year 2012 (7.1 percent). In addition, reporting data demonstrates more 
victims are coming forward to report sexual harassment and sexual 
assault. In fiscal year 2014, sexual assault reporting in the Army 
increased by 12 percent over the previous year. We view this as a vote 
of confidence and a sign of increased trust. Nevertheless, we must 
continue striving to foster a climate where individuals are not afraid 
of retaliation or stigma for reporting a crime by ensuring individuals, 
units, organizations and specifically commanders and leaders understand 
their responsibilities. Retaliation takes many forms and originates 
from many sources--leaders, family, friends and, most pervasively, peer 
to peer. Retaliation in its simplest form is bullying. It enables 
offenders, threatens survivors, pushes bystanders to shy from action, 
and breeds a culture of complacency. Retaliation has no place in the 
Army and we must stamp it out.
    The chain of command must be at the center of any effort to combat 
sexual assault and harassment, and we must ensure leaders remain fully 
engaged, involved and vigilant. With commanders at the center of our 
efforts, we will continue to decrease the prevalence of sexual assault 
through prevention and encourage greater reporting of the crime.
    Sexual assault and sexual harassment will be eliminated when every 
Soldier, Civilian and Family Member stands up and unequivocally acts to 
stamp it out. Together, we have an obligation to do all we can to 
safeguard America's sons and daughters, and maintain trust between 
Soldiers, Civilians, Families and the Nation. Army leaders, at every 
level of the chain of command, are doing this through prevention, 
investigation, accountability, advocacy and assessments.
Modernization
    It is impossible to discuss readiness without highlighting 
modernization, as systems and equipment play a key role in future force 
readiness. Equipment modernization must address emerging threats in an 
increasingly sophisticated technological environment. The Army must 
maintain its ability to contend with such diverse threats as cyber 
attacks, electronic warfare, unmanned systems, chemical and biological 
agents, and air and missile threats. Decreases to the Army budget over 
the past several years significantly impacted Army modernization. Since 
2011, the Army has ended 20 programs, delayed 125 and restructured 124. 
Between 2011 and 2015, Research and Development and Acquisition 
accounts plunged 35 percent from $31 billion to $20 billion. 
Procurement alone dropped from $21.3 billion to $13.9 billion. We 
estimate that sequestration-level funding will affect over 80 Army 
programs. Major impacts include delays in equipping to support 
expeditionary forces, delays in combat vehicle and aviation 
modernization, unaffordable increases in sustainment costs to repair 
older equipment and increases in capability gaps.
    The centerpiece of the Army's Modernization Strategy continues to 
be the Soldier and the squad. The Army will also develop and field a 
robust, integrated tactical mission command network linking command 
posts, and extending out to the tactical edge and across platforms. The 
Army's objective is to rapidly integrate technologies and applications 
that empower, protect and unburden the Soldier and our formations, thus 
providing the Soldier with the right equipment, at the right time, to 
accomplish the assigned mission.
    The President's Budget request would provide over $2 billion to 
begin to address the growing gaps in our modernization accounts. Even 
with this additional funding, modernization will require several years 
to recover from the effects of recent budget reductions and regain 
balance in the Force. As such, the Army emphasizes early affordability 
reviews, establishing cost caps (funding and procurement objectives), 
synchronizing multiple processes and divesting older equipment.
End Strength
    Readiness includes possessing the capacity to execute the missions 
required by the Defense Strategic Guidance and the Combatant 
Commanders. The minimum end strength the Army requires to fully execute 
the 2012 Defense Strategic Guidance is 980,000 Soldiers--450,000 in the 
active Army, 335,000 in the Army National Guard and 195,000 in the Army 
Reserve. All three components will be smaller than pre-2001 force. If 
prolonged sequestration-level funding occurs, we will need to reduce 
end strength even further--to 420,000 in the AC by fiscal year 2020, 
and 315,000 in the National Guard and 185,000 in the Army Reserve, both 
by fiscal year 2019. At these levels we assess the Army would be unable 
to fulfill all the elements of the Defense Strategic Guidance.
    Although the Army expects to lose combat-seasoned Soldiers and 
leaders, our focus through these processes will be on retaining those 
individuals with the greatest potential for future service in the right 
grades and with the right skills.
Recap: Effects of Sequestration
    At force levels driven by affordability under full sequestration, 
the Army cannot fully implement its role in the defense strategy. 
Sequestration would require the Army to further reduce our Total Army 
end strength to at least 920,000 or 60,000 below the 980,000 currently 
reflected in the President's Budget request and would severely limit 
the Army's investment to equip Soldiers to meet the warfighting 
requirements of tomorrow. Under sequestration-level funding readiness 
will be reduced to a level the Army will be unable to recover from 
until well past the current target of fiscal year 2023. Only 24 of 60 
Brigade Combat Teams will receive sufficient funding to conduct 
required readiness training. An estimated 85,000 seats will be lost in 
specialized skills training, and there will be a $1 billion decrease to 
base operations support, eliminating jobs, contracts, causing barracks 
and furnishings to further deteriorate. While we will protect funding 
for the Combat Training Centers (CTCs), funding for home station 
training will be severely reduced which will undermine many units' 
readiness and inhibit those scheduled for a CTC from adequate 
preparation.
    We are expecting a decline in the overall readiness of our forces 
because of reduced funding in fiscal year 2015, and sequestration in 
fiscal year 2016 will dissipate the gains we achieved from the 
Bipartisan Budget Agreement in fiscal year 2014 and leave the Army in a 
precarious state. Because we cannot draw down end strength in a rapid 
manner, operations and training funding would absorb the majority of 
the budget cuts resulting from sequestration, leaving the Army hollow--
lacking training and modern equipment and vulnerable if needed in a 
crisis. Ultimately, sequestration will put Soldiers' lives at risk.
                                closing
    As the velocity of instability increases so does the demand for a 
ready and modern Army, adequately sized and trained to prevent, shape, 
and win. We ask Congress to repeal the harmful cuts arbitrarily imposed 
under sequestration-level funding and provide Soldiers with greater 
predictability in these uncertain times.
    We are committed to working closely with Congress to ensure that we 
are good stewards of our Nation's resources. There are critical cost-
saving measures that allow the Army to further reallocate scarce 
resources to ensure we remain ready and resilient. These include 
compensation reform, sustainable energy and resource initiatives, a new 
round of Base Realignment and Closure (BRAC), and the Aviation 
Restructure Initiative (ARI). We also ask Congress to support a Total 
Army solution to end strength reductions. Cuts must come from the Total 
Force--Active, National Guard, and Reserve--to maintain the balance 
among all components to best execute the Army's strategic mission. We 
ask Congress to support these initiatives because without the 
flexibility to manage our budgets to achieve the greatest capability 
possible, we will be forced to make even larger reductions to manpower, 
modernization, and training.
    The United States Army plays a foundational role in the Joint Force 
and is indispensible as we work to reassure our allies, deter our 
enemies, and when necessary, win our Nation's wars. The strength of the 
All Volunteer Force is our Soldiers, Civilians and their Families, and 
we must ensure they always stand Ready. History has taught us that the 
price of improperly managing the readiness of our force will ultimately 
fall on the backs of our fighting Soldiers. With your assistance, we 
will continue to resource the best-trained, best-equipped and best-led 
fighting force in the world. We thank Congress for their steadfast and 
generous support of the outstanding men and women of the United States 
Army, our Army Civilians, Families, and Veterans.

    Senator Ayotte. Thank you, General Allyn.
    We're now going to hear testimony from Admiral Michelle 
Howard, who's the Vice Chief of Staff for Naval Operations.
    Thank you, Admiral Howard.

  STATEMENT OF ADMIRAL MICHELLE J. HOWARD, USN, VICE CHIEF OF 
              NAVAL OPERATIONS, UNITED STATES NAVY

    Admiral Howard. Chairwoman Ayotte, Senator Kaine, and 
Senator Rounds, distinguished members of the committee, thank 
you for the opportunity to testify today.
    It is my honor to represent the Navy's Active and Reserve 
sailors and civilians, and particularly the 41,000 sailors who 
are underway and deployed around the world today. They're 
standing watch right now, and ready to meet today's security 
challenges. The citizens of this Nation can take great pride in 
the daily contributions of their sons and daughters who fulfill 
our Navy's longstanding mandate to be where it matters when it 
matters.
    Recent events exemplify the benefit of forward presence. 
Last August, the George Herbert Walker Bush Carrier Strike 
Group relocated 750 nautical miles from the Arabian Sea to the 
Arabian Gulf in less than 30 hours. They executed 20 to 30 
combat sorties per day. For 54 days, they were the only 
coalition strike option to project power against the Islamic 
State of Iraq and Syria (ISIS). Then there's the U.S.S. 
Truxton, a destroyer that arrived in the Black Sea within a 
week after Russia invaded Crimea, to help reassure our allies 
in the area. Another destroyer, U.S.S. Sampson, and littoral 
combat ship U.S.S. Fort Worth were among the first vessels to 
support the search effort for Air Asia Flight 8501 in the Java 
Sea. Our forward presence truly allows us to be where it 
matters when it matters.
    Effectively operating forward around the globe requires a 
high state of readiness of our people and platforms. We are 
still recovering from a degraded readiness as a result of over 
a decade of combat operations. Sequestration in 2013 
exasperated our circumstances and created maintenance backlogs 
that have prevented us from getting ships back to the fleet on 
time and aircraft back on the flight line. Since 2013, many 
ships have been on deployment for 8 to 10 months or longer, 
negatively impacting the morale of our people and readiness of 
our ships.
    Our Navy fiscal year 2016 budget is designed to continue 
our readiness recovery, restoring our required contingency 
operations capacity by the 2018-to-2020 timeframe, while 
continuing to provide a sustainable forward presence. It also 
includes credible and survivable sea-based strategic 
deterrence. With continued overseas operation funding, our 
fiscal year 2016 budget meets the requirements of the global 
force management allocation plan. This includes at least two 
carrier strike groups and two amphibious ready groups operating 
forward, fully mission capable and certified for deployment.
    Recovery of readiness also requires a commitment to protect 
the time it takes to properly maintain and modernize our 
capital-intensive force and to conduct full-spectrum training. 
Achieving full readiness entails the restoration of shipyard 
capacity and aviation depots primarily through hiring and 
workforce development, and PB-16 puts us on a path to address 
these challenges.
    I want to make it clear. The Navy's fiscal year 2016 budget 
is the minimum funding required to execute the Nation's defense 
strategy. In other words, if we return to a sequestered budget, 
we will not be able to execute the defense strategic guidance. 
Past budget shortfalls have forced us to accept significant 
risks in two important mission areas. The first mission at risk 
is ``deter and defeat aggression,'' which means to win a war in 
one theater while deterring another adversary in a different 
theater. Assuming risk in this mission leads to loss of 
credibility and ability to assure our allies of our support. 
The second mission at risk is ``project power despite anti-
access aerial-denial challenges.'' This brings risk in our 
ability to win a war. Some of our people and platforms will 
arrive late to the fight and inadequately prepared. They will 
arrive with insufficient ordnance and without the modern combat 
systems and sensors and networks required to win. Ultimately, 
this means more ships and aircraft out of action, more sailors, 
marines, and merchant marines killed.
    As we look to the future, the Navy will continue to be 
globally deployed to provide a credible and survivable 
strategic deterrent and to support the mission requirements of 
the regional combatant commanders. The Navy is fundamentally 
multi-mission and will rapidly adjust to meet new challenges 
that might require U.S. presence and the--and projecting power.
    Our Navy will continue to ensure the security of the 
maritime domain by sustaining its forward presence, warfighting 
focus, and readiness preparations. Since there is no 
foreseeable reduction to global maritime requirements, we have 
focused our fiscal year Navy budget to address the challenges 
to achieving the necessary readiness to execute our missions. 
Any funding below this submission requires a revision of the 
defense strategy. To put it simply, sequestration will gravely 
damage the national security of this country. Despite these 
future challenges, we are fortunate to have the highest 
quality, the most diverse force in my Navy's history. These 
outstanding men and women who serve our Nation at sea make us 
the finest navy in the world.
    So, on behalf of all our Active and Reserve sailors, our 
civilians, and their families, I extend our appreciation to 
this committee for your efforts and continued support to keep 
our Navy ready to defend this Nation.
    Thank you.
    [The prepared statement of Admiral Howard follows:]

             Prepared Statement by Admiral Michelle Howard
    Chairman Ayotte, Senator Kaine, and distinguished members of the 
Senate Armed Services Subcommittee on Readiness and Management Support, 
I appreciate the opportunity to testify on the current state of Navy 
readiness and the resources necessary to provide a ready Navy in the 
future as described in our Fiscal Year 2016 budget request. As we meet, 
the Navy and our sister Services have entered a third year of fiscal 
uncertainty. In addition, new threats to our nation's interests are 
emerging and old tensions are surfacing. Today, it is my honor to 
represent all our active and reserve Sailors, particularly the 41,000 
Sailors who are underway on ships and submarines or deployed in 
expeditionary roles overseas today. They are standing the watch and are 
ready to meet today's security challenges. American citizens can take 
great pride in the daily contributions of their sons and daughters who 
serve in Navy units around the world. We are where it matters, when it 
matters, ensuring the security that underpins the global economy and 
responding to crises.
    Last August, the George H.W. Bush carrier strike group, already 
forward present in the North Arabian Sea quickly relocated to the North 
Arabian Gulf. Flying 20-30 combat sorties per day, this Navy-Marine 
Corps strike fighter team was the only coalition strike option to 
project power against the Islamic State of Iraq and the Levant (ISIL) 
from the skies over Iraq and Syria for 54 days. Similarly, USS Truxton 
(DDG-103) arrived in the Black Sea to establish U.S. presence and to 
reassure allies a week after Russia invaded Crimea. In the Java Sea, 
USS Fort Worth (LCS-3), a littoral combat ship, and USS Sampson (DDG-
102), a destroyer, were among the first to support the Indonesian-led 
search effort for Air Asia Flight 8501. This forward presence is 
possible because Navy planning and budget decisions continue to be 
guided by the three tenets the Chief of Naval Operations (CNO) 
established when he first took office: Warfighting First, Operate 
Forward, and Be Ready. Each of these tenets helps drive a strong focus 
on readiness--both now and in the future.
    Actions of Congress helped stabilize readiness by supporting 
increases over sequestered funding levels through the Bipartisan Budget 
Act of 2013, and the subsequent authorization and appropriations acts 
for fiscal year 2014 and this year. Nonetheless, we have not yet 
recovered from the readiness impact of over a decade of combat 
operations, exacerbated by the imposition of a lengthy Continuing 
Resolution and followed by budget sequestration in fiscal year 2013, 
just as we were beginning to reset the force. These circumstances 
created maintenance backlogs that have prevented us from getting ships 
back to the Fleet on time and aircraft back on the flight line. We 
continue our efforts to rebuild the workforce in our public depots--
both shipyards and aviation readiness centers--and reduce the number of 
lost operational days, but it will take years to dig out of a readiness 
hole.
    The fiscal year 2016 Navy budget submission is designed to continue 
our readiness recovery, restoring our required contingency operations 
capacity by 2018-2020 while continuing to provide a sustainable forward 
presence. PB-16 is the minimum funding required to execute the nation's 
Defense Strategy, though we still carry risks in two important mission 
areas, notably when confronted with a technologically advanced 
adversary or when forced to deny the objective of an opportunistic 
aggressor in a second region while already engaged in a major 
contingency. As the CNO stated in his recent testimony to the full 
committee, risk in our ability to Deter and Defeat Aggression and 
Project Power Despite Anti-Access/Area Denial (A2/AD) Challenges mean 
``longer timelines to win, more ships and aircraft out of action in 
battle, more Sailors, Marines, and Merchant Mariners killed, and less 
credibility to deter adversaries and assure allies in the future.'' 
That level of risk arises from capacity and readiness challenges as 
well as slower delivery of critical capabilities to the Fleet, 
particularly in air and missile defense and overall ordnance capacity.
    My testimony today will focus on the current readiness of the Navy, 
and our plan, supported by our fiscal year 2016 budget submission, to 
meet the challenges to delivering future readiness. If we return to a 
sequestered budget in fiscal year 2016, we will not be able to execute 
the Defense Strategy as it is conveyed in the 2014 Quadrennial Defense 
Review and a revision will be required.
Current Navy Operations and Readiness
    Employing a combination of Forward Deployed Naval Force ships 
homeported overseas and rotationally deploying units from CONUS, our 
Navy sustains a global presence of about 100 ships and submarines. 
Their combat power and other capabilities include the contributions of 
embarked Carrier Air Wings or other aviation units, Marine 
Expeditionary Units or elements of a Special Purpose Marine Air/Ground 
Task Force, Coast Guard detachments, and Special Operations units, 
among others. These capabilities are further enhanced by land-based or 
expeditionary Navy forces in theater. With additional ships training in 
home waters, approximately half the battle force is underway or 
deployed on any given day.
    Every hour of every day around the globe we are executing missions. 
The sun never sets on the U.S. Navy. Ballistic Missile Submarines 
sustain the most survivable leg of our nation's nuclear triad. Carrier 
Strike Groups (CSGs), Amphibious Ready Groups (ARGs) and attack 
submarines (SSNs) conduct named operations in support of the Combatant 
Commanders (COCOMs) or exercise with other nations to build the 
partnerships essential to the stability of the global system. Ballistic 
Missile Defense-capable Cruisers and Destroyers protect U.S. and allied 
sea and shore-based assets. Our units operate with other nations 
through exercises or through executing theater security cooperation 
plans; activities essential to the stability of the global system. As 
an example, last month, USS Fort Worth (LCS-3) practiced the Code for 
Unplanned Encounters at Sea (CUES) with the Chinese Navy, enhancing the 
professional maritime relationship between the U.S. Seventh Fleet and 
the People's Liberation Army-Navy [PLA(N)]. Our crews and platforms are 
trained and certified to execute their core capabilities across the 
spectrum of military operations and are ready to be re-tasked as 
required to meet the next challenge. This was the case in August 2014 
when the George HW Bush CSG relocated from the Arabian Sea to the North 
Arabian Gulf and was on station, ready for combat operations, in less 
than 30 hours. The Navy is fundamentally multi-mission and rapidly 
adjusts to meet new challenges that might require U.S. presence and 
power projection forces.
    Navy will continue to sustain the readiness of our deployed forces 
under our fiscal year 2016 budget submission, but it will require 
several years to fully recover the capability to rapidly respond to 
COCOM requirements for a major contingency. In addition to our forces 
that are globally deployed today, combined requirements include: three 
extra CSGs and three ARGs to deploy within 30 days to respond to a 
major crisis. However, on average, we have only been able to keep one 
CSG and one ARG in this readiness posture, 1/3 of the requirement. 
Assuming the best case of an on-time, sufficient, and stable budget 
with no major contingencies, we should be able to recover from 
accumulated backlogs by 2018 for CSGs and 2020 for ARGs--five plus 
years after the first round of sequestration.
    Recovery of readiness also requires a commitment to protect the 
time required to properly maintain and modernize our capital-intensive 
force and to conduct full-spectrum training. Our updated force 
generation model--the Optimized Fleet Response Plan (OFRP)--is designed 
to meet this commitment as well as better align all elements that 
support readiness development. Achieving full readiness entails the 
restoration of required capacity to our public shipyards and aviation 
depots-primarily through hiring and workforce development. In addition 
to aviation depots backlogs, we must also overcome the challenges of 
extending the service life of our legacy F/A-18 Hornet aircraft to 
10,000 hours. Underlying our plan is the need to operate the battle 
force at a sustainable level over the long term. With this plan we 
recover our material readiness, keep faith with our Sailors and their 
Families by providing more predictability in the operations schedule, 
and control the pace of deployments.
Meeting Our Readiness Challenges
    The Navy fiscal year 2016 budget request continues to fully support 
the readiness of our deployed forces. The budget request sustains our 
credible and survivable sea-based strategic deterrent and with 
continued overseas contingency operations (OCO) funding meets the 
adjudicated requirements of the fiscal year 2016 Global Force 
Management Allocation Plan (GFMAP). This includes at least two CSGs and 
two ARGs, operating forward, fully mission-capable and certified for 
deployment. We continue to employ innovative approaches, including the 
use of new platforms like the Joint High Speed Vessel and the Mobile 
Landing Platform, to ensure the Navy/Marine Corps team continues to 
meet the security requirements of our nation, while providing the 
opportunity to reset and sustain the material condition of the force. 
Greater use of capable auxiliaries helps relieve pressure on our 
overstretched amphibious fleet.
  Generating the Force
    Navy readiness is at its lowest point in many years. Budget 
reductions forced cuts to afloat and ashore operations, generated ship 
and aircraft maintenance backlogs, and compelled us to extend unit 
deployments. Since 2013, many ships have been on deployment for 8-10 
months or longer, exacting a cost on the resiliency of our people, 
sustainability of our equipment, and service life of our ships.
    Navy has managed force generation using the Fleet Response Plan 
(FRP) since it was adopted in 2003 and fully implemented in 2007. This 
cyclic process was designed to support readiness by synchronizing 
periodic deep maintenance and modernization with the Fleet training 
required to achieve GFMAP forward presence objectives and provide 
contingency response capacity. However, the continued employment of our 
contingency response units to generate increased presence over the past 
decade has not only increased maintenance requirements, it has also 
limited their availability to complete required maintenance and 
training. As with previous testimony of the last few years, this 
practice is unsustainable.
    In 2013 and 2014, for example, Naval forces provided six percent 
and five percent more forward presence, respectively, than allocated 
due to emergent operations and unanticipated contingencies. This 
unbudgeted employment amounted to greater than 2,200 days in theater 
over that approved on the global force management plan in 2013 and 
greater than 1,800 days in theater over in 2014. We should operate the 
Fleet at sustainable presence levels in order for the Navy to meet 
requirements, while still maintaining material readiness, giving ships 
time to modernize, and allowing them to reach their expected service 
lives.
    This year, Navy began implementation of the Optimized Fleet 
Response Plan (OFRP) to address these challenges. Designed to stabilize 
maintenance schedules and provide sufficient time to maintain and train 
the force while continuing to meet operational commitments, OFRP aligns 
supporting processes and resources to improve overall readiness. 
Furthermore, it provides a more stable and predictable schedule for our 
Sailors and their Families. We will continue OFRP implementation across 
the FYDP.
  Ship Operations
    The baseline Ship Operations request for fiscal year 2016 provides 
an average of 45 underway steaming days per quarter for deployed ships 
and 20 days non-deployed, and would support the highest priority 
presence requirements of the Combatant Commanders to include global 
presence for two CSGs, two ARGs and an acceptable number of deployed 
submarines. With OCO, ship operations are funded at 58 steaming days 
deployed/24 days non-deployed. The requested funding will meet the full 
adjudicated fiscal year 2016 GFMAP ship presence requirement, support 
higher operational tempo for deployed forces and provide full operating 
funding for individual ship level maintenance and training.
  Air Operations (Flying Hour Program)
    The Flying Hour Program (FHP) funds operations, intermediate and 
unit-level maintenance, and training for ten Navy carrier air wings, 
three Marine Corps air wings, Fleet Air Support aircraft, training 
squadrons, Reserve forces and various enabling activities. The fiscal 
year 2016 baseline program provides funding to build required levels of 
readiness for deployment and sustain the readiness of units that are 
deployed. Navy and Marine Corps aviation forces are intended to achieve 
an average T-2.5/T-2.0 USN/USMC training readiness requirement with the 
exception of non-deployed F/A-18 (A-D) squadrons. Because of shortfalls 
in available aircraft due to depot throughput issues, these squadrons 
are funded at the maximum executable level while non-deployed, 
resulting in an overall readiness average of T-2.8/2.4. All squadrons 
deploy meeting theT-2.0 readiness requirement and OCO provides for 
additional deployed operating tempo above baseline funding.
  Spares
    The replenishment of existing, ``off the shelf'' spares used in 
ship and aircraft maintenance is funded through the Ship Operations and 
Flying Hour Programs. With OCO, those programs are fully funded in 
PB16. The provision of initial and outfitting spares for new platforms, 
systems and modifications is funded through the spares accounts. 
Traditionally, these accounts have been funded below the requirement 
due to limited funding or past execution issues. Due to the ultimate 
impact on readiness, PB16 sustains executable funding levels to reduce 
cross-decking and cannibalization of parts driven by large backlogs. 
This is complemented by Navy-wide efforts to improve execution of these 
accounts, which have shown considerable success in aviation spares over 
the last two years, and continues to be a focus area.
  Readiness Investments Required to Sustain the Force--Ship and 
        Aircraft Maintenance
    The Navy maintenance budget requests are built upon proven 
sustainment models. They are focused on continuing our ongoing 
investment to improve material readiness of our surface combatants, and 
support the integration of new capabilities into naval aviation.
    The fiscal year 2016 baseline budget request funds 80 percent of 
the ship maintenance requirement across the force, addressing both 
depot and intermediate level maintenance for carriers, submarines and 
surface ships. OCO funding provides the remaining 20 percent of the 
full baseline requirement to continue reduction of the backlog of life-
cycle maintenance in our surface ships after years of high operational 
tempo and deferred maintenance. This year, the additional OCO for 
maintenance reset ($557M) includes funding for aircraft carriers (CVNs) 
as well to address increased wear and tear outside of the propulsion 
plant as a result of high operational demands. Since much of this work 
can only be accomplished in drydock, maintenance reset must continue 
across the FYDP.
    To address the increased workload in our public shipyards and 
improve on-time delivery of ships and submarines back to the Fleet, the 
fiscal year 2016 budget grows the shipyard workforce, reaching a high 
of 33,500 personnel in fiscal year 2017, with additional investment in 
workforce training and development. One attack submarine (SSN) 
availability is moved to the private sector in fiscal year 2016 with 
plans for two additional SSN availabilities in the private sector in 
fiscal year 2017 to mitigate total workload. The fiscal year 2016 
budget includes $89.5M in MILCON projects and $142M in restoration and 
modernization projects for Naval Shipyards in fiscal year 2016, for a 
total capital investment of 8.7 percent in these important facilities.
    The Fleet Readiness Centers (FRCs), Navy's aviation depots, have 
been challenged to recover full productivity after hiring freezes, 
furlough, and overtime restrictions in fiscal year 2013. They face a 
growing workload, particularly for the additional service life 
extension of our legacy
    F/A-18 Hornets. FRCs are aggressively hiring with a goal of 
reaching full capacity by the end of this year. The hiring of 
additional engineering support to address new repairs required to reach 
10,000 hours of service life, reallocation of some of the workforce, 
and contracting for private sector support have all been undertaken to 
complete existing work-in-process at the FRCs, particularly for legacy 
Hornets. Field teams have been increased to improve flight line 
maintenance and understanding of the material condition of airframes 
coming to the depots. As new repairs and parts are identified and 
approved, kits are developed to ensure long-lead parts are readily 
available.
    As a result of these challenges, the Aviation Depot Maintenance 
program is funded to an executable level of 77 percent in baseline, 83 
percent with OCO for new work to be inducted in fiscal year 2016. This 
funding level supports a total of 564 airframes and 1,834 engines/
engine modules to be repaired.
  Navy Expeditionary Combat Forces
    Navy expeditionary combat forces support ongoing combat operations 
and enduring Combatant Commander requirements by deploying maritime 
security, construction, explosive ordnance disposal, logistics and 
intelligence units to execute missions across the full spectrum of 
naval, joint and combined operations. In fiscal year 2016, baseline 
funding is improved significantly over prior years, providing 80 
percent of the enduring requirement, with OCO supporting an additional 
15 percent of the requirement.
  Readiness Investments Required to Sustain the Force--Shore 
        Infrastructure
    The Navy's shore infrastructure, both in the United States and 
overseas, provides essential support to our Fleet. In addition to 
supporting operational and combat readiness, it is also a critical 
element in the quality of life and quality of work for our Sailors, 
Navy Civilians, and their Families. As we have done for several years, 
we continue to take risk in the long-term viability of our shore 
infrastructure to sustain Fleet readiness under the current funding 
level. However, in fiscal year 2016 our facilities sustainment is 
improved to 84 percent of the OSD Facilities Sustainment Model versus 
70 percent this year. When restoring and modernizing our 
infrastructure, we intend to prioritize life/safety issues and 
efficiency improvements to existing infrastructure and focus on 
repairing only the key components of our mission critical facilities. 
Lessor critical projects will remain deferred. Overall, the Department 
of the Navy will exceed the mandated capital investment of 6 percent 
across all shipyards and depots described in 10 USC 2476 with a 7.4 
percent total investment in fiscal year 2016. With the support provided 
by the Congress, Navy is on track to exceed the minimum investment in 
fiscal year 2015 as well.
Looking Ahead
    As we look to the future, the Navy will continue to be globally 
deployed to provide a credible and survivable strategic deterrent and 
to support the mission requirements of the regional Combatant 
Commanders. Global operations continue to assume an increasingly 
maritime focus, and our Navy will sustain its forward presence, 
warfighting focus, and readiness preparations to continue operating 
where it matters, when it matters. We see no future reduction of these 
requirements and we have focused the fiscal year 2016 Navy budget 
submission to address the challenges to achieving the necessary 
readiness to execute our missions. Any funding below this submission 
requires a revision of America's defense strategy. Sequestration would 
outright damage the national security of this country.
    In closing, we should recall that our Sailors are the most 
important element of the future readiness of the Navy. Fortunately, 
they are the highest quality, most diverse force in our history and 
continue to make us the finest Navy in the world. As the CNO says, 
``They are our asymmetric advantage.'' On behalf of all our Sailors 
(active and reserve), Civilians and their Families let me reiterate our 
appreciation for the continued support of the members of the committee.

    Senator Ayotte. Thank you, Admiral Howard.
    I would like to now receive testimony from General Paxton, 
the Assistant Commandant of the United States Marine Corps.
    Thank you, General Paxton.

   STATEMENT OF GENERAL JOHN M. PAXTON, JR., USMC, ASSISTANT 
             COMMANDANT, UNITED STATES MARINE CORPS

    General Paxton. Thank you, Chairman Ayotte, Ranking Member 
Kaine, Senator Rounds, and distinguished members of the 
Readiness Subcommittee. I appreciate the opportunity to appear 
before you today and to report on the readiness of your United 
States Marine Corps.
    Today, as always, your Marine Corps is committed to 
remaining our Nation's ready force, a force that's truly 
capable of responding to a crisis anywhere around the globe at 
a moment's notice. I know that this committee and the American 
people have high expectations of your marines. You expect your 
marines to operate forward, to stay engaged with our partners, 
to deter potential adversaries, and to respond to crises. When 
we fight, you expect us to always win. You expect a lot of your 
marines. You should.
    As we gather today, more than 31,000 marines are forward 
deployed and engaged, doing just what you expect and we expect 
them to be doing. Our role as the Nation's ready force 
continues to inform how we man, train, and equip the Marine 
Corps. It also prioritizes the allocation of resources which we 
receive from Congress. I can assure you that your forward-
deployed marines are well trained, well led, and well equipped.
    In fact, our readiness was proven last year, as your Marine 
Corps supported recent evacuations of United States citizens in 
South Sudan and then Libya and then Yemen. Those ready forces 
are also currently engaged in the Middle East, conducting 
strikes against Syria and Iraq, training Iraqi army units, and 
protecting our Embassy in Baghdad. They also routinely deploy 
and exercise across the Asia-Pacific region, where over 21,000 
are west of the International Dateline.
    These events demonstrate the reality and the necessity of 
maintaining a combat-ready force that's capable of handling 
today's crisis today. Such an investment is essential to 
maintaining our Nation's security and the prosperity for the 
future.
    We will work hard with you in order to maintain the 
readiness of our forward-deployed forces. While we do that, we 
have not sufficiently invested in our home-station readiness 
and in our next-to-deploy forces. We have also underfunded or 
delayed the full funding for our modernization, for our 
infrastructure sustainment, and some of our quality-of-life 
programs. As a result, approximately half of our non-deployed 
units are suffering personnel, equipment, or training 
shortfalls. Ultimately, this has created an imbalance in our 
institutional readiness. At the foundation of our readiness, we 
emphasize that all marines and all marine units are physically 
and mentally ready, are fully equipped, and have sufficient 
time to train with quality small-unit leaders at the helm. They 
are, thus, ready to move out whenever they're called.
    As we continue to face the possibility of full 
implementation of the Budget Control Act (BCA), our future 
capacity for crisis response, as well as our capacity for major 
contingency response, is likely to be significantly reduced. 
Quite simply, if our home-station units are not ready due to a 
lack of training, a lack of equipment or manning, it could mean 
a delayed response to resolve a contingency or to execute an 
operational plan, both of which would create unacceptable risk 
for our national defense strategy as well as risk to the limits 
of mission accomplishment or the physical risk to the force, 
itself.
    The readiness challenge we already see today provide 
context for our messages this morning. Your United States 
Marine Corps can, indeed, meet the requirements of the defense 
strategic guidance with the President's Budget, but, 
unfortunately, there is no margin. As our chairman stated, even 
under PB-16, we are already at the ragged lower edge for 
readiness.
    I thank each of you for your faithfulness to our Nation, 
for your support of the Department and all four of our 
services.
    I request that my written testimony be accepted for the 
record.
    I thank you for the opportunity to appear before you this 
afternoon, and I look forward to your questions.
    Thank you.
    [The prepared statement of General Paxton follows:]

               Prepared Statement by General John Paxton
    General Paxton was promoted to General and assumed the duties of 
Assistant Commandant of the Marine Corps on December 15, 2012. A native 
of Pennsylvania, he graduated from Cornell University with a Bachelor 
and Master of Science in Civil Engineering and was commissioned through 
Officer Candidate School in 1974.
    General Paxton's assignments in the operating forces include Rifle 
and Weapons Platoon Commander and Company Executive Officer, Co. B, 1st 
Battalion, 3d Marines; Training Officer, 4th Marine Regiment; Executive 
Officer, Co. G, 2d Battalion, 4th Marines; Company Commander, Co. L and 
Operations Officer, 3d Battalion, 5th Marines; GCE Operations Officer, 
II MEF, and Assistant Chief of Staff, G-3, 1st Marine Division. He 
commanded the 1st Battalion, gth Marines in support of operations in 
Bosnia and Somalia and later the 1st Marine Regiment.
    Other assignments include Company Commander, Co. B, Marine Barracks 
Washington and Commanding Officer of Marine Corps Recruiting Station 
New York. He served as a Plans Division Officer, Plans, Policies and 
Operations, HQMC; the Executive Assistant to the Undersecretary of the 
Navy; and Amphibious Operations Officer/Crisis Action Team Executive 
Officer, Combined Forces Command, Republic of Korea.
    As a general officer, he has served as the Director, Programs 
Division,Programs and Resources, HQMC; the Commanding General of Marine 
Corps Recruit Depot San Diego/Western Recruiting Region; Commanding 
General,1st Marine Division; Chief of Staff, Multi-National Forces--
Iraq; Director for Operations, J-3, The Joint Staff; and Commanding 
General, II Marine Expeditionary Force and Commander Marine Forces 
Africa. Most recently he served as the Commander, Marine Corps Forces 
Command; Commanding General, Fleet Marine Force Atlantic; and 
Commander, Marine Forces Europe.
    General Paxton is a graduate of the U.S. Army Infantry Officer 
Advanced Course and Marine Corps Command and Staff College. He has also 
served as a Commandant's Fellow at the Brookings Institute as well as 
at the Council on Foreign Relations.
Introduction
    Chairman Ayotte, Ranking Member Kaine, and distinguished members of 
the Senate Armed Services Subcommittee on Readiness: I appreciate the 
opportunity to testify on the current state of readiness in your Marine 
Corps and on our Fiscal Year 2016 budget request. We greatly appreciate 
the continued support of Congress and of this subcommittee in ensuring 
our ability to remain the Nation's ready force.
    Since 1775 the Marine Corps, has been our nation's Crisis Response 
force. This was mandated by our 82nd Congress. Continuing to fulfill 
this role remains our top priority. Balanced air-ground-logistics 
forces that are forward-deployed, forward-engaged, and postured to 
shape events, manage instability, project influence, and immediately 
respond to crises around the globe are what we provide. Marine forces 
remain expeditionary and are partnered with the Navy, coming from the 
sea, operating ashore, and providing the time and decision space 
necessary for our National Command Authority. Ultimately, our role as 
America's 9-1-1 force informs how we man, train, and equip our force 
both for today and into the future.
    This past year has demonstrated that the Marine Corps must be ready 
to respond, fight, and win more than just the last war. In 2014 the 
performance of your Marine Corps underscored the fact that 
responsiveness and versatility are in high demand today and that fact 
can be expected in the future.
                 your marines--operationally responsive
OEF--Afghanistan
    In 2014, Marine Expeditionary Brigade-Afghanistan (MEB-A) concluded 
six years of sustained Marine Air-Ground Task Force (MAGTF) operations 
in Afghanistan. Operations there focused on ensuring the success of the 
Afghanistan presidential elections in the summer of 2014 and 
transitioning security responsibilities to the Afghanistan National 
Defense Security Forces (ANDSF). With Marines serving in an advisory 
capacity, the ANSF in Helmand Province held control of all district 
centers.
    Regional Command (SW) also turned over operational responsibilities 
to the
    International Security Assistance Force Joint Command (IJC). Today, 
a residual Marine presence of several hundred continues to support the 
Resolute Support Mission (NATO)/OPERATION FREEDOM'S SENTINEL (US) in 
Afghanistan.
Special Purpose Marine Air Ground Task Force--Crisis Response (SPMAGTF-
        CR) Operations
    While not as independent, flexible and responsive as our Marine 
Expeditionary Units (MEU) embarked and underway aboard Amphibious Ready 
Groups (ARG), two SPMAGTF-CRs are filling crisis response critical 
capability gaps for the combatant commanders in AFRICOM and CENTCOM. 
This past year SPMAGTF-CR units assigned to AFRICOM positioned forward 
in Moron, Spain and Signonella, Italy safeguarded the lives of our 
diplomatic personnel and conducted military-assisted departures from 
the U.S. Embassy in South Sudan in January and our Embassy in Libya in 
July 14.
    The Marine Corps SPMAGTF-CR unit assigned to CENTCOM (SPMAGTF-CR-
CC) became fully operational on 1 November 2014 and deployed to the 
CENTCOM AOR. Since that time, SPMAGTF-CR-CC conducted embassy 
reinforcement, Theater Security Cooperation (TSC) exercises, and 
provided critical aviation and ground capabilities in the fight against 
ISIL. Most recently, Marines from SPMAGTF-CR-CC supported the 
evacuation of our Embassy in Sana'a, Yemen in February of this year.
Current Operations
    Today, there are over 31,000 Marines forward deployed, conducting a 
full range of theater security and crisis response missions. Marines 
are currently conducting security cooperation activities in 29 
countries around the globe. Over 22,000 Marines are west of the 
international dateline in the Pacific building partnership capacity, 
strengthening alliances, deterring aggression, and preparing for any 
contingency. Your Marines serving today in the operating forces are 
either deployed, getting ready to deploy, or have recently returned 
from deployment. Our operational tempo since September 11, 2001 has 
been high and remains high today. We expect this trend to continue.
                         institutional balance
    The Marine Corps is committed to remaining the Nation's ready 
force, a force truly capable of responding to a crisis anywhere around 
the globe at a moment's notice. Thus, the American people and this 
Congress have rightly come to expect the Marine Corps to do what must 
be done in ``any clime and place'' and under any conditions. As our 
36th Commandant recently published in his Commandant's Planning 
Guidance (CPG), ``you expect us to respond quickly and win always.''
    This obligation requires the Marine Corps to maintain a high state 
of combat readiness at all times. Readiness is the critical measure of 
our Marine Corps' capacity to respond with required capability and 
leadership. We look at readiness through the lens of our five 
institutional pillars of readiness--high quality people, unit 
readiness, capacity to meet the combatant commanders' requirements, 
infrastructure sustainment, and equipment modernization. These pillars 
represent the operational and foundational components of readiness 
across the Marine Corps. We know we are ready when leaders confirm that 
their units are well trained, well led at all levels, and can respond 
quickly to the unforeseen. This capability helps to minimize 
operational risk and provides our national leaders the time and space 
to make reasoned decisions.
    While we will always ensure that our forward deployed Marines and 
Sailors are properly manned, trained, and equipped, we must seek a 
balanced investment across the pillars to simultaneously ensure current 
as well as future (i.e. next to deploy) readiness. At the foundation of 
this readiness, we emphasize that all Marines and all Marine units 
(i.e. from home station) are physically and mentally ready, are fully 
equipped, and have sufficient time with quality small unit leaders in 
place to move and train whenever called upon.
    We also fully appreciate that our readiness and institutional 
balance today, and the ability to maintain it in the future, are 
directly related to today's fiscal realities. During these fiscally 
constrained times, we must remain focused on the allocation of 
resources to ensure the holistic readiness of the institution (i.e. 
training, education, infrastructure and modernization), making every 
dollar count when and where it is needed most.
    As the Marine Corps looks to achieve balance across the five 
pillars of readiness after thirteen years of uninterrupted war, our 
efforts have been frustrated by two clearly tenuous variables. First, 
the continued high operational tempo of, and high demand for, Marine 
forces, and second, the continued budget uncertainty surrounding annual 
appropriations (i.e. sequestration and impacts). Both of these 
variables have been keenly and repeatedly felt throughout the Marine 
Corps all this year as we have protected near-term readiness at the 
expense of our long-term modernization and of our infrastructure 
investments. This reality has forced the Marine Corps' to make the hard 
choice to underfund, reduce or delay funding, which threatens our 
future readiness and responsiveness.
    As America's 9-1-1 force, your Corps is required to maintain an 
institutional capability, an operational balance, and an expeditionary 
mindset that facilitates our ability to deploy ready forces tonight. 
However, as we continue to face the possibility of sequestration-level 
funding for FY 2016, we may well be forced into adopting some short 
term or limited scope and scale variations for future unexpected 
deployments over the next few years. This means quite simply, that we 
will see increased risk in timely response to crises, in properly 
training and equipping our Marines to respond, and in their overall 
readiness to respond. By responding later with less and being less 
trained we may eventually expect to see an increase in casualties.
Readiness and the Capacity to Respond
    With the support of Congress, the Marine Corps is committed to 
remaining ready and continuing the tradition of innovation, adaptation, 
and winning our Nation's battles. The challenges of the future 
operating environment will demand that our Nation maintain a force-in-
readiness that is capable of true global response. America's 
responsibility as a world leader requires an approach to the current 
and future strategic landscape that leverages the forward presence of 
our military forces in support of our diplomatic and economic elements 
of power.
    As stated in the 2012 President's Defense Strategic Guidance, ``The 
United States will continue to lead global efforts with capable allies 
and partners to assure access to and use of the global commons, both by 
strengthening international norms of responsible behavior and by 
maintaining relevant and interoperable military capabilities.'' High-
yield, relatively low-investment Marine Corps capabilities (ready and 
responsive air-ground-logistics forces) uniquely support this strategic 
approach.
                           current readiness
    Maintaining the readiness of our forward deployed forces during a 
period of high operational tempo while amidst fiscal uncertainty; as 
well as fiscal decline, comes with ever increasing operational and 
programmatic risk. Today, approximately half of the Marine Corps' home-
station units are at an unacceptable level ofreadiness in their ability 
to execute wartime missions, respond to unexpected crises, and surge 
for major contingencies. Furthermore, the ability of non-deployed units 
to conduct full spectrum operations continues to degrade as home-
station personnel and equipment are sourced to protect and project the 
readiness of deployed and next-to-deploy units. As the Nation's first 
responders, the Marine Corps' home-stationed units are expected to be 
at or near the same high state of readiness as our deployed units, 
since these non-deployed units will provide the capacity to respond 
with the capability required (leadership and training) in the event of 
unexpected crises and or major contingencies.
    Despite this challenge and imbalance, the Marine Corps continues to 
provide units ready and responsive to meet core and assigned missions 
in support of all directed current operational, crisis, and contingency 
requirements. However, we continue to assume long-term risk 
particularly in supporting major contingencies in order to fund unit 
readiness in the near term. Consequently, the Marine Corps' future 
capacity for crisis response and major contingency response is likely 
to be significantly reduced. Quite simply, if those units are not ready 
due to a lack of training, equipment or manning, it could mean a 
delayed response to resolve a contingency or to execute an operational 
plan, both of which create unacceptable risk for our national defense 
strategy as well as risk to mission accomplishment and to the whole-of-
force itself. The following sections elaborate on some specific 
readiness challenges the Corps is facing today.
      current challenges to readiness and the capacitv to respond
    As the Nation's first responders, we firmly believe that the Marine 
Corps as a service, and in its entirety, is expected to be always in a 
high state of readiness. Today however, there are numerous challenges 
that have created a readiness imbalance, affecting our capacity to 
respond to future challenges with the required capability and 
leadership. For example, our home station unit's ability to train is 
challenged. Time is the essential component required to fix worn 
equipment and to train units to standard. A lower end-strength and 
unwavering and high unit deployment to dwell (D2D) ratios exacerbate 
time at home stations to prepare, train, and maintain. This, coupled 
with temporary shortages of personnel and equipment at the unit level, 
validate operational requirements that exceed resource availability, 
and a growing paucity of amphibious platforms on which to train, all 
contribute to degraded full-spectrum capabilities across the entire 
Service. As an example, a D2D ratio of 1:2 means your Marines are 
deploying for 7 months and home for 14 months before deploying again. 
During that 14-month ``dwell,'' units are affected by personnel changes 
and gaps (duty station rotations, schooling, and maintenance), ship 
availability shortfalls and growing maintenance requirements, equipment 
reset requirements (service life extensions and upgrades), degraded 
supply storages, training schedule challenges (older ranges and 
equipment, and weather) and more. These collective challenges factor 
into every unit's compressed and stressing task to remain constantly 
ready. In some case, the D2D ratio is even lower than 1:2 (MV-22 
squadrons, Combat Engineer units, and F/A-18 squadrons), placing 
considerable stress on high demand, low density units and equipment. 
Also concerning is the inability to assess the long-term health of the 
force at lower D2D ratios and the impact on overall force retention. 
Quite simply, despite OIF and OEF being ``over,'' the unstable world 
and ``New Normal'' is causing your Corps to continue to ``run hot.'' As 
referenced earlier, just over half of Marine Corps home-stationed units 
are at unacceptable levels of readiness. For example, Marine Aviation 
contains some of our most stressed units. As operational commitments 
remain relatively steady, the overall number of Marine aircraft 
available for tasking and or training has decreased since 2003. At that 
time Marine Aviation contained 58 active component squadrons and 12 
reserve component squadrons for a total of 70 squadrons.
    The Marine Corps has 55 active component squadrons today, three of 
which (2 VMM, and lVMFA) are in transition. Of the 52 remaining 
squadrons, 33 percent are deployed and 17 percent are in pre-deployment 
workups to deploy. Our minimum readiness goal to deploy is T-2.0, which 
is simply the cut line between a squadron trained to accomplish its 
core mission and a squadron that is not. To attain a T-2.0 rating, a 
squadron must be qualified to perform at least 70 percent of its 
Mission Essential Tasks (METs) (i.e. tasks required to accomplish the 
multiple missions that are or may be assigned to a unit). Currently, 
our deployed squadrons and detachments remain well trained and properly 
resourced, averaging T-2.17. Next-to-deploy units are often unable to 
achieve the minimum goal of T-2.0 until just prior to deployment. Non-
deployed squadrons experience significant and unhealthy resource 
challenges, which manifest in training and readiness degradation, 
averaging T-2.96.
    The Marine Corps is actively and deliberately applying resources to 
maintain the readiness of deployed and next-to-deploy units. Our focus 
is to continue to meet all current requirements, while addressing the 
personnel, equipment, and training challenges across the remainder of 
the force. We are in the midst of a comprehensive review of our manning 
and readiness reporting systems and will develop a detailed plan to 
enhance our overall readiness during 2015.
    We are also committed to meet the growing expeditionary 
requirements of our combatant commanders (COCOMs). To meet COCOM 
requirements, the Marine Corps will be required to sustain a D2D ratio 
in the active component force of 1:2 vice a more stable, and time 
proven, D2D ratio of 1:3. The Marine Corps also has some high demand/
low density units that maintain a current D2D ratio of less than 1:2, 
such as the (VMGR/KC-130) community. These communities are closely 
monitored for training, maintenance, and deployment readiness as well 
as deployment frequency. The Marine Corps will continue to provide 
ready forces to meet COCOM demands, but we are carefully assessing the 
impact of reduced D2D ratios on our training and quality of life across 
all units and occupational fields. What we do know is that the optimal 
size of your Marine Corps to meet the requirements of the Defense 
Strategic Guidance is 186,800 Marines. This optimal size gives the 
Marine Corps the capacity we need to meet current operational 
requirements demand with a D2D ratio closer to 1:3 which supports time 
for home station units to train and maintain. We continue to validate 
and support this assessment. Today, due to fiscal realities, the Marine 
Corps is adjusting its active duty end-strength to reach 182,000 
Marines by 2017. As we continue to downsize, we must emphasize the 
enduring national mission requirement to provide forces that can always 
meet today's crisis response demands.
    Another significant readiness challenge is the growing gap in the 
numbers of small unit leaders with the right grade, experience, 
technical skills and leadership qualifications associated with their 
billets. Specifically, our current inventory of Non-Commissioned 
Officers (NCOs) and Staff Non-Commissioned Officers (SNCOs) is not 
meeting our force structure requirements. The technical, tactical, and 
leadership demands on our NCOs and SNCOs has grown during 13 years of 
OIF and OEF. These Marine combat leaders have proven their mettle. We 
remain committed to fully and properly training them and their 
successors for the rigors of an unstable world with disaggregated 
operations against an asymmetric enemy in a distant and hostile 
environment. This dynamic directly affects our current and future 
training, maintenance, and discipline. We must train and retain 
adequate numbers of SNCOs and NCOs to preclude degraded crisis response 
readiness and ensure combat effectiveness. The Marine Corps' PB16 
military budget funds a fiscal year 2016 end-strength of 184,000 in our 
base budget and supports right-sizing our NCO ranks to provide our 
Marines the small unit leadership they deserve and which our Corps and 
nation need.
                       naval expeditionary force
    We share a rich heritage and maintain a strong partnership with the 
United States Navy. Sea-based and forward deployed naval forces provide 
the day-to-day engagement, crisis response, and assured access for the 
joint force in a contingency. The availability of amphibious shipping 
is paramount to both our readiness and to our overall ability to 
respond. The Marine Corps' requirement for amphibious warships to 
respond, for war plans, and for contingencies remains at 38 platforms. 
The Navy's inventory today is 31 total amphibious warships. When 
accounting for steady-state demands and for essential maintenance 
requirements we are seeing that far fewer platforms are readily 
available for employment. Simply put we have a serious inventory 
problem and a growing availability challenge.
    This is why the Marine Corps fully supports the Secretary of the 
Navy and Chief of Naval Operations' (CNO) efforts to increase the 
inventory and availability of amphibious platforms and surface 
connectors that facilitate our key concepts of operational maneuver 
from the sea (OMFTS) and ship-to-objective maneuver (STOM). The 
President's budget supports key investments in LPD-28, LX(R), and ship-
to-shore connectors (SSC), and demonstrates our commitment to global 
maritime presence and to our Nation's mandate to sustain an amphibious 
capability that can respond to, deter, deny, and defeat threats on a 
global scale. We appreciate Congress providing a substantial portion of 
funding to procure a 12th LPD, and respectfully request that this 
committee continue to support full funding of that amphibious ship. The 
enhanced mission profiles of these new, improved and much needed 
platforms create operational flexibility, extended geographical reach, 
and surge capabilities for all our COCOMs.
    Naval investments in alternative seabasing platforms expand access 
and reduce dependence on land bases, supporting national global 
strategic objectives and providing operational flexibility in an 
uncertain world. The naval seabasing investments in the Mobile Landing 
Platform (MLP), the Large Medium-Speed Roll-on/Roll-off (LMSR) 
strategic sealift ship, and the (T-AKE) Dry Cargo and Ammunition Ship 
as part of the Maritime Prepositioning Ship Squadrons (MPS), coupled 
with the Joint High Speed Vessel (JHSV), Afloat Forward Staging Base 
(AFSB) and ship-to-shore connectors provide additional lift, speed, and 
maneuver capability to augment, yet not necessarily replace or 
substitute for proven Navy and Marine Corps amphibious combat 
capabilities. Although never a substitute for amphibious warships, 
particularly in a contested environment, these alternative platforms 
will continually complement amphibious ships and can enhance national 
readiness and ability to answer COCOM non-combat demands.
    While the President's Budget moves us in the right direction, it 
will take many years and a sustained effort to address the serious risk 
in the current inventory and availability of amphibious ships. The 
Marine Corps will continue to work closely with the Navy and Congress 
to implement the 30 year ship building plan and to address the current 
amphibious availability and readiness challenges.
Building the Force of the Future
    As challenging as it has been to prepare Marines for the current 
fight, our force must adapt to the ever-changing character and conduct 
of warfare to remain ready, relevant, and responsive. Innovation and 
adaptability will be required to build the force of the future. For the 
last 14 years, the Marine Corps has applied a small but key percentage 
of our resources to providing Marines what tey need for today's fight. 
While individual Marines are our critical weapons system, we must 
outfit him with modem, reliable and useful gear and equipment. Because 
readiness remains our first priority in meeting our national security 
responsibility, our focus on an unrelenting demand for forces coupled 
with a declining budget has forced the Marine Corps to make difficult 
choices and to reduce investment in modernization in order to maintain 
current and near term readiness. We are consciously, by necessity, 
delaying needed modernization.
                         modernization efforts
    Our declining budget has forced the Marine Corps to make difficult 
choices at the expense of modernization to maintain current and near 
term readiness. In the current fiscal environment, the Marine Corps is 
investing only in essential modernization, focusing on those areas that 
underpin our core competencies. Today, we have placed much emphasis on 
new or replacement programs such as our Amphibious Combat Vehicle 
(ACV), a Joint Light Tactical Vehicle (JLTV), our CH-53K Heavy Lift 
Replacement, and the critical fifth generation F-35 Joint Strike 
Fighter (JSF). At the same time, our modernization resources are also 
necessarily focused on improving capabilities and extending the life of 
current systems in order to fill gaps that can be exploited by today's 
threats.
    In order to balance modernization across the capabilities of the 
MAGTF and ensure a ready and responsive force of the future, our two 
top priorities remain the ACV, to include science and technology 
efforts toward high-water speed capabilities, and the JSF, both of 
which provide the technology required to dominate our adversaries in 
the future. Additionally, our investments in Network On-the-Move 
(NOTM), Ground/Air Task Oriented Radar (G/ATOR), and other additional 
aviation platforms such as the MV-22, CH-53K, and UH-lY/AH-l Z programs 
are vital to the overall combat effectiveness and readiness of our 
future MAGTFs. We are also focused on and investing heavily in 
extending the service life and improving the interim capabilities of 
our legacy systems due to the time required to recapitalize needed 
capabilities while ensuring a smooth transition to future requirements.
    For example, the need for recapitalization of our 42-year old AAV 
is critical and the nation cannot afford to gap this capability. Rising 
annual maintenance costs for the AAV and other legacy systems compete 
for resources against modernization efforts that seek to replace them 
with modem combat capabilities (i.e. ACV). This required allocation of 
precious resources works against our other investment and 
recapitalization efforts. Additionally, for our legacy aircraft 
platforms, the focus is on modernization to make them relevant in 
tomorrow's fight while simultaneously providing a bridge to rearrange 
our aviation recapitalization efforts. Rapid procurement of these new 
systems is critical to solving both our serious current and future 
readiness problems.
    If we do not modernize, we will actually move backwards. Our 
adversaries continue to develop new capabilities exploiting any 
technology gaps associated with specific domains and functions. By 
under-resourcing equipment modernization we will ultimately fall 
behind. Increasing threats, the proliferation of A2/AD weapon systems, 
and the aging of key material capabilities present an unacceptable risk 
to forcible entry operations and our overall combat effectiveness if 
modernization continues to be diminished or halted.
    Modernization and innovation are more than just procurement 
programs. We will re-energize our MAGTF experimentation and test new 
tactics, techniques, procedures, equipment and concepts that will allow 
us to meet every challenge. We are maintaining our commitment to 
Science and Technology, and we continue to look for opportunities to 
expand our efforts in this critical area.
                concept development and experimentation
    The current and future operating environment will remain volatile, 
unpredictable, and complex. To continue to deliver order from the 
chaos, we anticipate no lessening in the demand for Marine capabilities 
ranging from Amphibious Ready Groups with enhanced Marine Expeditionary 
Units (ARG/MEUs) and Special Purpose MAGTFs for crisis response as well 
as for more Marine Security Guards at our embassies and consulates 
(MCESG). Trends point to greater security challenges to our vital 
national interests almost everywhere. Therefore, as our Nation meets 
these future challenges, it will rely heavily on the Marine Corps to 
remain the ready, relevant, and responsive force of first resort. While 
there will be a degree of consistency in our missions, there is likely 
to be inconsistency in the operating environment, and we must be 
willing to experiment, take risk, and implement change to overcome 
challenges in those varied operating environments (threat, access, 
communications, etc.). As was the case prior to World War II, the 
quality and focus of our concept development, our expansion of science 
and technology, the :frequency and significance of our exercises, and 
our constant experimentation efforts will remain critical to our 
overall readiness, relevance, and indeed our mission success. The end 
state of our efforts to link concepts and doctrine to exercises and 
experimentation will be to develop and nurture the intellectual energy 
and creativity of individual Marines and of units. This will enable the 
Marine Corps to continue to be a leader in both tactical and 
operational innovation.
    A year ago we published Expeditionary Force 21 (EF-21), our Marine 
Corps capstone concept. EF-21 establishes our vision and goals for the 
next 10 years and provides guidance for the design and development of 
the future force that will fight and win in the future environment. 
Expeditionary Force 21 will also inform decisions regarding how we will 
adjust our organizational structure to exploit the value of regionally 
focused forces and provide the basis for future Navy and Marine Corps 
capability development to meet the challenges of the 21st Century. 
Developed in close coordination with the recent update of our maritime 
strategy (i.e. Cooperative Strategy 21 (CS21)), Expeditionary Force 21 
describes how the Marine Corps will be postured, organized, trained, 
and equipped to fulfill the responsibilities and missions required 
around the world. This comprises four essential lines of effort: 
refining our organization, adjusting our forward posture, increasing 
our naval integration, and enhancing littoral maneuver capability.
                          all volunteer force
    Our Marines and civilians are the foundation of who we are and of 
all that we do. We succeed because of our focus on recruiting, 
training, and retaining quality people. People are the primary means 
through which the Marine Corps remains ready and responsive in 
guaranteeing the defense of our great Nation. The resources we dedicate 
to recruiting, retaining, and developing high quality people directly 
contribute to the success of our institution. Thus, our commitment to 
attract, train, and deploy with the best quality Marines must always 
remain at the forefront.
    Today, the Marine Corps does not have the proper level of personnel 
stability or cohesion in our non-deployed units. Having to move Marines 
between units to meet manning goals for approaching often accelerated 
or extended deployment cycles creates personnel turbulence, inhibits 
cohesion, and is not visible in our current readiness assessment tools. 
This personnel turbulence affects our combat readiness and our ability 
to optimally train, retain, and take care of Marines. Moving forward, 
we will improve cohesion by increasing our individual and unit 
preparedness across the force as well as emphasizing consistency of 
leadership and personnel stability across that same force.
Conclusion
    On behalf of the Marines and Sailors and their families, all of 
whom provide this Nation with its versatile and reliable force-in 
readiness, I thank Congress and this subcommittee for your continued 
interest in and recognition of our operational and fiscal challenges 
and our key contributions to national security. We are proud of our 
reputation for frugality and remaining one of the best values for the 
defense dollar. In these times of budget austerity, the Nation 
continues to hold high expectations of her Marine Corps, and our 
stewardship of taxpayer dollars. The Marine Corps will continue to 
answer the Nation's call to arms, meet the needs of the Combatant 
Commanders and others who depend upon our service, and operate forward 
as a strategically mobile force optimized for forward-presence and 
crisis response. Your continued support is requested to provide a 
balance across all five of our readiness pillars, so we can maintain 
our institutional readiness and our ability to remain responsive . . . 
as your predecessors wisely charged more than 60 years ago, ``to be the 
most ready when the nation is least ready.''

    Senator Ayotte. Thank you, General Paxton.
    We'll now receive testimony from General Spencer, who is 
the Vice Chief of Staff for the United States Air Force.
    Thank you, General Spencer.

  STATEMENT OF GENERAL LARRY O. SPENCER, USAF, VICE CHIEF OF 
                 STAFF, UNITED STATES AIR FORCE

    General Spencer. Thank you, Madam Chair, Ranking Member 
Kaine, and Senator Rounds, and distinguished members of the 
subcommittee. Thank you for your continued support of America's 
airmen and their families, and for the opportunity to share the 
Air Force's current readiness posture.
    The United States Air Force is the most globally engaged 
air force on the planet, and our airmen are defending the 
Nation through a wide spectrum of activities, from dropping 
bombs and flying space assets to delivering humanitarian relief 
and protecting the homeland. We remain the best air force in 
the world. But, recent budget cuts, coupled with 24 years of 
combat operations, has taken its toll.
    Our airmen, your airmen, have always been, and will always 
be, the cornerstone of the Air Force. Combatant commanders tell 
us that our airmen continue to perform exceptionally well 
across the globe. However, we are the smallest and oldest air 
force we have ever been, while demand for air power continues 
to grow. This is not a complaint. We're happy that what we 
bring to the table is recognized as indispensable when it comes 
to meeting the Nation's objectives. But, I am concerned. In 
fact, I'm more concerned than I--today than I was when I 
testified last year.
    We have tankers that are, on average, 52 years old; bombers 
that are over 50 years old; and fourth-generation fighters that 
are, on average, 25 years old. In 1991, if we had used the B-17 
bomber to strike targets in Baghdad during the first Gulf War, 
it would have been younger than the B-52, the KC-135, and the 
U-2 are today. We have to modernize to maintain our 
technological advantage, and this is something that we've set 
aside, the last few years. Our potential adversaries have been 
watching us and now know what it takes to create the best air 
force in the world. They are investing in technologies and 
doing everything they can to reduce our current airpower 
advantage.
    Because we have the smallest and oldest air force in 
history, we need all of our airmen to be proficient in every 
aspect of their mission. Unfortunately, our high operations 
tempo has caused our airmen to only be proficient in the jobs 
they perform when they deploy. We simply do not have the time 
and the resources to train airmen across the full range of Air 
Force missions. I'm confident that, with your help, we can 
reverse this trend and regain our readiness. But, we will have 
to make some difficult choices to balance capacity, capability, 
and readiness, all of which have already been cut to the bone.
    Our fiscal year 2016 President's Budget submission aims to 
balance critical operational training and modernization 
commitments, but, even at this level, it will take years to 
recover lost readiness. We have already delayed major 
modernization efforts, cut manpower, and reduced training 
dollars.
    One final point. The capability gap that separates us from 
other air forces is narrowing. That gap will close even faster 
under BCA levels of funding. When sequestration first hit in 
2013, we saw the domino effect it had on our pilots, 
maintainers, weapons loaders, air traffic controllers, and our 
fighters and bomber squadrons. Readiness levels of those 
central to combat operations plummeted. In short, we were not 
fully ready. We cannot afford to let that happen again.
    To quote a young C-17 instructor pilot, ``I am committed to 
defending this Nation anytime and anyplace, but I need the 
training and equipment to be ready to perform at my best.'' 
This is critical to answering the Nation's call to fly, fight, 
and win.
    I'd like to thank you all for the opportunity to be here 
today, and for your continued support of your Air Force. I'm 
now happy to take your questions.
    Thank you.
    [The prepared statement of General Spencer follows:]
             Prepared Statement by General Larry O. Spencer
                              introduction
    The United States Air Force has never failed to meet any threat our 
Nation has faced and establish an environment that was beyond the 
capabilities of our enemies to resist. Our capabilities of range, 
speed, and agility give our Nation an indispensable and qualitative 
advantage that is unparalleled today and we must retain them going into 
the future. Whether it's opening an aerial port to deliver humanitarian 
aid, flying a single sortie from middle-America to the Korea peninsula 
and back to send a clear message, dropping a bomb, or dropping a 
Brigade Combat Team into the conflict zone--we can reach out and touch 
anyone, anytime, at any place, in a matter of hours, not days. Since 
1947, Americans have been able to sleep soundly knowing that in every 
corner of the globe, the United States Air Force is ready.
    Through technology, ingenuity, and unparalleled training and 
expertise the Air Force provides our Nation and allies more precise and 
effective options. But readiness requires the right number of Airmen, 
with the right equipment, trained to the right level, and with the 
right amount of support and resources, to accomplish what the Nation 
asks us to do. While Airmen have performed exceptionally well in major 
combat operations such as those in Iraq, and Afghanistan, these 
operations come at a price. Today, continual demand for airpower, 
coupled with dwindling and uncertain budgets, leave the force with 
insufficient time and resources to train Airmen across the full range 
of Air Force missions. Proficiency required for highly contested, non-
permissive environments has suffered, due to our necessary engagement 
in the current counterinsurgency fights.
    We recognize that there are no quick fixes. Even at the level of 
the President's Budget it will take the Air Force years to recover lost 
readiness. Our return to full-spectrum readiness must include the 
funding of critical programs such as flying hours, weapons system 
sustainment, and infrastructure, while also balancing deployment tempo, 
training, and exercises. We must also be technologically superior and 
agile enough to evolve ahead of the myriad of future potential threats.
    However, because of the current restrictive and uncertain fiscal 
environment we have been forced to make difficult choices within an 
incredibly complex security environment. Our current Service readiness 
and capacity are degraded to the point where our core capabilities are 
at risk. To correct this, the fiscal year 2016 President's Budget (FY16 
PB) preserves the minimum capability to sustain current warfighting 
efforts, and places the Air Force on a path toward balancing readiness 
with necessary modernization in order to meet evolving threats.
                  readiness today; readiness tomorrow
    The 2012 Defense Strategic Guidance (as updated by the 2014 
Quadrennial Defense Review) requires healthy and sustainable Air Force 
combat readiness, modernization and recapitalization programs. Since 
passage of the Budget Control Act, the Air Force has been forced to 
trade capacity in an attempt to preserve capability. We are now at the 
point where any further reduction in size equals a reduction in 
capability--the two are inextricably linked. Combatant commanders 
require Air Force support on a 24/7 basis, and the Air Force does not 
have excess capacity to trade away. If asked to accomplish multiple 
parts of the defense strategy, we will have to make difficult decisions 
on mission priorities and dilute coverage across the board. Unless we 
improve readiness levels, our full combat power will take longer to 
apply, will pull coverage from other areas, and will increase risk to 
our Joint and coalition forces.
    The FY16 PB is a step to alleviate some of that risk. It allows us 
to preserve our future readiness, including munitions inventories; 
protect our top three acquisitions programs; and protect investments 
such as the training aircraft system, cyber mission forces and the next 
generation of space systems. Our plan is to reduce risk in high-
priority areas by accelerating the modernization of aging fleets and 
improving our installations around the country. We are focused on 
capabilities, not platforms--preserving and enhancing the agility and 
flexibility of the Air Force.
Weapons System Sustainment
    Weapons system sustainment (WSS) is a key component of full-
spectrum readiness. Years of combat demands have taken a toll across 
many weapons systems. We continue to see an increase in the costs of 
WSS requirements. These costs are driven by factors such as the 
complexity of new systems, operations tempo, force structure changes, 
and growth in required depot-level maintenance on legacy aircraft.
    If sequestration-level funding returns, it will hamper our efforts 
to improve WSS. Depot delays will result in the grounding of some 
aircraft. It will mean idle production shops, a degradation of 
workforce proficiency and productivity, and corresponding future 
volatility and operational costs. Analysis shows it can take up to 
three years to recover full restoration of depot workforce productivity 
and proficiency. Historically, WSS funding requirements for combat-
ready forces increase at a rate double that of inflation planning 
factors. WSS costs still outpace inflationary growth, and in the 
current fiscal environment, our efforts to restore weapons systems to 
required levels will be a major challenge.
    The longer we fly our legacy aircraft, the more they will break and 
require increased preventative maintenance. We have tankers that are on 
average 52 years old, bombers that are over 50 years old, and fourth 
generation fighters that are an average of 25 years old. If we had kept 
WWII's B-17 bomber, and flown it in Operation Desert Storm 1991, it 
would have been younger than the B-52, the KC-135, and the U-2 are 
today. If we are not able to perform weapons system sustainment on our 
aircraft or modernize them so we can improve upon their speed, range, 
and survivability, we will lose our technological edge and superiority.
Flying Hours and Training
    Our flying hour program is essential to full-spectrum readiness. If 
sequestration is implemented, it will affect our ability to accomplish 
flying and training requirements and our ability to meet full-spectrum 
operations. Readiness is not just influenced by funding, but also 
ongoing operations. Time and resources used to conduct current 
operations limit opportunities to train across the full-spectrum of 
missions. For example, the operational and combat demands over the last 
decade have eroded our ability to train for missions involving anti-
access/area denial scenarios. To meet combatant commander requirements, 
we have had to increase our deployment lengths and decrease time 
between deployments, which affect our reconstitution and training 
cycles. Our high operations tempo has resulted in Airmen that are only 
proficient in the jobs they do when they deploy.
    To fix this problem and be able to meet an increasing demand for 
Air Force capabilities in future operations, we need the funding and 
the latitude to balance these rotational and expeditionary requirements 
with adequate full-spectrum training. The additional funding requested 
in the FY16 PB will help us recover flying hour-related readiness due 
to the fiscal year 2013 sequester and put us on a steady path toward 
full recovery.
Operational Training Infrastructure (OTI)
    Full-spectrum training for combat against a high-end adversary 
requires specific investment and emphasis on an integrated training and 
exercise capability. This includes the availability and sustainability 
of air-to-air and air-to-ground training ranges, fully augmented by, 
and integrated with, virtual training in simulators and with 
constructive models to represent a high-end adversary. This is what we 
call our Operational Training Infrastructure (OTI). Our ability to 
effectively expose our forces to a realistic, sufficiently dense, and 
advanced threat capability cannot be accomplished without our focus on 
OTI.
    OTI becomes critical when you consider that we must expand our 5th 
generation weapon systems. These systems are so advanced that 
challenging our operators in live training environments while 
protecting the capabilities and tactics of these systems is 
problematic. Our approach to OTI will address these training shortfalls 
while maximizing the value of every training dollar.
    In addition to investments in simulators as part of OTI, our ranges 
are used for large-scale joint and coalition exercises that are 
critical to training in realistic scenarios. We intend to sustain these 
critical national assets to elevate flying training effectiveness for 
the joint team and improve unit readiness. The same is true for our 
munitions. The FY16 PB includes funding to addresses the shortfalls in 
our critical munitions programs and to accelerate production and reduce 
unit cost.
Space Readiness
    Space-based capabilities and effects are vital to US warfighting 
and the Air Force remains committed to maintaining the advantages this 
domain provides. Potential adversaries are developing and fielding 
capabilities to deny us these advantages and are also fielding their 
own space capabilities to support their terrestrial warfighting 
operations. We now recognize that space can no longer be considered a 
sanctuary. In order to deter and defeat interference and attacks on US 
space systems we must improve space domain mission assurance 
capabilities against aggressive and comprehensive space control 
programs.
Nuclear Readiness
    The FY16 PB strengthens the nuclear enterprise, the number one 
mission priority of the Air Force. The Air Force's intercontinental 
ballistic missiles and heavy bombers provide two legs of the Nation's 
nuclear triad. The FY16 PB funds additional investments across the FYDP 
to sustain and modernize the ICBM force and funds 1,120 additional 
military and civilian billets across the nuclear enterprise as part of 
the Secretary of the Air Force-directed Force Improvement Program.
                               conclusion
    A ready, strong, and agile Air Force is a critical component of the 
best, most credible military in the world. Air Force capabilities are 
indispensable to deterrence, controlled escalation, and destruction of 
an adversary's military capability . . . as well as development, 
stability, and partnership-building. Today's Air Force provides America 
an indispensable hedge against the challenges of a dangerous and 
uncertain future, providing viable foreign policy options without 
requiring a large military commitment on foreign soil.
    Such a force does not happen by accident; it must be deliberately 
planned and consistently funded in order to be successful. Continued 
investments in Air Force capabilities and readiness are essential to 
ensuring that the Air Force maintains the range, speed, and agility the 
Nation expects. Regardless of the future security environment, the Air 
Force must retain--and maintain--its unique ability to provide America 
with Global Vigilance, Global Reach, and Global Power.

    Senator Ayotte. Thank you, General Spencer.
    In light of the fact that we've had President Ghani here, I 
wanted to, in particular, ask General Allyn and General Paxton 
about what is happening on the ground in Afghanistan. In--you 
know, in particular, I was pleased to hear the President's 
announcement this week that he has decided to leave 9,800 
troops in Afghanistan until the end of the year. However, it 
seems to me that, as we look forward, having spoken to General 
Campbell and others about the situation in Afghanistan, that, 
even after this year, the most prudent course forward would be 
a ground--a conditions-based determination of what we do with 
those 9,800 troops. So, could you speak to that issue for me, 
in terms of where we are in Afghanistan and the needs we will 
have, going forward? You know, and I think one of the things 
all of us took from the President's speech today is, we 
actually have a partner that we can work with. That is 
refreshing.
    So, General Allyn?
    General Allyn. Thank you, Madam Chair.
    I was fortunate to be in Afghanistan with General Campbell 
the first week of February, and I had an opportunity to deploy 
down to be with both of our divisions that are forward, 
providing mission command--one from Kandahar, at Regional 
Command South, Tactical Air Command South (TAC-South), and the 
other one in TAC-East, from the 3rd Infantry Division stationed 
at Bagram. What was very clear to me as they were posturing for 
the potential to have to draw down to the directed numbers by 
the end of the year was that we had increased the ratio of our 
soldiers to contractors to a level that was what I would call 
the ``razor's edge of risk.'' We had contractors doing that 
which soldiers need to do to assure the security of our forces. 
It was really driven by the force manning levels that General 
Campbell was posturing for to accomplish the mission.
    I also had an opportunity to meet with two of the senior 
commanders from the Afghan Security Forces that I had served 
with in 2011 to 2012 in Regional Command East, and I asked for 
their assessment of where they thought the Afghan Security 
Forces were and what gave them concern. They were, overall, 
very optimistic, very determined, and very confident that they 
could weather the battle against the Taliban if they had the 
critical enabling capability that they required from--you know, 
from the United States--and, in specific, some of the--closing 
the gap for them, in terms of their aviation and their close 
air support capability that is not yet fully developed, and to 
continue to mature their sustainment capacity. Both efforts are 
well underway by the joint team that is there on the ground in 
Bagram under General Campbell's leadership. I concur with you 
that the ground that we have been able to regain with the 
partnership between General Campbell and President Ghani is 
very, very inspiring, certainly to us, who have not had that 
experience in the last couple of years, but it's also very 
inspiring to the Afghan Security Forces. Because President 
Ghani has personally gone down to spend time with his forces 
and communicate his intent to enable them to fight and win. So, 
I think it bodes well as we look forward, ma'am.
    General Paxton. Yeah, thank you, Madam Chair. I, too, have 
had the opportunity on many occasions to be over in Afghanistan 
and, just several months ago, with our Marine Expeditionary 
Brigade (MEB) Alpha, who was down in Helmand Province before 
they pulled out. I'd echo what General Allyn said a moment ago, 
in that the conditions for success in Afghanistan have been 
set, both at the tactical level as well as at the strategic 
level. Making events on the ground and the commitment to 
continue there be more conditions-based than time-based is 
always a good thing. I feel good for General Campbell and our 
national leadership that, by making things condition-based, we 
have set ourselves on a path for success over there, and set 
the government as well as the Afghan National Security Force on 
the conditions for success.
    President Ghani committed as much to the Department of 
Defense and the Armed Forces when he was over at the Pentagon 
the other day. So, I think we're in a good trajectory now, 
ma'am.
    Senator Ayotte. Thank you both.
    I wanted to follow up with General Spencer and Admiral 
Howard on the issue of--we're engaged with, obviously, still 
the mission against ISIS, which has involved significant use of 
our fighters that, if we had met probably a year ago, we 
wouldn't have been talking about some of the additional use of 
our fighter force in regard to this fight that we face and 
challenge that we face there. Can you help update the--both of 
you update me on where--what are our challenges, in terms of 
having enough fighters, given that this is sort of a situation 
that we're, on the air, really helping the Kurds and the Iraqis 
on the ground fight the fight? You know, where do you see that, 
in terms of extra push on the force? As we do the 
authorization, what would you like us to think about that, just 
in terms of the current situation on the ground in Iraq and 
Syria?
    Admiral Howard. Thank you, Senator.
    So, as I mentioned in my opening statement, as we maintain 
carriers about--the George Herbert Walker Bush was there, and 
first the fighter size started to fly nontraditional 
Intelligence, Surveillance and Reconnaissance (ISR), but then 
quickly went into strike missions. As we stay committed in 
these endeavors, we will most likely maintain carrier presence 
over there. What we're finding is, we're flying the aircraft at 
a higher operational tempo. So, as we move forward and we 
continue staying engaged in support to the land components, we 
end up flying these aircraft much longer, longer distances, and 
then we end up consuming their readiness. We're seeing that 
play out as we try and extend the life of these fighters, 
particularly the legacy Hornets, from 6,000 hours to 10,000 
hours.
    Then, as we go through and we do maintenance on them, we're 
finding that the additional flight time has created 
deterioration problems that we just weren't expecting. So, as 
Senator Kaine pointed out, it would have been this morning's 
testimony, the more--the higher the OPTEMPO and the more we're 
engaged, the more we're flying, and then the more hours we put 
on these aircraft, and then the longer it is to return them 
back to a flyable status. So, we're clearly committed to the--
any--the support that we're tasked to provide, but it does 
consume readiness.
    Senator Ayotte. General Spencer?
    General Spencer. Yes. Madam Chair, first of all, I echo 
everything that Admiral Howard had--Admiral Howard said. I'd 
like to--but, let me add a couple of things to give you some 
context.
    Back during Desert Storm, in the Air Force, we had 133 
combat aircraft squadrons--133. We--during Desert Storm, we 
deployed 33 forward, so we had a lot of squadrons left to do 
something else if something came up in the world. Today, we 
have 54 fighter squadrons--54 total. So, I would ask you to 
think back, if we were in Desert Storm today and we deployed 33 
forward. So, that's problem number one.
    The other issue is--and that we've--I assume we'll get 
into, here--is readiness, because a lot of folks assume you 
deploy folks to war and they are as ready as they can get. But, 
that's not the case in a counter insurgency (COIN) fight, 
because they're getting a lot of training, flying and dropping 
smart munitions, but they don't have the sophisticated surface-
to-air threat that they would have in a more--in a higher-level 
fight. So, part of our challenge is, we are continually 
deploying folks to the current war. We don't keep them back 
home long enough to go out and train on these higher-level 
threats.
    The final challenge I would mention is, we are using up a 
lot of smart munitions, and--which are expensive--and the 
interesting thing about the OCO budget is, overseas contingency 
operations (OCO) allows us to replace smart munitions that have 
already been expended. It doesn't let us project ahead.
    Senator Ayotte. Really?
    General Spencer. So, we--we're always chasing ourselves, 
getting behind in the amount of munitions we have.
    So, to add a couple with Admiral Howard's comments, I 
couldn't agree with you more.
    Senator Ayotte. Thank you.
    I'd like to turn it over to Senator Kaine.
    Senator Kaine. Thank you, Madam Chair.
    Thanks, to the witnesses, for your testimony.
    General Allyn, you said something--I tried to write it down 
fast, and I'm having a hard time reading my handwriting, during 
your testimony, but I think it was, ``We have enough readiness 
for immediate consumption, but not enough for a contingency.'' 
Is that basically the thought you were expressing?
    General Allyn. Yes, it is, Senator Kaine. We--for the past, 
you know, in--about 6 months after sequestration, our readiness 
had degraded to about 10 percent of our brigades being ready 
for a global contingency. The next 18 months, we rebuilt that 
to just above 30 percent. But, we have been holding steady at 
30 percent now for about 4 months, because, as fast as we 
generate the readiness, it's being consumed.
    As an example, when the ebola crisis hit----
    Senator Kaine. Yeah.
    General Allyn.--you know, within days, we deployed the 
101st Airborne Division, that was a force training and ready to 
go to Afghanistan, to divert in and provide essential support 
to the U.S. Agency for International Development (USAID) to 
fight and abate the Ebola crisis. We also deployed a Brigade 
Combat Team of the 82nd Airborne Division into Iraq to provide 
the plus-up and advise-and-assist capability that was required 
in Iraq. Their readiness was, you know, absolutely at the top, 
because they had just handed off the Global Response Force 
mission to the 2nd Brigade of the 82nd. We had sort of counted 
on that brigade coming off to provide some surge capacity for a 
number of months, but, instead, you know, a requirement 
emerged, and we met it, just as we always will.
    So, as we've been, you know, being good stewards of the 
resources you are giving us to generate readiness, we are also 
responding to emergent requirements.
    Senator Kaine. Right.
    General Allyn. In 2014, about 87 percent of the emergent 
requirements, we met as an Army, as we will continue to do, but 
it does speak to the--really, the twofold challenge of building 
readiness. You know, we can generate additional readiness, but 
we can't control the demand.
    Senator Kaine. Right. Right. Is that just basic, kind of, 
phraseology, ``We have readiness for immediate consumption, but 
not for a contingency"? Would that be kind of a fair statement 
that all of you from your respective branches would agree with?
    Admiral Howard. So, in particular for the Navy, we look at 
the readiness of the units that we deploy and then the forward-
deployed units, and then we've always kept a level of readiness 
for the units in order to surge, those that respond to a 
contingency, just as General Allyn described. Right now we're 
at our lowest surge capacity that we've been at in years, and--
so, we're able to have two carriers out and about, but we've 
only got one in backup. The same with the amphibious ready 
group (ARG). We've got two out and about and one in backup.
    Our goal is to--with this budget, to get us back and 
increase that readiness and meet our own goals of two--having 
two carriers deployed and three ready to surge, approximately 
half the force.
    So, yes, as time has gone on, we have literally consumed 
the readiness, and then the readiness of the forces that are 
next in the wicket.
    Senator Kaine. Great, thank you.
    General Paxton?
    General Paxton. Thank you, Senator Kaine.
    I guess the short answer is, absolutely, we generate 
readiness, but we consume it as fast as we generate it. We, as 
a Corps, are focused primarily on crisis response. As we do 
that, we are mortgaging our future for sustainment and for 
modernization, and we're also reducing the at-home or home-
station training and availability of units.
    I can give you two examples, if I may, Senator. One is in 
the Africa Command (AFRICOM) area, and one is in the Central 
Command area. In both of those geographic combatant commanders 
today, we have a Special Purpose Marine Air-Ground Task Force. 
We would like to say that is kind of like a MEU, a Marine 
Expeditionary Unit. It is not as sustainable and expeditionary 
ashore, and it certainly doesn't have the power projection and 
sovereign capability that we would like to have coming off of 
an amphibious platform, a ship. But, we generated those two 
capabilities in immediate response to combatant commander 
requests. In the case of AFRICOM, it was to help with some 
security-force arrangements at some embassies, to work some 
train, advise, and assist missions and develop partnership 
capacity. Then, in the Central Command area of responsibility 
(AOR), it was because of specific risks at two embassies, and 
then also to start working on train, advise, and assist 
missions with the Iraqi Security Forces.
    But, in both of those cases, that has now consumed what 
would have been home-station readiness, because it's now 
forward deployed. It has brought us closer to a one-to-two 
depth-to-dwell, which creates stress on the force. It further 
exacerbates the age and the maintenance of our equipment. 
Despite the good work of my shipmate and where the Navy's 
trying to go with capital investment, it highlights the fact 
that we already have a paucity of amphibious ships by 
inventory, and that's also exacerbated by the fact that they 
have maintenance challenges keeping them in the yard. So, we 
can't generate enough sovereign launch-and-recovery capability 
for the Nation that we have to do these things with a smaller 
unit and go what we call ``feet dry'' ashore. So, we consume it 
as soon as we generate it, yes, sir.
    Senator Kaine. General Spencer?
    General Spencer. Yes, sir. The--first of all, a similar 
story from--for the Air Force. The combat air forces that we 
have right now, less than 50 percent are fully spectrum ready--
less than 50 percent. Let me give you a couple of examples, 
because, again, we're--right now we're just talking about 
combat air forces. We haven't talked about nuclear, we haven't 
talked about ISR, we haven't talked about space. But, let's 
talk about ISR for a second.
    I mean, right now we have been in a position of surge in 
our ISR caps since 2007. That does not define a surge. So, we 
are essentially----
    Senator Kaine. Because nobody ever asks for less ISR.
    General Spencer. That's exactly right.
    Senator Kaine. It just continue--it continues to----
    General Spencer. It continues----
    Senator Kaine. Yeah.
    General Spencer.--it has exploded--the demand has exploded. 
So, we have been staffed, if you will, for 55 cap since 2007, 
flying 65. We've--we surged, that entire time. So, we have 
essentially at our wits' end at the--where we are now, because 
we've got--remotely piloted aircraft (RPA) pilots are that we 
have just worked to the point where we are worried that we--
whether we can retain them, or not, and whether they will stay.
    Now--so, when we first started ISR, as you know, we did a 
combination of things. We brought in pilots from other 
airplanes, other weapon systems, brought them in, taught them 
how to fly RPAs, and we also created a schoolhouse to train new 
RPA pilots.
    We've now reached the point where the new RPA pilots are 
coming up to the point where they can separate. We have asked 
them all, in a survey, ``Are you going to take the bonus and 
stay?'' Roughly 30 percent say they'll stay. We've already 
reached a point where our pilots can go back and fly other 
weapon systems, and we're telling them they can't go back. So, 
we're asking for volunteers to come back in, we're increasing 
their bonuses. We're asking for Guard, you know, to volunteer. 
We're--we have a series of things we're doing to try to make 
that enterprise healthier, but it's just an indication of what 
the current Ops Tempo has done. I can't--I want to footstop 
that, because General Paxton mentioned it. The Ops Tempo that 
we're under now has now allowed us to bring the--where we are 
down low enough so we can----
    Senator Kaine. Yeah.
    General Spencer.--train and get ready to go again.
    Senator Kaine. Right. Well, I'm over time, but just to say, 
you know, if we have, essentially, a force that's ready for 
immediate consumption, but we don't really have the contingency 
ability, you've just got to look at the world and say, ``So, 
are we in a world without contingencies, or are we in a world 
that is likely to throw some contingencies?'' The answer to 
that is just as plain as everyday's front page. We are in a 
contingency-rich world right now.
    So, thank you, Madam Chair.
    Senator Ayotte. Senator Rounds.
    Senator Rounds. Thank you, Madam Chair.
    Thank you for your service.
    Admiral Howard, a week ago today we had a group of South 
Dakotans in for a meet-and-greet. One of the guys was about my 
age, brought in and was very proud of the fact that in his 
wallet he was carrying a picture that his son had taken at his 
first solo flight in an F/A-18. In doing so, we could see the 
pride. But, he said something that was concerning to me, and 
that was that it was just unfortunate that it was taking 
approximately 18 months for them to reach a certain level of 
readiness, where, if they would have had the parts to keep the 
aircraft in the air, it would have taken normally about 12 
months. It seems to me that, if that anecdotal information 
being shared is accurate, that you're going to have a tough 
time coming up with the pilots, in a regular order of 
operation, just to replace and keep up with the readiness 
necessary for the folks that are working right now in combat 
areas.
    Could you visit a little bit about--number one, is my 
estimate--or is my information accurate, in terms of the 
challenges you've got right now with keeping aircraft in the 
air and operational? Second of all, with OCO funding the way 
that it's set up right now--and I'm going to ask this of all of 
the members here--is there something that we can do, with 
regards to the limitations that we've got, to where we can 
modify OCO somehow so that you can access funds that might 
otherwise be there, but not available for what your immediate 
needs are?
    Admiral Howard. Thank you, Senator.
    Perhaps a slightly different perspective. This gets down to 
that 2013, when we sequestered, we furloughed some of our 
artisans and engineers, and then we created a backlog in our 
aviation depots. So, when we're looking at the throughput of 
those aviation depots, coupled with the aging aircraft, and 
then as we open up those older F/A-18s and discover that, by 
flying them longer, there's more corrosion, that backlog just 
increased. So, we already had the--have and are living with the 
impact of that short period of sequester. We now are in the 
timeframe where we are hiring the artisans as quickly as we 
can, several hundred this year, to help get us to being able to 
assess those aircraft quickly and then repair them as quickly 
as we can.
    This is where OCO has been very helpful. So, we have our 
fundamental aviation maintenance account, and then we've 
plussed-up that maintenance account to help get that throughput 
up to where it needs to be, and to decrease that backlog.
    So, for us, right now the limitations for the depot is not 
the money. The limitation is literally getting the people hired 
and in place; for the people who are new, getting them trained. 
But, there's also another piece to it. I think there's a trust 
factor there, that, when we want to bring people--proud 
civilians in to do all the support for our aircraft, or whether 
it's ships, they have to trust that the work's going to be 
there, that they can live their lives, pay their mortgages, and 
not worry about being furloughed, so that they want to have a 
job with the government.
    So, we know we have a backlog, and we expect to be able to 
clear that up in 18 months. But, all bets will be off if we 
sequester again. Then, you're right, then it gets down to, not 
just, ``Do we have the aircraft for our pilots to train in?"--
but, when we sequestered last time, I was the Deputy Commander 
of Fleet, and I had the very unhappy job of going down and 
talking to a cruiser community officer (CO) and his chiefs and 
his crew, because we weren't going to be able to get that ship 
underway. We talked about what it meant for their 
qualifications, what it meant for the--their ability to serve 
at sea. If people can't do their jobs, it's an immense 
dissatisfier.
    Thank you.
    General Allyn. Senator Rounds, in terms of the OCO 
flexibility that's required, clearly OCO has been critical for 
us to meet the readiness and the equipment recovery, 
replenishment for our forces that have been deployed in support 
of the countless operational requirements, both emerging and 
known. We've been thankful for that funding. But, as you talk 
about a wider application of OCO in the future, it needs to be 
more flexible. It must be more flexible. Because, otherwise, we 
cannot use it for all the readiness requirements that we have, 
and certainly the year-to-year application of it----
    Senator Rounds. Sir, if I could, would you get us a list of 
what you need the flexibility on that we may be able to look 
at, in terms of OCO funding available?
    General Allyn. Yes, sir, we will.
    [The information referred to follows:]

    General Allyn. The Army, like each of the other services, needs the 
fiscal flexibility to address the uncertainty of funding we are dealing 
with, in a world were instability is creating increased overseas 
requirements. What we really need is sufficient base funding, but where 
feasible, we need broader discretion on the use of already appropriated 
Overseas Contingency Operations (OCO) funds in order to maintain the 
readiness of our formations and to respond to new missions. An example 
is what has occurred in Europe due to the Russian annexation of Crimea. 
This created a demand for the Army to defer sending an active component 
Brigade Combat Team to Kosovo, and instead, we sent it to Eastern 
Europe to deter and assure. To backfill that brigade, which was 
responding to a named operation, we mobilized a National Guard unit to 
go to Kosovo. Current OCO rules do not allow us to use OCO to pay the 
mobilization costs of the National Guard unit, instead we used base 
funding and had to reduce the readiness of other units to pay for those 
costs. Allowing for more flexible use of OCO, for direct and indirect 
impacts to named operations that may not occur in the geographic area 
of the named operation, would greatly improve our readiness.
    Admiral Howard. I have nothing further to add to my response.
    General Spencer. Senator Rounds' question was directed to General 
Allyn, not General Spencer.
    General Paxton. The largest issue concerning flexibility in OCO 
funding is timing. The Marine Corps begins to plan its requirements for 
the OCO budget approximately 18 months before the funding would likely 
be made available. Even with our best forecasting, requirements will 
change during the year of execution, requiring transfers between 
accounts, many of which require Congressional approval.
    Additionally, the planning process for long-term modernization, 
sustainment and upgrade programs requires a lengthy, multi-year 
timeline. Since the OCO budget is developed outside the normal 
Planning, Programming, Budgeting and Execution process, it is difficult 
to use on critical shortfall procurement items in the current year.

    Senator Rounds. Thank you.
    General Paxton. Yeah, thank you, Senator Rounds.
    If I may, two things. Number one, to follow up on Vice 
Chief of Naval Operations' (CNO) comments, when we have a 
challenge with our maintenance and the dollars for 
maintenance--and you used F-18s as an example. We call it RBA, 
Ready Basic Aircraft. Those are the ones that are through the 
upgrades, modernization, and they're ready on the flight line 
to take off. When those aircraft are delayed, either because we 
don't have money for parts, money for engineers, or money to 
actually move the aircraft to the depot, we still have pilots 
who are waiting to fly. So, now we have more pilots than we 
have aircraft. Sometimes, if we have a higher demand signal, 
those pilots may actually go forward. So, the time they have 
available to train to them when they get back is shorter. So, 
you can see the downward spiral that happens, because then you 
have more pilots with a shorter-term time, with less aircraft 
to train on, and then you get in this training readiness spiral 
that goes down.
    If you exacerbate that by the fact that some of those 
flight requirements actually have to come from the deck of the 
ship that you need bounces on carrier calls or that you need 
night vision goggle ops, the minute you perturb the 
availability of a ship or an aircraft, the spiral starts, and 
it's really hard to regain.
    To your second question, on OCO dollars, always helpful. 
We'll all work together to get you examples of how that would 
help. But, I'd just like to be on the record, sir, that the OCO 
dollars are insufficient to the problem we have right now. I 
mean, they are single-year dollars. It's a short planning 
horizon. It's actually the BCA caps and it's the ability to 
forecast across the Future Years Defense Program (FYDP) to 
start long-term modernization programs and sustainment and 
upgrade programs that will eventually allow us to not only 
handle the crisis, but to handle the contingency we need 
because we have enough readiness at home station.
    Thank you, sir.
    General Spencer. Senator, in terms of OCO specifically, 
flexibilities of where you may--might be able to help, I 
already mentioned one. So, there are certain things, like 
munitions, that are after-the-fact. So, we put, in our OCO 
submission, munitions that we used last year, but we can't put 
in OCO submission what we plan to use this year. So, again, 
we're always a year behind.
    Timing is really critical, because if the OCO budget comes 
late in the year, that does a lot of things to us. One, we are 
trying to plan, hoping on the come, not exactly sure what we'll 
get passed. There is actually a law that says you have to 
obligate 80 percent of our own end money by July. So, if the 
money comes late, we've got a problem there that we have to 
work through.
    We're all afraid to death one of these days, if OCO goes 
away, and a lot of the things that are being funded in OCO, 
quite frankly, will end up in our base. How is that going to 
work? You know, in the Air Force, for example, we have several 
bases in the theater right now that we've been told are going 
to be, quote/unquote, ``enduring,'' which means we'll probably 
hang onto those bases. They're being funded by OCO. What 
happens when OCO goes away? How do we get that money into the 
base?
    Finally, as General Paxton mentioned, planning is a really 
big deal, because--particularly in a procurement account. So, 
if we're going to buy a weapon system, if we're going to pay 
for F-35s or do a multiyear for C-130s, it--that's really 
difficult to do if you're trying to do that one year at a time, 
because you don't know what's going to come in the next few 
years. So, to the extent that those type of purchases can--you 
know, I've been told that there's a--there is--that we have had 
a multiyear OCO in the past, or a supplemental. I don't know if 
that's under consideration. But, the real answer for us is if 
we can get that money in the base, that would really be 
helpful.
    Senator Rounds. Thank you, Madam Chair.
    Senator Ayotte. Thank you.
    It would be really helpful to us, especially those of us 
that serve jointly on the Budget and Armed Services Committee, 
if all of you could submit to us what you think, in terms of 
flexibility for OCO, because we don't know how this story ends, 
this year, and just--you know, you're, I'm sure, aware of 
things that happen on the floor on the budget and all that. It 
would be helpful for us to understand that. If the plus-up ends 
up being in the OCO line versus the base budget, what do you 
really need, to do what needs to be done? I know it's not 
ideal. Frankly, there are many of us that want to deal with the 
overall BCA in solving it. I'm still committed to doing that. 
But, you know, we've got to do what we've got to do around 
here. So, just--if you can get that to us, it would be 
helpful--all of the branches--to understand what you really 
need.
    [The information referred to follows:]

    General Allyn. Receiving OCO funding instead of base funding for 
fiscal year 2016 would allow the Army to conduct its missions and 
achieve readiness targets provided that appropriation language and OMB 
interpretation fully allowed OCO dollars to be spent on base 
requirements. However, in the long term, using OCO to circumvent Budget 
Control Act caps would put Army readiness at risk, because steady, 
predictable base funding is the key to long term, enduring readiness.
    Admiral Howard. What we really need is what we have included in the 
fiscal year 2016 Navy budget submission. As we look to the future, the 
Navy will continue to be globally deployed to provide a credible and 
survivable strategic deterrent and to support the mission requirements 
of the regional Combatant Commanders. Global operations continue to 
assume an increasingly maritime focus, and our Navy will sustain its 
forward presence, warfighting focus, and readiness preparations. We see 
no future reduction to these requirements. The fiscal year 2016 Navy 
budget submission addresses the challenges to achieving the necessary 
readiness to execute our missions.
    Overseas Contingency Operations funding is meant to fund 
incremental costs of overseas conflicts such as in Afghanistan and 
Iraq. OCO does not provide a stable, multi-year budget horizon. Our 
defense industry partners need stability and long term plans--not 
short-term fixes--to be efficient and cutting-edge. OCO is dispiriting 
to our force. Our personnel, active, reserve and civilian and their 
families deserve to know their future more than just one year at a 
time.
    The Navy appreciates Congress' continued action to explore 
alternative paths that do not lock in sequestration. Any funding below 
our Navy budget submission requires a revision of America's defense 
strategy. Sequestration would outright damage the national security of 
this country.
    General Spencer. Question. It would be really helpful to us, 
especially those of us that serve jointly on the Budget and Armed 
Services Committee, if all of you could submit to us what you think, in 
terms of flexibility for OCO, because we don't know how this story 
ends, this year, and just--you know, you're, I'm sure, aware of things 
that happen on the floor on the budget and all that. It would be 
helpful for us to understand that. If the plus-up ends up being in the 
OCO line versus the base budget, what do you really need, to do what 
needs to be done? I know it's not ideal. Frankly, there are many of us 
that want to deal with the overall BCA in solving it. I'm still 
committed to doing that. But, you know, we've got to do what we've got 
to do around here. So, just--if you can get that to us, it would be 
helpful--all of the branches--to understand what you really need.
    Answer. The fiscal year 2016 President's Budget supports our 
critical needs to execute the defense strategy, but we made tough 
choices in capacity and capability / modernization. The Air Force does 
not support any reductions to the President's Budget and the short term 
solution of using OCO does not address the long term budgeting 
challenges created by the Budget Control Act (BCA). Further, this short 
term solution does not provide the necessary BCA relief for the other 
Federal Agencies that the Air Force works with such as Homeland 
Security and Department of Energy. Without relief for the other Federal 
Agencies, our partner missions will be at risk. Most importantly, this 
solution does not move us towards a more stable budget environment that 
is critical to long term strategic planning to meet the Defense 
Strategic Guidance and protect the Homeland.
    General Paxton. The largest issue concerning flexibility in OCO 
funding is timing. The Marine Corps begins to plan its requirements for 
the OCO budget approximately 18 months before the funding would likely 
be made available. Even with our best forecasting, requirements will 
change during the year of execution, requiring transfers between 
accounts, many of which require Congressional approval.
    Additionally, the planning process for long-term modernization, 
sustainment and upgrade programs requires a lengthy, multi-year 
timeline. Since the OCO budget is developed outside the normal 
Planning, Programming, Budgeting and Execution process, it is difficult 
to use on critical shortfall procurement items in the current year.

    Senator Ayotte. I wanted to ask, General Allyn, can you 
give us an update on end strength and where we are, in terms of 
numbers, on end strength? How many people have we had to use 
involuntary terminations for in 2014? What's been the status of 
those individuals? You know, are they--are there people that we 
have in combat that we're giving involuntary terminations to? 
Then, you know, one thing I think that's fairly powerful as we 
look at--if we go to sequester, where does that put our end 
strength? I know we've talked about it in the larger committee. 
But, also, what does that mean, in terms of involuntary 
terminations?
    I really want people to understand. I think this committee 
understands very well. In some ways, when we talk about 
sequester, when you talk to the Armed Services Committee, a 
little bit like preaching to the choir, but we want to get this 
word out also to the broader Senate. So, if you could comment 
on the involuntary termination issue, end-strength numbers. I 
would also then ask General Paxton to follow up the same with 
the Marine Corps.
    General Allyn. Yes, Madam Chair. The bottom line is, we are 
at about 498,000 today in the United States Army, headed toward 
a end-of-fiscal-year number of 490,000 and budgeted in the, 
Program Objective Memorandum (POM) to go down to 450,000. To 
give you the broader answer first, to get to 450,000 soldiers, 
as has been directed by our current budget, that will require 
the involuntary separation of 14,000 soldiers. On average--
that's officers and noncommissioned officers--on average, it's 
about 2,000 per year. Okay? So, fiscal year 2014 was about 
2,100 soldiers. Just over 50 percent of those soldiers served 
over two or more combat tours. So, these are soldiers that 
answered the call multiple times to meet the requirements that 
the Nation had. They were----
    Senator Ayotte. Two or more combat tours.
    General Allyn. Two or more combat tours for 50 percent of 
that--those that we were asking to leave involuntarily. Now, 
first and foremost, this is not a choice the United States Army 
took. This is a budget-driven requirement. So----
    Senator Ayotte. I assume that, if you've done two tours, 
you're not terminating these people because they aren't capable 
of fighting.
    General Allyn. You are absolutely accurate. You asked a 
question, were we really having to separate some soldiers that 
were forward deployed? The answer is yes.
    Let me first let you understand that treating those 
veterans of multiple combat tours with dignity and respect is 
our absolute number-one commitment. Every single officer or 
noncommissioned officer that we asked to involuntarily separate 
was briefed, before the board was held, by a general officer--
first general officer in the chain of command, and then, when 
the board completed its process and identified those for 
separation, they were briefed again, face to face, as much as 
possible. In a couple of cases, they had to have the general 
officer contact by phone or video teleconference (VTC) with the 
immediate commander present to ensure that we treated these, 
you know, people who had served so courageously with the 
absolute utmost dignity and respect.
    Our objective in notifying people that were forward 
deployed was to give them the maximum time possible to 
transition effectively to the next phase of their life. The 
minimum that we wanted to provide them was 10 months, at least, 
so that they would have an opportunity to take the benefit of 
all of the transition, education, plug them into employment 
advisors through programs like our Soldier for Life Initiative, 
and ensure that we set them up for success, to include 
providing opportunities for mentors from industries around 
their communities that they intend to go back to.
    So, not a choice that we took willingly or voluntarily, but 
we have taken it on, we have ensured the appropriate care of 
every one of our soldiers, and are committed to do so as we go 
forward.
    Senator Ayotte. General Paxton?
    General Paxton. Yeah, thank you, Senator Ayotte.
    Your Marine Corps today is 184,000. We had grown to 202,000 
by some special appropriations and authorizations. That was 
temporary. We knew we were not going to be able to sustain 
that. So, we had started our downward growth, if you will, 
before BCA kicked in.
    Under BCA, we have to be at 182,000 by the end of fiscal 
year 2017. We expect, if full BCA continues, we could very well 
have to go to 175,000.
    To date, we have deliberately not broken faith with 
marines. Almost all of our separations have been voluntary. We 
have had low double digits of majors who were not selected to 
lieutenant colonel, and staff sergeants who were not selected 
to gunnery sergeant, who we did not continue. But, they were 
afforded other venues for separation at that time.
    We do have a concern that if the BCA caps come back and we 
have to go to 175,000, that at some point we could be forced to 
do larger numbers of involuntary termination.
    Senator Ayotte. I don't know if--you know, Admiral Howard, 
I'm not trying to exclude the Navy and the Air Force on this. 
Anything you want to report on this end?
    General Spencer. I would only add that we've--we were on a 
steady decline in manpower, and finally have--we've drawn a red 
line at around 317,000 for active duty, because we just can't 
go any lower. Based on our--the levels of maintenance folks we 
have on our flight lines, fixing our airplanes, launching 
satellites, we've sort drawn a red line and said we can't go 
any further.
    Admiral Howard. So, along with General Spencer, I think the 
Navy and Air Force were on a different journey these last 15 
years. I recall, in December of 2000, when I reported to the 
Joint Staff and then 9/11 happened the following year, 
literally I--we were a Navy of about 14 carriers, 383,000 
people, and I think it was close to 312 ships. We're--we've 
downsized about 67,000 people, and we're about 279 ships today
    The budget we've submitted continues to acquire ships, 
build ships, and we would be looking at being back to 304 ships 
in 2020. But, because we're a capital-intensive force, our 
manning is matched to those ships. So, we would expect to be at 
329,000, and about 57,000 Reserve. But, we took--we reduced our 
force over the last 14 years. So, along with the Air Force, 
we're not trying to get any smaller.
    Senator Ayotte. Thank you.
    Senator Kaine?
    Senator Kaine. On the issue of OCO and flexibility, I'm 
maybe a little bit like a former Governor. We're all into 
flexibility. I like giving folks flexibility.
    But, I would guess that, as long as we're talking about 
readiness, even putting flexibility doesn't necessarily--I 
think, General, you said, it's the caps, not the flexibility. 
Flexibility would be helpful. But, won't there always be a 
tendency, if you have to choose between priorities, to kind of 
short readiness? I mean, you're always going to--you're always 
going to do the day's mission and try to have people as well 
deployed as you can for doing a deployed mission. If you don't 
have enough to choose from, you'll always pick that, and 
probably try to save on the readiness side. It seems like 
that's one of the challenges. So, even if you allow for 
flexibility, it would seem that readiness is always going to be 
somewhat at risk in a capped environment when there aren't 
sufficient resources, ``Well, we can't--we don't want to short 
the folks who are forward deployed during these missions, so 
we'll probably--you know, if we have to save it somewhere, 
we're going to save on the readiness side.''
    So, flexibility, I don't view that as the real solution. I 
mean, it could be helpful, but it's not really going to solve 
the readiness challenge we have, in my view. Am I wrong to look 
at it that way?
    General Paxton. Senator, if I may, I'll start, only because 
we've just had this discussion this morning in the building. 
Although there are some common terminologies and lexicon, each 
of the services has to look----
    Senator Kaine. Yeah.
    General Paxton.--at this in a little different way.
    So, on the part of the Marine Corps, we truly envision 
ourselves as the 9-1-1 force that you--that the American 
public, the American Congress, the taxpayer, they expect us to 
be most ready when everybody else is least ready. We don't have 
a big role or mission in the nuclear triad and things like 
that. We're a rather conventional force, we're a rather small-
unit force, and we're supposed to be forward deployed, forward 
engaged. So, we fully expect that we're going to generate 
readiness and consume readiness, and, at some point, we will 
take risk in some modernization and we'll take risk in some 
home-station readiness. We think we're at that ragged edge 
right now.
    For example, our aircraft are old, too, anywhere from 22 to 
29 years, and growing. Our amphibious vehicle capability is 42 
years old. So, we're at the point, as General Spencer said 
earlier, that we have to modernize. We, early on, after 
Operation Iraqi Freedom (OIF) and Operation Enduring Freedom 
(OEF), went into this bathtub, and we had to go all in to 
modernize, because the gear was too old.
    So, we feel at risk now for modernization and sustainment. 
But, we're going to continue to give you fight-tonight forces, 
ready forces for the crisis that's at hand, even if we know, 
later on, we may eventually get to the point of, ``Yes, but,'' 
that we'll give you several companies, but not a whole 
battalion, we'll give you a squadron with 8 aircraft instead of 
12 aircraft.
    But, each of the other services, at some point, looks at it 
just a little differently. So, that's where the Marine Corps 
is, sir.
    General Spencer. Yes, Senator. You put your finger on 
really what our challenge is, quite frankly, because you said, 
in most cases, we would go to readiness if we had a budget 
issue, a budget concern. The reason we do that is because we 
don't have a lot of choice. We've only got three pots of money. 
We have people, procurement, and readiness. People, you can't 
just send people home. I mean, you know, you--even if--people--
actually, our military folks were exempt from sequestration, 
but, even if they weren't, that's a long process to reduce. 
Quite frankly, we can't reduce any more. Similarly with 
procurement, those are multiyear purchases that are stretched 
out over many years, involve a lot of money. If you start 
cutting those, your unit cost goes up.
    Senator Kaine. Yeah, you can slow down the next one, but 
you can't----
    General Spencer. That's----
    Senator Kaine.--break the one that you're----
    General Spencer. That's exactly right.
    Senator Kaine.--in the middle of. Right.
    General Spencer. So, then--so, a lot of times, we don't 
have any choice, if we have to find fast money, but to go to 
readiness, because it's essentially Operations and Maintenance 
(O&M) money. But, that's the dilemma, because we--that's where 
our readiness is. So, that's the box we're put in.
    Senator Kaine. Yeah.
    General Spencer. We don't want to do that. We're--all the 
services are obviously a little bit different, but, at least in 
the Air Force's case, as you know, you know, if we get called 
upon, I mean, we've got to be there in hours, not days, weeks, 
or months. So, it's--we have to--readiness is critical for us, 
yet readiness is the only account we can go reach out and take 
money quickly. So, that's the sort of dichotomy we're in.
    Senator Kaine. Indeed.
    Other comments? General Allyn, Admiral Howard?
    General Allyn. I was just going to just reinforce my 
teammates' points, here. But, it really does come down to 
trying to balance concurrent priorities. As has been stated, 
the Army's budget, over 50 percent of it is committed to our 
national treasure, our people, you know, both the military and 
civilian. So, we've got 50 percent of the budget with which we 
wrestle with the dual priorities of readiness and 
modernization. We, in the Army, have actually erred on the side 
of delivering the readiness that's required for the known and 
emerging missions, and taking risk in the mid- to long-term 
with modernization. But, that is a--that's a hard choice, and 
it's a choice that our Chief and our Secretary take, fully 
analyzing, you know, the opportunity costs of doing that.
    It's just a very, very difficult position to be in, and 
one--with the capacity that this Nation has, we shouldn't be in 
that position.
    Senator Kaine. Yeah.
    General Allyn. You know, our soldiers should expect that, 
when they go up against an adversary, that adversary faces an 
unfair fight whenever they come up against the United States of 
America. We are putting that at risk.
    Senator Kaine. Admiral Howard?
    Admiral Howard. Senator, thank you. I just wanted to share 
that, when I was at fleet, when we sequestered last time, as 
General Spencer pointed out, that was the only intermediate 
choices we had.
    Senator Kaine. Yeah.
    Admiral Howard. When you talk about readiness, we had to 
cancel deployments of ships. Now you're not where you need to 
be, and you're not giving the COCOM any forces, let alone ready 
forces.
    Then we had to reduce steaming hours and flying hours, 
which is the training of the piece Senator Rounds brought up. 
We had to take some of the air wings down to tactical hard deck 
to generate the savings to hit that lower target budget--budget 
target. So, there is, in the immediate aftermath of 
sequestration, an impact on the forces and--in the Operations 
and Maintenance (O&M) account and in operations and in training 
dollars.
    Thank you.
    Senator Kaine. Last--just a comment. You had--you mentioned 
the COCOM, and that reminded me of one other thought. We have 
the hearings with the COCOMs, you know, the status hearings, 
during the spring. One of the things I'm really always 
impressed by, and most recently a conversation with General 
Kelly at SOUTHCOM, is the degree to which the COCOMs really 
approach their mission with kind of a whole-of-government 
approach. They're relying on the intelligence community, 
they're relying on the State Department, they're relying on 
Department of Justice, they're relying on the Department of 
Homeland Security (DHS)--especially in the SOUTHCOM, that's 
really important. All these agencies are affected by sequester, 
too, the partners that our COCOMs rely on. They may not be--you 
know, it may not be defense sequester, but they're sequestered 
on the nondefense side, and they have a direct impact on the 
security mission. So, again, there's a lot of compounding 
effects here, and your testimony is good tribute to that.
    Thank you, Madam Chair.
    Senator Ayotte. Senator Rounds.
    Senator Rounds. Thank you, Madam Chair.
    I think it's becoming obvious in the discussion that, as 
you listen to us, we talk about trying to make it--we're trying 
to set it up so that there is a way to skin this cat that's out 
there right now with BCA basically there and in front of us. 
Part of it is to give you as many options as possible in order 
to be able to utilize the funds that we are able to allocate, 
either through the budget and then through the appropriations 
process. I want to make sure that, if we do take a particular 
approach, that it is as readily available to you as possible 
without other strings attached to it. So, you know, we're not 
exactly sure how we skin this cat that's in front of us, but we 
want your help in doing so, and that's the reason for the 
discussion.
    I just wanted to go directly to General Spencer with 
something that you said earlier that I think is just so 
impactful, and that is that, if we would have been going to war 
in 1991, we would have been in the same position as we are 
today with the age of our aircraft; we'd be flying B-17s. You 
know, in fact, if my information is correct, the Department of 
Defense (DOD) currently operates a bomber force that is half 
the size of the Cold War force recommended by its 1993 bottom-
up review.
    Now, if it's true that advances in sensor technologies and 
precision-guided weapons have helped to offset cuts driven by 
budget reductions, but--in other words, they have the effect, 
though, of acting as a force multiplier--but, that being said, 
reduced readiness levels--and that's what we've been talking 
about here, are the readiness levels--the readiness levels have 
an opposite effect.
    I'd just like to talk a little bit, and I want to give you 
an opportunity to visit a little bit, about the--what happens 
with the--has the combination of reduced readiness and smaller 
force size eroded our global strike advantage? Right now we're 
talking about aircraft that are very, very old, and you've got 
an F-35 that's available right now that you're still trying to 
procure, you've got a tanker that's necessary to be set up and 
operational, but you also have a need to replace, or at least 
to supplement, the B-1 and the B-2. Right now you've got B-52s 
that are doing some of that work, but the Long Range Strike 
Bomber (LRSB) has clearly got to be maintained, as well, or at 
least you've got to be able to procure that in the future. Can 
you talk a little bit about what that is and what's going on 
right now within the Air Force to try to maintain all of those 
goals, and procure and still maintain readiness?
    General Spencer. No, thank you, Senator.
    Again, you've put your finger right on the issues, here. 
You know, the--we've only got 20 B-2s, and if--so, if we have 
to have a long-range penetrating bomber that can get through a 
lot of the--you know, back when the B-52 and the B-1 was built, 
they aren't stealthy, they don't--they won't penetrate some of 
the systems that are out there now, so we have to have that 
capability. Similarly, for our other platforms, as well. The F-
35, for example, along with the F-22, you know, some of--there 
are other fighters being introduced into the market now, so-
called 4.5 generation, if you will, that would beat our--I 
mean, the advantage that we have always had, and I think we 
still have, is, our pilots are better trained. But, if you give 
the adversary a better airplane, then that's a real problem.
    So, the faster and the more efficiently we can get to fifth 
generation, the better.
    Senator Rounds. Do you want to talk just a little bit in--
you made the remark, and then you moved on rather quickly, but 
you're talking about a 4.5, which is out there, which is going 
to, basically, be in a position to where--we don't ever want to 
be in a fair fight, but we want to the advantage to be on our 
side all the time. Do you want to talk about that just a little 
bit?
    General Spencer. Sure, yes. So, the--they are being 
produced, as we speak, developed and produced, a fighter that 
is ahead of our fourth-generation--the F-15, F-16s--it is 
ahead. So, based on the systems they have, we--they would--as 
our Chief said, 4.5 kills a fourth-generation airplane. So, 
that's why it's--and the sense of--we have to modernize our 
fleet, is what I'm saying. The age of our fleet that we have 
now won't--is not sufficient for us in the high-end threats and 
the high-end fights that we are--that we could be involved in. 
So, we--so, if nothing else, to maintain, first, deterrence, 
but then to be able to win if deterrence fails. We want to go 
in--as General Allyn said, we don't want a fair fight. We want 
the best equipment, with the best technology, with the best-
trained both--maintenance folks, pilots, you name it, space 
operators--we need the absolute best that we can have. So, 
that's really imperative for us to stay on track with our 
modernization.
    Senator Rounds. Thank you, Madam Chair.
    Unless one of the other----
    Sir?
    General Paxton. Thank you, Senator Rounds.
    If I may--I had made the point earlier about how we all 
need a planning horizon. We had aging aircraft in both our F-
18s, our AV-8Bs and our EA-6s. We knew we were going to have to 
replace them, so we put--we went all in on the F-35, and we're 
in that bathtub right now. So, the monies and the planning that 
is available to us to bring the F-35 to fruition are critical 
for the fight in the future. If we don't--if the BCA kicks in 
and we buy fewer, then you lose the economies of scale, you 
delay the production line, and then our fight-tonight force and 
our fight-tomorrow force are both jeopardized.
    Thank you.
    Senator Rounds. Thank you.
    General Allyn. I would just add, for the Army, the same 
application that General Paxton just talked about for our--
modernization of our aviation fleet is absolutely the exact 
same dynamic. So, we will not procure the more modern UH-60 
aircraft that our total force needs, we will not modernize the 
AH-64 to the level that it needs to, and our CH-47 
modernization will stop after fiscal year `16. So, it is 
absolutely critical that we stay on this path.
    Admiral Howard. So, we have often used a technological edge 
as a warfighting edge. So, as we've had to meet budget targets, 
we've had to slow modernization down. But, really what that 
gets to is our ability to win in a anti-access aerial-denial 
fight. So, as we slow down our ability to modernize weapon 
systems on ships or on aircraft or the physical platforms 
themselves, it's given potential adversaries an opportunity to 
get closer to us and to start--and that gap in the 
technological edge is starting to diminish.
    Senator Rounds. Thank you.
    Thank you, Madam Chair.
    Senator Ayotte. So, I wanted to--we have--Senator Shaheen 
is on her way for some questions--but when--Admiral Howard, 
when we met in my office, one of the issues that you raised, we 
saw, recently, the attempt by ISIS to expose our men and women 
in uniform in the cyber domain. So, I wanted to get your 
thoughts on, you know, What are the cyber challenges that our 
forces face, and how does all this relate to readiness and our 
posture?
    Admiral Howard, I'd start with you.
    Admiral Howard. Thank you. So, there's two issues. All of 
us--one is the force, writ large--our civilians, our Active, 
and our Reserve. We all actually live and operate in this 
domain. We're in it for our workday, and then, for our sailors 
and Reserve, they're in it when they're off duty. So, for us, 
we have to continue to develop and train our workforce to 
understand that as much innovation and excitement and fun as 
you can have on liberty in this domain, there's vulnerabilities 
in this domain. Because of the robustness of knowledge exchange 
in this domain, the vulnerabilities translate to potential 
operational security issues, which is some of what we saw this 
week.
    So, as--whether they're sailors, Reserves, or civilian, if 
they are out and about on social networks, and identify 
themselves or identify units, that they have to be trained to 
understand operational security in this virtual domain, just as 
they understand operational security in the physical domain.
    The next piece is, there is a more professional cohort when 
you look at the--for us, the information dominance community, 
you look at our enlisted, our IT, and then, for officer, 
informational professionals, cryptologists, intelligence 
officers, and then they are really the heart of our cyber 
warriors and the workforce that we're developing to not only 
defend our networks, but also develop both offensive cyber 
capability, as well. Then, that's--for us, those are the 
components, those are the folks we put together, and then they 
are the ones that work underneath U.S. Cyber Command in 
whatever mission sets they're required to provide.
    General Allyn. Madam Chair, I would just add that, you 
know, in 2013, we had no Army cyber mission teams. Today we 
have 24 that are supporting combatant commanders at the initial 
operating capability, building to over 40, you know, by the end 
of next year. Their training and development is absolutely 
critical.
    But, you highlighted a very critical point, and that is, we 
should be trying to accelerate the elimination of our 
vulnerabilities. Unfortunately, all of us are faced with the 
reality of having to take a multiyear approach to this, because 
of funding limitations. My belief is, this cyber risk is 
accelerating very, very fast.
    General Paxton. Senator, if I may, the--it also shows--to 
General Allyn's point, it shows the dynamic here--I'm sorry--it 
shows the dynamic of the pressure we're under. As the money 
gets tighter--BCA cap, if you will--and as the pressure on end 
strength goes down, we're--we all spend over 50 cents of our 
dollar on our people, the most important weapon system that we 
have. In the Marine Corps, it happens to be about 61 cents on 
the dollar. We have also stood up cyber mission teams and cyber 
support teams, both for the service and for some of the 
geographic combatant commanders--in our particular case, 
Special Operations Command. So, then you get into the tension 
about providing conventional force capability and providing 
cyber capability. It really shouldn't be a tension. You should 
provide both. But, when you're under an end-strength reduction 
and a fiscal reduction, that's hard to do.
    General Spencer. Yes, Senator, and we're similar. We've got 
20 cyber teams, growing to 40, as General Allyn mentioned. 
Because of funding, we've had to stretch that out longer than 
we would--we're comfortable with.
    You know, I was raised, you know, to keep my personal 
business to myself. You know, my daughter puts all of her 
business out on Facebook. I don't really get that.
    [Laughter.]
    General Spencer. But, that's kind of the generation of 
folks that are coming in the military now, that everything they 
do and everywhere they go and everything they eat and everybody 
they talk to is on Facebook. You know, we're realizing now, 
that's a vulnerability. So, all of us have--you know, all of 
the names that were listed by ISIL on their list, we've 
contacted them all and talked to them specifically about these 
sort of social networks, if you will, that they put your--you 
know, your access out there. Unfortunately for us, I mean, you 
can Google any of us, and our whole life history is out there, 
whether we like it or not. But, for a lot of our troops that 
deploy, again, those, you know, Twitter or Facebook, all 
those--they're great social tools, but they also make us all 
vulnerable, and they expose our personal--some of our personal 
information.
    Senator Ayotte. Thank you, I think all three of us can 
relate to that, certainly.
    I wanted to call on Senator Rounds for a brief follow-up 
question, and then I'm going to turn it over to Senator 
Shaheen.
    Senator Rounds. Thank you, and I'll try to make this brief. 
It's just a followup to what the Chairman was asking about a 
little bit.
    In terms of your overseas operation or your downrange 
operations, particularly with regard to ISR, have you seen any 
kind of a degradation with either regard to the cyber 
capabilities or your space capabilities? Anything, in terms of 
the items there that you would like to address or that you see 
as threats to our capabilities, that we should be aware of, in 
terms of things that impact your ability to deliver?
    General Allyn. Well, I think we have to be careful, in 
terms of, you know, just how much we can talk about, there is--
--
    Senator Rounds. If a simple ``yes'' is there, then----
    General Allyn. There is risk out there in that domain.
    Admiral Howard. Senator, I'm sure you're aware, for the 
Navy, we had, a year and a half ago, multiple simultaneous 
intrusions into our network. So, that really, I think, raised 
our awareness and our focus on defending our networks and 
making sure we mitigate risk in this domain.
    Senator Rounds. Impacted you overseas.
    Admiral Howard. It was simultaneous, and several different 
organizations.
    Senator Rounds. Thank you.
    General Paxton. Yes, sir, there is risk. There has been 
intrusion and threat. We need both the policies and the monies 
to do the training to combat that, sir.
    Senator Rounds. Thank you.
    General Spencer. Senator, I agree, and would offer that we 
could--any of us, certainly the Air Force, would like to come 
and brief you, sort of, one on one, if we could.
    Senator Rounds. Thank you.
    Senator Ayotte. Senator Shaheen.
    Senator Shaheen. Thank you, Madam Chair.
    Thank you all very much for your service and for being here 
today.
    I know this--I don't think the Chair has asked this 
question, though I know she's very interested in it, as well. 
One of the things that I have heard from folks at the 
Portsmouth Naval Shipyard, which, of course, is one of the 
shipyards that we're very interested in, is that if 
sequestration returns, the ability to attract the workers that 
we need for the shipyard is going to be compromised. Right now, 
they're in the process of hiring 700 people. We're seeing a 
whole generation of engineers, technicians, people who have 
real expertise at the shipyard who are retiring. If--can you 
just talk about what the potential challenges are, if 
sequestration returns in 2016, to being able to attract the 
workforce we need to fill our public shipyards?
    Admiral Howard. Yes, ma'am. So, when I was down at fleet--
this is anecdotal, but--as we sequestered and then we had a 
hiring freeze, and then we ended up furloughing different 
folks, we found, in some areas, that folks who had sufficient 
years decided to retire early, that the potential of not having 
a full year of employment, year to year, was enough for them to 
rethink.
    So, for us, if that happens again and then we have to 
reduce maintenance contracts or make similar tough choices, in 
particular for our shipyards, we have that--a demographic, 
where we have an older cohort that's a substantial part of the 
workforce that might make that decision.
    The next thing is, for the folks who stay, there becomes 
doubt as to--and a lack of trust as to whether they are going 
to have a full year's worth of employment. It's not just the 
pay. There is that component, because they have to support 
their families.
    Senator Shaheen. Right.
    Admiral Howard. But, it's also, they take a lot of pride in 
who they are and what they do as helping generate forces for 
our Navy or as public servants in other areas.
    Senator Shaheen. Is this something that the rest of you are 
seeing in a different way as you're trying to recruit folks?
    General Allyn. Well, I think, ma'am, the impact of the 
furlough across our civilian workers was devastating. It gets 
at this issue of erosion of trust. We've got incredibly 
dedicated workforce, in uniform and in civilian workforce. But, 
there is a limit to, you know, how many times we can keep going 
back and asking them to hang in there with us. We have seen a 
similar case, where some of them that were retirement-eligible 
or could take an early retirement option decided, ``You know, 
this has been a great run. I love serving in the Army, but I'm 
not sure the Army loves me as much as I love it.'' That's a 
terrible feeling for us, who take this on as a profession.
    General Paxton. Senator Shaheen, if I may, just as a 
overview of our civilian workforce, most of us are pretty lean 
in the civilian workforce. Between mil-to-civ conversions and 
then outsourcing and contractors, our civilian workforce has 
been getting smaller and smaller. The furlough and the BCA caps 
had a disproportionate effect on our civilian workforce. So, 
there is a sense of an erosion of trust and confidence, and 
they're really valuable members of the team. When the 
Commandant testified in front of the full committee several 
weeks ago, he said that, in the Marine Corps' case, only 1 in 
10 in civilian workers, civilian in military is the workforce--
over 90 percent of them work outside of the national capital 
region. So, there's this perception there that maybe the 
headquarters are bloated and there's a lot in Washington. Now, 
they're actually tooth and not tail, and they're actually out 
there doing important things for the service and for the 
Nation.
    The anecdotal story that I bring up is, I went down our 
depot in Albany, Georgia, about a year ago, and this was in the 
aftermath of the furlough. We had worked very hard to keep 
folks there. Some of these folks are working in a very small 
county, a very rural county. The other two or three industries 
in the county, a rubber and tire plant and a golf plant, had 
left. So, the only viable workforce in--major in the area now, 
is--there's one health system and then there's the Marine 
Logistics Depot. When we started to furlough people, there was 
no other place for them to go. Many of them were working on 
equipment where they needed a security clearance. As they went 
from payday to payday without a security clearance, they were 
deathly worried that the creditors would come after them; and 
then, the minute the creditor came after them, even if it was a 
delayed payment in a home mortgage, that would affect their 
clearance, so that, even when the furlough was relieved, we 
couldn't hire them back because then they'd be flagged as a 
security risk. So, there's this horrible downward spiral when 
that happens.
    Thank you.
    Senator Shaheen. Thank you.
    General Spencer. Senator, we have a similar story. We also 
have 96 percent of our civilians that work outside of the 
national capital region, so at our training bases, for example, 
where we train pilots to fly, the entire flight-line 
maintenance operation are civilians, the whole unit. So, if you 
think about the Air Force--as an example, when we sequestered, 
last--or a year and a half or so ago, we stopped flying 
airplanes, we actually put airplanes down, which meant now 
pilots can't train, so they lose their certification over time, 
maintenance folks have nothing to work on, and airplanes--I 
happen to have a '72 Monte Carlo at home, and if you don't 
start that thing about once a week and drive it, it's not any 
good. Airplane--you have to fly airplanes to have them 
efficient.
    So, we had airplanes sitting down. Now they're not going to 
the depot. Now you've got this stackup. You've got--don't have 
airplanes available. As you know, it's going to take X number 
of days to get an airplane through the depot. So, now they back 
up. So, it's not like if sequestration is suddenly lifted, you 
know, everything works well. No. You've got this backlog that 
you have to now push through a funnel.
    The final thing I'll mentioned, that General Paxton touched 
on, is my son, who works for the government--he's a computer 
science guy--he--when we furloughed him, he--and this is 
similar to what I heard from a lot of other civilians--he was 
really frustrated, because--he said, ``I can go work somewhere 
else and make more money. I want to be a part of the 
government.'' But, he said, ``If they're going to--I've got a 
family. And I''--you know, two of my grandkids--``and if every 
time there's budget dispute, they lay me off,'' he said, ``I 
don't know if I could do that for the long term.'' So, it had--
it took a real toll.
    Senator Shaheen. I very much appreciate what you all are 
saying. I think it's an important reminder for those who say, 
``Well, you know, we exempted uniformed personnel, and so it 
didn't have the kind of impact,'' that all of you are pointing 
out that it really did. Hopefully, we will act with more sanity 
in this budget cycle.
    Thank you all very much.
    Senator Ayotte. I just have a couple of follow-ups, but, 
since I have my colleague, Senator Shaheen, here, I know she'd 
want me to follow this one up with General Spencer.
    Just wanted to check in on the KC-46As delivery to Pease in 
2018. I know there were a couple of testing delays, but are 
things looking pretty good, on track?
    General Spencer. Yes, Madam Chair. We're on track. As you 
know, we had a couple of concerns, but we are still on track. 
We had some slack built in. Some of--a lot of that slack's been 
taken up now. But, as we stand today, we're still on track. We 
still feel good about the schedule.
    Senator Ayotte. Excellent. Appreciate that. We appreciated 
General Welsh's recent visit to Pease, as well. That was 
terrific, and I know it meant a lot to those in our Guard and 
those that are part of the 157th Air Refueling Wing. So, please 
pass our gratitude on.
    Senator Shaheen. Thank you, Madam Chair. We like to tag 
team on this issue whenever possible.
    [Laughter.]
    Senator Ayotte. I just have a couple of follow-up 
questions.
    One, General Spencer, I had a question about the joint 
terminal attack controller (JTAC) training, because recently it 
was brought to our attention, a memo that was dated February 
25th, 2014, signed by the Commander of the 18th Air Support 
Operations Group, ASOG, Commander. The memo relates to JTAC 
training. The issue raised in the memo are problems with ground 
force commander coordination, airspace deconfliction, and nine 
line errors. The Commander also writes that an increasing lack 
of live-fly close air support (CAS) training opportunities and 
funds for temporary duties (TDYs) have eroded overall JTAC 
proficiency across the 18 ASOG. The Commander notes that 
continued decrease in the amount of live-fly CAS controls 
available to unit JTACs; and to the credit of the Commander, he 
intends to offset that decline with using simulators. So, can 
you give me a sense of what's happening with the JTAC training, 
and especially live-fly CAS training, and where we are with 
that, and just an update on how the JTAC training is going?
    General Spencer. Yeah. First, Madam Chair, I have to 
apologize. I haven't seen that letter, so I would like to go 
back and take a look at it and give you a more--give you a 
better response----
    Senator Ayotte. Sure.
    General Spencer.--so I can get the specifics. I'm actually 
going down to Pope Air Force Base on Monday to talk to some of 
our----
    Senator Ayotte. Okay. Well----
    General Spencer.--JTACs----
    Senator Ayotte.--we're happy to get it for you, and we'll 
be happy----
    General Spencer. Okay. So, if----
    Senator Ayotte.--if you want to take it for the record and 
get back----
    General Spencer. So, if I could, I would like to give you--
--
    Senator Ayotte. Absolutely.
    General Spencer.--make sure I give you a good response on 
that.
    [The information referred to follows:]

            joint terminal attack controller (jtac) training
    Question. I just have a couple of follow-up questions. One, General 
Spencer, I had a question about JTAC training because recently, it was 
brought to our attention a memo that was dated February 25, 2014, 
signed by the commander of the 18th Air Support Operations Group, ASOG 
Commander, and the memo relates to JTAC training. The issues raised in 
the memo are problems with ground force commander coordination airspace 
deconfliction and nine line errors, and the commander also writes that 
an increasing lack of live fly CAS training opportunities and funds for 
T.D.Y. have eroded overall JTAC proficiency across the 18 ASOG. The 
commander notes that continued decrease in the amount of live fly CAS 
controls (available unit) JTAC, and to the credit of the commander, he 
intends to offset that decline with using simulators. So can you give 
me a sense of what's happening with the JTAC training especially live 
fly CAS training and where we are with that and just an update on how 
the JTAC training is going.
    Answer. The 18th Air Support Operations Group (18 ASOG) is trained, 
combat mission ready and has certified personnel deployed down range. 
Regarding JTAC training, while we anticipate simulation to become a 
more significant element of our overall training program, we recognize 
that live-fly training will remain an essential tool for our overall 
combat readiness. By design, the actual amount of live-fly close air 
support controls for JTACs is planned to steadily decline over the 
years and transition to a more balanced combination of live-fly events 
and simulators. The Air Force is a contributing member of the Joint 
Staff J6 led Joint Fire Support Executive Steering Committee (JFS ESC). 
The JFS ESC produces an Action Plan which focuses analytical efforts 
and solution recommendations to assist Services and Combatant Commands 
in providing enhanced, jointly integrated, interoperable and cost 
efficient JFS capabilities to the warfighter. We collaborated with the 
JFS ESC to develop and field a Joint Terminal Control Training and 
Rehearsal System that provides a realistic, modular, upgradeable and 
scalable Joint Combat Air Support training / rehearsal simulation 
system. Simulation is already becoming a fundamental part of JTAC 
training. In fact, simulation is better than live-fly training in many 
areas. For example, simulation can permit more complex mission 
scenarios with more simulated aircraft involved resulting in a 
significant cost savings. The 18 ASOG is scheduled to receive a JTAC 
Dome simulator in the summer of 2015.

    Senator Ayotte. No problem. Appreciate that very much.
    The other question that I had for you was, you know, about 
what's happening at Nellis. Can you confirm for me whether the 
Air Force has made a decision to close the A-10 Division at 422 
Test and Evaluation Squadron at Nellis? If so--I mean, yes or 
no. I don't know if you're making that decision or where things 
are.
    General Spencer. Yeah, that--again, I'm a deer in the 
headlights on that one, as well. You--close the squadron?
    Senator Ayotte. Yes.
    General Spencer. No, I--again, I'll have to follow up with 
that, because I--
    Senator Ayotte. Then why don't I give you a follow-up 
question--
    General Spencer. Okay.
    Senator Ayotte.--on that one, too.
    General Spencer. Okay.
    Senator Ayotte. That's pretty specific.
    [The information referred to follows:]

                      a-10 squadron at nellis afb
    Question. The other question that I had for you was you know about 
what's happening at Nellis, can you confirm for me whether the Air 
Force has made a decision to close the A-10 division at 422nd Tests and 
Evaluation Squadron at Nellis. If so, it would be yes or no, I don't 
know, if you're making that decision or where things are.
    Answer. Yes. The FY16 PB divests the A-10 division at the 422nd 
Tests and Evaluation Squadron in fiscal year 2016. However, because of 
the prohibition on the divestiture of A-10s contained in the fiscal 
year 2015 NDAA, the Air Force will not be divesting A-10s at Nellis AFB 
at this time.

    Senator Ayotte. I wanted to thank you, Admiral Howard. You 
and I talked about this when we met in person, and that is on 
the maintenance projects at the Portsmouth Naval Shipyard. 
Frankly, you know, I want to commend the Navy for meeting and 
exceeding its capital investment requirements across all the 
shipyards. The thing that you and I talked about was the P-266 
project at Portsmouth. I know I was very happy with your 
answer, and you're very focused on seeing that go forward. So, 
thank you for that.
    Admiral Howard. Yes, ma'am. Thank you.
    Senator Ayotte. Terrific.
    Not to keep you all too much longer, but there was one 
question that I just wanted to follow up since I had you all 
here, because I think it's important. You know, we spent a lot 
of last year talking about how are we going to address sexual 
assaults in the military. Having all of you here today, I think 
I'd be remiss if I didn't ask you how things were going, where 
is the status of--what's the status of the legislation that we 
passed, and how do you perceive the implementation of that 
legislation in your branches, and--give us an update on how 
things are going and where you see we can help some more.
    General Allyn. I'll start, Madam Chair.
    First of all, we have made significant headway in 
eliminating the threat and the presence of sexual assault and 
sexual harassment in the military. Most promising is that 
reporting is up. Our soldiers are reporting over 90-percent 
confidence that, if they report an incident, that the chain of 
command is going to take the right actions, both to protect the 
person that is--has been assaulted, as well as to ensure 
accountability of those who perpetrate the alleged assault.
    So, we are continuing a rising level of reporting. We are 
seeing a reduction in the incidences of assaults. Both 
promising. But, we still have work to do, particularly in 
eliminating the risk and the perception of retaliation by our 
soldiers inside our formations. So, our sergeant major of the 
Army has initiated an effort called ``Not in My Squad,'' 
because the confidence level that we see at the battalion level 
and above is very high, but the incidents are occurring at the 
company level and below. So, he is bringing forward a group of 
staff sergeants from across our total force to get their input 
on how do we improve both ownership of resolving this threat to 
our trust and our dignity and respect in our formation, and 
accountability to ensure that every soldier, every leader, is 
doing everything they can, not only to prevent these acts, but 
to prevent even the perception of any--retaliation of any type.
    We talked a bit ago about social media and the impact that 
that has. What we're seeing is, the most significant level, and 
the hardest to defeat, is the retaliation--the social 
retaliation by peers and others that's occurring in social 
media. So, we are arming our leaders with the tools that they 
need and the training to understand how to attack this part of 
the spectrum that is somewhat new to most of us, but, 
unfortunately, not new to our soldiers.
    Admiral Howard. Thank you, Senator.
    I'd like to, if I may, refer some of this to the report, 
but some of it to the conversations I've had with our sailors 
as I've traveled as Vice Chief. So, when I do my all-hands 
calls, I talk about this issue, about the RAND survey, and then 
ask them for their thoughts. Then, in particular, in San Diego, 
I was able to sit down with a group of 40 women who represent 
all the different communities on our ships, from commanding 
officers to the medical officers to engineers.
    The--from the RAND survey, we understand that prevalence 
has decreased for both men and women. But, you asked, more 
specifically, what changes have we made, some of it based on 
law, that really has made a difference. The feedback I'm 
getting, which seems to be buttressed by the results of the 
survey, is, first of all, having Naval Criminal Investigative 
Service (NCIS) be the first one on scene to investigate sexual 
assault seems to be bring an objectivity to the whole process. 
So, that is an important change that--you know, I think all of 
the services are committed to professional investigation when 
there's an incident.
    The--in our case, bringing in victim legal counsel--this is 
the person who's the--who helps the victim through the 
process--that person is making a big difference for our sailors 
and their trust in the--
    Senator Ayotte. That's music to my ears, because that was 
my piece, and I'm glad to hear that.
    Admiral Howard. I actually just sat down with one of our 
first Victim's Legal Counsels. She's in Rota, Spain. She talked 
a lot about both her and the Sexual Assault Response 
Coordinator (SARC) and what their presence meant to the Victims 
throughout the process.
    The other is, for the--for us--for the training, the 
bystander intervention. I've heard from our sailors, both men 
and women, and then it bears out in the metrics, that this 
training that we put together, the scenario-based training, 
really felt--empowered them to be able to take care of their 
shipmates. Then, when you look at the results of the RAND 
survey, that when our sailors saw something, nine out of ten of 
them took action. The training works. They understand the 
importance of taking care of shipmates, whether, when you see 
something, you go to help your shipmate, you help your shipmate 
make a report through another process, or you report it 
yourself. When I've spoken, particularly to the women, they say 
the training is very effective, but that the results are even 
more impressive. So, thank you for all of that.
    General Paxton. Thank you, Madam Chair.
    I would echo--and I think the Secretary of Defense was on 
record as saying--in the subject of Sexual Assault Prevention 
and Response (SAPR), we have had almost unprecedented focus and 
significant success and accomplishments. We're not, as General 
Allyn said, anywhere near where we want to be, need to be, 
should be, but we're going to continue the focus. In the case 
of the Marine Corps, we've had almost 1,000 fewer documented 
cases of unwanted sexual contact. That's about a 30-percent 
reduction, so pretty significant.
    The two pieces to your specific question that I'd like to 
highlight, if I may, Senator--number one is, there's over 70 
pieces of legislation that have either been enacted or 
proposed, and it's going to take us a while to work with them. 
I would echo what the VCNO said. We have several documented 
cases where the victim's legal counsel office--or officer was a 
big help, both in comfort to the potential victim and then in 
the adjudication and the defense. But, we have also had cases, 
too, where we have now introduced a fourth lawyer into what was 
a three-lawyer equation, where you had a prosecutor, a 
defender, and a judge. You know much better than I, ma'am. But, 
we're going to have to work through that, because some of these 
cases will be challenged, and you would hate for the one out or 
the one each to perturb the goodness of the whole system.
    The last piece, if I may, Senator, is just to highlight the 
centrality and the criticality of the commander in all this. 
We're very appreciative of the work by the committee to keep 
the commander involved. Because whether it comes to bystander 
intervention, NCO leadership, legal accountability, you have to 
have the commander there.
    So, thank you.
    General Spencer. Madam Chair, similarly, we--because we all 
work together on this problem to share lessons learned, and 
working together to try to solve this problem. It's similar, 
the Air Force. Our prevalence is down by 25 percent, our 
reporting is up by 61 percent. So, we think that's all in the 
right direction. We've done a lot of work, as you know, through 
special victim's counsel, things to make sure victims are taken 
care of, make sure that commanders have the tools they need to 
prosecute if someone is found guilty.
    Our big push right now is on prevention, preventing this 
from happening in the first place. So, we've done several 
things. About a month ago, we had a Sexual Assault Prevention 
Summit. We brought in everyone from E1 all the way up to wing 
commanders. We brought in experts around the country, brought 
in the Center for Disease Control. We spent a whole week diving 
into this issue. The good news was, the answer was yes, you can 
prevent it, but it takes a lot of study, a lot of understanding 
the crime and to have things that specifically get at it.
    Just two weeks ago, I was down in North Carolina, in the 
Research Triangle. I met with folks from University of North 
Carolina and from Duke who are also working on this crime in 
their colleges--local colleges--have a lot of great ideas. 
We're partnering with them. In fact, they're on their way now 
to Sheppard Air Force Base to work with some of our trainees 
there. So, we're--this is something--I can promise you, this is 
something I--we all work on. I know I work on it every day. 
We're not going to stop until this is fixed.
    Senator Ayotte. Thank you. We're not going to stop, either. 
So, you know, I think this is something we--we did tremendous 
pieces of legislation and worked on this collectively in a 
bipartisan fashion in the last Congress. Now you've got, as 
General Paxton really pointed out, a lot of implementation of--
you know, to get this right. I really appreciate what I hear 
most from all four of you, which is understanding the 
importance of this and the commitment that we need, you know, 
every day to get this right, and to work together on it. So, I 
appreciate your giving me an update on that. I look forward to 
continuing to work with you, all of you, on this issue.
    Thank you all for being here today and for what you do for 
the country.
    [Whereupon, at 4:21 p.m., the hearing was adjourned.]

    [Questions for the record with answers supplied follow:]
              Questions Submitted by Senator Kelly Ayotte
                              hollow army
    1. Senator Ayotte. General Allyn, what does a hollow Army look 
like?
    General Allyn. A hollow Army is characterized by prolonged and 
disproportionate investments across manpower, operations and 
maintenance, modernization, and procurement without corresponding 
adjustments to strategy. If we have too little of anyone of these, the 
Army won't be ready when called upon.
    Specifically, a hollow Army is one that appears capable on the 
surface, but is unable to adequately meet national objectives without 
assuming an extremely high amount of risk. We accept a greater 
likelihood of forfeiting the decisive edge we expect our Soldiers to 
retain when we face an adversary in combat . . . we create an 
opportunity for adversaries to experience a ``fair fight,'' which we 
should never permit given our National capacity.

    2. Senator Ayotte. General Allyn, what warning signs should we look 
for when we are coming dangerously close to a hollow Army?
    General Allyn. A hollow Army is characterized by prolonged and 
disproportionate investments across manpower, operations and 
maintenance, modernization, and procurement without corresponding 
adjustments to strategy.
    By this measure, the Army is not hollow. However, we are beginning 
to see the warning signs. The Army today is able to produce only enough 
readiness to meet requirements--and we can only achieve this because of 
the extra funding made available by the Bipartisan Budget Act (BBA). 
The result has been a steady erosion of readiness across the force. 
Underfunding readiness not only reduces training, but the maintenance 
of our equipment as well. This is evidenced by a gradual decrease in 
equipment readiness. Because we are underfunding modernization, we risk 
our qualitative edge. Our equipment has continued to age, becoming less 
reliable and less survivable as the technological sophistication of our 
adversaries is increased. Finally, the underfunding of our 
installations impacts Soldier and Family quality of life and 
ultimately, retention. We've consistently deferred critical 
sustainment, restoration, and modernization projects, creating 
substandard living conditions on many of our bases. If sequestration 
levels of funding continue, we will have a hard time maintaining the 
balance between manpower, readiness, and modernization. That is a 
template for a hollow force.

    3. Senator Ayotte. General Allyn, would a return of defense 
sequestration in fiscal year 2016 result in a hollow Army?
    General Allyn. Not immediately, but the necessary actions to meet 
sequestration level funding requirements would keep the Army out of 
balance in terms of manpower, operations and maintenance, 
modernization, and procurement for several years--until at least fiscal 
year 2023. Without a major change in national strategy to account for a 
smaller force with reduced capability, the Army will likely experience 
a period where it is indeed hollow.
                         marine corps readiness
    4. Senator Ayotte. General Paxton, in your prepared statement, you 
writes that ``approximately half of the Marine Corps' home station 
units are at an unacceptable level of readiness in their ability to 
execute wartime missions, respond to unexpected crises, and surge for 
major contingencies.'' What are the primary reasons for this reduced 
readiness?
    General Paxton. Resource shortfalls in available personnel and 
needed equipment at the unit level remain the principal detractors to 
achieving the level of readiness home station units need to execute 
wartime missions, respond to unexpected crises, and surge for major 
contingencies. The Marine Corps' principal concern going forward is the 
recovery of full spectrum readiness of our home station units and the 
reconstitution of the whole-of-force after over a decade of 
unprecedented sustained conflict.
    The Marine Corps excels at meeting current operational requirements 
in support of the geographic combatant commanders. To maintain the high 
readiness of our forward deployed and forward engaged units, we 
globally source personnel and equipment from our home station units--
the ready force. Ultimately, readiness comes at a cost and the high 
readiness of our forward deployed and forward engaged forces comes at 
the expense of our home station units' readiness.
    Further compounding the recovery of full spectrum readiness for 
home station units is the paucity of available amphibious shipping 
essential to unit level training. Although Service-level training is 
protected through the future years defense plan, home station training 
enablers (primarily simulation systems and ranges, and operationally 
available amphibious ships) will steadily degrade due to inadequate 
sustainment, recapitalization, and modernization. Without appropriate 
funding, lower equipment maintenance levels will begin to quickly 
degrade those essential equipment pools, leading to degradation in 
training and readiness. Any reduction in amphibious ship maintenance 
will directly limit operationally available amphibious warships and 
erode readiness. Eventually, the equipment needed at home station will 
wear out; when it does, our Marines will lose associated training and 
therefore the proficiency necessary to keep these units ready to 
respond. Budget Control Act funding levels may force the Marine Corps 
to choose between having its home station units being either well-
equipped or well-trained. Training home station units to standard is 
necessary since these units constitute the ready force that would 
immediately respond to unforeseen crises or major contingencies.

    5. Senator Ayotte. General Paxton, which type of Marine units are 
having the most readiness challenges?
    General Paxton. Approximately half of Marine Corps' home station 
units are insufficiently resourced to achieve those readiness levels 
needed to execute wartime missions, respond to unexpected crises, and 
surge for major contingencies. Using Marine aviation as an example in 
this era of fiscal austerity, Marine Corps operational requirements 
have increased while the overall number of Marine aircraft for tasking 
and training has decreased. Approximately 80 percent of Marine aviation 
lack the minimum required Ready Basic Aircraft to train to the minimum 
readiness levels. Lack of procurement (future readiness) and aging 
legacy aircraft negatively impact aircraft availability for training 
and meeting operational demands. A significant training and warfighting 
requirement gap of RBA exists. Shallow procurement ramps (not buying 
aircraft fast enough) directly increase both the cost and complexity of 
maintaining legacy systems beyond their projected life. Marine aviation 
is 106 aircraft short of the training requirement or 158 aircraft (10-
squadron equivalent) short of the wartime formations. Out of 52 fully 
operational capable squadrons, 13 are deployed and 8 are preparing to 
deploy. Of the remaining 31 squadrons, 22 are below the minimum 
training level required to go to combat in the event of a contingency. 
The majority of the aircraft deficit is caused by insufficient aviation 
depot repair capacity and throughput. Our aviation depots have not 
fully recovered from the turmoil caused by the last sequester. Marine 
aviation is not sufficiently ready now; another sequester would prevent 
any opportunity to recover readiness.

    6. Senator Ayotte. General Paxton, how can Congress best help with 
these readiness challenges?
    General Paxton. The Marine Corps' current resource level represents 
the bare minimum at which it can meet the current Defense Strategic 
Guidance. This budget allows the Marine Corps to protect near-term 
readiness, but does so at the expense of long-term modernization and 
infrastructure, threatening an imbalance across the five Pillars of 
Readiness--high quality people, unit readiness, capacity to meet 
commanders' requirements, infrastructure sustainment, and equipment 
modernization. An extended imbalance among the Pillars leads to 
conditions that could hollow the force and create unacceptable risk for 
our national defense.
    Congress' continued support, and specifically support of the fiscal 
year 2016 President's Budget request, will be critical to ensuring our 
ability to fulfill our commitments as outlined in the Defense Strategic 
Guidance. Further, an end to both the threat of a sequester and to the 
caps imposed by the Budget Control Act would allow the Marine Corps to 
begin to address some of the readiness imbalances and would introduce 
much-needed budget stability to allow for effective long range 
planning.
                           optimal army size
    7. Senator Ayotte. General Allyn, setting aside the budget-driven 
Army endstrength reduction currently being implemented, based on 
combatant commander requirements, what size of an Army do we really 
need? Active Component? Guard? Reserve?
    General Allyn. Assuming our planning assumptions are correct, the 
minimum end strength the Army requires to fully execute the 2012 
Defense Strategic Guidance (DSG), and answer the current demands of the 
Combatant Commanders is 980,000 Soldiers, including 450,000 in the 
Active Army, 335,000 in the Army National Guard, and 195,000 in the 
Army Reserve. At these levels, all three components will be smaller 
than the pre-2001 force.
    However, much like the Chief of Staff and the Secretary, I am 
concerned that our 2012 DSG assumptions may prove to be incorrect. The 
2012 DSG makes a number of optimistic assumptions regarding the number, 
duration, location, and size of future conflicts. Today, we see 
requirements and operational environments that were not forecasted in 
the 2012 DSG. These include Russian aggression in Europe, the rise of 
ISIL, and the rapidly changing security environment in Eastern Asia. 
All of these developments challenge our assumptions and elevate our 
strategic risk. It is my military judgment that, based on increasing 
world instability, we should reconsider currently programmed reductions 
in Army endstrength.
                         impacts of budget cuts
    8. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, please describe how defense sequestration, 
combined with continuing resolutions, have had a lasting and negative 
impact on your Service's readiness.
    General Allyn. The readiness of the Army today is insufficient to 
support the national security objectives outlined in the guiding 
strategic documents and specified within Combatant Commander 
operational plans. Reduced funding coupled with sustained demand for 
Army forces results in fewer Army units available for contingency 
response and at lower levels of readiness. The specific readiness 
levels of units and the ability of the Army to execute its Title 10 
requirements are classified; however, the causes and implications of 
the Army's degraded readiness are clear--over a decade of focus on 
counterinsurgency operations jeopardizes the Army's assured dominance 
to conduct Decisive Action in support of Unified Land Operations (DA/
ULO). This degraded ability to provide sufficient ready forces to 
achieve those objectives outlined by the President has resulted in 
increased risk for the Nation.
    Army readiness is approaching a tipping point. The combined effects 
of the Budget Control Act of 2011 (BCA), fiscal and end-strength 
reductions, and over a decade of conflict have suppressed the Army's 
ability to build readiness across our formations. While the Bipartisan 
Budget Act of 2013 (BBA) provided additional readiness funding, 
continued improvement requires multi-year consistent and predictable 
funding designed to build Army readiness beyond counter-insurgency 
towards decisive action in support of unified land operations. 
Sequestration will not provide sufficient funding to man, equip, 
sustain, and train units to the appropriate readiness levels and places 
our Soldiers at risk when responding to unforecasted contingency 
operations. The use of continuing resolutions wreak havoc on Army 
readiness, modernization, and manpower. It makes long term planning 
difficult. As a result, we are forced to train sporadically, and the 
materiel and equipment we buy costs more and takes longer to acquire.
    Admiral Howard. Sequestration, the Continuing Resolution in fiscal 
year 2013, and a decade of combat operations have created maintenance 
backlogs that have prevented us from getting ships back to the Fleet on 
time and aircraft back on the flight line. We continue our efforts to 
rebuild the workforce in our public depots--both at shipyards and 
aviation Fleet Readiness Centers--and reduce the number of lost 
operational days, but it will take years to fully recover our 
readiness.
    General Paxton. For the last few years the Department of Defense, 
along with all other federal departments and agencies, has had to 
operate in an uncertain fiscal environment shaped by sequestration 
threats, BCA caps, and the near certainty of starting every fiscal year 
under a continuing resolution. Against this chaotic background the 
Marine Corps has been forced to make extremely difficult fiscal 
decisions that directly impact day-to-day operations. The recent budget 
cuts and the looming threat of sequestration have been particularly 
difficult to absorb. Today, approximately half of the Marine Corps' 
home station units are at an unacceptable level of readiness. 
Investment in the future is less than what is required, and 
infrastructure sustainment is budgeted below the Department of Defense 
standard. The Marine Corps has significantly reduced many of the 
programs that have helped to maintain morale and family readiness 
through over a decade of war. Additionally, the deployment-to-dwell 
ratio is being maintained at a very challenging level. The operating 
forces are deploying for up to 7 months and returning home for 14 or 
less months before redeploying. These are some of the damages to date 
caused by sequestration and lower funding levels.
    The fiscal year 2016 President's Budget is the bare bones budget 
for the Marine Corps that can meet the current Defense Strategic 
Guidance. The budget prioritizes near-term readiness at the expense of 
modernization and facilities. Another round of sequestration would 
force the Marine Corps to significantly degrade the readiness of our 
home station units, which is the Marine Corps' ready force to respond 
to crises or major combat operations. The fiscal challenges we face 
today will be further exacerbated by assuming even more risk in long-
term modernization and infrastructure in order to maintain ready forces 
forward. This is not sustainable and degrades our capacity as the 
Nation's force-in-readiness.
    Annual continuing resolutions, some lasting several months, will 
further complicate these concerns. The delay in receipt of funds, 
combined with the uncertainty over when and how much will finally be 
appropriated, can wreak havoc on contract award timelines and our 
participation in training exercises, and put us at risk of accruing 
additional costs in the long run. Furthermore, because CRs only fund 
agencies at prior year levels, critical programs may not be sustained.
    General Spencer. The Air Force has sought to protect readiness 
accounts under sequestration. Despite that, fiscal year 2013 
sequestration has had a long-lasting negative impact on Air Force 
readiness. Prior to April of 2013, readiness levels were already low, 
predominantly due to constant global demand combined with a 20+ year 
steady decline in force structure. In 2013, as a result of 
sequestration, we were forced to ground 31 flying squadrons, cancel 8 
exercises, and significantly curtail 8 more. Additionally, maintenance, 
repair, and upgrades to operational training ranges had to be deferred, 
degrading our ability to support high-end combat training. 
Individually, the training and professional development lost as a 
result of sequestration can never be recovered. Institutionally, it has 
taken 2 years to recover readiness to a point where still less than 
half of our fighter and bomber squadrons are full-spectrum ready. This 
is well short of Defense Strategic Guidance requirements. Restored 
funding will assist in re-building readiness, but the Air Force will 
also need relief from the current ops tempo and time to regain 
capabilities lost as a result of sequestration.

    9. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, if defense sequestration returns in fiscal year 
2016, can we expect the negative readiness effects to last for many 
years?
    General Allyn. Yes. If sequestration levels of funding continue, 
the Army will be out of balance until at least fiscal year 2023 and 
will require at least 3 years thereafter to return to a state of full 
readiness, albeit with a much smaller Army.
    Admiral Howard. Yes. Under sequestration there is no path to full 
readiness recovery to execute the required missions of the Defense 
Strategic Guidance (DSG). A return to sequestration in fiscal year 2016 
would necessitate a revisit and revision of the defense strategy. The 
required cuts would force us to further delay critical warfighting 
capabilities, reduce readiness of forces needed for contingency 
responses, further downsize weapons capacity, and forego or stretch 
procurement of force structure as a last resort. While sequestration 
has caused significant near-term impacts, a return to sequestration in 
fiscal year 2016 would create further serious problems that would 
manifest across the years and be difficult from which to recover.
    Assuming a stable budget and no major contingencies for the 
foreseeable future, I estimate that we will not recover from the 
maintenance backlogs until 2018 for Carrier Strike Groups and 
approximately 2020 for Amphibious Ready Groups. Sequestration would 
derail these readiness goals.
    General Paxton. Yes, the deleterious effects of another sequester 
would further compound the turmoil caused by the last sequester from 
which we still are trying to recover. We have yet to fully appreciate 
the cuts that have been made to date; however, sequestration has a 
chaotic effect on the force during a time of extraordinary challenges. 
Sequestration does not fund the optimally designed force of 186,800 
active component required to meet the strategy. Sequestration prevents 
the Marine Corps from generating ready forces to meet operational 
requirements now and into the future. Sequestration equates to less 
force capacity; we would not have what is needed to fight in a major 
war. Essentially, all operational units would be committed for the 
war's duration with no relief and we would have very little left for 
crises that would occur in other parts of the world. Home station unit 
readiness and investments in infrastructure and modernization will 
continue to suffer as limited resources are prioritized to protect the 
near-term readiness of deployed units in harm's way. A return to 
sequestration-level funding with a force of 175,000 active component 
would equate to high risk. At this lower resource level, our units that 
deploy to combat would not be as well trained and would be slower 
arriving. This means that it will take longer to achieve our objectives 
and the human cost would be higher. This is what we mean when we say 
high risk.
    General Spencer. Yes. Individually, the training and professional 
development that would be lost as a result of sequestration can never 
be recovered. Readiness growth takes time and resources, readiness 
develops momentum slowly. Additionally, readiness in a small force can 
be lost very quickly when time and resources are not available. 
Institutionally, under the Balanced Budget Act, it took 2 years to 
recover readiness to a point somewhere near the pre-sequester level. 
Even so, still less than half of our fighter and bomber squadrons are 
currently full-spectrum ready. We can expect the same or worse for the 
foreseeable future if sequestration returns.

    10. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, how long will it take to recover?
    General Allyn. Under sequestration, the Army will not be able to 
bring its manpower, operations and maintenance, modernization, and 
procurement expenditures into balance until at least fiscal year 2023 
and will require at least an additional 3 years thereafter to return to 
full readiness. Meeting Combatant Commander requirements will force 
tough decisions about how much ``surge capacity'' we retain, and how 
little dwell time between deployments our units continue to absorb. 
Increased demands from Combatant Commanders will elevate stress on the 
force and the risk to meet contingency response requirements.
    Admiral Howard. The fiscal year 2016 Navy budget submission is 
designed to continue our readiness recovery, reset the force and 
restore our required contingency operations capacity by 2020 while 
continuing to provide a sustainable forward presence. However, under a 
return to sequestration in fiscal year 2016 and beyond, there is no 
path to full readiness recovery to execute the required missions of the 
Defense Strategic Guidance (DSG). A revision of the defense strategy 
will be necessary.
    General Paxton. We have yet to fully appreciate the cuts that have 
been made to date by sequestration. A return to BCA-level spending 
would further delay readiness recovery. Another sequester would 
exacerbate the fiscal challenges we already face today and force 
significant challenges upon the Marine Corps. The months-long sequester 
of 2013 adversely impacted the aviation depots leading to the release 
of artisans whose skills have not been replicated, leading to 
maintenance backlogs and today's degraded operational readiness. The 
specter of another sequester, especially one that is more than just 
months-long, would only lead to compounding the deleterious effects 
brought about by the 2013 sequester. The time needed to recover 
readiness would exponentially exceed the duration of sequestration, for 
an experienced and proficient generation does not grow overnight. 
Today, approximately half of Marine Corps' home station units are 
insufficiently resourced to achieve those readiness levels needed to 
execute wartime missions, respond to unexpected crises, and surge for 
major contingencies. There is no recovery under sequestration. It would 
take many years to recover readiness once sequestration ends.
    General Spencer. The Air Force's current plan calls for a recovery 
to 80 percent readiness by the end of 2023. However, this plan was 
contingent on full Presidential Budget (PB) 2016 funding, Overseas 
Contingency Operations funding moved to baseline, and a reduction of 
operations tempo to allow for a 1:4 deployment-to-dwell level. Recovery 
is likely to be delayed at least 5 years if sequestration returns in 
fiscal year 2016.
                             unfunded needs
    11. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, what is the greatest need for your Services in 
respect to rebuilding readiness?
    General Allyn. The Army's greatest need is budget certainty. 
Building proficient and ready units requires a well-synchronized 
training plan supported by available manpower and ready equipment. 
Without certainty in funding, it is impossible to fully develop and 
source a training plan beyond the short term. Further, a lack of budget 
certainty prevents the Army from developing a modernization plan 
because we are uncertain how much or how long funding will continue to 
enable fielding of modernized capability.
    Admiral Howard. Time and stable budgets are the most critical 
elements of Navy readiness recovery. A decade of combat operations and 
the resulting high operational tempo require a period of time for 
reset. With the additional impact of the Continuing Resolution and 
sequestration in fiscal year 2013, we have experienced significant 
delays. Further budget uncertainty will create additional setbacks to 
restoring our readiness.
    The fiscal year 2016 Navy budget submission is balanced to continue 
on a path towards readiness recovery while sustaining the most critical 
procurement and modernization necessary to achieve a ready Navy in the 
future. The Navy unfunded priority list forwarded by the Secretary of 
Defense reflects the additional procurement and modernization funding 
that would improve future readiness with respect to Navy's ability to 
execute the Defense Strategic Guidance. However, none of those 
requirements are a higher priority than the balanced approach offered 
in our fiscal year 2016 budget submission.
    General Paxton. The Marine Corps views rebuilding readiness through 
the lens of institutional readiness. Institutional readiness consists 
of five pillars: (1) Capability and Capacity to Meet Combatant 
Commander Requirements, (2) Unit Readiness, (3) High Quality People, 
(4) Infrastructure Sustainment, and (5) Equipment Modernization. 
Currently, institutional readiness is out of balance. Achieving and 
sustaining balance across these pillars now and into the future is 
essential to rebuilding readiness. Balanced institutional readiness 
leads to the whole-of-force reconstitution after over a decade of 
unprecedented sustain conflict to meet current and future requirements. 
A budget that supports required end strength and equipment 
recapitalization and modernization is an essential component leading to 
balanced institutional readiness.
    General Spencer. The Air Force needs both time and resources to 
rebuild readiness. Currently, time is our greatest need to recover 
readiness. However, time available to train (generate readiness) is 
severely limited by ongoing rotational deployments. The next 
significant limitation to readiness growth is skilled manpower for 
maintenance and operations. In short, after years of force reductions, 
we have a supply-demand mismatch. Two possible solutions exist: reduce 
the number/length of deployments to sustainable levels or increase the 
Air Force capacity to meet rotational demand to permit readiness 
growth. On the resource side, any defense authorization below PB levels 
will prevent full recovery of readiness.

    12. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, what additional necessary capability are you 
lacking in the fiscal year 2016 budget?
    General Allyn. The Army's unfunded priorities list was provided 
directly to Congress by the Department of Defense on March 27, 2015.
    Admiral Howard. PB-16 provides the minimum funding required to meet 
the missions articulated in the Defense Strategic Guidance and 
Quadrennial Defense Review. However, Navy had to accept risk in naval 
warfare systems' modernization, aircraft procurement, and air and 
missile defense capabilities to meet fiscal constraints. There are 
three warfare areas that could benefit from additional resources: 1) 
improve sensors and systems to defeat current and emerging air-to-air 
warfare and anti-ship cruise missile threats; 2) increase strike 
fighter, intelligence, surveillance and reconnaissance (ISR), and 
logistic aircraft capacity; and 3) improve undersea warfare sensors and 
fire control systems. A summary follows:

      Air-to-air Radio Frequency (RF) Kill Chain kits provide 
our aircraft the ability to counter sophisticated digital weapons and 
combat systems proliferated around the world today.
      Destroyer (DDG) combat system modernization will increase 
our capacity to meet Combatant Commander Ballistic Missile Defense 
(BMD) and Naval Integrated Fire Control-Counter Air (NIFC-CA) warfare 
needs (to defeat advanced missiles and strike/fighter aircraft).
      Surface Electronic Warfare Improvement Program (SEWIP 
Block II) will provide radar and communications signal intercept, and 
defeat anti-ship cruise missiles, enabling surface ships to operate in 
an anti-access environment.
      Submarine towed arrays are the most important sensors in 
our undersea warfare enterprise. Current inventory is inadequate to 
reliably meet global demand.
      Our legacy strike fighters (F/A-18A-D) are reaching end 
of life faster than planned due to use and wear. Improving the 
inventory of F/A-18F and F-35C aircraft will help reconcile a near term 
(2018-2020) strike fighter inventory capacity challenge, and longer 
term (2020-2035) strike fighter model balance within the carrier air 
wing.
      An additional MQ-4C (TRITON) would increase our capacity 
to respond to projected worldwide Combatant Commander ISR demand.
      C-40A aircraft fulfill a maritime logistics requirement, 
and provide short-notice high-priority cargo and passenger missions 
globally. Two additional aircraft will bring the fleet to the minimum 
wartime requirement of 17 aircraft to support execution of Combatant 
Commander operational plans.

    General Paxton. In addition to the fiscal year 2016 President's 
Budget request, the Department of Defense has submitted to Congress a 
consolidated list of the Services' unfunded priorities. The Marine 
Corps portion of this list totals $2.1 billion. Additional requirements 
include funding to enhance aviation readiness ($1.5 billion), funding 
for additional investments in critical training and weapon systems such 
as Networking on the Move, Javelin, and the Infantry Immersion Trainer 
($412 million), and for high-priority construction projects ($167 
million). These requirements do not supersede those laid out in the 
fiscal year 2016 President's Budget request.
    General Spencer. In the event congressional funding exceeds the 
level requested in the FY16 PB, the capabilities the Air Force would 
seek to acquire using the additional resources are identified in our 
fiscal year 2016 Unfunded Priorities List (UPL). Readiness is the 
highest priority on the UPL; this includes munitions, training, 
simulators, ranges, vehicle support, and equipment. The next priority 
is modifications for legacy fleets and programs supporting Combatant 
Commander requirements.
                       army brigade combat teams
    13. Senator Ayotte. General Allyn, if sequestration returns, what 
will specifically happen to the readiness of our Army Brigade Combat 
Teams?
    General Allyn. Sequestration will reduce the resources available 
for training and maintenance of units thereby reducing the readiness 
levels of our Brigade Combat Teams (BCTs). Under sequestration, the 
Army will struggle to maintain sufficient readiness to meet all of its 
current known requirements. The lack of funding and the need to 
dedicate resources to units filling current requirements will result in 
a degradation of readiness in every other unit, eliminating the Army's 
ability to rapidly respond to a contingency or other crisis. We will 
have fewer BCTs ready to respond to emerging crises and unforecasted 
demands.

    14. Senator Ayotte. General Allyn, General Odierno recently 
testified that ``The unrelenting budget impasse has also compelled us 
to degrade readiness to historically low levels. Today, only 33 percent 
of our brigades are ready, when our sustained readiness rate should be 
closer to 70 percent.'' What is the primary reason for this degraded 
readiness: insufficient training, manning, or poorly maintained 
equipment?
    General Allyn. Generally, four factors drive unit readiness: 
availability of Soldiers, availability of equipment; equipment 
serviceability; and unit training. Currently, Soldier availability and 
training are the leading factors of degraded readiness. The combined 
effects of sustained demand for Army capabilities, fiscal reductions, 
and the friction associated with re-organizing of Brigade Combat Teams 
(BCT) and the associated downsizing of the force, impact Soldier 
availability and the training time needed to restore proficiency. 
Unpredictable funding creates an additional, preventable level of risk 
to deliver ready forces.

    15. Senator Ayotte. General Allyn, if sequestration continues, what 
percent of units would have degraded readiness?
    General Allyn. If sequestration continues, the Army will only be 
able to build sufficient readiness to meet current known requirements. 
All other units will experience varying levels of degradation in 
readiness, ranging from significant to severe.
                    combat training center rotations
    16. Senator Ayotte. General Allyn, can you elaborate on how many 
Combat Training Center (CTC) rotations would be cut if sequester were 
to occur in fiscal year 2016?
    General Allyn. The Combat Training Centers (CTCs) continue to be 
our Army's premier training venue. If sequester occurs in fiscal year 
2016, the Army does not plan on cutting any of the scheduled rotations. 
The Army recognizes the value of a CTC rotation to a Brigade Combat 
Team not only in terms of maneuver training, but training in processes 
such as deployment, field maintenance, mission command, and leader 
development--training that cannot be accomplished at home station. As a 
result, the Army has elected to accept risk in home station training 
and readiness in order to preserve the ability to train these complex 
skills. However, the cuts imposed on home station training (HST) as a 
result of the sequester will result in many units arriving at the CTC 
in a degraded state of readiness--which means they will depart the CTC-
experience less ready than a fully resourced HST model delivers.
                        public shipyard workers
    17. Senator Ayotte. Admiral Howard, Admiral Greenert has testified 
that to address the workload to be completed in our public shipyards, 
the Navy will need to fund an additional workforce up to 33,500 Full 
Time Equivalent (FTEs) workers by fiscal year 2017. Secretary Sean 
Stackley stated that shipbuilding is critical to our security. If 
sequestration were to occur, how would that impact this Navy plan?
    Admiral Howard. If sequestration returns in fiscal year 2016, it 
will force deep cuts to the Navy Operation and Maintenance account, 
impacting our ability to hire the public shipyard workforce needed to 
properly maintain and modernize our existing fleet of nuclear powered 
aircraft carriers and submarines. The resulting shortfall in shipyard 
capacity would drive delays in maintenance completion, negatively 
impacting the readiness of our forces, particularly those needed for 
contingency response, and diminish the ability to achieve platform 
expected service life. Ultimately, this puts our ability to provide the 
forces to support Combatant Commander requirements at risk.
    It is also likely that continued sequestration would force us to 
forego or stretch procurement of ships and submarines. This would slow 
our progress toward achieving the 306-ship force required by the 2012 
Force Structure Assessment and driven by the Defense Strategic 
Guidance. In addition, the resulting disruptions in the ship design and 
construction phases would have significant consequences for the health 
and sustainment of the shipbuilding industrial base, which relies on 
stability and predictability to cost effectively build the future 
fleet.

    18. Senator Ayotte. Admiral Howard, how crucial are these new hires 
to the Navy's readiness recovery?
    Admiral Howard. Increasing the size of the workforce to meet the 
workload demand in the public shipyards is critical to ensure our ships 
and submarines receive required maintenance after many years of high 
operational tempo, achieve expected service life, and are modernized to 
keep pace with the evolving threat. Most of the work in the public 
shipyards involves nuclear-powered submarines and aircraft carriers, 
and there is very limited private sector capacity for this type of 
highly technical work. As a result, any shortfall in the public sector 
workforce capacity results in maintenance delays and deferrals, 
ultimately impacting Navy's ability to provide ready forces.

    19. Senator Ayotte. Admiral Howard, what is the work that will 
drive this demand?
    Admiral Howard. The increasing workload in the public shipyards on 
our nuclear-powered ships is driven by a combination of midlife 
availabilities on our legacy ship classes and the first docking 
availabilities on our newer ship classes. Those include Engineered 
Overhauls on Los Angeles Class submarines, Engineering Refueling 
Overhauls on Ohio Class submarines, Extended Docking Selected 
Restricted Availabilities on Virginia Class submarines, and Planned 
Incremental Availabilities (PIA) and Docking PIAs on Nimitz Class 
aircraft carriers. The volume of this anticipated work is a function of 
these regularly scheduled yard periods and the growth work that has 
accumulated as a function of a decade of high tempo combat operations.

    20. Senator Ayotte. Admiral Howard, which shipyards will require 
this additional workforce?
    Admiral Howard. All four public shipyards (Portsmouth, Norfolk, 
Puget Sound, and Pearl Harbor Naval Shipyards) require additional 
personnel to meet the projected workload in fiscal year 2016 and beyond

    21. Senator Ayotte. Admiral Howard, how will the increased need 
affect each of the four public shipyards?
    Admiral Howard. Each public shipyard has unique requirements, based 
on their projected workload in fiscal year 2016 and beyond. The 
President's Budget for fiscal year 2016 supports these important 
increases, which began in fiscal year 2015. The total manpower levels 
by shipyard in fiscal years 2014-16, including both Direct and 
Reimbursable funded Full-Time Equivalents (FTEs), are as follows:

 
----------------------------------------------------------------------------------------------------------------
                                                                                                FY14 to FY16 FTE
              Shipyard                  FY14 FTE Total     FY15 FTE Total     FY16 FTE Total       Difference
----------------------------------------------------------------------------------------------------------------
Norfolk.............................              8,917              9,433              9,732               +815
Pearl Harbor........................              4,341              4,628              4,765               +424
Portsmouth..........................              4,601              4,855              5,023               +422
Puget Sound.........................             11,122             12,560             13,283             +2,161
----------------------------------------------------------------------------------------------------------------
    TOTAL...........................             28,981             31,476             32,803             +3,822
----------------------------------------------------------------------------------------------------------------

                     amphibious warships shortfall
    22. Senator Ayotte. Admiral Howard, of the current inventory of 31 
amphibious warships, how many are prepared to embark marines and deploy 
right now?
    Admiral Howard. We currently have two Amphibious Ready Groups 
deployed with assigned Marine Expeditionary Units. We maintain at least 
one additional Amphibious Ready Group for contingency response. 
Additional ships are capable of embarking Marines and/or their 
equipment and deploying as Amphibious Task Force (ATF) Lift. While 
specific numbers vary based on operational cycles, the total number of 
ships available for ATF Lift do not meet the full requirement of the 
Combatant Commanders.

    23. Senator Ayotte. General Paxton, what is the Marine Corps' 
requirement for amphibious warships?
    General Paxton. The Chief of Naval Operations and the Commandant of 
the Marine Corps have determined the force structure to support the 
deployment and employment of 2 MEBs simultaneously is 38 amphibious 
warfare ships. Understanding this requirement, in light of fiscal 
constraints faced by the nation, the Department of the Navy has agreed 
to sustain a minimum of 33 amphibious warfare ships. However, COCOM 
demand is more realistically defined at about 54.
    It should be noted that, the 33 ship force accepts risk in the 
arrival of combat support and combat service support elements of the 
MEB, but has been determined to be adequate in meeting the needs of the 
naval force within today's fiscal limitations. This inventory level 
also provides the needed capacity for a forward presence and a MEB/
Expeditionary Strike Group (ESG) to respond to a crisis or contingency 
within 25 days.

    24. Senator Ayotte. General Paxton, what is the impact of the 
shortfall?
    General Paxton. The Chief of Naval Operations and the Commandant of 
the Marine Corps have determined the force structure to support the 
deployment and employment of 2 MEBs simultaneously is 38 amphibious 
warfare ships. Understanding this requirement, in light of fiscal 
constraints faced by the nation, the Department of the Navy has agreed 
to sustain a minimum of 33 amphibious warfare ships. However, COCOM 
demands are more realistically defined at about 54.
    Shortfalls in amphibious warship inventory have multiple negative 
effects. The 33 ship force accepts risk in the arrival of combat 
support and combat service support elements of the MEB, but has been 
determined to be adequate in meeting the needs of the naval force 
within today's fiscal limitations. This inventory level also provides 
the needed capacity for a forward presence and a MEB/Expeditionary 
Strike Group (ESG) to respond to a crisis or contingency within 25 
days. Shortfalls also negatively affect our ability to train. 
Conducting amphibious operations with our joint services is not just a 
matter of putting Marines on Navy ships. Those units must have the 
opportunity to operate with each other during their workup to establish 
relationships, tactics, techniques, procedures, and build 
interoperability.
                    air force mobilization authority
    25. Senator Ayotte. General Spencer, Congress recently provided a 
new mobilization authority to give increased access to the Reserve 
components. To date, how many times has the Air Force made use of this 
new authority and what, if any, impact has this had on the readiness of 
Active component units?
    General Spencer. The Air Force has utilized 12304b to mobilize 
approximately 1350 airmen across a variety of mission sets in support 
of fiscal year 2015 Combatant Commander requirements. 12304b has 
primarily been used by the Air Force for pre-planned missions in 
support of a Combatant Commander when there is no other authorized 
mobilization authority (12302) available. The impact on the readiness 
of the Active Component is unknown at this time as the requirements 
filled by these mobilized reservists would have otherwise gone unfilled 
if the Reserve Component was not made available by mobilization. In 
other words, the Air Force did not have sufficient capacity in its 
Active Component force to fill all requirements levied upon it by the 
Combatant Commanders.
    If the Air Force could change one aspect of the new authority it 
would be to relieve the Service of the requirement to provide prior 
notification of the use of 12304b in the ``J-Books'', and allow the 
service submission of the Program Objective Memorandum (POM) to OSD as 
sufficient notification. Due to the timing of the ``supplemental'' J-
Book submission, the Air Force is not able to utilize the new authority 
for pre-planned Combatant Commander missions paid for out of the 
supplemental budget and still allow sufficient notification to the 
Reserve Component members to manage their employer and personal lives 
with enough time to deploy.

    26. Senator Ayotte. General Spencer, please provide deployment-to-
dwell figures for Active and Reserve component units for each mission 
design series (MDS), i.e. type of aircraft, for 2012, 2013, and 2014.
    General Spencer. With a view towards regaining readiness by 2023, 
the Air Force manages our Combat Air Forces (CAF) fighter/bomber fleet 
at a 1:4 Deploy-to-Dwell (1:5 Mob-to-Dwell). All other MDS' are managed 
at 1:2 Deploy-to-Dwell (1:5 Mob-to-Dwell). Specific MDS' are listed 
below.

 
----------------------------------------------------------------------------------------------------------------
        Combat Air Forces MDS             Component             FY12               FY13               FY14
----------------------------------------------------------------------------------------------------------------
B-1.................................             Active              1:2.0              1:2.0              1:1.5
B-2.................................             Active                N/A                N/A                N/A
B-52................................             Active              1:2.5              1:3.7              1:3.6
A-10C...............................             Active              1:2.2              1:2.3              1:2.0
A-10C...............................                ANG             1:20.0                N/A                N/A
A-10C...............................               AFRC             1:30.0                N/A              1:7.5
F-15C...............................             Active             1:17.6              1:7.3              1:4.4
F-15C...............................                ANG             1:39.6                N/A                N/A
F-15E...............................             Active              1:3.4              1:2.9              1:3.3
F-16C+/CM...........................             Active              1:8.3              1:2.8              1:5.6
F-16C+/CM...........................                ANG             1:14.6             1:22.7             1:21.5
F-16C+/CM...........................               AFRC                N/A                N/A              1:8.6
F-16CJ..............................             Active              1:4.2              1:2.9              1:2.8
F-16CJ..............................                ANG              1:8.2                N/A              1:4.3
F-22................................             Active              1:6.4              1:7.0              1:1.6
HC-130..............................             Active              1:1.1              1:2.8              1:2.0
HC-130..............................                ANG                N/A             1:18.1                N/A
HC-130..............................               AFRC             1:12.3                N/A              1:6.4
HH-60...............................             Active              1:1.5              1:2.6              1:2.5
HH-60...............................                ANG              1:7.9             1:10.3                N/A
HH-60...............................               AFRC              1:7.1                N/A              1:7.0
----------------------------------------------------------------------------------------------------------------

CAF NOTES:

    1.  N/A means no contingency deployment for that MDS during that 
time frame.
    2.  CAF Deploy-to-Dwell ratio based on deployment of lead UTCs for 
each MDS.
    3.  Dwell is average for each CAF MDS deployment during specified 
fiscal year.
    4.  We do not track dwell for Low Supply/High Demand weapon systems 
such as E-3, E-8, EC-130H, RC-135, U-2, and SOF aircraft (includes 
Battlefield Airmen). Dwell is managed by individual crew position and 
can vary widely within a single unit.

 
----------------------------------------------------------------------------------------------------------------
       Mobility Air Forces MDS            Component             CY12               CY13               CY14
----------------------------------------------------------------------------------------------------------------
C-17................................             Active              1:1.7              1:2.1              1:2.2
C-17................................                ANG              1:6.3              1:6.9              1:7.5
C-17................................               AFRC              1:7.5             1:10.3             1:11.4
C-5A/B/C............................             Active              1:2.3              1:4.7              1:5.3
C-5A/B/C............................                ANG              1:3.8              1:4.5              1:5.2
C-5A/B/C............................               AFRC              1:5.4              1:6.2              1:6.7
C-5M................................             Active              1:5.1              1:4.5              1:4.2
C-5M................................               AFRC              1:5.6             1:13.2             1:11.0
KC-135..............................             Active              1:2.4              1:3.2              1:2.6
KC-135..............................                ANG              1:5.7              1:6.0              1:6.5
KC-135..............................               AFRC              1:5.2              1:5.3              1:6.8
KC-10...............................             Active              1:2.2              1:2.6              1:2.3
KC-10...............................               AFRC              1:5.9             1:10.0             1:13.1
C-130H..............................             Active              1:3.3              1:2.7              1:3.3
C-130H..............................                ANG              1:7.1             1:11.8             1:10.1
C-130H..............................               AFRC              1:8.1             1:12.5             1:11.1
C-130J..............................             Active              1:2.0              1:2.1              1:2.2
C-130J..............................                ANG              1:57*             1:18.7              1:7.6
C-130J..............................               AFRC              1:6.9              1:5.1              1:6.9
----------------------------------------------------------------------------------------------------------------

MAF NOTES:

    1.  * ANG units in transition from C-130H to C-130J.
    2.  MAF Deploy-to-Dwell: Ratio of time aircrews are on missions 
away from home supporting SECDEF-directed contingency taskings and 
TRANSCOM/HHQ-validated taskings vs. time at home station.
    3.  MAF Deploy-to-Dwell Calculation: Line qualified available 
aircrews divided by taskings minus one.
                            Equipment Reset
    27. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, what is the current status of our retrograde and 
reset efforts from Iraq and Afghanistan, and what equipment shortfalls 
would we face if we were forced to surge in the next 12 months?
    General Allyn.
Afghanistan Retrograde:
    United States Forces-Afghanistan reported that as of 28 March 2015, 
there were 86,900 pieces of Rolling Stock (RS) and 810,000 Twenty-Foot 
Equivalent Units (TEU) of Non-Rolling Stock (NRS) in Afghanistan that 
includes both supply and ammunition stocks. Of this equipment, about 
3,700 pieces of RS and roughly 1,250 TEUs of NRS belong to the Army. By 
the end of 2015, the current plan is to reduce these totals by 
approximately 25 percent from their current values through either 
retrograde, redeployment or divesture efforts. The vast majority of 
non-Army equipment is Contractor Managed, Government Owned (CMGO) 
equipment that will be divested of in Afghanistan. The Army currently 
plans to retrograde a total of about 2,900 pieces of RS and 1,000 TEUs 
of NRS and divest all remaining equipment.
    Equipment shortfalls due to a surge would be contingent on the size 
and scope of the operation. The Army has Army Prepositioned Stocks 
(APS) and equipment strategically located in or near the theater of 
operation to support several contingency plans that may potentially 
mitigate equipment shortfalls and reduce strategic deployment of unit 
equipment.
Iraq Retrograde:
    There are currently no major retrograde operations on going in 
Iraq. We are utilizing our Kuwait based APS equipment to support 
CENTCOM operations in Iraq.
Reset:
    The Army programmed to reset 841,000 major end items returning from 
Afghanistan in fiscal year 2015. However, 84,600 of those items are 
still required to support the Resolute Support Mission (RSM) and will 
be reset once they are no longer required for operations.
    Depending on the type of units and equipment required for a surge, 
the Army's programmed equipment Reset schedule may be delayed until the 
equipment is no longer required for operations and is again available 
for Reset.
    Admiral Howard. Navy is resetting both ships and our ground Navy 
Expeditionary Combat Command (NECC) forces.
    Reset of material readiness in carriers, surface combatants and 
amphibious ships, after over a decade of high tempo combat operations, 
requires $2.6B across the FYDP. The majority of the work should be 
completed by the end of fiscal year 2018. Some reset work will continue 
at lower levels through fiscal year 2020 because some of these 
platforms require the availability of a drydock to conduct lifecycle 
maintenance to achieve their expected service life (drydock maintenance 
is normally on an eight year cycle). The Navy OCO request for fiscal 
year 2016 includes $557M for this work.
    Navy capacity to surge ships for contingency response remains 
constrained until this work is completed.
    Retrograde for NECC equipment has been successfully executed with 
only a small percentage remaining (currently in transit). With OCO 
($62M), Navy's fiscal year 2016 budget request supports reset 
requirements for all NECC Mine Resistant Ambush Protected (MRAP) and 
Medium Tactical Vehicle Replacement (MTVR) vehicles, including 
communications gear and improvised explosive device defeat system 
installations.
    NECC forces could support a surge if required, but would be 
accepting risk related to the inventory of tactical vehicles until 
reset is completed in the beginning of fiscal year 2017. Upon 
completion of remaining equipment reset, NECC will be fully postured to 
support contingency response requirements when necessary.
    General Paxton. As a result of the continued support of Congress 
via OCO appropriations, the Marine Corps has been executing an 
aggressive ground equipment reset strategy to repair and return our OEF 
equipment to the Operating Forces as rapidly as possible. All Marine 
Corps equipment was withdrawn from Afghanistan in December 2014, and as 
of April 2015, all equipment has been returned to CONUS. To date, the 
Marine Corps is approximately 60 percent reset-complete and anticipates 
reset completion in fiscal year 2017.
    Our reset effort is helping in two key ways; (1) Providing an 
opportunity to repair, replace or recapitalize war-torn equipment 
slated to remain in our inventory; and (2) producing positive readiness 
impacts for some of our key high-demand/low-density equipment items. 
For example, we expect to see measureable readiness increase in many of 
our radar, satellite communications and motor transport systems.
    The Marine Corps is optimized and resourced for global crisis 
response, and we give priority to the equipping needs of deployed 
forces. To address equipping shortfalls in non-deployed units, the 
Marine Corps is undertaking a deliberate effort to right-size and 
balance our ground equipment inventory to support our future force 
structure and ensure equipment is optimally aligned to requirements. 
This ``ground equipment optimization effort'' will support 
reconstitution to properly scaled and balance force by fiscal year 
2017.
    General Spencer. After years of effort, major Air Force retrograde 
actions are nearing completion. Still engaged in combat, the Air Force 
has leaned its footprint and is positioned to support its Afghanistan 
enduring commitment equipment levels. Regarding reset actions, we still 
face significant work ahead to realize a complete reset of equipment 
after years of sustained combat operations. Major Air Force weapon 
systems do not have typical one-time ``reset'' requirements. Our major 
aircraft and engines are sustained on an ongoing basis. Sustainment 
requirements are driven by various timing criteria including aircraft/
engine cycles, life-limited parts, flying hours, etc. Such on-going 
sustainment activities underpin readiness. Our major reset areas such 
as aircraft procurement, ammunition and missile procurement, aerospace 
ground equipment, support equipment, basic expeditionary airfield 
resources, and vehicles continue to remain a high priority for the Air 
Force. However, depending on the nature of a surge, we would most 
likely exacerbate existing munitions shortfalls Air Force wide. Cross 
leveling between combatant commands would be required and could create 
risk to other operational plans. If the committee would like 
additional, more finite detail, we would be happy to provide a 
classified briefing upon your request.
                            Naval Readiness
    28. Senator Ayotte. Admiral Howard, in your written statement, you 
note that the Navy has only been able to keep one Carrier Strike Group 
and one Amphibious Readiness Group in the heightened readiness 
posture--just one third of the requirement. What have been the 
consequences of that shortfall?
    Admiral Howard. CSGs and ARGs deliver a significant portion of our 
striking power, and we are committed to keeping, on average, three 
additional CSGs and three additional ARGs in a contingency response 
status, ready to deploy within 30 days to meet operation plans 
(OPLANs). However, if sequestered, we will prioritize the readiness of 
forces forward deployed at the expense of those in a contingency 
response status. We cannot do both. We will only be able to provide a 
response force of one CSG and one ARG. Our current OPLANs require a 
significantly more ready force than this reduced surge capacity can 
provide. Less contingency response capacity would mean higher 
casualties as wars are prolonged by the slow arrival of naval forces 
into a combat zone. Without the ability to respond rapidly enough, our 
forces possibly could arrive too late to affect the outcome of a fight.

    29. Senator Ayotte. Admiral Howard, is the Navy considering forward 
deploying any additional carriers to make up for the lost presence 
under the Optimized Fleet Response Plan?
    Admiral Howard. The Navy continuously evaluates how best to 
position our naval forces overseas to meet evolving security 
environments, but we have no plans to forward deploy additional 
carriers at this time.
    While carrier presence varies slightly from year to year, our 
overall carrier presence will increase from fiscal year 2015 to fiscal 
year 2016. Seven month deployments under OFRP are a sustainable goal 
that balances our requirement to generate ready forces, provides 
forward presence, gets us to stable maintenance cycles, and enables us 
to respond to contingencies.

    30. Senator Ayotte. Admiral Howard, how, if at all, is the Navy 
used to meet NATO missions?
    Admiral Howard. The Navy provides support to a wide range of NATO 
missions. Specific rotational requirements are identified through the 
Global Force Management Allocation Plan (GFMAP). Additionally, other 
forces are offered in a ``Notice to Move'' (NTM) status. These forces 
are offered formally to NATO to be available within 30 days of an 
incident.
    Specific examples of Navy support to NATO include:

      Surface combatants support to Operation Atlantic Sentry, 
which provides for the Ballistic Missile Defense (BMD) of Europe. This 
persistent presence is a gateway for future endeavors, including Aegis 
Ashore, and establishing an organic NATO BMD capability.
      We provide surface combatant and Maritime Patrol Aircraft 
support to Operation ACTIVE ENDEAVOR, the U.S.-NATO counter-terrorism 
operation.
      Surface combatants provide presence in the Black Sea 
under NATO auspices. For example, USS Vicksburg is currently the 
command ship for Standing NATO Maritime Group 2 (SNMG-2) which provided 
presence in the Black Sea for nearly the whole month of March. SNMG-2 
began operations in January, 2015, and will conclude this June.
      Commander, Naval Forces Europe is dual-hatted as a NATO 
Joint Force Command, Naples, coordinating NATO operations in Kosovo. 
Commander, SIXTH Fleet is also dual-hatted as Commander, Naval Striking 
and Support Forces NATO, in Lisbon, Portugal.
      We actively participate in NATO exercises: BALTOPS, 
TRIDENT JUNCTURE, MARINER, and MANTA. Additionally, we conduct bi-
lateral exercises such as Joint Warrior, to strengthen our 
interoperability and tactics with our NATO partners.

    Port visits and Distinguished Visitor embarks, such as USS Theodore 
Roosevelt's recent visit to the United Kingdom and embarks of senior 
government officials from UK, Finland, Sweden, France, and Greece, also 
deepen ties with our NATO partners.

    31. Senator Ayotte. Admiral Howard, how does that affect the 
carrier presence that is required for combatant commander missions?
    Admiral Howard. NATO has not requested carrier presence in fiscal 
year 2016, and Navy is not sourcing any NATO carrier presence in the 
SECDEF-approved fiscal year 2016 Global Force Management Allocation 
Plan.
                        Training and Simulation
    32. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, in 2013, training simulation accounts were 
severely cut due to sequestration, yet they can provide significant 
cost savings where trainees and long-term servicemembers can learn 
lessons that don't cost thousands of dollars each time a mistake is 
made. How do each of your Services plan to integrate simulators into 
your readiness and training agenda?
    General Allyn. Live, Virtual, Constructive, and Gaming capabilities 
are integral components of the Army Training Strategy. Use of 
simulations is integrated into Army training in two ways. First, 
simulations are specified in our Unit Training Models and units use 
virtual, gaming, or constructive simulations to execute building-block 
training events. Units move progressively from simulations based events 
to ``live'' events. Similarly, in Army schools, specific simulations 
are required in executing Programs of Instruction. Second, Commanders 
routinely use simulations to enhance their training. For example, units 
train Mission Command using simulations to reduce lower-echelon unit 
participation to save on operations and maintenance dollars. Further, 
aviation units use the Aviation Combined Arms Tactical Trainer (AVCATT) 
to practice aviation missions in a virtual environment prior to 
expending flying hours.
    Admiral Howard. Navy has long recognized the criticality of 
integrating Modeling and Simulation (M&S) technology into Navy's 
training and readiness plans. M&S technology is a ``readiness 
enabler'', and supports Navy's mission to man, train and equip our 
forces.
    As a result, Navy formally established the OPNAV Simulator Training 
Requirements Group (OSTRG), which reviews investment plans for 
simulator, Fleet Synthetic Training (FST) and Live, Virtual, and 
Constructive (LVC) Training, Joint National Training Capability (JNTC) 
programs, and assesses current capabilities and limitations. OSTRG 
leverages the Fleet Training Integration Panel (FTIP), and meets bi-
annually to achieve cross-community, multi-mission synthetic training 
integration, and proposes live training events for simulator-based 
training. Individual platform and integrated simulator/training 
requirements are codified in Naval Training System Plans. Furthermore, 
Warfare Area Simulator Master Plans, updated during bi-annual FTIP 
symposiums, formulate capability-based requirements and acquisition 
strategies to expand simulator training. These plans consider legacy 
systems as candidates for modernization and reflect the development of 
a full range of simulators to support synthetic training. The OSTRG and 
its members focus on cost-effective solutions and leverage new 
technologies to meet readiness performance standards.
    Since PB-14, OSTRG and FTIP members worked to develop the first 
OPNAV Simulator Master Plan (OSMP). The goal of the OSMP is to provide 
ready, responsive, and adaptive forces at tactical and operational 
levels, through a training continuum that balances simulated and live 
training events to improve warfighting readiness while reducing Total 
Ownership Cost. The OSMP translates validated and Fleet-approved 
integrated training requirements into integrated simulator training 
roadmaps; and prioritizes and recommends sourcing solutions for Navy's 
simulator, FST and LVC training requirements in support of both 
platform and warfare area readiness.
    General Paxton. There is no doubt that simulators provide a unique 
opportunity to provide realistic training opportunities that offset 
some of the costs associated with real-world training. These systems 
allow for varied training experiences, can minimize ammunition usage, 
and decrease logistical costs. In fact, the Commandant's Planning 
Guidance for 2015 specifically states that development and use of 
simulators remains a high priority for the service.

        ``We will continue to support the fielding of systems that 
        enhance our proficiency and safety in operating weapons and 
        equipment. Our investment in training systems will reflect the 
        priority we place on preparing for combat and be fully 
        integrated with training and readiness standards. I expect all 
        elements of the MAGTF to make extensive use of simulators where 
        appropriate.''
                                    -Gen. Joseph Dunford

    However, as with other modernization efforts, we have had to defer 
some simulator development initiatives in order to prioritize near term 
readiness. We are currently funding simulator development and testing 
through individual system programs and supporting contracts. Due to the 
programming cycle, Fiscal Year 2018 will be the first opportunity to 
fund enduring integrated simulator capability.
    Specifically, the Marine Corps Training and Education Command's 
(TECOM) Modeling and Simulation (M&S) Master Plan, Squad Immersive 
Training Environment (SITE), as well as the Live, Virtual, 
Constructive-Training Environment (LVC-TE) identify service 
requirements for simulators and simulations. These requirements are 
being addressed by TECOM. In conjunction with this we are continuing 
our efforts to integrate aviation systems with ground simulations to 
provide opportunities to conduct training that tests the full structure 
and capabilities of the Marine Air Ground Task Force (MAGTF).
    General Spencer. The Air Force uses aircrew simulators in most 
cases to augment or supplement live fly training as simulators cannot 
replace all live fly training. We focus most of our simulator effort on 
providing training in emergency procedures, contested and degraded ops, 
mission rehearsal and area denial, all items that are best suited for 
training in a controlled and secure virtual training environment. 
Simulators are an integral part of the Air Force readiness training 
objectives. Without high fidelity aircrew simulators readiness would 
quickly be reduced to unacceptable levels.

    33. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, what cost savings can the Services leverage from 
using simulation technology when preparing our Armed Forces?
    General Allyn. The Army maintains a large variety of training 
simulators allowing units to train at basic skills such as 
marksmanship, driving, tank gunnery, and aviation. Some are networked 
to several others allowing battalion task forces to simulate large 
scale maneuvers at reduced cost and equipment OPTEMPO.
    These training simulators save the Army money when compared to live 
training as they require less operations and maintenance funds (e.g. 
tank track, ammunition, etc.). However, the cost of acquiring and then 
maintaining simulators offsets a considerable amount of these savings--
these systems are costly. Simulators are used to provide baseline and 
some sustainment skills, and to rehearse complex actions in order to 
reduce risk to Soldiers. Ultimately, however, Soldiers must execute 
their training in a ``real-world'' environment--such as with live-fire 
exercises. While simulations are vital in building Soldier, Leader, and 
unit proficiency, they cannot replicate the complexity and critical 
human factors that arise in live, combined arms maneuver exercises 
against a thinking adversary.
    Admiral Howard. The Navy continues to explore simulation technology 
opportunities to ultimately reduce operations and maintenance costs 
while sustaining, or improving, force readiness. Simulators are 
integrated into individual and team training, both as part of formal 
courses of instruction and crew preparation for at-sea operations. 
Simulator investments play a pivotal role in improving training 
proficiency and delivery. Life cycle costs of simulation are less than 
the overhaul, and preventive/corrective maintenance of the tactical 
equipment. Simulation can prevent personal injury as well as weapons 
damage, saving thousands of dollars as well as damage to personnel 
readiness.
    Simulators normally operate at a fraction of the cost of 
operational equipment (e.g. operation of aviation simulators are 
normally 1/10 or less the cost of actual aircraft flying cost). In 
addition, simulators do not wear out or break high-valued equipment 
during routine training. This applies to all levels of training where 
simulators can be used. In some cases, lower fidelity devices can 
perform a large percentage of training tasks lowering total procurement 
cost of a training system.
    General Paxton. There is no doubt that simulators provide a unique 
opportunity to provide realistic training opportunities that offset 
some of the costs associated with real-world training. These systems 
allow for varied training experiences, can minimize ammunition usage, 
and decrease logistical costs. In fact, the Commandant's Planning 
Guidance for 2015 specifically states that development and use of 
simulators remains a high priority for the service.

        ``We will continue to support the fielding of systems that 
        enhance our proficiency and safety in operating weapons and 
        equipment. Our investment in training systems will reflect the 
        priority we place on preparing for combat and be fully 
        integrated with training and readiness standards. I expect all 
        elements of the MAGTF to make extensive use of simulators where 
        appropriate.''
                                    -Gen. Joseph Dunford

    However, as with other modernization efforts, we have had to defer 
some simulator development initiatives in order to prioritize near term 
readiness. We are currently funding simulator development and testing 
through individual system programs and supporting contracts. Due to the 
programming cycle, Fiscal Year 2018 will be the first opportunity to 
fund enduring integrated simulator capability.
    Specifically, the Marine Corps Training and Education Command's 
(TECOM) Modeling and Simulation (M&S) Master Plan, Squad Immersive 
Training Environment (SITE), as well as the Live, Virtual, 
Constructive-Training Environment (LVC-TE) identify service 
requirements for simulators and simulations. These requirements are 
being addressed by TECOM. In conjunction with this we are continuing 
our efforts to integrate aviation systems with ground simulations to 
provide opportunities to conduct training that tests the full structure 
and capabilities of the Marine Air Ground Task Force (MAGTF).
    General Spencer. First and foremost, our number one priority is to 
sustain and enhance force readiness. We use simulation technology to 
maintain, sustain, enhance, supplement, and in some cases, replace 
training conducted in a live environment. The use of simulation 
technology may or may not result in direct cost savings, but should 
result in a more ready force. Therefore, we do not have an additional 
cost savings estimate beyond those that have already been programmed 
and budgeted.
    Training is a key to force readiness and training for combat and 
other operational missions is an extremely complex endeavor. 
Sophisticated threat systems and advanced operational capabilities are 
driving an increased emphasis on the use of simulation technologies 
(Live, Virtual, and Constructive-Operational Training (LVC-OT) 
capabilities). As threat environments become more dense and more highly 
contested, our ability to simulate them in the live training 
environment is becoming increasingly difficult. Additionally, our fifth 
generation weapon systems are so advanced that challenging them in the 
live training environment while protecting their capabilities and 
tactics from exploitation is likewise becoming more and more 
problematic.
    LVC-OT capabilities address these issues by providing solutions for 
increasing the value of live operational training, and simulating the 
live environment using concurrent, high-fidelity, networked training 
systems. Leveraging simulation technology significantly improves our 
readiness at a cost that would be otherwise unaffordable. We are 
working diligently to maximize the value of every training dollar by 
optimizing our LVC-OT capabilities.

    34. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Allyn, if sequestration does occur, will training 
simulators be cut similarly to the 2013 sequestration?
    General Allyn. The Army will seek to optimize its investments in 
training by balancing operational training investments, institutional 
investments, and simulations investments. All three areas will be 
impacted significantly by sequestration much as they were in 2013.
    Admiral Howard. A return to sequestration in fiscal year 2016 would 
necessitate a revisit and revision of the Defense Strategic Guidance. 
Required cuts will force us to further delay critical warfighting 
capabilities, reduce readiness of forces needed for contingency 
response, further downsize weapons capacity, and forego or stretch 
procurement of ships and submarines as a last resort. We will be unable 
to mitigate the shortfalls like we did in fiscal year 2013 because we 
are still recovering from operating account shortfalls that were 
deferred to later years in the fiscal year 2013 FYDP. Our PB-16 budget 
represents the minimum funding necessary to execute the defense 
strategy. Sequestration impact to training simulators would come if we 
had to stretch or eliminate building new facilities or reduce training 
associated with generating ready forces in order to husband dollars.
    General Paxton. Despite the unique training opportunities afforded 
by simulation systems, such opportunities would, as with all training 
efforts across the Marine Corps, be affected by a sequester in fiscal 
year 2016. The fiscal year 2016 President's Budget request represents 
the bare minimum at which the Marine Corps can meet the current Defense 
Strategic Guidance. The Marine Corps would be forced to reduce or delay 
home station operations and maintenance activities in order to protect 
near-term readiness, forward deployed forces, and our capacity to meet 
COCOM demands under sequestration. Though no decisions have been made 
regarding specific reductions under an fiscal year 2016 sequester, 
advanced skills training and service level exercises would likely be 
scaled back accordingly, along with advanced training technologies, 
simulation systems training, and related activities. We would also 
assume additional risk in our modernization accounts, reducing the 
amount of investment funding available to develop and procure new 
systems.
    General Spencer. In 2013 due to sequestration, the Air Force was 
required to make several reductions in simulator operations and 
support. While we did not remove simulators or completely shut down 
simulator operations, the Air Force cancelled large virtual exercises, 
reduced travel funding for units not co-located with a simulator, and 
curtailed simulator sustainment funding. We don't yet know the specific 
training areas that will be impacted by any future sequestration 
actions. During any sequestration, the Air Force will balance training 
resources to meet fiscal constraints.
                       Combatant Commander Demand
    35. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, what are the current mitigation plans and 
strategies to meet combatant commander demand until full readiness is 
recovered?
    General Allyn. The Army currently meets the majority of combatant 
commander requirements for forces. The Army has identified a ceiling to 
the Joint Staff that identifies an upper limit for overall demand that 
still permits Service readiness recovery. Above this ceiling, 
additional requirements would put service readiness recovery at risk. 
In the Global Force Management process, the Army identifies which 
additional requirements would be above the ceiling, the risks to 
sourcing those requirements, and risk mitigation plans. For planned 
requirements, these mitigation options include cancelling or delaying 
modernization programs and taking risk in services and infrastructure. 
For unplanned or contingency requirements, mitigation requires 
balancing between repurposing units from other missions, meeting 
deployment timelines, and the overall readiness of deploying units.
    Admiral Howard. While we continue to source to capacity, the 
reality is we do not have sufficient force structure to meet all 
Combatant Commander (CCDR) demand. CCDRs must mitigate risk through 
judicious employment of allocated forces.
    Risk is mitigated through the Global Force Management Allocation 
Plan (GFMAP), by allocating forces to the highest priority missions, 
and in coordination with the CCDRs, Joint Staff, and other Services, to 
ensure global mission requirements are executed at an acceptable level 
of risk.
    General Paxton.

      For the Marine Corps to create dwell time necessary to 
build the institutional readiness our nation requires from its 911 
force both now and in the future, we will have to change how we provide 
forces to meet Geographic Combatant Commander (GCC) requirements.
      In the near term, your Marine Corps will be ready to 
respond to the nation's call; however, our capacity to respond may be 
severely diminished.
      By reducing the capacity, but not the capabilities of our 
forward deployed MAGTFs, we can create some trade space in personnel 
and resources necessary to improve institutional readiness.
      Reductions in unit capacity alone may be insufficient to 
improve D2D significantly and more importantly to optimize unit 
readiness. While requiring further study, anticipate each element of 
the MAGTF will require uniquely tailored solutions.
      By tailoring the MAGTF to the specific capabilities 
required by the Combatant Commanders, we can create the opportunity for 
the Marine Corps as a Service to regain readiness from over a decade of 
conflict. These readiness and recovery efforts will further allow the 
Marine Corps to provide a ``ready force'' to support the operations 
across ROMO.

    General Spencer. The Air Force is currently meeting combatant 
commander rotational demand with ready forces, and they are performing 
exceptionally well in Operations RESOLUTE SUPPORT and INHERENT RESOLVE. 
Unfortunately, this has come at the cost of likely sourcing the demands 
of the Defense Strategic Guidance with unready forces. We have 
successfully mitigated risk to rotational requirements at the expense 
of our broader National Military Strategy. We simply cannot mitigate 
all of the risk at our current capacity.

    36. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, have you established milestones or metrics to 
track the rebuilding of the readiness?
    General Allyn. Yes. The Army has developed a combination of metrics 
to evaluate our readiness recovery and force generation efforts. Those 
metrics consist of, but are not limited to, deploy-to-dwell ratios; 
aggregate demand for Army forces, including deploy-to-dwell, theater 
committed, or prepare to deploy units; combat training center unit 
preparedness results (or other major training event); and minimum 
floors of full spectrum readiness. By examining these and other 
variables, the Army accurately tracks readiness progress toward 
healthy, sustainable force generation levels.
    Admiral Howard. Yes. Navy measures our current and projected 
operational output through the Fleet Response Plan Operational 
Availability (FRP Ao) metric. This measures ``presence delivered'' and 
``contingency response capacity'' against a standard of sustainable 
levels of presence and the most demanding Combatant Commander 
Operational Plan for contingency response capacity. The CNO recently 
discussed the FRP metric of 2+3 Carrier Strike Groups (CSGs) as our 
goal which reflects a sustained global presence of 2 CSGs and 3 ``ready 
to respond'' within about 30 days. Across most of the Fleet, Navy will 
continue to be challenged through this year, particularly for 
contingency response capacity, and then slowly begin to recover FRP Ao 
levels through FY 2020 across the force.
    Because our depot maintenance challenges are among the most 
critical aspects underpinning our readiness recovery, we are monitoring 
the hiring plans and output of both aviation depots and shipyards 
closely, adjusting as needed. We are investing not only in staffing, 
but also in workforce development, to achieve these goals.
    General Paxton. Yes. Service-level readiness systems and processes 
are informed by, and inform, the Chairman's Readiness System that 
codifies readiness reporting and assessment used to track the degree to 
which readiness is recovering or decaying.
    Our metrics to monitor manning, equipment, and training levels, and 
assessment process provides near-term analysis of readiness of the 
Marine Corps' ability to execute operational plans and portend 
readiness to resourcing linkages.
    The full weight of the Budget Control Act would preclude the Marine 
Corps from meeting its full statutory and regulatory obligations, and 
adequately prepare for the future. Under sustained sequestration for 
forces not deploying, the fuel, ammunition, and other support necessary 
for training would be reduced thus inhibiting our ability to provide 
fully-trained Marines and ready units to meet emerging crises or 
unexpected contingencies. We would see real impacts to all home station 
units, then our next-to-deploy and some deploy forces . . . this 
constitutes the internal decay, the beginnings of the hollow force we 
have fought so hard to avoid.
    Prior to the onset of sequestration and operational requirements 
supporting the New Normal, the Marine Corps was on a trajectory to 
reconstitute to a ready force by 2017. Regrettably, this is no longer 
the case. We have not fully recovered from the turmoil caused by the 
last sequester. Full recovery is frustrated by the specter of another. 
Another sequester would prevent any opportunity to further recover 
readiness.
    General Spencer. The Air Force has employed a readiness recovery 
model that assesses the five key ``levers'' of Air Force Readiness 
(deploy-to-dwell ratio, and four resource levers--flying hour program, 
critical skills availability, access to training resources, and weapons 
system sustainment). Additionally, the model provides an analytical 
assessment of 20 leading indicators of readiness to provide a detailed 
understanding of the range of possibilities for resourcing and ops 
tempo over the planning horizon. This methodology helps quantify two 
key readiness realities; the readiness generation process takes 
resources and time. While one lever cannot fix the problem 
independently, a shortfall in any single lever can create a severe 
readiness problem. Our readiness metrics are tracked through the Joint 
Service system called Defense Readiness Reporting System. This system 
communicates commanders' observations, concerns, metrics, and 
approaches to their combat readiness, from the field back to the 
headquarters staff. The aggregate findings from the field are shared 
with our legislators through the Quarterly Readiness Report to 
Congress. With that understanding, our requirements to achieve 80 
percent readiness by the end of 2023 are PB-level funding of programs 
that support the four resource levers, in combination with improved 
deploy-to-dwell ratios for our force; through 2023.

    37. Senator Ayotte. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, if sequester does happen, how many years would 
full readiness recovery be delayed, and how would you respond to the 
needs of combatant command?
    General Allyn. Under sequestration, the Army will not be able to 
bring its manpower, operations and maintenance, modernization, and 
procurement expenditures into balance until at least FY23 and will 
require at least an additional 3 years thereafter to return to full 
readiness. In short, the nation would be accepting considerable risk 
for no less than 7 years.
    In order to meet the priority needs of combatant commands, the Army 
would focus resources on deploying units and decrement training 
resources for units not deploying. This will increase the risk for 
contingency operations and weaken overall leadership experience across 
the Army, but will ensure we can meet Combatant Commander near term 
requirements.
    Admiral Howard. Under sequestration there is no path to full 
readiness recovery to execute the required missions of the Defense 
Strategic Guidance (DSG). Our PB16 budget submission represents the 
bare minimum necessary to execute the DSG in the world we face. A 
return to sequestration in fiscal year 2016 would necessitate a revisit 
and revision of the defense strategy.
    In the short term, the required cuts would force us to further 
delay critical warfighting capabilities, reduce readiness of forces 
needed for contingency responses, further downsize weapons capacity, 
and forego or stretch procurement of force structure as a last resort. 
While sequestration causes significant near-term impacts, it would also 
create serious problems that would manifest themselves after 2020 and 
would be difficult to recover from. For example, even assuming a stable 
budget at PB-16 levels and no major contingencies for the foreseeable 
future, we estimate that Navy will not recover from the maintenance 
backlogs that have accumulated from the high operational tempo over the 
last decade of war and the additional effects of the fiscal year 2013 
sequestration until approximately fiscal year 2018 for Carrier Strike 
Groups and approximately fiscal year 2020 for Amphibious Ready Groups, 
more than five years after sequestration in fiscal year 2013.
    As we did in fiscal year 2013, if sequestered in 2016 and beyond, 
Navy will deliver ready forces forward to meet the highest priorities 
of the Combatant Commanders. Some lower priority deployments may have 
to be cancelled and contingency response capacity will continue at 
reduced levels.
    General Paxton. We are not able to fully assess the impact of a 
sequester or BCA funding levels. One of the greatest challenges with 
this current environment is the constant change and resultant 
uncertainty. We are providing our best estimates for all aspects of our 
Title X responsibilities, but we do know that we will have fewer units 
resulting in less capacity and high deployment to dwell ratios 
(Organize).
    There will be reduced time to train, as well as reduced assets 
available for training (such as fuel, ammunition, and equipment 
readiness) (Train).
    Reduced equipment availability and legacy equipment not on par with 
the modern battlefield (AAVs, 4th generation aircraft, outmoded radars 
and C4I) (Equip).
    Over time, sequestered budgets will prevent the Marine Corps from 
meeting Combatant Commanders' requirements at an acceptable deployment 
to dwell ratio and prioritize training resources toward next to deploy 
units, leading to a less-ready force.
    With respect to our response to a major contingency, all of the 
Marine Corps' operational units would be fully committed with no 
capacity for rotation of forces. Bottom line, those units directed to 
the operation would remain until the mission is complete regardless of 
the duration.
    In the near term, your Marine Corps will be ready to respond to the 
nation's call; however, our capacity to respond will be severely 
diminished.
    By tailoring the MAGTF to the specific capabilities required by the 
Combatant Commanders, we can create the opportunity for the Marine 
Corps as a Service to regain readiness from over a decade of conflict. 
This readiness and recovery model would allow the Marine Corps' home 
station units to be the ready force that would respond to unforeseen 
crises and major contingencies.
    General Spencer. The Air Force is committed to meeting Combatant 
Commander requirements for all aspects of Air Power projection. To that 
end we are performing exceptionally well in Operations RESOLUTE SUPPORT 
and INHERENT RESOLVE. If sequester were to return, we would likely 
continue to perform at high levels in support of these and similar 
operations, to the further detriment of overall full-spectrum 
readiness. Under sequester funding levels, our recovery rate to achieve 
80 percent readiness by the end of 2023 would slow significantly; 
delaying this goal by at least 5 years. Finally, Combatant Commander 
requirements extend well beyond counterterrorism and counterinsurgency 
efforts and the Air Force is committed to supporting Combatant 
Commander needs were we to go to war with a near-peer adversary in a 
high-end fight. We would have insufficient ready forces to meet that 
demand and the requirements of the Defense Strategic Guidance.
              Special Purpose Marine Air-Ground Task Force
    38. Senator Ayotte. General Paxton, in December 2014 testimony, 
General Dunford testified that approximately 50 percent of Marine Corps 
units at home station were in a degraded state of readiness due to 
personnel and equipment shortfalls. He further noted that this lack of 
readiness is due, in part, to the increased requirements from the 
unexpected Special Purpose Marine Air Ground Task Force (MAGTF) crisis 
response teams in U.S. Central Command (CENTCOM) and U.S. Africa 
Command (AFRICOM). Did the Force Structure Review Group consider the 
Special Purpose MAGTF crisis response team requirements when 
determining the optimal number of forces required? If not, how will 
this new--and potentially enduring--requirement affect the Marine 
Corps' ability to meet personnel tempo goals and readiness requirements 
as the size of the force continues to decline?
    General Paxton. No, the Force Structure Review Group did not 
consider the SPMAGTFs for CENTCOM or AFRICOM when it was originally 
convened. However, the 186,800 force was designed to optimally fulfill 
a crisis response capability which these units are performing. In a 
fiscally constrained environment below 186,800, since we are committed 
to maintaining near term readiness and crisis response, the enduring 
requirement for these units will negatively affect the readiness of 
home station units which are preparing for contingency response in 
support of Major Combat Operations (MCO). If we were fully funded at 
the optimal 186,800 personnel end strength we would be able to fulfill 
our crisis response capability and improve our preparedness for 
contingency response because the increased dwell time built into this 
end strength allows sufficient time to train, equip, and man home 
station units.

    39. Senator Ayotte. General Paxton, what is the Marine Corps doing 
to ensure we're not `robbing Peter to pay Paul' when you remove 
capabilities and readiness from Marine Expeditionary Forces to stand up 
Special Purpose MAGTFs?
    General Paxton. The current construct of a three-ship Amphibious 
Ready Group (ARG) and a Marine Expeditionary Unit (MEU) remains 
America's preeminent crisis response force providing deterrence and 
decision space across the range of military operations. However, 
amphibious war ship inventory and operational tempo constrain the 
number of ARGs available to support Combatant Commanders. In a changing 
security environment, forward deployed and forward engaged Special 
Purpose MAGTFs are employed to provide crisis response, security, and 
theater cooperation capabilities as required by the Combatant 
Commanders. Special Purpose MAGTFs are intended to fill the crisis 
response gap when the paucity of operationally available amphibious 
warships precludes the allocation of ARG/MEUs to the Combatant 
Commanders.
    The Marine Corps' top resourcing priority remains those forward 
deployed and forward engaged Marines and Marine units, especially those 
in harm's way. To protect the readiness of those forward deployed and 
forward engaged units--such as Special Purpose MAGTFs and Marine 
Expeditionary Units--personnel and equipment are resourced from home 
station units subordinate to the three Marine Expeditionary Forces. 
Home station units constitute the ready force that would surge to 
unforeseen crises and major contingencies. The Marine Corps is 
committed to generating ready forces to respond to all operational 
requirements, while working to ensure all Marine Expeditionary Forces 
are capable of executing missions. However, another sequester would 
prevent any opportunity to recover the readiness our Nation deserves 
and lead to creating a hollow force we have fought so hard to avoid. In 
a major conflict, resource shortfalls resulting from sequester-level 
funding would increase the timelines needed to achieve our objectives 
thus elevating the likelihood of mission failure and greater loss of 
life.

    40. Senator Ayotte. General Paxton, with approximately 50 percent 
of home station units, which are needed to respond to major crises, 
being declared ``not ready'', what is the Marine Corps' plan to restore 
these units to readiness?
    General Paxton. Home station units constitute the ready force that 
would respond to unforeseen crises and contingencies. As the Nation's 
ready force, the Marine Corps will continue to generate ready forces to 
meet current operational requirements, work to recover full spectrum 
readiness for home station units, and protect those aspects of 
institutional readiness that allow for the reconstitution of the whole-
of-force after over a decade of unprecedented sustained conflict. 
Personnel shortfalls at the unit level are a principal detractor to 
recovering readiness. Actions taken to help restore home station unit 
readiness include manning assignment policies that improve (1) leader-
to-led ratios, especially among the Noncommissioned Officer and Staff 
Noncommissioned Office grades; (2) required unit personnel fill levels 
essential for combat effectiveness, (3) seek to employ the force at a 
1:3 deployment to dwell ratio (optimum) in the future, and(4) optimized 
readiness across the entire unit life cycle versus only the pre-
deployment training period. The Marine Corps regularly examines 
balancing the requirements to meet current operational requirements 
against operational tempo that promotes readiness restoration of home 
station units.

    41. Senator Ayotte. General Paxton, what specific risks are the 
Marine Corps taking by having a total force less than the optimal force 
of 186,000?
    General Paxton. A discussion of required force structure to meet 
U.S. national security requirements must be viewed from the lens of the 
five pillars of readiness. At PB16 funding levels, the Marine Corps 
meets current crisis and contingency response force levels, but with 
some risk. We will meet the nation's requirements, the question is, how 
well can we prepare those troops for deployment? In order to make 
continuous and long term readiness a reality, we have to be able to 
train personnel and perform maintenance on equipment. Right now, we 
have about a 1:2 deployment to dwell ratio. That is, Marines are 
deployed for 7 months and home for 14. This allows a proper unit 
rotation to ensure that each time a unit deploys they are fully ready. 
If we are forced to take further cuts, that level will decrease closer 
to 1:1.5 or 1:1. What this means is that units have less time between 
deployments to conduct the required training prior to their next 
deployment.
                      Joint Light Tactical Vehicle
    42. Senator Ayotte. General Allyn and General Paxton, how important 
is the Joint Light Tactical Vehicle (JLTV) program to the readiness of 
each of your Services?
    General Allyn. Joint Light Tactical Vehicle (JLTV) fielding will 
substantially improve Army readiness by closing capability gaps in the 
Army's light tactical vehicle fleet. Tactical mobility is a vital 
ground combat force enabler and enhances the effectiveness of combat 
and sustainment forces. The current High Mobility Multi-purpose Wheeled 
Vehicle (HMMWV) is not suitable in the current environment as armoring 
initiatives have overweighed the chassis, limiting its mobility. 
Additionally, the HMMWV lacks the requisite on-board power to support 
the current mission command systems. Current trends in military 
operations require forces to continue to develop expeditionary 
capabilities across the range of military operations. The JLTV provides 
the mobility Soldiers need, with the protection and on-board power 
needed in the future operating environment. The Mine-Resistant Ambush 
Protected (MRAP) vehicles used in Iraq and Afghanistan lacked the 
cross-country mobility JLTV will provide. MRAP's size and weight 
limited Army operations to road networks making our Soldiers' movements 
predictable and easier to target. JLTV will allow our Soldiers more 
flexibility for off-road operations, reducing their exposure to 
Improvised Explosive Devices and ambushes. This added mobility coupled 
with the increased protection integrated into the JLTV design reduces 
our Soldiers' risk. Finally, JLTV is designed to enable the integration 
of our current and future mission command. This will enable commanders 
to see the battlefield and synchronize combat power to enable mission 
success. The Army plans to prioritize early fielding to Infantry 
Brigades and Special Operations Forces.
    General Paxton. The JLTV is a central pillar of our ground combat 
and tactical vehicle modernization plan and critical to readiness of 
Marine Corps forces to deploy and to be employed in any clime and 
place. The JLTV program, and the capability it will provide, is second 
only in importance to our amphibious mobility modernization within our 
vehicle portfolio. JLTVs will replace the portion of HMMWVs that are 
most at risk; those that perform a combat function and are most likely 
to be exposed to enemy fires. Those vehicles are assigned predominately 
to Ground Combat Element and Direct Support Logistics units, and 
perform mission roles as Heavy Weapons (Machine Guns) and Anti-Armor 
(TOW and Javelin) Weapons carriers and critical command and control and 
tactical logistics functions.
    Initially, we will procure and field 5,500 JLTVs between fiscal 
years 2017 and 2022, to replace the highest risk portion of our 18,000 
vehicle HMMWV fleet. In addition to providing protection equivalent to 
the base MRAP All-Terrain Vehicle (M-ATV), the JLTV will restore off-
road performance and payload to the light vehicle fleet that was lost 
when `frag kit' armor was installed on HMMWVs during Operation Iraqi 
Freedom. Frag kit armor does not protect against the underbody IED 
threat, a major vulnerability of the HMMWV, and the reason why it could 
not be used in recent combat operations. The JLTV will support the most 
demanding missions, including Joint Forcible Entry and crisis response 
operations from the sea. The JLTV will be transportable externally by 
CH-53 helicopter and will be capable of being stored and transported in 
the spaces formerly occupied by HMMWVs aboard amphibious and maritime 
prepositioning ships and surface connectors, such as the LCAC. JLTV 
competitive prototypes have also demonstrated fuel efficiency equal to 
a similarly equipped HMMWV, while moving, and a 20 percent less fuel 
use when at idle.
    We are pleased with the performance of the JLTV program and the 
three highly competitive vendors, AM General, Lockheed Martin, and 
Oshkosh Defense, working with us during the program's Engineering, and 
Manufacturing Development (EMD) phase. We look forward to working with 
our U. S. Army partners later this summer as the JLTV program prepares 
for its Milestone C decision and the selection of one of the EMD 
vendors to produce JLTV, beginning in fiscal year 2016.

    43. Senator Ayotte. General Allyn and General Paxton, as the JLTV 
program ramps up, how will existing HMMWV (Humvee) vehicles be 
reallocated?
    General Allyn. As the four JLTV variants (Heavy Gun Carrier, Close 
Combat Weapons Carrier, General Purpose, Utility/Shelter Carrier) are 
fielded to units, the Army will reallocate the most modern HMMWVs 
across all Army Components to replace older model HMMWVs. The Army will 
then divest those older model HMMWVs.
    General Paxton. Our intent is to replace the entire HMMWV fleet. 
Between 2017 and 2022 we will procure the first of the 5,500 JLTV's to 
replace the aging and overburdened HMMWV fleet. These 5,500 will 
fulfill a portion of the overall requirement we have for roughly 
818,000 vehicles. JLTVs will replace the portion of HMMWVs that are 
most at risk; those that perform a combat function and are most likely 
to be exposed to enemy fires. Those vehicles are assigned predominately 
to Ground Combat Element and Direct Support Logistics units, and 
perform mission roles as Heavy Weapons (Machine Guns) and Anti-Armor 
(TOW and Javelin) Weapons carriers and critical command and control and 
tactical logistics functions.
    The current Ground Combat Vehicle Strategy (GCTVS) outlines our 
plan to replace the remaining HMMWV fleet with JLTV, however we will 
need to make investments in the ACV during the 2020's to ensure that 
this platform remains prepared to carry us into the future. By 
sequencing our JLTV buy around the peak years of the ACV program, and 
modernizing a portion of our AAV fleet we will be able to achieve our 
long range goals within the projected limits of future budget 
restrictions. However, if the budget is fully sequestered in fiscal 
year 2016 or beyond, it will jeopardize both the timing and resources 
required to undertake this strategy and greatly affect our ability to 
achieve our requirements in both vehicle fleets.

    44. Senator Ayotte. General Allyn and General Paxton, after JLTV is 
fully implemented, how many HMMWV's will remain in each Service's 
inventory?
    General Allyn. The JLTV begins fielding in fiscal year 2018. Based 
on Force Structure projections for that year, fielding 49,099 JLTVs 
will leave 67,301 HMMWVs distributed across the Total Army.
    General Paxton. Our intent is to replace the entire HMMWV fleet. 
Between 2017 and 2022 we will procure the first of the 5,500 JLTV's to 
replace the aging and overburdened HMMWV fleet. These 5,500 will 
fulfill a portion of the overall requirement we have for roughly 
818,000 vehicles. JLTVs will replace the portion of HMMWVs that are 
most at risk; those that perform a combat function and are most likely 
to be exposed to enemy fires. Those vehicles are assigned predominately 
to Ground Combat Element and Direct Support Logistics units, and 
perform mission roles as Heavy Weapons (Machine Guns) and Anti-Armor 
(TOW and Javelin) Weapons carriers and critical command and control and 
tactical logistics functions.
    The current Ground Combat Vehicle Strategy (GCTVS) outlines our 
plan to replace the remaining HMMWV fleet with JLTV, however we will 
need to make investments in the ACV during the 2020's to ensure that 
this platform remains prepared to carry us into the future. By 
sequencing our JLTV buy around the peak years of the ACV program, and 
modernizing a portion of our AAV fleet we will be able to achieve our 
long range goals within the projected limits of future budget 
restrictions. However, if the budget is fully sequestered in fiscal 
year 2016 or beyond, it will jeopardize both the timing and resources 
required to undertake this strategy and greatly affect our ability to 
achieve our requirements in both vehicle fleets.
                               __________
                Questions Submitted by Senator Tim Kaine
             Sequestration--Second and Third Order Effects
    45. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, in multiple hearings we have heard testimony from 
the Service Chiefs on some of the negative effects of sequestration-
level budget caps. In fiscal year 2013, the Services took varied 
approaches to implement sequestration cuts. The Army cancelled major 
training exercises, the Air Force grounded aircraft, and the Navy 
deferred maintenance. Deferring costs into future years can create 
second and third order negative such as creating training and readiness 
deficits and the loss of capabilities. We have not heard many details 
about these second and third order effects. Additionally, because of 
the focus on counterinsurgency (COIN) training to prepare for 
deployments to Iraq and Afghanistan, our military now has an entire 
generation of officer and enlisted personnel who have never conducted 
full-spectrum training. If sequestration remains in fiscal year 2016 
and the Services again halts training for pilots, while they will 
continue to be paid, if they cannot fly--not only will they lose 
proficiency--but their morale suffers and can either lead them to leave 
the military or lead to behavior and family problems. Can each of you 
provide examples of the inefficient use of resources, such as time 
lost, increased long-term costs, and the second and third order 
problems those conditions create for training and readiness deficits?
    General Allyn. If we return to sequestration in fiscal year 2016, 
the Army will experience increased risk through degraded readiness to 
both our organizations and our installations.
    Reductions to individual training and education will create a 
backlog that will take years to correct and create gaps at critical 
points in leader development--especially mid-career officers and NCOs. 
Unit training for approximately 80 percent of the Force will be 
curtailed, impacting basic warfighting skills and readiness posture, 
and inducing shortfalls across critical specialties such as aviation 
and intelligence. The Army will generate fewer Brigade Combat Teams 
(BCTs) to the readiness levels required to support rapid combat 
deployment as we balance the readiness levels of BCTs with other 
critical enablers such as Combat Aviation Brigades and Combat 
Sustainment Brigades. The remaining BCTs will be resourced only to 
minimum Individual/Crew/Squad levels. This will stretch the time 
required to flow forces into a war-fighting theater, allowing our 
adversary more time to prepare and inevitably leading to greater U.S. 
casualties.
    From an installation perspective, our Army is still feeling the 
effects of sequestration in fiscal year 2013 when over 3.2 billion 
dollars of requirements were deferred to fiscal year 2014, to include 
significant Military Construction (MILCON) and Sustainment, Restoration 
and Modernization (SRM) projects. As you know, sustaining facilities is 
more cost effective than restoring them and our data shows that for 
every 1 dollar we purportedly `save' on sustainment we incur 1.33 
dollars of costs in restoration. By 2013, the Army already had a total 
restoration backlog of over 15 billion dollars. At current levels of 
funding, it will take approximately twenty-six years (2039) to return 
all of our installations to standard. A return to sequestration will 
only exacerbate this delay in providing our Soldiers and their Families 
with the mission essential facilities their selfless service warrants.
    Likewise, a return to sequestration will compel the Army to defer 
vehicle maintenance. Under sequestration in fiscal year 2013, commands 
reduced OPTEMPO to make additional resources available to address the 
deferred maintenance workload. Additionally, the Army reduced the 
maintenance requirements from ``10/20 standards'' (all routine 
maintenance is executed and all deficiencies are repaired) to a Fully 
Mission Capable (FMC) plus safety standard, decreasing the quantity of 
reliable and deployable equipment.
    Admiral Howard. Ship and air depot maintenance backlogs are good 
examples of the second and third order effects of sequestration. The 
impacts of the growing ship depot maintenance backlogs may not be 
immediately apparent, but will result in greater funding needs in the 
future to make up for the shortfalls each year and potentially more 
material casualty reports, impacting operations. For aviation depot 
maintenance, the growing backlog will result in more aircraft awaiting 
maintenance and fewer operational aircraft on the flight line for 
squadrons training for deployment. This will lead to less proficient 
aircrews, decreased combat effectiveness of naval air forces, and 
increased potential for flight and ground mishaps.
    In addition, sequestration in fiscal year 2013 led to decreases in 
the workforce and overall productivity in the depots/shipyards due to 
hiring freezes at a time when the Navy should have been increasing the 
workforce to meet a growing workload and replace normal attrition. 
These outcomes were further exacerbated by workforce overtime 
restrictions which prevented recovery of production schedules. A third 
order effect was an increase in workforce attrition from accelerated 
retirements or pursuit of other employment. While difficult to measure 
motivation, the anecdotal evidence suggests that furloughs, lack of 
overtime and an uncertain future were key contributors to an increased 
loss of experienced workers. The end results were delayed and more 
costly shipyard maintenance availabilities, and aviation depots were 
unable to execute the necessary workload to keep the required numbers 
of aircraft on the flight line.
    General Paxton. A return to sequestration--or to BCA caps--would 
exacerbate current fiscal challenges and force us to assume greater 
risk in our capacity to meet long-term operational requirements. The 
Marine Corps' current resource level represents the bare minimum at 
which it can meet the current Defense Strategic Guidance. Though we are 
committed to generating ready, forward deployed forces, at BCA levels 
we will accept significantly greater risk in the next major theater 
war. This is a ``one major combat operation,'' reduced-capacity force; 
essentially, we would be all in with no rotations, no surge capacity, 
and significantly reduced pre-deployment training. There would also be 
significant reductions in aviation and ground combat units, further 
reducing our available infantry battalions. Coupled with recent 
reductions in critical combat support capabilities such as artillery, 
tanks, and amphibious assault vehicles, such reductions would result in 
wars that last longer and extract a higher human cost.
    At BCA levels we would be unable to meet our ongoing operational 
commitments and would forgo participation in many of our planned 
security cooperation exercises. Though we intend to preserve the Guam/
DPRI effort as much as possible, a sequester would lengthen the 
timeline for completion.
    In terms of lasting implications, sequestration caps would also 
require us to adopt massively inefficient business and operational 
practices that end up costing much more over the long term. For 
instance, delaying modernization in order to protect near-term 
readiness greatly risks driving up acquisition costs. Any interruptions 
during program acquisitions--schedule slips, loss of efficiencies, and 
potential Nunn-McCurdy breaches--would ultimately increase total 
program costs. Deferred modernization would have implications for our 
equipment maintenance programs as well. We would be forced to sustain 
legacy systems longer than planned, and to shift focus away from 
cheaper, more efficient green technologies, toward older, more 
inefficient and expensive technologies. We would also reduce regular, 
scheduled maintenance on ground equipment (such as depot-level vehicle 
overhauls) as a further near-term cost saving measure. However, the net 
result of this combination of obsolete technology and reduced 
maintenance will drive up operations and support costs over the long 
term.
    We would see similar effects to our facilities. Long-terms 
infrastructure standards would be reduced, resulting in a score of Q3 
or ``Poor'' on the Facility Conditions Index. Base operating functions 
such as utilities and services would be depressed to minimum levels, 
and energy efficiency projects would be eliminated. Over time the 
cumulative effects of deferred or canceled maintenance will accelerate 
the deterioration of buildings and drive up long term costs.
    Finally, the return of sequestration would have costly implications 
for our workforce, particularly personnel at our maintenance centers. 
Because our depots are required to plan around the Services' 
maintenance funding levels, cuts to their maintenance budgets require 
corresponding reductions in staffing levels at the depots. This risks 
the accumulation of a maintenance backlog that must be worked down with 
(more costly) overtime. It also jeopardizes the retention of depot 
skilled artisans, thus permanently reducing our throughput/surge 
capacity. Our aviation units are experiencing these effects firsthand. 
The fiscal year 2013 sequester forced mass layoffs at aviation depots, 
which are now struggling to meet maintenance demands for our aircraft. 
The number of aviation assets available for training and missions has 
thus been reduced, and the readiness of our aviation units has dropped 
accordingly.
    General Spencer. Meeting the current and expanding demand for 
forces against a shrinking capacity has required the Air Force to make 
extraordinary choices in order to continue to supply air power. 
Examples of this problem manifest themselves in areas like remotely 
piloted aircraft (RPA) manning, fighter pilot manning, and maintenance 
support to flight operations. RPA pilot numbers are decreasing and RPA 
pilot training has been significantly constrained since 2007 due to the 
requirement to utilize RPA instructors for surge combat operations and 
not to conduct student training. The reduction of Air Force fighter 
cockpits limits the capacity to season junior fighter pilots, delays 
matriculation, and limits the experience level of our future fighter 
pilot leaders. Finally, reductions and limits to total Air Force 
manning have resulted in a lack of experienced aircraft maintenance 
expertise needed to keep aging legacy aircraft flying and to bring new 
weapons systems to active duty. Second and third order effects include 
an RPA community that is losing operators faster than it can train 
replacements, and a 5-year decline in the acceptance of the pilot 
retention bonus. There are no short-term solutions for these 
shortfalls. Full Presidential Budget (PB) 2016 funding, Overseas 
Contingency Operations funding moved to baseline, a reduction in 
deployment requirements, and time are necessary to develop the 
experienced Airmen required to repair Air Force readiness.

    46. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, what kind of impact would not only stopping basic 
training proficiency, but losing the opportunity to conduct advanced 
training, and what kind of impact that would have on our future 
generation of leaders?
    General Allyn. As codified in Title 10 US Code (Subtitle A, PART 
II, Chapter 39, Section 671), Soldiers may not be deployed without 
completing basic training. Initial Military Training (basic combat 
training and initial skills training) transforms volunteers into 
Soldiers with the requisite warfighting and technical skills to 
positively contribute to their unit. Without this foundational, 
institutional training, Soldiers would require burdensome, time-
consuming training at their first unit of assignment. Additionally, 
standardization of initial training, when conducted at first unit of 
assignment, would be extremely difficult to ensure and lead to an 
increased risk of casualties in the event of a contingency. Delaying or 
halting the various advanced training courses offered to mid-career 
leaders will create a significant gap in professional development. This 
gap will force the Army to choose between placing leaders in positions 
of increasing responsibility without the appropriate level of 
professional education or delaying their promotion until such a time as 
the training can be completed.
    Admiral Howard. Stopping basic training proficiency and pre-
deployment advanced training would gravely impact the Navy's mission. 
We continually operate in a rotational deployment cycle, and the 
Combatant Commanders expect deployed Navy units to be ready to execute 
any core mission when and where directed. Therefore, full spectrum pre-
deployment training is paramount.
    If we return to sequestration, growing numbers of future leaders 
would develop experience gaps at key stages in their careers. Although 
Navy will prioritize pre-deployment training, sequestration will slow 
the training cycle. Non-deployed units will conduct advanced training 
``just-in-time'' to complete deployment certification, and their post-
deployment training to sustain readiness may not be funded. This 
reduces the total number of training opportunities at each career 
level. Joint partner participation in our certification exercises would 
also likely be reduced, and other cancelled or down-scoped advanced 
training exercises would limit the quantity and quality of additional 
training opportunities beyond pre-deployment certification.
    General Paxton. We are able to meet our current training 
requirements. However, in order to make continuous and long term 
readiness a reality, we have to strike the right balance between 
deployment for operations and training time here at home. Right now, we 
have about a 1:2 deployment to dwell ratio. That is, Marines are 
deployed for 7 months and home for 14. This allows a proper unit 
rotation to ensure that each time a unit deploys they are fully ready. 
If we are forced to take further cuts, that level will decrease closer 
to 1:1.5 or 1:1. What this means is that units have less time between 
deployments to conduct the required training prior to their next 
deployment.
    More specifically, home station readiness is at risk when personnel 
and equipment are sourced to protect the readiness of deployed and 
next-to deploy units. This is a logical decision when validated 
operational requirements exceed resource availability. Home station 
units are expected to be in a higher state of readiness since the 
Marine Corps is charged to be the Nations' force in readiness. The way 
they preserve this readiness is through training. By way of example, 5 
of the last 6 infantry battalions assigned to Marine Expeditionary 
Units were not prepared until 30 days before deployment. This is 
sufficient for planned deployments, but becomes problematic and 
dangerous as conflicts extend or the need to respond to unexpended 
crises arises.
    To the point about our future leaders, it is essential that we have 
the ability not only to train leaders in tactical and technical skills 
at Professional Military Education (PME) courses, but also that those 
leaders have an opportunity to train with their subordinates during 
unit training. Cuts to either facet damage long term leadership 
development because leaders do not get the individual development they 
require and subordinates are not provided the opportunity to learn 
through interaction with seasoned and effective leaders. This creates a 
compounding downward spiral of competence and experience that we can 
ill afford.
    General Spencer. The loss of both basic and advanced training is 
reflected in the steady decline of overall Air Force readiness. The 
reality is that our current generations of Air Force Airmen have been 
heavily involved in low intensity or counter-insurgency conflicts for 
the past 14 years. Our Air Force, to include our leadership, is better 
than it has ever been at close air support, mobility, and special 
operations in low intensity operations. However, this has come at the 
expense of full spectrum readiness and the ability to fully support the 
Defense Strategic Guidance. For example, by 2012, 10+ years of 
cumulative skill atrophy have driven B-1 crews to routinely train for 
low-level attack missions at double the desired tactical altitude as a 
result of insufficient training proficiency and readiness. Simply put, 
the B-1 community sacrificed a distinct tactical and operational 
advantage due to fundamental aircrew safety and readiness concerns. A 
similar example exists in every Air Force community. Lost training has 
extended the matriculation of our future Air Force leaders. Lost 
opportunities to train and practice our ``high-end fight'' garner gaps 
of experience in our future leaders and insert unseen risk resulting in 
errors that will be swift and catastrophic.
                    Path to Full-Spectrum Readiness
    47. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, several of the Military Services have identified 
2020 or 2023 as a target to restoring full-spectrum proficiency and 
address the degraded state of non-deployed readiness. Meanwhile, the 
Navy has an optimized fleet response plan to achieve consistent and 
long-term presence around the globe. In the event sequestration could 
be avoided--could each of you please describe in specifics how you plan 
to restore full-spectrum readiness and what the end-state looks like?
    General Allyn. The Army's readiness recovery goal is to build 
readiness for current operations and ensure enough operational depth is 
ready to sustain larger contingency operations.
    The Army's ``get-well'' date is heavily influenced by two factors: 
demand for Army forces and funding availability. Assuming no change to 
current global demand and the fiscal year 2016 President's Budget (PB) 
funding levels are sustained, the Army forecasts achieving fiscal 
balance no earlier than fiscal year 2017 and returns to proficiency no 
earlier than fiscal year 2020. However, any increase in demand or 
reduction in funding will extend this recovery period. Fundamentally, 
we deliver full spectrum readiness through a combination of fully-
resourced Home Station Training, culminating in a unit's successful 
completion of a decisive action Combat Training Center rotation. If 
fully resourced at current force levels, it would take two years to 
cycle all our active Brigade Combat Teams through this training 
regimen.
    Admiral Howard. The Optimized Fleet Response Plan (OFRP) is the 
Navy's framework for readiness recovery. It is a disciplined process 
which preserves the time necessary to conduct required maintenance and 
modernization of our capital-intensive force. It also protects the time 
to conduct full spectrum training. Multiple lines of effort are being 
aligned to deliver the full readiness impact of OFRP. Achieving the 
desired end-state first depends on restoring the capacity of our 
shipyards and aviation depots. Our success will result in completion of 
maintenance and modernization on schedule; ready units that are 
available at sustainable levels from year-to-year to support Combatant 
Commander global presence requirements; and additional operational 
availability providing full contingency response capacity that is 
routinely sustained until the next maintenance cycle begins. 
Furthermore, to sustain full-spectrum readiness over time we must 
continue on a stable path to procure new platforms and ordnance, while 
also modifying existing platforms at a pace that sustains our 
warfighting advantage.
    General Paxton. Should sequestration be avoided and its deleterious 
pecuniary effects put aside, the Marine Corps recognizes that non-
pecuniary actions and time would be required to restore full spectrum 
readiness. The Marine Corps is the Nation's ready force, a force 
capable of responding to crises and contingencies anywhere around the 
globe at a moment's notice. To fully reconstitute the whole-of-force 
after over a decade of sustained unprecedented conflict and fiscal 
challenges, the Marine Corps would continue taking actions that address 
readiness concerns across the Future Years Defense Plan. Those actions 
include: (1) Balance readiness between deployed and home station units. 
Forward deployed and engaged units will remain a priority for 
resourcing. However, to help lessen the burden of high operational 
tempo and improve overall readiness, the Marine Corps will employ 
deployment-to-dwell ratios that improve home station unit readiness. 
Personnel shortfalls at the unit level are a principal detractor to 
recovering readiness. Actions taken to help restore home station unit 
readiness include manning assignment policies that improve leader-to-
led ratios, especially among the Noncommissioned Officer and Staff 
Noncommissioned Office grades; ensuring required unit personnel fill 
levels essential for combat effectiveness are protected; and that 
readiness recovery is optimized across the entire unit life cycle 
versus only the pre-deployment training period. (2) Reconstitute the 
force to New Normal and upcoming challenges. To meet current 
requirements and preserve readiness recovery, the Marine Corps will 
continue to mature its capstone concept and vision for designing and 
developing the force now and into the future. (3) Equipment Reset. 
Ground equipment supporting Operation Enduring Freedom has retrograded 
to the U.S. Much of this equipment has completed the required post-OEF 
repairs and subsequently has been redistributed to units. The Marine 
Corps is on track to complete repair and redistribution of all OEF war-
torn equipment in fiscal year 2017.
    For the Marine Corps, full spectrum readiness equates to Service-
wide capability of operating, effectively and efficiently, across the 
range of military operations, and achieving mission objectives at any 
time or place. All Marine Corps units would be capable of responding to 
a broad spectrum of conflict scenarios. Full spectrum readiness allows 
the service to meet current and future requirements. Full spectrum 
readiness entails the ability to simultaneously meet (1) current 
operations supporting the Combatant Commands, (2) emergent crises and 
major contingencies, (3) the demands of the institution that underpins 
the ability to effectively and efficiently fulfill the Service's 
statutory and regulatory obligations.
    General Spencer. The Air Force is the smallest in its history and 
lacks the capacity to meet both the rotational Combatant Commander 
requirements and the required dwell time necessary to train in-
garrison. With FY16 PB funding and a transition to deployment cycles 
that allow sufficient time to build and maintain full-spectrum 
readiness, the Air Force will be able to build readiness in the short, 
medium, and long term. Short term improvements will be derived from 
executing a robust flying hour program that emphasizes full-spectrum 
training. Mid-term gains are expected from accomplishing delayed 
maintenance and upgrades to weapon systems and support equipment. Long-
term gains will come from investments in our Airmen. It takes time to 
recruit and train our Airmen to be journeymen, supervisors, and leaders 
who are ready to execute the full-spectrum of missions required of our 
Air Force. If 80 percent readiness is achieved by the end of 2023, the 
result will be a highly capable Air Force, able to meet the two largest 
pillars of the Defense Strategic Guidance with ready forces.
         Sequestration Relief for Other U.S. Security Agencies
    48. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, the new National Security Strategy released last 
month, states that our national security relies on more than just the 
work of Department of Defense (DOD). Sequestration is having as harmful 
an impact on our diplomatic and international development tools, 
Homeland security, law enforcement, and intelligence activities as 
well. Would you agree that we should provide sequestration relief to 
DOD and all the non-DOD contributors to our national security like the 
State Department, the Intelligence Community, the Department of 
Homeland Security, and the Department of Justice to name a few?
    General Allyn. There are several instruments of national power that 
we commonly refer to as ``DIME'' which stands for diplomatic, 
information, military, and economic. We are only one component of 
this--the remaining agencies provide the bulk of the other national 
capabilities. We believe that only through a whole-of-government 
approach can our national security objectives be met.
    As such, it is our belief that even if sequestration relief were 
provided to the Department of Defense, the nation's ability to achieve 
its objectives would remain at risk without funding relief across the 
whole-of-government.
    Admiral Howard. The Navy continues to oppose sequestration for the 
entire federal budget because it implements harmful automatic cuts with 
no regard for priority. The Navy is globally deployed to provide a 
credible and survivable strategic deterrent and to support the mission 
requirements of the regional Combatant Commanders. In executing our 
operations, the Navy relies on joint and interagency support from other 
DoD and non-DoD organizations. Any negative impacts to the 
organizations we partner with can have an impact on our ability to 
execute operations and the Defense Strategic Guidance. A return to 
sequestration would jeopardize the Navy's readiness and damage our 
national security.
    General Paxton. ``While I do not dispute that national security is 
a whole-of-government effort, I cannot authoritatively comment on the 
potential impact of sequestration on any organization, other than the 
U.S. Marine Corps.''
    General Spencer. Yes. Non-DoD agencies should be similarly 
considered for relief from sequestration. Any increase in defense 
spending should be matched at some level for the non-defense 
discretionary spending that contributes to our national security.

    49. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, if sequestration-level budget caps remain in 
fiscal year 2016, how would you characterize the impact of lost 
capability or capacity from these other agencies to meet the 
requirements of our Nation's security needs?
    General Allyn. The Army, and indeed the Department of Defense, 
cannot solely defend national security or meet the nation's strategic 
objectives in a way consistent with our values. The military is only 
one of the instruments available to the nation for achieving its 
objectives and securing its interests. Loss of capability and capacity 
in these other areas would certainly make our job more difficult and 
hinder the Nation's ability to meet its security objectives.
    Admiral Howard. The Navy continues to oppose sequestration for the 
entire federal budget because it implements harmful automatic cuts with 
no regard for priority. The Navy is globally deployed to provide a 
credible and survivable strategic deterrent and to support the mission 
requirements of the regional Combatant Commanders. In executing our 
operations, the Navy relies on joint and interagency support from other 
DoD and non-DoD organizations. Any negative impacts to the 
organizations we partner with can have an impact on our ability to 
execute operations and the Defense Strategic Guidance. A return to 
sequestration would jeopardize the Navy's readiness and damage our 
national security.
    General Paxton. ``While I do not dispute that national security is 
a whole-of-government effort and that sequestration could have an 
impact on the ability of other government organizations, I cannot 
authoritatively comment on the potential impact of sequestration on any 
organization, other than the U.S. Marine Corps.''
    General Spencer. The Air Force relies heavily on the support of 
both DoD and non-DoD entities and will find it difficult to complete 
its mission if our agency partners lose capability or capacity. The 
support we receive through these relationships extends to all domains 
and strengthens our ability to conduct full-spectrum operations in 
support of our national interests.

    50. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, in your view, what would be the impact of 
sequestration-level budget cuts to Federal support services commonly 
used by soldiers, sailors, airmen, marines, and their families?
    General Allyn. The Army collaborates and coordinates with non-DoD 
agencies such as the Department of Agriculture, Health and Human 
Services, American Red Cross, Department of Labor and the Department of 
Veterans Affairs to achieve common Soldier and Family readiness goals. 
Non-DoD services and programs are an integral part of the Soldier and 
Family readiness system. Therefore, the readiness of Soldiers and 
Families who use non-DoD programs will inevitably be impacted by any 
reduction in outside agency programs or services.
    From a strictly Army standpoint, Soldier and Family programs would 
be unavoidably impacted if we are funded at the Budget Control Act 
levels. We can protect the highest priority programs such as 
Exceptional Family Member Program, Survivor Outreach Services, Child 
and Youth Programs, Family Advocacy, and Financial Readiness for 
Soldiers and Families. However, there will be increased risk to 
programs such as spouse employment, Army OneSource, library services, 
and Family and Morale, Welfare and Recreation programs. Reductions will 
affect staffing, operating hours, and range of services, resulting in a 
potential degradation to readiness, resiliency, and quality of life.
    Admiral Howard. Sequestration in fiscal year 2016 would have 
serious impacts to readiness overall. Because our Sailors are our most 
important asset and we must invest appropriately to keep a high-caliber 
all-volunteer force, we would try to minimize the impact to Sailor 
support, family readiness, and education programs. However, other 
support services may need to be reduced or delayed because of the 
significant funding reductions, which could negatively impact their 
morale and readiness. Furthermore, across-the-board sequestration cuts 
to non-DOD organizations such as the Consumer Financial Protection 
Bureau and the Department of Labor may also negatively impact the 
support services to our people.
    General Paxton. It is unclear how sequestration would affect the 
budgets and programs of other Federal programs. In regard to Marine 
Corps quality of life programs used by Marines and their families, 
recent budget reductions have already caused curtailment of many non-
core programs, such as Family Care, Family Readiness, and Semper Fit 
and Recreation. We are currently protecting core programs, such as 
Behavioral Health, Sexual Assault Prevention, and Wounded Warrior care, 
as well as support services for Marines returning from Afghanistan and 
transitioning out of the Marine Corps. However, under prolonged 
sequestration-level budget cuts, even these programs could be put at 
risk.
    Fundamentally, sequestration will exacerbate the challenges we have 
today including readiness of our Marines and their families including 
impacting the five pillars of readiness: high quality people, near unit 
readiness, capability and capacity to meet combatant commanders' 
requirements, infrastructure sustainment, and modernization. We have 
maintained near-term readiness at the cost of our long-term 
investments. The Budget Control Act has presented many readiness 
challenges and a sequestered budget would further exacerbate readiness 
issues.
    General Spencer. Under constrained budgets and impending 
sequestration, if not repealed, it is becoming more challenging to 
maintain diverse quality of life programs and services at adequate 
levels. The Air Force is committed to ``Taking Care of People'' and 
strives to maintain installation services and family programs to help 
build and maintain ready, resilient Airmen and their families. To help 
mitigate budget impacts, the Air Force has prioritized Airmen and 
family support programs from an enterprise-wide perspective. Our 
fitness, child and youth care, food services, and some family support 
programs (outdoor recreation, libraries, youth centers, etc.) are 
programmed to continue in the FY16 PB request. Funding below the PB 
request will force commanders to make difficult decisions to prioritize 
these support activities against operational and mission requirements.

    51. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, in your view, do reductions to federal support 
services hurt education and health care in local communities and 
ultimately risk the quality of life and readiness of our servicemembers 
and their families?
    General Allyn. Through DOD funding, the Army is maintaining a 
viable Voluntary Education Program IAW DoDI 1322.25 requirements. If 
funding to non-DOD Agencies (community and state schools) were reduced, 
it could have some impact on Soldier education by increasing costs not 
covered by the DOD programs.
    Members of the Army and their families live and work in the 
communities surrounding our installations. While some members of the 
military live on installations with access to DoD schools, an 
increasing number (880 percent of dependent Servicemembers children) do 
not. Instead, they use public or private education in the local 
community. Our members have access to military healthcare facilities in 
many locations but we still rely on local private and public sector 
healthcare services to augment our capabilities. Degradation of 
healthcare or education services within a community would impact the 
quality of life and readiness of our service members and their 
families.
    Admiral Howard. Since the majority of our Sailors and their 
families live in the local communities surrounding the installations, 
if local community services are negatively impacted by reductions, our 
Sailors and families will likely share the same consequences with the 
local community. We have no data or feedback from regions or 
installations to substantiate negative impact on local community 
services.
    General Paxton. In specific regard to military and family quality 
of life support programs, we have taken cuts in areas of Family Care, 
Family Readiness, and Semper Fit and Recreation. As we move forward, we 
will evaluate our programs and develop a plan with a bias toward 
decentralizing decision-making and resource allocation. Funding will 
focus on sustainment of core readiness and higher headquarters 
requirements, such as Behavioral Health, Sexual Assault Prevention, and 
Wounded Warrior care. Marines and their families have and may be 
impacted by reductions in noncore programs due to accessibility of 
programs, establishment or increase of fees to use resources (e.g., 
youth programs, pools, etc.), and hours of operations (e.g., fitness 
facilities). However, the Marine Corps has made all efforts to find 
savings without resulting in direct impacts to our Marines and families 
and those impacts being minimal in areas of noncore programs. Funding 
reductions that impact support services do risk Marine and family 
quality of life and readiness, but it is not clear the impact on 
education and health care in local communities.
    General Spencer. Federal support services for education and health 
care, combined with Air Force programs, comprise the package of 
services that military families rely upon. Funding reductions for these 
programs result in less support to service members and their families. 
Many Air Force members and their families rely on public education and 
medical services available through local communities so reductions in 
federal support to these services adversely affect quality of life for 
service members.
                 Aircraft Maintenance Throughput Issues
    52. Senator Kaine. Admiral Howard and General Paxton, with the 
delay of the F-35, legacy aircraft like the F/A-18 Hornet A and D 
models, must undergo service-life extension programs (SLEP) to cover 
the gap in aircraft coverage. In addition to sequestration-level budget 
caps, there have been reports of obsolescent parts, a shrinking to non-
existent vendor industrial base, maintenance backlogs, and higher than 
planned failure rates as the aircraft age. Could you please explain how 
even if Congress were to give you additional funding, it may not fix 
the aircraft maintenance throughput issues, and how you either need 
relief from sequestration, decreased op-tempo, or more people?
    Admiral Howard. The Fiscal Year 2016 President's Budget request 
provides funding to align F/A-18A-F depot throughput to projected 
capacity.
    To improve F/A-18 depot capacity, the Department is attacking the 
major barriers to production--manpower and material. This includes an 
aggressive hiring and training plan for artisans and engineers, and 
improved parts availability and staging for high flight hour (HFH) 
maintenance events based on common repair requirements. Additionally, 
the Navy has collaborated with Boeing in identifying several areas to 
improve overall depot throughput, such as employing Boeing Engineering 
Support and incorporating Super Hornet modifications at its Cecil Field 
facility. The strategy is proving successful as depot production levels 
are improving, but requires time to fully mature. With the requested 
funding, and under this plan, the Department anticipates continued 
improvement in depot throughput to meet annual production requirements 
by fiscal year 2017 and full recovery by fiscal year 2019.
    A return to sequestration in fiscal year 2016 is a recurring 
concern as the Department requires a stable budget to meet these 
objectives. Sequestration and the compound effects of the 2013 
government shutdown drove manning shortfalls for both artisans and 
engineers and hampered the Navy's ability to respond to unplanned work 
found during HFH inspections. Any further reductions in the depot 
maintenance, engineering and contractor support budgets will impede the 
depot throughput improvement strategy. Moreover, a return to 
sequestration will affect recent initiatives including the F/A-18E/F 
service life assessment and extension programs (SLAP/SLEP). Current 
efforts for Super Hornet SLAP/SLEP include fatigue life analysis, 
stress predictions, and inspection and modification development. These 
analyses will inform future work and ensure material kits are developed 
to better support life extension efforts, but are required prior to the 
first aircraft reaching its 6,000 hour limit, expected in CY2017. A 
return to sequestration would have a compounding effect that will 
further increase risk in our strike fighter inventory management 
strategy and reduce the availability of warfighting assets.
    General Paxton. The Marine Corps, along with all of the other 
services, is facing with issues with our current aircraft and keeping 
them relevant and ready while transitioning to new airframes in each of 
our aviation communities. The specter of sequestration-level budget 
caps frustrates the Marine Corps movement towards recovery and will 
reintroduce many of the problems from the first round of sequestration. 
Our Aviation Depots were not protected and we experienced a loss of 
skilled artisans and personnel. We are still rebuilding the workforce 
that we lost. It is critical that we do so to improve the throughput 
issues experienced with the SLEP and other engineering challenges we 
are experiencing with all of our type/model/series of aircraft: CH-53E, 
AV-8B, MV-22, H-1, and the more widely recognized F/A-18A-D. If given 
any additional funding, we would protect and grow manpower at our 
Depots to help with our Current Readiness challenges and increase our 
throughput.
    In the near term, we are pursuing commercial alternatives as 
additions to our Depots to also increase throughput. This will directly 
translate to increased current readiness for all of our type/model/
series of aircraft. We would continue to invest in our current fleet of 
aircraft to ensure their relevance on the battlefield as we continue to 
upgrade every aviation community. Finally, we would continue to fund 
our vital transition plan by purchasing more new aircraft in our 
current programs to complete our transitions sooner and divest of our 
current fleet faster, helping our Future Readiness.
    The Marine Corps stands behind the fiscal year 2016 President's 
Budget and the Marine Corps' Unfunded Priorities List. This will help 
us keep all of our aircraft relevant and ready while continuing to 
build our F-35 fleet in addition to our other transitioning platforms. 
A return to sequestration would only exacerbate our issues with our 
aircraft, their modernization, and the SLEP programs necessary to make 
our way to aircraft like the F-35, CH-53K, and all other transitioning 
airframes.
                          Simulation Training
    53. Senator Kaine. General Allyn, Admiral Howard, General Paxton, 
and General Spencer, the Chief of Nacal Operations' (CNO) Navigation 
Plan from 2015-2019 calls for focus on critical afloat and ashore 
readiness, including the ``developing and fielding of live, virtual, 
and constructive training, to provide more realistic training at a 
reduced cost.'' For example, there is a 3-D software program called the 
Multipurpose Reconfigurable Training System ( MRTS) that enables a 
sailor to view and access all parts of an engine found aboard Virginia 
class submarines. The Marine Corps uses combat convoy simulators at 
their bases in Quantico, California, North Carolina, Hawaii, and Japan. 
If we are unable to reverse sequestration, how can the Services 
leverage simulators to maximize full-spectrum training proficiency in 
the face of fiscal constraints?
    General Allyn. The Army currently has the appropriate mix of live, 
virtual, and constructive training. The three complement each other 
allowing Soldiers to practice basic skills and in some cases to 
practice complex maneuvers prior to live execution. It is important to 
remember that virtual and constructive training cannot replace live 
training. Simulation allows for greater repetition and practice, but 
does not qualify a Soldier or unit as trained.
    While simulations do save some training dollars, they are not a low 
cost solution. Simulating training requires complex and maintenance-
intensive systems. The Army will always seek to optimize its 
investments in training resources, but there must be balance as some 
skills cannot be practiced in a simulator and units must execute live 
training to be proficient.
    Admiral Howard. There remains a fine balance between the 
requirement for live, hands-on training and the complementary training 
capability provided by simulation. But even in a fiscally constrained 
environment, Navy is making the necessary investments to effectively 
leverage the live, virtual and constructive (LVC) training continuum to 
deliver more cost effective and higher quality training than live 
training alone can provide. New platforms, such as LCS, use simulation 
as the focus of their training, saving some of the expense of underway 
training operations, while we continue to invest in the Fleet Synthetic 
Training (FST) program, linking multiple Navy units, U.S. Joint Forces, 
and partner nations across the globe to practice operationally relevant 
scenarios. Current and planned investments will support our future 
training needs while continuing to improve the overall quality of 
tactical training.
    Leveraging the successes we have achieved with FST and its 
connected tactical ship and aviation trainers, we are also applying 
simulation more frequently to maintenance training. The MRTS cited in 
your question is a good example. We are creating a virtual Virginia 
Class Submarine diesel engine room with considerable savings versus an 
alternative brick and mortar solution.
    General Paxton. There is no doubt that simulators provide a unique 
opportunity to provide realistic training opportunities that offset 
some of the costs associated with real-world training. These systems 
allow for varied training experiences, can minimize ammunition usage, 
and decrease logistical costs. In fact, the Commandant's Planning 
Guidance for 2015 specifically states that development and use of 
simulators remains a high priority for the service.

        ``We will continue to support the fielding of systems that 
        enhance our proficiency and safety in operating weapons and 
        equipment. Our investment in training systems will reflect the 
        priority we place on preparing for combat and be fully 
        integrated with training and readiness standards. I expect all 
        elements of the MAGTF to make extensive use of simulators where 
        appropriate.''
                                    -Gen. Joseph Dunford

    However, as with other modernization efforts, we have had to defer 
some simulator development initiatives in order to prioritize near term 
readiness. We are currently funding simulator development and testing 
through individual system programs and supporting contracts. Due to the 
programming cycle, Fiscal Year 2018 will be the first opportunity to 
fund enduring integrated simulator capability.
    Specifically, the Marine Corps Training and Education Command's 
(TECOM) Modeling and Simulation (M&S) Master Plan, Squad Immersive 
Training Environment (SITE), as well as the Live, Virtual, 
Constructive--Training Environment (LVC-TE) identify service 
requirements for simulators and simulations. These requirements are 
being addressed by TECOM. In conjunction with this we are continuing 
our efforts to integrate aviation systems with ground simulations to 
provide opportunities to conduct training that tests the full structure 
and capabilities of the Marine Air Ground Task Force (MAGTF).
    General Spencer. The Air Force is committed to ensuring force 
readiness in the most effective manner. Our combat and mobility 
communities, each have unique assets and therefore, different 
solutions. Some events/sorties can be replicated in the virtual world, 
while others cannot. In addition, for both communities, live training 
encompasses more participants than merely the aircrew. Maintenance, 
logistics, and airfield operations functions, to name a few, are active 
participants of the total flying activity and must be used every day to 
ensure combat power is available when and where the nation needs it. 
Current aircrew simulators do not exercise the entire logistical chain.
    Air Combat Command utilizes simulators as an integrated component 
of a daily comprehensive live and virtual training construct. In 
conjunction with a command-wide realignment of the Ready Aircrew 
Program (RAP--the annual training specification) that occurred in 2010-
2011, simulator training now constitutes 27 percent of total fighter 
RAP training, 40 percent of B-1 RAP training, and 50 percent of Command 
and Control, Intelligence, Surveillance and Reconnaissance RAP 
training. Given the quality and capacity of the combat simulators, 
there are not additional events/sorties that could be transferred to 
the virtual environment.
    Air Mobility Command (AMC) offset over $700 million in live fly 
hours in fiscal year 2014 through the employment of Live, Virtual, and 
Constructive (LVC) capabilities. AMC has established a Distributed 
Mission Operations capability with networked connectivity for C-17s 
with other MAJCOMs and Joint partners to allow for expanded training 
opportunities in more realistic environments. AMC will expand upon 
current capabilities by connecting tanker (KC-10, KC-135, and KC-46) 
and additional airlift assets (C-130s and C-5s) over the next 5 years. 
In addition, AMC is pursuing a networked, virtual air refueling 
capability for their tanker and airlift systems to allow for additional 
migration of refueling training to the simulators (initial capability 
in fiscal year 2018).

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2016 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              

                       WEDNESDAY, APRIL 22, 2015

                           U.S. Senate,    
                  Subcommittee on Readiness
                            and Management Support,
                               Committee on Armed Services,
                                                    Washington, DC.

                REFORM OF THE DEFENSE ACQUISITION SYSTEM

    The subcommittee met, pursuant to notice, at 2:39 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Kelly 
Ayotte (chairman of the subcommittee) presiding.
    Committee members present: Senators Ayotte, Ernst, Kaine, 
and Heinrich.

             OPENING STATEMENT OF SENATOR TIM KAINE

    Senator Kaine [presiding]. If I can get everyone's 
attention. We are in the middle of six votes. We just cast vote 
two. I am going to go ahead and get the hearing started. 
Senator Ayotte and I will ping pong a little bit, as will 
committee members. But if I could have the witnesses take their 
seats and bring you all in, the meeting of our subcommittee is 
now called to order.
    This is a Senate Armed Services Committee (SASC) Readiness 
and Management Support Subcommittee hearing on the very 
important topic of defense acquisition system reforms. It is a 
matter that is deeply important to all committee members. I 
know that the chairman of the committee, Senator McCain, has a 
keen interest in this, and you will see us taking it up not 
only in Readiness but in the larger committee.
    I am very honored to work with Senator Ayotte together on 
the Armed Services Committee and this particular subcommittee.
    You are the key executives, service acquisition executives, 
who say grace and have control over this very, very important 
part of what we do. I certainly know from close family and 
friends in the military how much they rely upon the 
acquisitions that you make to help them perform their missions. 
So this is about a process of understanding reforms that are 
already underway. We do not need to do things that get in the 
way or cut across efforts that the Service and the Department 
of Defense (DOD) are already working on.
    But we do know that there are a number of challenges in the 
management of acquisition programs. How do you develop the most 
technologically advanced solutions to some of our challenges, 
complex weapons systems, under both the constraints of budget 
with sequester and other budget constraints and also with a 
diminishing defense industrial base? Consolidations and other 
activities in the broader economy are shrinking that base.
    How do we balance risks? We want to try to promote 
flexibility and speed but also try to balance some of the 
financial risks that can come with flexibility and speed, and 
what is the right balance there?
    What is the right level of oversight either by the 
Secretary of Defense's (SecDef's) office of the Service 
branches or by Congress over the Services themselves? 
Appropriate oversight is needed. Excess oversight slows us down 
and impedes our effectiveness.
    Then a huge issue that I feel--and I talk to my own people 
about in northern Virginia and elsewhere. What is the right way 
to make sure we have the best acquisition workforce within the 
DOD? This is a huge issue. I as Governor once faced a challenge 
of taking a massive organization, our State's department of 
transportation, that had been built up to be basically project 
providers and project managers, but over time the industry 
changed and what they really needed to be was contract managers 
for outside organizations doing a lot of the work. The skill 
set is not exactly the same. You have got to have the right 
skill set to manage acquisition programs, and that is also 
complicated by furloughs and sequesters and some of the 
budgetary constraints we are under.
    So you are grappling with all of those things, and we want 
to hear about them.
    As I said, Chairman McCain has repeatedly made plain that 
he knows that we can improve acquisition programs and we have 
to do it. You will not find a more passionate advocate against 
the foolishness of sequester than Chairman McCain, but he 
always says we are going to do our best job of convincing 
others to release foolish budgetary ideas like sequester if we 
do our best job of convincing everybody that when we have the 
resources, that we are going to use them in the best possible 
way in acquisition programs and elsewhere.
    So how do we get a system that is more agile that keeps up 
with the accelerating pace of technological change? How do we 
continue progress that you have already made as a result of the 
Weapon Systems Acquisition Reform Act of 2009 that the DOD is 
doing?
    So there is ongoing debate about the various role of 
different Governmental agencies, and we are looking forward to 
hearing from you what the appropriate level of oversight is.
    With that, I want to go ahead and move forward. Chairwoman 
Ayotte will be here presently. She was going to cast one more 
vote and come, and then as I say, you will see us moving back 
and forth. But this is the opening of a discussion on a matter 
that I think is going to play some importance as we work this 
month and next on the National Defense Authorization Act (NDAA) 
for this year. I thank the chairwoman for calling this hearing. 
Thank you for attending. I would like to ask each of you to go 
ahead and give your opening statements. Maybe I can just begin 
with Secretary Shyu.

 STATEMENT OF HON. HEIDI SHYU, ASSISTANT SECRETARY OF THE ARMY 
           FOR ACQUISITION, LOGISTICS, AND TECHNOLOGY

    Ms. Shyu. Chairman Ayotte, Senator Kaine, and distinguished 
members of the Subcommittee on Readiness and Management 
Support, thank you for this opportunity to provide comments on 
our collective efforts to make the defense acquisition process 
more effective and responsive to our national security needs.
    Defense acquisition is a highly risk-averse, compliance-
based process with a checklist mentality that has become unduly 
cumbersome. Prior to my service to the Government, I spent 33 
years working in the defense industry. I would like to provide 
you some insight and share some of my program management 
experience in industry and compare and contrast that to that of 
a Government Program Manager (PM). I was able to develop a 
sophisticated radar system in record time with authorities that 
simply a Government PM does not have. So I would like to expand 
upon that.
    When I was in industry, I controlled my budget. The 
Government PM, on the other hand, does not really control his 
or her budget. On an annual basis, there is budget perturbation 
that occurs without regard to program impacts. So it is very 
difficult to sustain a program based on an annual basis it is 
perturbing.
    I had the ability to hold reserve budget at my level to 
mitigate unanticipated risks. There is no way you will have 100 
percent visibility on all potential risks that could happen in 
the life of a program. But I was able to pivot. Within the 
Government, you are unable to hold a reserve budget because it 
is deemed early to need.
    The requirements--we fully understood the requirements that 
are desired, and we were able to do the trade space to identify 
its impacts of performance versus cost versus schedule versus 
technical risks. On the Government side, what I have seen 
requirements are derived or changed without the full knowledge 
of cost, schedule, of technical risk to the program.
    Let us talk about stakeholders. In industry, the functional 
staff--that means engineering, finance, manufacturing, 
contracts, you name it--are actually incentivized to help the 
PM to achieve the cost, schedule, and budget. In the 
Government, there are many, many stakeholders. They are all 
stovepiped with different interests directly impacting 
programs. So what happens is, however, none of them are 
responsible for program cost, schedule, and performance. Just 
the PM.
    Let us talk about tests. When I was in industry, I was able 
to coordinate testing plans with the testers. In the 
Government, an operational tester can add additional tests 
without consideration of programmatic impacts.
    Documentation. I was able to move fast because I can tailor 
documentation to my program needs. In the Government, there is 
an extensive amount of mandatory documentation that you have to 
compile before you can go through a milestone.
    Senator Ayotte. Let the record show she showed a pile with 
her hands.
    [Laughter.]
    Ms. Shyu. Taller than me.
    Financial incentives. I am able to hire employees, 
incentivize them to work overtime with overtime pay, with stock 
options, with bonuses. I do not have such flexibility within 
the Government.
    Hiring. I used to get very upset in industry when it took 
me a month--when the human resource person took a month to hire 
somebody. Here I am delighted we can hire the person in 8 to 9 
months.
    So I think the best way I can talk about the process that 
we have in industry versus the Government, I would give you an 
analogy that is simple to understand. Over here, I have an 
acquisition bus. The PM, as you know, is in the front. That is 
bus driver. All of the stakeholders within the Army, as well as 
the Office of the Secretary of Defense (OSD) and Cost 
Assessment and Program Evaluation (CAPE) and Comptroller and 
Congress, by the way, is on this bus. Everybody on this bus has 
a separate steering wheel and a brake, but no acceleration 
pedal.
    So what happens when a program gets into trouble? The best 
analogy I can give is the bus is turned upside down. So what 
happens in industry? Everybody would jump in to bail out the 
program manager because you are bleeding cash. There is a 
financial incentive to reduce loss. So everybody helps out the 
program manager. You will throw the best and brightest across 
the company to help out.
    In the Government, what I have seen the 4 and a half years 
of being in the Government, they will shoot out the windows, 
the tires, and the kneecap of the bus driver. Why? It is an 
opportunity to actually take the program manager's money and 
use it for their stovepipe purpose.
    So compared and contrasted to, it is so starkly different. 
So it is this fundamental lack of program manager authority 
that is commensurate with the responsibility, as well as the 
failure to properly align the various stakeholders? 
responsibilities for the program's success that has contributed 
most heavily to the critical shortcomings in the acquisition 
process in my opinion.
    I urge Congress to empower the PMs with authority needed. 
Help them guide the program successfully to completion in a 
manner that is similar to industry, which I could move very 
rapidly. More documentation does not enable agility.
    So, Mr. Chairman, members of the subcommittee, thank you 
for your steadfast and strong support of the outstanding men 
and women of the United States Army, Army civilians, and their 
families. I look forward to your questions.
    [The prepared statement of Ms. Shyu follows:]

             The Prepared Statement by the Hon. Heidi Shyu
                              introduction
    Chairman Ayotte, Senator Kaine, and distinguished Members of the 
Subcommittee on Readiness and Management Support, thank you for the 
opportunity to address the committee on reform of the Department of 
Defense (DOD) acquisition system. Having acted as the Army Acquisition 
Executive since 2011, following 33 years in the defense industry, it is 
a privilege to offer my perspective on the unique challenges facing 
defense acquisition.
    Acquisition reform has proven elusive. From 1960 to this decade, at 
least 27 major studies of defense acquisition, all proposing various 
reforms, have been conducted by the Department, the Congress, the White 
House, think tanks, and each of the individual services. Nearly each 
effort has attempted to define legislative solutions, create new 
processes and propose additional oversight to challenges that are, in 
many respects, endemic to defense acquisition.
    The objectives of reform are all too familiar: tackling cost and 
schedule growth in our acquisition programs, addressing unrealistic 
program requirements, streamlining a process that is bureaucratic, 
ponderous and slow, and addressing the need for a skilled and 
professional acquisition workforce. However, there are limits to what 
acquisition reform can achieve based on certain enduring realities of 
our business. The first is that the defense acquisition system is full 
of inherent technical risk. We design, develop and integrate novel 
technologies in unique ways unknown in commercial business. Second, 
unlike the private sector, the incentives and responsibilities of 
various Government stakeholders in the acquisition system are diffuse 
and often inconsistent. Third, prior efforts at reform have mostly 
resulted in greater oversight, added bureaucracy and the associated 
prolixity of statutes and regulations, slowing down the process 
substantially.
    While we must continue to improve on our past record, the reality 
is that there are no easy fixes that allow us to deliver incomparable 
warfighting capabilities while eliminating all sources of risk. The 
need for oversight must be weighed against the need for flexibility of 
our acquisition processes. As the Department has recently emphasized, 
our desire to reduce risk must be balanced by the need to maintain our 
technological advantage. Most importantly, we must recognize that 
improved acquisition outcomes depend on mutual accountability among the 
various stakeholders that affect the success of our programs. These 
considerations cannot be overlooked as we work together to craft a more 
responsive and effective acquisition system.
                    empowering our program managers
    During my time in the defense industry, I saw firsthand the agility 
and empowerment that program managers are given to do their difficult 
jobs. The largest single difference in Government, which also accounts 
for the proliferation of studies directed at these issues, rests in the 
sheer number of stakeholders that influence Department acquisition 
programs. While program managers are accountable for program outcomes, 
they are only nominally in control of their programs--the program 
manager is subject to the influence of many other organizations with 
discrete authorities and priorities. As we embark on another reform 
effort, we must acknowledge the program manager's reliance on 
programmers and budgeting teams to plan and execute program resources, 
and on the requirements developers for achievable system requirements.
    Too often, previous efforts at reform have attempted to engineer 
the decision-making process by adding layers of oversight to avoid 
repeating past mistakes. Stakeholders are thus incentivized to 
legitimatize their role in the process rather than add value to 
acquisition programs. Effective reform must ensure a common vested 
interest in program success, with an emphasis on mutual accountability 
for program managers, functional oversight stakeholders, and other 
Service components who play a role in acquisition.
    Over the past 60 years, nearly every acquisition reform study has 
emphasized the need for technically feasible requirements that trade 
off desired capabilities to meet cost and schedule constraints. 
Requirements which are not achievable within cost, schedule, and 
technical realities are doomed for failure before the acquisition 
process even begins. In industry, this process is dynamic and fostered 
by the company's financial incentive to meet cost and schedule 
objectives. Our requirements generation process often develops in 
isolation, based on operational desires removed from engineering and 
resource constraints. The results are requirements based on ideal 
aspirations versus ``good enough'' operational utility. To improve 
program outcomes, we must also address the requirements process, which 
mostly takes place well before a program is started.
    These ingredients for program success are not currently in the 
program manager's control. However, these aspects of the process must 
be considered as changes are made to our processes affecting program 
managers.
                     stable and predictable funding
    Despite our efforts to improve acquisition, budgeting decisions 
outside of the acquisition process can greatly disrupt prudent planning 
to achieve cost efficiencies and incentivize contractors. Our budgets 
are subject to numerous factors outside the program manger's control, 
including Congressional authorization and appropriation, and Department 
and Service funding prioritizations. Furthermore, the threat of 
sequestration continues to disrupt the Department's overall budget 
process, with the resulting changes having effects on the industrial 
base.
    In industry, a program manager controls his or her own budget, and 
is able to hold reserve funds to account for unexpected risks. In our 
process, program managers have little such control despite evidence 
that stable funding has a directly proportional effect on program 
health and performance. A management reserve account for program 
managers would provide some buffer against the annual funding 
perturbations common to our programs.
                         reducing documentation
    Previous efforts at acquisition reform have generated numerous 
documentation requirements in an attempt to ensure effective oversight. 
I am encouraged by Congress and the Department having the shared 
intention to make headway on the documentation burden this fiscal year. 
The Department and Congress have collaborated on efforts to identify 
redundant and duplicative documentation requirements that stem from 
statutory requirements over several years. Statutory callouts of 
particular types of documentation, such as manpower estimates, has led 
to the generation of standalone documents which must be created and 
staffed separately. This creates additional, unneeded documentation 
since the substantive information is already adequately captured in 
existing documents such as the acquisition strategy.
    The Department submitted seven legislative proposals which will 
address the examples cited above and others, and proposes some revised 
language to clarify existing misinterpretations. Additionally, these 
proposals recast certain oversight stakeholders as advisors to the 
acquisition decision-maker, and emphasize the overall streamlining of 
the decision making process. This will avoid further dispersion of 
responsibility and authority over acquisition, and help balance 
oversight needs with the need to maintain flexibility and agility in 
the process. When we align incentives towards program success, we can 
preserve the ability to move fast while maintaining effective 
oversight--as seen in classified programs.
    The Department is also undertaking its own reforms to improve 
internal acquisition processes, most notably the introduction and 
implementation of Better Buying Power, now on its third iteration. As 
part of this initiative, the Army is leading a cross-Department of 
Defense team to identify and eliminate unproductive paperwork. On 
average, program managers across the Department are required to develop 
more than 40 separate documents and reports for program milestone 
reviews. The review and approval of these documents can take up to 18 
months, adding significant time to acquisition programs. The cross-
departmental team will formulate recommendations to reduce unnecessary 
or low-value-added documents, while still providing sufficient 
oversight of key program decisions. As finite resources, the time and 
attention of program managers are best utilized to manage programs 
effectively versus oversight compliance, and I support the recent 
efforts that recognize the need to balance effective oversight with 
flexibility in the acquisition process.
                      people and talent management
    Lastly, the acquisition community must have the ability to attract, 
train, and retain a qualified workforce, both uniformed and civilian. 
Originally recommended by the Packard Commission and inaugurated by 
Congress via the Defense Acquisition Workforce Improvement Act (DAWIA), 
a professionalized acquisition workforce is perhaps the largest factor 
within the process that contributes to success. Such a workforce is 
necessary to balance the technical demands of developing sophisticated 
weapons systems while exercising the business judgment needed to ensure 
value received for public resources. The Army requires access to an 
experienced and energetic workforce of systems engineers, logisticians, 
contracting personnel, and many other critical skill sets essential to 
ensuring successful acquisition execution.
    Again, I draw on my industry experience for an idea of best 
practices. Industry is better able to attract and quickly hire the 
necessary technical expertise to successfully execute high risk 
programs, offering financial incentives and awards to its high-
performing employees in the form of overtime pay, stock options, and 
bonuses. Such financial incentives are often unavailable for Government 
program managers. The Government hiring system is laborious and slow, 
and our ability to attract talent has diminished due to hiring freezes 
and furloughs.
    I thank Congress for the tools and resources provided to date, and 
I fully support the intent to make permanent the Defense Acquisition 
Workforce Development Fund (DAWDF) and the expedited hiring authority. 
I propose that more flexible talent management tools are needed, 
particularly those that will allow us to assess critical skill sets 
within our workforce and promote accountability.
                       role of the service chiefs
    Under the current system, the Service chiefs hold no formal role 
within the acquisition process, but still exercise significant 
authority over the capabilities ultimately developed and procured. 
Numerous studies have already examined the need for achievable and 
affordable requirements, as well as stable and predictable funding for 
program success, thus, the Service chiefs are well-positioned to 
address the most urgent and influential issues that ultimately affect 
acquisition success.
    The operational knowledge and leadership possessed by the Service 
chiefs are invaluable to the type of tradespace analyses typically done 
in industry: an examination of capability gaps against projected 
resources and overall priorities, which can then be used to generate 
achievable requirements and ensure protection of the resources needed 
to meet those gaps. The Service chiefs can also engage in the larger 
strategic decisions about what capabilities the Army needs and what 
resources should be put against those needs, balancing the overall 
readiness and training requirements of the force at large. These are 
essential roles that Service chiefs can execute without modification to 
existing authorities.
    I do not believe that Service Chiefs require greater decision-
making authority regarding program decisions, such as technological 
maturity, production readiness, risk mitigation planning, and 
industrial base considerations. The Service Chiefs rarely have the 
technical expertise or industry experience to make such decisions. 
Service Chiefs, and their significant operational expertise, is best 
leveraged on requirements and the overall priority given to our 
acquisition efforts.
                               conclusion
    I am heartened by the committee's stated interest in making the 
acquisition process better serve our Army and ultimately our Soldiers. 
Acquisition reform cannot focus only on oversight of program managers 
or revamping the decision-making process, but must address how the 
system manages risk. We must collectively continue to work to ensure 
that the requirements for what we procure are informed by cost, 
schedule, and performance tradeoffs as well as technical risks, and 
accept that some risks cannot be eliminated entirely.
    The security challenges of tomorrow will be met with the equipment 
we develop, modernize, and procure today. We cannot allow our own 
process to hinder the agility we so desperately need to maintain our 
operational overmatch. I applaud the committee for expressing interest 
in relieving our burdens and streamlining the process. We should 
measure success by our ability to deliver to the Warfighter the 
capabilities needed to accomplish the mission, and despite all of our 
current challenges, we continue to field the best equipment to the best 
Army the world has ever known.
    Madam Chairman, Members of the Subcommittee, thank you for your 
steadfast and strong support of the outstanding men and women of the 
United States Army, Army Civilians, and their Families. I look forward 
to your questions.

    Senator Kaine. Thank you, Secretary Shyu.
    Secretary Stackley?

STATEMENT OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE 
         NAVY FOR RESEARCH, DEVELOPMENT AND ACQUISITION

    Mr. Stackley. Yes, sir. Senator Kaine, Senator Heinrich, 
thanks for the opportunity to appear before you today.
    Let me start by saying that I concur wholly with Secretary 
Shyu's characterization of the challenges particularly that the 
program manager faces inside of our acquisition system. Now, I 
would provide a slightly different perspective in terms of how 
we are going about dealing with some of these challenges.
    First, it cannot be lost on this subcommittee that as we 
talk about acquisition and the need for improvement, that in 
fact we deliver extraordinary capability to our warfighter 
today. The challenge is that we do so at great cost, and it is 
a cost which is proving increasingly difficult for the Nation 
to bear.
    Foreseeing the budget challenges of our current day, 
Secretary Gates gave guidance and warning back in 2010 
remarking, given America's difficult economic circumstances and 
perilous fiscal conditions, military spending on things large 
and small can and should expect closer, harsher scrutiny. As a 
matter of principle and political reality, the Department of 
Defense cannot go to America's elected representatives and ask 
for increases each year unless we have done everything possible 
to make every dollar count.
    Shortly after Dr. Carter, who was then the Under Secretary 
of Defense, issued his directive on how we buy what we buy, 
which today we know as Better Buying Power.
    So today in building our budget, every program, things 
large and small, is subject to answering four most basic 
questions. What will it cost to buy it? What will it buy us in 
performance? What can we afford? What can we do to make it more 
affordable? Simply put, we must change the cost equation.
    We have gone about adhering to this by using five basic 
principles.
    First, get the requirements right. Requirements definition 
is the most critical phase in determining the outcome of a 
major weapon systems program. Requirements that are well 
informed by a thorough assessment of technical feasibility and 
a realistic cost estimate are inherently at lower risk of 
overrun or delay during execution.
    Two, because today our Services' requirements exceed our 
budgets, the Department of the Navy has made affordability or a 
cost requirement alongside performance in defining a system in 
order to drive capability trades needed to reduce the cost of 
our programs. Properly define and seamlessly transition from 
requirements to design to build, test, and field to do so 
within agreed budgets and schedules based on realistic 
estimates necessitates total alignment between requirements and 
acquisition, and it all begins with getting the requirements 
right.
    Second, perform to a stable plan. Our most successful 
programs are underpinned by stable requirements, stable 
designs, and stable budgets. Stability translates into 
predictable, reliable performance, unit cost reduction, 
improved material purchasing and workforce planning, retention 
of the skilled labor, and the ability for industry to invest in 
facility improvements, all resulting in more efficient 
production and a more affordable program. Further, program 
stability enables the use of multiyear procurements to further 
reduce the cost of our acquisitions. Alternatively, 
uncertainty, delay, or changes to requirements or the budget or 
the acquisition plan all destabilize a program ultimately 
leading to cost growth and schedule delay.
    Third, in Secretary Gates' words, make every dollar count. 
It is essential that we pursue efficiencies by procuring at 
efficient rates, leveraging investments across multiple 
programs, maximizing competition, employing open architectures, 
reducing overheads and bureaucracy, and sustaining a constant 
effort to pursue cost reductions, and change practices that 
would meaningfully reduce program cost or risk without 
substantively impacting key requirements regardless of what 
phase the program is in. In short, return to the basics of what 
our systems should cost.
    Fourth and most importantly, build a skilled and 
experienced acquisition workforce. To meet our objectives, we 
must be smart buyers and, two, tough customers, and to be so, 
we must possess a skilled and experienced acquisition 
workforce. The Department, with strong support from Congress, 
is taking measures to strengthen this workforce, and we must 
stay the course. This is the single most important fundamental 
in achieving strong performance in defense acquisition.
    Fifth, foster a healthy industrial base. In the end, 
improvements to acquisition rely upon performance by industry. 
The critical skills, capabilities, and capacities inherent to 
our weapon system developers inarguably underpin our dominant 
military position. Accordingly, in the course of considering 
policy to improve acquisition, the effect of such policy on the 
industrial base must be closely weighed. From research and 
development to production, implicit to each of these principles 
we must pick up the pace. Time is money, and time is stripping 
much-needed capability from the hands of our sailors and 
marines. We demonstrated the ability to accelerate capability 
in response to urgent needs. The Mine-Resistant Ambush 
Protected Vehicle (MRAP) was a great example. Production 
increased 100-fold in a year's time, saving countless lives 
while meet the most urgent need of the warfighter. While the 
rules and process may differ, we need to bring a similar sense 
of urgency to major program acquisition to deliver a capability 
not at the speed of bureaucracy but at the speed of technology. 
We must pick up the pace.
    In closing, I would like to return to Secretary Gates' 
remarks at the Eisenhower Library. What is required going 
forward, he said, is not more study, nor do we need more 
legislation. It is not a great mystery what needs to change. 
What it takes is the willingness to make hard choices. In order 
to remain the most capable military in the world, we will 
always face hard choices. Making the right choices--that 
returns me to the need for a highly skilled, experienced 
acquisition workforce.
    Thank you, Mr. Chairman--Senator Kaine and Senator 
Heinrich, for the opportunity to appear before you today. I 
look forward to your questions.
    [The prepared statement of Mr. Stackley follows:]

            Prepared Statement by the Hon. Sean J. Stackley
    Madam Chairwoman, Senator Kaine, and distinguished members of the 
subcommittee, thank you for the opportunity to appear before you today 
to address acquisition reform initiatives. The acquisition process, as 
difficult as it is, produces the most capable military weapon systems 
in the world, by far. This achievement is only made possible by the 
combined efforts of the Congress, the nation's industrial base, the 
Department of Defense's (DOD's) acquisition workforce, and, of course, 
our men and women in uniform who test, train, deploy, and ultimately 
take these weapons to war. The great challenge before us all is to 
produce the needed capability at a more affordable cost, and at a pace 
that preserves the technological edge that our military has possessed 
for nearly three-quarters of a century. The Department of the Navy 
(DON) is committed to meeting that challenge and these remarks are 
provided in that context.
    To consider what improvements could be made in acquisition today, 
it is important to understand the environment in which it operates. 
Within the DON, we are responsible to the warfighter and taxpayer to 
manage and execute upwards of $60 billion per year for Navy and Marine 
Corps development and procurement. Clearly, our first priority is to 
meet the needs of our Sailors and Marines deployed around the world 
today, fighting today's war. At the same time, we are also responsible 
to bring forward significant advances in capacity and capability that 
the Navy and Marine Corps will rely upon to maintain naval superiority 
well into the 21st century. This must be accomplished in an environment 
characterized by constrained budgets, increasing system complexity, 
limited competition, a shrinking industrial base operating within a 
tough economy, and increasingly burdensome requirements associated with 
the administration, oversight, and reporting of our major weapon 
systems programs. It is also important to understand the essential 
nature of weapon systems procurement--neither the DOD nor the defense 
industry exercises a classic role of buyer or seller in the free-
enterprise system. As a result, it can be difficult to attract new 
entrants into a unique, high-entry-cost, and often less understood 
market in the U.S. And finally, this large Government bureaucracy that 
envelops Defense acquisition discourages risk and thwarts rapid or even 
timely delivery when, in fact, the very nature of weapon systems 
development is risky, and the very pace oftechnology and of the threat, 
demand a faster, appropriate response. Given this environment, which is 
not prone to agility, primary emphasis must be placed on the need for 
experienced, knowledgeable acquisition professionals who know how to 
work in the unique defense marketplace, who understand the technical 
dimensions of extraordinarily complex systems, and who can navigate the 
bureaucracy and produce excellent outcomes in spite of it all.
    With the above in mind, history and experience have demonstrated 
that programs succeed when they adhere to basic principles: (a) get the 
requirements right; (b) perform to a stable plan; (c) make every dollar 
count; (d) rely on an experienced acquisition workforce; and (e) foster 
a healthy industrial base.
                     getting the requirements right
    Arguably, requirements definition is the most critical phase in 
determining the successful outcome of a major weapon systems program. 
Requirements that are underpinned by a thorough assessment oftechnical 
feasibility and a realistic cost estimate are inherently at lower risk 
of cost or schedule overrun, or performance shortfalls, during program 
execution. Conversely, the preponderance of `failed programs' can trace 
their undoing to poor understanding of the technical requirements 
(including what are often referred to as `derived requirements'), cost, 
and risk intrinsic to such programs' operational requirements. Our 
mandate--to properly define and seamlessly transition from requirements 
to design, to build, test, field, and sustain and to do so within 
agreed budgets and schedules based on realistic estimates--necessitates 
unity of purpose and unity of action between the Requirements and 
Acquisition organizations each step along the way. And it all begins 
with and hinges upon getting the requirements right.
    Expert knowledge is required to understand the link between 
operational requirements and technical requirements; and the 
development, design, and production challenges that must be overcome to 
achieve these technical requirements; and the time and resources that 
will be required. This expert knowledge should be the inherently 
Governmental responsibility assigned to the Acquisition Workforce 
(AWF). Accordingly, it is critical that the acquisition arm, which will 
be accountable for delivering to the technical requirements defined for 
a weapon system, is embedded in the requirements definition process to 
provide the Department its best assessment of technical feasibility, 
cost, and risk in the course of defining those requirements.
    Understanding the cost and risk of a program's requirements are 
not, however, sufficient. As Secretary Gates remarked in his speech at 
the Eisenhower Presidential Library in 2010, ``Without exercising real 
diligence, if nature takes its course, major weapons programs will 
devolve into pursuing the limits of what technology will bear without 
regard to cost or what a real world enemy can do.''
    Accordingly, because today our Services' requirements exceed our 
budgets, the DON has directed that cost--or more appropriately, 
affordability--must be defined alongside, and managed with the same 
discipline and rigor, and if need be, drive tradeoffs across such 
traditional requirements as the speed, power, range, or payload of a 
weapon system.
    The DON has designed its acquisition process, commonly referred to 
as the Navy Gate Review process, to ensure there is no gap between the 
Requirements and Acquisition organizations so that the Navy understands 
the relationship between requirements, technical feasibility, and cost. 
The process requires the Navy/Marine Corps operational requirements 
leadership and acquisition leadership to agree, and repeatedly affirm 
that agreement throughout the development, acquisition, and sustainment 
of a system. A misalignment between requirements and acquisition is 
always costly and sometimes fatal--inducing unnecessary costs 
associated with redesigning, retesting, schedule delays, and even 
cancellation. The DON uses Gate Reviews to eliminate that misalignment 
early in a program, and to check alignment regularly.
    Each `gate' is co-chaired by the Service Chief or senior military 
requirements officer and Service Acquisition Executive (SAE). In all, 
there are six gates. The first three are chaired by the Service Chief 
(co-chaired by the SAE) and ensure that warfighter requirements are 
well understood and can be translated into technical requirements that 
the acquisition community can affordably achieve in the commercial or 
defense marketplace. The last three gates are chaired by the SAE (co-
chaired by the senior military requirements officer) and ensure the 
technical specification, statement of work, and Request for Proposal 
have accurately translated the warfighter's requirements into an 
acquisition approach that is executable, affordable, and agreeable 
across acquisition and requirements leadership.
    Within the Department of the Navy, this acquisition method 
reinforces the authority and strengthens the ability of the Service 
Chiefs to set and manage operational requirements, to realistically 
budget for these requirements, and oversee execution pursuant to their 
responsibility to man, train and equip the force. Likewise, it 
reinforces the authority and strengthens the ability of the SAE to 
manage the technical requirements, to construct the acquisition 
strategy to achieve these requirements, and oversee execution pursuant 
to his/her responsibility to the Service Chief to deliver the 
warfighting capability on-cost, on-schedule and within performance 
parameters.
                      performing to a stable plan
    Good acquisition outcomes are more probable when a Program Manager 
can manage to a plan with a foundation of stable requirements, 
technical baselines, and budgets--which is an expected benefit of the 
Gate Reviews described above. Alternately, instability causes added 
cost in rework/time, and a chronic inability to accurately estimate 
program costs. Perpetual instability produces an historical record of 
higher-than-necessary cost estimates which, in tum, are used as 
baselines to estimate future programs which, in tum, are used to inform 
budget submissions--establishing a repeatable cycle of spiraling, self-
fulfilling cost growth.
    Good examples of program stability that enable performing to a 
stable plan, include the DDG51, Virginia-class, F/A-18E/F, MV-22 
Osprey, Mobile Landing Platform, and Next Generation Enterprise Network 
(NGEN). In each case, the Navy/USMC made strong efforts to establish 
well-defined and stable requirements that allowed industry to more 
accurately understand the Government's requirements, and then produce 
cost-effective proposals. Program stability also permits the use of 
additional cost-saving contracting measures not available where 
stability is absent, such as multi-year contracting and shorter 
construction cycles.
    A chronic counter to program stability, however, is the 
bureaucratic environment in which Program Managers operate. In this 
context, the 'bureaucracy' is viewed by the Program Manager as the 
accrued effects of individual stakeholders across the broad Government 
who have, or believe they have, a role derived from the myriad of 
regulations and policies embodied in the FAR, DF AR, FMR, DOD 5000, 
Services 5000, JCIDs, etc., in decision-making, administering or 
overseeing some element of that program.
    In pushing the boundaries of science and technology to deliver 
leading edge capability, the risk, complexity and cost of our weapon 
systems have grown significantly. The response has been decades of 
well-intended legislation, regulation, and policy designed to reverse 
cost trends and avoid past mistakes. The result being that Program 
Managers spend increasing amounts of their time fighting back the 
destabilizing effects of an increasingly bureaucratic oversight system 
that is too risk-averse, and less time performing to a stable plan. The 
unplanned, unpredictable, and often intrusive bureaucracy the Program 
Manager faces undermines his or her ability and therefore, 
accountability, to execute a plan too often interrupted or modified by 
well-meaning individuals outside of the chain-of-command, who may have 
positional authority, but otherwise are not themselves responsible, 
accountable or incentivized to ensure a Program Manager is successful. 
Further attempts to improve Program Manager accountability should be 
mindful of this reality.
    Budget instability destabilizes programs and reduces the likelihood 
a Program Manager can control program outcomes. The great uncertainty, 
delay (Continuing Resolutions), and frequent changes to budgets through 
the annual authorization and appropriations process counter our efforts 
to effectively execute to a plan. Sequestration, alone, threatens to 
undo all of the Department's gains in productivity brought about by 
`Better Buying Power' initiatives. A timely, predictable defense budget 
(ultimately, a multiple year budget) would directly increase the 
productivity of Defense acquisition; provide needed stability to the 
industrial base; and improve both Government and industry's ability to 
manage outlay risk and invest in R&D, facilities, and people. It would 
also reduce Government deadline pressures to meet artificial 
obligations or expenditure benchmarks that impact effective contract 
negotiations. Reducing these pressures would allow the time necessary 
to achieve the best deal for the Department.
    Budget stability is also critical for managing through challenges 
in program execution. There is a compelling need to establish a 
Management Reserve (MR) account to address the execution risks inherent 
to every major program. Absent an MR account, each program is left to 
establish and protect its own MR, which at best, results in inefficient 
resource allocation. At worst, those programs unable to provide for 
such reserve within the program's budget suffer program breakage as 
funding shortfalls emerge in the course of program execution. An MR 
account to be administered by the Services could be established with 
unobligated funds and be used by the Services to address individual 
program risks or urgent needs that have emerged in an execution year.
                       making every dollar count
    As stated earlier, the DON's requirements exceed the DON budget. 
While it is left to the budget cycle to balance the two, it is 
essential that, corporately, efficiencies are achieved by procuring at 
efficient rates, leveraging investments across multiple programs, and 
maintaining year-to-year stability in programs. In short--making every 
dollar count.
    Program by program, the DON remains committed to competition--at 
the prime and subcontract level--through early prototyping, spiral 
development, open architectures, fixed price contracts, and effective 
use of incentive fees. Competition or competitive rivalries can take 
many forms. Head-to-head competition is not appropriate for everything 
the Department buys, nor is it always an available option, but in 
almost all cases, it is a Program Manager's best friend.
    The DON has successfully applied multiple and various forms of 
competition, beginning with competing against the budget itself--
ensuring each dollar spent is necessary to meet a requirement. Beyond 
that, the DON has recently applied direct, full and open competition to 
major programs to include Next Generation Jammer, Consolidated Afloat 
Network Enterprise System (CANES), NGEN, Presidential Helicopter, and 
Amphibious Combat Vehicle (1.1). Taken together, the savings generated 
relative to pre-award independent cost estimates have been significant 
and allowed the Department to direct those savings to increase 
procurement where we fall short of the warfighting capacity 
requirement.
    In cases where there is a fragile and limited industrial base, the 
DON has competed profit between two primes; competed quantity; competed 
different solutions which satisfy the same requirement; combined 
acquisitions in a competitive manner; and tied successful cost-
proposals in limited competitions to anticipated additional quantity. 
Various competitive forms have allowed the Department to make every 
dollar count.
    Open architecture has proven to be a necessary component to achieve 
repeatable and sustained full and open competition and to level the 
competitive field, allowing small business to compete head-to-head with 
large business. The DON's previous open architecture success in the 
Submarine Acoustic Rapid COTs Insertion Program established a business 
model that has been replicated in other DON programs, including AEGIS 
Combat System modernization, F/A-18, Littoral Combat Ship, Air and 
Missile Defense Radar, CANES, NGEN, and MK 48 Torpedo Programs, to name 
a few. The DON's experience with open architecture has emphasized an 
important principle that affects acquisition reform--DON ``ownership'' 
of the system interfaces/protocols/definitions is necessary for 
success, placing added emphasis on the need to hire and retain 
outstanding technical talent.
    Further, there is a need to ensure that total ownership cost, 
including energy considerations, carries weight in the formulation of 
major acquisition strategies and source selection criteria. These 
fundamentals are emphasized in Department policy, including policy that 
emphasizes program decisions that favor DON corporate interests, though 
such policy may at times appear at odds with individual program 
preferences.
    The Program Manager is expected to execute within the framework of 
established requirements and budget. During execution, it is important 
to sustain a constant effort to pursue cost reductions and bring 
forward recommended changes to specifications, scope, requirements, 
policy, acquisition strategy, or management practice that would 
meaningfully reduce program cost or risk without substantively 
impacting key requirements--regardless of what phase the program is in. 
The DON's Program Managers are tasked, not merely with understanding 
the basis of estimate for their programs' costs, but equally or more 
importantly, to understand what drives those costs and to formulate a 
strategy to reduce those costs in accordance with the program's best 
estimate of its ``should cost''--again, making every dollar count.
         relying on an experienced acquisition workforce (awf)
    An experienced Acquisition Workforce is the single-most important 
fundamental in achieving strong, repeatable performance in Defense 
acquisition. GAO has reported that ``the principles and practices that 
programs embrace are determined not by policy, but by [Program 
Managers'] decisions.'' The business of Defense acquisition consists of 
tens of thousands of individual decisions made daily--requirements, 
technical, contracting, financial, supply, etc.--and the more 
experienced and qualified the AWF, the better the decisions. The best 
acquisition outcomes are produced by the most experienced acquisition 
people--in technical knowledge and business acumen. As the 
Undersecretary of Defense for Acquisition, Technology and Logistics 
(USD(AT&L)), Frank Kendall, stated to the Senate Homeland Security and 
Governmental Affairs Subcommittee on Contracting Oversight on April 30, 
2014: ``Maybe we've been changing the wrong things. Defense acquisition 
is a human endeavor, and my view is that we have focused too much on 
organizational structures, processes, and oversight mechanisms, and not 
enough on providing people with the skills and the incentives they need 
to be successful.''
    The AWF requires highly-educated and highly-skilled professionals 
in the following areas: Scientists & Engineers; Contracts Officers; 
Program Managers; Cost Estimators; Financial Managers; Logistics 
Managers; Auditors; Acquisition Attorneys; Information Technology 
Professionals; and Construction Engineers and Architects. It requires 
highly talented and dedicated military and civilians who are the 
``Special Forces'' of the federal civilian workforce. To recruit and 
retain the best and brightest for this work so that the DOD AWF becomes 
the premier technical and business workforce in the world, requires 
changes to human resource authorities, accommodations, and 
compensation.
    The idea of building and retaining a highly capable AWF as the 
cornerstone of improving the Defense acquisition system is not new. 
Indeed, echoing similar findings of the Blue Ribbon Defense Panel in 
its report to the President in July 1970, Dr. Ron Fox states:

        ``Were there a more attractive Government career in DOD 
        acquisition management, it would then be possible to minimize 
        the conflicts associated with frequent turnover of military 
        personnel and widespread military retirements to industry, 
        while preserving the rights of individuals to careers in 
        acquisition management. The basic goal of any legislative 
        remedy must be achieving and maintaining outstanding competence 
        and integrity to the Defense acquisition system.''

    The same statement is true for the civilians who make up the AWF.
    The professional Acquisition Workforce, however, is increasingly 
difficult to sustain. The AWF operates in a human capital system that 
was not designed with the 21st century professional employee in mind. 
It is archaic and lacks agility to hire and retain an elite workforce. 
Further, the A WF remains subject to the same undistributed Government 
personnel reductions as with any other part of the federal workforce 
and, today, is operating in the shadow of the FY 2013 furlough and FY 
2013 Government shutdown. The prospect of the same scenario looms in 
the current budget cycle. None of these facts are attractive to 
prospective hires or the current acquisition professionals the 
Department must retain.
    Congress has recognized the Department's need for a large, robust, 
highly qualified AWF, and provided much-needed legislative relief with 
the passage of Section 852 in the 2008 National Defense Authorization 
Act (NDAA) and Section 219 in the 2009 NDAA, and support for the 
Department's desire to expand the Acquisition Demonstration Project to 
more of DOD's AWF. These provisions, which have been amended several 
times, provide helpful authorities for AWF hiring, training, and 
retention, as well as budget authority dedicated to rebuilding the 
Department's in-house Science and Engineering foundation. These 
provisions are important and the DON is grateful to the Congress for 
their support. But for the 21st century AWF, more agility will be 
needed to hire and retain quality people with elite skills.
                  fostering a healthy industrial base
    In the end, improving acquisition outcomes relies upon performance 
by industry, so it is appropriate to understand the issues affecting 
industry's performance. Industry needs experienced engineers, skilled 
tradesmen, capital to invest, and fair opportunities for stable 
production and repeatable profits over the long-term. On the other 
hand, Defense acquisition needs sustained competition, repeatable cost 
performance, and repeatable product performance.
    The difficult reality is today's defense industrial base is 
fragile, less competitive, has limited U.S. growth opportunities, and 
continues to face an uncertain defense and national budget environment. 
The result is a somewhat smaller, less competitive defense industrial 
base comprised of large consolidated prime integrators with multiple 
tier suppliers. The primes are often compelled to invest outside of 
defense to maximize shareholder value. Without more stability and 
predictability in defense budgets, there is less defense market 
investment and innovation, and less product affordability without more 
companies in the market to improve competitive pricing.
    Attracting new entrants into the defense industrial base to offset 
the loss of innovation and competition has proven challenging as well. 
Barriers to entering the defense market remain chronically high as the 
overhead cost of entering and operating in a unique, uneven, and overly 
bureaucratic market discourages prospective entrants--both large and 
small commercial compames.
    These industrial base (and supply chain) realities come at a time 
when Combatant Commanders, via the requirements process, need and 
expect the Defense acquisition enterprise to respond with significantly 
more speed, agility, and innovation. No longer are the small, rogue 
non-state actors the only ones able to supply warfighting units with 
material capability faster than the U.S. Defense acquisition system can 
respond. Even a country the size of China can now produce capability 
seemingly much faster than its U.S. counterpart because, in part, it is 
unburdened by
    U.S. Defense acquisition laws, regulations, and policies. The 
unfortunate mismatch is that warfighters are expecting the acquisition 
system to respond at the speed-of-technology at a time when agile and 
more affordable medium and small businesses find it increasingly 
difficult to penetrate the Defense acquisition bureaucracy.
    As our industrial base and its supply base continue to undergo 
reshaping as a natural response to U.S. and global economic conditions, 
it is vital that weight be given to these factors when considering any 
new legislation or policy affecting Defense acquisition.
                             final thoughts
    Defense acquisition is a large enterprise of complex, 
interdependent systems-of-systems, engineering disciplines, procurement 
rules, budget rules, organizations and processes. Oversight and 
governance of the enterprise is necessary and is expected, but it is 
crucial to strike the right balance in order to achieve affordable 
outcomes. The penalty for too much oversight is ever-increasing costs 
and impediments to execution that have no ceiling. The penalty for too 
little oversight is the costs and risks of rework for unforced errors. 
Oversight and governance requirements have added multiple layers of 
prescriptive processes, authoritative organizations and extensive 
reporting and documentation requirements. In short, the sheer size and 
overlapping nature of the bureaucracy runs counter to objectives of 
efficiency, productivity, and performance.
    Lessons learned from highly successful programs highlight that the 
right balance is attainable by applying the fundamental disciplines 
already known and available to each Program Manager (like those 
expressed here), then exposing the products of that discipline to 
simplified oversight by an appropriate but limited number of highly 
experienced managers, engineers, and business executives who serve at 
the Service Secretariat and OSD levels in policy oversight capacities. 
The fundamentals expressed in this statement have proven to produce 
successful acquisition outcomes. The DON recommends the subcommittee 
work with USD(AT &L) in the current effort to identify and roll back 
legislation that has produced unnecessary and redundant, regulatory and 
reporting burdens on Program Managers which have the effect of 
thwarting the steady application of these fundamentals.

    Senator Kaine. Thank you, Mr. Secretary.
    Secretary LaPlante?

 STATEMENT OF HON. WILLIAM A. LaPLANTE, ASSISTANT SECRETARY OF 
                 THE AIR FORCE FOR ACQUISITION

    Dr. LaPlante. Senator Kaine, Senator Heinrich, thank you 
for holding the hearing.
    I too endorse strongly my colleagues here, both the bus 
analogy, as well as everything that Mr. Stackley said. It is an 
honor to be here with them today. These are two remarkable 
public servants. They are actually role models for a lot of 
folks in the Government, as well as in academia and industry, 
and they are exactly the kind of people that we need in the 
Government. So I just want to call them out.
    This is an important hearing. We have a solemn duty to the 
taxpayer and the warfighter to get this right. But this is a 
well-studied topic. I was on the Defense Science Board. At one 
point we had a moratorium against doing acquisition reform 
studies. It lasted for about 2 years, but then we got back into 
it again. It is important that this ground, though, be looked 
at and continually improved. I welcome what this committee is 
doing, as well as its counterpart in the House, to help us 
here.
    I want to mention one thing about agility. Senator Kaine, 
you mentioned agility as a fundamental issue that we are trying 
to get. I had the privilege of co-chairing a study on 
adaptability and agility for Secretary Gates back in 2010. What 
you fundamentally find out in agility and adaptability is the 
metric is speed. Speed is the fundamental metric. If you do 
things fast, do it fast, failing fast is better than doing 
things slow that may or may not succeed.
    The second thing you can do if you cannot do it very fast, 
if it is a modular type approach laid to a big platform, then 
build in hooks, build in open architectures, ability for you to 
pivot as the threat changes, as technology changes, as the 
warfighter learns things. So agility has to be fundamental to 
how we do acquisition. So I am a very strong believer in that. 
I think it echoes what my colleagues here have said.
    I also think I am going to spend a few minutes here in the 
opening remarks just the level-set everybody. In science, it is 
usually good to get definitions on the table because a lot of 
times you find out people are not talking about the same thing. 
So if you bear with me, I am going to go through a few 
definitions and come back to this issue of people.
    So, first, let us take your plain, generic acquisition 
program. Most of the time what the means is we have three 
phases to that program. We develop it. We procure it, and then 
we sustain it. Now, in the Government for the complex weapons 
systems that we deal with, we do not have the luxury--we wish 
we did--to go to a parking lot and buy something off the 
parking lot. We have to develop it. We have to pay industry to 
do the research and development. That means get to a mature 
design, get the test articles done, do the developmental 
testing where you learn where the problems are, get ready for 
production, get all ready to go. That is the first phase. That 
is Research, Development, Test, and Evaluation (RDT&E) money. 
The skill set for that is usually a very sophisticated, deep 
understanding of engineering.
    The second phase is procurement. You are now in the 
production line. There it is usually a different color of 
money, different type of contracting, typically a fixed-price 
type contracting. There you are after learning. You are after 
cost reductions.
    Then the third phase. The third phase is sustainment. 
Actually it turns out most people believe, who have looked at 
it, 70 percent of the lifecycle cost of the program is actually 
in the sustainment. So what you do in that first phase or that 
second phase, even if it might be a little bit more expensive, 
might actually save you money if you think it through for the 
third phase. Now, what is sustainment? Sustainment is about 
performance-based logistics, understanding the depots, 
understanding how we spend our operations and sustainment. I 
have found in my time in the Government that you can have an 
expert in sustainment, 20-25 years, and you can have an expert 
in acquisition, 20-25 years, I have not found hardly one person 
who is an expert in both.
    Okay, so that is just the standard three-phase acquisition. 
What else are we not talking about? Services. The Department of 
Defense last year spent $156 billion in the acquisition of 
services. Services can be anything from cutting the lawn to 
launching our most precious national security payloads into 
space. Those are all services. Different skill set. Right? 
Totally different skill set. Different management.
    Okay. Then the third category, which Secretary Stackley 
mentioned. He mentioned MRAPs, rapid acquisition. Over the last 
15 years, we have had a proliferation of rapid acquisition 
offices. Most of them are responding to rapid urgent 
operational needs (UONs) we call it. That is a totally 
different model as well. Usually it is an 80 percent solution. 
Usually the sustainment part is often put aside. Very different 
skill set. Very different contracting.
    So imagine what all of that has in common. Very little, 
except one thing: people. The experts you need in each part of 
that system have to be customized to where they are. That is 
what you were getting at, Senator, right at the beginning about 
your experience. So that is important to this, is the people.
    So I just want to make sure we are all level-set on that 
because oftentimes when I hear people talking about 
acquisition, I am not sure which phase or which aspect they are 
talking about.
    There are promising signs. There are good things going on 
that should be built upon. I am always a believer in looking at 
what is going well and building upon it. The Better Buying 
Power initiatives that Secretary Carter announced that 
Secretary Kendall initiated is paying off. The ``should cost'' 
savings that all three of our services are having are real and 
they are incredible. They are not cost avoidance. People 
sometimes say it is cost avoidance. No. Very specifically, they 
are real savings. That is paying off.
    We also do have outreach to nontraditionals. We are running 
experiments in the Air Force with non-traditional ways to bring 
in academia or small businesses. Open architectures, which I 
mentioned earlier, for adaptability are a great way to bring in 
non-traditional companies and players into our system. We are 
trying things in the Air Force. I know the other Services are--
outside the acquisition 5000, doing something that is called 
``other transactional authority.'' We are doing an experiment 
next month on one of our systems to try to get folks under 
contract within a week if they impress us with one of their 
algorithms. So there are lots of these little experiments going 
on that I think we need to watch, pay attention to, encourage.
    I would just look forward to working with the committee as 
we work on this. Thank you very much.
    [The prepared statement of Dr. LaPlante follows:]

               Prepared Statement by Dr. William LaPlante
                            i. introduction
    Chairman Ayotte, Ranking Member Kaine and distinguished members of 
the Subcommittee, thank you for the opportunity to discuss reform of 
the defense acquisition system. Modernizing our weapons systems is 
paramount to the success of the Armed Forces. The Air Force Acquisition 
Enterprise is exceptionally capable and we are aligned to deliver the 
world's best and most advanced weapons and other capabilities both now 
and in the years to come.
    I'd like to start by commending the United States Senate Permanent 
Subcommittee on Investigations for their October 2014 report, Defense 
Acquisition Reform: Where Do We Go From Here? This compilation of 
essays from a comprehensive range of defense acquisition professionals 
has been crucial to our own internal studies and reviews on what 
actions to take as we move forward. Particularly, the report from Dr. 
Paul Kaminski, currently the Chairman of the Defense Science Board and 
Chairman and CEO of Technovation among other Boards, and previously the 
Under Secretary of Defense for Acquisition, Technology & Logistics and 
a retired Air Force officer, speaks to me. He simply states that ``No 
combination of statutes, regulations and policies can ensure that major 
weapons systems are delivered on time, at a reasonable cost, and 
provide the needed capability. The acquisition system depends upon good 
people making good decisions involving complex issues.'' This 
declaration helps us shape the context of the improvements we 
continuously challenge ourselves to seek: They will not happen 
overnight, they require a cohesive team in agreement of the desired 
outcomes, and we need the collective thrust of the enterprise 
initiatives and sufficient stable funding to support the people as they 
turn the change from idealism to reality.
    I would also like to highlight House Armed Services Committee 
(HASC) Chairman Thornberry for his recently introduced acquisition 
legislation. Among other things, the legislation would streamline many 
of our processes and improve efficiency of the acquisition system. The 
Department of Defense, in conjunction with the Services, provided input 
to Chairman Thornberry's legislation, which generally complements the 
Better Buying Power (BBP) initiatives and supports reducing unnecessary 
bureaucracy and red tape.
    Congress has been a terrific partner in helping us achieve greater 
acquisition successes. Of note, the Competition in Contracting Act 
(CICA) of 1984 which stressed competition, and was further accentuated 
by Weapon Systems Acquisition Reform Act's (WSARA) emphasis on life 
cycle competition and prototyping to reduce development risk, 
contributed to many of our successes. The 1990 Defense Acquisition 
Workforce Improvement Act, which established qualification standards 
for the workforce, as well as the more recent National Defense 
Authorization Act for Fiscal Year 2011 Defense Exportability Features 
(DEF) to improve our ability to increase foreign military sales, also 
helped us get where we are today. These laws are all examples of 
improvements to the process aided by Congressional direction.
    However, as Dr. Kaminski states, laws upon laws will not improve 
the acquisition process. While we believe these laws were created with 
the best intentions, as our processes increase in complexity, many of 
the statutory requirements continue to grow, resulting in duplicative 
and often overly cautious requirements whose burdens outweighed their 
values.
    We have made tremendous improvements in recent years to our 
acquisition system; although, we still have work to do. Since my 
nomination as Assistant Secretary of the Air Force (Acquisition), I've 
challenged the acquisition community to achieve five priorities: Get 
programs right, increase transparency to external stakeholders, own the 
technical baseline, continue our efforts on BBP, and build our systems 
towards a future Air Force. All of these initiatives contribute to a 
stronger, cost conscious acquisition community. Within the Air Force 
and Department of Defense, initiatives including the Acquisition 
Improvement Plan (AIP) (2009), Better Buying Power (BBP) 1.0 (2010), 
BBP 2.0 (2012), Bending the Cost Curve (2014), and now BBP 3.0 (2015) 
also contributed to our successes.
    We are far from reaching our fullest potential. We agree with the 
GAO's conclusion in their February 2015 report, DOD Should Streamline 
Its Decision-Making Process for Weapon Systems to Reduce 
Inefficiencies, which stated that the DOD can eliminate many reviews 
and information requirements that are no longer necessary, and 
streamline processes so that decision makers only review the most 
essential information. While we always ensure our Air Force programs 
receive appropriate oversight from external stakeholders, fewer 
documentation requirements would allow our Program Managers (PMs) to 
devote more time to managing programs, rather than completing 
duplicative and overly burdensome paperwork. With more time devoted to 
actual program management, costs and schedule could improve without 
sacrificing technical performance.
    The Air Force is committed to the Integrated Life Cycle Management 
(ILCM) of its weapon systems. To that end, we must address product 
support equities during every phase of the life cycle for all our 
programs. In order to ensure product support equities are in the 
forefront of our acquisition process, we have established a new Deputy 
Assistant Secretary (DAS) for Logistics and Product Support, SAF/AQD, 
working directly for SAF/AQ. This office is headed by an SES, two-Star 
equivalent, life cycle logistician with extensive experience in the 
sustainment community.
    The establishment of SAF/AQD properly aligns Logistics and Product 
Support oversight across the Air Force ILCM enterprise. As you are 
aware, 10 USC 2337 mandates that all weapon system programs be 
supported by a Product Support Manager (PSM) reporting directly to the 
PM. The PSM's primary responsibility is to plan and develop the weapon 
system product support strategy. The Air Force has implemented PSMs in 
all of its Acquisition Category I and II program offices, and they are 
accomplishing excellent work. Our PSMs are integral members of the 
program office team and are directly advising the PM on logistics and 
product support issues.
    Prior to the establishment of SAF/AQD, SAF/AQ lacked a senior 
logistics and product support advocate. SAF/AQD fills that gap and 
ensures SAF/AQ staff has a Senior Executive Service level logistician 
advocating for logistics and product support equities, as well as 
subject matter experts providing policy and oversight to our PSMs in 
the field. Additionally, SAF/AQD has the responsibility for ensuring 
the Air Force complies with all statutory depot maintenance 
requirements. This will ensure that SAF/AQ will fully consider ILCM for 
each of our weapons systems, including decisions that affect the future 
viability of our organic depots.
    The Air Force's commitment to improve acquisition of our major 
programs is paying off. In 2013, the Air Force had no Nunn-McCurdy 
breaches. In 2014, the AF's sole Nunn-McCurdy breach was to the AWACS 
Block 40/45 program. This breach did not occur due to poor program 
performance, but to a reduction in the quantity of aircraft from 31 to 
24 that was driven by the fiscal constraints resulting from the Budget 
Control Act. In fact, total program costs for the AWACS Block 40/45 
program went down, but the reduction in quantity drove our unit costs 
above the Nunn-McCurdy threshold. Furthermore, the Air Force has had no 
Nunn-McCurdy breaches in 2015.
    We have a number of initiatives underway to lead us into the next 
era of acquisition excellence:
    One of my initiatives is to ``Own the Technical Baseline (OTB).'' 
OTB is essential to our future and means the Government program team, 
independent of the prime contractor, has the wherewithal to make proper 
decisions to achieve successful acquisition outcomes. A few examples 
include a deep understanding of system and subsystem designs and 
architectures; the ability to conduct end-to-end performance models of 
the system combined with a continuous technical effort to update and 
validate system models using testing and engineering data; and the 
ability to understand and actively mitigate technology and system 
integration risks. In some ways, our emphasis on OTB seeks to overcome 
the residual undesirable effects of the acquisition workforce 
downsizing during the 1990's ``acquisition reform'' era. This was a 
time when there was significant outsourcing of Government capabilities 
and decision making to the prime contractor with a ``thin'' Government 
program office.
    A related initiative is to build the future Air Force by 
reinvigorating development planning (DP) and experimentation. Put 
simply, DP is a range of activities to understand the Air Force's 
future warfighting needs and reconcile those with available and 
potential capabilities, concepts, and emerging technologies. DP will 
result in a credible body of knowledge to inform strategic decisions 
and guide future capability developments. The umbrella of DP includes 
requirements analysis, cost versus capability trades, modeling and 
simulation, rapid prototyping (both virtual and hardware), and 
experimentation. Experimentation is absolutely critical because it 
provides a means for technologists and operational personnel to 
conceive and co-evolve new capability concepts along with the doctrine 
to effectively implement them. Experimentation will enable us to 
rapidly and efficiently explore uncertain futures whether emanating 
from the emergence of disruptive technology, new capabilities using 
existing systems and technologies in a new way, or the evolution of 
security threats from anywhere across the globe. Historically, the Air 
Force is credited with using DP and experimentation to drive innovation 
and plan its future; we are going back to our roots to re-establish 
this across the enterprise to produce truly innovative capabilities.
    Affordability, which is an Office of the Secretary of Defense (OSD) 
initiative, challenges Air Force Core Function Leads to look at each 
program and determine if the Air Force can afford it throughout its 
lifecycle. Affordability is different in that we look at our entire 
portfolio across at least 30 years and evaluate if we will allocate 
resources far longer than the typical five year outlook. If a program 
is determined to be unaffordable, we restructure, we re-scope, or we 
cancel it. We are still in the early stages of this initiative, but we 
believe it is a strong approach in controlling costs and suppressing 
our appetites for what we cannot afford.
    We are also encouraging programs to make often difficult trades in 
cost and capability. Where can a program reduce or eliminate a 
requirement without impacting the warfighter's capability, in order to 
save costs? These questions are never easy, but they force us as a team 
to determine where we are willing to decrease some functionality to 
save costs without sacrificing capability, and enable the Air Force to 
be strategically agile and deliver capabilities on time.
    The Air Force also remains committed to Should Cost, which was 
first introduced in BBP 1.0. Should Cost is a management tool designed 
to proactively target cost reduction and drive productivity 
improvements into programs. I am pleased to announce that the Air 
Force's FY14 Realized Savings were $1.4 billion. While that is a 
tremendous start, I continue to challenge all Program Executive Offices 
(PEOs) and PMs to seek out additional Should Cost opportunities, 
reaping as much as possible from our current portfolio.
    While we have found good success in containing cost in recent 
years, we have been challenged in our efforts to improve schedule 
performance. This is a priority for Air Force Acquisition. Our root 
cause analysis of the growing development cycle times we are 
experiencing points to the following primary contributors: 
Underestimation of technology risk, underestimation of software 
development and integration complexity, testing challenges and delays, 
and contracting delays. We are applying lessons learned to our new 
programs to avoid repeating the same miscalculations. To correct for 
this trend we are pursuing two strategies: Continued emphasis on sound 
program execution practices and implementation of Strategic Agility and 
Adaptability principles.
    Emphasis on sound program execution is not a concept exclusive to 
good day-to-day program management or effective execution reviews. To 
be sure, these are important; however, it also requires that we 
initiate programs with sound acquisition strategies, fixed, well-
defined and affordable requirements, properly resourced program 
baselines, and deliberate measures to mature critical technologies and 
to reduce technology and program risks.
    Strategic Agility and Adaptability principles are foundational to 
the Air Force Strategy released last summer. The emphasis is on 
fielding systems more rapidly and building resilient systems that are 
inherently resistant to predictive failure. Hallmarks of agility/
adaptability are: Modular systems, the use of block upgrade approaches 
to system fielding, and the use of open system architecture designs. 
These techniques help to shorten development cycle times, allowing for 
increased performance beyond legacy systems with the rapidly fielded 
``A-model'' design of the system. Such systems are designed for later 
modular upgrades/enhancements (block upgrades) to the initial baseline 
design. The Air Force has identified Advanced Pilot Trainer (T-X) and 
Joint Surveillance Target Attack Radar System Recapitalization as 
strategic agility pilots that will utilize these approaches, much as 
Long Range Strike Bomber is already doing.
    The Air Force has been on an upward trend in competition the last 
two years, with an increase from 36.8 percent in fiscal year 2012 to 
43.5 percent in fiscal year 2014. Early fiscal year 2015 results 
indicate a probable leveling of the rate of improvement. Air Force 
major impediments to improvement in competition include the lack of re-
procurement data for our aging weapons systems and the extent of 
country directed foreign military sales (FMS) procurements. The Air 
Force continues to explore opportunities to enhance competition by 
exploring cost effective acquisition of technical data, potential 
breakouts of component parts, or encouraging more subcontract 
competition. I expect Program Executive Offices to seek competition at 
every opportunity and have recently instituted quarterly reports on 
competition status of upcoming program contracting awards. This 
initiative resulted in reporting and tracking of 120 weapon system 
requirements totaling $60 billion, with approximately 85 percent of 
this value planned for competitive award over the next 3 years. Since 
the initiative began, we project approximately $2.17 billion has 
shifted to the competitive environment, with more requirements moving 
closer to transition in the fiscal year 2016 timeframe. For example, 
our new Evolved Expendable Launch Vehicle (EELV) space launch strategy 
allows for competition between United Launch Alliance and new entrants 
to the EELV program as soon as the commercial launch companies can be 
certified for national security launches. This strategy should help to 
control costs and ensure multiple sources for critical launch 
capabilities.
    In 2014, Air Force leaders initiated the Bending the Cost Curve 
(BTCC) Initiative to address the escalation in weapon system costs and 
development times. To accomplish this BTCC amplifies the Better Buying 
Power principles by encouraging innovation through active engagements 
with Industry and the acquisition workforce to identify, evaluate, and 
implement transformational reforms. Unlike Better Buying Power, which 
is a broader set of practices and techniques for the workforce to 
employ, ``Bending the Cost Curve'' is a targeted initiative to 
encourage innovation and active industry partnerships to improve the 
way we procure our systems and to drive down cost. What began as a 
series of discussions with industry has evolved into an ever growing 
set of targeted actions aimed at addressing the most critical 
challenges within the acquisition process.
    There are three things that differentiate BTCC from other 
acquisition reform efforts pursued in the past: a robust and proactive 
collaboration with industry, a focus on prompt, tangible actions, and 
an emphasis on measurable results. I believe that by being able to 
achieve our goals, we needed an improved dialogue with industry, so we 
can better understand how processes, procedures, and some of the 
choices we make can inadvertently contribute to rising costs, the 
stifling of innovation, and slow processes.
    Ensuring a clear and unambiguous chain of authority has been a 
focus of the Air Force for some time. We ensure streamlined Air Force 
management structures characterized by short, clearly defined lines of 
responsibility, authority, and accountability. Acquisition execution 
responsibility and authority flows from Mr. Frank Kendall, the Defense 
Acquisition Executive, to me, as the Service Acquisition Executive 
(SAE), to the PEO straight to the accountable PM. Close program 
schedule monitoring in the acquisition strategy allows us to ensure no 
one outside the acquisition execution chain exercises decision-making 
authority on programmatic matters. Our PMs know they are accountable 
for credible cost, schedule, and performance reporting and analysis to 
the MDA, and have responsibility and authority to accomplish objectives 
for the total life cycle of the program.
    PMs assigned to Major Defense Acquisition Programs (MDAP) sign 
tenure agreements for four years or the closest milestone. This tenure 
may be tailored based on the PEO's recommendation in order to 
accommodate the particular needs of the program, such as significant 
milestones, events, or efforts. The PM is held accountable since his or 
her tenure does not end until those unique requirements or efforts are 
accomplished, which also affects their performance reports used for 
promotion and future assignments. In the unfortunate event of a Unit 
Cost Breach, there is an assessment of the current management team to 
ensure they are qualified to lead the program going forward. IAW 10 
U.S.C. 2433 and 2433a, for Major Defense Acquisition Programs, the 
Secretary submits to Congress recertification that the management 
structure for the program is adequate to manage and control program 
acquisition unit cost or procurement unit cost. The same management 
review takes place prior to recertification of Major Automated 
Information Systems experiencing critical changes IAW 10 U.S.C. 2445c.
    BBP 3.0 reinforces current Air Force efforts. To ensure the 
Enterprise is not getting in the way of PM accountability, we have 
performed a review of all acquisition documents and the organizations 
outside the acquisition execution chain who review them for 
coordination and approval. We are following the accountability and 
responsibility of the BBP 3.0-specified action to re-validate the need 
for organizations to coordinate or approve the documents. This 
revalidation, which I will personally approve upon completion, can 
potentially streamline the number of individuals and organizations in 
the approval process; thereby, reducing unnecessary schedule delays. In 
addition, we are automating the document review process using the 
Electronic Coordination Tool (ECT), which allows us to control review 
times. We currently use ECT to route a program's acquisition strategy 
for review and will systematically load other acquisition documents 
into ECT.
    Contractor accountability is dependent on contract type and clauses 
spelled out in each contract. Contractors are held monetarily 
accountable by absorbing overruns on fixed contracts. Contractors can 
also lose out on incentives built into contracts for failure to 
deliver. The PMs provide a Contractor Performance Assessment Report 
(CPAR), which is essentially the contractor's report card. The CPAR 
assesses a contractor's performance and provides a record, both 
positive and negative, on a given contract for a specific period of 
time. Each CPAR is based on objective facts and is supported by program 
and contract management data. CPAR results are a component for 
evaluating contractors during source selection for others contracts. We 
are taking the CPAR further by instituting the Superior Supplier 
Incentive Program (SSIP) mentioned in BBP 3.0 at the Air Force level, 
which is a public accountability rating for contractors. We provided 
SSIP ratings for industry partners earlier this year and will update 
the ratings in the June timeframe.
    The Air Force is committed to streamlining the acquisition process 
to remove non-value added bureaucratic and administration requirements. 
We continuously review the requirements for all of our SAE Oversight 
Reviews to ensure we are not putting too much of a burden on the PEO 
and PM and taking away from their responsibility to manage the 
execution of the program. From these reviews we have eliminated any 
mandatory requirement to pre-brief the headquarters staff and SAE. We 
have also looked at the possibility of combining reviews when it makes 
sense and is appropriate. We have eliminated any requirement for PMs to 
travel to the Pentagon for briefings, and conduct most of our meetings 
via VTC. That eliminates travel time and expenses, and reduces the time 
required by the PM to devote to the review. We have also taken 
advantage of the statutory and regulatory requirements to conduct 
annual Configuration Steering Boards (CSBs) by encouraging programs, in 
addition to covering the required areas for CSBs, to bring forward any 
other program issues or concerns that would benefit from a discussion 
by the SAE and CSB members. Another area we have addressed is to ensure 
that all members of our Oversight Reviews are prepared to resolve 
issues at meetings rather than merely discussing the issues without 
resolution. We have accomplished this by establishing timelines that 
allow the briefings to be reviewed at least a week prior to the meeting 
and ensuring that feedback from the Headquarters staff is provided back 
to the SAE, PEO and PM for their awareness in preparation for the 
meeting.
    With regard to program documentation, we annually review the 
documentation requirements for programs nearing Milestone reviews. We 
have developed a document coordination matrix that identifies the 
organizations that need to be included in the coordination and approval 
process for every information/document requirement. The annual review 
ensures that the list of organizations needed to coordinate and approve 
does not grow beyond those organizations that have a statutory or 
regulatory responsibility for the information contained in any 
document. This practice has helped expedite our coordination process 
where we have a current goal of achieving Headquarters Air Force 
coordination/approval within 30 days of receipt of the document.
    Where it is appropriate, I am a strong advocate for delegating 
acquisition authority to the lowest possible level. Not only does it 
create efficiencies, but it also empowers our leadership. Existing 
policies and processes for planning and executing acquisition programs 
provide multiple opportunities for the Service Chiefs to be involved in 
managing acquisition programs and to vector programs towards meeting 
cost, schedule, and performance targets. My regular interactions with 
General Welsh, including Quarterly Acquisition Program Reviews and Key 
Acquisition Program updates, provide him insight into how acquisition 
strategies and solutions are meeting the requirements of the 
operational forces and improve his ability to attest to requirements 
affordability and reduce program requirements. Further, we are working 
with OSD (AT&L) to delegate Milestone Decision Authority to me on 
Acquisition Category ID programs where appropriate, which will increase 
our efficiency and streamlining requirements.
    Executing these priorities and in indeed, all of our efforts to 
achieve and maintain acquisition excellence depend on the abilities of 
our acquisition professionals to solve problems, manage complexity and 
exercise sound judgment in concert with the requirements and budget 
communities. So we've adopted the same continuous improvement 
philosophy to our acquisition workforce.
    This is not a new focus for us. The Air Force has been a leader in 
managing its professional acquisition workforce, with an Acquisition 
Professional Development Program that predates the Defense Acquisition 
Workforce Improvement Act of 1990 (DAWIA).
    The Air Force deliberately develops military and civilian 
acquisition professionals according to well defined career path models 
which serve as a guide for professional experience opportunities, 
education, and training. These career models provide ample opportunity 
and experience for acquisition professionals at all ranks, and provide 
a defined path to greater rank and responsibility within the 
acquisition workforce.
    In 2002, we made a major enhancement to our talent management 
processes with the implementation of formal processes for ``Force 
Development.'' The development of acquisition workforce members is 
enhanced by the use of Career Field Development Teams consisting of 
senior leaders from within each Career Field. Using published career 
path models as a guide, the Development Teams (DTs) provide tailored 
developmental guidance to individuals based on their past record of 
training, education and experiences. This action gives them a specific 
path or vector for greater progression and opportunity in the Air 
Force. The DTs also nominate officers and civilians for developmental 
education, including Professional Military Education, and identify 
military and civilian candidates for command and Materiel Leader 
positions within the acquisition workforce.
    The Air Force also has established career field management teams at 
the Headquarters Air Staff level that provide strategic direction and 
daily oversight of the career fields, as well as managing the 
Developmental Team process. Under this Air Force construct, each 
acquisition career field is under the functional management and 
oversight of a senior functional leader at the Assistant Secretary of 
the Air Force or Headquarters Air Force level. Talent management is a 
major responsibility of our general officer/Senior Executive Service 
level senior functional leaders as well as my Military Deputy and 
Principal Deputy.
    The creation by Congress of the Defense Acquisition Workforce 
Development Fund (DAWDF) in the fiscal year 2008 NDAA represents a 
landmark improvement in our ability to develop and continually improve 
the capabilities and professionalism of our acquisition workforce. 
DAWDF enabled us to accelerate rebuilding the acquisition workforce 
after drawdowns in the `90s, and it has finally put significant, stable 
funding behind the training and development programs established under 
DAWIA. Thanks to DAWDF, we've been able to address training gaps more 
quickly, and we are enjoying increased training throughput capacity 
that has eliminated bottlenecks in the Defense Acquisition University 
courses that our members depend on for professional certification and 
currency. As a result, we've been able to increase our DAWIA 
certification rates significantly, from 49 percent at the end of fiscal 
year 2010 to 73 percent in December 2014.
    We've also used DAWDF to address professional currency needs and 
gaps in acquisition technical training, building application skill 
courses at the Air Force Institute of Technology that complement and 
build on the foundational certification training provided by DAU. 
Examples include courses in Cost Estimating, Test and Evaluation, 
Developmental Planning, Human Systems Integration, Technical and 
Manufacturing Readiness, as well as project management and business 
acumen. DAWDF has also enabled us to build a robust Tuition Assistance 
program focused on acquisition professionals, enabling them to further 
their education in acquisition-related fields--a tool for increasing 
professionalism as well as retention.
    An original focus of DAWDF was to grow and rebuild the acquisition 
workforce. The Air Force aggressively used DAWDF to accelerate growth 
hiring under our Acquisition Improvement Program and achieved the 
Secretary of Defenses growth target in 2012. Through the combination of 
growth hiring, insourcing and position re-coding, our workforce has 
grown from 24,417 in fiscal year 2008 to 34,404 at the end of fiscal 
year 2014. We continue to protect and sustain that growth (an increase 
of over 1500 positions) over the Future Years Defense Program. An 
important and related initiative that promises to improve acquisition 
manpower management long term is our partnership with the Air Force 
Deputy Chief of Staff for Manpower, Personnel & Services to develop 
manpower models that improve our ability to predict the current and 
future manpower requirements for acquisition program offices.
    Our retention is generally very strong, but we have challenges in 
certain hard-to-fill locations and shortage career fields. We've 
secured DAWDF funds to offer retention incentives (e.g., Student Loan 
Repayment and Retention Allowances) to our civilian acquisition 
professionals when/where needed (e.g., mid-grade contracting officers 
and engineers). We continue to use DAWDF to improve recruiting 
capabilities at our acquisition centers and to ensure adequate numbers 
of recent college graduates are hired to renew the force. We've been 
able to extend our outreach and increase the availability of recruiting 
incentives (like Student Loan Repayment) to attract and retain talent. 
Overall, our reliance on DAWDF is increasing as O&M budgets shrink, and 
I strongly support initiatives to make DAWDF permanent.
    While we are devoting considerable attention to developing business 
acumen, critical thinking and technical skills across the acquisition 
workforce, senior leader succession planning is a special focus. With 
the assistance of the Air Force Materiel Command and Air Force Space 
Command as well as my Military Deputy and Principal Deputy, I am 
directly involved in the management of all Key Leadership Positions and 
the talent management activities related to the assignment of qualified 
PMs and Deputy Program Managers to our ACAT I and II programs. Our 
recommendations are approved by the Chief of Staff and Secretary of the 
Air Force. Our Materiel Leader and Senior Materiel Leader qualification 
process incorporates additional acquisition-specific standards and is 
fully integrated with the Chief of Staff's Command Screening Board used 
to screen candidates for operational group and wing command billets.
    The Air Force has implemented several steps in recent years to 
improve PM tenure. Most recently, we updated our Materiel Leader/Senior 
Materiel Leader assignment polices to mandate MDAP PM/DPM tenures of 4 
years or the milestone closest to 4 years. In addition, we've charged 
our PEOs with the responsibility to provide the Chief of Staff and the 
Service Acquisition Executive a recommended tenure, based on the 
particular needs of the program, at the time DPM candidates are matched 
to a program.
    Following Mr. Kendall's OSD leadership under BBP, we've identified 
key leadership positions and ensured we have rigorous processes for 
qualifying and selecting candidates to fill these roles. I believe we 
have the processes, tools and resources in place to ensure members of 
the acquisition workforce are fully qualified to meet their 
responsibilities. And I can tell you that senior acquisition leaders in 
the Air Force consider their talent management responsibilities one of 
their most important duties.
    As part of our efforts to improve the hiring process and reward top 
performers for their performance, with OSD (AT&L) support, we're 
working to expand the Acquisition Personnel Demonstration Project 
(``Acq Demo'') which brings pay and performance management 
flexibilities, to the major acquisition centers and contracting 
organizations. This personnel system has been shown to facilitate more 
flexible hiring and pay setting, incentivize performance through 
contribution-based compensation, and promote retention of a high-
performance workforce. SAF/SB (Small Business) and the 11th Contracting 
Squadron at Joint Base Andrews transitioned in 2014. Four additional 
organizations are scheduled to transition during fiscal year 2015, and 
more in fiscal year 2016. I strongly support making ``Acq Demo'' and 
Expedited Hiring Authority permanent--these authorities have been very 
valuable improvements to our hiring process for acquisition 
professionals.
    I would also like to note that the GAO ``sustained'' protest rate 
for the Air Force has been consistently low. In FY14, our sustained 
rate was less than half of 1 percent (.044). Although we cannot totally 
preclude bid protests, we have implemented major initiatives which have 
been successful in reducing them. We enhanced our training for source 
selections, and ensure the entire team receives extensive training 
prior to evaluation of proposals. We emphasize the selection of proper 
evaluation criteria and ensure proper documentation throughout the 
source selection process, to ensure the decision is well-supported and 
can withstand scrutiny. We increased our oversight at various stages of 
the acquisition, and selectively offer Extended Debriefings to 
unsuccessful offerors for the more complex, higher-value contracts. 
These debriefings provide greater transparency to the underlying 
factors and conclusions than the traditional debriefings. I believe 
these efforts to date have been instrumental in reducing our sustained 
protest rate.
                             ii. conclusion
    In conclusion, I hope I have been able to convey to you some of the 
tremendous improvements we have been able to make to the acquisition 
system, although, we still have work to do to reach our fullest 
potential. I will continue to challenge the acquisition community to 
achieve the five priorities I discussed earlier: Get programs right, 
increase transparency to external stakeholders, own the technical 
baseline, continue our efforts on BBP, and build our systems towards a 
future Air Force. I continue to appreciate the support Congress has 
provided the acquisition community and look forward to working with 
this Subcommittee to ensure that we reach our highest goals.

    Senator Kaine. Excellent.
    We are going to stand in a quick recess so Senator Heinrich 
and I can--I have not voted in number three. Senator Heinrich, 
I am not sure you have either. We will stand in recess, and we 
will likely start back up with questions. I suspect the 
chairwoman will likely arrive first because I think she has 
voted. Senator Ernst, you just voted on the second or third?
    Senator Ernst. Actually it was the third.
    Senator Ayotte. If you would like to begin with questions. 
We just finished opening, and Senator Heinrich and I have to go 
vote. So we will do that and return. Great. Thank you all.
    Senator Ernst. Thank you everyone for being here. I 
appreciate it. A lot of activity on the floor today.
    First, I will go ahead and get started. I will go back and 
review some of the information that you have given already 
today.
    But, first, to Secretary Shyu, if you would please, I have 
been looking into a number of different areas regarding program 
and project management. This is an issue that we had actually 
discussed in visiting with the Government Accountability Office 
(GAO) last week in the Homeland Security and Governmental 
Affairs Committee. For years, the GAO has categorized the 
Department of Defense's program management as high risk. It 
shows up year after year on the infamous list with still very 
large problems and processes that need to be fixed and 
improved. What specific steps are you taking to improve program 
management at DOD, and is there any way that we as legislators 
can assist in that process?
    Ms. Shyu. What we do to ensure the skills of our Program 
Managers are adequate, we actually have different levels of 
courses that Program Managers have to take.
    The other thing that we do--there is actual structure. So 
you do not jump in as early level being the most senior Program 
Manager. There is different lower level program management than 
the senior level Program Managers. So within the acquisition 
process, we actually do train our Program Managers.
    They are mostly military with some civilians also as 
Program Managers, but primarily the ways that we train them are 
from Defense Acquisition University (DAU) courses that they 
take. Also, internally we bring them up for assignments into 
the Pentagon so they can sit and listen and see, observe how 
programs are being reviewed. So there are many different ways 
we are actually training our Program Managers.
    Senator Ernst. I appreciate that.
    Then any comments from either of you gentlemen?
    Mr. Stackley. I would simply add I was a career Navy 
officer. My last job in the Navy was as a Program Manager. 
Course training is interesting, but the greatest experience you 
get is on the factory floor, rolling up your sleeves, being 
hands on the project. That is irreplaceable when it comes time 
to actually be in charge of a major weapon system. So we are 
ensuring that in our pipeline for program management the first 
tour coming out of grad school will be an industrial tour so 
they can get that hands-on experience and continually put it to 
work as they climb the ladder and become more competitive for 
the program management.
    I sit on the panels. I review the panels, and I approve the 
Program Managers. I will tell you it is very competitive. We 
have stellar Program Manager candidates, civilian and military. 
The challenge we have got is depth and breadth to fill that 
base that needs to be there for the overall acquisition 
workforce.
    Senator Ernst. Very good.
    Secretary?
    Dr. LaPlante. Thank you, Senator.
    I would add to that that the best indicator of whether a 
Program Manager is going to be successful at a program is 
whether they have been successful before at a program. So what 
we have to do is do what Secretary Stackley said, which is give 
them experience early so that they can, in a safe environment, 
learn the ropes so that when they get up to the bigger 
environment, they have already been a Program Manager.
    When I came into this job 2 years ago, I came in from 
academia and Federally Funded Research and Development Centers 
(FFRDC) community. The stereotype I had heard ringing in my 
ears, particularly in the Air Force, was that we would take 
pilots and switch them from being a pilot one day and they 
could go in and be a Program Manager. That was kind of a 
stereotype, but I was surprised at what I found. The average 
acquisition professional running a program in the Air Force has 
17 years of acquisition experience. They start as a second 
lieutenant and they go up to 17 years. They have actually 
experienced more than 17 because they have done a tour 
somewhere else to give them experience.
    The second thing is they are competitively selected, the 
same thing as Secretary Stackley said in the Navy. We always 
can do better, but I was shocked at how different I saw the 
Program Managers and the Program Executive Officers (PEOs), 
which is one level above it, which is typically 25 years of 
acquisition experience.
    I also do not understand when people say, well, there is 
not an acquisition career field for the military. My military 
deputy, Lieutenant General Ellen Pawlikowski, is an acquisition 
professional. She is now going to be a four-star Air Force 
Material Command (AFMC) commander next month, the top of her 
game. There is a career path. So I think that maybe they are 
not explaining the situation as well as we could. There are 
challenges there, but there is a lot of attention put into 
training our Program Managers.
    Thank you.
    Senator Ernst. Yes, and I appreciate that very much.
    You mentioned there are different ways to gain experience, 
whether it is on a factory floor, actual hands-on experience, 
whether it is civilian courses. I was just going to jump in and 
mention an identifier or Military Occupational Specialty (MOS). 
I do recognize that it takes a lot of time developing those 
skills.
    But at the same time, it seems that the DOD has had some 
significant trouble in keeping Program Managers. Once they gain 
that skill, they seem to move on into other areas. What can we 
do to improve that, keep those people that have gained those 
skills in that area in program management?
    Mr. Stackley. I think we all have some comments to that 
one.
    Let me first describe that. Yes, you are correct. In terms 
of a military career path, when you reach Program Manager for a 
major weapon systems program, you are a senior O6. In order to 
continue on, you either need to be promoted or you might have 
some runway left in your career to move on to a graybeard type 
of position.
    What we are exploring is how do you, in fact, retain those 
senior military to stay past that Program Manager position. 
What would encourage them? In fact, it takes an appeal, 
frankly, to an individual's--it is a patriotic appeal. Now, 
that you are at the peak of your career, now that you are at 
the height of your experience, and now that you have completed 
your major command tour, we are going to ask you to go ahead 
and continue on to serve because we need your experience. We 
need to continue that experience in military in uniform in the 
Government. That is a challenge. So what we are trying to 
identify is are there opportunities that would make it less of 
a challenge, make it more attractive for an individual, post 
major command, to continue to serve.
    Senator Ernst. Are there any specific suggestions?
    Mr. Stackley. I can just give you one example. So I know 
the Naval Academy and I believe West Point has a similar 
program where they actually take on senior O6s and put them in 
a permanent military position. In that case, it is as an 
instructor, but what they are able to do is continue to accrue 
benefits that come with military service, and in certain cases 
in the past, what you have had is O6s that actually gain 
benefits beyond their rank by continuing to serve. In certain 
cases, it is non-monetary. In other cases, it is monetary 
benefits. So we are trying to see what makes sense, work with 
the Service Chiefs and see if there is a program in the making 
there that makes for select individuals, not across the board, 
but select individuals that you want to retain for the long 
haul.
    Senator Ernst. Very good.
    Yes, ma'am.
    Ms. Shyu. I would like to expand upon that. I absolutely 
concur with Sean.
    I will give you a couple examples that actually happened. 
For example, it is actually the senior O6 that runs the more 
complex, what is called the Acquisition Category (ACAT) 1D 
programs. We have had very senior O6's retire, then come back 
in as GS-15, and also be a Program Manager. So that is a way we 
can entice them to come back even after they retire as a great 
Program Manager to hiring them back in as a civilian.
    The other thing is a lot of the outstanding Program 
Managers get promoted to program executive officers to run an 
entire PEO. So this is a way they can then mentor all the PMs 
underneath a PEO.
    Dr. LaPlante. I would just add to that. One thing that when 
I came into Government that even though intellectually I knew 
it, but what broke my heart was seeing the people like we were 
just talking about--let us say a very, very talented senior O6 
or in some cases a one- or a two-star who the country has 
invested 30-35 years in, has incredible knowledge--retire. It 
just breaks your heart.
    So programs like what Sean was mentioning about perhaps the 
academies--now, one question there is, okay, let us say you get 
on the academies. Can they still be a Program Manager? You 
know, that is a question.
    I have another case right now, which I do not want to give 
the specifics on because we are still working it. Clearly we 
have a star. We have an absolute star in one of the most 
important programs you could imagine. We are trying to keep 
this person as a highly qualified expert, the Highly Qualified 
Expert (HQE) program. I am hoping it will work. But what you 
find even with the HQE program is it is not nearly as easy to 
do as you might think, and then you still know that you are 
going to have to appeal to the patriotism of this individual 
and their family to take this job and stay as a civilian. We 
may pull it off; we may not.
    But we have got to do something about that because you 
would not do that outside. You take your best program managers 
and put them on your hardest programs. You do not sit there and 
say, wow, they are at the peak of their game, go find another 
job, thank you very much. So we need to figure out a way to do 
this.
    Thanks.
    Senator Ernst. I would agree. Really bottom line, we need 
to make sure that we are working with these programs to make 
sure that our taxpayers are, of course, getting the best bang 
for their buck as they can while making sure that our service 
men and women have exactly what they need through these 
programs.
    Do you find that a number of these qualified, wonderful 
individuals are being drawn away into private industry? Are the 
benefits and salaries that they might receive as a GS-15 
competitive with what they would see in the private industry? 
No. I think I knew the answer to that before asking.
    But we have invested a lot of time, energy, money in these 
individuals to make sure they are appropriately trained. It 
would be nice to use that expertise in these programs and the 
management. Secretary, any thoughts there?
    Ms. Shyu. You are absolutely right. I think the example we 
have had is we have some great colonels, senior colonels, who 
did not make it to the GO level. That does not mean they are 
not great because there is a pinnacle. Very few get selected to 
the GO, but they are outstanding program managers with lots of 
years experience. So we have had the opportunity to hire them 
back. So we have done a pretty good job of hiring back. Again, 
this is because they want to serve. They can make a lot more 
money in industry. I can tell you that from experience, being 
there.
    Senator Ernst. Yes.
    Ms. Shyu. It is because their heart is in the services. 
They want to continue to serve. So that is where we leverage 
their desire to continue to serve and bring them back as a 
civilian and keep them in the program management side.
    Senator Ernst. Fantastic.
    Mr. Stackley. I cannot add too much except to say that 
there is no single solution here. Secretary LaPlante described 
flag potentials. We have 18 acquisition flag officers in the 
Department of the Navy, and those are the best and brightest. 
We have a number of post-major command Program Managers that 
are continuing to serve. They have been enticed and they are 
continuing to serve. We found the right job for the right 
individuals because they love to serve. As Secretary Shyu 
described, we have others that in fact retired and have come 
back as a civilian and are civilian program managers. Again, it 
is a great win-win for the Department and the individuals.
    Then there is the larger number that after they complete 
their major command, they move on. They move on. Then what we 
look to do is, frankly, we look to have them to continue to 
serve except in a different capacity out of uniform and see if 
those skills can continue to contribute to what we are doing in 
acquisition, which is trying to develop and field the best 
weapons we can for our sailors and marines.
    No single solution. It is a case-by-case basis, and we work 
with the individuals. One thing about the acquisition workforce 
is you get to know all of your Program Managers personally and 
you work with them to find the right best fit for that 
individual and what the Department needs.
    Senator Ernst. Great. Thank you.
    Dr. LaPlante. I have just a couple, two quick things. The 
Highly Qualified Expert program I think is potentially one we 
could use more.
    Second is the program called IPA--it is a personnel 
assignment, Interagency Personnel Assignment. My experience is 
we are using it much less than we used to, and I have views 
why. So there are flexibilities like that that we can 
investigate to bring highly qualified people in.
    Remember during World War II there was the ``dollar a year 
men'' is what they were called, very wealthy people. I heard a 
recent term for them called ``post-economic people'' that come 
into the Government. Of course, we all want to be post-
economic. But we have to do something to get the highly 
motivated, talented people in this country to get into the 
Government.
    Thank you.
    Senator Ernst. Thank you. Again, I just want to reiterate 
thank you very much for being here today. We do have some 
challenges out there with acquisition. We want to make sure 
that we are retaining good qualified people in that program 
management. Whatever we can do to benefit our taxpayers is 
greatly appreciated, as well as making sure that we are 
protecting our men and women in uniform. So I thank you again.
    I turn the floor back over to the chair.
    Senator Ayotte [presiding]. Well, thank you, Senator Ernst, 
for holding down the fort, and thank you, Senator Kaine, for 
doing the same. As you know, we are voting on the floor.
    I want to thank all of our witnesses for being here.
    I am just going to submit for the record my opening 
statement and just go right to questions for all of you.
    [The opening statement of Senator Ayotte follows:]

               Opening Statement of Senator Kelly Ayotte
    Good afternoon everyone. This hearing of the Subcommittee on 
Readiness and Management Support will come to order.
    The subcommittee meets today to receive testimony on the state of 
the defense acquisition system and to discuss necessary reforms. I 
would like to thank the Ranking Member, Senator Kaine, for his support 
on this very important issue.
    We are joined this afternoon by the three Service Acquisition 
Executives: The Honorable Heidi Shyu, the Assistant Secretary of the 
Army for Acquisition, Logistics and Technology; the Honorable Sean 
Stackley, Assistant Secretary of the Navy for Research, Development and 
Acquisition; and the Honorable William A. LaPlante, Assistant Secretary 
of the Air Force for Acquisition.
    I would like to thank each of you for your efforts to acquire the 
best equipment, supplies, and services for the men and women in uniform 
from your respective service.
    The purpose of this hearing is to discuss reform of the defense 
acquisition system. This topic could not be more important.
    When our troops deploy to war, we have a responsibility to provide 
them the very best equipment. That is what our troops deserve and their 
loved ones expect.
    When our acquisition system fails to deliver the best possible 
equipment in a timely manner, tragically, the costs are often measured 
in the lives of our troops.
    Providing the best weapons and equipment to our service members can 
be the difference between our troops returning home safely or not at 
all; and the difference between our forces achieving victory or 
suffering defeat.
    Reform of the acquisition system is necessary to maintain America's 
technological and military dominance. The current, inadequate 
acquisition system is leading to the erosion of America's defense 
technological advantage, which the United States could lose altogether 
if the Department continues with business as usual.
    We know that the growing national security threats to our country 
require that we end defense sequestration once and for all and base our 
defense spending on the threats we face and the military we need--not 
arbitrary budget caps.
    But if we are going to convince skeptics that we must spend more on 
defense to protect our country against growing threats, the Pentagon 
must simultaneously redouble its efforts to end wasteful acquisition 
programs and unacceptable cost overruns. Every dollar wasted on an 
acquisition program is a dollar we don't have to provide our troops the 
equipment they need.
    If the Department's calls for increased defense spending is going 
to have credibility with the American people and their representatives 
in Congress, the Department must strive to be better stewards of the 
tax dollars it is given.
    Much has been done. But by most accounts, despite countless 
studies, plans, and reports--and some progress--the Pentagon's 
acquisition system remains broken.
    We see too many cost overruns and too many schedule delays. We see 
too many instances in which taxpayers dollars are poured into programs 
that are never fielded. The taxpayers justifiably expect better. We can 
and must do better.
    To address these problems, the Committee has solicited input from 
industry associations, defense suppliers, and acquisition experts. I 
would like to request unanimous consent that those responses be a part 
of the hearing record.
    It is also appropriate that we hear from the services. The 
Subcommittee is interested in your assessment of the reform measures 
adopted over the last several decades and your views on the need for 
further improvements to the defense acquisition system.
    In particular, the subcommittee is interested in your 
recommendations on how your Service can: control costs; increase 
competition; innovate in a much different industrial environment than 
existed in the Cold War, access commercial technology; achieve 
accountability for results; streamline the process; and improve the 
acquisition workforce.
    I look forward to hearing our witnesses' assessment of these 
issues, and I would now like to call on our Ranking Member, Senator 
Kaine, for any opening remarks. Senator Kaine . . .

    I wanted to ask a question about lessons that we have 
learned from prior acquisition failures. Each of the services 
have had their share of programs plagued by major cost 
overruns, schedule slippages, and performance shortfalls. For 
example, we have seen important programs like the Air Force's 
evolved expendable launch vehicle managed badly resulting in a 
270 percent unit cost growth.
    We have had the Expeditionary Combat Support System (ECSS). 
I am not picking on the Air Force, but that is another Air 
Force one. That increment one program took over 9 years and 
expended over $1 billion before it was canceled and shut down. 
We never had an acquisition program baseline on that one.
    Another example. The Marine Corps ground air task-oriented 
radar program has seen 175 percent growth in research and 
development costs and 151 percent unit cost growth. An expert 
panel chartered by the Navy last year found that the program 
cannot achieve its current reliability requirements within the 
program's planned cost and schedule and that the requirements 
do not reflect Marine Corps operational needs.
    We can go on and on. As you know, there are too many 
examples like that where our constituents say to us, listen, we 
want to defend the Nation. We want to support our military, but 
you all better address these issues.
    So rather than getting updates on each of those, would you 
each share with the subcommittee what you have learned from 
your Service's acquisition failures and tell us how those 
lessons are informing your efforts to improve how your service 
conducts acquisition going forward.
    Dr. LaPlante. I can start with at least one of the examples 
you said representing the Air Force. You asked me at my 
confirmation hearing--you may not remember this--about ECSS.
    Senator Ayotte. You have a better memory than me. 
Apparently I have been on this program----
    Dr. LaPlante. No. It is a good one to be on because it is a 
great----
    The Air Force has done this process that I think is really 
a useful thing. They started it 2 years ago. I cannot take 
credit for it. But it was, you know, when you have an accident, 
a crash, there is a safety investigation. Remember we had this 
last year with the F-35. We are doing the same thing when we 
have an acquisition crash. So the first one that was done was 
an independent review of the ECSS program, the one you 
mentioned. The second one was a small business program that had 
a problem.
    I will just tell you what the lessons learned from ECSS. 
The Senate Armed Services Committee has also studied ECSS.
    First of all, to make a long story short, I think it is one 
of the reasons why the position that Peter Levine has been 
nominated for was created, was to prevent things like ECSS.
    The lessons learned on that came down to about six root 
causes, and they are very fundamental: not understanding the 
data of the business system that you were talking about using; 
not doing the business processes, because the whole reason you 
do an IT system modernize is you are trying to modernize your 
business processes. You are supposed to change your culture. 
That was not done. The analogy that the reviewer of this report 
did for ECSS said imagine like it is like the Big Dig in 
Boston. If you have been to Boston, maybe you know this. 
Remember for many years it was if you went into the airport up 
there. Well, the easiest part of doing probably that project 
was going to a map and drawing a line and saying would it not 
be great to have a tunnel from here to here. That is the 
vision. That is the `to-be.' That was done in ECSS.
    Here is the part that was not done. What do we have today? 
What is the traffic using today? What do the cars look like? 
What is the volume? That is the data. How are the users using 
the system? Here is most important. What is the transition 
plan? How are we going to get workers to work in the next 5 
years while we build this thing? The today and the transition 
plan were not done. So these are fundamental errors.
    What we did in the Air Force after this report is we took 
those same lessons learned and went with our Deputy Chief 
Management Officer (DCMO), the new position, and went program-
by-program and said do we have any of those same root causes. 
When we started to see them, we were addressing them.
    So it was a big learning experience, and I would recommend 
anybody who has not read that report--it has been provided to 
Congress. Very interesting reading.
    The second one--I will not go into any more detail--was a 
personal beacon that we had a failure. It was actually a small 
business and it came down to--I am going to over-summarize it--
systems engineering. The Government program office did not do 
the systems engineering on that. It was something we call the 
technical baseline. We are trying to build back into our 
program offices the ability to be a smart buyer. So those are 
two examples I will bring up.
    Senator Ayotte. Thank you.
    Mr. Stackley. Yes, ma`am. I am going to go back to about a 
decade ago where there were a number of major programs in the 
Department of the Navy that had significant failures in terms 
of cost and schedule performance. It brought to light, as you 
did the forensics on each of these, that we failed in step one 
of the process which is understanding the requirements and what 
we refer to as getting the requirements right. So this is not 
challenging the operational requirement. This is when you set 
the operational requirement having acquisition right side by 
side and identifying that in order to meet this performance, it 
is going to require this level of technology. Here is the risk 
that goes with it. Here is the cost that goes with it. So when 
you lock down the requirement, you understand maturity, 
feasibility, cost, and risk, and then you hold that firm as you 
move forward in the program.
    So with that in mind, we basically went back and rewrote 
our acquisition governance process to a thing that we call the 
``gate review process'' where today the requirements in the 
acquisition community are lockstep, side by side, around the 
table in each step of a program, starting with the definition 
of the requirement, moving from that definition of the 
requirement to transition to specifications to a request for 
proposal right down to contract award and execution of the 
contract so that there is no separation between requirements 
and acquisition throughout the process. You keep control over 
not just the requirements but also the cost and schedule to 
meet those requirements.
    So we have found that to be a very effective process. The 
partnership that exists today between myself, the Chief of 
Naval Operations (CNO), and the Commandant--I would say that we 
are inseparable when it comes to end to end from requirements 
to delivering the requirements in terms of the budget. This has 
been a learning experience going back to some major failures 
perhaps 10 years ago, and we are continuing to improve as we 
go.
    Ms. Shyu. So based upon my background--by the way, I have 
had 33 years in the defense industry before coming to the 
Government in the last 4 and a half years. I was a PM back in 
industry as well. So I have lots of experience actually 
designing, developing, producing products.
    So based upon my experience, when I have seen a failed 
program, I have seen unrealistic requirements. The requirements 
were set not by what Sean had talked about, namely it was not 
necessarily informed by technical risks, by cost and schedule 
realism. So if the requirements said that I want to have this 
capability and nobody challenges, that becomes the 
requirements. Then they are lobbed over to the acquisition 
community, go design, develop something that meets this goal. 
Every contractor will say, yes, I can do it. Right? I can do it 
until you are pregnant. That is what happens.
    So one of the things you have got to do up front is do the 
trade space. What are the requirements you desire? What type of 
technology can actually give you that performance, and what is 
the cost associated with that? What is the schedule it will 
take to develop it? You got to go through that entire trade 
space before you lock down on requirements and say, yes, I want 
to get going on this program. On the Army side, I do not see 
that being done very well.
    The second piece I want to talk about is realistic 
schedule. Just because somebody dictated you are going to 
produce this next year, engineering does not always follow what 
you dictate. So if you set an unrealistic schedule up front, 
you are just setting yourself up for failure. I have seen that 
on a program in which it squished the milestone because 
somebody somewhere said I want this by this date. So you work 
backwards into the art of possible. Well, if that was your end 
goal and worked backwards in a development program that has 
high risk, you are doomed to failure, and I have seen that 
happen.
    The third thing, really important, stable budget. If you 
hack away at the program budget on an annual basis, your 
baseline is constantly moving. You are standing on quicksand. 
How on earth do you build a foundation of a program if your 
every single year is changing.
    Three biggest things that impact stability of our program.
    Senator Ayotte. Thank you all. That is excellent. 
Appreciate it.
    I want to turn it back to Senator Kaine for any follow-up 
questions he has.
    Senator Kaine. Thank you all.
    I understand that Senator Ernst asked some questions about 
the talent workforce, you know, PM. I do agree. All of you said 
that that is absolutely key to this. I will not ask questions 
about that, but I think that is important.
    As we are looking at reform, the Better Buying Power 
initiative is already about reforms. We do not want to do 
reforms that are overlapping, just creating more documentation 
requirements. We would like to do reforms or be part of reforms 
that are streamlining requirements so that they find that sweet 
spot between enough oversight to avoid problems but not so much 
as to get in the way of agility and timing.
    What advice would you have for us as we are looking at 
drafting a National Defense Authorization Act (NDAA) on what we 
ought to be doing to try to find that sweet spot?
    Mr. Stackley. Sir, I am going to go back to my opening 
statement and the quote from Secretary Gates with regard to we 
do not need more studies and we do not need more legislation. I 
mean that in the most respectful manner. We have a tremendous 
amount of oversight, process, a minefield of rules and 
regulations that we are trying to navigate.
    With regard to a sweet spot, I think we have paved over the 
sweet spot. If it is possible, as you review this, to delay 
some of the rules and regulations, this framework that we 
operate in--Secretary LaPlante described the Big Dig. Let me 
give you a different view of the Big Dig. I am going to guess, 
Senator, that you have driven in and around Boston.
    Senator Ayotte. I sure have.
    Mr. Stackley. So asking what the sweet spot is is like 
asking how would you fix traffic in downtown Boston. What would 
you do to the roads? After hundreds of years of trying to 
improve the roads by adding more roads, they realized that it 
only gets ?worser? the more you try to make it better. So they 
decided that you cannot drive through Boston. You have got to 
get, in this case, under it. That is what gave us the Big Dig. 
So $10 billion and a decade later, it is much improved, but it 
was not by trying to straighten out the roads in Boston.
    So I would start by trying to figure out how do you roll 
back to Goldwater-Nichols. I mean, it was actually a pretty 
good starting place, and since then we have added 20-plus years 
of--30 years almost of additional rule and regulation in how to 
improve things. It has made it harder, but it has not 
necessarily made it better.
    Senator Kaine. Secretary LaPlante?
    Dr. LaPlante. Yes. I mentioned in my opening remarks that 
we did a study on adaptability and agility. What we did on the 
Defense Science Board is we looked at cases in the Department 
of successes and in industry successes and failures. The ones 
that were successes all had a few things in common, which was 
interesting, maybe by accident. They all were relatively small, 
small activities usually protected by leadership.
    The F-117, the stealth fighter. We interviewed Paul 
Kaminski, who was the colonel at the time who ran that program. 
Paul said it was a small functional team, about 7 to 8 people. 
They could make decisions. They were protected by leadership. 
They had a lot of things that Heidi Shyu talked about in her 
opening. They controlled the budget, the requirements. They 
were allowed to fail, and they were left alone. But they were 
held accountable.
    Whenever we went around and said what was this successful 
here, it all had the same characteristics, very highly skilled. 
What I see when I see those activities going on in the Defense 
Department, I see they are either there because the leader is 
protecting them. They are hiding and nobody knows they are 
doing this great stuff. Or they are highly classified.
    So something tells me we know to do this. If it has those 
characteristics, if we can streamline the way that Sean 
describes, we can be successful. I do not believe you can scale 
these things. I do not believe you can take something that is 
really highly agile, mobile delivering things and make it three 
times as big because then it will be slow. I think you can 
multiply those models. So we do know how to do it. There are 
success stories in the Department, but they all have those 
characteristics.
    Thank you.
    Senator Kaine. Secretary Shyu?
    Ms. Shyu. So number one, streamlined oversight. I can tell 
you coming from industry and coming to the Government was mind 
boggling to see the layers of oversight that you have. Also my 
Program Manager will have to--to get to a milestone decision, 
one of our major programs, the PM will drag through into the 
Pentagon 31 separate times to give briefings to various 
stakeholders. It does not happen in industry because you cannot 
afford that. So there are things that we are doing to ourselves 
within the Government that just does not make any sense. It 
slows you down. Increased bureaucracy does not enable you to be 
agile.
    The other second thing is there is mutual accountability in 
industry. Namely, when I was a PM and then moved on to become 
Director and Vice President, while I was managing multiple 
programs, on the monthly operations review you would report to 
the President. If I am short 12 engineers, this is why I am red 
on my program, I need your help, he does not just beat me up. 
He turns to the VP Engineering and says what are you doing 
about it. So there is mutual accountability here. That does not 
happen inside the Pentagon. We are just beating the crap out of 
the PM while everybody else has a steering wheel and a brake. 
So mutual accountability is very important.
    Nobody makes things better just because you filled out 79 
documents. So you can spend your time managing the program or 
you can spend your time filling out documents.
    Senator Kaine. Can I ask one more question, Madam Chair, or 
do you have a question that you want to ask?
    Senator Ayotte. I definitely do, but go ahead.
    Senator Kaine. How about each of you just brag? What is an 
acquisition program you are engaged in right now that you 
really think is doing great and that you want to brag about? 
Because, yes, we talked about problems, but you have got some 
that you think are going well. So that is just an opportunity 
for each of you. What is going great and why? Try to be quick.
    Mr. Stackley. I am going to tell you one you already know 
about. Virginia. Virginia is going great. Why? One, stability.
    Senator Ayotte. We like that.
    [Laughter.]
    Senator Kaine. Yes, that is right. That is one we can both 
agree on.
    Mr. Stackley. The program has stability. It has stability 
and it has got a quality team that is running it. When you put 
those two together, it has got the support of the Department of 
Defense. So everybody is pulling in the same direction on the 
Virginia program. Everybody is pulling in the same direction. 
That is not the case in all programs.
    Senator Kaine. Even with a little friendly competition to 
drive it ahead, as each side shows that their module is 
fantastic.
    Mr. Stackley. They pulled faster.
    So there is something that comes with stability and quality 
leadership and getting the alignment of the organization all 
pulling in the same direction that drives success.
    Senator Kaine. Secretary Shyu, Secretary LaPlante?
    Ms. Shyu. I will give you the Paladin Integrated 
Management, the PIM program. Why? We had an outstanding program 
manager who just drove this program through. This is what you 
need. You need tenacity to succeed in this job, and you need 
God to be on your side.
    On top of that, we had congressional support to help us 
protect the budget because otherwise, our programs are just 
vulnerable to be hacked away on the budget on an annual basis.
    Senator Kaine. Great. Thank you.
    Dr. LaPlante. I am very proud of our munitions portfolio in 
the Air Force. A lot of the preferred munitions that are being 
used right now in the fight, a lot of them are done by our guys 
in the Air Force. At the big picture level, they have carved 
out about half a billion dollars in ``should cost'' savings. A 
lot of them bought back more weapons, things that are being 
used in the fight today. I am very proud of them.
    A specific program I want to call out, though, is something 
called Small Diameter Bomb II. It has got a tri-mode seeker, 
all-weather weapon. Think of it as something that will go 
against highly moving targets in all weather with very low 
collateral damage. This program was initiated--very 
interesting. It was initiated in about 2009-2010 right when 
Weapons System Acquisition Reform Act (WSARA) legislation had 
come into play, right as the Better Buying Power initiative. So 
I was very interested in looking at this program. It is going 
to a milestone C in the next couple weeks. Milestone C is where 
you make the decision to go to full-rate production.
    Here is the thing. The program has come in under the cap. 
It was fixed-price development. Very unusual. It is coming in 
under that cap. The cost per weapon is coming in about $60,000 
cheaper than the objective requirement which is the stretch 
goal. What it is is what my colleagues said. The requirements 
were not changed. There was singular focus by the contractor.
    Here is the fascinating thing for us acquisition nerds. The 
Milestone C took about 6 months/8 months longer than we 
expected. How did they come in under the ceiling? Because 
everybody thinks time is money. Well, it turns out, you know, 
if you have worked in industry and outside, you know that 
actually you cannot take engineers and charge to a project that 
they do not have work to do. So this contractor, maybe because 
it was a fixed-price contract, maybe not--but I would like to 
find out--actually took the engineers off when they stopped 
flight testing to fix their problems. So even though the 
schedule slipped a little bit, we still came under the ceiling. 
Really remarkable. It is going to be a great weapon.
    Thank you.
    Senator Ayotte. I have some additional questions. So I am 
going to start this, but then we have a vote on the floor that 
we have to be back in 4 minutes. So if you do not mind, I might 
recess and then come back.
    But I am going to have the staff give you out--all of you 
have touched upon this, but maybe not all of the details are 
correct on this, but it is pretty close. You know, I heard from 
each of you that we do not need more layers. What we need to do 
is eliminate some of the layers. I mean, it is crazy. Look at 
this. I do not know how anyone could work through this process. 
Truthfully, in many ways, if you have that many layers, it 
actually does, as you have already touched upon, eliminate 
responsibility because you can pass it on to the next layer 
versus having people just take responsibility for the area of 
oversight rather than layering.
    So I think one of our goals in this acquisition reform is 
actually to streamline and to actually make this a more 
efficient yet accountable system for all of you and for us so 
that we know who to hold accountable. You know, we are making 
our contractors jump through so many hoops that I worry that we 
are going to stop not only the contractors that work in this 
space, but I am hoping that we can better attract some new 
folks that are more on the high-tech side that we need in terms 
of innovation of new products who are not normally used to 
operating in this type of space.
    So any thoughts you have on how we can streamline this, 
which I think will be good news for all of you, but also make 
it just a better system. I think that is our goal in this 
markup.
    Mr. Stackley. We have been working on streamlining this 
since this flowchart was started. I actually have a pocket 
version that I break out----
    [Laughter.]
    --to show people that this is the problem.
    Senator Ayotte. You really need reading glasses for that 
one.
    [Laughter.]
    Mr. Stackley. I had a conversation with the CNO about 6 
weeks or so ago, and we talked about the Service Chief's role 
in acquisition. He asked me can you lay out how a bill becomes 
a law. In other words, how does a requirement become a weapon.
    Senator Ayotte. It reminds me of Schoolhouse Rock.
    Mr. Stackley. When you take this and up in the upper left-
hand corner is where the Service Chief signs off on a 
requirement. At that point in time, he believes he just made a 
decision, not recognizing that what he as the Service Chief 
decided was necessary to meet his statutory responsibilities to 
man, train, and equip the force then has to be agreed upon by 
literally hundreds of individuals who do not have 
accountability to man, train, and equip the force.
    So how to improve upon this? We are working with the 
Service Chiefs to be able to come back to you all to describe 
some things that we believe can be done. It might not delay 
this, but what it should not do is strip away the Service 
Chief's authority when he says I need this capability, I am 
putting this money against it to deliver to the warfighter to 
meet our responsibility.
    Senator Ayotte. So I will have to interrupt for a minute so 
I can go and vote. But let me just say this, that I think that 
working together on this, it is the Service Chief getting what 
the Service Chief needs for his or her Service, but also there 
will be more accountability for the Service Chief. But that is 
okay if it is not a morass that no reasonable person could 
actually make their way through in terms of the layers here.
    So I am going to run and vote, and we will take a quick 
break and come back and we will reconvene. Thanks.
    [Recess.]
    Senator Ayotte. I know that I had a chance to hear from 
Secretary Stackley on his take on this whole thing, but 
anything that any of the other Secretaries wanted to add, I 
would be happy to receive.
    Dr. LaPlante. I was mentioning during the break that I 
think it was the first time I saw as exhibit A where somebody 
did this was Jack Gansler who did a Defense Science Board (DSB) 
study on urgent operational needs in 2009. He showed this 
chart, and he said ``exhibit A.'' That is all I need to say. We 
cannot do rapid acquisition with it.
    The next year, on our adaptability study, we showed the 
same chart and said ``exhibit A.'' But then what we did--and I 
think others have done this--they have taken--they have gone to 
non-defense industry and they have said what is your version of 
this chart. It is, of course, much, much simpler than this. I 
would recommend as a way to go is look at the work where people 
have done that, where they have taken and they said how in the 
commercial world do they make this realization. People have 
done that and said why can we not make it more like that.
    Senator Ayotte. Well, they have used process like the Lean 
Process that can be used in companies to be able to look 
through each step and eliminate steps that are unnecessary.
    Ms. Shyu. So I will say we absolutely need to streamline 
the processes, but enable us to tailor it. That is what we do 
in industry when we are designing, developing programs. We have 
a standard engineering process that you have to go through, but 
we allow the Program Manager the flexibility to tailor it. If 
it does not apply to my program, I can axe it off. It does not 
apply. Just focus on the piece that is relevant to what you are 
doing. The tailoring does not exist. This is why we have dumb 
things we end up doing like you go to go through corrosion--if 
it does not matter if it is a software program.
    Senator Ayotte. Right. Thank you.
    I wanted to ask a question about foreign military sales 
(FMS). With regard to contracting for foreign military sales, 
it seems that the U.S. Government is, in essence, negotiating 
on behalf of foreign Governments against U.S. defense 
companies. That is done by imposing the same standards, 
auditing, and regulations, what we would do if the U.S. 
Government were using taxpayer dollars to buy a U.S. product. 
After working to negotiate a better deal on behalf of the 
foreign taxpayer, in reality then we add as much as 8 to 10 
percent markup for U.S. Government services and transaction 
costs. These cost dollars then go to subsidizing money, I 
guess, back into the DOD, not to maintaining the industrial 
base. Given that foreign sales are intensely competitive, is 
the foreign military sales contracting process really in the 
best interest of the United States and the long-term health of 
the defense industrial base?
    You know, one of the challenges I think we are facing is as 
we spend less on defense, we want to maintain our industrial 
base and, where appropriate, we want to allow them to engage in 
foreign military sales. Obviously, anything that infringes on 
our National security interests, that is really where the focus 
needs to be from our perspective on regulation and the 
Department of Defense. But things that do not do that we can 
sell to our partners, it seems to me it benefits us because it 
helps keep our companies robust.
    So can you help me understand this process? Because I 
learned more about it the other day, and I was somewhat 
surprised by the fact that we would be pushing back on our 
companies on prices on behalf of foreign Governments and 
wondered whether that was the best use of DOD time when the 
market itself would adjust any kind of exorbitant prices that 
the buyer was willing to pay.
    Mr. Stackley. Ma`am, I will start and ask my colleagues 
here to join in.
    First, when it comes to foreign military sales, it is a 
win-win. It is a win-win-win. It helps our industrial base. It 
helps our international partners, and that helps us from the 
standpoint of security and affordability of our programs. So it 
is in our best interest to foster increased foreign military 
sales, particularly now that you see our defense spending 
flattening out. So particularly our major defense contractors, 
they are in pursuit of increased foreign military sales, and we 
are supporting that to the extent that we can.
    When it comes to the mechanics of the foreign military sale 
itself, that foreign country looks to us to protect their best 
interest in the sale.
    Senator Ayotte. Why?
    Mr. Stackley. Because they do not sit down at the table to 
negotiate with industry.
    Senator Ayotte. It is the strangest thing I have ever heard 
because usually in a buyer-seller relationship, why would we 
negotiate on behalf of taxpayers in other countries? That is 
what I am trying to understand. I understand our interests in 
making sure that we are not engaging in foreign military sales 
that could undermine technology and interests that we want to 
remain protected, but I guess I do not understand why we are 
negotiating for them when we are dealing with scarce dollars 
and we could be better focusing our resources on oversight of 
our own taxpayer dollars.
    Mr. Stackley. In almost all cases, the thing that is the 
subject of the foreign military sale is something that we are 
producing for our own military.
    Senator Ayotte. Right.
    Mr. Stackley. So quite often, they are either buying off of 
our contract or an extension of our contract. So there is a 
single negotiation that typically is taking place associated 
with this product line, and then if it is Australia buying F-
18s, for example, they are going to work off of our pricing for 
the F-18. We strive for a singular effort when it comes to 
negotiating.
    Senator Ayotte. So it never happens that they are just 
doing an add-on to our contract. So it never happens that they 
independently want something that we are not at the moment 
procuring?
    Mr. Stackley. There are going to be some exceptions where 
they might be ahead of us in terms of procurement, but those 
are--
    Senator Ayotte. You understand why conceptually I am having 
a difficulty with this in the sense that some of the feedback I 
have heard is that we often push our companies, but we are not 
pushing our companies on behalf of our own taxpayers. It is on 
behalf of our foreign partners, which I am all for our 
partnerships with our allies. It is just that usually would be 
the role of that Government doing this. I am just trying to 
understand why that is necessary.
    Mr. Stackley. There is a separate avenue called direct 
commercial sale where that other country could go direct to the 
vendor to procure the item. Then you start to get into security 
issues in terms of releaseability, but that is an alternative. 
What they look for is they look to stay as compatible with the 
U.S. version as possible for interoperability purposes, and if 
we are in production and we are procuring, they want to get as 
close to the same deal that we get with industry as possible.
    With regard to a surcharge----
    Senator Ayotte. What if they did not get the same deal? How 
does that hurt us? Like what if they are willing to pay more 
but we are not because we are negotiating on behalf of 
taxpayers. How does that undermine our interests?
    Mr. Stackley. Okay.
    Senator Ayotte. I am just being honest. I just want to 
know. I am trying to figure out how that undermines our 
interests.
    Mr. Stackley. The process starts with the foreign military 
sales customer identifying what their requirement is, and if 
the requirement matches something that we are currently 
procuring, then what we do is we put side by side what the 
requirement is versus what we procure and whether or not it is 
releaseable to them as is.
    Senator Ayotte. Which is important.
    Mr. Stackley. If it is not, there will be some deltas. If 
there is something that they want, they might want their own 
missile integrated into an aircraft, that type of thing, then 
those are further deltas. But we have a baseline in terms of 
the cost of the item.
    Senator Ayotte. So if they want their own missile 
incorporated into an aircraft or some other piece of technology 
and yet that is not what we want, we would actually still, 
though--we would be the ones trying to negotiate the best price 
for that delta as well. Correct?
    Mr. Stackley. If it is being done over here. We do a 
pricing check in terms of pricing as provided by industry.
    Senator Ayotte. It is hard for me to get my head around.
    Dr. LaPlante. I think you are asking good questions about 
exactly what the----
    Senator Ayotte. We are in a scarce resource environment, 
and so I want to understand where is the best use of our 
resources. You know, our number one job is to protect U.S. 
taxpayers. That is what I am trying to get at.
    Dr. LaPlante. I think one thing. When I see companies going 
the FMS route versus direct military sale--they can do direct 
military sale--what they are usually getting for that is they 
are getting the Government expertise, the Government-furnished 
equipment. For example, if the Government buys a radar that 
would be put on it, they are getting the Government's benefits. 
Right? What comes with air worthiness, sometimes when you are 
buying an airplane, you want to make sure that the U.S. Air 
Force, U.S. Navy have certified it for air worthiness. So they 
are getting these kind of--think of them as Government 
services. But what they also get with that is all the joy of 
contracting with the U.S. Government as well. The contracting 
officers, who are trained to do their job as contracting 
officers for a fair and reasonable price for using things--and 
so that is the dilemma that you are seeing here.
    If it was a direct military sale, then the Government is 
not involved. Once the Government gets involved, then we have 
to do all the things that the contracting officers are trained 
to do. I think that is what you are getting at.
    Senator Ayotte. Yes. I think it is worth considering 
whether every step needs to be followed through with the 
contractor. Like it would be a U.S. contractor versus--with 
taxpayer dollars a purchase here versus a purchase there.
    I also wanted to ask about--New Hampshire has, of course, 
many small- and medium-sized defense suppliers who do some 
incredible work. Obviously, especially on our small- and 
medium-suppliers, the sequestration effect is even greater 
because they cannot necessarily reallocate in a way because 
they are a small supplier. Many of them, unfortunately, I think 
are going out of business.
    So I wanted to get your perspective as we look at the 
impact on small suppliers. Have you had a situation with where 
we are in the fiscal climate toward having to go toward more 
sole suppliers or foreign suppliers for critical components?
    Ms. Shyu. I will talk about that one. We do look at the 
industrial base and not just on the first tier. We look at the 
impact on the second tier and potentially the third tier as 
well because the first tier guys will tell us our production 
rate has gone down to half of what it used to be and here is 
the impact that I am worried about to small businesses.
    So we have had multiple workarounds. For example, one 
program that we had had a supplier that builds transmissions 
that was really going bankrupt. So what happened, the prime 
actually floated money financially to help this company to keep 
going until they could get a buyer. So that is one example of 
what happened.
    In another situation we had, we worked with another company 
that built a very unique product for the Army. But we already 
have a 7-year supply of that product. So we got lots of 
inventory just sitting on the shelf. We do not need to buy 
more. But we told the small company, hey, you got to diversify. 
You cannot have one egg in this basket. Right? That is very 
risky. So over a period of 2 years, this particular supplier 
went from 90 percent dependent upon the Army down to 50 percent 
because that person diversified into the commercial space.
    So those are a couple of real-life examples that we have 
experienced the last couple years.
    I will say one third thing to give you one other example. 
So when we have had congressional plus-ups, what we have done, 
as an example, is look at the second tier, what is also 
potentially vulnerable, and taken some of the congressional 
plus-up money to fund the second tier to make sure that we have 
the base at a minimal, sustainable rate.
    Dr. LaPlante. I think there is a tactical like near-term 
aspect to this and then there is the strategic. The tactical 
near-term is a focused effort all the time in every program to 
see are you maximizing opportunities for small business.
    Senator, you mentioned New Hampshire. One thing you learn 
about small business--they say all politics is local. All small 
businesses--it is kind of a local thing. In other words, the 
small businesses that we have around Hanscom Air Force Base up 
in New England tend to be the type that work on command and 
control applications because that is what we do up there. 
Contrast that with Maxwell where we have a lot of information 
technology (IT) small businesses. What we are finding is doing 
a lot of regional roundtables with small business to customize 
and open up opportunities for them is the way to go as opposed 
to a wide sweep. Our small business numbers are up, but it 
takes a lot of work.
    The strategic comment I would make is I think this is why 
open and modular systems are really important. I really want to 
make sure people understand that. As we build our platforms 
with open and modular systems where the standards are open 
standards, then there is no reason that small business should 
not be a competitor for a sensor, an algorithm, as we refresh 
them every 1 to 2 years. That is the benefit of going to open 
systems as opposed to a prime where the system is closed, which 
is traditionally the way we do it. We need to get small 
business into the open system market is what I believe.
    Mr. Stackley. I would simply add that the comments that 
Secretary Shyu made regarding what happens with regard to cash 
flow and how we have to fill in the cash flow when we have 
delays for a continuing resolution or in the case of 
sequestration, things of that nature, working either directly 
through use of things like advanced procurement, which we get 
in our contracts, or with a large defense contractor.
    However, what I have found is small businesses are not on 
the radar screen for most of our Program Managers. So what we 
need to do is put it on the radar screen. So each program has a 
Deputy Program Manager, and so each Deputy Program Manager in 
the Department of the Navy has been assigned a responsibility 
to be the small business advocate for all things associated 
with his program. So to have a watch on the health of his 
second tier, lower tier small businesses that are directly 
affected when we have ebb and flow in terms of cash on a 
program and also when we change our production rates or if we 
are going to shut down production and go into a sustainment 
mode to understand not just your prime, not just your major 
subcontractors, but what is happening down at that small 
business level because quite often they are not just unique. 
Quite often they are the sole source. In fact, your question, 
have you seen vendors go out of business, the answer is yes, we 
have. We have had to go offshore as a result because the 
manufacturer in the United States was ``one of'' and we have 
had to go offshore to replace that company.
    Senator Ayotte. Excellent.
    Before I conclude the hearing, is there anything that, as 
we look at this markup and trying to improve our ability to 
perform with the dollars we have--and, you know, we talked 
about this, but anything that you feel like we did not ask you 
that you want to make sure that we are focusing on?
    Dr. LaPlante. I think one specific thing is the Defense 
Acquisition Workforce Development Fund (DAWDF) for the 
acquisition workforce has been very, very useful for us. All of 
us are suffering from when the acquisition workforce was 
decimated in the 1990s. With the DAWDF and other tools, we have 
gotten the workforce back up from levels to kind of almost 
where it needs to be. So that is really important for us to 
continue to do that. So I would just call that out.
    Thank you.
    Mr. Stackley. I am going to pound that point. You asked 
about failures, what have we learned from certain failures. 
This dates back to WSARA in the 2008-2009 timeframe. One of the 
more noted failures in the Department of the Navy was the 
Littoral Combat Ship (LCS) program and how it got out of the 
starting blocks. One of the things that came out of that was 
the lack of oversight on that program, right down to the deck 
plates. So you trace that. Well, what drove that? Well, the 
fact was that the acquisition workforce had been drawn down in 
terms of size to the extent that we were stretched too thin.
    So in terms of the Department of the Navy, setting out a 
strategic plan for the size and shape of its workforce and 
Congress--you know, basically putting the weight of Congress 
behind that as reflected in WSARA and the Defense Acquisition 
Workforce Development Fund, we have, in fact, modestly restored 
our workforce to where we believe it needs to be in order to 
support our programs going forward. That is under threat today 
because of the budget picture.
    So here we are today talking about what we have done to 
improve and the criticality of the acquisition workforce. Today 
that exact acquisition workforce is under the gun in this 
budget environment and threatens to go back to where it was pre 
WSARA. So that is a concern for us. You have provided 
incredible support in this regard in the past, and we look 
forward to that continued support.
    Ms. Shyu. So I absolutely concur with my colleagues, 
protecting the acquisition workforce, because I see a bimodal 
distribution in our workforce. We are going to have a lot of 
senior folks that are going to be retiring in the next 5 years, 
and then we will get into even deeper trouble because we do not 
have a skilled workforce. Right now there is significant 
pressure in reducing the civilian workforce because the force 
structure is coming down. So I have a significant concern on 
that side.
    The other piece is I will say WSARA provided the sound 
system engineering. What we do need to understand is what 
happens is the interpretation of the law from this side of the 
Hill to the other side of the Hill--what happens? We 
reinterpret the meaning of the language and it becomes much 
more onerous. So if there is anything that you guys take away, 
allow us to do tailoring to expedite, to enable our agility.
    Thank you.
    Senator Ayotte. Thank you.
    Well, thank you all. I appreciate everything are doing, and 
we look forward to working with you. Thanks for your important 
focus on this issue. Thank you.
    [Whereupon, at 4:12 p.m., the subcommittee adjourned.]

    [Questions for the record with answers supplied follow:]
              Questions Submitted by Senator Kelly Ayotte
                      attracting talent to defense
    1. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, as you know, the sophistication and pace of 
development of foreign and commercial technology have increased in 
recent years. Much of the innovation taking place today is coming from 
commercial firms that do not do business with the Department of Defense 
(DOD) because they believe the barriers and impediments to quick 
innovation are too burdensome. In contrast, DOD's acquisition processes 
tend to be much less innovative, more inflexible, and too slow to 
deliver new capabilities when needed. Do you have any ideas on how to 
tap the talent and innovative spirit of nontraditional suppliers (like 
some in Silicon Valley) to reinvigorate our military technology base?
    Ms.Shyu. The Army is committed to attracting and harnessing 
innovative solutions and capabilities for Soldiers. This priority must 
always be balanced with other goals of the defense acquisition system 
that impact its responsiveness and speed, such as the need for proper 
oversight of taxpayer resources, fairness, and transparency.
    Notwithstanding these considerations, the Army is taking deliberate 
steps to ensure that it has access to commercial innovation needed to 
maintain dominant warfighting capabilities. For instance, the Army uses 
innovative contracting methods and partnerships to access non-
traditional suppliers in support of needed capabilities in several 
warfighting areas, like munitions and cyber security. Other Transaction 
Authorities (OTA), industry consortia, and Cooperative Research and 
Development Agreements enable DOD and the Army to more quickly access 
companies that provide commercial technologies of interest and 
incentivize them to do business with DOD.
    For example, Army Science and Technology uses the Ground Vehicle 
System (GVS) OTA to focus on vehicle and robotics technology research, 
development, test and evaluation projects. The GVS OTA mechanism 
facilitates collaboration and innovative technology development with 
industry, academia, and other Services and allows us to leverage 
Industry Research and Development Funding. The OTA mechanism allows a 
wider base of industry and academia partners to develop more rapid 
responses to DOD Warfighter requirements. Specifically, the Army is 
using this OTA for our Modular Active Protection Systems and Combat 
Vehicle Prototyping programs, among other efforts.
    The Army is also utilizing cooperative research and development 
agreements (CRADAs) as a technology transfer mechanism to promote 
industry and academia collaboration with the U.S. Army Research 
Laboratory (ARL). ARL currently has 72 active CRADAs with industry. 
Collaborative alliances and the Army Open Campus Initiative are 
additional mechanisms used by the Army science and technology community 
to foster collaboration with academia, small business, industry, and 
other Government agencies.
    Moreover, the Army continues to rely on innovative companies, such 
as Silicon Valley firms. For example, the Army Research Laboratory is 
collaborating with the Palo Alto Research Center on the development of 
high power deep ultraviolet lasers. Additionally, the Army is pursuing 
CRADAs with both HP and WindRiver (part of Intel) to explore how to use 
software defined networking (allowing usage across large bandwidth) in 
the dynamic tactical environment that the Army faces. In another 
example, the Army is working with Cisco in the experimentation and 
testing of cyber capabilities.
    To increase partnership between the department and technology 
leaders, the Secretary of Defense announced the creation of the 
department's first permanent office in Silicon Valley as well as a plan 
to provide venture capital to tap into developing technology for use 
across the Army and DOD.
    Mr. Stackley. The DON, through the Office of Naval Research, has 
effectively used Broad Agency Announcements for research topics to 
encourage small and large companies to share and develop their ideas 
and new or improved technologies. For small businesses, the DON has 
effectively used the Small Business Innovation Research (SBIR) and 
Small Business Technology Transfer (STTR) program to encourage small 
businesses to share and develop their new or improved technologies. To 
encourage small business participation in our programs, the DON has 
assigned each Deputy Program Manager the responsibility to be the small 
business advocate for all things associated with the program.
    Dr. LaPlante. The Air Force and DOD must continuously strive to 
increase access to and collaboration with nontraditional suppliers. 
Expanding and encouraging the use of Other Transaction Authorities, 
Cooperative Research and Development Agreements, Open Challenges, and 
Small Business programs are flexible and potentially faster processes 
to tap the innovative talent of nontraditional vendors. The Air Force 
is always on the lookout to find the leading edge technologies often 
found in nontraditional vendors. We recently partnered with 
nontraditional defense companies, Applied Minds and Stottler Henke 
Associates, to develop innovative space operations solutions, building 
an immersive visualization environment tool and using artificial 
intelligence to aid satellite communications. It's true, our capability 
development paradigm is inadequate. To the extent that our current 
policies and regulations can be modified to change the paradigm from 
large, complex programs rife with crippling interdependencies to 
programs with simple, severable components, open architectures, and 
more distributed participation, we will enact those changes.

    2. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, please describe any steps you believe are necessary 
to eliminate the barriers and impediments for greater participation by 
nontraditional suppliers to provide new and advanced technologies for 
weapon systems.
    Ms. Shyu. The Army is working with the Office of the Secretary of 
Defense to increase participation by nontraditional suppliers. First, 
the Army is utilizing consortium arrangements and other transaction 
authorities to acquire new capabilities. These arrangements allow the 
Government easier access to vendors that provide emerging commercial 
innovation, but may not be experienced in working with the Government.
    Second, as part of the Department's Better Buying Power initiative, 
the Army is currently participating in Department-wide efforts to 
identify barriers to the adoption and use of commercial technology for 
military systems. This study will facilitate recommendations to improve 
the incorporation of commercial off the shelf technology from 
nontraditional contractors. A related area of focus is designed to 
improve the process for technology insertion into our current weapon 
systems. This allows the Army to more quickly leverage commercial 
innovation as opposed to waiting until the overall system is 
modernized. Moreover, the Army is also investing in modular open 
systems architecture. Open architecture standards and modularity opens 
the market to more companies with cutting edge capabilities that may 
not traditionally compete for development of a full system.
    Finally, to increase partnership between the department and 
technology leaders, the Secretary of Defense announced the creation of 
the department's first permanent office in Silicon Valley as well as a 
plan to provide venture capital to tap into developing technology for 
use across the Army and Department of Defense. The Army is looking 
forward to working through these new initiatives to leverage new 
technologies that make us faster and better connected. These steps are 
the first of many to improve our ability to adopt the cutting edge 
technologies that will enable our information dominance into the 
future.
    Mr. Stackley. To encourage further opportunity and greater 
participation by nontraditional suppliers, the DON recommends that the 
Congress work with the Undersecretary of Defense for Acquisition, 
Technology and Logistics to identify and roll back legislation that has 
produced unnecessary, and redundant regulatory and reporting burdens on 
contractors. Additionally, a timely, predictable defense budget would 
improve both government and industry's ability to manage outlay risk 
and invest in R&D, facilities, and people.
    Dr. LaPlante. Intellectual property concerns and burdensome 
acquisition processes often make doing business with the Air Force and 
DOD unattractive to nontraditional suppliers. There are policy and 
authority adjustments that can help to reduce and eliminate some of 
these barriers and impediments. For example, the Air Force is 
establishing a Small Business Innovation Research (SBIR) direct to 
Phase II pilot program to provide full and immediate research and 
development support to small businesses with mature technologies and 
concepts. This will reduce the number of associated low dollar, short 
duration Phase I contracts issued, expedite technology transition, and 
achieve a higher return on investment. In addition, the Air Force 
Research Laboratory Center for Rapid Innovation will use this new 
authority to establish a Strategic Innovation component of the SBIR 
program to generate innovative, game-changing concepts. Expanding and 
encouraging the use of Other Transaction Authorities, Cooperative 
Research and Development Agreements, Open Challenges, and Small 
Business programs are flexible and potentially faster processes to tap 
the innovative talent of nontraditional vendors.
             combatting terrorism technical support office
    3. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, are you familiar with the Combatting Terrorism 
Technical Support Office (CTTSO)? Have you examined what the CTTSO does 
to see if there are lessons that could be applied to your service's 
acquisition processes?
    Ms. Shyu. Yes, the CTTSO provides a forum for interagency and 
international users to discuss mission requirements to combat 
terrorism, prioritize requirements, fund and manage solutions and 
deliver capabilities. The Army is actively involved in several CTTSO 
subgroups, to include Chemical, Biological, Radiological, Nuclear and 
Explosives; Explosive Ordnance Disposal; and Tactical Operations 
support. Through the sub-group work, the CTTSO can deliver capabilities 
to the community through rapid research, development, test, and 
evaluation. The Army's participation in CTTSO allows us to leverage 
this multi-disciplinary community to acquire and field capabilities to 
the Soldier. As an example, the Joint Program Executive Office for 
Chemical and Biological Defense (JPEO-CBD) collaborates with CTTSO to 
advance programs such as the Dismounted Reconnaissance Sets, Kits, and 
Outfits package, which allows Soldiers to perform dismounted assessment 
of weapons of mass destruction suspect areas not accessible by military 
vehicles. JPEO-CBD also collaborates with CTTSO on the Ebola Portal, an 
online bio-surveillance resource consisting of collaborative tools, 
event watch-boards, disease monitoring, and geographic information for 
use during the Ebola outbreak in West Africa.
    Mr. Stackley. The CTTSO uses an approach that is very similar to 
DON's existing use of Broad Agency Announcements (BAAs) through the 
Office of Naval Research (ONR). The DON, through ONR, has effectively 
used BAAs for a wide range of research topics to encourage small and 
large companies to share and develop their ideas and new or improved 
technologies. Additionally, for small businesses, the DON has 
effectively used the Small Business Innovation Research (SBIR) and 
Small Business Technology Transfer (STTR) program to encourage small 
business innovators to share and develop their new or improved 
technologies. To encourage small business participation in our 
programs, the DON has assigned each Deputy Program Manager the 
responsibility to be the small business advocate for all things 
associated with the program.
    Dr. LaPlante. I am familiar with the Combating Terrorism Technical 
Support Office; however, I have not specifically examined their 
approach to acquisition. I will work with the Assistant Secretary of 
Defense for Special Operations and Low-Intensity Conflict to determine 
if there are any lessons learned or processes that can be applied to US 
Air Force acquisitions.
                    wartime acquisition work-arounds
    4. Senator Ayotte. Secretary Shyu, during the early years of the 
Iraq and Afghanistan wars, difficulty was encountered in getting the 
deployed units specifically-needed equipment due to lengthy and 
complicated acquisition processes. As a result, the Army implemented 
several rapid acquisition programs to help mitigate required equipment 
delays to our warriors in harm's way. Such programs, like the Rapid 
Equipping Force (REF) and the Soldier Enhancement Program (SEP), have 
been highly successful with equipment procurement to the field in a 
timeframe as short as 90 days. What can we learn from the success of 
these rapid acquisition programs to improve more traditional service 
acquisition processes?
    Ms. Shyu. Rapid acquisition processes are highly effective in 
providing deployed units with warfighting capabilities on an urgent 
basis under certain conditions. Our experience confirms that these 
processes work best where the requirement calls for low-risk, available 
technologies, where minimal development or integration is required to 
field these capabilities to Soldiers, and where the acquisition 
supports a small scale deployment of Soldiers with a focused mission, 
as opposed to fielding equipment to the entire Army. Under these 
conditions, the Army's rapid acquisition processes can be extremely 
effective. Accordingly, REF requirements development will continue 
under the authority of the Training and Doctrine Command. PEO Soldier 
will execute REF acquisition functions, which will maintain the REF's 
responsive speed while ensuring appropriate oversight of REF efforts.

    5. Senator Ayotte. Secretary Shyu, does the Army plan to retain 
these rapid acquisition programs in the coming years? Why or why not?
    Ms. Shyu. The Soldier Enhancement Program (SEP) has been in place 
since 1989. So as long as Soldiers and Combat Developers continue to 
identify commercial or non-developmental items for potential Soldier 
use, SEP will continue to provide an important function in the Army's 
equipping efforts. The Army has also decided that the Rapid Equipping 
Force (REF) capabilities must continue as an enduring process. 
Accordingly, REF requirements development will continue under the 
authority of the Training and Doctrine Command. This maintains a 
wartime capability for rapid response by providing resources for unique 
or emerging requirements through REF ``10-Liner'' requests while 
helping to identify potential enduring capabilities. PEO Soldier will 
execute REF acquisition functions, which will maintain the REF's 
responsive speed while ensuring appropriate oversight of REF efforts.
                        audit/oversight balance
    6. Senator Ayotte. Secretary Stackley, your testimony states: ``The 
penalty for too much oversight is ever-increasing costs and impediments 
to execution that have no ceiling. The penalty for too little oversight 
is the costs and risks of rework for unforced errors.'' How do we 
achieve the right oversight balance? How do we avoid erecting 
unnecessary ``impediments to execution'' and also avoid ``unforced 
errors''? How can the audit and oversight processes be organized so 
that we have neither too little nor too much oversight?
    Mr. Stackley. Oversight and governance requirements have added 
multiple layers of prescriptive processes, authoritative organizations, 
and extensive reporting and documentation requirements. The DON rewrote 
its acquisition governance process, commonly referred to as the Gate 
Review process, to ensure there is no gap between the Requirements and 
Acquisition organizations so that the DON understands the relationship 
between requirements, technical feasibility, and cost. The process 
requires the Navy/Marine Corps operational requirements leadership and 
acquisition leadership to agree, and repeatedly affirm that agreement 
throughout the development, acquisition, and sustainment of a system. 
The DON uses Gate Reviews to eliminate any misalignment between 
requirements and acquisition early in a program, and to check alignment 
regularly; and, to keep control over requirements as well as the cost 
and schedule to meet those requirements.
    Each `gate' is co-chaired by the Service Chief or senior military 
requirements officer and the Service Acquisition Executive (SAE). In 
all there are six gates, with the first three chaired by the Service 
Chief (co-chaired by the SAE) and ensure warfighter requirements are 
well understood and can be translated into technical requirements that 
the acquisition community can affordably achieve in the commercial or 
defense marketplace. The last three gates are chaired by the SAE (co-
chaired by the senior military requirements officer) and ensure the 
technical specification, statement of work, and Request for Proposal 
have accurately translated the warfighter's requirements into an 
acquisition approach that is executable, affordable, and agreeable 
across acquisition and requirements leadership. The DON is confident 
that this Gate Review process provides the right balance of oversight.
    The DON recommends that that the Congress work with USD(AT&L) in 
the current effort to identify and roll back legislation that has 
produced unnecessary and redundant regulatory and reporting burdens on 
Program Managers which have the effect of thwarting the steady 
application of these fundamentals.
             role of the office of the secretary of defense
    7. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, there have been concerns raised about defense 
acquisition that there is a lot of duplicative oversight within Office 
of the Secretary of Defense and the services. The process is said to be 
providing very little insight or help to program managers and has 
evolved into a series of burdensome and time-consuming boxes to check 
on the way to actually buying something. What should the proper role 
and division of responsibility be between the military service chiefs 
and secretaries, the Office of the Secretary of Defense, and defense 
agencies and entities charged with overseeing acquisition programs?
    Ms. Shyu. OSD oversight provides significant expertise and 
independent evaluation on the Department's major programs. Importantly, 
USD(AT&L) interfaces on behalf of the Army's major programs with OSD 
Cost Analysis and Program Evaluation and the Director, Operational Test 
and Evaluation. This relationship supports our efforts to successfully 
guide critical programs through the test and evaluation process and 
ensures that cost estimates are accurate and realistic at program 
initiation. Additionally, OSD plays an important role in adjudicating 
cross-Service issues on joint programs. This independent and external 
perspective ensures that the Department maximizes its limited resources 
across all three Services.
    The Service Chiefs possess significant operational insight and 
expertise that benefits the Army's equipping efforts. As 
representatives of the Warfighters' needs, the Service Chiefs have a 
critical role to play in validating and prioritizing requirements. This 
role is especially important during times of decreased budgets, such as 
now, when the Department must make the right investment decisions with 
limited resources. However, there are no additional authorities 
necessary in order for the Chiefs to continue to execute this valuable 
role in the acquisition process.
    Mr. Stackley. The Service Chief sets requirements and allocates the 
necessary resources to meet these requirements. It is the role and 
responsibility of the acquisition system to meet these requirements. As 
such, the DON's experience is that the greater role/involvement by the 
Service Chief in the acquisition process, the greater likelihood of 
successfully meeting the requirements within the resources provided. 
The DON's Gate Review process strives to achieve total alignment 
between requirements, resources, and acquisition by establishing shared 
responsibility for oversight and decision-making via a structured 
milestone process co-chaired by the CNO or CNO representative and the 
Assistant Secretary of the Navy (RD&A).
    Separately, USD(AT&L) and his OSD staff have an oversight role that 
is important for program management and they add value in that role. 
The Military Services are best suited to manage programs and the day to 
day business of the programs under their cognizance while allowing OSD 
insights and abilities to check the program as it proceeds.
    Dr. LaPlante. The Better Buying Power 3.0 ``Emphasize acquisition 
chain of command responsibility, authority and accountability'' 
initiative is driving an analysis of the important, but supporting 
role, of staff oversight in the Office of the Secretary of Defense 
(OSD) and Services. The Office of the Under Secretary of Defense 
(Acquisition, Technology & Logistics) (OUSD(AT&L)) is conducting a 
review of the accountability and responsibility of individuals within 
OSD. The review is identifying all the touch points an acquisition 
document experiences enroute to the Milestone Decision Authority (MDA) 
for approval. The review is considering the accountability of the 
reviewers and the contribution that these reviews provide in order to 
identify potential streamlining to the current review process and 
emphasize Program Manager (PM), Program Executive Officer (PEO), and 
Component Acquisition Executive (CAE) authority.
    Additionally, the Air Force is conducting a similar review of the 
accountability and responsibility of all individuals throughout the Air 
Force who review acquisition documents prepared for MDA or OSD 
approval. The Service leadership is considering the accountability of 
the reviewers and the contribution these reviews provide in order to 
identify potential streamlining to the current process and emphasize 
PM, PEO, and CAE authority.
    Once these reviews are accomplished, the proper role and division 
of responsibility between the military service chiefs and secretaries, 
OSD, and defense agencies charged with overseeing acquisition programs 
should be apparent and enable a clear picture of any needed changes in 
responsibilities.

    8. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, are you in favor of giving the service chiefs an 
increased decision making role in the acquisition process? If so, how 
would you structure that role so that it complements, not competes, 
with the Service Acquisition Executive?
    Ms. Shyu. Under the current system, the Service chiefs hold no 
formal role within the acquisition process, but still exercise 
significant authority over the formulation of Service requirements and 
the allocation of funding necessary to successfully develop and field 
programs. Achievable and affordable requirements, as well as stable and 
predictable funding, are crucial to program success. The operational 
experience and leadership of Service Chiefs are invaluable to 
generating and stabilizing achievable requirements and protecting the 
resources necessary to achieve these capabilities. Additionally, the 
Service Chiefs are ideally positioned to make the larger strategic 
decisions to balance the overall readiness requirements of the current 
force with the resources necessary to modernize equipment for the 
future force. In addition, the Service Chiefs can play a greater role 
in promoting the qualifications, expertise and capability of the 
acquisition workforce, comprised of both military and civilian 
acquisition professionals. The Service Chiefs can execute these 
critical roles without modification to existing authorities with 
maximum effect on acquisition outcomes.
    I do not believe that Service Chiefs require greater decision-
making authority regarding acquisition decisions, including such areas 
as technical risks, development schedules, industrial base 
considerations or production readiness. These areas, which are 
typically addressed in formal acquisition decisions, would not benefit 
from greater involvement by Service Chiefs. The Service Chiefs do not 
typically have the technical expertise or industry experience to make 
such decisions. Rather, we should leverage the significant operational 
expertise of the Service Chiefs to define and stabilize realistic 
requirements and resources to execute our acquisition efforts.
    Mr. Stackley. The Service Chief sets requirements and allocates the 
necessary resources to meet these requirements. It is the role and 
responsibility of the acquisition system to meet these requirements. As 
such, the DON's experience is that the greater role/involvement by the 
Service Chief in the acquisition process, the greater likelihood of 
successfully meeting the requirements within the resources provided. 
The DON's Gate Review process strives to achieve total alignment 
between requirements, resources, and acquisition by establishing shared 
responsibility for oversight and decision-making via a structured 
milestone process co-chaired by the CNO or CNO representative and the 
Assistant Secretary of the Navy (RD&A).
    Separately, USD(AT&L) and his OSD staff have an oversight role that 
is important for program management and they add value in that role. 
The Military Services are best suited to manage programs and the day to 
day business of the programs under their cognizance while allowing OSD 
insights and abilities to check the program as it proceeds.
    Dr. LaPlante. The Chief of Staff of the Air Force's (CSAF) current 
role in Air Force acquisition is appropriate. Existing policies and 
processes for planning and executing acquisition programs provide 
multiple opportunities for the Service Chiefs to complement and be 
involved in acquisition to vector programs towards meeting cost, 
schedule, and performance targets. Regular interactions between the 
CSAF and the Service Acquisition Executive (SAE) today are effective 
and sufficient in providing feedback to the Acquisition community and 
vectoring based on USAF priorities. These interactions provide the CSAF 
insight into how acquisition strategies and solutions are meeting the 
requirements of the operational forces. This insight also improves the 
CSAF's ability to attest to requirements affordability and reduce 
program requirements, allowing for the potential to improve program 
cost or schedule in a manner consistent with desired operational 
capability.
    In the USAF, the Secretary and the CSAF are ultimately accountable 
for the USAF Acquisition process and outcomes. They have delegated 
specific responsibilities to key leaders, and hold them accountable for 
their outcomes, assuring that the requirements, acquisition, and budget 
processes are clearly defined and include integrated reviews that 
enable cohesive coordination across all areas. For example, USAF Review 
Boards (AFRBs), Acquisition Strategy Panels (ASPs), Air Force 
Requirements Oversight Council (AFROCs), and Configuration Steering 
Boards (CSBs), provide oversight forums with representation from the 
requirements, acquisition, and budget communities.
    In addition, CSAF holds regular meetings with the SAE, most notably 
Quarterly Acquisition Program Reviews (QAPR) and Key Acquisition 
Program updates. These engagements afford the CSAF opportunities to 
advise the SAE on important matters where warfighting requirements and 
priorities associated with capability gaps have the potential to affect 
acquisition strategies and other acquisition efforts. The CSAF's 
involvement in the acquisition process is critical in order to ensure 
military needs are met.
                         acquisition workforce
    9. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what are the biggest challenges your service faces 
in improving the professionalism of the acquisition workforce; in 
particular those supporting the acquisition of major weapon systems? 
Are there certain skills that you believe need more emphasis than 
others such as program management, contracting, or engineering?
    Ms. Shyu. Over 50 percent of the Army Acquisition Workforce (AAW) 
will be eligible to retire within 10 years. Combined with an average 
annual attrition rate of approximately 8 percent, the Army is quickly 
losing invaluable institutional knowledge and demonstrated acquisition 
skills. Additionally, since 2012, we have experienced a relative 
slowdown in overall hiring, particularly in the hiring of college 
graduates, due to budgetary and manpower constraints. We currently 
average less than 100 new graduate hires per year under the age of 26. 
This means that we risk losing an opportunity for the future workforce 
to be coached and mentored by those with the greatest depth and breadth 
of experience.
    Within this context, we must remain focused on recruiting, 
developing, and retaining individuals with critical acquisition skill 
sets in order to provide the Army essential capabilities for continued 
success. The Army must ensure it has the appropriate depth and 
expertise within critical functional areas, to include software 
engineering, contracting, and systems engineering. To that end, the 
Defense Acquisition Workforce Development Fund provided under Section 
852, USC 10, is a critical and necessary enabler to maintain a trained 
and professional workforce.
    I am also working to strengthen our pipeline of future acquisition 
leaders by equipping them with the requisite capabilities and 
qualifications to assume positions of greater responsibility through 
investments in leader development and talent management. To this end, 
we have instituted a civilian talent management process benchmarked 
from industry to identify high performing/high potential talent early 
and provide them with varied experiences to develop breadth and depth 
to meet our future leader needs. We have also initiated work to 
establish stronger professional qualification requirements for all 
acquisition specialties. We are working to strengthen the technical 
proficiency of Program Managers responsible for managing Major Defense 
Acquisition Programs by incorporating technical criteria into our 
accessions and Central Selection Program Manager slating guidance. By 
developing competent and innovative future acquisition leaders, we will 
build capacity and capability for the Army enterprise.
    Mr. Stackley. A major challenge the Navy faces is retaining our 
acquisition professionals after a considerable investment in their 
development. Sequestration, workforce reductions, pay and hiring 
freezes, pay systems (GS vs. pay for performance), and military 
turnover are all challenges facing the acquisition workforce. The Navy 
is focusing professional development efforts on critical technical and 
business skill sets in program management, contracting and engineering. 
The permanent continuation of the Defense Acquisition Workforce 
Development Fund (DAWDF) will be critical to our ability to stay the 
course and continue to develop a skilled and experienced acquisition 
corps. For example, the Navy has used DAWDF to hire 1,590 entry and 
associate level employees over the past five years in order to bring in 
the right talent for the workforce of the future. To expand the 
workforce's professional education, the Navy established the 
``Understanding Government-Industry Relationship'' course for current 
Program Managers and Deputy Program Managers and a Master of Science in 
Contract Management curriculum for the Contracting career field. In the 
engineering realm, the Navy utilizes the Master's degree programs at 
numerous universities across the nation. The Acquisition Demonstration 
Project is helpful in hiring, training, and retention. It also provides 
flexibility to move personnel to support the most critical areas. 
Therefore, to remove the challenge of the current pay systems, the Navy 
supports making the Acquisition Demonstration Project permanent.
    Maintaining the right level of workload for the Navy Laboratory and 
Warfare Centers is also a challenge that the Navy continues to 
carefully manage and is directly tied consistently maintaining the 
workforce with the right skills. The ability to transform military 
requirements into material solutions comes from education and hands-on 
experience. Providing the right job experiences to transform journeymen 
into experts is critical in maintaining a technological edge. The 
future weapon systems are being developed today and the acquisition 
workforce that has hands-on experience and insight will ensure 
competence and integrity of the Defense acquisition system but only if 
the pipeline of experience can be maintained through budget 
uncertainties.
    Lastly, acquiring the current expertise that resides in industry 
has been a challenge and could be addressed with a one year personnel 
exchange agreement pilot program. The exchange would allow the Navy to 
benefit from the knowledge of industry innovation, business 
streamlining and understanding of industry challenges.
    Dr. LaPlante. Within our acquisition workforce framework, we 
consider the examples you listed, program management, contracting and 
engineering, to be broad functional areas that require the development 
of people with specific sets of skills and competencies related to that 
function. The elements of the acquisition process being performed at a 
point in time, based on the phase and needs of the specific program, 
drive requirements for personnel with specific skills and expertise 
within a functional area.
    While program management, contracting and engineering represent the 
largest portions of the workload required to execute Government 
responsibilities for a major weapon system program, we also can't 
neglect the expertise the Program Manager requires from acquisition 
professionals specialized in financial management, information 
technology, production and manufacturing management, quality assurance, 
life cycle logistics/product support management, cost estimating and 
test and evaluation. Each of these functional areas requires its own 
set of skills and competencies which must be developed by appropriate 
education, technical training and years of experience.
    To have the pool of people required to match people to positions 
within our program offices, the Air Force deliberately develops 
military and civilian acquisition professionals according to well 
defined career path models which serve as a guide for professional 
experience opportunities, education, and training. These career models 
provide ample opportunity and experience for acquisition professionals 
at all ranks, and provide a defined path to greater rank and 
responsibility within the acquisition workforce. The development of 
acquisition workforce members is enhanced by the use of Career Field 
Development Teams consisting of senior leaders from within each Career 
Field. Using published career path models as a guide, the Development 
Teams provide tailored developmental guidance to individuals based on 
their past record of training, education and experiences.
    We have used the Defense Acquisition Workforce Development Fund 
(DAWDF) established by Congress (10 USC Sec.  1705) to address 
professional currency needs and gaps in acquisition technical training, 
developing application skill courses at the Air Force Institute of 
Technology that complement and build on the foundational certification 
training provided by Defense Acquisition University. Examples include 
courses in Cost Estimating, Test and Evaluation, Developmental 
Planning, Human Systems Integration, Technical and Manufacturing 
Readiness, as well as project management and business acumen. DAWDF has 
also enabled us to build a robust Tuition Assistance program for 
acquisition professionals, enabling them to further their education in 
acquisition-related fields--a tool for increasing professionalism as 
well as retention.
    I believe there are certain skills we need to emphasize across all 
of the acquisition functional areas to help our people apply their 
acquisition technical training more effectively. These include critical 
thinking, business acumen, and understanding industry perspective. We 
have been using the Defense Acquisition Workforce Development Fund to 
develop and improve training in these areas, and continue to work 
closely with OSD(AT&L) and Defense Acquisition University on courses 
addressing these needs. Our talent management and force development 
programs are designed to ensure personnel exercise what they learn from 
formal training as they progress through varying assignments of 
increasing responsibility over the course of their acquisition careers.
                       approach to cost overruns
    10. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, Department of Defense weapons systems have often 
been plagued by huge cost overruns, schedule slippages, and performance 
shortfalls. In response to problems like this, recent acquisition 
reform efforts have been focused on not moving forward on a program 
until there are realistic cost estimates, mature technology, and stable 
requirements and budgets. Does this approach force more programs to be 
incremental in their acquisition approach? If so, what about cases 
where there is a pressing need for revolutionary innovation? How should 
these efforts be managed and funded?
    Ms. Shyu. Historically, defense acquisition reform efforts have 
focused on adding oversight to ensure that cost overruns or schedule 
delays experienced by programs do not recur in future efforts. However, 
these additional layers of oversight turn into larger bureaucratic 
hurdles that Program Managers must leap, expending resources and adding 
time to successfully achieve milestone decisions. The recent language 
put forth by the HASC and Chairman Thornberry attempts to streamline 
the process by reducing redundant and overly-bureaucratic documentation 
requirements while maintaining a broad focus on risk reduction. These 
provisions incentivize the Department to instead focus efforts on 
reducing technological risk, building realistic cost estimates, and 
stabilizing funding.
    This approach does not force programs to be incremental, but allows 
program managers more flexibility to utilize an incremental approach 
where appropriate. Incremental acquisition can increase competition and 
thereby reduce overall costs for programs. By employing a modular, open 
architecture approach, the Department can take advantage of rapid 
technological development in private industry more quickly, rather than 
waiting for entire systems to be modernized over several years.
    By incentivizing program managers to tailor their acquisition 
approach and focus their efforts on reducing programmatic and technical 
risk, the Department can more quickly leverage technological 
breakthroughs in industry and incorporate these advancements into our 
weapon systems.
    Mr. Stackley. The DON designed its acquisition process, commonly 
referred to as the Navy Gate Review process, to ensure there is no gap 
between the Requirements and Acquisition organizations so that the Navy 
understands the relationship between requirements, technical 
feasibility, and cost. The process requires the Navy/Marine Corps 
operational requirements leadership and acquisition leadership to 
agree, and repeatedly affirm that the agreement throughout the 
development, acquisition, and sustainment of a system. The DON uses 
Gate Reviews to eliminate any misalignment between requirements and 
acquisition early in a program, and to check alignment regularly.
    This process provides governance and oversight, and ensures 
adherence to the DON's basic principles to get the requirements right, 
perform to a stable plan, make every dollar count, rely on an 
experienced acquisition workforce, and foster a healthy industrial 
base. Performing to a stable plan (stable requirements, designs and 
budgets) translates into predictable, reliable performance, unit cost 
reduction, improved material purchasing and workforce planning, 
retention of skilled labor and the ability for industry to invest in 
facility improvements, all resulting in more efficient production and a 
more affordable program. While proceeding with a stable plan is the 
preferred approach for an affordable program, the Gate Review process 
is designed to ensure the warfighter requirements are well understood, 
including technical feasibility with associated levels of technical and 
cost risk where there is a pressing need to proceed in advance of a 
stable design for a capability.
    Separately the Department has access to rapid acquisition 
processes. The DON has assigned a Deputy Assistant Secretary of the 
Navy (Research, Development, Test and Evaluation) to explore methods 
and opportunities to effectively expand upon existing processes and 
improve our responsiveness to urgent needs.
    Dr. LaPlante. Yes. Depending on the urgency of need for specific 
validated weapon system requirements, anticipated technological 
maturity and full funding support, the incremental acquisition approach 
reduces program risk and may be more appropriate. In order to have 
higher confidence in cost and schedule estimates, we need to ensure we 
use mature technology. Sometimes technology is not mature enough to 
deliver all warfighter capability requirements in a single increment. 
Therefore, it makes more sense to breakup programs into increments to 
take advantage of mature technology while maturing technology in 
parallel for incorporation into future increments to meet the full-up 
capability requirements. Using the incremental approach allows us to 
have higher confidence in our cost and schedule estimates because we 
have a better understanding of the technology and technical risks.
    In addition, the 2014 Air Force Strategy highlights the 
foundational principles of Strategic Agility and Adaptability, which 
places emphasis on fielding systems more rapidly and building resilient 
systems that are inherently resistant to predictive failure. Hallmarks 
of agility/adaptability include modular systems, the use of block 
upgrade approaches to system fielding, and the use of open system 
architecture designs. These techniques help to shorten development 
cycle times, allowing for increased performance beyond legacy systems 
with the rapidly fielded ``A-model'' design of the system. Such systems 
are designed for later modular upgrades/enhancements (block upgrades) 
to the initial baseline design. Additionally, reevaluating technology 
that can be infused into systems and address the threats which systems 
are designed to face is prudent throughout the system's lifecycle and 
allows several on-ramps for new technology and off-ramps for obsolete, 
or ineffective, programs.
    That being said, the DOD acquisition system does provide for cases 
where there is a pressing need for revolutionary innovation. The 
revised DODI 5000.02, Operation of the Defense Acquisition System, 
presents several tailored acquisition processes, which allow multiple 
paths for the services to rapidly field capabilities incorporating new 
technologies. These efforts should take advantage of the flexibility 
allowed per DODI 5000.02 to get the capability to the warfighter as 
soon as possible while considering long-range sustainment 
considerations to ensure the system is sustainable in a cost-effective 
manner.
    Finally, under the Joint Urgent Operational Need (JUON) and 
emerging needs processes, there is a formal Warfighter Senior 
Integration Group (SIG) to identify urgent issues and a Secretary of 
Defense Rapid Acquisition Authority (RAA) Determination to rapidly 
field systems.
             lowest price technically acceptable contracts
    11. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, There has been a recent trend to buy more products 
through Lowest Price Technically Acceptable (LPTA) and reverse auction 
acquisition methods. I have become aware of cases where these methods 
have even been used for the development of personal protective 
equipment where safety and quality are critical and the failure of the 
item could result in combat casualties.
    Our troops who put their lives on the line for our freedom and 
security should not be sent into harm's way with the cheapest 
equipment--they should go with the best equipment. In combat, as well 
as in training, quality personal protective equipment can prevent 
serious injuries and even be the difference between life and death for 
our service members.
    My understanding is that the Army utilized LPTA and Reverse Auction 
procedures to award contracts for the lighter, next generation combat 
helmet. For the past year and a half, the Army has been unable to 
procure these combat helmets because none of the companies that were 
awarded contracts have been able to pass ballistic requirements while 
meeting the pricing that is a direct result of the LPTA bidding 
process. This has resulted in a new-helmet production delay, and 
currently the domestic helmet supply chain is struggling.
    As the Department considers comprehensive defense acquisition 
reform, I continue to be concerned about the use of Lowest Price 
Technically Acceptable (LPTA) contracts for specialized gear.
    In your opinion, when are LPTA and reverse auction methods 
appropriate and when are they not?
    Ms. Shyu. When used in the appropriate circumstances, and combined 
with effective competition and proper contract type, LPTA and reverse 
auction methods can drive down costs without jeopardizing contract 
performance. These approaches are best suited to the procurement of 
commercial and non-complex services and supplies (commodities or 
commodity-like products that have well-defined specifications and 
universally accepted standards).
    The LPTA source selection method is appropriate to apply when there 
are well-defined requirements, the risk of unsuccessful contract 
performance is minimal, where price is a significant factor in the 
source selection, and where there is neither value, need, nor 
willingness to pay for higher performance. When the Warfighter is 
willing to pay more for performance and may benefit from an innovative 
and technologically superior solution to meet mission needs, a tradeoff 
source selection process is more appropriate than LPTA.
    Use of the LPTA source selection method does not relax contract 
quality assurance requirements or quality standards. Offerors are 
required to provide evidence that their products meet the quality 
requirements set by the Government and identified in the solicitation. 
In the case of the Army Combat Helmet (ACH), the Defense Logistics 
Agency (DLA) awarded the initial contract in 2009 using the best-value 
tradeoff source selection process. Following the development of the 
initial ACH, DLA determined the requirements for the follow-on Light 
Weight ACH (LWACH) were well defined to support awarding a follow-on 
LPTA contract. The LWACH Performance Document included specific 
ballistic and non-ballistic requirements and test criteria to determine 
whether vendor's helmets met or exceeded the requirements. The 
technical evaluation portion of the LPTA analysis required submission 
and analysis of the ballistic test reports. To date, there are no new 
procurement actions, planned or in process, for the ACH or LWACH.
    Reverse auctioning is a technique wherein multiple vendors compete 
to obtain business from the Army. The prices offered by the vendors 
will typically decrease as the sellers compete against one another, 
allowing the Army to obtain commercial goods and services at a lower 
price than might otherwise be obtained.
    The Army is pursuing multiple initiatives to ensure contracting 
professionals are trained on the appropriate use of LPTA and reverse 
auctions. The Army Contracting Command (ACC), in conjunction with the 
Office of the Deputy Assistant Secretary of the Army (Procurement), 
will release an LPTA Quick Reference Guide and additional training to 
ensure contracting personnel across the Army enterprise understand how 
to appropriately use LPTA. Both the LPTA Guide and training materials 
are expected to be published in September 2015. Additionally, the ACC 
has established Source Selection Support Centers of Excellence, which 
consist of subject matter experts and practitioners who support the 
source selection process and facilitate development of source selection 
skills across the workforce. Senior acquisition professionals provide 
source selection training to their junior counterparts at these ACC 
centers. Training includes review of appropriate situations for use of 
LPTA, coaching and mentoring, and providing real-time review and 
assistance for planned and ongoing source selections.
    The Army is also proactively working with defense policy officials 
to develop proposed Defense of Department Federal Acquisition 
Regulation Supplement language that will standardize application of 
reverse auction practices across the Department of Defense. Until this 
language is published, the Army continues to engage with contracting 
organizations to advise on the best use of reverse auction practices.
    Mr. Stackley. Reverse auction methods are another tool in our 
acquisition toolbox. The use of Lowest Price Technically Acceptable 
(LPTA) is used in some cases for reverse auction acquisitions. Within 
the Navy, the Reverse Auction Program is led by the Naval Supply 
Command (NAVSUP). Navy utilizes reverse auctions primarily for service 
contracts that fall under the $150,000 simplified acquisition 
threshold. Approximately 80 percent of the awards made under the 
reverse auction program are awarded to small business. It has been our 
experience that using LPTA within the reverse auction program for 
service contracts is a great value to the Government, while encouraging 
and bolstering small business participation.
    Dr. LaPlante. LPTA is the appropriate source selection process to 
apply only when there are well defined requirements, the risk of 
unsuccessful contract performance is minimal, price is a significant 
factor in the source selection, and there is neither value, need , nor 
willingness to pay for higher performance. Well-defined requirements 
equates to technical requirements and ``technical acceptability'' 
standards that are clearly understood by both industry and Government, 
are expressed in terms of performance objectives, measures, and 
standards that map to our requirement documents, and lend themselves to 
technical evaluation on an acceptable/ unacceptable basis. LPTA is most 
appropriate when best value is expected to result from the selection of 
the technically acceptable proposal with the lowest evaluated price. 
LPTA has a clear, but limited place in the source selection ``best 
value'' continuum. Used in appropriate circumstances and combined with 
effective competition and proper contract type, LPTA can drive down 
costs and provide the best value solution. No single source selection 
process is right for every acquisition.
    If we have tradable requirements, then we should pursue use of an 
appropriate tradeoff process and LPTA may not be an appropriate 
selection methodology. Whenever the Warfighter is willing to pay more 
for above threshold requirements or performance standards and might 
benefit from an innovative and technologically superior solution to 
meet their mission needs, a tradeoff source selection process between 
cost or price and non-cost factors is optimal. In these situations, the 
Department should share in advance with industry our technical 
requirements and communicate the monetary value of performance above 
the threshold or performance standards for evaluation purposes. 
Industry will understand the value proposition and can clearly propose 
to meet our needs with a cost-effective and innovative solution.
    Use of Reverse Auction is appropriate when the specification can be 
clearly and accurately defined, when there is sufficient capacity in 
the market, and there are many qualified suppliers. Reverse Auction may 
be used for a broad range of requirements for both products and 
services and, used appropriately; Reverse Auction can stimulate 
competition and determine a market price. Successful Reverse Auction 
acquisitions focus on the market that exists rather than the product or 
service. Advance preparation is critical and thorough market research 
is essential to mitigate risks such as a failed market (no bidders), 
technology failure, collusion, and damage to supplier relationships. 
The Air Force must know its business.
    While the Air Force utilizes Reverse Auction on a limited basis for 
commodities that have clear specifications and lowest price is the only 
determining factor for award, the majority of Air Force purchases 
require more complex methods of evaluation.

    12. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, please explain how the Department plans on moving 
away from LPTA and towards the use of Best Value contracting 
mechanisms, where such things as quality and past performance are 
considered when awarding a contract.
    Ms. Shyu. When used in the proper circumstances, and combined with 
effective competition and proper contract type, the LPTA source 
selection method can offer a streamlined and simplified source 
selection approach to rapidly procure commercial and non-complex 
services and supplies while saving taxpayer dollars.
    The LPTA source selection method is appropriate to apply when there 
are well-defined requirements, the risk of unsuccessful contract 
performance is minimal, where price is a significant factor in the 
source selection, and where there is neither value, need, nor 
willingness to pay for higher performance. When the Warfighter is 
willing to pay more for performance and may benefit from an innovative 
and technologically superior solution to meet mission needs, a tradeoff 
source selection process is more appropriate than LPTA.
    The Army has undertaken several efforts to address concerns and 
continuously improve our use of the LPTA source selection method. 
First, the Army Contracting Command (ACC), in conjunction with the 
Office of the Deputy Assistant Secretary of the Army (Procurement), 
will release a Quick Reference Guide and additional training to ensure 
contracting personnel across the Army enterprise understand how to 
appropriately use LPTA. Both the LPTA Guide and training materials are 
expected to be published in September 2015. Additionally, the ACC has 
established Source Selection Support Centers of Excellence, which 
consist of subject matter experts and practitioners who support the 
source selection process and facilitate development of source selection 
skills across the workforce. Senior acquisition professionals provide 
source selection training to their junior counterparts at these ACC 
centers. Training includes review of appropriate situations for use of 
LPTA, coaching and mentoring, and providing real-time review and 
assistance for planned and ongoing source selections.
    Mr. Stackley. The Lowest Price Technically Acceptable (LPTA) method 
is one of the tools in the Best Value Continuum, and when used in 
appropriate circumstances, combined with effective competition and 
proper contract type, can provide the best value solution. The first 
prerequisite to use of LPTA is a firm understanding of what constitutes 
``technically acceptable.'' The DON, in conjunction with Better Buying 
Power initiatives, continues refining the guidance for appropriate use 
of LPTA in the Best Value Continuum.
    Dr. LaPlante. For those acquisitions where the Warfighter is 
willing to pay more for above threshold requirements or performance 
standards and will benefit from an innovative and technologically 
superior solution to meet their mission needs, a Lowest Priced 
Technically Acceptable (LPTA) methodology is not appropriate. LPTA has 
a clear, but limited place in the source selection ``best value'' 
continuum for commercial or non-complex services or supplies which are 
clearly and objectively defined. We will continue to scrutinize all 
source selection plans to assure LPTA is used only in the very limited 
circumstances under which it is appropriate.
                                 ______
                                 
                Questions Submitted by Senator Mike Lee
                              sustainment
    13. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, the majority of a weapons system's cost is often 
not found in the initial development and procurement phases, but in the 
logistics and sustainment of such equipment throughout the duration of 
its service. This is especially important to consider as the rapid 
development of technology outpaces the ability to develop and acquire 
new systems. Can each of you discuss how your respective branches are 
working to incorporate lifecycle concerns into the acquisitions process 
and how you are achieving efficiency and acquiring a better product 
through this coordination?
    Ms. Shyu. The Army recognizes that sustainment represents a 
significant portion of a system's total lifecycle cost. Accordingly, 
the Army has taken steps to ensure that lifecycle factors are 
considered throughout the acquisition process.
    First, the program manager is required to develop and update a 
sustainment strategy in a Life Cycle Sustainment Plan (LCSP) throughout 
the life of the system. The LCSP captures the robust analysis conducted 
to determine the optimum sustainment strategy, and is updated at each 
milestone. The sustainment strategy and LCSP are developed under the 
leadership of the program manager's Product Support Manager (PSM) who 
is an expert in integrating the sustainment strategy with the system 
design to achieve effectiveness and affordability. In addition, PSMs 
conduct analyses of product support alternatives to determine the 
optimal product support approach while considering cost and risk for 
each support alternative. These processes are designed to ensure that 
sustainment planning remains an important consideration throughout the 
program lifecycle.
    Second, the Army conducts robust reviews at program milestones to 
address sustainment concerns on major systems. Examples of these 
reviews include the Integrated Product Support Review, which assesses 
the readiness and acceptability of the sustainment strategy prior to 
Milestone Decision Reviews, the Independent Logistics Assessment, where 
an expert, independent team assesses the thoroughness of the 
sustainment strategy and whether sufficient resources are available to 
execute the strategy, and a Sustainment Review that assesses actual 
execution of the sustainment strategy.
    Third, the Assistant Secretary of the Army for Acquisition, 
Logistics and Technology and the Army Materiel Command Commanding 
General conduct quarterly Joint Acquisition and Sustainment Reviews. 
These meetings facilitate discussion among key leaders from the 
acquisition and sustainment communities and enable the frank and open 
debate of the Army's strategic materiel sustainment issues. Each of 
these efforts ensures that lifecycle sustainment considerations are 
incorporated in program development to achieve better efficiency and 
acquire better products.
    Mr. Stackley. DON's Program Managers address basic principles to 
get the requirement right, perform to a stable plan, and make every 
dollar count at each Gate Review wherever they are in their program's 
life cycle so that sustainment and its associated costs are no longer 
an afterthought. The DON Gate Review process was designed to ensure 
there is no gap between requirements and acquisition organizations, and 
that cost and affordability are managed with the same discipline and 
rigor as traditional performance requirements.
    DON acquisitions emphasize stable designs as well as modularity and 
open architecture to reduce cost, extend service life, and increase 
acquisition agility, including a focus on operating and support (O&S) 
cost early in design. Earlier engagement on O&S and disposal costs 
enables Program Managers to more fully evaluate system affordability 
and possible trade space leading to better understanding of Total Cost 
earlier in the process, which in turn allows better informed decisions. 
The DON's Program Managers are tasked with understanding what drives 
those costs and formulating a `should cost' strategy to meaningfully 
reduce program cost or risk without substantively impacting key 
requirements regardless of what phase the program is in.
    Dr. LaPlante. The Air Force highlights sustainment planning early 
in acquisition planning and during the systems engineering process. 
These sustainment considerations are addressed in the Life Cycle 
Sustainment Plan (LCSP) and reviewed at every milestone review 
throughout a systems' lifecycle. We have identified Product Support 
Managers for every acquisition program that ensures sustainment 
requirements are considered as part of every review and integrated with 
the other functional areas. We are coordinating with other services in 
joint programs to leverage strategic agility within the acquisition 
process to inject new technologies into weapon systems when it makes 
sense and is affordable. The Air Force will achieve further 
efficiencies by implementing OSD AT&L's Better Buying Power (BBP) and 
applying our own Bending the Cost Curve (BTCC) initiative. BTCC begins 
with having an in-depth grasp of how much various design options will 
ultimately cost--not just to build, but to operate--and what potential 
trade space we have. Additionally, our focus on owning the technical 
baseline emphasizes to Program Managers the need to understanding of 
all aspects their systems and processes--beyond schedule and financial 
management and regardless of where program is in its maturity. This 
includes considering key lifecycle attributes such as interface 
definition and data rights early and throughout a programs lifecycle. 
These initiatives are supported by organizational changes that better 
align authorities with the responsibilities of lifecycle management. 
First, Air Force Material Command reorganized into a 5-center construct 
which created a ``lead'' center for each of AFMC's five mission areas 
(life cycle management, sustainment, test and evaluation, research and 
development and nuclear support). That consolidation made us more 
efficient and effective as an acquisition enterprise by aligning all 
program management authority across a system's entire life cycle--
cradle to grave--to an accountable program manager in the Life Cycle 
Management Center. As a result of the insight now provided, PEOs are 
empowered to drive down sustainment costs during all phases. The second 
major organizational change was to re-align Air Staff product support 
functions under SAF/AQ. This resulted in the establishment of a ``Total 
Life Cycle construct'' presenting opportunities to simplify lines of 
authority and eliminate process redundancies.

    14. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, the concept of ``acquisitions reform'' has been 
around for many decades, however we have witnessed major weapons 
programs taking a longer time to develop with greater cost and risk to 
taxpayer money. The GAO recently reported that lost buying power over 
the past year created $2.2 billion in additional costs to the 
Department and increased deliver capability by over a month. What are 
the primary and most realistic goals that we should be setting with any 
new acquisitions reform, and significantly, how do you find the balance 
between holding contractors accountable for costs and not waste funding 
on unneeded equipment while preserving the vital parts of the defense 
industrial base?
    Ms. Shyu. Our acquisition system must always balance two permanent 
objectives: delivering dominant warfighting capabilities to our 
Soldiers while ensuring the prudent and efficient use of taxpayer 
resources. To achieve these objectives, the Army must prioritize two 
key efforts, which work in tandem to help us deliver successful 
acquisition outcomes while serving as proper stewards of taxpayer 
resources.
    First, we must continue to recruit, develop, and retain an 
experienced, skilled acquisition workforce. The development and 
retention of talent in acquisition disciplines is an essential 
ingredient to accountability and effectiveness in the acquisition 
system. We must remain focused on recruiting, developing, and retaining 
individuals with critical acquisition skill sets in order to provide 
the Army essential capabilities for continued success. To that end, the 
Defense Acquisition Workforce Development Fund (DAWDF) provided under 
Section 852, of title 10, is a critical and necessary enabler to 
maintain a trained and professional workforce. Additionally, we have 
instituted a civilian talent management process benchmarked from 
industry to identify high performing/high potential talent early and 
provide them with varied experiences to develop breadth and depth to 
meet our future leader needs. By developing competent and innovative 
future acquisition leaders, we will build capacity and capability for 
the Army enterprise.
    Second, any efforts to institute reform must also focus on 
simplifying and streamlining rules and processes while retaining 
emphasis on sound program planning and risk mitigation. To this end, 
the Department submitted several proposals last year designed to reduce 
redundant documentation, place greater emphasis on sound acquisition 
planning, and broaden the established practices for risk reduction. 
While our acquisition process employs a wide range of practices and 
reviews to promote accountability by contractors in the performance of 
our programs, their role must be informed by the need for flexibility 
by our program managers to identify and mitigate risks across our 
programs. If enacted, these proposals will balance sufficient oversight 
of contractors and program performance with the program manager's 
ability to tailor strategies to meet the risks and goals of each 
specific program.
    Mr. Stackley. The DON designed its acquisition process, commonly 
referred to as the Navy Gate Review process, to ensure there is no gap 
between the Requirements and Acquisition organizations so that the Navy 
understands the relationship between requirements, technical 
feasibility, and cost. The process requires the Navy/Marine Corps 
operational requirements leadership and acquisition leadership to 
agree, and repeatedly affirm that the agreement throughout the 
development, acquisition, and sustainment of a system. The DON uses 
Gate Reviews to eliminate any misalignment between requirements and 
acquisition early in a program, and to check alignment regularly.
    This process provides governance and oversight, and ensures 
adherence to the DON's basic principles to get the requirements right, 
perform to a stable plan, make every dollar count, rely on an 
experienced acquisition workforce, and foster a healthy industrial 
base. Performing to a stable plan (stable requirements, designs and 
budgets) translates into predictable, reliable performance, unit cost 
reduction, improved material purchasing and workforce planning, 
retention of skilled labor and the ability for industry to invest in 
facility improvements, all resulting in more efficient production and a 
more affordable program.
    Dr. LaPlante. The most important goal with new acquisition reform 
is to ensure we work together to prevent unintended bureaucratic 
consequences of new legislation before we make it into law.
    To help control cost and schedule, the Air Force supports 
increasing use of incentive type contracts, where appropriate. The 
Better Buying Power 3.0 memorandum contains an initiative titled 
``Employ appropriate contract types, but increase the use of incentive 
type contracts'' acknowledging the use of Cost Plus Incentive Fee 
(CPIF) and Fixed Price Incentive Firm (FPIF) contracts was highly 
correlated with better cost and schedule performance. The Under 
Secretary of Defense (Acquisition, Technology & Logistics) (USD(AT&L)) 
encourages the use of ``formulaic incentives'' contracts, where the 
impact of overruns and underruns are shared between the industry and 
Government based on a formula established in the contract that 
explicitly ties the contractor's cost or benefit to performance.
    In addition the Air Force is paying close attention to 
requirements, making sure they remain stable throughout the programs 
development phase. This will help keep contractor and Government costs 
down. Further, the Air Force supports Government and defense industry 
determination of the minimum viable defense industrial base required to 
support national security (sector-based and not company specific).

    15. Senator Ayotte. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, in a January 22 report, the Defense Business Board 
highlighted what they believed to be $125 billion dollars in savings 
that can be achieved over the next five fiscal years through a series 
of business practice recommendations. The biggest potentials for 
savings they identified were through more rigorous negotiations for 
contract goods and the retirement and attrition of civilian and 
contract workers. Have each of you had the opportunity to review this 
report, and what type of positive or negative impacts do you believe 
recommendations such as these could have on the acquisitions process?
    Ms. Shyu. The Defense Business Board's report, titled 
``Transforming DOD's Core Business Processes for Revolutionary 
Change,'' concludes that approximately $46-89B in savings can be 
achieved through optimization of contract spending. Specifically, the 
report recommends more rigorous vendor negotiations, aggregating spend 
to gain economies of scale, and reducing contract duplication. To this 
end, the Army is pursuing efficiencies and cost savings through many 
initiatives consistent with the report. In 2012, the Army implemented 
the Services Acquisition Implementation Plan to improve services 
acquisition oversight, management, and execution, with the ultimate 
goal of achieving five percent annual savings on service contracts. At 
the conclusion of fiscal year 2014, the Army's commands reported 
approximately $1.6B in savings as a result of implementing the 
optimization plan.
    As the Department continues to assess the findings and 
recommendations in the report, the Army will pursue efficiencies and 
cost savings through these efforts.
    Mr. Stackley. As noted, an experienced acquisition workforce is the 
single-most important fundamental in achieving strong, repeatable 
performance in Defense Acquisition. Our experience has shown us that 
the best acquisition outcomes are produced by the most experienced 
acquisition people, both in technical knowledge and business acumen. 
The focus on potential for savings through retirement and attrition of 
civilian workers with limited backfill raises concerns because it 
includes reductions in procurement and logistics which are key parts of 
the acquisition workforce that DON is working hard to restore. Since 
implementation of WSARA, the DON has modestly restored our acquisition 
workforce to where we believe it needs to be to support our programs 
while we are continuing to train and rebuild our acquisition workforce 
that supports our fielded systems, and supports our installations and 
our Sailors and Marines.
    Dr. LaPlante. Yes, I have read the report and do not see any 
positive outcomes from the recommendations to the acquisition processes 
for the following reasons:

      The report recommends creating Contract Optimization 
teams responsible to analyze and renegotiate the top 20-50 contracts in 
each major category. If the analysis and renegotiation were plausible, 
an endeavor of this magnitude would hurt an already overworked and 
understaffed acquisition community.
      o  The report suggests the team utilize part time expertise of 
Program Managers (PM), Contract Officers (CO), and Functional Sponsors. 
Contracting Officers are the only profession legally able to obligate 
the Government and are supported by PMs and functional sponsors with 
full time obligations.
      o  The report does not specify the members or disciplines of the 
150 full-time equivalents required to serve in a full time capacity 
with the Contract Optimization team. However, the PM's, CO's, or 
functional sponsors are not part of the core team.
      o  The report proposes a rack and stack of top contract 
categories to renegotiate based on size, complexity and contract terms 
without taking into consideration mission-critical requirements. Many 
services coded under the Knowledge Based Services portfolio are direct 
mission support. For example: System Engineering efforts performed by 
Original Equipment Manufacturer (OEM) in support of sustaining and 
flying a much older aircraft fleet than originally envisioned.
      The report identifies a 29 percent reduction in DOD 
workforce by managing retirements/attrition with limited backfills that 
could result in $50+ billion in total savings.
      o  Cuts leveraged through Human Resources (HR) have impacted the 
organization's ability to effectively manage the workforce based on the 
current environment.
      o  As it pertains to the acquisition process, civilian fill-
actions do not meet current hiring demands. The slow speed of the 
hiring system actually causes us to miss out on many high caliber, high 
capacity candidates and leaves positions vacant for long periods. More 
and better HR capacity is needed at this time, not less.
      o  As we work to stay in line with industry while supporting our 
warfighters, the reductions imposed on the HR system limit the ability 
to bring in ``appropriately skilled'' IT experts to keep DOD current 
with ever changing technology.
                                 ______
                                 
             Questions Submitted by Senator Jeanne Shaheen
                           acquisition reform
    16. Senator Shaheen. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, small businesses drive technological innovation and 
generate new ideas to benefit the defense industry. I am concerned that 
small businesses that develop new technology, or that improve existing 
technology that may reduce costs, often face barriers to entry in the 
defense acquisition system. What kind of reforms are necessary to allow 
small businesses to share their ideas and new technology and how do we 
reduce barriers to new entrants?
    Ms. Shyu. Small businesses foster innovation, but the risk and 
expense of conducting independent research and development can be 
present significant challenges to many small businesses. To assist 
these types of small businesses, the Army employs several efforts 
designed to attract small business innovation. The Small Business 
Technology Transfer (STTR) and Small Business Innovation Research 
(SBIR) programs allow small, technology-focused businesses to provide 
innovative research and development solutions in response to critical 
Army needs. The STTR program requires small businesses to formally 
collaborate with a large research institution, which combines the 
strengths of both entities and allows small businesses to leverage the 
infrastructure and expertise of larger institutions. The SBIR program 
is a highly competitive, awards-based program that encourages domestic 
small businesses to engage in research and development that has the 
potential for commercialization. The program encourages small 
businesses to explore their technological potential and provides the 
incentive to profit from its commercialization. This practice expands 
the Army's ability to leverage technological innovation from non-
traditional small businesses that face barriers to entry in the defense 
acquisition system.
    As part of Better Buying Power, the Army is working with the Office 
of the Secretary of Defense to make it easier for small businesses to 
work with DOD. While the SBIR program has been successful in helping 
small businesses make progress in early technology development, it has 
only been moderately successful in helping businesses transition from 
development to production. To that end, the Department provides 
outreach to educate small businesses on Federal contracting and 
provides assistance to small businesses and Government personnel to 
facilitate transition of promising technologies.
    Mr. Stackley. The barriers to entering the defense market remain 
high as the overhead cost of entering and operating in a unique, uneven 
and overly bureaucratic market discourages entrants, both large and 
small commercial companies. The DON recommends that that the Congress 
work with USD(AT&L) in the current effort to identify and roll back 
legislation that has produced unnecessary and redundant regulatory and 
reporting burdens on Program Managers.
    The DON, through the Office of Naval Research, has effectively used 
Broad Agency Announcements for research topics to encourage small and 
large companies to share and develop their ideas and new or improved 
technologies. For small businesses, the DON has effectively used the 
Small Business Innovation Research (SBIR) and Small Business Technology 
Transfer (STTR) program to encourage small businesses to share and 
develop their new or improved technologies. To encourage small business 
participation in our programs, the DON has assigned each Deputy Program 
Manager the responsibility to be the small business advocate for all 
things associated with the program.
    Dr. LaPlante. As small businesses develop and improve technology, 
there are innumerable barriers to overcome in entering the defense 
acquisition system. In an effort to continually increase the industrial 
base and support the sustainment of small business, the Air Force has 
identified several barriers whereby change can occur via reform. 
Specific barriers in need of reform include: Transparency & 
Communication, Intellectual Property, Facilities Clearances, Timelines, 
and Market Research
    Transparency & Communication: The lack of transparency and 
communication during the procurement process has the effect of 
isolating offerors and as a result perpetuates an overall sense of 
distrust for Government acquisition. To combat this, the Air Force 
inserts small business professionals into acquisition planning early on 
in the process to not only provide advice but also ensure that the 
small businesses are kept informed of the acquisition progress, 
therefore alleviating distrust. In an effort to increase communication, 
small business professionals consistently encourage businesses to 
respond to pre-solicitation notices. As a result of this communication 
during `open dialogue periods', small business have a voice in how the 
acquisition strategy is shaped and developed prior to issuance of the 
solicitation. Small business professionals also garner trust by 
prioritizing small business participation through early consideration 
of set-aside opportunities and ensuring a level playing field among 
bidders via early release of requirements documents and technical 
libraries. As a result of these efforts, the Air Force has seen an 
increase in small businesses participation via both set-aside and full 
& open competitive awards.
    Intellectual Property: As a result of recurring small business 
industry engagements, the Air Force has obtained feedback from small 
business that protections related to intellectual property, and more 
specifically data rights, are in need of reform. For example, many 
small businesses are concerned with ``protecting'' themselves from the 
risk of unlawful access to or theft of trade secrets after entering 
into contracts with large prime contractors. To mitigate the 
impediments posed by this barrier the Air Force continues to hold Small 
Business Industry Days to educate small business and encourage further 
protection intellectual property rights by: i) tracking and documenting 
development work; ii) disclosing inventions; iii) utilizing 
nondisclosure agreements; iv) protecting proposal information through 
proper marking; and v) marking all deliverable technical data and 
computer software appropriately.
    Facilities Clearances: Facility clearance requirements continue to 
pose a barrier to small business participation in Government 
acquisitions. For example, present security policies mandate that 
businesses have a contract in place to even become eligible for a 
facilities clearance, which oftentimes is a pre-requisite for 
consideration for contract award. Additionally, the large costs 
associated with obtaining secured facilities only compounds existing 
policy challenges. There is a pressing need to facilitate opportunities 
for small businesses to obtain access to classified programs, an area 
where small business technology capabilities are paramount. To date, 
there has been no collectively identified solution to alleviate this 
barrier to entry.
    Timelines: The lengthy timelines associated with Government 
acquisitions present a barrier to small business participation. For 
example, small businesses may not have the necessary resources to 
expend to prepare a proposal for an effort that will likely not be 
awarded within a reasonable timeframe. In response, the Air Force 
Research Laboratory Center for Rapid Innovation is using new pilot 
program authority to establish a Strategic Innovation component of the 
SBIR program to generate innovative, game-changing concepts. This 
includes expanding and encouraging the use of Other Transaction 
Authorities, Cooperative Research and Development Agreements, Open 
Challenges, and Small Business programs.
    Direct to Phase II Pilot: One of the efforts undertaken by the Air 
Force to reduce the burden on small business is a Small Business 
Innovation Research (SBIR) direct to Phase II pilot program. This 
program will provide full and immediate research and development 
support to small businesses with mature technologies and concepts, 
therefore shortening the timeline associated with these complex 
requirements. Not only will reduce the number of associated low dollar, 
short duration Phase I contracts issued, but also it will expedite 
technology transition and achieve a higher return on investment for 
small business.
    SBIR EZ Pilot: Another initiative to reduce the timeline and burden 
associated with joining the SBIR program is the piloting of SBIR EZ. 
SBIR EZ will enhance the current application process through intuition 
based technology, allowing small businesses to quickly submit 
applications, as well as reduce the paperwork associated with the 
current process.
    Overall, there is a need to shorten the timeline associated with 
Government acquisition and create a joint information environment to 
remove barriers to entry and make programs more accessible to small 
business.
    Market Research: As the Air Force continues facilitate and increase 
small business participation, a barrier has been identified in our 
ability to conduct data-driven market research. Data-driven market 
research allows the small business professional to utilize a central 
database to locate and connect with capable small businesses to meet 
warfighter needs. Existing IT tools and systems not only limit this 
ability, but also present significant challenges when attempting to 
acquire strategic and enterprise wide market intelligence. While there 
are pockets of activity throughout the Air Force to improve this 
capability, there is currently no central repository that will 
systematically address enterprise needs and challenges.

    17. Senator Shaheen. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, the Quadrennial Defense Review Independent Panel 
found that ``the fundamental reason for the continued underperformance 
in acquisition activities is fragmentation of authority and 
accountability for performance.'' Can you provide a few specific 
measures that can be taken streamline and tailor the acquisition 
process and give Program Managers more authority and flexibility?
    Ms. Shyu. Acquisition reform has been attempted many times over the 
last several decades. However, while prior efforts recognized that the 
complexity of processes and rules in the defense acquisition system can 
limit flexibility and add time and cost to the process of developing 
and fielding new warfighting capabilities, few focuses on streamlining 
the process. To that end, the Army has actively worked with both OSD 
and Congress to develop several legislative proposals specifically 
designed to streamline the acquisition process, reduce redundant 
documentation, provide flexibility to program managers, and place 
greater emphasis on sound acquisition planning. These changes would 
allow program managers to tailor effective program strategies to meet 
cost, schedule, and performance goals while balancing technical risks. 
If enacted, these proposals inject much-needed agility and flexibility 
into the process while maintaining robust oversight of taxpayer 
dollars.
    Mr. Stackley. Lessons learned from highly successful programs 
highlight that the right balance is attainable by applying the 
fundamental disciplines already known and available to each program 
manager, then exposing the products of that discipline to simplified 
oversight by an appropriate but limited number of highly experienced 
managers, engineers and business executives who serve at the Service 
Secretariat and OSD levels in policy oversight capacities. The DON 
recommends that that the Congress work with USD(AT&L) in the current 
effort to identify and roll back legislation that has produced 
unnecessary and redundant regulatory and reporting burdens on Program 
Managers which have the effect of thwarting the steady application of 
these fundamentals.
    Dr. LaPlante. The Air Force, in conjunction with the Under 
Secretary of Defense (Acquisition, Technology & Logistics) (USD(AT&L)), 
has extensively studied mechanisms to help streamline and tailor the 
acquisition process. Overall, we recommend Congress institute the 
USD(AT&L)-recommended set of legislative proposals for the 2016 NDAA, 
which seek to reduce additional reporting requirements imposed on the 
defense acquisition workforce. Many of those proposals are included in 
the House-passed version of the 2016 NDAA.
    We also recommend allowing USD(AT&L), the Service Acquisition 
Executive (SAE), or the Milestone Decision Authority (MDA) to waive or 
submit statutory tailoring of ACAT programs. MDAs will ensure tailoring 
is consistent with sound business practice and the risks associated 
with the product being acquired. Justification for waivers will be 
documented in Selected Acquisition Reports (SARs) and MAIS Annual 
Reports (MARs) and will be included as an attachment to Acquisition 
Decision Memorandums (ADMs). Termination SAR/MAR will contain Program 
Manager, Program Executive Officer, and MDA assessments of statutory 
items that provided resistance and/or delays in program success.
    USD(AT&L), via DODI 5000.02, already allows MDAs to tailor 
regulatory procedures in the document consistent with sound business 
practice and the risks associated with the product being acquired. 
Further, the Air Force is instituting mandatory maximum review 
timeframes for statutory acquisition procedures and documents.
    USD(AT&L) continues to pursue streamlining documentation 
requirements and staff reviews under Better Buying Power initiatives in 
order to eliminate unproductive processes and bureaucracy.

    18. Senator Shaheen. Secretary Stackley, you stated that Virginia-
class submarine procurement is an example of acquisition success. Can 
you highlight a few reasons why and outline what authorities or 
resources you need to replicate this acquisition success to other 
procurement programs?
    Mr. Stackley. The U.S. Navy's Virginia-class attack submarine 
program awarded a ten-ship Block IV contract to General Dynamics 
Electric Boat (GDEB) on April 28, 2014. The Block IV contract is a 
$17.6 billion fixed-price incentive fee, multiyear procurement contract 
with economic order quantity that continues the program's two-per-year 
build rate for fiscal years 2014 through 2018.
    The Block IV award is the largest shipbuilding contract in U.S. 
Navy history in terms of total dollar value and builds upon the 
Virginia-class program's successful Navy and industry relationship. The 
Block IV contract continues the Virginia-class teaming arrangement 
between prime contractor GDEB in Groton, Conn., and the major 
subcontractor Huntington Ingalls Industries--Newport News Shipbuilding 
(HII-NNS) in Newport News, Va. Entering into a multiyear procurement 
construction contract saved over $2 billion across Government and 
contractor furnished equipment, effectively getting ten ships for the 
price of nine as opposed to building the same ships under a more 
traditional annual procurement arrangement.
    The Block IV contract is the culmination of 20 months of work 
between the Navy and shipbuilders. The Navy and shipbuilders performed 
an in-depth analysis and thoroughly engaged on all elements of cost to 
produce a contract that is both fair to the Navy and industry. This 
contract lowers the per-ship cost compared to Block III. On average, 
the Block IV per-ship negotiated cost is approximately $100M less in 
constant year dollars than the Block III per-ship negotiated cost.
    Block IV submarines will incorporate modifications that reduce 
acquisition and lifecycle costs. Reducing the ships' total lifecycle 
cost, an initiative called ``3:15,'' aims to decrease the number of 
major shipyard availabilities from four to three, allowing for an 
additional deployment per hull--raising each submarine's capability 
from 14 to 15 full-length deployments. With the decrease in cost and 
the increase in capability, we are essentially getting more for less.
    Competitive edge features were also included in the Block IV 
request for proposal (RFP). It was structured to leverage the best 
potential ten ship scenario pricing by requiring the shipyards to 
propose both a five/five and a six/four delivery yard allocation. The 
contract included a six/four workshare allocation (6 to GDEB and 4 to 
HII-NNS). A ``win-back'' provision was included in the subcontract to 
allow HII-NNS to deliver the 18-2 ship (fifth HII delivered ship) based 
on certain improved performance criteria subject to Navy approval.
    The Virginia-class submarine program has delivered the last seven 
ships on budget and ahead of schedule. The last ship delivered, USS 
North Dakota (SSN 784), included a completely redesigned bow section as 
part of the Design for Affordability efforts. Additionally, USS North 
Dakota delivered with the highest quality of any Virginia-class 
submarine to date.
    Replicating this acquisition success in other programs would 
require congressional authority for use of multiyear procurement 
authority with funding for economic ordering quantity and streamlined 
acquisition approaches where appropriate. While Virginia-class Block 
contracts are sole-source, the shipbuilders are also motivated by 
innovative contracting approaches such as the optimal pricing six/four 
workshare allocation with a win-back provision. In addition, the Block 
IV team conducted robust, in-depth reviews of major second-tier 
vendors, analyzing labor hours, material, rates, and profits. These 
processes can be leveraged by any acquisition program.
                                 ______
                                 
              Questions Submitted by Senator Mazie Hirono
                 overall acquisition reform/improvement
    19. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, Acquisition Reform has been around as long as the 
Government has been procuring items. Congress and the President began 
to use special commissions and panels to improve the process. Between 
the end of the Civil War and the end of WW II, groups chartered 
include: the Dockery Commission, Keep Commission, Shannon Committee and 
Truman Committee. Over the seven decades since the end of WW II, we've 
likely had 20 plus panels, commissions and industry groups who have 
made many recommendations to improve the acquisition management 
process. Yet, we still have programs with significant cost overruns and 
weapons systems with technical deficiencies. Obviously this is not 
something that can be ``fixed'' overnight. We want you to make the best 
use of tax payer dollars to provide the systems that the men and women 
of our armed services need to carry out their responsibilities.
    For each of you as expert practitioners in the field--I'd be 
interested in hearing what would be the number one item on your list to 
improve the acquisition process?
    Ms. Shyu. The number one item on my list is empowering Program 
Managers. Too often, past reforms have required additional oversight by 
stakeholders outside the acquisition chain. This external influence--
without corresponding responsibility for outcomes--creates additional 
process and bureaucracy. The acquisition process must be reformed to 
empower Program Managers and Milestone Decision Authorities and foster 
mutual accountability by all stakeholders. Stakeholders involved in the 
process must be incentivized to identify problems and share 
accountability for program success. The acquisition process must also 
provide program managers the ability to tailor their acquisition 
approaches to fit program needs. Accordingly, the Department submitted 
several legislative proposals this year designed to reduce redundant 
documentation and allow program managers the flexibility to manage the 
specific risks inherent to their programs. The Army supports these 
proposals and their intended goal to balance effective oversight with a 
streamlined acquisition process.
    Mr. Stackley. An experienced acquisition workforce is the single-
most important fundamental in achieving strong, repeatable performance 
in Defense Acquisition. Our experience has shown us that the best 
acquisition outcomes are produced by the most experienced acquisition 
people, both in technical knowledge and business acumen. The 
professional Acquisition Workforce, however, operates in a human 
capital system that was not designed with the 21st century professional 
employee in mind and is increasingly difficult to sustain. The Congress 
has recognized the need for a large, robust, highly qualified 
Acquisition Workforce and provided much-needed legislative relief 
through the Defense Acquisition Workforce Development Fund. The DON is 
grateful to the Congress for their continuing support. For the 21st 
century Acquisition Workforce more agility will be needed to hire and 
retain quality acquisition professionals with critical skills needed to 
attain and sustain the best acquisition outcomes.
    Dr. LaPlante. We believe ensuring we initiate programs with sound 
acquisition strategies, fixed, well-defined and affordable 
requirements, modular systems with open architectures, properly 
resourced program baselines, and deliberate measures to mature critical 
technologies to reduce technology and program risks is the number one 
item to reduce cost overruns and weapons systems with technical 
deficiencies in the acquisition process.
                             rapid fielding
    20. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, I know that PACOM is concerned with the ability of 
the acquisition process to rapidly deliver the systems that they 
urgently need to meet the threats they face in the Pacific. Do you have 
the ability to make our slow moving system respond to urgent 
requirements?
    Ms. Shyu. Army field commanders and combatant commanders can 
identify urgent operational needs that jeopardize mission 
accomplishment through an Operational Need Statement (ONS). This 
provides an opportunity to the field commander, outside of the 
traditional acquisition and requirements process, to identify an urgent 
requirement needed to meet the threats they face. Once a commander 
endorses an ONS request, Army headquarters can quickly validate, 
authorize funding, and procure and field materiel solutions to meet 
these urgent needs. Accordingly, this ONS process allows the Army to 
quickly respond to urgent combatant commander needs outside the 
traditional defense acquisition system.
    Additionally, Combatant Commanders use the Integrated Priority List 
to characterize high priority needs across Service and functional lines 
in order to define shortfalls in the key areas which may severely 
affect the mission. These processes ensure that Combatant Commanders 
have a means to identify and prioritize the fulfillment of materiel 
needs to meet their urgent mission requirements.
    Mr. Stackley. The DON has demonstrated the ability to accelerate 
capability in response to urgent needs. The most significant example 
was the MRAP program. However, more recent examples--the Torpedo 
Defense System installed on USS George H.W. Bush (CVN 77) and the 
Transportable Electronic Warfare Module (TEWM) installed on board 
select ships deploying to the Eastern Mediterranean--are indicative of 
our ability to make the slow moving system respond to urgent 
requirements. Our current efforts are focused on making these examples 
more the norm by way of fundamental changes to the way we manage the 
Naval Research and Development Enterprise.
    Dr. LaPlante. Yes. Over the last 10 years we have demonstrated the 
ability to rapidly field capabilities and we continue to improve our 
processes. The AF identifies Quick Reaction Capability programs during 
the requirements process to respond to approved Urgent Operational 
Needs, Joint Urgent Operational Needs, and Top-Down Direction. The 
revised DODI 5000.02, Operation of the Defense Acquisition System, 
codifies several of acquisition processes and allows multiple paths for 
the services to rapidly field capabilities including one specifically 
addressing Rapid Acquisition. Supporting the Joint Urgent Operational 
Need (JUON) and emerging needs processes, there is a formal Warfighter 
Senior Integration Group (SIG) to identify urgent issues and a 
Secretary of Defense Rapid Acquisition Authority (RAA) Determination to 
rapidly field systems. Overall, the AF has the mechanisms in place to 
respond to approved urgent requirements.

    21. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, do you need the Congress to give you more 
flexibility or release from constraints in order to better support 
PACOM and other Combatant Commands?
    Ms. Shyu. Army field commanders and combatant commanders can 
identify urgent operational needs that jeopardize mission 
accomplishment through an Operational Need Statement (ONS). This 
provides an opportunity to the field commander, outside of the 
traditional acquisition and requirements process, to identify an urgent 
requirement needed to meet the threats they face. Once a commander 
endorses an ONS request, Army headquarters can quickly validate, 
authorize funding, and procure and field materiel solutions to meet 
these urgent needs. Accordingly, this ONS process allows the Army to 
quickly respond to urgent combatant commander needs outside the 
traditional defense acquisition system.
    Additionally, Combatant Commanders use the Integrated Priority List 
to characterize high priority needs across Service and functional lines 
in order to define shortfalls in the key areas which may severely 
affect the mission. These processes ensure that Combatant Commanders 
have a means to identify and prioritize the fulfillment of materiel 
needs to meet their urgent mission requirements.
    Mr. Stackley. While additional flexibility in acquisition is always 
welcome, in this particular case, the Navy has demonstrated the ability 
to rapidly field capability to Combatant Commanders in response to the 
well-defined Urgent Operational Needs (UONs) process. Recent examples--
the Torpedo Defense System installed on USS George H.W. Bush (CVN 77) 
and the Transportable Electronic Warfare Module (TEWM) installed on 
board select ships deploying to the Eastern Mediterranean--are 
indicative of our ability to make the slow moving system respond to 
urgent requirements. Our current efforts are focused on making these 
examples more the norm by way of fundamental changes to the way we 
manage the Naval Research and Development Enterprise.
    Dr. LaPlante. No. The Air Force uses all the rapid acquisition 
authorities provided to us to respond to any Warfighter urgent needs. 
To ensure a flexible acquisition environment, the Air Force has an 
urgent operational needs process to address capability gaps that would 
result in imminent loss of life or result in critical mission failure 
during a current conflict or crisis situation. To address urgent 
capability gaps which require synchronization across multiple Services, 
the Air Force participates in the Joint Urgent Operational Needs 
process and the Warfighter Senior Integration Group.
                       cybersecurity acquisition
    22. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, cybersecurity is a field that appears to be moving 
much faster than the acquisition processes you describe. In my state, 
we have a number of small businesses with good technologies, but I 
wonder if we can move fast enough to take advantage of them. How can we 
do a better job of buying and deploying the best cybersecurity systems 
in a timely manner?
    Ms. Shyu. The Army recognizes that innovation in cyberspace 
capabilities and cybersecurity will be essential in order to defend 
against sophisticated threats in an increasingly complex and contested 
environment. The Army is actively addressing barriers to non-
traditional innovative companies through the tenets outlined in the 
Defense Secretary's April 2015 Department of Defense (DOD) Cyber 
Strategy: information sharing and interagency coordination, building 
bridges to the private sector, and building partnerships abroad.
    The Army has a number of active defensive and offensive cyberspace 
pilots to broaden information sharing and interagency coordination, to 
include establishing academic and industry consortia. For example, the 
Army hosted a cyberspace industry and innovation day on 28 May to 
outline requirements and capability needs for industry. Such efforts 
support market research needs and drive awards to vendors through 
existing DOD contract mechanisms. Additionally, the Army will host a 
Cyberspace Challenge in August that will use the integrated cyber 
laboratory at Aberdeen Proving Ground to allow vendors to demonstrate 
their innovative technology to potential Government partners.
    Second, the Army is utilizing consortia hosted by industry and 
contracting instruments such as Other Transaction Authorities to 
acquire new capabilities. These instruments support flexible 
contracting arrangements with industry for innovation and service to 
attract innovative firms that do not typically do business with the 
Government. The Army is looking at the potential use of multiple 
existing cyberspace consortium efforts, including both the Army led C5 
consortium at Picatinny Arsenal and the DOD led Cyberspace consortium 
at Defense Technical Information Center.
    Third, the Army is actively working with partner nations to 
leverage their cyberspace capabilities. The Army has already begun 
cyberspace discussions with partners from the Brazilian Army Center for 
Cyber Defense and the Chilean Cyber Army, and is actively looking for 
other cooperation opportunities. The Army is also planning its first 
coalition Network Integration Evaluation at Fort Bliss in fiscal year 
2016 that will include partners from multiple countries and include a 
variety of cyberspace attack and defense scenarios on a fully 
integrated coalition network environment.
    Finally, commercial innovation can also be built directly into Army 
contract structure(s). The strategy--grounded in Better Buying Power 
principles--includes frequent competitions among multiple vendors for 
mature capabilities, driving innovation while maintaining 
interoperability between different vendor systems, allowing the Army to 
incrementally provide capabilities. For example, to set the conditions 
for future upgrades, the Army will enable ``plug-and-play'' insertion 
of new capabilities on existing platforms. This concept encourages 
competition among a wide pool of potential competitors, to include non-
traditional partners, which lowers the cost of integrated technology 
solutions. To further encourage competition and innovation, the common 
operating environment provides software development kits, which enables 
interested industry partners to contribute new tactical applications to 
a standard baseline. These methods create a competitive environment 
that will allow us to more quickly procure and insert innovative 
technologies.
    Mr. Stackley. The Department of the Navy (DON) routinely engages 
industry, both small and large companies, to evaluate emerging cyber 
technologies to keep apprised of what is available to help ensure the 
integrity and availability of DON systems. These engagements include 
industry days, conferences, office calls and site visits/capability 
demonstrations. The DON designs contracts to take advantage of small 
business offerings. The DON also has an active fellowship program where 
our program managers and engineers spend up to a year working in 
industry, where they are exposed to best commercial business practices, 
including the value of speed as a critical enabler, as well as pressing 
cyber security issues businesses are facing.
    The latest instantiation of our afloat and ashore networks offer us 
better internal configuration control and network management and 
monitoring tools to more rapidly detect and respond to threats. In 
addition, the contract for ashore networks contains a 35 percent small 
business requirement which explicitly allows for small businesses to be 
assessed for a variety of network contributions, including 
cybersecurity.
    The DON has also established an Innovation Cell within the Program 
Executive Office for Enterprise Information Systems to examine 
alternatives to accelerate the integration of commercially available 
technologies and services (e.g. cloud) into the Naval Business IT 
Enterprise. The Innovation Cell is an assessment framework focused on 
enabling rapid acquisition and deployment of emerging capabilities and 
providing technical and business analysis data in a manner that is 
consumable across the Department of Defense. The Innovation Cell seeks 
to accelerate acquisition of new information technologies, including 
those related to cybersecurity. The Innovation Cell works closely with 
program office staffs to identify enterprise challenges, then seeks 
collaborative engagements with Industry to bridge between available 
technologies and refined requirements. The Innovation Cell is creating 
a competitive environment far in advance of any acquisition. In 
addition, the Innovation Cell process enhances the opportunity for 
small business to propose their recommended solution.
    Dr. LaPlante. In order to buy and deploy the best cybersecurity 
systems in a timely manner, the Department of Defense should continue 
to streamline acquisition, empower program managers, leverage 
continuous monitoring, and manage risk for all weapon systems.
    On January 7, 2015, OSD released a revised DODI 5000.02, Operation 
of the Defense Acquisition System, that addresses these efforts. In 
this latest instruction, OSD continued to reinforce the ability for 
program managers to tailor program execution; ``The structure of a DOD 
acquisition program and the procedures used should be tailored as much 
as possible to the characteristics of the product being acquired, and 
to the totality of circumstances associated with the program including 
operational urgency and risk factors.'' It also includes examples and 
models to aid program offices, acquisition decision-makers, and 
operators to generate requirements and structure programs to enable 
efficient execution and higher probabilities of programmatic success. 
Specifically, it includes models that are designed to field systems 
rapidly while still considering all the necessary risks and threats 
against that type of systems, including cybersecurity. Additionally, 
the DOD is developing a new enclosure to the DODI 5000.02 which will 
specifically address cybersecurity while continuing the transition to 
the Risk Management Framework.
    Within the Air Force, Air Force Materiel Command (AFMC) and Air 
Force Space Command (AFSPC) have been working diligently to improve the 
responsiveness of satisfying cyber requirements to counter ever-
increasing threats in cybersecurity. Currently, improvements are 
focused in three areas: three tier delivery model, streamlining 
acquisition processes, and organization of AFMC resources to improve 
responsiveness of solutions and collaboration with Air Force cyber 
operations. The three tier delivery model provides a framework for the 
acquisition community to determine the right acquisition approach based 
on requirements and time constraints. In this framework, cybersecurity 
requirements are satisfied through real-time operations and innovation 
(less than 180 days), rapid acquisition (less than 18 months), or 
foundational acquisition (greater than 18 months). Additionally, AFMC 
has put in place several processes and tools to streamline cyber 
acquisition, including the adoption of the Cyber Acquisition Process 
Pilot and maximizing the set of technology producers (both large and 
small) through Broad Agency Announcements and Indefinite Delivery 
Indefinite Quantity contracts. Finally, AFMC has reorganized its cyber 
acquisition organizations to align with the cyber operations community. 
Through these three improvement areas, the Air Force acquisition 
community is better positioned to collaborate, understand requirements, 
and develop courses of action to meet cyber requirements in a timely, 
efficient, and effective manner.
    The Air Force will continue to update published guidance and 
promote tailoring of acquisition processes to satisfy cybersecurity 
requirements, which include creating opportunities for small business.
                     processes that don't add value
    23. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, yesterday, the Chairman called a hearing to 
consider the nomination of Peter Levine to be the Chief Management 
Officer at the Pentagon. We discussed the many levels of checks and 
balances and numerous reports that don't seem to add value, but appear 
to add cost and time to our programs. Can you give some examples of 
those kinds of processes that fit the description from your point of 
view?
    Ms. Shyu. Historically, Congress and DOD respond to specific 
program failures by instituting specific processes and documents 
designed to prevent similar issues in future programs. Over time, these 
responses have resulted in a complex, cumbersome, and inflexible 
acquisition process.
    One example is the requirement for a stand-alone manpower estimate 
report (MER). This requirement was designed to ensure that manpower 
costs associated with weapons systems are fully considered at key 
program milestones. However, the statutory requirements duplicates 
separate processes that generate this information for consideration 
elsewhere in the acquisition process. As such, the Department proposed 
the elimination of this redundant requirements that generates 
unnecessary documentation.
    Another example is the milestone certification required by 10 USC 
2366a and 2366b. These statutes require consideration and documentation 
of certain findings at program milestones which duplicate paperwork 
required elsewhere in the acquisition process. For example, 10 USC 
section 2366b requires certification of a valid requirement for weapon 
systems, which is a predicate to the existence of an acquisition 
program.
    Any time spent by program managers on producing and staffing 
unnecessary documents is time that could be spent on effectively 
managing programs.
    Mr. Stackley. The Acquisition System Framework flowchart includes 
documents, steps and processes that involve multiple layers of 
prescriptive processes, authoritative organizations and extensive 
reporting and documentation requirements. The DON recommends that that 
the Congress work with USD(AT&L) in the current effort to identify and 
roll back legislation that has produced unnecessary and redundant 
regulatory and reporting burdens on Program Managers.
    Dr. LaPlante. The Department of Defense (DOD) concurred with the 
recommendations of the GAO Report ``Acquisition Reform: DOD Should 
Streamline Its Decision-making Process for Weapons Systems to Reduced 
Inefficiencies'' to minimize any reviews between the program office and 
the different functional staff offices within each chain of command 
level and establish frequent, regular interaction between the program 
office and milestone decision makers, in lieu of documentation reviews.
    To ensure the Enterprise is not getting in the way of PM 
accountability, we have performed a review of all acquisition documents 
and the organizations outside the acquisition execution chain who 
review them for coordination and approval.
    We are following the accountability and responsibility of the 
Better Buying Power 3.0-specified action to re-validate the need for 
organizations to coordinate or approve the documents. This 
revalidation, which I will personally approve upon completion, can 
potentially streamline the number of individuals and organizations in 
the approval process; thereby, reducing unnecessary schedule delays. In 
addition, we are automating the document review process using the 
Electronic Coordination Tool (ECT), which allows us to control review 
times. We currently use ECT to route a program's acquisition strategy 
for review and will systematically load other acquisition documents 
into ECT.
    We also worked with and support the legislative proposals that OSD 
submitted to Congress for the 2016 NDAA that included several 
recommended changes to program documentation, which reduces redundant 
and unnecessary documentation burdens on Program Managers. It also 
included some recommendations to consolidate related statutory 
requirements to help programs comply with all statutory requirements 
and minimize excess documentation.

    24. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, if we gave more authority to you three to manage 
your programs, would that relieve some of this burden and speed things 
up?
    Ms. Shyu. The Army supports efforts to promote flexibility and 
streamlined oversight of Major Defense Acquisition Programs. To this 
end, the Army worked extensively with Office of the Secretary of 
Defense (OSD) and Congress to develop legislative proposals designed 
specifically to streamline the acquisition process and provide 
increased flexibility to program managers. These proposals inject much-
needed agility and flexibility into the process while maintaining 
robust oversight of taxpayer dollars.
    OSD performs an annual review of ACAT ID and special interest 
programs and determines if the program can be delegated to the 
Services. Increased authority to manage programs at the Service level 
would provide additional flexibility.
    Mr. Stackley. Lessons learned from highly successful programs 
highlight that the right balance is attainable by applying the 
fundamental disciplines already known and available to each program 
manager, then exposing the products of that discipline to simplified 
oversight by an appropriate but limited number of highly experienced 
managers, engineers and business executives who serve at the Service 
Secretariat and OSD levels in policy oversight capacities. The DON 
recommends that that the Congress work with USD(AT&L) in the current 
effort to identify and roll back legislation that has produced 
unnecessary and redundant regulatory and reporting burdens on Program 
Managers which have the effect of thwarting the steady application of 
these fundamentals.
    Dr. LaPlante. Allowing the Under Secretary of Defense (Acquisition, 
Technology & Logistics) (USD(AT&L)), the Service Acquisition Executives 
(SAEs), or Milestone Decision Authorities (MDAs) to waive or submit 
statutory tailoring of ACAT programs is an example where processes 
could be improved. MDAs will ensure tailoring is consistent with sound 
business practice and the risks associated with the product being 
acquired.
    USD(AT&L), via DODI 5000.02, already allows MDAs to tailor 
regulatory procedures in the document consistent with sound business 
practice and the risks associated with the product being acquired.
                  training, recruitment and retention
    25. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, obviously, your people are the most important part 
of this endeavor. Without a capable and motivated workforce, all the 
changes to rules and regulations will not amount to much. In your view 
are there things that Congress can do to help you recruit and retain 
the best workforce possible?
    Ms. Shyu. The development and retention of talent in acquisition 
disciplines is an essential ingredient to the accountability and 
effectiveness of the acquisition system.
    Congress can help strengthen recruitment and retention of the best 
talent by making the Defense Acquisition Workforce Development Fund 
(DAWDF) and the Expedited Hiring Authority (EHA) permanent. DAWDF is 
currently set to expire in fiscal year 2018 (fiscal year 2018). Since 
the establishment of DAWDF, the Army has hired 2,127 interns and 
journeymen in mission-critical acquisition career fields. With DAWDF, 
the Army is able to invest in the continuing education and 
professionalism of our acquisition workforce. DAWDF has also allowed 
the Army to fund a Student Loan Repayment Program, which acts as a 
retention tool to maintain more than 4,000 Army acquisition 
professionals in mission-critical acquisition career fields, who are 
required to sign a 3-year service agreement. EHA is set to expire in 
fiscal year 2017. As over 50 percent of our Army Acquisition Workforce 
is eligible to retire in 10 years, permanent EHA will assist the Army 
in securing critical acquisition talent and enable proper succession 
planning for the future. Direct Hire Authority specified for mission 
critical acquisition career fields may enable us to reach out to recent 
college graduates and industry for new talent.
    Mr. Stackley. The Navy appreciates the support of Congress for the 
Acquisition Workforce, especially the Defense Acquisition Workforce 
Development Fund for hiring and retention and would like to see that 
support continue permanently.
    The vitality of Acquisition Corps has suffered due to personnel 
actions affecting the federal workforce including mandated reductions, 
furloughs, sequestration, unstable budgets and retirements. To retain 
the best talent we must find ways to minimize the exposure to forces 
that threaten the Acquisition Corps. Other potential initiatives 
include:

      Make permanent Direct Hiring Authority to provide a 
mechanism to hire quickly and better enable the Navy to compete for the 
best talent in the nation.
      Make the Acquisition Demonstration Project permanent to 
eliminate the recent pay plan roller coaster and provide a pay-for-
contribution plan.
      Provide authority to build partnerships with universities 
for student internships followed by hiring to assist in immersing 
students in the Navy technical fields and accessing state of the art 
technologies which would assist in hiring and retention.
      Establish a special pay category or incentive structure 
for senior Acquisition Corps members (typically PMs/DPMs/BFMs 
responsible for multi-billion dollar programs) to increase the 
competitiveness of the positions and assist in retention.
      Establish a pilot program to experiment with retention to 
help shape and train the Acquisition Corps. Potential pilots could 
include:
      o  Government/Industry one-year personnel exchange agreements 
would allow the Navy to benefit from the knowledge of industry 
innovation, business streamlining and challenges. Conversely industry 
would benefit from understanding the capabilities of the Navy and offer 
potential insights to more effective partnering. These agreements could 
also add insight to workforce development, retention and succession 
planning.
      o  Specialized training in critical skill areas with retention 
incentives.
      o  Educational benefits for the civilian Acquisition Corps 
similar to the Post 9/11 GI Bill.
      o  Student loan forgiveness for Acquisition Corps members.
    o  Special post-PM/DPM positions to mentor and train the next 
generation Acquisition Corps.

    Dr. LaPlante. I believe we have the flexibilities and resources in 
place to recruit and retain the talent we need. We are especially 
appreciative of the acquisition-specific authorities provided by the 
Defense Acquisition Workforce Development Fund (DAWDF) and Expedited 
Hiring Authority (EHA), as well as the Acquisition Personnel 
Demonstration Project (``Acq Demo''). Legislation in work which would 
make DAWDF and EHA permanent will lend stability and increase 
confidence in our organizations for using these authorities.
    In the current austere budget environment, DAWDF has become even 
more important to our efforts to maintain and improve a highly capable 
acquisition workforce. We have become much more reliant on DAWDF for 
training, as well as to increase our ability to find and recruit 
outstanding talent. We have also used DAWDF to offer retention 
incentives for personnel in high-demand career fields such as 
contracting and engineering. Continued support for DAWDF is critical.
    The highly-talented candidates we seek in the job market have a 
choice of where they choose to work. If we are to attract and motivate 
the ``best of the best'' to the challenging work we offer, I believe it 
is incumbent upon all of us in Government to help ``sell'' the career 
opportunities, pride and personal satisfaction available through 
Government service.
                      ndaa 2015 study requirement
    26. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, the fiscal year 2015 National Defense Authorization 
Act included a requirement (on p. 745) that the Secretary of Defense 
submit a report to the congressional defense committees, no later than 
180 days after the enactment of this Act, regarding how the DOD is 
considering the operational impact of energy logistics through energy 
supportability analysis. Lifecycle energy costs are an important 
consideration for acquisition reform. Can you provide a status update 
on how this study is progressing?
    Ms. Shyu. Pending a review of the final report that is currently in 
staffing with the Office of the Secretary of Defense, we will 
incorporate appropriate changes into our acquisition and logistics 
policies as part of our continuing effort to reform acquisition within 
the Army. As an interim step, we adjusted our product support policy in 
October of 2014 to consider design for energy efficiency. The new 
policy calls for materiel developers to conduct product support 
analysis to assess opportunities that improve energy efficiency where 
feasible and assess operational effects throughout the products 
lifecycle.
    Mr. Stackley. The study was submitted to the congressional defense 
committees on August 6, 2015, by the Undersecretary of Defense.
    Dr. LaPlante. The Office of the Secretary of Defense has drafted 
the subject report and is circulating it for comment.
                           service contracts
    27. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, the Department has said that it is 30 percent 
compliant with the fiscal year 2008 requirement to develop an inventory 
of service contracts and integrate those results into the budget 
process. Please explain how the Department arrived at this 
determination.
    Ms. Shyu. The 30 percent compliance represents the percentage of 
services contracts contained within the Enterprise-wide Contractor 
Reporting Manpower Application (ECRMA) for fiscal year 2014 across the 
Department of Defense. The Army uses the CRMA as its primary vehicle to 
compile and review its annual inventory of services contracts contained 
within the CRMA and continues to work with the Office of the Under 
Secretary of Defense (Personnel and Readiness) to integrate the results 
of this inventory into the budget process.
    Mr. Stackley. The Department of the Navy (DON) understands the 30 
percent to be a fiscal year 2014 target that will increase to 90 
percent in the next few years. The target is related to increasing the 
percentage of services contracts that contain the Enterprise-wide 
Contractor Manpower Reporting Application (eCMRA) reporting 
requirement. The DON is including this requirement in all new service 
contracts.
    The DON is compliant with the statutory requirements to develop an 
inventory of contracted services (ICS) and has submitted the inventory 
each of the past five years. The contractor's reporting in eCMRA is 
improving the accuracy and fidelity of data captured in the ICS.
    Dr. LaPlante. We will defer to USD(P&R) to answer this question as 
they provided this overall assessment, but our understanding is that 
this 30 percent factor is the percentage of DOD contracts that have 
incorporated the reporting requirement for contractors to provide their 
man-hours and labor dollars into the Contractor Manpower Reporting 
Application (CMRA) as of our fiscal year 2013 Inventory of Contracted 
Services (ICS). In November 2012, the AF directed incorporation of 
provisions within all of our contracts for the use of the Army designed 
CMRA. Currently, we are nearly complete in the contract modifications, 
but are still working with our contractors on the reporting processes.

    28. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, Mr. Levine testified that the Army has a system in 
place to determine the number of contractor employees while the other 
military departments rely on a conversion factor. It is my 
understanding the Department in 2012 mandated the use of the Army 
system for all DOD Components and in fact resourced that capability. 
Can you please clarify--are other Components in fact using system(s) 
similar to the Army's?
    Ms. Shyu. The Department of the Army utilizes the Contractor 
Manpower Reporting Application (CMRA) to collect information on 
services contracts and comply with the annual contractor inventory 
requirement. Furthermore, the Army is leveraging the Panel for 
Documenting Contractors (PDC), a module within the CMRA, to enable 
commands to better project their contract services requirements. The 
Army will pilot a process in fiscal years 2018-2023 that will leverage 
the data collected by the PDC module in order to better plan and 
program for these contracts.
    Mr. Stackley. The Department of the Navy (DON) is using a system 
modeled after and very similar to the Army's. It is an early Army 
version with tailoring for DON organizational structure, business 
processes, and nomenclature.
    The DON is capturing contractor direct labor hours for an 
increasing number of service contracts each year.
    Dr. LaPlante. Public Law 112-10, the DOD and Full-Year Continuing 
Appropriations Act 2011, Section 8108 (System to Document Contractor 
FTEs)--required the Air Force and Navy to leverage the Army's 
Contractor Manpower Reporting Application (CMRA), modified as 
appropriate for Service specific requirements, for documenting the 
number of contractor FTEs (or its equivalent) pursuant to USC Title 10 
Section 2330a(c) and meeting the requirements of USC Title 10, Section 
2330a(e) and USC Title 10, Section 235.
    The Air Force's CMRA system was operational on 1 Oct 12 and was 
used to inform both the fiscal year 2013 and fiscal year 2014 Inventory 
of Contracted Services. The primary difference in our system versus the 
Army's system is the maturity of the data and the enabling processes 
and procedures. The Army's reporting system is more robust since they 
have been using it for years. The Air Force, DOD Fourth Estate, and 
Navy applications have been able to incorporate many of the Army's 
lessons learned, but are still not 100 percent fully implemented 
primarily due to contractor reporting ``ramp-up''.

    29. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what are the specific challenges of creating a 
common reporting application?
    Ms. Shyu. While Congress continues to urge the DOD to implement a 
common reporting application to support its annual inventory of 
services contracts, multiple challenges hinder these efforts. First, 
the Department lacks sufficient dedicated resources to successfully 
manage a common reporting application. To remedy this, representatives 
from the Army and other military departments are currently working with 
the Acting Assistant Secretary of Defense (Readiness and Force 
Management) to redefine and re-scope the missions, functions, 
organizational placement and composition of the Total Force Management 
Support Office (TFMSO). Second, the Department lacks a methodology to 
consistently identify Closely Associated with Inherently Governmental 
(CAIG) functions. Some of the inventory review processes may not be 
sufficient to accurately identify CAIG functions. Consistent 
methodologies must be established across the Department of Defense as 
an initial step in developing and applying a common reporting 
application.
    In order to combat the challenges related to implementing a common 
reporting system, the Army is working to designate a senior official 
responsible for managing the Contractor Manpower Reporting Application 
(CMRA). This designee will work with the Air Force, Navy and other DOD 
components to establish a defined path forward and ensure to the Army 
supports the implementation of a common reporting system.
    Mr. Stackley. For a single application, the challenges would 
include standardizing business rules and processes across the 
Department, instituting data standardization, transforming and 
migrating existing data structures, and the related training 
implications.
    Dr. LaPlante. As stated in question 28, we are all using primarily 
the same reporting application, CMRA, albeit slightly different 
operating versions. One specific challenge area, which is continuing to 
be discussed within DOD, is how do we best use this information to 
ensure that it is integrated into the acquisition, requirements 
determination, programming, and budget business processes internal to 
the Military Departments and DOD.

    30. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what is the Department's current timeline for full 
implementation, including developing rules and standardized business 
processes, to bring all components onto the system and to rely on the 
data for budget analysis?
    Ms. Shyu. In October 2013, the Department of Defense (DOD) fielded 
a system based on the Army's Contractor Manpower Reporting Application 
(CMRA) system, to support the remaining Defense components, to include 
the Air Force and Navy. Each of the four CMRA systems is independent, 
maintaining its own interface, but all are accessible through a common 
webpage. In March 2015, the Office of the Under Secretary of Defense, 
Personnel and Readiness (OUSD P&R) established a working group with 
members from across the DOD to continue maturing the CMRA systems and 
to develop one, common application. As the Army's CMRA system is 
significantly more mature than the other systems, and contains 
capabilities for projecting contracted services for purposes of 
integration into the programming, planning, and budgeting activities, 
the working group will use it as a basis to develop the DOD-wide common 
application. The timeline for full implementation, and subsequent 
development of standardized rules and business processes, are currently 
in the initial stages of development.
    Mr. Stackley. Office of the Under Secretary of Defense for 
Personnel and Readiness is leading an effort to migrate the Department 
to the Defense Manpower Data Center by the end of 2015 to establish a 
``common environment'' for hosting and maintenance and support of the 
applications. Once transition occurs, the Department plans to develop 
the rules and business processes to bring about a ``common solution'' 
across all elements of the Department.
    Dr. LaPlante. Office of the Under Secretary of Defense, Personnel & 
Readiness OSD(P&R) is leading a working group where the AF is 
participating. The timeline for full implementation and the rules and 
standardized business process have not been finalized.
                     total force management office
    31. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, has the Total Force Management Support Office been 
stood up?
    Ms. Shyu. No. Representatives from the Office of the Assistant 
Secretary of the Army (Manpower and Reserve Affairs) and other Military 
Departments are working with the Acting Assistant Secretary of Defense, 
Readiness and Force Management to redefine and re-scope the missions, 
functions, organizational placement, and composition of the Total Force 
Management Support Office.
    Mr. Stackley. A working group has been established by the Office of 
the Under Secretary of Defense for Personnel and Readiness and the 
Department of the Navy is an active participant. The working group is 
developing the necessary work functions and associated skill sets for 
the Total Force Management Support Office.
    Dr. LaPlante. We expect that the Total Force Management Support 
Office will be stood up by September 2015.

    32. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, if so, how many fulltime employees does it have?
    Ms. Shyu. The Office of the Under Secretary of Defense, Personnel 
and Readiness, is reviewing the resource requirements for the Total 
Force Management Support Office. While currently planned to be staffed 
with six full-time employees, this number could change.
    Mr. Stackley. The number of fulltime employees for the Total Force 
Management Support Office (TFMSO) has not yet been defined by Office of 
the Under Secretary of Defense for Personnel and Readiness. A working 
group has been established to support the stand-up of the TFMSO by 
developing the necessary work functions and associated skillsets 
required; the number of fulltime employees desired will be based on the 
work functions and the skillset requirements determined by the working 
group. The DON is an active participant on that working group.
    Dr. LaPlante. The working group, established to support the stand-
up of the Total Force Management Support Office, is developing the 
necessary work functions and associated skillsets required; the number 
of full-time employees desired will be based on the work functions and 
the skillset requirements determined.

    33. Senator Hirono. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, to whom will the leader of this office report?
    Ms. Shyu. The Office of the Under Secretary of Defense, Personnel 
and Readiness, is reviewing the resourcing requirements and 
organizational structure of the Total Force Management Support Office.
    Mr. Stackley. The current deliberations of the working group are 
recommending that the Total Force Management Support Office (TFMSO) 
Lead receive policy oversight and guidance, as well as operational and 
technical direction, from the Office of Total Force Planning & 
Requirement within the Office of the Under Secretary of Defense for 
Personnel and Readiness (OUSD (P&R)). The TFMSO itself is expected to 
be an element of the Defense Human Resources Activity, a field activity 
of the OUSD (P&R). The working group continues to define mission, 
tasks, functions, and associated skillsets. The command and control 
structure of the TFMSO is currently being developed.
    Dr. LaPlante. At present time, it is anticipated that the Total 
Force Management Support Office (TFMSO) will report to the Assistant 
Secretary of Defense for Manpower and Reserve Affairs (under the 
auspices of the Under Secretary of Defense for Personnel and Readiness) 
for policy direction. The Director, Defense Human Resources Activity 
will provide administrative support (also under the auspices of the 
Under Secretary of Defense for Personnel and Readiness).
                                 ______
                                 
             Questions Submitted by Senator Martin Heinrich
                           acquisition reform
    34. Senator Heinrich. Secretary Shyu, one of the issues that is 
hampering acquisition programs is ``requirements creep'', that is: we 
keep changing what we want our systems to do, even while we are 
building them. For example, we may add new features to a combat 
vehicle, which adds to complexity and cost. How do we try to control 
this kind of change in requirements and the negative effects it has on 
acquisition programs?
    Ms. Shyu. The Army conducts Configuration Steering Boards (CSB) for 
all required Major Defense Acquisition Programs/Major Automated 
Information System programs and encourages them for all other 
acquisition programs. CSBs bring
together members of the acquisition, requirements, and resourcing 
communities to review system requirements and technical configuration 
changes to help achieve program objectives in terms of cost, schedule, 
and performance. Additionally, many programs use a pre-planned 
Knowledge Point (KP) process to manage requirements through expanded 
collaboration between our program managers and combat developers. This 
review process identifies and addresses key trade-offs that affect 
affordability and performance. Moreover, this process allows senior 
leaders to align requirements and resources early in the program's 
development, maximizing our
investments by achieving the best capability at an affordable cost 
through cost-informed trades and capability prioritization. This 
process was used successfully in the Armored Multi-Purpose Vehicle and 
Joint Light Tactical Vehicle, resulting in executable and affordable 
programs.

    35. Senator Heinrich. Secretary Shyu, in your testimony you state 
that DOD's ``requirements generation process often develops in 
isolation, based on operational desires removed from engineering and 
resource constraints. The results are requirements based on ideal 
aspirations versus ``good enough'' operational utility.'' How do you 
specifically propose we address the requirements process so that we can 
stop making ``the perfect'' the enemy of ``the good enough''?
    Ms. Shyu. Requirements must be informed by technical feasibility, 
from the initial concept phase through development. To meet a series of 
requirements, a program manager must balance product performance 
against competing priorities, such as cost, delivery schedule, size, 
weight, power consumption, reliability and risks. Informed trades among 
the competing priorities are essential to achieving operational 
capability.
    To ensure requirements are achievable, the Army must fully 
understand the limits of the trade-space, which is informed by 
technical designs, intended product operation, and the availability of 
critical enabling technologies. Our industry partners must be involved 
in providing this trade-space early on in the acquisition process since 
they design and manufacture the products. To this end, there are 
several initiatives that aim to improve the Army's understanding of 
requirements and the trade space throughout product development.
    First, during concept and development, prototyping for critical 
enabling technologies reduces technical risk and informs technical 
design analyses. Involving industry early in the design process, 
through prototyping and feedback on draft requirements, will enable 
detailed technical feedback for informed trade analyses.
    Additionally, the Army conducts Configuration Steering Boards (CSB) 
for Major Defense Acquisition Programs/Major Automated Information 
System programs and encourages them for all other acquisition programs. 
CSBs bring together members of the acquisition, requirements, and 
resourcing communities to review system requirements and technical 
configuration changes to help achieve program performance objectives 
while ensuring the systems remain affordable. Additionally, many 
programs use a pre-planned Knowledge Point process to manage 
requirements through expanded collaboration between our program 
managers and combat developers. This review process identifies and 
addresses key trade-offs that affect affordability and performance. 
Moreover, this process allows senior leaders to align requirements and 
resources early in the program's development, maximizing our 
investments by achieving the best capability at an affordable cost 
through cost-informed trades and capability prioritization.
    From a broader perspective, we aim to increase a program manager's 
ability to understand and mitigate technical risks through annual 
program assessment reviews. These annual program assessments require 
the program manager to analyze the technical aspects of the program, 
including requirements feasibility, and emphasize ongoing risk 
mitigation strategies with the acquisition chain of command.

    36. Senator Heinrich. Dr. LaPlante, if we don't understand what we 
are buying, it is hard to pin down an appropriate cost and schedule for 
the development and delivery of a system. What role do the world class 
technical staff at Air Force Research Labs, the other DOD labs, and DOE 
National Labs play in helping DOD be a ``smart buyer'' of complex 
technical systems?
    Dr. LaPlante. The Air Force Research Laboratory (AFRL) employs 
subject matter experts who support the acquisition community through a 
technical advisory role during the entire acquisition life cycle, 
development, procurement, and sustainment. AFRL's technical expertise 
is used now and will continue to be leaned upon to assist in Technology 
Readiness Assessments, ensuring technical program risks are understood. 
Furthermore, our initiatives to reinvigorate development planning and 
experimentation will strengthen the Air Force's technical knowledge of 
future capability options. AFRL will play a big role in maturing 
technologies and helping others to gain this knowledge and 
understanding of technical options. The development planning and 
experimentation process is expected to design agility into our 
capability development by interconnecting relationships between AFRL, 
operators, acquisition, and requirements communities early-on in the 
acquisition cycle. This integration across Air Force organizations will 
inform strategic funding choices that will result in low risk 
acquisition programs to deliver warfighting capabilities on time and 
within budget.

    37. Senator Heinrich. Dr. LaPlante, what can be done to strengthen 
that role?
    Dr. LaPlante. The Air Force must continue to focus on recruiting 
and retaining a highly talented science, technology, engineering and 
mathematics (STEM) and STEM-literate workforce in order to maintain the 
strong relationship the Air Force Research Laboratory has with the 
greater Air Force Acquisition community. To promote these efforts the 
Secretary and Chief of the Staff of the Air Force published the Air 
Force Engineering Enterprise Strategic Plan and the Air Force STEM 
Workforce Strategy, Bright Horizons 2.0. Both documents provide 
framework and strategic goals to guide STEM workforce planning, improve 
the technical workforce and address competency gaps across the Air 
Force enterprise. Recruiting and retaining a highly qualified STEM and 
STEM literate workforce will ensure the Air Force Acquisition community 
has access to top-notch technical guidance to make ``smart'' 
procurement decisions.
                                testing
    38. Senator Heinrich. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what role do test ranges and testing play in 
ensuring that the products we are trying to build and deploy will 
actually work as planned?
    Ms. Shyu. Test Ranges, test activities, and associated evaluations 
are integral parts of developing and producing equipment, as they 
provide the environments, measurement capabilities, skilled people and 
methods required to collect and evaluate data to verify and validate 
product designs. Developmental testing and evaluation supports 
verification and focuses on collecting and evaluating product 
specification data in order to answer the question ``Did we meet the 
necessary specifications to achieve desired operational outcomes?'' 
Operational testing and evaluation supports validation and focuses on 
collecting and evaluating system performance data when the system is 
used by Soldiers under realistic usage conditions in order to answer 
the question ``Will the product meet the desired operational intent 
when fielded?'' Both functions continue to perform an important role in 
the development of warfighting capabilities.
    Mr. Stackley. The results of testing activity conducted in support 
of Navy and Marine Corps defense acquisition systems is used to 
evaluate the capabilities and manage the risks in developing, 
producing, operating and sustaining systems and capabilities that are 
fielded to sailors and marines. Test and Evaluation (T&E) provides 
knowledge to the acquisition community for use in assessing performance 
to the system requirements, evaluating critical operational issues, 
improving the system performance where needed and providing the user 
community with information for optimizing system use in operations.
    Test ranges are critical to the T&E process and provide the 
infrastructure, capability, manpower and knowledge to conduct testing 
in a timely, thorough, and cost efficient manner. The Navy's test 
ranges and facilities, and other elements of the Major Range and Test 
Facility Base assets that we use, serve at the forefront of innovation 
in test capability, instrumentation and enhanced test practices. 
Through these efforts the Navy is able to continually improve the 
quality and capabilities of testing being performed on our acquisition 
programs.
    T&E expertise and test ranges are available to acquisition programs 
at the beginning of the system life cycle to provide learning about the 
strengths and weaknesses of the system under development and throughout 
its lifecycle to facilitate upgrades and enhancements. This allows for 
appropriate and timely corrective actions that can be developed prior 
to fielding of the system.
    Dr. LaPlante. Fundamentally, the purpose of Test & Evaluation (T&E) 
in a defense acquisition program is to help reduce or manage risks in 
defining, developing, acquiring, fielding, using and supporting a 
system.
    T&E is generally divided in two categories. Developmental T&E 
(DT&E), also known as Development Test (DT), verifies a system meets 
detailed technical requirements or specifications (the system is built 
right). Operational T&E (OT&E), also known as Operational Test (OT), 
validates a system meets warfighter requirements in an operational 
environment (the right system is built to complete the mission).
    Quality DT and OT require robust T&E infrastructure, from 
laboratories and simulation facilities to open-air ranges with a wide 
range of threat simulators, stimulators, and emitters. This 
infrastructure enables technologically superior, reliable, 
maintainable, sustainable, and safe weapons systems that ultimately 
ensure warfighter combat readiness. Key components of the AF's T&E 
infrastructure are described below:

      Ranges such as the R-2508 Complex at Edwards AFB, the 
Nevada Test and Training Range (NTTR) and the Eglin Range at Eglin AFB 
provide a flexible, realistic and multidimensional DT and OT battle-
space to conduct aircraft and aircraft systems evaluations, electronic 
combat testing, munitions testing, electronic countermeasure 
evaluations, small and large footprint weapons testing and sensor 
(Intelligence, Surveillance and Reconnaissance (ISR)) testing.
      The Space and Missile Systems Center is responsible for 
on-orbit check-out, testing, sustainment and maintenance of military 
satellite constellations and other DOD space systems. DT is 
predominately accomplished through Government-led, contractor-run 
ground-based simulations and launch, and early-orbit functional 
checkouts. The Air Force Operational Test and Evaluation Center 
(AFOTEC) completes OT by performing on-orbit operationally based end-
to-end testing and capability verification. Both components are 
essential to delivering resilient and affordable space capabilities and 
providing mission support to the warfighter (precision navigation, 
secured communications, reliable intelligence, surveillance and 
reconnaissance (ISR)).
      The primary Air Force (AF) cyber test ranges are the 
Capabilities Integration Environment (CIE), the Air and Space 
Operations Center (AOC) Test Lab, the Datalink Test Facility (DTF) and 
the Command, Control Communications, Computers, Intelligence, 
Surveillance and Reconnaissance (C4ISR) Enterprise Integration Facility 
(CEIF). Cyber testing ensures weapon systems can execute the intended 
mission even when faced with cyber threats such as cyber attacks (e.g., 
denial-of-service operations) and cyber espionage (e.g., network 
intrusions to access sensitive information).

    39. Senator Heinrich. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what can we do to improve the quality of testing 
and strengthen the organizations that perform that testing?
    Ms. Shyu. We can improve the quality of testing and strengthen the 
organizations that perform it by pursuing test efficiencies and 
adopting best practices.
    The Army must continuously pursue efficiencies in the test process. 
First, instead of sequential testing, we can buy sufficient test 
articles to maximize simultaneous testing. Second, to make test data 
sharing easier and quicker, we can create certified developmental test 
standards applicable to both Government and contractor testing 
practices. Additionally, we can develop a database of qualified parts, 
components, and pre-certified sources the multiple programs can 
leverage to reduce cost and avoid retesting.
    There are several best practices that can be adopted to improve the 
quality of our testing processes and outcomes. By investing early in 
appropriate models and simulations that can be accredited for use, we 
can supplement, inform, and improve physical testing. Another 
improvement is to obtain limited use rights for vendor Computer Aided 
Design/Computer Aided Manufacturing designs and materiel 
specifications. This allows us to rapidly trace faults to root causes. 
Third, Soldier feedback remains one of the most important outcomes of 
test efforts. Multiple early opportunities with users offer better 
feedback than a single defining event and allow the Army to incorporate 
this critical feedback earlier. Fourth, rapid equipping and prototyping 
experiences in theater provide valuable technical insight. The Army can 
leverage this information to adjust testing or challenge existing 
programs. Finally, the Army must base system requirements documents on 
desired operational outcomes, not system attributes.
    Mr. Stackley. I believe the quality of our testing and expertise of 
our Test and Evaluation (T&E) workforce in our organizations is high, 
and we have highly educated and motivated individuals devoted to these 
efforts. However, let me also say, we continually strive for 
improvement to address the latest test capability needs and 
requirements for new systems under development, and to stay abreast of 
the latest threat systems that we must counter on the battlefield. In 
support of acquisition programs, one of the Navy's top priorities is to 
integrate testing earlier in the process. Within the Department of 
Defense (DOD), this early start is known as ``Shift Left'' with the 
focus on enabling acquisition programs to incorporate T&E expertise at 
the beginning of the system life-cycle to clearly define test 
requirements and provide early learning and identification of technical 
deficiencies as part of the developmental process. This ensures that 
appropriate and timely corrective actions can be developed and 
completed prior to operational testing by our independent Navy and 
Marine Corps Operational Test Agencies.
    With respect to the quality of testing and strengthening the 
organizations that perform that testing, since 2009 we have completed 
annual self-assessment reviews and reports to evaluate and confirm the 
adequacy of our Navy and Marine Corps T&E workforce, facilities, 
process and practices. We have received OSD concurrence on that 
assessment in their annual DOD Developmental T&E Reports to Congress. 
Our Naval Systems Commands (SYSCOM), Program Executive Offices and 
Naval Warfare and System Centers utilize a Competency Aligned 
Organization and Integrated Product Team business model to support T&E 
activities. SYSCOM Commanders structure and staff their organization to 
meet workload demands, and provide required T&E technical expertise.
    In the Department of the Navy, our focus on quality testing 
provides a venue to systematically assess and demonstrate system 
performance at each phase of development from design through 
sustainment. Through testing, acquisition programs gain a better 
understanding of any technical challenges early on to ensure the system 
can perform as intended in an operational environment in a systems-of-
systems content. In doing so, T&E provides an essential service in 
advancing the overall safety and combat effectiveness of our 
warfighters and the systems delivered to them.
    Dr. LaPlante. To improve test quality, the AF is identifying near 
to mid-term investments to restore and improve World War II-era test 
infrastructure and create modern capabilities to meet future test 
requirements. Specific focus areas include:

    1.  Test Range Improvement and Modernization: The AF is pursuing 
improvements to 1960s era range instrumentation. These improvements 
will provide needed instrumentation agility, standardized dynamic data 
access, and seamless data transport. In addition, they will enable 
``system of systems'' testing through the fusion of range display 
systems.
    2.  Electronic Warfare (EW) Test Capability Modernization: Planned 
upgrades will resolve existing shortfalls and will enable the testing 
of legacy and new EW threat waveforms in realistic densities and 
fidelities to address expected threats in anti-access/area denial (A2/
AD) integrated air defense system (IADS) environments. Ultimately, 
these upgrades will support the requirements and complex missions of 
5th and 6th generation systems.
    3.  Ground Test Capabilities and Facilities: Wind tunnel and engine 
test facility updates will benefit future AF test programs such as the 
Long Range Strike Bomber, KC-46 and Hypersonic-Boost-Glide Vehicle.
    4.  Cyber Test Infrastructure Improvement and Modernization: The AF 
is pursuing new capabilities to address expanding cyber offensive/
defensive and weapons systems testing in response to defined threats. 
Specifically, the AF is seeking to develop a Cyber Defense DT&E 
environment and the methodologies, techniques, tools and metrics to 
determine and evaluate mission effectiveness and success for cyber 
protection, detection, reaction and restoration.

    In addition to infrastructure improvements, the AF is pursuing 
efforts to strengthen test organizations through best practice and 
workforce management initiatives. Two such initiatives are:

    1.  Adjust Acquisition Program Emphasis on the Concept of 
Operations/Intended Use: This emphasis would improve acquisition 
programs' OT results. OT is the capstone assessment of the system's 
ability to perform the mission. Per OSD Acquisition policy, CONOPS/OMS/
MPs are required prior to Milestone `A' and its OT implications are to 
be identified in the Milestone `A' Test and Evaluation Master Plan 
(TEMP), i.e., early in the acquisition process. (DODI 5000.02)
    2.  Professional Test and Evaluation Workforce Management: The Air 
Force is pursuing a formal Management Function that will provide day to 
day management responsibility over the T&E functional community. This 
Functional Manager will maintain an institutional focus with regard to 
workforce development, and will be responsible for ensuring the test 
specialty is equipped, developed, and sustained to provide AF T&E 
capabilities.
                                 ______
                                 
               Questions Submitted by Senator Joe Manchin
                      technology domain awareness
    40. Senator Manchin. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, how important is it for DOD and your Service to 
have better global insight into research and development, both private 
and public? What benefits could increased technology domain awareness 
have for the Department and your Service?
    Ms. Shyu. The technology playing field is changing, and important 
breakthroughs in many fields are now often driven by commercial needs 
and international development. Therefore, it is critical that we both 
understand the global research and development environment and leverage 
these breakthroughs where possible. By better understanding where both 
our potential enemies and our allies are focusing their research 
efforts, we are able to more accurately forecast future threats, as 
well as leverage areas where our allies may be more advanced than we 
are currently.
    The Army conducts a comprehensive annual review of 15 to 20 leading 
open source forecasts on emerging Science and Technology (S&T) trends. 
We compile the top trends and publish them in an unclassified report. 
This analysis then informs the development of future Army concepts. 
Additionally, the Army uses crowd-sourcing techniques to engage 
nontraditional partners in order to generate innovative ideas and novel 
capabilities that the Army could employ in the future (2035-2040). 
Subject matter experts analyze these ideas to determine which are 
feasible, what research needs to be done, and when the technology or 
capability may be ready. This information is then used to better inform 
wargaming scenarios and enable future warfighting concepts.
    Additionally, the Department of Defense is sponsoring a Technology 
Domain Awareness (TDA) initiative, which aims to integrate commercial 
research and development with defense capabilities and expand awareness 
and application of commercial investments. This effort connects defense 
acquisition with innovative providers to enable better, faster, and 
cheaper capability development. The Army is working with DOD to learn 
more about TDA's utility, understand how to potentially integrate 
existing Army technology search tools within TDA, and will explore the 
potential of a TDA pilot program within the Army.
    Mr. Stackley. The Office of Naval Research (ONR) has offices in 
London, Prague, Singapore, Tokyo, Sao Paolo, and Santiago--and closely 
coordinates activities with the other services and Assistant Secretary 
of Defense (Research and Engineering). The mission of these ONR Global 
offices is to catalyze the Department of Navy (DON) science and 
technology (S&T) connectivity to the international research community 
and the Naval Research Enterprise. This technology domain awareness 
benefits DON and DOD by leveraging international S&T investment, 
building partnerships, and preventing technological surprise on the 
battlefield by tracking technology advances and applications, 
particularly in emerging fields such as quantum computing and synthetic 
biology. We search for emerging research and technologies to help 
address current Naval needs, as well as requirements for future 
capabilities.
    As stated in the DOD International Engagement Strategy (2014), the 
mission of international engagement is to ``leverage global R&D 
investment to ensure superior and affordable development in areas 
critical to defense.'' Our International Science Program gives 
scientists from academia, Government and industry opportunities to 
engage leading international scientists and innovators. Our staff, in 
partnership with scientists throughout the Naval Research Enterprise, 
develops key collaborations with international counterparts, and 
identifies the organizations and individuals conducting novel research 
that will significantly advance the Naval S&T Strategy.
    ONR Global establishes contacts with international S&T leaders, 
giving us new perspectives and helping identify trends and forecast 
threats. ONR Global S&T engagement enables us to foster international 
partnerships through mutually beneficial technology advancement. We 
collaborate with the world's scientists and engineers in partnerships 
to benefit the U.S. and our allies and to support security cooperation 
objectives through science diplomacy.
    Dr. LaPlante. With offices in London (UK), Tokyo (Japan), Santiago 
(Chile), and Arlington, Virginia, Air Force International Project 
Officers provide access to world-class researchers and facilities by 
providing grants, supporting conferences, and facilitating scientist 
and engineer exchanges. Technical experts within the Air Force are 
expected to be globally knowledgeable within their domains, and serve 
important roles representing Air Force interests within bi-lateral and 
multi-lateral fora where critical technical information is developed 
and exchanged. Through these relationships, opportunities are 
identified to leverage investments, advance capabilities, produce 
standards for interoperability, and avoid technological surprise. 
Activities include collaborative research, facility sharing, personnel 
exchanges, and information exchanges. The Air Force and DOD must 
continuously monitor, leverage, and increase insight into global 
research and development. The DOD no longer has sole access to nor the 
ability to control the development of cutting edge technology. Public 
and private global research and development is driving revolutionary 
innovation in many emerging areas at a breathtaking pace and is 
accessible to everyone, presenting asymmetric technology trends to the 
DOD. Increasing global technology domain awareness provides an 
effective understanding of the technical landscape as it relates to 
defense needs and better informs where and when to invest Air Force and 
DOD research and development.

    41. Senator Manchin. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what is your Service doing to achieve greater 
insights into intellectual property being developed and advances being 
made by public and private sector research and development? How can 
this effort best be structured to maximize the value, especially 
through development of opportunities to leverage these advances, for 
the whole Department?
    Ms. Shyu. The technology playing field is changing, and important 
breakthroughs in many fields are now often driven by commercial needs 
and international development. Therefore, it is critical that we both 
understand the global research and development environment and leverage 
these breakthroughs where possible. By better understanding where both 
our potential enemies and our allies are focusing their research 
efforts, we are able to more accurately forecast future threats, as 
well as leverage areas where our allies may be more advanced than we 
are currently.
    The Army conducts a comprehensive annual review of 15 to 20 leading 
open source forecasts on emerging Science and Technology (S&T) trends. 
We compile the top trends and publish them in an unclassified report. 
This analysis then informs the development of future Army concepts. 
Additionally, the Army uses crowd-sourcing techniques to engage 
nontraditional partners in order to generate innovative ideas and novel 
capabilities that the Army could employ in the future (2035-2040). 
Subject matter experts analyze these ideas to determine which are 
feasible, what research needs to be done, and when the technology or 
capability may be ready. This information is then used to better inform 
wargaming scenarios and enable future warfighting concepts.
    The Army leverages the independent research and development pursued 
by industry and academia through multiple forums. One example is the 
Army Research Laboratory's (ARL) Open Campus Initiative. This effort 
enhances innovation by connecting Army researchers with the substantial 
intellectual resources of the global scientific research community, 
including academia, industry and small business. Since its inception, 
the Open Campus has initiated 84 Cooperative Research and Development 
Agreements with small businesses, industry and academia, with another 
70 in the works. More than 500 researchers have leveraged the 
laboratory to conduct side-by-side research in critical Army Science 
and Technology portfolios.
    Mr. Stackley. U.S Naval forces require a broad spectrum of core 
capabilities to assure access to the global maritime domain. 
Consequently, the Naval Science and Technology (S&T) strategy invests 
in a balanced and broad portfolio of promising scientific research and 
innovative technology in the United States and around the world.
    The Office of Naval Research Global (ONR Global) establishes 
contacts with international S&T leaders, giving us new perspectives and 
helping identify trends and forecast threats. This technology awareness 
prevents technological surprise on the battlefield by tracking 
technology advances and applications, particularly in emerging fields 
such as quantum computing and synthetic biology. ONR Global S&T 
engagement enables us to foster international partnerships through 
mutually beneficial technology advancement.
    Achieving this mission requires working with the best and the 
brightest people from partner organizations both at home and abroad. 
Fostering the intellectual capital necessary for America's Defense is 
fundamental to our national security.
    The Naval S&T strategy ensures the technical superiority of the 
Navy and Marine Corps and avoids technology surprise.
    Dr. LaPlante. The DOD Technology Domain Awareness initiative is 
focused on developing the networks, knowledge, and business processes 
to connect our needs to industry's technology development and potential 
solutions. DOD stakeholders will have improved insight into thousands 
of commercial businesses, start-ups, venture capitalists, universities, 
and defense contractors. Additionally, the Air Force and DOD have 
initiated a continuing series of joint technical interchange meetings 
with industry, organized by 17 DOD Science and Technology (S&T) 
Communities of Interests (CoIs). Through a continuous virtual exchange 
of data and in-person reviews, the S&T CoIs provide industry with 
detailed information about future program plans and requirements, while 
gaining enhanced understanding and visibility into relevant industry 
research and development efforts. Through this increased transparency 
and awareness, our goal is to better focus and align industry's 
investment and solutions toward Air Force needs and problems.
                      current acquisition concerns
    42. Senator Manchin. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what current program in your portfolio are you most 
concerned about? What are the challenges about it that have you 
concerned and how do you plan on mitigating those issues?
    Ms. Shyu. I remain most concerned not about one particular program, 
but about the ongoing budgetary instability that affects every one of 
the Army's modernization programs. Stable resources are a primary 
factor in program success, and the continual budget cuts and lack of 
long-term fiscal stability represent a significant threat to our 
modernization efforts. Since manpower costs cannot be reduced quickly 
or significantly, the Research, Development, and Acquisition accounts 
take the brunt of budget cuts. These long-term funding uncertainties 
significantly hamper the Army's capacity to plan and execute programs 
for the development of new Soldier capabilities.
    Mr. Stackley. While not a specific program, there are challenges in 
defining requirements and pricing contracts for fielded systems that 
are no longer managed by the PEO/PM structure. While we've modestly 
restored our acquisition workforce to where we believe it needs to be 
to support our programs, we are focusing additional effort and making 
progress to train and rebuild the acquisition workforce responsible for 
these other acquisition and procurement areas. Today the budget 
environment threatens to dismantle the progress made in restoring the 
acquisition workforce.
    Dr. LaPlante. The program I am most concerned about is the Next 
Generation Operational Control System (OCX), which is the ground 
control system within the Global Positioning System (GPS) Enterprise.
    The contractor's approach of concurrent systems engineering for the 
OCX program, as well as cyber-security requirements that proved more 
challenging than anticipated, drove both cost and schedule breaches on 
the program. In December 2013, the GPS Program Director ordered a pause 
to further design work until corrective actions were implemented by the 
contractor. I reviewed these corrective actions along with USD(AT&L) at 
a Deep Dive in February 2015 and they appear to be moving the program 
in the right direction.
    We have put the following additional controls in place on OCX: 
First, USD(AT&L) established five key milestones with cost/schedule 
tripwires that require Department review if the program breaches. 
Second, SECAF requested an Acquisition Incident Review on 29 Apr 15, 
chartered by the PEO for Space, to identify root causes of program 
issues and make recommendations to the acquisition community. Finally, 
the GPS Program Director commissioned a long-term study to determine if 
there are viable alternatives in the event that one or more tripwires 
are triggered and the Department makes the decision that the current 
OCX contract approach is no longer viable. As a result of these 
oversight controls, OCX continues to be under rigorous review by the 
Air Force and Department.

    43. Senator Manchin. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what broader lessons for the future can we learn 
from these challenges?
    Ms. Shyu. Acquisition reform is a goal sought over the last several 
decades. The recent steps taken by both the House and Senate, as well 
as the Department's acquisition reform legislative proposals, reflect a 
shared commitment to streamline the acquisition process. However, the 
acquisition process works in tandem with budgeting and requirements 
processes. The complex integration of these processes, combined with 
the multitude of stakeholders who can influence or stall program 
decisions, is a significant impediment to successful programs. True 
acquisition reform must fundamentally take a holistic look at the 
integration and mechanics of these processes and significantly reduce 
the stakeholders impacting program decisions. Without streamlining the 
decision process and willingness to accept manageable risk, we cannot 
significantly reform the defense acquisition system.
    Mr. Stackley. Defense acquisition is a large enterprise of complex, 
interdependent systems-of-systems, engineering disciplines, procurement 
rules, budget rules, organizations and processes. Oversight and 
governance of the enterprise is necessary and is expected, but it is 
crucial to strike the right balance in order to achieve affordable 
outcomes. Experience has shown that an experienced Acquisition 
Workforce is the single-most important fundamental in achieving strong, 
repeatable performance in Defense acquisition, and requires highly-
educated and highly-skilled professionals. Lessons learned from highly 
successful programs highlight that the right balance is attainable by 
applying the fundamental disciplines already known and available to 
each Program Manager, then exposing the products of that discipline to 
simplified oversight by an appropriate but limited number of highly 
experienced managers, engineers, and business executives serving at the 
Service Secretariat and OSD levels. The current oversight and 
governance requirements, however, have added multiple layers of 
prescriptive processes, authoritative organizations and extensive 
reporting and documentation requirements that run counter to the 
objectives of efficiency, productivity, and performance. The DON 
recommends that the Congress work with USD(AT&L) in the current effort 
to roll back legislation that has produced unnecessary and redundant, 
regulatory and reporting burdens.
    Dr. LaPlante. Command and control systems are inherently complex. 
As we learn more about the challenges and complexity that cyber 
security brings to complex systems, it is important we develop these 
using a very robust systems engineering approach. Agile software 
development has proven to be an effective approach for the iterative 
development of very large software systems. We found on the Next 
Generation Operational Control System (OCX) for Global Positioning 
System satellites that the added complexity from new cyber security 
requirements may have been more than could be absorbed into an agile 
development, resulting in substantial rework. So we returned to a more 
structured systems engineering approach that appears to be bearing 
fruit. As we move into the future and incorporate similar cyber 
security requirements into other command and control systems, we will 
relook at how best to balance the efficiencies of agile software 
development with the structure of a traditional systems engineering 
approach.
                                 ______
                                 
                Questions Submitted by Senator Tim Kaine
   best practices success of weapons systems acquisition reform act 
                                (wsara)
    44. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, since the implementation of the WSARA and the 
Better Buying Power initiatives, GAO indicates that acquisition program 
costs have come more under control. What are some of the specific steps 
that have led to these successes?
    Ms. Shyu. Sequestration has significantly reduced investment in 
Army acquisition programs. As a result, the Army has started fewer new 
programs and faces an all-time low in modernization investment. The 
Army recognizes that given this reduced investment, it is more 
important than ever to ensure that programs are affordable to maximize 
the return on the limited investment available. Accordingly, the Army 
has implemented several process controls designed to promote 
affordability.
    First, the Army requires Program Managers (PMs) to consistently 
look for ways to reduce program costs throughout the acquisition life-
cycle. Accordingly, all PMs establish ``Should-Cost'' targets for 
programs to set cost goals below budgets. Second, the Army requires PMs 
to establish an affordability assessment and competitive strategy at 
each milestone decision. Setting and enforcing affordability caps for 
major programs helps screen requirements to ensure that programs remain 
viable and within budget. While managing programs to affordability 
constraints is mandatory for major ACAT I programs, the Army is 
expanding this policy to include all programs. These efforts promote 
improved management of the leading causes of cost growth in programs.
    Additionally, the Army conducts Configuration Steering Boards (CSB) 
for Major Defense Acquisition Programs/Major Automated Information 
System programs and encourages them for all other acquisition programs. 
CSBs bring together members of the acquisition, requirements, and 
resourcing communities to review system requirements and technical 
configuration changes to help achieve program performance objectives 
while ensuring the systems remain affordable. Additionally, many 
programs use a pre-planned Knowledge Point (KP) process to manage 
requirements through expanded collaboration between our program 
managers and combat developers. This review process identifies and 
addresses key trade-offs that affect affordability and performance. 
Moreover, this process allows senior leaders to align requirements and 
resources early in the program's development, maximizing our 
investments by achieving the best capability at an affordable cost 
through cost-informed trades and capability prioritization.
    Mr. Stackley. The DON designed its acquisition process, commonly 
referred to as the Navy Gate Review process, to ensure there is no gap 
between the Requirements and Acquisition organizations so that the Navy 
understands the relationship between requirements, technical 
feasibility, and cost. The process requires the Navy/Marine Corps 
operational requirements leadership and acquisition leadership to 
agree, and repeatedly affirm that the agreement throughout the 
development, acquisition, and sustainment of a system. The DON uses 
Gate Reviews to eliminate any misalignment between requirements and 
acquisition early in a program, and to check alignment regularly.
    Each `gate' is co-chaired by the Service Chief or senior military 
requirements officer and the Service Acquisition Executive (SAE). In 
all there are six gates, with the first three chaired by the Service 
Chief (co-chaired by the SAE) and ensure warfighter requirements are 
well understood and can be translated into technical requirements that 
the acquisition community can affordably achieve in the commercial or 
defense marketplace. The last three gates are chaired by the SAE (co-
chaired by the senior military requirements officer) and ensure the 
technical specification, statement of work, and Request for Proposal 
have accurately translated the warfighter's requirements into an 
acquisition approach that is executable, affordable, and agreeable 
across acquisition and requirements leadership.
    This process provides governance and oversight, and ensures 
adherence to the DON's basic principles to get the requirements right, 
perform to a stable plan, make every dollar count, rely on an 
experienced acquisition workforce, and foster a healthy industrial 
base.
    Dr. LaPlante. The Air Force remains committed to keeping the costs 
of weapons program development under control. One of the steps we've 
taken that have led to our successes is encouraging programs to make 
what are often difficult trades in cost and capability. Essentially, we 
are working to figure out where can a program reduce or eliminate a 
requirement to save cost without impacting the warfighter's capability. 
These trades are never easy, but they force us as a team to determine 
where we are willing to decrease some functionality to save costs and 
still provide the warfighter the capability they need. In programs 
where we have done these trades so far, we've been successful in 
enabling the Air Force to be strategically agile and deliver 
capabilities on time.
    The Air Force also remains committed to Should Cost, which was 
first introduced in Better Buying Power (BBP) 1.0. Should Cost is a 
management tool designed to proactively target cost reduction and drive 
productivity improvements into programs. I am pleased to announce that 
the Air Force's fiscal year 2014 Realized Savings were $2.8 billion. 
While that is a tremendous start, I continue to challenge all PEOs and 
PMs to seek out additional Should Cost opportunities, reaping as much 
as possible from our current portfolio.

    45. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, I am told there are proposed changes to processes 
created by WSARA, which GAO says have helped improve acquisition 
outcomes, for example by putting more discipline into checking how 
ready technologies are and by mandating strict oversight reviews of 
programs before they fall behind schedule. Do you have concerns about 
these proposed changes?
    Ms. Shyu. Section 203 of the Weapon System Acquisition Reform Act 
of 2009 currently requires the Department to utilize competitive 
prototyping prior to Milestone B approval of the development phase in 
an acquisition program. In practice, many acquisition programs seek to 
upgrade existing systems to meet additional requirements and do not 
employ as many novel, untested technologies. Therefore, full 
prototyping of a system may not be cost-effective in these programs. 
Moreover, the current statute does not address other measures designed 
to address technological maturity and attendant risks in acquisition 
programs, to include modeling and simulation, systems engineering, use 
of multiple designs approaches, and subsystem prototyping, e.g., 
prototyping of components.
    The Department has proposed modification of this requirement to 
provide greater flexibility in the Army's ability to tailor risk 
mitigation approaches to fit the product being acquired. The language 
moves from a single prescriptive requirement to assess competitive 
prototyping to a set of guidelines that addresses a broader set of 
approaches to programmatic and technical risk reduction. In addition, 
the elimination of a complex waiver process will further streamline the 
documentation requirements imposed on Program Managers. I have no 
concerns about these proposed changes, as they will strengthen and 
broaden the mechanisms in place to ensure that program risks are 
readily identified and effectively managed.
    Mr. Stackley. The DON's acquisition process, commonly referred to 
as the Navy Gate Review process involves discipline in assessing 
technology readiness levels and associated risks, and adherence to the 
basic principles of getting the requirements right and performing to a 
stable plan. The Gate Review process has resulted in the requirements 
and acquisition community being aligned around the table and at each 
step of the program, starting with the definition of the requirement 
translated into technical requirements that the acquisition community 
can affordably achieve in the commercial or defense marketplace, right 
down to the contract award and execution of the contract. When there is 
no separation between requirements and acquisition throughout the 
process, the DON is able to keep control over the requirements as well 
as the cost and schedule to meet those requirements.
    Dr. LaPlante. The Air Force concurs with the GAO that WSARA 
provided additional discipline in the early stages of the acquisition 
lifecycle to help set up programs for success. We believe the current 
assessment of technology readiness and program oversight is 
appropriate.
      working with high tech startups and technological innovators
    46. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, this week, Secretary Carter was in Silicon Valley 
engaging some of our high tech companies. It appears the Government no 
longer seems to attract the fastest moving, most innovative companies. 
What has been your experience in trying to work with some of the best 
high tech commercial companies?
    Ms. Shyu. The Army recognizes the importance of leveraging high-
tech commercial innovation. However, some of these companies have 
difficulty working within the Government's acquisition process due to 
barriers in three primary areas--the complexity of the regulations, 
compliance with audit oversight, and data rights. First, contracting 
with the Federal Government is a highly regulated process. The rules 
and regulations governing defense acquisition frequently change and 
evolve. Both the complexity of the regulations and the cost to keep up 
with the changes can make it difficult for some companies to enter the 
Government contracting arena. Second, the numerous audit and oversight 
bodies with jurisdiction to oversee Defense contracts may dissuade some 
companies from competing. There is a financial and administrative 
burden associated with compliance that may outweigh the benefit for 
some companies. Finally, Federal contracts generally--and Defense 
contracts particularly--give the Government broad rights with regard to 
the two types of intellectual property that are most likely to be of 
concern to small and midsize businesses: (1) patent rights, and (2) 
rights in technical data. Smaller businesses can experience particular 
difficulties in protecting their rights because of their size and the 
comparatively limited resources available to them.
    IT capability is critical to connecting our global Army, yet 
commercial innovation often outpaces our traditional acquisition 
processes. As part of the Department's Better Buying Power initiative, 
the Army is working to address the challenges associated with access to 
commercial innovation and IT acquisition. The Army is currently 
participating in Department-wide efforts to identify barriers to the 
adoption and use of commercial technology for military systems. This 
study will facilitate recommendations to improve the incorporation of 
commercial off the shelf technology from nontraditional information 
technology contractors. A related area of focus is designed to improve 
the process for technology insertion into our current weapon systems. 
This allows the Army to more quickly leverage commercial innovation as 
opposed to waiting until the overall system is modernized. Moreover, 
the Army is also investing in modular open systems architecture. Open 
architecture standards and modularity opens the market to more 
companies with cutting edge capabilities that may not traditionally 
compete for development of a full system.
    Mr. Stackley. The DON, through the Office of Naval Research, has 
effectively used Broad Agency Announcements for research topics to 
encourage small and large companies to share and develop their ideas 
and new or improved technologies. For small businesses, the DON has 
effectively used the Small Business Innovation Research (SBIR) and 
Small Business Technology Transfer (STTR) program to encourage small 
business innovators to share and develop their new or improved 
technologies. To encourage small business participation in our 
programs, the DON has assigned each Deputy Program Manager the 
responsibility to be the small business advocate for all things 
associated with the program.
    Dr. LaPlante. The Air Force and DOD must continuously strive to 
increase access to and collaboration with nontraditional suppliers. 
Expanding and encouraging the use of Other Transaction Authorities, 
Cooperative Research and Development Agreements, Open Challenges, and 
Small Business programs are flexible and potentially faster processes 
to tap the innovative talent of nontraditional vendors. The Air Force 
is always on the lookout to find the leading edge technologies often 
found in nontraditional vendors. We recently partnered with 
nontraditional defense companies, Applied Minds and Stottler Henke 
Associates, to develop innovative space operations solutions, building 
an immersive visualization environment tool and using artificial 
intelligence to aid satellite communications. It's true, our capability 
development paradigm is inadequate. To the extent that our current 
policies and regulations can be modified to change the paradigm from 
large, complex programs rife with crippling interdependencies to 
programs with simple, severable components, open architectures, and 
more distributed participation, we will enact those changes.

    47. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, what steps should we take so that we can get more 
of these companies working on our defense acquisition programs?
    Ms. Shyu. The Army recognizes the importance of leveraging high-
tech commercial innovation. As part of the Department's Better Buying 
Power initiative, the Army is working to address the challenges 
associated with access to commercial innovation. The Army is currently 
participating in Department-wide efforts to identify barriers to the 
adoption and use of commercial technology for military systems. This 
study will facilitate recommendations to improve the incorporation of 
commercial off the shelf technology from nontraditional information 
technology contractors. A related area of focus is designed to improve 
the process for technology insertion into our current weapon systems. 
This allows the Army to more quickly leverage commercial innovation as 
opposed to waiting until the overall system is modernized. Moreover, 
the Army is also investing in modular open systems architecture. Open 
architecture standards and modularity opens the market to more 
companies with cutting edge capabilities that may not traditionally 
compete for development of a full system.
    To increase partnership between the department and technology 
leaders, the Secretary of Defense announced the creation of the 
department's first permanent office in Silicon Valley as well as a plan 
to provide venture capital to tap into developing technology for use 
across the Army and Department of Defense. The Army is looking forward 
to working through these new initiatives to leverage new technologies 
that make us faster and better connected. These steps are the first of 
many to improve our ability to adopt the cutting edge technologies that 
will enable our information dominance into the future.
    Mr. Stackley. The DON, through the Office of Naval Research, has 
effectively used Broad Agency Announcements for research topics to 
encourage small and large companies to share and develop their ideas 
and new or improved technologies. For small businesses, the DON has 
effectively used the Small Business Innovation Research (SBIR) and 
Small Business Technology Transfer (STTR) program to encourage small 
businesses to share and develop their new or improved technologies. To 
encourage small business participation in our programs, the DON has 
assigned each Deputy Program Manager the responsibility to be the small 
business advocate for all things associated with the program.
    To encourage further opportunity and greater participation by high-
tech startups and technological innovators, the DON recommends that the 
Congress work with USD(AT&L) in the current effort to identify and roll 
back legislation that has produced unnecessary and redundant regulatory 
and reporting burdens on Program Managers. Additionally, a timely, 
predictable defense budget would improve both Government and industry's 
ability to manage outlay risk and invest in R&D, facilities, and 
people.
    Dr. LaPlante. Intellectual property concerns and burdensome 
acquisition processes often make doing business with the Air Force and 
DOD unattractive to nontraditional suppliers. There are policy and 
authority adjustments that can help to reduce and eliminate some of 
these barriers and impediments. For example, the Air Force is 
establishing a Small Business Innovation Research (SBIR) direct to 
Phase II pilot program to provide full and immediate research and 
development support to small businesses with mature technologies and 
concepts. This will reduce the number of associated low dollar, short 
duration Phase I contracts issued, expedite technology transition, and 
achieve a higher return on investment. In addition, the Air Force 
Research Laboratory Center for Rapid Innovation will use this new 
authority to establish a Strategic Innovation component of the SBIR 
program to generate innovative, game-changing concepts. Expanding and 
encouraging the use of Other Transaction Authorities, Cooperative 
Research and Development Agreements, Open Challenges, and Small 
Business programs are flexible and potentially faster processes to tap 
the innovative talent of nontraditional vendors.
                 incentives for government contractors
    48. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, one theme that has come out in the current 
discussion of acquisition reform is the need to develop better tools to 
provide incentives to contractors to help improve acquisition outcomes. 
What tools do you have, or wish you had, to incentivize contractors to 
reduce costs and deliver the best technology?
    Ms. Shyu. Since 2010, with the implementation of the initial Better 
Buying Power guidance, the Army has initiated several measures to 
enhance the acquisition process and incentivize contractors to reduce 
costs while continuing to deliver the best technology for the 
Warfighter.
    Selection of Appropriate Contract Type and Incentive Strategies: 
The selection of a contract type that most appropriately balances the 
responsibility assumed by the contractor for the costs of performance 
and provides the contractor with the greatest incentive for achieving 
or exceeding standards or goals is essential for successful acquisition 
outcomes. To that end, in June 2014, the Army provided updated guidance 
regarding the selection and justification of contract type based on the 
principles set forth in Better Buying Power. This memorandum emphasized 
that all procurements are unique in nature, and that contracting 
officers should select the appropriate contract type for the product or 
service being acquired. Furthermore, in line with the Performance of 
the Defense Acquisition System 2014 Annual Report, which emphasized 
that a key element for improving acquisition performance is improving 
how contract incentives are aligned with performance objectives, and 
how effective those incentives are when measured against the 
performance objectives, the Army challenged both program and 
contracting offices to consider, where appropriate, incentive-type 
contracts, including Fixed Price Incentive Firm Target, to encourage 
industry to reduce its costs while providing first-class equipment for 
the Warfighter. The Army continues to work with the Department of 
Defense (DOD) to further refine guidance for the use of incentives, 
while ensuring the acquisition professionals maintain the latitude to 
identify the best contract type for the individual procurement.
    Other Transaction Authorities (OTAs): OTAs are valuable tools 
utilized by the Army to establish contractual relationships with 
technology firms to obtain leading-edge research and development or 
prototype products. By its nature, an OTA allows for more flexibility 
and allows for the establishment of a contractual relationship with 
technology firms that otherwise would be unwilling or unable to comply 
with the Government's procurement regulations. For example, 
intellectual property terms and conditions and cost accounting standard 
clauses are negotiable under an OTA and are not as restrictive as those 
required by the Federal Acquisition Regulation. In recent years, many 
projects have been successfully executed by t he Army with significant 
participation from nontraditional defense firms. The Army is currently 
working with the DOD to explore the possibilities of establishing an 
OTA Community of Practice to promote the increased use of OTAs for 
Prototyping and Research projects.
    Superior Supplier Incentive Program: In fiscal year 2015, the Army 
implemented the Superior Supplier Incentive Program at the direction of 
the Defense Acquisition Executive. The program recognizes the Army's 
high-performing industry partners based on past performance 
evaluations. The 2014 superior supplier list, published in February 
2015, generated extensive discussions with industry about how they can 
continue to improve their performance. Moving forward, the superior 
supplier list will be jointly released with both the Air Force and Navy 
lists on an annual basis.
    Mr. Stackley. Adherence to basic principles--to get the requirement 
right, perform to a stable plan, make every dollar count, rely on an 
experienced acquisition workforce, and foster a healthy and competitive 
industrial base--have proven to be useful tools to incentivize 
contractors. Our most successful programs have stable requirements, 
stable designs, and stable budgets. This stability translates into 
predictable, reliable performance, unit cost reduction, improved 
material purchasing and workforce planning, retention of skilled labor 
and the ability for industry to invest in facility improvements, all 
resulting in more efficient production and a more affordable program.
    Dr. LaPlante. Under Secretary of Defense for Acquisition, 
Technology and Logistics released the implementation directives for the 
third iteration of Better Buying Power initiatives during a Pentagon 
press conference April 9, 2015 that included a stronger emphasis on 
innovation, technical excellence, and the quality of our products. This 
updated policy will continue to prioritize previously established core 
initiatives aligning to those goals, including program affordability, 
``should cost'' savings opportunities, competition emphasis, 
bureaucratic reduction, improved services acquisition and increased 
professionalism of the workforce.
    Better Buying Power 3.0 Implementation Guidance identifies 
``Incentivize Productivity in Industry and Government'' as a major 
initiative under this effort, with ``aligning profitability more 
tightly with Department goals'' as sub-element. Under this initiative, 
profit incentive is tied to better performance and lower profit to 
poorer performance. Industrial performance responds to the incentive 
structure that the Department designs into our business arrangements. 
While the Department will continue to refine its guidance on the use of 
incentives in contracting to align profit with performance that ensures 
a defense industry that is competitive and innovative, the following 
are ongoing Air Force efforts to encourage contractors to improve 
acquisition outcomes:

      Manufacturing and Industrial Base Policy (MIBP): The Air 
Force supports the Deputy Assistant Secretary of Defense for MIBP, with 
the Defense Procurement and Acquisition Policy (DPAP) office and the 
Assistant Secretary of Defense for Research and Engineering (ASD(R&E)) 
with the development of a handbook of methods and best practices by 
August 2015 that informs DOD managers on how to engage more effectively 
with commercial technology companies using existing authorities. The 
handbook will emphasize Other Transaction Authority (OTA), Cooperative 
Research and Development Agreements (CRADAs), Federal Acquisition 
Regulation (FAR) Part 12, public-private partnership, use of 10 USC 
2373, and applicable FAR clauses to enable DOD to more quickly access 
companies that provide commercial technologies of interest and 
incentivize them to do business with DOD. In addition, the Air Force 
supports MIBP and DPAP in evaluating the potential for legislative or 
policy changes that would provide greater opportunity for access to 
commercial technology and report results by November 2015. This action 
will include an assessment of intellectual property, liability 
implications, and other commercial industry concerns.
    In addition, the Air Force utilizes two tools to incentivize 
superior contract performance in alignment with BBP 3.0 include 
incentive type contracts and the superior supplier incentive program:
    [Questions for the record with answers supplied follow:]

      Incentive Type Contracts: Air Force use of incentive type 
contracts, when appropriate, to facilitate better cost and schedule 
performance. In formulaic incentives contracts, such as those with Cost 
Plus Incentive Fee (CPIF) and Fixed Price Incentive Fee (FPIF) pricing 
arrangements, the impact of overruns and underruns are shared between 
the industry and Government based on a formula (established in the 
contract) that explicitly ties the contractor's cost or benefit to 
performance.
      Superior Supplier Incentive Program (SSIP): SSIP is 
designed to recognize higher-performing industry partners based on past 
performance evaluations, with the intent of incentivizing superior 
performers and creating healthy competition among industry.

    49. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, how do we incentivize them to invest their own R&D 
money in defense technologies?
    Ms. Shyu. Under Better Buying Power (BBP) 2.0 and 3.0, the 
Department expanded programs to leverage industry's Independent 
Research and Development (IR&D) to support priorities in defense 
acquisition. To better align industry IR&D with Department of Defense 
(DOD) needs, BBP 3.0 stresses improved communication between DOD and 
industry to restore a higher degree of Government influence and insight 
into these investments. One example of these initiatives is the Defense 
Innovation Marketplace, which is a one-stop shop for information on the 
Army's investment priorities and technology requirements. This website 
allows the Army to publish its investment priorities and provide 
initial direction to industry, which allows industry to better align 
its IR&D projects to the Army's needs. We will continue to work closely 
with industry to seek new avenues to increase the Soldier's 
capabilities and ensure our technological superiority.
    Perhaps most importantly, resource stability is the most essential 
condition for any potential investor. The threat of continued 
sequestration is the largest disincentive to the defense industry. 
Stable and predictable budgets demonstrate the Department's--and the 
country's--commitment to long-term investment and modernization.
    Mr. Stackley. Government Contractors' R&D money, or Independent 
Research and Development (IRAD), is largely spent on defense 
technologies. Better use of IRAD toward future defense needs requires 
continuous communication from the Department of the Navy on technology 
roadmaps and future plans.
    Dr. LaPlante. Two great examples of how the Air Force makes use of 
existing opportunities to incentivize Government contractors to invest 
their own research and development (R&D) money in defense technologies 
are the Defense Exportability Features (DEF) Pilot Program and the 
Other Transaction Authority (OTA). The DEF legislation and Pilot 
Program gives Air Force program offices the authority to spend R&D 
dollars on international requirements while requiring cost-sharing with 
their industry partners to incorporate exportability features into 
system designs. Traditionally the cost-sharing has been split 50/50 
between Government and industry and has resulted in lower per-unit 
costs.
    The Air Force Evolved Expendable Launch Vehicle (EELV) program 
utilizes the OTA to incentivize Government contractor R&D investment. 
OTA is granted from 10 US Code Section 2371 enabling Department of 
Defense programs to enter into agreements with industry to prototype 
projects that are directly relevant to weapons or weapons systems 
proposed to be acquired by the Department of Defense. The EELV program 
is using OTA to develop new rocket propulsion system(s) and increase 
competition for future launch systems. The Air Force is providing R&D 
to develop propulsion and launch system prototypes and industry 
partners will be required to invest at least 1/3 of the total cost of 
this prototyping project.
    role of the office of the secretary of defense vs. the military 
                                services
    50. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, I know that each of you and your staff manages some 
of your Services major weapons programs, while others are managed by 
Secretary Kendall and his OSD staff. How should we think about the 
proper role of the OSD versus the Military Services with respect to 
management of acquisition programs?
    Ms. Shyu. OSD oversight provides significant expertise and 
independent evaluation on the Department's major programs. Importantly, 
USD(AT&L) interfaces on behalf of the Army's major programs with OSD 
Cost Analysis and Program Evaluation and the Director, Operational Test 
and Evaluation. This relationship supports our efforts to successfully 
guide critical programs through the test and evaluation process and 
ensures that cost estimates are accurate and realistic at program 
initiation. Additionally, OSD plays an important role in adjudicating 
cross-Service issues on joint programs. This independent and external 
perspective ensures that the Department maximizes its limited resources 
across all three Services.
    Mr. Stackley. The Service Chief sets requirements and allocates the 
necessary resources to meet these requirements. It is the role and 
responsibility of the acquisition system to meet these requirements. As 
such, the DON's experience is that the greater role/involvement by the 
Service Chief in the acquisition process, the greater likelihood of 
successfully meeting the requirements within the resources provided. 
The DON's Gate Review process strives to achieve total alignment 
between requirements, resources, and acquisition by establishing shared 
responsibility for oversight and decision-making via a structured 
milestone process co-chaired by the CNO or CNO representative and the 
Assistant Secretary of the Navy (RD&A).
    Separately, USD (AT&L) and his OSD staff have an oversight role 
that is important for program management and they add value in that 
role. The Military Services are best suited to manage programs and the 
day to day business of the programs under their cognizance while 
allowing OSD insights and abilities to check the program as it 
proceeds.
    Dr. LaPlante. As the Services become more integrated in delivering 
war-winning effects, the impact of an Air Force program's success or 
failure may extend beyond just the Air Force in executing the mission; 
therefore, it makes good sense for programs to fall under the external 
decision authority and oversight of the Defense Acquisition Executive 
(DAE). This ensures that Air Force programs will meet all of the 
Services and/or Departments requirements. Additionally, DAE oversight 
decreases the risk of overly optimistic program planning and provides 
an objective assessment of affordability leading to realistic cost and 
schedule projections.

    51. Senator Kaine. Secretary Shyu, Secretary Stackley, and 
Secretary LaPlante, is there a healthy balance of programs managed at 
the OSD and Service level? What are the benefits and costs of this 
distribution of management?
    Ms. Shyu. OSD oversight provides significant expertise and 
independent evaluation on the Department's major programs. Importantly, 
USD(AT&L) interfaces on behalf of the Army's major programs with OSD 
Cost Analysis and Program Evaluation and the Director, Operational Test 
and Evaluation. This relationship supports our efforts to successfully 
guide critical programs through the test and evaluation process and 
ensures that cost estimates are accurate and realistic at program 
initiation. Additionally, OSD plays an important role in adjudicating 
cross-Service issues on joint programs. This independent and external 
perspective ensures that the Department maximizes its limited resources 
across all three Services.
    Mr. Stackley. The Service Chief sets requirements and allocates the 
necessary resources to meet these requirements. It is the role and 
responsibility of the acquisition system to meet these requirements. As 
such, the DON's experience is that the greater role/involvement by the 
Service Chief in the acquisition process, the greater likelihood of 
successfully meeting the requirements within the resources provided. 
The DON's Gate Review process strives to achieve total alignment 
between requirements, resources, and acquisition by establishing shared 
responsibility for oversight and decision-making via a structured 
milestone process co-chaired by the CNO or CNO representative and the 
Assistant Secretary of the Navy (RD&A).
    Separately, USD(AT&L) and his OSD staff have an oversight role that 
is important for program management and they add value in that role. 
The Military Services are best suited to manage programs and the day to 
day business of the programs under their cognizance while allowing OSD 
insights and abilities to check the program as it proceeds.
    Dr. LaPlante. Yes, I believe there is a healthy balance in the 
distribution of program authority and oversight between the Service and 
OSD level. Specifically, for larger ACAT I/IA acquisition programs, OSD 
oversight provides an objective assessment and integrates requirements 
across the Services. Additionally, our engagement with OSD across the 
full spectrum of our programs improves the Air Force's ability to meet 
affordability requirements, make sound business decisions, and reduce 
risk during program execution.

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