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[H.A.S.C. No. 106–40]



FOR FISCAL YEAR 2001—H.R. 4205







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MARCH 1, 2000



HERBERT H. BATEMAN, Virginia, Chairman
WALTER B. JONES, Jr., North Carolina
BOB RILEY, Alabama
CURT WELDON, Pennsylvania

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JOHN M. SPRATT, Jr., South Carolina
ADAM SMITH, Washington
JAMES H. MALONEY, Connecticut
MIKE McINTYRE, North Carolina

Peter M. Steffes, Professional Staff Member
Joseph F. Boessen, Professional Staff Member
Mary Ellen Fraser, Counsel
Diane W. Bowman, Staff Assistant



    Wednesday, March 1, 2000, Fiscal Year 2001 National Defense Authorization Act—Real Property Maintenance and Infrastructure Sustainment Funding

    Wednesday, March 1, 2000
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    Bateman, Hon. Herbert H., a Representative from Virginia, Chairman, Military Readiness Subcommittee
    Ortiz, Hon. Solomon P., a Representative from Texas, Ranking Member, Military Readiness Subcommittee


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

    Mashburn, Maj. Gen. Harold, Jr., Director of Facilities and Services Division, Office of the Deputy Chief of Staff for Installations and Logistics, U.S. Marine Corps

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

    Smith, Rear Adm. Louis M., Commander, Naval Facilities Engineering Command, U.S. Navy
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    Van Antwerp, Maj. Gen. Robert L., Jr., Assistant Chief of Staff for Installation Management, U.S. Army

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


[The Prepared Statements can be viewed in the hard copy.]
Chan, Kwai-Cheung, Director, Special Studies and Evaluations, National Security and International Affairs Division, U.S. General Accounting Office

Curtin, Neal P.

Mashburn, Maj. Gen. Harold, Jr.

Ortiz, Hon. Solomon P.

Robbins, Maj. Gen. Earnest O., II

Smith, Rear Adm. Louis M.

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

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Yim, Randall A.

[There were no Documents submitted for the Record.]

[The Questions and Answers are pending.]


House of Representatives,
Committee on Armed Services,
Military Readiness Subcommittee,
Washington, DC, Wednesday, March 1, 2000.

    The subcommittee met, pursuant to call, at 10:06 a.m., in room 2118, Rayburn House Office Building, Washington, DC, Hon. Herbert H. Bateman (chairman of the subcommittee) presiding.


    Mr. BATEMAN. The subcommittee will please come to order. And I apologize to our witnesses and to all others that we are later getting underway than the schedule calls for. My colleagues have conferences hither there and yon and other, I am sure, vital business that would deter them from being where they are supposed to be at this hour. I hope they will be joining us in great numbers shortly.
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    I would like to welcome everyone here today to the Subcommittee on Military Readiness Hearing on Real Property Maintenance. This is a critical quality of life area with a funding backlog that continues to grow with no indication that funding in the future will improve. The committee understands that the Department of Defense does not have a comprehensive strategy for managing its maintenance and repair needs. Each military service sets its own standards for maintaining its property using different methods to assess property conditions, prioritize repairs, and allocate funds. We are told that in some cases, bases and major commands within the services sometimes applied their own assessment criteria and do so inconsistently.

    I must tell you that it baffles me as to how the military departments can determine their actual needs and make intelligent decisions about how much money needs to be budgeted without having a consistent policy. Due to systematic underfunding, it seems obvious to me that the backlog of repairs and maintenance can be expected to continue to grow in future years as has been the case in the past. The transfer of scarce funds from other readiness accounts will continue to be necessary.

    As an example, records indicate that from fiscal years 1994 through 1999, the services moved $7.1 billion from other accounts into real property maintenance and base operations over and above the amount requested and authorized by the Congress. Although the amount varied between each service, Department of Defense records show that a portion of this money was moved from unit training funds, such as flight hours, tank miles, and steaming days. This, of course, has a direct impact on readiness. Now, I want to learn from our witnesses what we can expect in this area in the future.

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    For the past five years, Congress has been adding money to the defense budget, only to read in the press that it is pork that the military didn't ask for and doesn't want. I submit to you that had we not added over $10 billion to the military readiness budget during the past several years, the state of readiness and backlog of real property maintenance would be much worse than it is.

    We are very fortunate to have two panels of witnesses today who can help us understand the magnitude of the problems in real property maintenance management and some of the efforts, hopefully, that are ongoing to improve the situation. The first panel is made up of General Accounting Office representatives who are doing research in some of the areas associated with real property maintenance. I look forward to their testimony to help us understand the past funding of real property maintenance, especially the transfers that have been necessary in this area.

    Our second panel is made up of representatives from the Department of Defense and the four services who work these problems on a regular basis. The panel can give us insight into the challenges they face and some idea about how we can all work toward improving the working and living conditions of our men and women in the military services. We look forward to their testimony.

    The gentleman from Texas, Mr. Ortiz, and the Ranking Member of the subcommittee, is detained on some other business and will be joining us shortly. He has asked that I submit his written statement for the record.

    [The Prepared Statement of Mr. Ortiz can be found in the Appendix.]
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    Now we will begin with our first panel of witnesses, which consists of the following General Accounting Office witnesses: Mr. Neal P. Curtin, Associate Director, and Ms. Brenda S. Farrell, Assistant Director, National Security Preparedness Issues, National Security and International Affairs Division of the General Accounting Office. Mr. Curtin, Ms. Farrell, we welcome you; and your written statements will be made a part of the record, and you may proceed in any way you see fit.


    Mr. CURTIN. Thank you, Mr. Chairman. As you mentioned, we have submitted our statements for the record and we, actually, submitted two statements, one that summarizes work that we just issued yesterday and a report on a movement of funds, and the other summarizes work we did last year on the overall issue of the DOD management of the real property maintenance. I thought what I would do is take a few minutes this morning in my opening remarks to provide some background and perspective on those issues and kind of a brief overview of what GAO has been saying about these issues over the recent past.

    DOD and the military services are responsible for maintaining more real property than any other entity in the world. And some numbers that illustrate that, more than 320,000 buildings; those buildings contain about 2.1 billion square feet of space and include such diverse things as day care centers, barracks, aircraft hangars, utility generation plants, supply depots, and such unusual items as piers, and railroad lines; 1.1 million square yards of pavement for things like runways and parking areas; tens of thousands of miles of roads and bridges. All of those items have a plant replacement value, a total value, that is upwards of $1/2 trillion; that is over $500 billion.
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    Most of the funds to operate and maintain those facilities come out of the operation and maintenance accounts; specifically, through base operations and real property maintenance sub-activities. So maybe a couple of definitions there would be helpful. Real property maintenance funds are used to maintain and repair all those myriad facilities and structures. DOD and the services have been spending about $5 billion annually out of this real property maintenance area.

    Base operations, on the other hand, funds the services that provide the basic operation of the installations; things such as utilities, base communications, snow removal, security, and morale, welfare and recreation activities. And base operations funding runs in the range of $12 to $13 billion annually in recent years.

    In a 1997 report, GAO talked a little bit about what has happened to the DOD facilities since the post-cold war drawdown. And what we said was that the reduction in forces and in spending in real dollars in DOD was reduced by 30 percent or so, been roughly a 30 percent reduction. But DOD facilities worldwide in terms of the numbers of installations have only been reduced by about 21 percent. And in fact, in terms of square feet of installations, the reduction has only been about 10 percent. But during that same time, the real property maintenance funding was reduced by about 40 percent, a much greater cut than the space reductions.

    So this is part of what has led to the backlog in maintenance and repair projects that you refer to. In our work last year, we reported DOD's latest estimate of the backlog. It had grown from about $8.9 billion in 1992 to $14.6 billion in 1998. And I think it is safe to say that that backlog has continued to grow since then. Nothing has happened in the last year-and-a-half that would have reduced that backlog.
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    In that 1997 report, we recommended that DOD establish more consistent criteria and facility condition data, as you mentioned, use those tools to establish a better strategic approach to facility management and make sure that unneeded and obsolete facilities were being demolished to save operation and maintenance funds. At about the same time, and for several years, we included the defense infrastructure management area in our GAO high risk series among the government programs that we consider most vulnerable to fraud, risk, abuse, and mismanagement. In this case, the reason for including it on the list is because of the excess capacity and the lack of an overall facilities management strategy. There really is a risk of losing the value of those facilities.

    In September of last year, then we reported again on real property management and, again, we cited the inconsistencies that still existed in the policies and practices among the different services and, again, the lack of an overall DOD-wide strategy. In fact, we went so far as to say in that report—and I will quote from that—without an overall management strategy, the services real property maintenance is in disarray. We reported that the services were funding only a portion of the facilities maintenance requirements, thus allowing the backlog to continue to grow. And we made several recommendations aimed at improving the DOD-wide approach and strategy for real property maintenance. And we understand that DOD has taken recent action to implement some of those recommendations.

    We have been briefed on some of what DOD is doing and, clearly, they have initiated some promising activities and approaches. And it is still a little early to make sure they are going to work; implementation is always the key. It is easier to start some of these initiatives than to complete them. But I do feel comfortable in saying that, you know, at this point, DOD has been responsive to our latest report.
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    Against that backdrop, the Fiscal Year 2000 Defense Authorization Act mandated GAO to study various aspects of real property maintenance and base operations funding. The overall concern that the conference report expressed is with the impact of all this on readiness. And specifically, we were asked to look at four things, and one of them is the movement of funds by the services into and out of the real property maintenance and base operation sub-activities after the initial Congressional action. Second, the impact of the movement of these funds on unit training and quality of life issues. Third, the backlog of maintenance and repair and the impact that it has on readiness. And finally, DOD's management structure and process for handling facility management.

    The report issued yesterday focuses on just the first aspect of the act, dealing with the movement of funds. And I think we need to work with the committee and with the Senate side as well to decide what issues to pursue next and what priorities are going to be coming out of this hearing and any action this year.

    Regarding the movement of funds, let me just quickly summarize the report we issued yesterday. During 1994 to 1999, the period we are asked to look at, the four services—and this is the active component only—moved about $7.1 billion into base operations and real property maintenance over and above the $88.6 billion that Congress originally designated for those areas. That is about an eight percent increase over that period. The largest movement of funds was in the early years of that period, with the Army and Air Force moving the largest amount and the largest percentage of funds. Almost three-quarters of the increase was for base operations, with the remainder going for real property maintenance.

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    While it is difficult in DOD's system—in fact, you really can't do it in DOD's system—to directly track where the money comes from and where the money goes in the O&M accounts, we did want to try to get a handle on what was happening during this same period for unit training because the concern we had is that money was moving from training into these real property and base operations areas. And we found kind of a mixed situation there for unit training.

    The Army was the only service that consistently had a net movement of funds out of unit training, and they had movement into base ops and real property maintenance. From 1997 to 1999, for example, the Army obligated about $1.1 billion, or about 12 percent less for unit training than Congressionally designated. The Air Force moved funds out of training in the early years of our study, 1994 to 1995, but they actually moved greater amounts into training in the last four years. And the Navy and Marines consistently moved funds into unit training, about eight percent above the Congressional designations. So the picture there is not clear in all the services.

    DOD has considerable discretion to move funds among these sub-activities; and in many cases, Congress is notified of these movements. And some degree of flexibility is important, I think, in letting the services adjust to changes that occur during the year. At the same time, though, it is important that good, consistent judgments are being made to assure that funds are going to the most important activities and the most needed areas. And this is where the overall policy and strategy needs to come into play. That is where it is important, if you have that baseline, then you have better assurance that the money is moving in the right directions.

    A couple of comments to conclude here on readiness and the implications of the movement of these funds for readiness. I want to reemphasize that we have not drawn any conclusions at this point about the effect of this movement of funds on readiness. Moving funds into base ops and real property maintenance by itself doesn't automatically mean that readiness is being degraded by that movement for a few reasons. Most of the funds that we saw moving went into the operating forces budget activity, which is the main, most closely associated with readiness, the main activity. And a lot of those funds would go for things like repair of runways, or repair of maintenance facilities, that could have a direct positive impact on readiness and may be very good decisions.
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    Other funding could improve the quality of life or morale welfare and recreation activities that would have an indirect, but still, could have a positive impact on morale and readiness. Even the movement of funds out of training doesn't always imply a degrading of readiness, although it is a concern, certainly. Training efficiencies during the year may have reduced the need for funds, or some training may have been cancelled, freeing up funds for other priorities. Those are the kinds of details that we would really need some extensive study to get a good handle on, and that is one of the things we need to talk about for future work.

    Let me stop there, and I hope that overview has been useful, and I would certainly be glad to take any questions.

    [The Prepared Statement of Mr. Curtin can be found in the Appendix.]

    Mr. BATEMAN. Thank you, Mr. Curtain. As is apparent, we are now joined by our distinguished Ranking Member, Mr. Ortiz, whose statement has been made a part of the record. But if you have any comments you would like to make, they are welcome at this time.

    Mr. ORTIZ. No. I just want to take this opportunity to welcome the witnesses this morning, and I am sorry I was late. I had a prior meeting, but I am happy that you are here. And I hope to learn something from you, and I know that we will. Thank you, Mr. Chairman.

    Mr. BATEMAN. Thank you, Mr. Ortiz. Ms. Farrell, do you have any comments that you would like to offer before we begin questions?
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    Ms. FARRELL. I will be happy to take any questions on our report that was issued just yesterday and build upon what you would like to address.

    Mr. BATEMAN. Very good. Well, let me try the generic approach to the problem we are wrestling with. It is apparent to me from what you have said, that we just can't sit here and point fingers, and say you moved lots of money from here to there without knowing the policy and the rationale that underlie why you moved the money from here to there.

    But it also occurs to me that if there is no Department of Defense-wide standard or criteria by which each of the services is held accountable for managing the maintenance of its real property, we are losing a very important management tool and coming to grips with how much is vital and how much is essential to see by some measurable, general criteria or standard of looking after our public assets that are held by the Department of Defense.

    It also occurs to me that we perhaps need some inventory of Department of Defense assets, real property assets which have reached a point where it may be a lot more efficient to provide the funding to demolish them than it is to continue to maintain them. And we ought to be, perhaps, developing an inventory of such facilities in order that we can see that we appropriately fund it in order that we can achieve over time the savings that can be put into doing other things that are more important.

    The bothersome thing about this is I am hearing you, Mr. Curtin, say that in some instances we have taken money from training and put it into real property maintenance. In other instances, I am hearing you say that we have done the reverse. And I don't know whether to be mad at somebody for doing one or mad at somebody for doing two; but don't we need some way that we can get a handle on where the money is moving and why it is moving that way if the Congress really is going to play in the orthodox traditional role in the formulation of a defense budget, which under the Constitution, it is our essential responsibility to do?
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    Mr. CURTIN. Yes. The best tool right now to get any kind of handle on this, and we tried to use it in the work we did this year, are the high priority readiness reports that the committee has required DOD to provide. But they are anecdotal for the most part, and they don't always talk about the impact on readiness. They will tell you which account money moved from and which account it moved into, but it is hard to get a good feel that that was a good judgment, that yes, it moved from an area that the need was less into an area where the need was greater.

    And that is the best thing that is out there right now, but it is still inadequate to really do what you are saying, to really be comfortable that the Department is being a good steward of these funds and a good steward of the properties.

    Brenda, I don't know if you have—

    Ms. FARRELL. I agree. The value of the priority readiness reports was evident in the report that we issued a couple of days ago on the movement of all O&M funds, where we identified the 43—

    Mr. BATEMAN. Pull the microphone closer, please.

    Ms. FARRELL. Yes, sir. Can you hear me now, Mr. Chairman?

    Mr. BATEMAN. Yes.

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    Ms. FARRELL. I was saying that I agree with the value of the high priority readiness reports, and those reports have been most helpful. And the other report that we issued earlier this week, looking at the total movement of O&M funds, where we identified $43 billion that had been moved between the period of fiscal year 1998—it was 1994 through 1998. Those are for selected activities. Those are areas that Congress has designated to be of high priority readiness. Those reports should continue, but DOD could be encouraged to maybe elaborate on the detailed explanations for the reasons for those movements.

    Mr. CURTIN. And again, if the Department and the services had a better overall strategy and some overall consistency in the way they do things, you could feel more comfortable about the movement of these funds. But right now, I don't have that comfort level at all.

    Mr. BATEMAN. Is it realistic for the committee to, in the Defense Authorization Bill, to include a provision directing the nature and type of some new reporting so that the Department of Defense, all the services, and the committee could have a better handle on the policy decisions about movement of funds?

    Mr. CURTIN. I am reluctant, I think, to recommend more reporting from DOD. I think Ms. Farrell's idea of making the current high priority readiness report more useful would probably be a good way to go. And again, I think you made a very good point earlier about the data. And we have said that in all the work that we have done, that DOD just doesn't have a good handle on what its facilities inventory is and the condition of that. That is the starting point. Until you have that, it is hard to be comfortable that the funds are moving to the right place, no matter what reporting we do, I guess.
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    Mr. BATEMAN. I hate to use the onerous term, reporting, because we get more reports now than we can read. But I am interested in data, and strike the word report—

    Mr. CURTIN. I understand.

    Mr. BATEMAN.—and say, do we need to require in some uniform methodology data from the Department of Defense and each of the services in order that they, as well as we, can look at it to measure the extent to which there is a problem and how to best get a solution to the problem?

    Mr. CURTIN. That may be something to look at, Mr. Chairman. I don't have a good comfort level right now to exactly what the best data would be for you to get, but we can look at that. I mean—

    Mr. BATEMAN. I am going to ask you if you would look at it and give me the benefit of your thinking on it. I have not sat here and listened this morning, and all of a sudden, had a blinding flash of rationality that tells me I know exactly how to fix this problem; but the Secretary and all of the services, I think we all have got to be looking at a better way that we can look at a set of data and be able to come to better management decisions. And so I am earnestly soliciting your help in doing that. Mr. Ortiz.

    Mr. ORTIZ. Since Mr. Sisisky has been here waiting longer than I have, I will yield to Mr. Sisisky.
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    Mr. BATEMAN. That is sure generous of the ranking member, and I am pleased to—

    Mr. SISISKY. And I appreciate he didn't mention age either so that makes me feel a little better today. Isn't the problem money? Money is the problem. Every time we have a contingency, something comes down from the Pentagon, cut the base ops 20 percent or 30 percent. Isn't that really the problem?

    Mr. CURTIN. The services tend to put the money into OPTEMPO. You are right. And whatever is leftover tends to go to—

    Mr. SISISKY. And then we don't know when they have a supplemental, whether it goes back in, and I am willing to bet it doesn't. We have been cutting base ops for so long it is just beyond belief, you know. How do you get data on it, you know—you can't. I think that is the real problem. And you know, we can fence the money. We do it in military construction. If we appropriate money, authorize money, for military construction, that is what it is used for. And I don't think even in the contingencies they can take out of that fund. And maybe that is what we have to do.

    I mean, sometimes we have a problem and we look for difficult answers to it, but it may be simple answers to it. But that doesn't solve the problem as I see it now, because we are so far behind, and getting behind, in real property maintenance that it is beyond belief. It will never catch up. I mean, you know, that is why I said, money, everything is money. As a matter of fact, the Chairman mentioned about destroying buildings. We did have a fund for that. I know in a shipyard that I represent, man, we are tearing down buildings as fast as we can get them—amazing amounts of money being saved. You don't heat them, you don't have to repair them, you know, all of these things. That is the way to do it, but fence the money. If we can find a way to fence the money in there, that they can't put their hands on it—I don't know how the gentlemen in uniform can even manage what they do to be very honest with you, not knowing what is going to happen.
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    Let me ask you another question. I also notice a trend to privatize public works in areas. Has that had any effect? Did you take a look at that to see about the maintenance?

    Mr. CURTIN. I haven't tried to make that connection, no.

    Mr. SISISKY. I may ask the military people whether they have seen anything on that.

    Mr. CURTIN. They may have better information on that.

    Mr. SISISKY. Because you know, when you have to let a contractor fix the sewerage, you may say, let it go. We don't have the money there. But if you have got the people there in public works, they may fix it, you know. I am just thinking out loud. But no matter what you do, and no matter what criteria, and no matter what strategy is taking place, you still have got to have the money to do it, and it has to be consistent. And some of these bases are just reeling from the problems of base ops and other things, because 20 percent cut, on a 20 percent cut, on a 20 percent cut, and it just goes on and on.

    Mr. CURTIN. The only caution I would make, the only comment on that—and I agree, ultimately, you have got to have money to make this work—but we would sure like to see a better handle on just what facilities we have, and the condition they are in, and something more consistent across services, so that money is going to the right places. If you want to provide additional money, that is fine, but make sure it goes to repair the facilities that need it the most. And I am not sure right now DOD could know that because of the lack of this—
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    Mr. SISISKY. Well, it isn't just a lack of that, a lack of accounting system that would—I mean, let us be honest, you know. I hate to say it out loud, but—

    Mr. CURTIN. So there is a lot of data problems in DOD.

    Mr. SISISKY. Thank you, Mr. Chairman.

    Mr. BATEMAN. Thank you, Mr. Sisisky. And now, Ms. Fowler.

    Ms. FOWLER. Thank you, Mr. Chairman. And thank you, Mr. Curtin, for being here. This is an interesting report, and I share the concerns that have been expressed already by the Chairman and Mr. Sisisky, because we go around to these bases, and we see the facilities and the problems, and money that is not getting spent where it needs to be, and it is our young peoples' quality of life that suffers so often. And then we wonder why we are losing them in the process.

    And I noticed in going through your survey, that you surveyed about 517 bases and major commands, and pointed out that the major commands only requested funding for about 20 percent of their known real property maintenance needs in fiscal year 1997, and they were funded at an even lower rate. Did you determine why these major commands were requesting so little of their required funding? Is that same practice still going on today as far as the requests we are getting from the major commands? And is this indicating that maybe the backlog is even greater than what they are showing us on paper?
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    Mr. CURTIN. I think—on the first part of your question, I think the major commands have put their emphasis on OPTEMPO and the traditionally funded tank miles, and airplane hours, and steaming hours, and those get the funding that the services compute that are needed; and they work from there. And probably, the lowest priority for funds becomes the real property maintenance and the base operations. They feel they can squeeze those, defer as much as possible, and then fund the OPTEMPO. And I don't see that changing anytime in the future if it is left to the services.

    In terms of the backlog, this backlog of maintenance and repairs is an interesting area and; clearly, the numbers have been growing. But again, what I am afraid of is that a lot of the facilities in that backlog are things that, as Mr. Sisisky said, really should be torn down. And we have been carrying them on the books and we have been spending operations and maintenance money on them. And we can't get a good handle. It is another area where the services are inconsistent as to how they define that backlog and what is a critical backlog versus deferrable types of backlog. They have several different categories that the services use. And no one that I know of has been able to state with any comfort level that that number is any good.

    Now, we talked about the 15 billion backlog. That is DOD's number. I would definitely call that an unaudited number. GAO has never had a chance to get a good look at that number, but as you say, the accounting systems, in general, are problematic. So I don't have much confidence in that number.

    Ms. FOWLER. This is what is so distressing, because at a time when all of us on this subcommittee and on this committee, really, are trying to get more dollars into our defense budget, because there are critical things we need, when time and again, things like this are shown where the Defense Department is not using good accounting practices, you can't find an audit trail, where the money is going. You can't document what the needs are. It makes it very difficult for those of us who are proponents of trying to get more funding into defense to defend that. And we somehow—any suggestions you can give us, because I know that is what the Chairman is looking for, how to hold the Pentagon's feet to the fire.
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    And we keep being told this year after year, oh, we are putting these good practices in, we are changing this system. And it still isn't being done. I looked at this list of some of the current promising practices that they are trying to do but, yet, not all of the military services have implemented these; and they have got a long way to go. So I think what we are looking for is what can we do to hold their feet to the fire. We set these accounts, we put the money in, they move it anyway.

    As I said, we get these reports. Reports don't mean a hill of beans, because they are still going to move it where they want to move, use it how they want to use it, find ways around it. Anytime you do a law, there is always a loophole to it. And so it is very frustrating to us and frustrating to the people we deal with on a daily basis out on these bases that are struggling to keep them up. And we say, well, we have sent this amount of money. Well, they sure aren't seeing it.

    So any suggestions I think we can get from GAO on how to better get a handle on this, and how to get this Defense Department to be more accountable and more receptive to the need to do that, because we can't just keep putting the money in when it can't be accounted for. We want to put it in, but we want to get it—you know, we have got to show just like any business in this country, that it is being spent wisely, and accounted for, and auditable, and we know where it is going. So thank you for what GAO is doing, and we just appreciate any further advice and assistance you can give us on this. Thank you.

    Mr. CURTIN. Thank you.

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    Mr. BATEMAN. Thank you, Ms. Fowler. Before I recognize Mr. Ortiz, let me try to get something clarified. As I recall what is in your statement and your testimony is that this is not a phenomena, that all the money that gets moved around gets moved from tank miles, steaming hours, flying hours, to real property maintenance and base operations support. Sometimes that happens, there are some where that has occurred. But more often than not, it is the reverse, where real property maintenance funds go into augmenting operational accounts and doing operational requirements.

    Mr. CURTIN. Well, it is interesting the way I think it is working, as best we can piece it together, is I think in the budget process and the budget buildup, real property maintenance and base ops, are getting a fairly low priority and the OPTEMPO, and tank miles, and things are getting the priority. But what we saw in terms of movement during the course of the year is that most of the movement, the net movement—there are ins and outs during the year—but the net movement is into—is back into base ops and RPM, because it was the lowest priority and was underfunded to begin with.

    And, in fact, you see kind of a pattern where early in the year money seems to be pulled out of base ops and RPM and used for training events or special things that come up that need funding. And then toward the end of the year the money moves back as the services found out they couldn't execute their full training program, or contingency money came available during the course of the year. Money moves back into these RPM and base maintenance accounts, and that makes it a harder management problem for the installations and for the commands as well, because they are never quite sure through the course of the year how much they can count on.

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    And a lot of their funding tends to come at the end of the year, a lot of the increase in funding is towards the end of the year and they have to make some quick decisions on what facilities will get the priority. So it is a difficult management task. I mean, you talk about the frustration of the installation commanders, there really has to be a high level of frustration. And we feel that as auditors, we want to get our hands on some hard numbers. But certainly the installation people feel it the worst.

    Mr. BATEMAN. Well, I am sure they do, and their frustration is even more important than my frustration. But I certainly have a lot of frustration, because I know that during the period that I have chaired the subcommittee, we start in the authorization process that we are responsible for primarily, with we are going to fund what is said to be necessary for every steaming day, for every tank mile, for every flying hour that is necessary for training purposes. That has been just an article of faith in the way we approach putting together the authorization bill. And yet, that doesn't necessarily mean that is what happens to it at the end of the day.

    Mr. CURTIN. No.

    Mr. BATEMAN. Okay. I am sorry to be taking—

    Mr. CURTIN. On that point, they don't pick on the Army so much, but the Army, in our data at least, seemed to be the service with the most movement out of unit training for whatever reason; and we would like to get behind that a little bit.

    Mr. BATEMAN. It might be something like Bosnia and Kosovo.
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    Mr. CURTIN. Well, that would do it, yes. That gets your attention.

    Mr. BATEMAN. Mr. Ortiz.

    Mr. ORTIZ. Thank you, Mr. Chairman. Now, my question would be what benefits do you think would result from the presence of the DOD-wide strategy for addressing the RPM crisis?

    Mr. CURTIN. Well, I think because the funds are so limited—and maybe we can find a way to get more money into that—but with the limited money, we have got to be sure that money is going to the facilities, and the installations, and the specific activities within that installation that are the highest priority based on a lot of factors. I mean, based on how important they are to the mission and, you know, what kind of condition they are in.

    Without some kind of coherent plan across the department, you may—see, what we see is buildings being classified one way in the Army and completely differently in the Navy. And we look at them, and most experts look at them, they say they are about the same condition. So where do you put your money? And until you can come up with something more consistent, you don't have a good handle on where you should spend that next dollar to have the best impact on our facilities across the board.

    Mr. ORTIZ. You know, and maybe this should be a question for the next panel, is there a central depository where the different agencies, the services, report as to the building in each command that should be destroyed or have no useful purposes? And like Mr. Sisisky just stated, where we can save money by demolishing those. Do we know what we have around the different military bases?
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    Mr. CURTIN. Well, I think the next panel can talk about that in more detail, but as it turns out, that is one area in which DOD, I think, has gotten its act together a little better, based partly—maybe I can give some credit to GAO here—our 1997 report put a lot of emphasis on that, and I think as a result of that, there is a special fund now and plan. DOD has a pretty good handle on what they want to demolish, the numbers of buildings, the number of square feet. I think they are fairly well into that program now and they have got a target date. I mean, that is one of the places where they have tried to get a better handle on it and they are a little farther along. I feel a little better about that area now.

    Mr. ORTIZ. Thank you, Mr. Chairman.

    Mr. BATEMAN. Thank you, Mr. Ortiz.

    Mr. Hansen.

    Mr. HANSEN. Thank you, Mr. Chairman. I really don't have any questions for the GAO, but I do have some questions for the next panel. My problem is that I have to go a resource meeting in a couple minutes. So I would ask that I could submit these written questions to the Army and the Air Force, which I feel very strongly about. Would that be—

    Mr. BATEMAN. That certainly would be in order. And I understand the unfortunate conflicts that we have. But yes, any questions you may have can be submitted for the record.

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    Mr. HANSEN. Thank you.

    Mr. BATEMAN. Let me mention before we bring forth the next panel that I have been furnished with figures from the unfunded priorities list from each of the military services for real property maintenance for fiscal year 2001. For the Army, this says $250 million; for the Navy, $136.6 million; for the Marine Corp, $49 million; and for the Air Force, $437 million; which totals $873.3 million.

    That figure, as large as it is, is woefully less than what I had been told is the outstanding backlog of real property maintenance. Is this, at least in part, because one of the Vice Chiefs of Staff of one of the services said to me almost with an approving tone, gee, this year's budget funds 69 percent of our real property maintenance requirements.

    Can we have confidence that these figures do, indeed, represent the only unfunded priorities of each of the services for real property management? I don't know whether the GAO panel has any response to that, but it is sort of forewarning the next panel that we would like to hear from you.

    Mr. CURTIN. It may also be a rhetorical question, Mr. Chairman. I don't know how it could represent all the needs.

    Mr. BATEMAN. Does anyone else have a question? Mr. Smith, any questions of this panel? All right. If not, then thank you very much for your testimony and for your important work that you have done for GAO and, especially, for this committee.

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    Mr. CURTIN. Thank you. I look forward to continuing to work with you.

    Mr. BATEMAN. Our next panel of witnesses consists of Mr. Randall A. Yim, Deputy Under Secretary of Defense for Installations; Major General Robert L. Van Antwerp, Jr., Deputy Chief of Staff for Installations and Housing for the United States Army; Rear Admiral Louis M. Smith, Commander, Naval Facilities Engineering Command and Chief of Navy Civil Engineers; Major General Earnest O. Robbins, II, The Civil Engineer of the United States Air Force; and Major General Harold Mashburn, Jr., Assistant Deputy Chief of Staff, Installations and Logistics for the United States Marine Corps.

    Secretary Yim, we would be pleased to hear from you. Your full statement will be made a part of the record, and you can proceed in such manner as you choose.


    Secretary YIM. Thank you very much, Mr. Chairman. Good morning, Mr. Chairman, Mr. Ortiz, distinguished members of this committee. I want to thank you for the strong support of the military program, to provide it, and the strong support for the people that are defending our country, both military and civilian. I also want to, particularly, thank you and my colleagues at GAO for your recognition of the important role that installations and infrastructure plays in maintaining readiness, and of the interrelationship between the many components of readiness and installation.

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    Military installations, in our view, are the foundation for a strong national defense and the platforms from which our forces successfully execute their very diverse missions. We are aware we maintain and deploy weapon systems, and where we train and mobilize for combat; in short, we are the foundation for the projection of power whenever and wherever needed. But installations are also where our military and civilian people live and work and where they become key members of the communities. And real property maintenance is absolutely the key for us in maintaining that foundation. We have to maintain the facilities that they support, not undermine or compromise our missions or quality of life.

    In short, I am really just saying what you already recognized, that there is a crucial relationship between readiness, and training, and missions, and weapon systems, and the quality of life, and the condition of our facilities, and that we have to recognize these relationships and take the appropriate steps to maintain and improve the condition of our facilities. And we are, frankly, talking a bit more than money. But please don't take my comments wrong, money always helps. Our great task is to become more cost efficient as well as enhance the performance of our facilities to support the military missions.

    So not only must we maintain proper funding levels for our facilities, but we have an obligation to spend that money more wisely and as efficiently as possible. We are continually faced with the stark reality of having to balance facility funding needs with other priorities, such as weapons, recapitalization, and modernization, research and development, and quality of life, and other requirements. So we have to not only make the best use of the funding we do receive as a result of this difficult balancing process, but we need to find ways to cut our costs and save money that can be used to support our other major programs as well as installations.
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    And when I talk about cutting cost, I am not talking about blindly cutting cost or blindly closing facilities. I believe that when we are talking about cutting costs, it is inextricably tied to finding better ways of doing our business, because these process improvements are really the key, I think, to the long-term savings that we hope to achieve. And finding, however, these process improvements involve change, and this change can be very difficult for us. But there it is also a time, as my colleagues in the military will indicate, of great change in the military. Our services are really substantially reshaping their force structure and operational constructs to meet the challenges that they are facing now of asymmetric threats, of home land defense, of specific targets against non-traditional areas like our computer information management systems.

    And so, too, must the installations match up, reshape, to support these mission requirements. We have to be as adaptable and multi-faceted as the military is going to—we have to adopt better business practices, we have to become interoperable as the military is trying to be with our allies. So we cannot afford, both on a monetary sense and in a mission sense, to be physically isolated either technologically or physically from the communities in which we operate. For example, by creating proprietary systems of installation management that are incompatible with the rest of the world or commercial off-the-shelf applications.

    We need to recognize this and then take steps to assure that installations are viewed as integral parts of the new weapon systems that we are fielding and the training missions that we require. We can't afford to field these new leap ahead technology weapon systems but lack the installations or platforms to support them. We cannot ask our people to perform these complex new missions without the facilities to house and train them, and this is precisely the reason why you will see all of us here in installations playing an important role in the upcoming Quadrennial Defense Review (QDR) process. We must prepare ourselves to have an important role in the QDR in May 2001 when it will come out. And as importantly, we have to have the proper analytic tools available to us to be able to intelligently participate in the Quadrennial Defense Review.
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    So one of the things I am talking about is just as we seek leap-ahead technology for weapons platforms, we have to find leap-ahead training and knowledge management techniques for our installation commanders. But to meet these cost efficiency and performance enhancement goals that we have set, we have to spend some of our money and intellectual capital on devising new and interactive ways to learn about these very complex installation management issues that we face, such as utility and housing privatization, such as energy deregulation, outsourcing. And I think that we have pioneered in the military these wargaming scenarios. Perhaps there is something like that, that we can also pioneer and just disseminate into complex installation management techniques out to the field, on the field commander to rely upon.

    Now, we are really committed to reshaping the installation infrastructure through several related initiatives, and I am going to briefly touch on a few of them. They include the privatization of our housing and utility systems. We need to manage our energy much, much better. We spent $2.2 billion on energy commodities alone. There is a lot of money to be made there. We need to outlease some of our underutilized facilities, not dispose of them, but perhaps make better dual use of them. We need to competitively source, rely on the private sector, frankly, for a lot of our noninherently government functions. And we have to improve the standards of a lot of our critical facilities like barracks and dormitories. And of course, we do need additional rounds of base closure. The Department must be able to pursue all of these initiatives, because they really complement each other, and no single one replaced the other one.

    Let me talk briefly about BRAC. The argument that we are making for BRAC I think is relatively straightforward. We are simply wasting money on maintaining facilities and bases, excess capacity that we neither use now or have a need of for the future. And while we can debate the magnitude of the cost savings, there is little doubt that we have achieved savings during the first four rounds of BRAC. Our estimates of about $14.5 billion by 2001, and about $5.7 billion every year thereafter, were actually called reasonable and credible by the CBO and the GAO.
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    But I want to emphasize that when we talk about BRAC, we are talking much more than just a comptroller-driven drill here. We need the authority to really realign and reshape our installation structure to meet the rapidly changing force structure in mission requirements envisioned by the Army, for example, in vision 2010, or the Air Force in the aerospace expeditionary force concept.

    The 1997 QDR talked about the need for two more rounds of base closures. Our December 1999 mobilization report that we submitted to Congress said that we had not closed assets that we could not reconstitute or really made some—we did not make fundamentally unsound decisions in the four prior BRAC's.

    And most importantly, what we are talking about, if we are proposing BRAC rounds in 2003 and 2005, we can then take advantage of installation's role in the 2001 Quadrennial Defense Review to really have a plan on how the installations need to match up with the changing force structures and act accordingly. We are on the path for demolition. We have set targets by 1993, to demolish over 80 million square feet. We are more than half-way on that path, and we are actually under budget right now on the cost of demolition. That is probably not going to maintain, because we are kind of picking off the easy stuff to demolish, and it is going to increase a little bit; but we are going to meet that 80 million square feet. And as Congressman Sisisky and others have mentioned, it is going to be a big benefit for us. We just don't need to maintain that stuff.

    We do have to also stretch our RPM dollars by adopting these best possible business practices, and we have to tap the best brains, not only in the private sector but also within our very strong public employees. And so we have to really make a strategic decision, who is in the best position to supply us with basic goods and services, not only now but into the future. And we believe that privatization or competitive sourcing, the competition aspect is not only the best way to do that but also the fairest way to do that. That is why we are aggressively seeking privatization of our utility distribution systems combined with effort toward better energy management and getting better deals in the energy commodity market, particularly with so much deregulation going on throughout the country.
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    That is why we are pursuing housing privatization, relying on experts in the private sector to help us meet a really critical family housing shortage. We have over 200,000 inadequate family housing units. We just wouldn't be able to fix that within a reasonable period of time using just MILCON. We need to leverage against the private capital. We are getting about an eight-to-one leverage effect, which means we can improve our family housing condition about eight times as fast as if we were just relying upon traditional MILCON. I know we have some examples in Texas in Congressman Ortiz's area.

    Let me spend a few minutes—just a minute on housing. Secretary of Defense Cohen prioritized housing as one of his two top priorities, improving family housing as one of his two top priorities this year, along with reforming our healthcare system. He has proposed a three-part program, increased reliance on housing privatization, a robust MILCON, where housing privatization doesn't work, and a substantial increase in the basic allowance for housing.

    Now, the BAH, the basic allowance for housing rate, will allow more people to immediately have better quality housing options off-base, because they can afford to live off-base. It also, because that is the principal economic driver for housing privatization, it will stimulate more and better—not only more, but better housing privatization projects. And hopefully, it will take the pressure off of our on-base housing requirements where we maintain old, or outdated, or cost-ineffective facilities, because we have to meet the housing need.

    We are also seeking legislation to make better use of our underutilized properties by enhancing leasing. We are talking about trying to really give an incentive at the installation level. Part of our problem, I think, as GAO correctly points out, is that a lot of our money for installations gets shifted around. We need that flexibility, we really do. But if we can have enhanced leasing opportunities where we make dual use of facilities, then we can keep that money, be it in kind contributions or real money at the installation commander level, without having it go up the chain and then come back to us. Because frankly, it doesn't come back to us in the same shape that it went up the chain. That would be a big plus forward for our installation commanders. And those programs are described in much more detail in my statement.
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    Now all of this sounds kind of good, but I want to hit one other point that is squarely on your criticism, sir, and the GAO criticisms. We can't really do all this stuff, and we can't effectively participate in the QDR. We can't advocate for our positions unless we have—we significantly improve our analytical tools. To effectively go where we need to go, we have to know where we are. And I accept, I agree with, your criticisms, GAO criticisms, that the Department has lacked, the services have lacked, comprehensive data not only on what we have, but what we need; and we have migration of funds. There is no question that those are the facts.

    Here are some of the things that we are trying to do to address these problems. As the first panel indicated, the GAO issued a report last September on real property management needs improvement, or in disarray, I think was one of their conclusions. The Senate Armed Services Committee (SASC) conducted a hearing in October—excuse me; both before and after the hearing, I, personally, with my staff, met with GAO. We went over their report. After the hearing, we went over the report. We went and visited the sites identified in the reports this last winter to get firsthand knowledge of those tools. I had the pleasure of meeting with Mr. Curtin yesterday to discuss his report. Some of the things we are going to do, we have committed to follow-up exercise with him. But more than that, just kind of talking with people, we are trying to develop some really basic analytic tools here.

    We need to first, as you point out, Mr. Chairman, accurately inventory what we have. The models that we are creating to validate our requirements fundamentally depend upon—this is the concept of garbage in, garbage out—you have to know what you are sticking into the models before it can spit out accurate data for us. So we are really trying to improve the integrity of our real property inventory now. The services have all submitted preliminary data to us. We are screening it and scrubbing it. We hope to have a much, much better handle on exactly what we have within the next coming months because, simply, it is true; the services do report the data slightly differently. So we are hoping to get some consistency in that.
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    Second, we are devoting a lot of our effort to improving the RPM requirements determination process to better justify RPM funding in our constrained fiscal environment. We are the advocates for installations here. If we cannot really lay on the table true requirements with the level of precision that can guide site specific decisions, either in the MILCON or the RPM budgets, then we are just not effective advocates.

    We cannot defend the programs when we go up against the wrong comptrollers or other programmers and compete for the limited budget resources. And this has really been one of our most persistent problems, a lack of sufficient RPM funding caused, in part, by our own inability to know exactly what we need, compounded by an inability to effectively compare requirements across the services. So this is what we are trying to do, and we know this is not an overnight fix, and this has been an endemic problem for the Department of Defense and the services.

    We are trying to lay the foundation to really correct this problem. First, we are making extensive use of an Installation Policy Board which I chair along with the senior leaders here of the services, not only on the civilian side, the uniform, and perhaps more importantly, we have brought the senior service engineers and then representatives from the financing and program community. I am very pleased with this board. We meet every single month. We are treating this board as the Board of Directors for Installations within the Department of Defense. It is augmented by outside planning and fiscal policy experts. We are allowing this board then to do peer review and auditing of the installation requirements, trying to get some consistency and standards across the services, and then serve as an effective forum where we can't solve it at our level, frame the issue, elevate it up to the senior levels as much as possible. Every single month we are meeting. I am dragging these poor gentlemen to these meetings every month, but I think we have been very effective about that.
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    Second, we are developing—or the board is supervising the maturation and the development of three very important analytical tools for us. First is a facility strategic plan. We knew that we had to give some thought if we were ever going to justify to Congress, which has very legitimate concerns about our request for BRAC. We had to have a strategic plan about how the installations would fit and match up with the force structure. We have some discussions about that now. There has been talk about what type of information do we need, what types of facilities we need to maintain. We are going to have the fruits of our labor be fed into the QDR discussions that are being built up now for May 2001, and we hope to then really have a strategic aspect of the QDR for facility planning.

    Next, we are really supervising in the board the development of a facility sustainment model using auditable—I think some of you used that term—auditable data input that will properly model and identify the funds that will keep our facilities in good working order. This is really going to enhance our ability to make estimates of what we really need and then defend us better in the budget process. And it is based on validated commercially bench marked maintenance costs for each type of facility and then, of course, an accurate inventory of our property.

    We have already developed a cost factor handbook that I would like to introduce for the record, sir, based on private sector techniques for real property maintenance and construction. We are in the final validation of our real property inventories. We hope to have this facility sustainment model on line for fiscal year 2002 budget programming and preparation. That means late spring, early summer, actually have the model up and running.

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    [The information referred to is retained in the committee files and can be viewed upon request.]

    We really like this. This is, for example, use the building—a variety of outside factors like the Building Owners Management Association, a nationally recognized organization that provides data on maintenance and repair costs. We have used a lot of commercially bench-marked factors to get a handle on what we should be spending on maintenance and repair. For example, outside sources use maybe two to four percent of the plant value for maintenance and repair for RPM. We have a goal of around two percent, but we are not really close to that. We are probably somewhere around 1–1.5 percent. It is hard to really even estimate what we are spending because we use several different sources.

    And finally, we are overseeing an installation readiness reporting system for the first time. And your committee was really the impetus for this. The installation component is going to be included as part of the overall operational readiness reporting being submitted by the services and DOD, roughly, the spring of this year. So we are developing, rolling up the various services different ways of reporting the status of readiness of installations. The Army has perhaps the most developed model on that. We are getting some consistency, and you will see that from us in the spring.

    And let me conclude now. I know I am running over. Let me conclude with the words, if I could, of Will Rogers. He said that even if you are on the right track, you are going to get run over if you stand still. And I believe that we are on the right track. We have a lot of work to do, though. And I think that this subcommittee and GAO has really been a catalyst for us. We are trying not to stay still, but we are trying to move with some speed and innovation.
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    One of the innovations, again, if I can give a commercial, is the leap ahead training management techniques for our installation commanders and our field leaders. We asked these guys to be full-fledged city managers in very, very complex areas with half-day training and two-day training entering—get us a better deal on the energy deregulation market. People are studying this for years as they go up against the energy power managers.

    And I think we need to have this leap ahead knowledge management, knowledge training tools, such as the wargaming interactive stuff that I have talked about, and I think it is a function that, I am no longer 20 years old, but I can't imagine some of the potential that some of the computer based gaming technology could lead for us. But we would like to see some devotion of thought to really leap ahead management techniques so we can disseminate to the field. And then I think that would be a big benefit for us.

    So again, thank you for your continued support of our program, sir.

    [The Prepared Statement of Secretary Yim can be found in the Appendix.]

    Mr. BATEMAN. Thank you very much, Secretary Yim. I want to tell you I am very impressed with your testimony. What you have said is a source of considerable comfort to me and, I am sure, the other members of the subcommittee. It would appear to be that you are getting about doing the kind of things that we hoped someone was going to be doing in order to develop the management and analytical tools that are going to be helpful to all of us in getting our hands around this very difficult problem of real property maintenance and base operations support funding, and making sure that those were taken care of, and not taken care of at the expense of training and other programs or vice versa. What you have said is, indeed, very encouraging.
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    Let me now ask General Van Antwerp if he would address the committee.


    General VAN ANTWERP. Thank you, Mr. Chairman, members of the committee. It is just great to be here with you. This is a subject that is near and dear to everyone on this panel's heart. I would like first just to say about Mr. Yim—we kind of chuckled when he said about the meetings he gathers us for—this team has been forged by Mr. Yim this year far beyond our expectations. There is a great trading of ideas, there is some very innovative things we are doing to try and get a handle on this, and I just give him the credit; not to make his head feel bigger, but he is just doing an outstanding job with all of us, and we in the Army surely appreciate that.

    There is no question in our minds that facilities' condition is a component of readiness in the Army. And as has been said three of the last five years, the Army migrated money into the RPM account. And it is a recognition of many factors, Kosovo and other factors, but it shows you the sense of the commanders out there in the field. I want to thank you for the Congressional adds that we have had and the quality of life enhancement funds that have been very crucial to us and help us in that. But as Mr. Sisisky says, it is dollars to a great extent. There is only so much you can do on the initiative realm before it comes down to dollars.

    Of course, I am sure you are all aware of the Army's new vision to transform itself. A lot of that vision will impact our installations as we try and project our power quicker. It means we have to look at our airfields and those power projection things. We also have to look at how we are training our force, our new force. Some of the things we see there will be the need for if we change equipment, and as we transform equipment, will be for the equipment shops. The other part of that is probably for more urban type training, mount training. So we are very much looking at the effect of the transformation on our facilities.
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    The Army has a comprehensive strategy. It involves the active, the Reserve, and the Guard, and it is one—we all have the same standards. So when you get a report from our installation status report that says the facilities in the Guard is rated at C–3, that is on the very same standard as the facilities in the active force.

    From our viewpoint, the Army has about 166,000 facilities. The average age of those facilities is 44 years old. There is two factors that really impact: one is the number of facilities that you have to maintain, and the other factor is the condition and age kind of lumped in there. As all the services are doing, we have a very good program for demolition. The Army feels right now, based on our installation status report we have 28 percent excess infrastructure. And we have a program, we have about 150 million square feet.

    Back in 1992, there was identified in our status report that we needed to demolish, that we don't need to maintain and be putting money into keeping them up. To date, we have demolished 68 million square feet. We will take another 10 million down, roughly, in 2001, with what is in the 2001 budget, so we are getting there. When the installations tell you they could use a lot more—Fort Hood, if you could give them another 10 million today, they would use it; Fort Bragg, another 10 million today. They can't get this down fast enough.

    The second part, I will just tell you that we are funding RPM at 69 percent this year, and it is woefully inadequate. We did make a change from last year with about the same level of funding in RPM as last year. We dropped ten percentage points, roughly, in how we are satisfying the requirement. That is because we understand the requirement much clearer now, and we made—we bit the bullet and said we are going to make a change and accurately reflect, based on standards, what is the backlog. If that backlog had current funding, we hope to be—and hope isn't a strategy—but that we plan to be by 2005 at 80 percent at the current funding, at 69 percent in 2001. But that is still woefully low, because 100 percent keeps it just like it is.
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    Our unfunded requirement of $250 million that you addressed, that will get us—if it is sustained, it will get us to the 90 percent mark by 2005, if it is $250 million addition every year. That still doesn't get at the big backlog. We have over a $15 billion backlog in quality. But it will get us so we are sustaining close to that level of 100 percent. You combine that with a military construction program that is renovating, remodeling and upgrading facilities; that and the 90 percent RPM will get us to a good position.

    I just want to conclude by saying that it has to be a balanced strategy, I think, between RPM and MILCON. And that strategy has really two pieces: it has the sustainment piece and it has the modernization piece. And our challenge is to balance those. What we have done up to this point is go after a very focused program. We have gone after permanent party barracks for quality of life of our soldiers, a readiness issue. We have gone after strategic mobility in order to upgrade so that we can project our forces from our power projection platforms.

    We do have a future strategy that is in my written statement. We would be glad to talk further if there are any questions. And sir, that concludes my statement. And again, it is great to be with you here today.

    [The Prepared Statement of General Van Antwerp can be found in the Appendix.]

    Mr. BATEMAN. Thank you very much, General. And now, Admiral Smith.

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    Admiral SMITH. Good morning, Mr. Chairman, members of the committee. I am Rear Admiral Lou Smith, the Commander of the Naval Facilities Engineering Command, and it is a pleasure to be here before the committee this morning. I would request, sir, that my written statement be included for the record.

    Mr. BATEMAN. It will be included.

    Admiral SMITH. Thank you, sir. I do appreciate this opportunity to be here this morning to talk about real property maintenance, and I thank you for your ongoing support for this program within the Navy. I talk a lot in my written testimony about our efforts to overcome the challenges of maintaining our aging infrastructure within the limited resources we have. We, in addition to get more dollars into the program, are trying to reduce the size of requirement. We do this through our ongoing efforts for regionalization and consolidation to eliminate redundancies we have and consolidate where we can.

    We, too, have a very aggressive demolition program. It is a program that was beefed up in fiscal year 1996. The results are seen around the Navy. We have demolished almost 7 million square feet already. We hope to get to 10 by 2002. It looks like now we will demolish another 5.5 million by 2002. And I would add for Mr. Sisisky that the added serendipity we have had there is that people are saying how pretty our bases look now that we have torn down a lot of these—yes, sir. It is amazing. We are also pursuing privatization in areas. Mr. Yim mentioned utilities; we are looking at that. We are looking hard at a lot of other areas, such as housing, that aren't necessarily inherently governmental, that we could get from the private sector and, again, reduce our facilities requirement.
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    Our RPM funding this year is good news for us. If you look at it, it is an increase from last year. Last year, our asset protection index, what was mentioned before our percentage of funding to our plant value, was at 1.6 percent; this year, it is at 1.8 percent. We are getting closer to that industry threshold of 2.0 percent. This allows us to do some, what we call tailored funding, where we will fund our mission critical infrastructure, such as quality of life, piers, runways, utilities, and training facilities to a C–2 rating condition. This will also help us to significantly slow the growth of the backlog of maintenance and repair in our other facilities.

    Ideally, I would hope to strive for C–2 readiness in all of our facility categories to avoid continuing deterioration, but the truth is we are a long way away from being there. With our fixed top line, our RPM program continues to be a balancing account that is needed by our warfighters to support higher priority readiness programs and emergent requirements. Accordingly, we work very closely with Mr. Yim and his staff, as well as the other services, to develop tools that better clarify the impact of these RPM reductions.

    In fiscal year 1999, our number of mission categories reporting C–3 or C–4 facilities condition increased for the first time in five years. Mr. Chairman, I would tell you it is imperative we need to reverse this trend. Deep down, the Navy does believe that the measure of our readiness is closely linked with the quality of our shore facilities. Quality facilities improve the quality of life for our people, reduce our cost of ownership, and as always, impact our ability to train and retain our sailors.

    This concludes my opening statement, sir. I would be more than pleased to answer any questions you or the rest of the committee may have.
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    [The Prepared Statement of Admiral Smith can be found in the Appendix.]

    Mr. BATEMAN. Thank you, Admiral Smith. And now, we look forward to hearing from General Robbins.


    General ROBBINS. Good morning, Mr. Chairman, members of the committee. I appreciate the opportunity to address the Air Force's real property maintenance requirements with you this morning. With your permission, I also will submit my full testimony for the record.

    As you know, we manage our facilities in infrastructure through two major programs, as was previously pointed out. First, the real property maintenance, or RPM account, provides funds to maintain the Air Force infrastructure already in place. Second, the military construction appropriation allows the Air Force to replace antiquated facilities and to bed down new weapons systems. And although the focus of today's hearing is obviously on the RPM account, success in both of these areas must be complimentary to allow us to provide the quality facilities we need to support our missions and our people.

    While there are clearly several areas where we have achieved notable successes as a result of excellent Congressional support, continued constraints in RPM and MILCON are beginning to show in degraded facilities and supporting infrastructure, as you have determined during your visits.
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    In fiscal year 2001, RPM in the Air Force is funded at what we in the Air Force call the preventive maintenance level, or PML. And this will allow us to accomplish only the day-to-day maintenance required to sustain real property facilities and infrastructure. It does not provide the resources necessary to accomplish much of the needed maintenance and repair. And although the Air Force continues to operate, we are increasingly required to develop work-arounds which impact Air Force combat capability and operational efficiencies. Examples include deteriorated airfield pavements, which require longer aircraft taxi times, reduced munitions storage capability due to degraded storage igloos, and increased foreign object damage risk to aircraft engines.

    The Air Force's current level of RPM funding defers most non-PML maintenance and repair, resulting in a current backlog of some $4.3 billion. Now, we have developed an RPM metric, which we call the Facility Investment Metric, or the FIM, to identify requirements above and beyond those day-to-day maintenance requirements I have mentioned. The FIM stratifies facility requirements based not on facility condition, but on mission impact, and allows us to identify and track our most critical needs.

    We mentioned the inventory earlier. The active Air Force has about 108,000 buildings; of those, about 58,000 are 40 years old or older, and so we obviously face a challenge in the day-to-day maintenance and repair that we encounter in the field. On the demolition front, since 1996, the Air Force has demolished some 1,700 buildings. And as Dr. Yim indicated, we are on the right glide slope to meet the DOD guidance to complete the demolition program.

    The scenario I have laid out for you, if we project it out to continue until fiscal year 2003 when the RPM program funding finally begins to increase within the Air Force budget, funding is currently projected to grow from one percent of the plant replacement value, which it is in the 2001 budget, to just over 1.4 percent by fiscal year 2005. This means our backlog will not disappear overnight and Air Force operations and readiness will continue to show increasingly adverse effects. Until then, the Air Force must limit RPM funding to the preventive maintenance level so that we can fund higher priority programs within our current total obligation authority.
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    There is good news regarding facilities. The Air Force has benefited over the past four years from Congressional adds to the RPM account for quality of life enhancements. This effort has allowed the Air Force to greatly improve conditions in our dormitories and other traditional quality of life facilities. And we deeply appreciate your support in this high visibility and high impact area.

    We obviously still have a lot of work to do. The Air Force currently has over $200 million worth of validated unfunded dormitory requirements. There also exists nearly $400 million of other validated unfunded quality of life requirements, such as child development centers, community centers, fitness centers, youth centers, and so on. Your support for quality of life enhancements will continue to have a positive effect on our airmen in the field.

    It is our responsibility to provide policy makers and decision makers with informed assessments of requirements along with our best engineering judgments regarding impacts on readiness and quality of life. We continue to capitalize on the limited resources at our disposal, and just as importantly, on the ingenuity and dedication of our officers, enlisted personnel, civilians, and contractors to operate and maintain our bases to the best of our ability.

    However, tough choices still lie ahead for the Air Force. As General Ryan stated during his recent testimony before this committee, the Air Force has identified a priority list that includes items related to personnel, readiness, modernization, and a very large need to support our infrastructure.

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    In conclusion, Mr. Chairman, I want to thank the committee again for its strong support of Air Force programs and the benefits they provided the Air Force in terms of readiness, retention, recruiting, and the quality performance of our people. I would be happy to address any questions.

    [The Prepared Statement of General Robbins can be found in the Appendix.]

    Mr. BATEMAN. Thank you, General Robbins. And now, we look forward to hearing from General Mashburn.


    General MASHBURN. Thank you, Mr. Chairman, members of the committee. I certainly concur with all the comments my colleagues have made, and I really appreciate the opportunity to address Marine Corps concerns for real property maintenance. I think from the discussions we have had today, we understand what an onerous task this is as far as management.

    You have heard General Jones, our Commandant, say that we have four pillars of readiness: Marines and their families, our legacy systems, infrastructure, modernization; all of that coming from the bottom line and the top line—very difficult to really look at those. However, looking at real property maintenance, it goes across all pillars, even looking at maintaining our legacy equipment, our old equipment, it actually does.
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    Is it true that we have deferred maintenance to help fund new timeliness? Certainly, it is, but we have done it during the budget process, knowingly doing it because of essentials, not the other way around. I can remember last August when all the monies came in that perhaps were not being able to be executed. We went out for a call to the field, what programs can you execute, installations, by 30 September—$66 million worth. They were executable because they were ready, and we were able to execute $29 million in a very short period of time—just fantastic work by the field.

    And actually, if you look at the history over the past several years, we have been able to execute more in real property maintenance than was actually anticipated at the beginning of the fiscal year. We have several goals: the unfriendly priority list of $49 million was mentioned. That is required to reach one of our goals, which is to reduce the backlog of maintenance repair to $106 million by 2010. That is a goal, and that this why it is on deficiency.

    Another goal is the recapitalization rate. Presently, our recapitalization rate, while industry's is at 50 years, is well over 100 years. Our goal is modest, 70 years. Real property maintenance funding request for 2001, we have requested an increase of $50 million; and it is a substantial increase, but it funds 90 percent requirement. Last year, we were able to reduce our backlog in maintenance repair with the programming request for 2001. We are looking at a $20 million reduction in backlog maintenance repair; again, looking at sustained funding increases of perhaps $49 million a year to reach that 2010 goal.

    Funding is the key. Is it adequate? It is adequate to maintain old facilities with sometimes band-aid approaches? We must sustain increases to reach our goal through 2010. We must combine it, as my colleagues have said, with strong demolition plans and a very strong military construction plan.
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    We are working together with Mr. Yim and the other services, of course, to really look at how we can orchestrate, first, the inventory upon which to base our requirements, and then to really be able to establish our goals for the end state. As a major concern, when we talk about the four pillars of readiness, again, maintenance real property transcends all pillars. It is critical because it is quality of life.

    We talk about quality of life. Sometimes we think about family care centers, family service centers, commissaries, PX's. Quality of life to Marines means something else: all about good roads, runways that don't have foreign object damage to the aircraft, basic infrastructure requirements. That is quality of life; quality of life that brings back our Marines alive.

    Again, thank you very much, Mr. Chairman, for your support. I look forward to answering any questions.

    [The Prepared Statement of General Mashburn can be found in the Appendix.]

    Mr. BATEMAN. Thank you very much, General Mashburn, and all of the witnesses who are part of this panel. Secretary Yim, I want to repeat again how pleased I am to get the indications from you that there is a very concerted, and I sense, a well-conceived effort to get your hands around the managerial and analysis problem that underlies so much of what we have been talking about today. I want to commend you for that and for all of the members of the military team who flank you for their understanding of the wisdom and necessity of doing that.

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    I want to return to the matter of BRAC and base closures. And I don't mean this in a vagaritive kind of way, but I think the perspective—or perception here on the Hill is that we would be into that process before now except for some loss of confidence in whether or not the last process in some manner, at least, allegedly, is perceived to having been politicized. Leaving that aside, I have no doubt but what we have more facilities than the downsized armed services require, and that we need critical analysis and decision making as to what to keep and what to arrange and rearrange.

    But you are talking in terms of two BRAC rounds. Explain to me, if you would, why you say two instead of one well-conceived and properly executed round.

    Secretary YIM. What we are estimating is about a 23 percent excess infrastructure, and the thinking is that that is too big of a bite to take in one round itself. That is quite a bit of excess infrastructure to take down. What has happened in the prior BRAC rounds, particularly, in 1993 and 1995, is the experience has shown that from the 1993 round, and you could make additional adjustments and tweaks in the subsequent follow-up round in 1995. And that is what we are envisioning, a 2003 round and a 2005 round, again, to make those tweaks and adjustments.

    It is—and frankly, if you ask us, well, would you take one round? Yes, we would definitely take one round, and we would try to do the very best job we could in that one round. Our analysis is that given the amount of the infrastructure that we believe needs to be taken down and shifted around—because it is not just closure, it is realignment, the two would benefit us more.

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    Mr. BATEMAN. I am sure you are aware that the base closure process is a very, very turbulent and traumatic kind of phenomena for hundreds of communities throughout America. It is nonetheless going to be something that at a point in time we must do. I just have some hesitation as to whether we need to put them through it twice as opposed to doing it comprehensively and doing it soundly once. I want to have you express your views as to why the dual round instead of a single round.

    Secretary YIM. One of the things we are doing also, Mr. Chairman, is to try to mitigate the impact of it. And with the help of Congress last year, we were able to—and Congressman Ortiz and Congressman Rodriguez—enact legislation to allow us to transfer the assets of our closing military bases to the communities at no cost for job generation purposes. And that, I think, has gone a long way to mitigating the impact or economic dislocation and trauma that the communities go through. But there is still no question that this is a traumatic process, just like any of our downsizing efforts, and we understand your point very well, sir.

    Mr. BATEMAN. Mr. Ortiz.

    Mr. ORTIZ. Thank you, Mr. Chairman. I appreciate you all being with us today and the fine work that you have done under the circumstances. And I know that money happens to be the problem, of which we don't have enough. But I am going to be asking some questions for all of the services. And my first question would be the question that I asked the prior panel, what benefits do you think will result from the presence of a DOD-wide strategy for addressing, you know, the RPM crisis, and how do you assess your service infrastructure recapitalization program? And then, what are your long-range plans for breaking the cycle of increasing the RPM backlog? And maybe you can give us a little input as to what we can expect.
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    Mr. BATEMAN. If you would suspend for a moment—Mr. Ortiz, I find myself in the situation where I made an improvident commitment to be somewhere at 11:45. So I am going, with the utmost confidence, proposing you of the responsibility for presiding over the hearing at the point where I have to leave, which is going to be in about two minutes.

    Mr. ORTIZ. That is fine, and I will not let Mr. Sisisky call for a vote.

    Mr. BATEMAN. Well, I might even be willing to go along with that.

    Secretary YIM. Thank you very much. Yes, we are trying to get some degree of consistency, but the biggest problem we have is—and it has been suggested that we have a floor, for example—is that I believe that we really do need the programming flexibility. We do see a lot of money being spent on training in the first part of the year, and then a lot of money coming in to RPM at the end of the year, as General Mashburn has indicated. That is actually good for us, because the only people that really can execute at the end of the year when money falls out is really the installation guys. So we really are benefiting from that type of budgeting system.

    The problem we face is that people are accused of having soft requirements within our own systems, our own comptrollers. The RPM needs, you don't know what you need, you don't really know what you have. How can you really say that this $10 million is really going to improve readiness? It is very difficult for us to create algorithms or connections between a specific mission readiness and a specific dollar devotion to a particular facility. So people accuse us of having soft requirements.
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    That is why it was very important for us to have this cooperative effort to get to a facility sustainment model that had commercial bench marks. So what I believe, where we are headed, is we are not going to get a floor unless it is mandated. That is not what the services nor the Department is requesting. However, what we need to do is increase the visibility of the decisions, either to fund or not to fund, and that is what we are attempting to do in the facility sustainment model so we can say to our programmers, okay, we know that you need this $50 million, but this $50 million would have done this, and the consequences of not giving us that $50 million this year and only giving us 20 is this. And we hope to get to that level of granularity in our model.

    Mr. ORTIZ [presiding]. Any of the services who would like to respond to my question?

    General VAN ANTWERP. Yes, sir. I would like to just say I think the facility sustainment model that Mr. Yim is working with the services; we have had the installation status report for several years—it is pretty mature at this point, and it is somewhat akin to that and will fold into that. I think the key to that is the standards that you have so you know exactly what the condition is, and what this facility sustainment model and the installation status report does, it actually—you go out and you look at a facility. You have a checklist, and when you are done, you know whether that—you know the sustainment costs and you know the modernization costs of that facility. So that is the first part.

    And then it gets into how do you break this chain that you alluded to. I think it is a combination of getting rid of, as we have already discussed, what we don't need anymore, so we are not pouring valuable dollars into that. And then the second part, you have to get this funding up to a level that while you are trying to sustain, it is not deteriorating at a greater rate. We are on a downslope right now because of chronic underfunding. And so we have to get it up to a level that allows us to—no fooling, not let the stuff we have go down further.
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    You combine that with a good program of military construction and modernization, and you take some of those C–4, what we would call a C–4, not mission capable facility, and you either tear it down or build a new one, or you really go in and modernize it. I think that is how you break it. We know the cost of that in the Army, to break that in RPM is about $500 million a year. Frankly, if we are going to do that over the next several years to sustain it, that very high level will break this trend that we are in right now.

    Mr. ORTIZ. Admiral.

    Admiral SMITH. Sir, I would offer that I really would check into everything that has been said so far. Within the Navy, I think, it is just a few simple words. The first is to focus what we have. We are spending money on operational facilities, quality of life facilities, training facilities, things that we know we are going to have and we are going to keep. We are going to get rid of things we don't need anymore, whether that is by demolition, or by outsourcing, or by privatization. We are going to consolidate where we can. And I would be remiss if I talked—and we are going to coordinate that, obviously, with our MILCON program to recapitalize our plant ashore. But I would be remiss if I didn't also mention that we are going to have—if we are going to have the discipline internally to break this cycle of poverty, we are going to need to educate our people. And it is not just our base commanders. It is also the people who live and work in these facilities as well as the people who fund those, our good friends in the comptroller business in Washington about not just a metric, but also, what this does and what the payback is for us.

    Our former CO, Admiral Boorda, used to say, quality of life is the last thing that happened to you today, and we are very sensitive to the fact that if you can live in a wonderful brand new one-plus-one barracks but, yet, at your workplace, the roof leaks, you have got an old typewriter instead of a word processor, that is not going to be an incentive for you to stay around in the Navy whether you are a civil servant or an active duty military member. So it is a multi-faceted approach, but I think we are on top of it and we are making enormous progress.
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    Mr. ORTIZ. Thank you. Mr. Robbins.

    General ROBBINS. Yes, sir. I would only add on the facility sustainment model, I think the beauty of it, and its utility to us as engineers, will be that because it is based on and bench marked against industry standards, commercial standards, as opposed to something that perhaps was just dreamed up, if that is the right term, internal in the Department of Defense—will allow us to better articulate and justify our requirements within the various corporate structures of our services, the Air Force Council, in my case, where we won't be just talking what civil engineers think we need, but Mr. Yim will have delivered to us a model that we can point to and say this is the way the rest of the world, commercial airports, universities, other government agencies, state governments, et cetera, approach this very nagging problem that we have. So I think that is the primary benefit that we see from developing a new model that we can all abide by across the uniformed services.

    Mr. ORTIZ. Thank you very much. General.

    General MASHBURN. Yes, sir. The only thing I could add is we must maintain the flexibility that is provided by not fencing real property maintenance money. For instance, I mentioned the four pillars of readiness, our legacy systems, very old equipment. During the course of a year, what happens if our vehicles' transmissions have a severe breakdown throughout the fleet—not under warranty—very difficult to handle unless there is something unfenced. If you have to weigh repairing the Amphibious Assault Vehicle (AAV's) versus repairing an old building, I think the commandant is right in making a decision as far as warfighting. So I just request that we be allowed to maintain the flexibility of managing the program with added emphasis on reporting properly.
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    Mr. ORTIZ. Thank you very much. I now will yield to my good friend, Mr. Sisisky, for any questions that he must have.

    Mr. SISISKY. Thank you. You don't want a fence then. Is that what you are saying? You want the flexibility to move that money around. Is that what you just said?

    General MASHBURN. Yes, sir.

    Mr. SISISKY. And you think that is the proper way to do it?

    General. MASHBURN. I do, sir, with better management tools.

    Mr. SISISKY. Thank all of you for being here today. Mr. Yim, I have never had the pleasure of seeing you before. As these gentlemen will testify, I was a pretty outspoken member of the Military Construction Committee, but they wouldn't let me serve on it this year.

    I would just get back for a minute to BRAC, and I know what the Chairman's—we have talked about it many times, the fear of two BRAC's. And the fear is not over two BRAC's, the fear is messing it up. For instance, in 1993, they closed the NADEP in Norfolk; that is the Air Rework facility. They closed it, basically, because the captain who was commanding the place took a gamble on 600 employees—this is a true story—that they were going to get enough business, when he should have RIF'd or laid them off, but he didn't do it, and he readily admitted it. So the cost went up and they took that picture right at that time and they closed it. Two years later, they sent it to Jacksonville. Two years later, they closed Jacksonville, Cecil Field, and sent all the airplanes to Norfolk. Now, they repair the airplanes in Jacksonville, and all of them were sitting up in Norfolk, so they had to fly down to get repaired.
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    But I can tell you a worse one than that. The Navy, was it—I forget the name of it, but it had to do with communications and radio work. It was done at the Norfolk Naval Shipyard in the annex, St. Julian Annex. So they closed Charleston in that year. I forget what year it was. They took all those ships out of Charleston, but they put the communications system, so now, the only one that benefited was U.S. Air, because then they had to fly from—you know, so that is our fear of two, you know, maybe you wouldn't mess up, you would be more careful in one. But you are going to have enough trouble just getting one through, so I don't know. But just prepare yourself for that.

    I think that's what they—you know, all this talk about—all of you talked about the real estate aspect of it. Nobody mentioned anything about base operations. That thing is really—am I imagining that that is hurt worse than anything, all the cuts in that? Is that my imagination or is it just base commanders complaining? Anybody like to—

    General VAN ANTWERP. I could just for the Army, we are in 2001, this budget funds the base ops at 96 percent to run the base. So I think it is really more in the RPM—

    Mr. SISISKY. Excuse me. Ninety-six percent of what figure?

    General VAN ANTWERP. Of the requirement.

    Mr. SISISKY. Of the requirement?

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    General VAN ANTWERP. Yes, sir. So that is the—

    Mr. SISISKY. While you have got the microphone, you made a statement about the 90 percent mark in 2005. That is what you want to get to in real property maintenance?

    General VAN ANTWERP. At least that high. I mean, I will tell you a—

    Mr. SISISKY. Well, let me just tell you what the problem is in that. You have been snookered, because they are basing that savings on an illusion that privatization is going to produce about $5 billion. Now, you prove it to me that it is going to do $5 billion. I am telling you, your fund is going to be shrunk if you base it on that. And that is what I worry about. And a lot of other things that are happening in the Department of Defense, based on an illusion that it may happen.

    I am not sure, Mr. Yim, when you said that the savings are real, coming off of the BRAC, that we do know that they are real. I got so upset eight years ago. I put the largest amendment that has ever happened in this place, a $70 billion amendment, and guess what it was for—to do away with DBOF because everybody was dipping their hands in the DBOF fund, which had to do with the D-builders all around and shortening those, you know. So you know, I worry, because I have seen it happen, you know, if we are going to save it in the accounting system is probably not the best that we will even know.

    Public works, now, is that an illusion of mine, too, that you privatize mostly public works. And is that saving a lot of money?
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    Admiral SMITH. If I could take that one, sir. I answered this, of course, as a two-time public works officer and a former Commanding Officer (CO) of a DBOF funded activity, I am sensitive to everything that you were talking about. We, of course, have a very active Commercial Activities (CA) outsourcing program, and public works utilities, of course, is a part of public works, and this is my third round of A–76 in my career. And I don't think any of them were easy, and this one isn't any easier either. We have gone back and, of course, we are in the middle of a lot of studies. We are studying everything from janitorial services and trash collection up through, basically, utilities privatization and outsourcing of vehicles for our fleets.

    We are finding savings. We found some substantial savings, and I would be glad to detail those for you for the record. The savings, what our friends in the comptroller shops have already taken from the budgets, that is not always a match, and I think that is what you were alluding to before, sir; but there is money to be saved there. There is money for us in the facility side to save there. Within my clemency at Naval Facility (NAVFAC), I have 1,200 people who work on managing, maintaining, operating, and repairing utility systems. I am not sure I need any of these people. Now, I never say never—I mean, I never say always, because I know I have got people doing that on Diego Garcia; and it is hard to get Hawaiian Electric to hook a line up all the way to Diego Garcia.

    But I think the point here is that we not only can save some money, and that is reason enough to keep doing it, but also, it does have a ripple effect back into our facility requirements on base, because where we can outsource utilities, we don't need a utilities shop on base anymore. Usually, the local power company or whoever will provide that in their own facilities off base.
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    Mr. SISISKY. Well, in the largest Naval installation in the world, you are doing that right now. I don't know if you gentlemen know, but down in Norfolk there is one commander of everything. He is in charge of every base that is around there, everybody reports to him. But public works, you know what bothers me; if you have people with sewerage, or anything, and they do maintenance work, but you save money by letting them go, and you privatize it so you do it when you have a problem, then that may be a problem. And that is why I say the savings may be an illusion to some degree.

    Admiral SMITH. Yes, sir. And that is always a concern, again, that you estimate the savings higher than they actually are. From a provision of service side, I do remember—that is why I have got all this gray hair—when we first contracted out things like trash collection, and we had several contractors default, it is kind of well, what happens once you get rid of the trash trucks and you can't pick it up yourself.

    Mr. SISISKY. I will tell you a better one than that. They hired a foreign company to fix cranes. I didn't realize fixing cranes was about $250,000, these huge cranes at the shipyard.

    Admiral SMITH. Portal cranes, yes, sir.

    Mr. SISISKY. So they hired this company, and it was a foreign company, said they could do it for $50,000. Well, what they did, they went bankrupt like in nine months. So do you know what I did? They have got a little thing in military construction budget, and you probably know, building a railroad down there. What we are going to do now, and it will pay back in five years, we are building a railroad to move the cranes all around the yard and do away with half the cranes. It makes sense.
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    Admiral SMITH. Yes, sir.

    Mr. SISISKY. So you say that it is not an illusion, or is an illusion, that we are saving money, or you don't know?

    Admiral SMITH. I would say, sir, it is not an illusion. We are saving money. It is a question of how much and, again, does it match the projections.

    Mr. SISISKY. I know the one question I really want to ask all of you, though. When they dip into RPM or base operations for contingencies, what percentage do you get back? Do you get it all back, half back? The Marine Corps said they got $6 billion—or $29 million back.

    General VAN ANTWERP. I didn't understand what percentage that was that he—

    Mr. SISISKY. I don't know either. That is why—

    General VAN ANTWERP. From the Army's standpoint, I will have to get that one for you for the record. We do get some of it back. There is no question about it. Is it 100 percent? I would speculate no.

    Mr. SISISKY. I don't want you to get in trouble.

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    General VAN ANTWERP. I know. Thank you, sir. I appreciate that.

    Admiral SMITH. Sir, I would have to say the Navy is happiest forward deployed around the world, and if we have got to take money out of RPM, well, there is enough Naval officer left in me to say, so be it. But I would say—I will take that also, if I could, that we get most all of it back. We do pretty well at the end of the year. But again, it is a matter of priorities. It really is.

    Mr. SISISKY. General Robbins.

    General ROBBINS. I think the prudent thing for an engineer in the Air Force to say would be, since we don't have any money to start with, we don't have any to lose. Perhaps, the more politically correct answer would be, it would be hard to say how much is diverted from RPM to go to contingencies to start with, as was alluded by one of the panelists earlier. We tend to be underfunded in the budget process itself. And so to determine how much we didn't get because a contingency comes along becomes a pretty difficult accounting problem.

    I know of no instance in my previous experience at Air Combat Command, sir, down at Langley, which you are familiar with—I don't remember us ever taking money that we already distributed to the wings and air combat command for RPM, pulling it back and saying we need to fund contingencies with this. What really has happened is we have seen a decrease in the year-end fallout money that comes our way, because it tends to be used to pay for those contingencies.

    We got a good healthy chunk of money after the Kosovo supplemental. Whether it is distributed, dollar for dollar, where we would have put that money in the first place or not is almost impossible to determine.
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    Mr. SISISKY. All right.

    General MASHBURN. Yes, sir. I would say it competes very well. I would not at any time say we could get 100 percent reimbursement, but it competes very well.

    Mr. SISISKY. I do have another question, but I will let my friend over here ask some questions. I am sorry. Then I will come back.

    Mr. ORTIZ. I yield to my good friend and colleague from Texas, Mr. Rodriguez. Congressman.

    Mr. RODRIGUEZ. I know Congressman Sisisky is very shy and so I want to thank you for yielding to me. I wanted to share with you, we have in San Antonio, and I am sure throughout the country, a lot of old bases, like Fort Sam and Randolph, that have some beautiful structures. And I know the last thing we want to do is knock some of those down. In fact, in some cases, the communities would not allow us to do that.

    But I wanted to throw out the question in terms of whether we need to do anything special in terms of historically for those historical sites that are throughout the country, in terms of making sure we maintain them appropriately because we want to do that for historical reasons. Also, in terms of I realize that a lot of them are still being utilized; and so I wanted to make sure, you know, I want to get your feedback on that one.

    Second, I wanted to also—I know, Mr. Yim, you mentioned a little bit in terms of the Brooks project in San Antonio; and I would want for you maybe to make some comments, because I think that not all bases are the same, but there are some opportunities out there—not, you know, despite BRAC, or whatever, but to also look in terms of some cost-effective measures in terms of reducing the costs and cost operations. And I would want for you also to make some comments in that area.
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    Secretary YIM. Yes. Thank you. First, on the historic issues, the historic properties, and this is more than just historic quarters; we have historic buildings, facilities. What we are suggesting is in our proposal for enhanced use leasing of our underutilized facilities, that the historic properties give a character to our installations and, actually, are often coveted by the private sector to use for representational events, conferences. It gives a cachet that is very nice for the private sector to use; and since we don't use a lot of our historical facilities to the full extent, that that is perhaps a vehicle that we could have some dual use, or renting of our facilities, and then capture the money in our enhanced use leasing proposal, and then keep it at that installation either to help maintain that historic property or to fund other real property maintenance or other infrastructure requirements.

    And I think that would—that would give then some functional significance to the preservation of our historic properties. If we are just looking at preserving them for their historical sense without a functional significance, there is always pressure to demolish them or underutilize them. We would like to give an economic, functional significance to them in that manner; and I think that is a good vehicle.

    Our data seems to show, and I think many people think it is much more expensive to maintain historic properties than others, that is probably not precisely true. It is more a function of the age rather than their historical character itself. And then if you also look at the life cycle cost of them, if we are putting a slate roof, for example, back on an historic property because that is what the appearance was, it has a much longer useful life than other types of building material. So over the cycle, the life cycle, it is about the same as most of our other facilities. But that is one that we would like to look at.
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    The other significance of historic properties is people are beginning to lose contact with the military and what role the military plays. And to the extent we can use historic properties as draws for the general public to come onto our bases or participate, it gives them a better sense of what the military is all about, and that fulfills another important goal for us.

    With respect to Brooks, as you know, sir, I am a very big advocate of Brooks and other projects like Brooks. Brooks is a project where we are actually asking a partnership in a true sense between the military installation and the community to help us with our operating costs. We are talking about concepts even as innovative as perhaps even leasing the whole—or conveying the whole property to the community and leasing back on the assumption that the private sector, taking advantage of the economies of scale, can be more efficient in management of installations than we can. And plus, it allows us to fulfill that other goal I just talked about, integrating the military function, military life, with the community, and giving people a better sense of what we do. So I think there is great potential in Brooks. We were able last year to get legislation allowing us to proceed. We have some reports back to Congress on that, in July, on progress for that. But you will see that my office installation is very, very strongly supportive of those type of concepts.

    I would like to mention one other thing, if I could, too, on our funding. And to go back to Congressman Sisisky's view, we do have problems with estimating the savings. And sometimes our budgets are—the comptrollers take more in assumed savings than perhaps we really can deliver. I also have to mention that last year, Congress in the Appropriations Act took $100 million from us on assumed savings from competitive sourcing. And that was quite a hit that we took from our own budget lines. So we would ask your support in helping us maintain our projections.
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    Mr. RODRIGUEZ. Thank you for those comments. Let me add one other thing. When you talked about historical sites, I know—and I would ask that, you know, because I think we have some unique sites out there. I have the distinction also of having Fort Ringo that was one of the forts that goes back a long time—not Bill Ringo, Fort Ringo. And it was turned over to the school district down there. And it is a beautiful facility right on the Rio Grande out there in Rio Grande City. And it used to be called Davis Landing way back in the 1850's, and so it is a beautiful facility. Yet, you know, and so you see some of those sites out there. And I think we have an obligation, I think, to all Americans that we kind of safeguard some of those sites. And I am not sure, exactly, how to go about that, but I would hope that maybe in the future we would come up with some recommendations as to how to do that.

    In reference to your comments, also, regarding Brooks, I think it is a unique opportunity. Not all communities would want to do that. Fortunately, we do have a community in San Antonio that is willing to move forward on some of that. Mainly, because of experiences from the closure of a base that had 20,000 people there, and that is Kelly. And so I want to thank you for being here and your comments. Thank you. And I relinquish the remaining time to my colleague.

    Mr. ORTIZ. I think that Congressman Sisisky has another soft question for—

    Mr. SISISKY. Well, just following on him, an historical thing, it is amazing what you can do with buildings today. We have historical plaques, Civil War plaques, at the Norfolk Naval Shipyard, and we have modernized those buildings. Now, they look terrible from—I mean, they are brick, they are not terrible, but they are old buildings. But you should see what they have done on the inside. It is unbelievable with computers, and carpets, and lighting, and everything. We have also built a very expensive hospital down there, and one of the buildings, you cannot tear down, so we will make that the administration building. So you know, there is something.
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    But what I wanted to ask you, I have told General Van Antwerp this story, and it has to do with family housing. I was over in Korea last fall, and I was having lunch with a group of soldiers. And you know, you go around the table from the state, I am from Fairfax, Alexandria, Fredericksburg, Richmond, and I get to this last one, and he says, Congressman, I am from Fort Lee, Virginia, and my family is living in the house while I am over here that you helped build. And I will tell you, I have never had a feeling in my life like that. But it was on base.

    And this is what I am asking you. I tried when I was on military construction to do something simple like the Virginia Housing and Development Authority, to loan money to sailors, because the Navy was in a position not to guarantee completely; but if you are an east coast sailor, you will usually be placed in Norfolk. If you are a west coast sailor, you would be in San Diego or Bremerton. So they could buy a house, even the lower enlisted person with very little interest rate.

    But how important do you think—and I know this is true with the Army. And of course, now, with the new expedition in the Air Force and Marine Corps, how important is it living on base in a family atmosphere where a young man or woman knows that when they are overseas, their family is in a family group. How would you weigh the importance of that?

    General VAN ANTWERP. Sir, I would say from an Army standpoint, it is very important. If you just look at the waiting list of people wanting to move on post, you will find they are enormous. They can run two years, over two years. Right now, we house about 25 percent of our people on our installations, so the majority of people live off the installation. But there is no question that it is the most attractive, both probably from a financial standpoint, from a community security standpoint, from having all of the benefits of living on post for the activities that are there for youth, just a lot of pluses why you want to do that.
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    But we—you know, our deficit on post is huge, if we would try and bring the percentage up much.

    Mr. ORTIZ. And if I may, I think that because the military owns the land, if there is enough land on base, then it would be cheaper to build—and correct me if I am wrong—than it would be to, either if it is a joint venture on the outside, because of the land that is owned. Now, many of the bases might not have as much land. But maybe you can add that to the question that Mr. Sisisky just asked.

    General VAN ANTWERP. I would just—in our one housing privatization that we awarded recently at Fort Carson, Colorado, part of that contract is to build 800 new sets. Of that 800 sets, that number was devised in working with the local population. We are finding that out in the economy, they can do mostly the two bedrooms. But the three and four bedrooms for our junior people, what they can't get out on the economy for what their allowance is, that is what we are going to build on the installation. And with that land, the little cost of land, if you have the space, it is a winner. So you are exactly on target there, sir.

    Mr. ORTIZ. Admiral.

    Admiral SMITH. Thank you, sir. First off, to say the Navy is for the large part coastal and urban, over 80 percent of our sailors live out in town in the community right now. That doesn't mean that the socialization that is offered by being on base and living in the community isn't of value to us, especially, when our sailors will deploy for six months or longer at a time. So that is an important thing to us to be able to provide to our service members.
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    Within the seven Planning, Programming and Budgeting (PPB) actions we have ongoing right now, some of them in Texas, we are also looking at using some of the authorities that the Virginia Housing Development Authority (VHDA) has in the Tidewater area. Land fleet had already proposed yet another pilot project; and they brought that to Washington, and we are talking to the Navy Secretary and Mr. Yim's staff about perhaps proposing that forward. I mean, that is not soup yet, but I think you all will be hearing from us shortly about that because, again, that is a wonderful agency down there. And our goal, as always, whether it is married family housing or bachelor housing, is to try to help more sailors faster.

    Mr. SISISKY. I will tell you what made me ask the question if you really want to know the truth, other than that young man thrilling me in Korea. We were interviewing dependent wives after Kosovo. I went down to Norfolk with the President and the Secretary of Defense. And one of the dependent wives said, you know, what really worries me—and she said, not in Norfolk, Virginia, because this is a military town, not in Norfolk, Virginia; but we are kind of treated like being on welfare all the time—we are second class citizens. People think we just get doles out from the government, and she was very sincere. She was in other places that I have been. She said I just want to make it plain, that this isn't Norfolk.

    And I wonder if that permeates through the system. That is why I mentioned the on-base housing versus the off-base housing.

    Secretary YIM. I think, Congressman, that I have to give a slightly different view, too. There is some doubt on the other side, in fairness to the issue, that particularly with families now that have working spouses, that if they could afford better quarters off-base, that they would prefer to live off-base. There was a recent study, for example, to that effect. Now, there is always going to be a need, always a need for on-base housing. We are never going to go completely away from that. We also are privatizing on-base housing so we can keep it on base but have the management responsibility shifted to the private sector, and there is some benefits of doing that.
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    When we overbuild on-base housing, there is quite a tale that goes along with it—roads, and support centers, and child care centers, and schools, et cetera. So there is quite an associated cost that sometimes also can be shifted to the community. I think that the increases in the basic allowance for housing, we are going to see does it really drive down a lot of the requirements. Is the Rand study correct, are people going to prefer to live off base? And I think we are going to see a mix of people still preferring to live on base, but more and more people actually preferring the off-base alternatives if they can afford quality quarters.

    Mr. SISISKY. If they can buy now. May I—because this is something that is bothering me, and I haven't been on a military construction subcommittee to really get in it. I was in it for a while. Do we have any real estate experts in the Department of Defense now? I mean, for leasing. Let me tell you why. I raised cain—I mean, you can't believe—over Southcom's leasing down in Miami. I could not believe that anything like that—and then, you know, the government Corps of Engineers did it, but he doesn't have the expertise to do it. I doubt whether you gentlemen have the expertise. But there are people that are skilled, that knowing how to make a deal, you know, and maybe you are the ones. I don't know.

    But do we have anybody, because Mr. Hamre promised me he was going to get some people in there that really were experts, because you mentioned privatization on federal land; and you are getting complicated deals here that are not easy deals, because you may say you are 100 years behind, but we are going to catch up through privatization; and it may be costing so much money that you are really not catching up.

    General YIM. That is a concern, sir. And I mentioned that we needed to get better knowledge management tools out in the field. There is a lot of in-house, it is smart people. And it is not because they are not smart, it is because they don't have the experience. This is a very different deal for us, and this is not a housing construction project. What we are looking at is a management project over time. The deals don't crash and burn in the first couple of years because they look like a standard construction project and we can do that. They will crash and burn if the financial or cash flows aren't sufficient to be able to do the repair and replace the roofs in the tenth year, or the fifteenth year, or the O&M account isn't sufficiently funded and the guys go bankrupt on us.
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    A lot of people, a lot of the services are augmenting with outside real estate experts that have worked this issue for either public entities or for private sector and bringing on that expertise and really learning how to do this. That is why we have had, frankly, a slow pace of housing privatization.

    Mr. SISISKY. It has been slow, there is no question about that.

    Secretary YIM. And I think we, justifiably, should be criticized for it has been slow. We have had some fits and starts. This is all part of this kind of market research, because we didn't even really know, frankly, what to ask for when we went out to the private sector. And I think we are getting better on that.

    Mr. SISISKY. All right. I will let everybody go to lunch.

    Mr. ORTIZ. Just one more question if nobody else has any questions. You know, I know that industry has a cost analysis system, more or less, how much it costs to maintain a square foot of building. And when you look at that, it may be a newer facility versus an older facility. Could you give me the difference, more or less, how much it would cost to maintain a newer facility and an old facility?

    Secretary YIM. I think that I will need to take that one for the record, because there will be a variety of different factors. So let me not just give you a cavalier attitude or answer. We will look at that more closely. That is what we tried to do with this costing handbook, is to try to get commercially benchmarked measurements on what it would cost to maintain both old and new facilities.
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    Mr. ORTIZ. Thanks, Mr. Secretary. General.

    General VAN ANTWERP. Sir, I would just say that right now in the Army, we are around $3.50 per square foot, but that is for all the buildings. And as you recognize, if it is a new building, it could be less. I personally think, based on the private sector and what we found, it is somewhere in the $5 to $6 range, $5 to $6 a square foot. It is very dependent on the type of building, the type of use. A warehouse space is much less than a child care center, for instance. So it has some dependence on that. But it is up in the $5 to $6 range, I would think.

    Mr. ORTIZ. Thank you. Anybody else? If not, we want to thank—I am sorry.

    General MASHBURN. Sir, if I could address Mr. Sisisky's question concerning base housing and the requirements for dependents of deploying members; historically, we have found that we have concentrated so much on the 25 to 30 percent of our military families who live on base and we greatly neglected that 70 to 75 percent who lived off. We found that many of our young Marine families desire to go to their home and be with their parents and family when our young Marines deploy. So I think in the entire package of benefits, we really must concentrate on Basic Allowance for Housing (BAH), medical benefits, so that when they go home, they feel like they are still part of the military.

    Mr. ORTIZ. Thank you, sir. If there is no further questions—he moves, Mr. Sisisky. I am glad he is my friend. Let me thank Mr. Secretary and all of you for being here. I think that this was a very informative hearing this morning. We want to thank you, and if there is no further business, this meeting is adjourned.
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    [Whereupon, at 12:15 p.m., the subcommittee was adjourned.]


March 1, 2000
[The Appendix is pending.]