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[H.A.S.C. No. 107–33]



FOR FISCAL YEAR 2003—H.R. 4546






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(H.R. 4546)

MARCH 7, 2002




JIM SAXTON, New Jersey, Chairman
ROBIN HAYES, North Carolina
KEN CALVERT, California
ED SCHROCK, Virginia
JOHN M. McHUGH, New York
HOWARD P. ''BUCK'' McKEON, California

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GENE TAYLOR, Mississippi
VIC SNYDER, Arkansas

Thomas E. Hawley, Professional Staff Member
George O. Withers, Professional Staff Member
Danleigh S. Halfast, Staff Assistant





    Thursday, March 7, 2002, Hearing on the Fiscal Year 2003 Military Construction Budget Request for Programs of the Office of the Secretary of Defense, The Defense Agencies, and the Active and Reserve Components of the Department of the Army

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    Thursday, March 7, 2002




    Abercrombie, Hon. Neil, a Representative from Hawaii, Ranking Member, Military Installations and Facilities Subcommittee
    Saxton, Hon. Jim, a Representative from New Jersey, Chairman, Military Installations and Facilities Subcommittee


    DuBois, Hon. Raymond F., Jr., Deputy Under Secretary of Defense, Installations and Environment
    Fiori, Hon. Mario P., Assistant Secretary of the Army, Installations and Environment
    Helmly, Maj. Gen. James R.. Commander (TPU), 78th Division, Training Support, United States Army Reserve
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    Squier, Brig. Gen. Michael J., Deputy Director, Army National Guard
    Van Antwerp, Maj. Gen. Robert L., Jr., Assistant Chief of Staff for Installations Management, United States Army
    Zakheim, Hon. Dov, Under Secretary of Defense (Comptroller)



Abercrombie, Hon. Neil
Dubois, Hon. Raymond F.
Fiori, Hon. Mario P.
Saxton, Hon. Jim
Zakheim, Hon. Dov S.

[There were no Documents Submitted for the Record.]

Mr. Abercrombie
Mr. Bartlett
Mr. Hayes
Mr. Saxton
Mr. Taylor

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House of Representatives,
Committee on Armed Services,
Military Installations and Facilities Subcommittee,
Washington, DC, Thursday, March 7, 2002.

    The subcommittee met, pursuant to call, at 2:00 p.m. in room 2212, Rayburn House Office Building, Hon. Jim Saxton (chairman of the subcommittee) presiding.


    Mr. SAXTON. The subcommittee will come to order. The Subcommittee on Military Installations and Facilities meets this afternoon to begin consideration of the President's budget request for the military construction and military family housing programs of the Department of Defense for fiscal year 2003.

    In the face of the oft-repeated concerns of this subcommittee, the Department of Defense has underfunded its military infrastructure for many years. This underfunding has occurred in both real property maintenance accounts and in new construction. Last year, for the first time in many years, the Department of Defense submitted a realistic budget that acknowledged these years of neglect and promised robust future investment. In fact, one of our witnesses here today, Mr. DuBois, stated in our hearing last July, ''Our fiscal year 2002 budget initiates an aggressive program to renew our facilities,'' end quote. My colleagues on this subcommittee and I were heartened by these remarks and believed that we were about to embark on a serious campaign to fix military infrastructure.
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    Unfortunately, we were in for a disappointment, because the budget before the subcommittee is a very disappointing document. In the year that the Department of Defense has received a substantial increase over last year's budget, the military construction budget has actually been cut by 15 percent. With all of the needs I have seen around the military, I find it hard to believe that military construction funding was not at the top of the priority list.

    Just last month, several members and I traveled to Germany and visited Air Force and Army installations. The conditions that our soldiers and airmen work under are in some cases appalling. For example, at Ramstein Air Force Base, Reserve and Guard units are reduced to working in cold, dank, converted fighter aircraft shelters across the flight line and isolated form the rest of the base. At Baumholder, Germany, we saw Army soldiers working in a motor pool, a railhead, and a battalion headquarters building that wouldn't be approved for use by prisoners in the United States. I know from the travel of other members and staff that similar conditions exist elsewhere in Europe and in our installations in the United States and the Pacific.

    In our hearing on July 11th, 2001, in the course of congratulating the administration for finally increasing the military construction budget and recognizing its priority, I said the following: ''the test will be to maintain the level of effort in committing the necessary funds to both military construction and maintenance to buy out the problem of deficient facilities. This budget request cannot be a monetary spike; it must be sustained.''
    Unfortunately, the budget before us fails to meet the challenge I placed on the Department last year. To be fair, I must report that there is some good news. The military services have emphasized the construction of dormitories and barracks for single service members. Additionally, the services are pursuing family housing privatization initiatives aggressively. Last, the services have ploughed much funding into sustaining restoration and modernization accounts. While I am always in favor of maintaining taxpayer-built facilities, I am less than enthusiastic about the reason for the increase; namely, a desire to put a band-aid on everything until after the base closure round in 2005.
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    Let me be clear. This subcommittee will not turn our backs on the need to modernize crumbling infrastructure for several years until the results of the base closure are known. With a hot war in progress and the force structure of military services in flux, this clearly was not the time to engage in a round of base closure, in my opinion. And if Congress had authorized a round in 2003, the services would be engaged in the analytical work today, instead of paying attention to the tasks at hand. I am very glad that we postponed base realignment and closure (BRAC) until 2005. The Department of Defense should thank Congress for its foresight, rather than chiding us for the delay and punishing military members around the world by underfunding military construction.

    Despite our differences on this point, I look forward to working with our friends in the Pentagon on these critical infrastructure issues.

    I now would like to yield to Mr. Abercrombie for any opening statement he may have.

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

    Mr. ABERCROMBIE. Thank you very much, Mr. Chairman. Please excuse me for not being here at the beginning of your remarks, but I had an opportunity to have a member of my staff have her picture taken with Richard Gere, and, as I am sure you can imagine, you came in a distant second.

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    Mr. SAXTON. First things first.

    Mr. ABERCROMBIE. First things first.

    But because we want to move this right along, Mr. Chairman, I do in fact have a statement that I would like your permission to submit for the record. And may I summarize it by saying that we have been told that we look forward to a healthy and robust series of budgets in the outyears, but one thing I have noticed during my tenure here is that the outyears never seem to come. They are like wedding dates that keep getting pushed back. So, we wait and wait for the facilities investment, and then we don't necessarily see it come to fruition.

    Recapitalization is well in line with the private sector. So I do hope that we can move forward, regardless of the positions that may or may not have been taken with respect to BRAC, and start dealing with the reality of today and move forward from this point.

    So again with your permission, Mr. Chairman, may I submit this?

    Mr. SAXTON. Without objection. Thank you, Mr. Abercrombie. We appreciate your participation as always.

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

    Mr. SAXTON. Today we have two panels of witnesses for our proceedings. I want to welcome our first panel, Dr. Dov Zakheim, Under Secretary of Defense, actually Comptroller; and Mr. Raymond DuBois, Deputy Under Secretary of Defense for Installations and Environment. We welcome your participation this afternoon. We look forward to working with you.
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    At the outset, I will state that, without objection, each of our prepared statements will be entered into the record. That is for the other members who haven't had a chance to speak.


    Mr. SAXTON. We will begin with Dr. Zakheim. Thank you for being with us, sir.

    Dr. ZAKHEIM. Well, thank you, Mr. Chairman. I would request, please, that my prepared written statement be also entered into the record.

    Mr. SAXTON. Without objection.

    Dr. ZAKHEIM. Mr. Chairman, Mr. Abercrombie, members of the subcommittee, thank you very much for this opportunity to discuss the military construction component of President Bush's fiscal year 2003 Department of Defense (DOD) budget request.

    The 2003 military construction (MILCON) budget supports the President's commitment to revitalize and transform America's defense posture, our forces, our capabilities, our infrastructure, in order to enable us to counter the 21st century threats that we face in a decisive manner.
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    Our budget balances this longer-term aim with immediate requirements, especially with respect to the war on terrorism and the need to improve the quality of life for our military people and their families. As with all of the appropriations accounts in our fiscal year 2003 budget, in our military construction request we had to make hard choices because of other pressing requirements.

    We were not spared these hard choices, even though the Department's budget top line increased substantially. Almost all of the $48 billion that was added by the President was needed to fund the war on terrorism or to cover inflation or to address must-pay bills such as pay raises and health care accruals and to provide for realistic costing of programs. In fact, only through management and program changes were we able to come up with approximately $9.3 billion in savings to enable us to allocate funds toward our highest priorities, and especially to invest in transformation. These savings helped enable us to increase fiscal year 2003 military construction funding significantly above what had been our previously planned level. We believe that our fiscal year 2003 budget strongly supports the facilities and quality-of-life requirements of America's Armed Forces.

    And I might add, Mr. Abercrombie, since I have a son who is engaged, I sure hope that the wedding doesn't keep getting delayed, and that as you know, sir, the fiscal year 2002 budget reflected the Secretary's commitment to lower the recapitalization rate. Obviously in light of what happened after September 11th, we had to revisit all of our priorities. That in no way implies that the commitment to lowering that recapitalization rate is any weaker, and indeed the way we have put our budget together in general reflects the determination that out-years really will be meaningful and not just an excuse for pushing off programs.
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    Let me give you an overview of our funding. The President's request for military construction and family housing totals, as you know, $9 billion and funds over 300 construction projects at more than 185 locations. This budget will enhance our sustainment and modernization of existing facilities. It will replace facilities that are no longer economic to repair. It will address environmental compliance requirements, and it will continue caretaker efforts at closed bases. It will fund new construction that we assessed as critical, most notably to support new weapons systems coming into the inventory.

    Now, it is true that the request is $1 billion lower than last year's 2002 request, but that in no way implies any easing of our commitment to revitalizing DOD infrastructure. The $9 billion total is the second largest request in the past 6 years, exceeded only by last year's unusually high level. Moreover, we added $1.6 billion to the 2003 funding that had been anticipated in the President's budget request for fiscal year 2002. This budget, therefore, clearly supports our critical requirements and missions.

    Secretary of Defense Rumsfeld's commitment to facilities revitalization is demonstrated not only in our carefully crafted military construction and family housing program, but also is reflected in our increased funding for sustainment, restoration and modernization (SRM) within the operation and maintenance (O&M) title.

    Fiscal year 2003 funding for SRM totals $6.2 billion, which is a $500 million increase over last year's request, and that total includes $5.6 billion for sustainment to keep our existing facilities in good shape. Although we had to make difficult choices because of the escalating demands from the war on terrorism, especially within the operations and maintenance accounts, we were able to fund 93 percent of the military services' facilities and maintenance requirements and we are on a trajectory to go higher, as you know. That represents an increase over the 89 percent provided for in last year's budget. It is also significantly higher than what was budgeted in the previous several years, such as in fiscal year 2000 when the Department met only 78 percent of the services' facilities maintenance requirements.
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    Our budget includes $225 million more than requested last year for military family housing construction and privatization. This keeps us on track to meet Secretary Rumsfeld's goal of ensuring adequate housing for all military personnel and their families by 2007, which is 3 years earlier than what was originally planned.

    Moreover, we are achieving greater benefit from our housing funds because, by joining forces with the private sector, we will be leveraging our investments to provide quality housing. In fiscal year 2003, we are planning to obtain about 35,000 privatized housing units, nearly twice the number of privatized units obtained to date. Based on the privatization projects awarded so far, we estimate that the DOD investment was leveraged at about 8:1, and that is a significant investment indeed.

    Our fiscal year 2003 funding request for privatization projects is $195 million, to provide about 24,000 housing units. If you apply that previous 8:1 ratio or leverage rate with our $195 million fiscal year 2003 investment, we should be able to obtain over $1.5 billion worth of quality privatized housing, and this leveraged return should be factored into the overall value of our military construction budget because it is real.

    A critical component of our plan is the congressionally approved BRAC, the base realignment and closure round, which we hope will achieve a needed 20 to 25 percent reduction in our infrastructure. With a successful BRAC round, our planned funding through fiscal year 2007 will be sufficient to achieve, by then, Secretary Rumsfeld's strong goals for facilities recapitalization. He has not backed off those goals.

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    A few highlights for our fiscal year 2003 request with respect to quality of life:

    The budget includes $1.2 billion for new or improved barracks for unaccompanied military personnel. This will fund 46 projects to construct and modernize barracks and to provide about 12 and a half thousand new or improved living spaces. In addition, the budget will allow the Department to construct and modernize 13 schools for dependents, 7 physical fitness centers, 2 child development centers, and 3 community support centers.

    With respect to overseas construction, keeping with the congressional direction, new construction in overseas areas is being requested only where construction requirements are of high priority; that is to say, when they are absolutely essential to U.S. Overseas basing needs, and after all burden sharing opportunities have been explored and found to be unworkable.

    The fiscal year 2003 program of $847 million for projects in overseas areas meets these criteria. I should add that in conjunction with this, we have recently reached an agreement with the Republic of Korea whereby they will be contributing, by fiscal year 2005, about—no, actually 50 cents on every dollar that is spent in support of our forces in Korea. That could not have been done without the support of Congress. It sets a terrific precedent for us when we discuss these similar sorts of issues with other countries, particularly in Europe, and it does allow us to work jointly to save the taxpayer money and to address many of these housing needs.

    With respect to chemical demilitarization construction, sustaining our steady progress, the 2003 budget includes $168 million for the construction of chemical demilitarization facilities, and reflects changes as a result of our view of the program's funding and schedule.
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    With respect to the North Atlantic Treaty Organization (NATO) and its security investment program, that request totals $168 million, roughly. This request is the minimum essential American contribution for NATO's efforts and is needed to support both our strategic security and our economic interest in the European theatre.

    With respect to family housing, budget authority for fiscal year 2003 family housing totals $4.2 billion, which is up from the $4 billion requested in the last fiscal year. The Department's 2003 family housing inventory will include an estimated 250,000 government-owned units, and 29,500 leased units worldwide. Our operation and maintenance budget of $2.9 billion will assure that houses in our inventory are in adequate condition for occupancy by our military families. We are requesting $1.3 billion to build, replace, or improve 7,200 family housing units.

    So let me conclude, Mr. Chairman, Mr. Abercrombie, members of the subcommittee, by thanking you again for the opportunity to describe our plans to sustain or revitalize DOD's facilities. This fiscal year 2003 budget will enhance the quality of life of our service members and their families. It will strongly support current requirements and missions. It will enable the needed long-term streamlining and recapitalization of DOD facilities that has long been wanting.

    I urge your approval of our request. The Department and I are ready to provide whatever details you all may need to make these important decisions. Thank you, sir.

    Mr. SAXTON. Thank you very much.
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    [The prepared statement of Dr. Zakheim can be found in the Appendix on page ?.]

    Mr. SAXTON. Secretary DuBois.

    Secretary DUBOIS. Thank you, Mr. Chairman, Mr. Abercrombie, distinguished members of the subcommittee. This is, as you know, my second appearance before this subcommittee on these important issues of installations and infrastructure.

    September 11th, as we all know, dramatically changed our nation, perhaps forever. But the Secretary of Defense and the President, Dr. Zakheim and I, and many others remain committed to the imperative that we must transform our installations and maintain our commitment to our people by improving their quality of life.

    In the context, as Dr. Zakheim has referred, in the context of competing priorities resulting from those events of 9–11, we have developed, we think, a feasible and fiscally responsible plan for getting our facilities—continuing our facilities on a path to recovery. Indeed, Mr. Chairman, you have reminded me and all of us of my remarks during the last legislative cycle.

    And in the wake of 9–11, I want to say to you that we believe we are giving quality of life in this budget submission an even higher priority since, of course, our servicemen and women and the civilians who work at the Department of Defense work and deploy and fight, if anything, in a more stressful environment than ever before.
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    We are increasing the basic allowance for housing (BAH), as you know, to diminish out-of-pocket costs by our service members. We are also increasing reliance upon the private sector, as Dr. Zakheim referred to, for access to existing quality housing and privatized housing. We are grateful to the Congress for extending our housing privatization authority to 2012, although as has been stated, Secretary Rumsfeld wants to eliminate all inadequate housing by 2007. We continue to fund MILCON for housing, where necessary, and are requesting an increase in this fiscal year of nearly $225 million.

    We are also maintaining our commitment to our unaccompanied servicemen and women. And in fiscal year 2002, as you know, we constructed and revitalized about 16,000 barracks spaces, and this year we plan to construct and revitalize almost 14,000 more.

    We have increased our construction funding for our overseas installations. It is important to remember that while 25 percent of all of our personnel are deployed overseas, we only devote approximately 23 percent of our MILCON budget to overseas investments. In terms of military family housing, it is only 21 percent. And as you have noted, Mr. Chairman, the appalling condition of many of our overseas facilities is as a result of many years of underinvestment.

    Yes, our forces deserve better wherever they are located. And our investments overseas are based on improving quality of life and resolving critical readiness shortfalls. It has been pointed out that in the totality of investments which we make with respect to facilities, infrastructure, housing, quality of life, that in terms of that total investment portfolio, not all of which is MILCON—we recognize that—but in terms of that total investment portfolio, to include new footprint MILCON, restoration and modernization MILCON, restoration and modernization in the O&M account, sustainment in the O&M account, family housing construction and family housing maintenance, if you take all services together, and include the defense agencies, we really are only in a reduction mode of some 2 to 3 percent over last year's.
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    I think it is important to remain cognizant that the sustainment account is in point of fact at its highest historical level ever, and fully sustaining our facilities has been our first priority this year. Our fiscal year 2003 budget request slows the deterioration of our facilities and over time we will fully restore their readiness.

    Now, on the one major program element within that total investment portfolio which is down, that is to say, the restoration and modernization account, I think it is important to recognize that it is, however, the second largest request in the past 6 years. And we do stand by our goal—and the Secretary is quite adamant about this—with respect to the recapitalization (recap) rate of achievement, a recap rate of 67 years by fiscal 2007.

    The fiscal year 2003 budget request does represent a restructuring of our priorities to achieve this, what we consider a more fiscally responsible program with lower costs over the longer term. Now, it also, I think, is important to highlight that the majority of MILCON projects, the majority, that is to say over 60 percent, is devoted to restoration and modernization of mission-critical requirements.

    And that gets back to the prioritization issue, whether we are prioritizing or whether the Secretary of Defense prioritizes between the five major accounts. But within the MILCON account, there has been prioritization with respect to each service. And as you will hear from each Service Assistant Secretary what their priorities are, slightly different in each case, the overall MILCON in terms of that 67 percent, 60 percent is devoted to restoration and modernization.

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    A couple more quick items, I mean this and the Secretary means this sincerely. He does, we do, appreciate and we would like to thank all of the Members of the House of Representatives, as well as the Senate, for giving and supporting the Secretary's effort to rationalize our total infrastructure through a needed BRAC round in 2005. And I think it is important to note that in the wake of the attacks of September 11th, the imperative to convert excess base capacity to warfighting capability will be enhanced, we believe, through an effective, comprehensive, thoughtful BRAC, not in any way diminished.

    Environmental issues, just briefly. As you know, we once again have asked for, in this case 2003, over $4 billion of total investments in those program accounts, be they compliance, clean-up, conservation, technology, or unexploded ordnance.

    Last point, and this is an important one because there has been a specific hearing called by another subcommittee of this full committee on this issue, and it is called encroachment. I think every member of the House Armed Services Committee has delved into this area in one way or another. I just wanted to say that the Secretary and I, when we were here 30 years ago, the term ''encroachment'' wasn't in our vocabulary. Maybe it should have been. We today face serious encroachment issues that do not diminish as the days go by, they only intensify. We hope to address this emerging concern—emerging very serious concern, in more detail on the 14th of March in front of the Military Readiness Subcommittee.

    In closing, over the past 9 months that I have been in this position, and honored to be in this position, I have visited over 30 installations and a number of our crown jewels in terms of training and test ranges. It is always important to go visit them, as you do, to talk to non-commissioned officer (NCO) wives, to talk to the general's driver, to talk to the civilian employees at these bases, and to recommit to them, in conjunction with you, Members of Congress, a commitment to provide and support healthy installations and facilities in housing, which in point of fact enhances the readiness and morale of all of our individuals in uniform and all of our civilians.
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    We remain committed to that, and we look forward to working with you to accomplish this. Thank you very much, Mr. Chairman.

    Mr. SAXTON. Thank you very much.

    [The prepared statement of Secretary DuBois can be found in the Appendix on page ?.]

    Mr. SAXTON. Before I turn to Mr. Abercrombie for the first set of questions, just let me ask for something for the record. I am frankly disappointed, as I have already said, with your proposed budget for military construction, which is almost 15 percent smaller than the fiscal year 2002 military construction budget that Congress just enacted.

    In addition, on July 11th, 2001, in your testimony before the Subcommittee on Installations and Facilities, Secretary DuBois stated, quote, ''Our fiscal year 2002 budget initiates an aggressive program to renew our facilities,'' end quote.

    Now, instead of an aggressive renewal program, we are presented with a 15 percent reduction and the additional news that you have deferred $400 million in projects because base closure authority was delayed until 2005.

    Would you be kind enough to submit for the record the list of the projects you deferred? Additionally, would you be kind enough to describe some of the deferred projects and why you chose not to submit these specific projects?
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    Dr. ZAKHEIM. We will take it for the record. I would just make a couple of points, though, about this because I know that there has been considerable discussion, and a lot of this, I suspect, is due to an unfortunate characterization of that $400 million on one particular briefing chart. And a lot of the discussion stems from that.

    In point of fact, there were no deferrals, per se. Second, there was no tie at all to BRAC. The reason that $400 million is on the chart is that there were plans initially, prior to putting together the budget, for undertaking a number of projects that subsequently, on review, just didn't need to be undertaken. I can give you some specifics on that right now, if you would like, Mr. Chairman.

    There were a number of projects that were accelerated by the Congress in fiscal year 2002. So, by definition, there was no need to do it again in 2003. That came to about $22 million. An example of that was the land purchase of Schofield Barracks in Hawaii for $1.5 million.

    There were some projects that are no longer required. That came to approximately $68 million. An example of that was the Peterson Air Force Base family housing, which was about $11.6 million. There were a number of projects that simply were not executable; we couldn't have spent the money. There were other projects that were funded with savings from prior year funds, and others that were requested prior to need, and others that were repriced based on favorable foreign currency rates and extension of congressional action, particularly with respect to NATO; $44 million there.

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    That category alone is $161 million. So you see there is no relationship to BRAC whatsoever, and I think it is important to point that out for the record.

    Mr. SAXTON. Thank you. And would you provide us with the appropriate lists and—.

    Dr. ZAKHEIM. We will do the best we can in the sense that, quite frankly, Mr. Chairman—and I am sure you will understand this—when there are decisions that are made internally, that historically have not been discussed in terms of the to-and-fro of any kind of budget decisions, I believe that those sorts of discussions are not released.

    I will be very happy to check with our general counsel and give you whatever they say I can. I am not in the business of trying to withhold information, so I will do what I can to the best of my ability.

    Mr. SAXTON. I appreciate that.

    [The information referred to can be found in the Appendix beginning on page ?.]

    Mr. SAXTON. Mr. Abercrombie.

    Mr. ABERCROMBIE. Thank you very much, Mr. Chairman.

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    Can I follow up on that just a little? I am a little confused.

    Dr. ZAKHEIM. Sure.

    Mr. ABERCROMBIE. As a matter of fact, the question I had, separate and apart from the Chairman, in making reference to the $400 million—by the way, I am quite content to accept the point that a chart somewhere got seized on. That is usually the way things are, right? You are always looking for suspicions to be confirmed, so if you can find something to do it, you would. But, Mr. Skelton had asked, as well, for an accounting of the projects that had been deferred. What I don't understand is your last statement.

    I thought we were just—at least my impression of what Mr. Skelton asked for was just the projects—whether it is barracks at Schofield or a wastewater treatment plant or whatever it would be—why would there be some question about conversations or anything? I am sure we are not interested in chasing poor Mr. Cheney down somewhere. He seems to have great difficult with Energy. So that is not really the point here.

    Have I misunderstood what you are referring to?

    Dr. ZAKHEIM. Well, all I am saying is that in some cases where clearly there was action that directly related to congressional action, there was—there is obviously no question that we will give you those lists. In some cases, it was simply a matter of whether indeed things were executable or not. And traditionally, to my understanding—and like my colleague, Ray DuBois, I haven't even been on board for a year, and so there maybe something I don't know. But to my current understanding, we have not in general discussed what we do with projects that are not executable, whether it is MILCON or anything else.
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    Mr. ABERCROMBIE. Well, wouldn't that be even more important for us to know, so that we don't go off on tangents?

    Dr. ZAKHEIM. I will be perfectly happy to take it back to my lawyers. If they say okay, it is okay with me. I am not trying to stonewall you, sir.

    Mr. ABERCROMBIE. Just so we are clear, because I am addressing you as the person in charge. The lawyers work for you. I want to have a very clear understanding. I guarantee that is the way I feel about it, and I expect the Chairman does, too, because we have run into things before with the Defense Department where sometimes the lawyers in the Defense Department don't understand that they are working for the Defense Department, the Defense Department isn't working for them.

    Dr. ZAKHEIM. No, let me again explain. And I certainly agree with you that it is much, much better to have a lawyer that figures out how to do something than doesn't want to figure out how to do anything. Those are my kind of lawyers, too. The real issue is, we are talking about working documents. And in general there is a rule about the release of working papers.

    Mr. ABERCROMBIE. I am not interested in that. And I am sure the Chairman—and I don't think Mr. Skelton is either in working documents, but simply an accounting of the projects that were deferred. That is the trouble with the English language. I think I understand it after all of those years.

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    Dr. ZAKHEIM. You are very loud and clear, sir. And I will do my best.

    Mr. ABERCROMBIE. Very good. Thank you.

    Mr. MCKEON. Will the gentleman yield?

    Mr. ABERCROMBIE. Certainly.

    Mr. MCKEON. I am new on this committee, but I don't know where lawyers get involved. We have $400 million worth of projects that were apparently scheduled that have been deferred. Why does the lawyer have to get between you and us to tell us we can't have that information?

    Dr. ZAKHEIM. Look, sir, again it is not a question of lawyers getting between us and you.

    Mr. MCKEON. I don't think there should be any question at all that we get that information.

    Dr. ZAKHEIM. I will do my best, sir. That is all I am saying.

    Mr. MCKEON. Well, if your best isn't good enough, then who do we go to?

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    Dr. ZAKHEIM. I suspect if my best isn't good enough, I will be hearing about it.

    Mr. MCKEON. I expect that you will. Because there should be no question on that. That is a simple question. This isn't national security we are talking about.

    Dr. ZAKHEIM. I understand, sir, and I know exactly where you are coming from. And I am simply saying that I will do what I can.

    Mr. ABERCROMBIE. Well, could it be—and I am sorry to have to go into this, because I was hoping to do it when the Navy gets here—but could it be—.

    Dr. ZAKHEIM. Well,you can certainly save it for the Navy, sir.

    Mr. ABERCROMBIE. I have had to deal with this over the past couple of days. It is always disconcerting to any member of this committee, as I am sure it is disconcerting to you to get phone calls or inquiries from the media about things that they know about and you don't. And I a assure you, as someone who—as my wife puts it—gets his license renewed every other year, I like to have that information available.

    Now, is part of the reason that this issue came up about what working documents can be made available or not available as a result of what is taking place out in Hawaii right now over at—on Kauai, Barking Sands, where apparently we have a military commander that is able to refurbish his house and spend money on all kinds of projects and hand off consultant contracts?
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    Dr. ZAKHEIM. No, sir. I mean it is simply a longstanding question of what you do with working papers. It has nothing to do with that. I have to tell you, I understand exactly what your concerns are.

    I have to play by the rules—that is, the rules that I have set for me—and, at the same time, the rules of being as forthcoming with the Congress as I can be. And I will try to square that circle. But please understand that is a challenge.

    Mr. ABERCROMBIE. In the 12 years that I have been on the committee as a whole, and most of that time on this subcommittee, I have never heard that come up before. It never occurred to me.

    Dr. ZAKHEIM. Well, maybe I am straightforward, sir, I can't help it. I will do my best.

    Mr. ABERCROMBIE. Well, let me move to okay. I know you will do your best and I am sure it will be good enough.

    If you look on page—not in a page of your testimony; I am looking at something I have outlined for myself in my own notes.

    You have what is called the base closure authority, now regional base closure authority. Right? Not base closure authority, I mean regional—I got the wrong page—regional installation management, that is what I am looking for.
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    Secretary DUBOIS. Mr. Abercrombie, the Army is going to institute a regional installation management program, and I know that they are—.

    Mr. ABERCROMBIE. I am looking at the wrong page, I am so fixated on base closure.

    Secretary DUBOIS. That was last year.

    Mr. ABERCROMBIE. The regional installation management structure, the reason I am bringing it up now is because of the question that I asked previously, about whether or not the management structure on the bases should be regionalized. I think one of the arguments that came up against it was that the commanders should have more control at the local level, and that if there was a regionalization of that management structure, that maybe some—that there would be a falling off of oversight on the command—at the local command level.

    And then this business with the Navy came up. You may or may not be familiar. It happens to be the Navy, it could be anybody.

    Secretary DUBOIS. I read about it this morning.

    Mr. ABERCROMBIE. And obviously here they had such local flexibility that, you know, there are at least these allegations of real serious improprieties taking place. And so my question has to do with is it your intention—is it the Army's intention to move to the regional installation management structure, or is that still a question that is being decided? That is not clear from the budget, as I am able to read it.
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    Secretary DUBOIS. Yes, sir, let me answer that. I will defer to the Army on the specifics of the Army program. As you know, all three services approach installation management slightly different, somewhat reflective of their culture, understandably. I support and have supported, continue to support, the fact—and I guess it is in conflict to some extent with what you just said, insofar as I think that an installation commander is much better off by having an installation management chain of command, rather than a functional operational or major chain of command.

    Mr. ABERCROMBIE. I agree with you.

    Secretary DUBOIS. If he or she has an ability to go to someone who understands their problem and can help them get funded appropriately, budgeted appropriately, and, when necessary, go to battle in Washington, which is what it is all about, they are better off.

    Will the monitoring and control and flexibility of that local installation commander be enhanced through some regionalization concept? I believe it to be the case. The Navy has their own regionalization program. The Army is in the process, as I understand it, and I am sure that they will testify to this one in the making, that the Secretary of the Army has under consideration.

    The Air Force hasn't gotten there yet. We have continuing discussions about this. But imagine if you were an installation commander, and you could go to a flag officer, a senior executive service (SES) regional director, and directly into the Assistant Chief of Staff for Installation Management. I think that is a much more streamlined and efficacious way to manage program and budget for our infrastructure and installation needs.
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    Mr. ABERCROMBIE. I am not disputing that. My question goes to—in fact, doesn't go to the question. I just want to know whether you were going to do it or not do it. If you are, that is fine with me. Because to me, I would prefer to have things done locally. That is why you have commanders. That is how they make judgments about their ability to manage and lead, as long as the process is clear, so it is not vague.

    My understanding of this situation that I referred to is that the management was, in effect, left up to the commander, and the guidelines were such that the envelope got pushed, and really pushed.

    Secretary DUBOIS. We always, unfortunately, have that.

    Mr. ABERCROMBIE. And bad judgment occurred. Now, obviously you can't do something where you have to have a general deciding whether or not the plumber can be called.

    Secretary DUBOIS. And if the next level of command for that installation commander is a level of command who understands how that base ought to be operated, I think we are all better off. Point number one.

    Point number two, it also gives a chance for the service, in this case the Army, to develop the expertise in that arena.

    Mr. ABERCROMBIE. That needs to be made clear so we have the right kind of expectations of how the installation will proceed once we do the authorization and the appropriation. Fair enough?
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    Secretary DUBOIS. Fair enough.

    Mr. ABERCROMBIE. One other point, Mr. Chairman, before we go to back to you and the other members, if you will indulge me one more question.

    With the various defense agencies—everything from the Threat Reduction Agency to the Defense Education Agency activities and so on. I am not clear as to what, if any, the commitment is toward the interim brigade combat team (IBCT) training facilities, because there will be at least five of them, right; and maybe six; maybe another one to be added for Europe?

    Secretary DUBOIS. Correct.

    Mr. ABERCROMBIE. I expect that because of the changes or the transformation taking place in the Army, that the kind of training facilities that need to be made available, everything from terrain to supply depots or base yards and so on might have significant changes required. That has environmental considerations, all of the rest of it.

    But I am not clear about the funding, which I presume has a lot to do with design and engineering at this stage, even land purchases, and I know at least out in Hawaii, the incidence of land purchase or exchange or something like that.

    How is that taken into account in this budget?

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    Secretary DUBOIS. Well, I hesitate to give you an answer because there are two gentlemen sitting behind me, Dr. Fiori, and General Van Antwerp for the Army, who will be able to answer that much better than I can.

    Mr. ABERCROMBIE. I am asking you from the commitment point of view of the Secretary's office.

    Secretary DUBOIS. There will be attached to the deployment of IBCTs, my understanding, appropriate training spaces and lands. As you know, there is an IBCT going into Schofield Barracks. There is a plan to have five of them around the world. They must have the appropriate training.

    Mr. ABERCROMBIE. That prompts my question, because I know for a fact that this is going to require a significant expenditure, because the littoral terrain upon which the training will take place is going to be—I am mixing metaphors, but it is a sea change in what is going to be required: land, environment, supplies everything.

    Secretary DUBOIS. And where IBCTs are going requires an environmental impact statement (EIS).

    Mr. ABERCROMBIE. Right. So we need to get them done as quickly as possible so we don't end up with tortoises in the way.

    Secretary DUBOIS. That is right, sir.

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    Mr. ABERCROMBIE. Okay. So the next panel will deal with that? Thanks, Mr. Chairman.

    Mr. SAXTON. The gentleman from Maryland, Mr. Bartlett.

    Mr. BARTLETT. Thank you very much. Thank you for your service to your country.

    I have two parochial questions that deal with a military facility in my district. We are very pleased with the move to privatized housing. You mentioned that it leverages 8:1.

    What that means is, I guess, is that we can have now what we would have had to wait 8 years to get if we had to save the money? In the private sector, that would be 15 years for a 15-year mortgage or 30 years for a 30-year mortgage, if you could only buy the house when you had saved enough money to buy it. Which is where we have been in the military, since we have to buy the whole thing that year.

    What this means is that we can have this quality-of-life improvement for our military families years ahead of when we would get it if we had to wait on funding to build those units from our budget. At Fort Detrick, we have had a major impact on our housing by the closing of Fort Ritchie and the movement of numbers of people, significantly a number of people who are involved with support of Site R, which is increasingly important now.

    And my question is, are we on track for meaningful and adequate amounts of support for privatized housing at Fort Detrick?
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    Secretary DUBOIS. As you point out, Fort Detrick is, if anything, more important than it has ever been before, whether we are talking about anthrax and tremendous capabilities, technological and otherwise, that reside at Fort Detrick, or in terms of support of Site R. We also are looking at, with the closure of Fort Ritchie, although a Reserve center remains at Fort Ritchie, but with the closure of Fort Ritchie and with the transfer of various elements, some of which—.

    Mr. BARTLETT. Excuse me. I don't think there is a Reserve center at Fort Ritchie. There is now no military presence there.

    Secretary DUBOIS. My understanding is there is still a Reserve center in the southeastern portion—.

    Mr. BARTLETT. Well, they are phantom if they are, because they aren't there.

    Secretary DUBOIS. Well, I was told that. I will clarify and confirm back to you, sir, directly.

    Mr. BARTLETT. Thank you.

    Secretary DUBOIS. Your issues about housing and housing privatization, the housing availability for the troops at Fort Detrick, I will look at them directly. I will take that for the record. And perhaps the Army, since it is their post, their panel following ours, might be able to address that more specifically.
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    [The information referred to can be found in the Appendix beginning on page ?.]

    Mr. BARTLETT. Thank you. I would like to emphasize that this is particularly important, for two reasons, to our personnel there. One, it is a matter of economics. Housing is very tight in that area. Rentals are expensive, so on-base housing is even more important than it might be some other places. And, second, I think that sense of community is a very, very important thing for our military people. And having housing on base really contributes to that sense of community which is so important to them.

    You mentioned the basis for my next question. That is, our premiere capability that we have at Fort Detrick in the biological warfare, biological defense, biological detection area. We clearly have more expertise there than any other location in the world. But we don't have enough. With the bioterrorism threat, we are stretched. And I know that there are plans for expansion at the U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID). And my question is, are those plans for quite immediate expansion at USAMRIID on track?

    Secretary DUBOIS. Again, I would defer to the Army, who will come directly after me. But my understanding is that renewed interest and attention is being paid to those assets. As we all saw, General Parker recently retired, head of Fort Detrick, out of the USAMRIID operation up there. We are focusing as much as we can on that arena, and I will defer to Dr. Fiori on that issue.

    Mr. BARTLETT. Thank you. I think John Parker retires just shortly.
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    Secretary DUBOIS. Certainly within days.

    Mr. BARTLETT. I would like to note that General Parker and I made a contribution, we think, to the sense of security in this country. He and I led a group of people through Building 270 that has been closed up since the anthrax manufacturing days. The rumor around Frederick—and I bought into that until I was advised that it wasn't true—was that the building was so contaminated that it couldn't be occupied.

    Mr. BARTLETT. As a matter of fact, it was so contaminated, it couldn't be torn down because we would then spread that contamination.

    So there it was, a 7-story building, one of the highest buildings in Frederick. It was going to be entombed forever because you couldn't use it or tear it down.

    That wasn't true, and to make the point that badly contaminated buildings—and it was badly contaminated; 800 gallons of pure anthrax was spilled there in that building during the development of the manufacturing process for anthrax. So General Parker and I led a large group of press through there, making the point that even badly contaminated buildings can be cleaned up.

    So our Senators can feel quite secure in returning to their quarters.

    Thank you very much, Mr. Chairman.

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    Mr. SAXTON. Thank you.

    Dr. Snyder.

    Dr. SNYDER. Thank you, Mr. Chairman.

    Mr. Comptroller, I have a specific question. I know you are a money guy, not a bricks-and-mortar guy. In your written statement, you used the phrase, referring to BRAC as needing an estimated 20 or 25 percent reduction in military infrastructure.

    As a numbers guy, when you use that phrase, does that mean square footage of the buildings? Does that mean acreage of facility? Does that mean amount of Tarmac space? Does that mean ability to handle military personnel and sleeping quarters? Does it mean just a simple list, the number of bases?

    Is it clear to you that the numbers used in this phrase are probably going to turn out to be a little high, I think so myself. Do you have a sense of that?

    Dr. ZAKHEIM. Let me take a stab at it, and then I will defer to my colleague, who really is an expert.

    Obviously, the number, by definition, is one that is essentially a composite of a variety of considerations, such as those you just listed. There is a general consensus that I believe was generated most recently by our joint staff, looking at all the factors you have talked about and concluding that relative to our needs, we are at about 20 to 25 percent, you see it is an approximation.
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    We clearly have an overage that is significant.

    Dr. SNYDER. A few years ago I asked for a statement for the record, and I forget who it was that provided it, but it basically took a list of bases and—.

    Dr. ZAKHEIM. It is a general composite, but I would like to defer to—.

    Secretary DUBOIS. Categories of capacities. And one shouldn't try to say, well, it is X percentage of installations or bases. It doesn't compute that.

    Dr. SNYDER. I agree with that. That is better than I got before. Is it Mr. DuBois or DuBois?

    Secretary DUBOIS. My grandfather was Leonaire Pierre DuBois, who came to this country as a baby.

    Dr. ZAKHEIM. From Russia. [Laughter]

    Dr. SNYDER. Having clarified that, Mr. Secretary, the encroachment issue you gave that is rightfully so very prominent—part of your written and oral statement, I notice you mentioned that you have a hearing coming up with the Military Readiness subcommittee of which I am not a member. The Little Rock Air Force Base is located in Jacksonville, Arkansas—which is ironic, but it is a great base. It has had great community support through the years, and in the last few years, both the State of Arkansas and the city of Jacksonville took some legislative action.
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    We have a very good mayor there, Tommy Swaim, their board, took some action to deal with the potential encroachment on Little Rock Air Force Base. I am told that is very rare in the country. It may be only one or two bases in the country that have done that. If that is an issue, you are interested in, it may be worth looking at just to see what they did and whether the laws and the ordinances are everything that they ought to be. We think they did some good things, but I just mention that to you.

    Secretary DuBois, if I might, I want to ask you a question—and it probably doesn't even require an answer—about something that is not in your bailiwick at all; I want to talk about it just for 40 seconds or so, because I think it is a very important issue for us as a nation, and I fear it is slipping through the cracks.

    When Secretary Rumsfeld spoke before the full committee a couple—three weeks ago, his number one priority was protection of the homeland and protection of our bases overseas. Somehow I wish, in the dividing up of responsibilities, that the military also had the responsibility, protection of our embassies overseas, because what we have seen happen in this budget cycle six months after the terrible events of September 11th is tremendous support in this Congress, in the country, for a dramatic increase in our military budget, but the line item in the State Department budget for embassy rehabilitation and new embassy construction is basically a flat line, a very minimal increase.

    I am not on the International Relations Committee. I don't have anyone in my district, to my knowledge, that builds and rehabilitates embassies, but there are a significant number of military personnel that are assigned to these embassies, both as attaches and Marines, to protect them, and I fear, in a way, it has fallen through the slats a little bit.
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    We looked at the State Department budget, and we think that means, oh, four and eight or something, but it doesn't get as much attention on infrastructure as the military does. Yet we have a lot of American citizens there. As we know, we learned very dramatically in 1998 with the destruction of two embassies; plus we see threats, it seems almost weekly now, on embassies overseas.

    I met yesterday with General Williams, retired Corps of Engineers, a former two-term Vietnam helicopter pilot that Secretary of State Powell brought in to look at embassy construction. He has a plan—they have been working on it for a year—that could literally spend, in an efficient manner, double the amount of money that is in that line item.

    We all know, in this room, there will be attacks on our embassies overseas; and we may be embarrassed if we kept that line flat and yet we have dramatically increased the defense budget elsewhere. I know that is not in your particular area of responsibilities, either one of you, but it is all of our responsibility if another embassy is hit.

    Secretary DUBOIS. I just might comment. David Carpenter, the Assistant Secretary of State who has this responsibility, he and I are going to get together, not in terms of what I as the Deputy Under Secretary can do to support embassy protection, but rather to share with him a number of new building techniques and building materials, ceramics and others, that have come to the forefront—in some cases developed on military research & development (R&D) dollars, in other cases, private sector dollars, to help better construct and reconstruct some of our embassies and military installations, using these new materials that are bomb-blast resistant, et cetera, what we are doing actually in the renovation of the Pentagon today.
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    It is expensive. Those bomb-blast windows that we put in there, where that airplane hit, they were enormously effective at diffusing and denying, if you will, greater deconstruction—destruction of the Pentagon because of those materials.

    Dr. SNYDER. I will just make one final comment, Mr. Chairman. Like the rest of the committee, I was disappointed when I saw the MILCON number, but if the Secretary had told us, we have decided to lower that because we are going to put an additional $600 or $700 million into embassy protection, it would have gone easier for me, because we have military people there. But that, of course, is not what was said.

    Thank you very much for your service.

    Thank you, Mr. Chairman.

    Mr. SAXTON. Before I recognize Mr. McKeon, let me emphasize the point that you just made about embassies. I happen to have been in Holland recently, I visited The Hague, of course; and the embassy there—I am not lecturing you, because this is not your responsibility, and I don't want this to sound lecture-like, but the embassy there is built right on the street, and I was absolutely surprised to walk in and find one Marine, which is what we assign at any given time, inside the glass window to check IDs and two unarmed host-country guards outside sitting in a trailer. It was right on the street in the city that is touted and is truly the center for international law, and our embassy sits there virtually unprotected.

    Dr. ZAKHEIM. Well, I will say this, Mr. Chairman and Dr. Snyder. We do work together with the State Department on this issue, as Ray DuBois indicated. We have a vested interest, obviously, not just in the protection of our own people in uniform who are there, but embassy protection generally.
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    Every time there is a tragedy, it tends to affect everyone who is affiliated with an embassy, but there is an ongoing interchange with the State Department, specifically addressing this. And as you know, Dr. Snyder, there is a line item in the State Department budget that specifically addresses this concern; it has moved up in the list of priorities for State, and I am sure they will give you more detail about that.

    Dr. SNYDER. Thank you, Mr. Chairman. I appreciate you—.

    Mr. SAXTON. Mr. McKeon.

    Mr. MCKEON. Thank you, Mr. Chairman.

    I thank you both for being here, and the second panel also for coming. I think it is very important for us to have the opportunity to review this budget.

    I echo the comments of others that I am disappointed with the budget, when we are putting more money into defense, that we should be cutting the MILCON budget by almost 15 percent.

    I also am curious. In last year's defense budget, you indicated that a primary goal of the Pentagon was to reduce the recapitalization rate from the 192 years down to 101 years and eventually down to 67 years. And then with these cuts this year, you are saying that we will still continue to do that. How do you do that?

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    Dr. ZAKHEIM. Well, obviously the recapitalization rate has gone up—there is just no question—and based on the same calculus of last year, it has gone up from 83 years, assuming 80 percent plant replacement value, to 121 years. However—and my colleague mentioned it in his statement—in part because of the realization of the BRAC 2005 round, but also because the Secretary is determined to reach the 67-year goal in fiscal year 2007, we will be turning this around.

    Mr. MCKEON. If this budget hadn't been cut, if it were just even flat-level funded with last year, do you have numbers that that recapitalization rate would have been cut to?

    Dr. ZAKHEIM. Well if it were flat, it would have been roughly the same.

    Again, I have to emphasize that—and this is, of course, not unique. We had to make choices this year, and so much of our budget was driven by catch-up in terms of realistic costing, in terms of inflation. And as you know, the health care component exceeds $22 billion, so there was actually much less give in that increase than people realize. We did have to make very tough trades; we believe they were smart trades.

    We stand by the President's budget, and we believe it reflects the best trade-offs and the best prioritization, given the funding levels. Obviously not everything could be funded the way we would have liked.

    Mr. MCKEON. I commend you for standing by the President's budget. After reading what happened to Mr. Parker I think that is a very wise decision.
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    Let me ask another question. Last year you talked about expanding the National Training Center (NTC) at Fort Irwin. Could you comment on the progress on that?

    Secretary DUBOIS. Yes, I am sure the Army can give you more detail, but the negotiations to buy the strip of land to the south of Fort Irwin proceeded apace. I believe it has been concluded. The important aspect of that situation—and this goes back to our encroachment issue, the environmental issue—is the critical habitat that exists on Fort Irwin for various species. We were concerned, A, that we needed this piece of land; the Army was concerned that they needed this piece of land. But they were also as concerned, were they going to be equally constrained in the use of that land?

    Now, through negotiations with the Department of Fish and Wildlife, through the usage of our integrated natural resource management plan, we have access to this new parcel of land. It connects to China Lake, as you know, allowing now for a full and, in some cases, brigade training exercise. But what it does is, it attaches or it identifies new critical habitat to the east.

    So we have done something creative, sure, but correct insofar as we have not diminished critical habitat. We have just redesignated areas to be called critical habitat, thereby satisfying our environmental stewardship requirements and allowing for greater training flexibility. It is a very good story.

    Mr. MCKEON. You talked about encroachment and the problems of encroachment. I know what has happened at China Lake. I know it has happened at Fort Irwin, I know it happens at Edwards, and that is probably going to continue as we seem to be able to find more and more endangered species and more and more reason to expand wilderness areas and protected lands.
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    I heard that Senator Warner got a law passed a few years ago that maybe sets some priorities. Where does defense come in versus protecting some of these endangered species? I think they used that in redoing the Wilson Bridge, because it was designated as very important to our national defense. It seems to me that Fort Irwin is also very important, and China Lake is very important. Could that same issue be used there?

    Secretary DUBOIS. To be sure. In fact, one of your colleagues, Mr. Weldon of Pennsylvania, discussed at some great length last year, during the previous legislative cycle, a so-called ''national security impact statement,'' written into the National Defense Authorization Act (NDAA) in fiscal year 2002 was a requirement that the Secretary of Defense report to the President and to the Congress in April of this year our views with respect to such legislative direction. As a matter of fact, in the 14th of March hearing before the Military Readiness Subcommittee, that is one of my specific Q&As to be able to answer in more detail. We believe that there are areas in this regard where national security—our national security, and I mean our, all the country's national security—imperatives in terms of realistic combat training have not been appropriately addressed in various areas.

    Now, how do we go about doing that, we are going to have to do it in consultation with the Congress, obviously and—.

    Mr. MCKEON. When you get that report and when you get to the point where you are ready to work on that, I would sure like to work with you on that.

    Secretary DUBOIS. We will be visiting very soon.
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    Mr. MCKEON. Thank you very much.

    Thank you, Mr. Chairman.

    Mr. SAXTON. The gentleman from El Paso, Mr. Reyes.

    Mr. REYES. Thank you, Mr. Chairman.

    I am kind of curious, following up on the question that Mr. McKeon asked about the fact that the Secretary came before our committee last summer and talked about reducing the recapitalization rate to an industry standard of 67 years, at the time he told us that it would go—with the amended 2002 defense budget, from 192 years to 101 years.

    Today, after this budget with a 15 percent reduction, it creeps back up to 121 years; and you make mention that there is a plan that by the year 2007 you are going to reach the 67-year standard.

    I am curious. What is the plan?

    Dr. ZAKHEIM. Well, first of all, just for clarity, the 101 years would have to be compared to a higher rate, because that assumes that you are looking at 100 percent of the plant replacement value; and last year it would be 83 years if you looked at 80 percent, which presupposed, in effect, what it would look like if we had had a BRAC.

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    Now, to get to your question, of course there is an outyear plan, and the intention is to put sufficient resources into the military construction budget to permit for that sort of facilities recapitalization.

    This is a major priority for the Secretary. He is committed to it. It was in our guidance. We are not backing off from it. And with sufficient resources, you can reach that. It is executable, it is doable, and we have every intention of doing it.

    Ray, do you want to add to that?

    Secretary DUBOIS. Mr. Reyes, it is inescapable that there is this 2005 round-out there. It is also inescapable that we cannot reduce the current nor the next several years' investment in our infrastructure, sustainment, restoration, modernization.

    To what extent will the Secretary and the President and the Congress agree to a reduction in 2005, 2006, 2007 in that footprint? That will have a direct relationship to achieving whatever recapitalization rate can be funded at the time. We do now, absent—repeat, absent—a BRAC, have a funding scenario that achieves the 67-year recap rate in 2007.

    Now, how will they go together, if you and I are sitting here three or four years from now, it remains to be seen, but we have committed—the Secretary has committed—to funding it appropriately.

    We all know that it is difficult to determine and project and predict what those funding rates will be in 2006 or 2007. As Dr. Zakheim has stated, that is our plan, and to the extent that I am able, I am going to hold them accountable to that plan.
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    Dr. ZAKHEIM. I go a little bit further, because I know when the term ''plan'' is used up here, or has been used in the past, there is some degree of skepticism. That is why I use the word ''priority.'' It is the Secretary's priority.

    Mr. REYES. Well, take it from somebody that is skeptical about these plans, because I have sat on this committee for 5 years now, and it is like riding a roller coaster. It seems like it is about surviving year to year in terms of the plan, the priority, whatever the issue is that we are talking about. And I, for one, thought that when the Secretary testified before our committee, he was very direct. He was firm on it, and I am very disappointed we are at a 15 percent reduction in the budget.

    Dr. ZAKHEIM. Again, I think it is very important to bear in mind that the Secretary's commitment was to get to 67 years by fiscal year 2007.

    We are now looking at fiscal year 2003, so you can't simply write it off, because we did something a little differently this year. What we did this year was change the mix between operations and maintenance, which is the sustainment part of the effort, and military construction. And the mix will change again.

    The point is that our defense guidance is absolutely unequivocal in that, by fiscal year 2007, we will reach that rate and the Secretary of Defense has not, to my knowledge, retracted that or used any language other than the straightforward kind of language for which he has become known.

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    Mr. REYES. Well, if I can follow up, Mr. Chairman, believe me, I, like other members of this committee, am glad that you are prioritizing family housing and troop barracks. But how is it that you are able to determine that these projects can move ahead in spite of the delayed base closure authority?

    How do you determine what other projects are deferred? In addition to that, does it mean that you are targeting, this year, non-troop installations for future closing? How do you—.

    Dr. ZAKHEIM. There is a two-part answer to that.

    The first part is that, of course, our people are our highest priority, and so family housing is part of the package for our people. That is straightforward. BRAC, no BRAC, immaterial, it goes to the housing side of it, whether it is basic allowances, whether it is family housing. It goes to the pay increase we have got, the targeted pay increases. It goes to the fact that we fully funded the health program. If you take all the programs that relate to our people, it is well in excess of $100 billion. Now, that is our unambiguous priority.

    Now, the second part of your problem as to how specific projects were chosen, I defer to the services on that. They have made their choices, and we have tended to follow them on this. They will be on the next panel, I am sure they will give you quite a bit more detail about that.

    Mr. REYES. Thank you.

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    Secretary DUBOIS. I think just to add a coda to that, the services have funded their priorities. Whether it is infrastructure, sustainment, restoration, modernization, family housing, barracks, it would be, in our view, totally unfair not to continue those programs on the basis of the services' priorities, irrespective of what might happen, what might be recommended, what you and the Congress may choose to accept in 2005.

    Dr. ZAKHEIM. Again, let me make this clear: BRAC did not play in this. It is not meant to and it didn't.

    Mr. SAXTON. I think you guys have a tough job. I think that you probably have one of the toughest jobs in the Pentagon, and I have the utmost respect for the way both of you respect the job—approach the job. But I have to—and I hate to keep harping on this subject that so many of the panel members today have discussed, but I have to make a couple of points, and then maybe ask a question.

    In 2002, for this fiscal year, we saw the need and agreed that we would plus up the military construction infrastructure budget, appropriations and authorization bill to $10.5 billion. That was in the context of a pending BRAC in 2003. The only change that we have made to that scenario is to change the year of the BRAC to 2005.

    We collectively agreed last year that we needed to proceed at a $10.5 billion level in that context. In the meantime, when the change took place in the year that the BRAC would occur, something seemed to have happened in your planning scenario which leaves, at best, a murky view from our point of view.

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    In addition to that, at least one military department has deferred military construction projects for the next 3 years. That will be 2003, 2004 and 2005. That is inexplicable to me, why you would pick those years if it didn't have anything to do with BRAC, frankly.

    And then they show a significant increase in 2006 and 2007, the 2 years following BRAC. It is inexplicable to me why that pattern would exist if it weren't for the 2005 BRAC. Again, I go back and say that that problem didn't exist when the BRAC was anticipated for 2003. It raises a big question.

    Two other departments have deferred any increases until fiscal year 2005.

    Given the state of DOD facilities, how does this approach make sense since the Department will be required to budget for increases in base closure environmental remediation costs beginning in fiscal year 2006?

    You and I were talking before this meeting, and you—we suggested that it might be as much as $4 billion, and you said maybe even more, maybe even $5 billion. So while our military construction effort will have to include another billion dollars, roughly, a year after 2005, it seems to me that we have now put ourselves in a position to find it very difficult to do anything significant in military construction for 9 years, if we follow your plan.

    Dr. ZAKHEIM. I guess I was a little bit misunderstood on the $5 billion, but I will address that, sir.

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    The basic point: There was one other major change since the summer when we came in with our proposed 2002 amendment, and that, of course, is 9–11. Clearly, our priorities shifted. They had to shift. And we place tremendous emphasis on doing a number of things that perhaps simply took priority over where we thought we would be with respect to military construction. Again, the services were responding to guidance that reflected overall priorities.

    In the next panel they can explain specifically why they chose one project and not another, or chose to defer one and not another. That is for them to explain, and we gave them that flexibility as long as they met our overall priorities, which we believe they did. They made tough trade-offs and we accepted those tough trade-offs.

    Now, as to the $5 billion, I mean, the number is actually—the 40 I had mentioned to you, that was relative to the annual savings that the General Accounting Office (GAO), the Congressional Budget Office (CBO), the analytical powerhouses around this town, as well as our own analysts, who are pretty good themselves, have estimated. We estimate savings from those facilities already closed to be $6 billion a year, and my point was simply, by way of illustration, that even if the $4 billion estimate were off by a factor of 25 percent—and I have no evidence that it is, by the way—still, that is a spend-out of costs over a number of years; whereas every single year, the current estimate is we are realizing $6 billion in savings.

    In other words, the savings far outweigh what the annual costs would be in terms of the costs of closing out bases. That is all I was trying to say there.

    Mr. SAXTON. Let me leave this subject and go on to some other things.
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    Housing privatization, just for the record because you and I have had this conversation, but I am an advocate of housing privatization; I think it brings to bear some short-term advantages and some long-term advantages. By the same token, I have a question, and the question is this: What does it do to our budgeting in the outyears through the use of basic allowance for housing (BAH)?

    Currently we use MILCON dollars or have historically used MILCON dollars to provide places for people to live, housing. I am an old real estate guy and what a lease really is is a way of financing over the long term, and we are going to use BAH over the long term to pay for housing, essentially.

    Have you looked at what this does in the outyears in terms of use of resources that are not currently being used in this way; and is there a cost—a long-term cost to it? Do we save money? What is the deal?

    Dr. ZAKHEIM. Well, I think the general deal is that it is a good deal for the taxpayer, and we do save money. I am not familiar with the most recent analyses, to give you the hard numbers. I could certainly get that for you for the record, if you would like, unless my colleague has some hard numbers right now.

    Secretary DUBOIS. No. I don't have hard numbers but we will take it for the record.

    I think it is important to note there is a BAH cost. If one goes the privatization route, the route that goes up. There is also a concomitant reduction in MILCON and O&M by virtue of utilizing the privatization vehicle that you have authorized us to use. How that nets out and over time, I am going to model, and I will get back to you.
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    [The information referred to can be found in the Appendix beginning on page ?.]

    Dr. ZAKHEIM. I would point out that just from a preliminary—I guess, as an old analyst, who can't keep away from analysis obviously—whether someone is—if someone is living in military construction housing, there is still a cost for maintenance and utilities and so on. That would be reflected in a private house in terms of rents.

    So the real issue is, is the difference the profit, in effect, that the lessor makes by doing it this way? Does it exceed the savings to the U.S. Government through this approach? My gut tells me it does not. This is a very, very good deal for the taxpayer, but we will get you the answer.

    Mr. SAXTON. Thank you.

    With regard to the other subject that we talked about prior to the meeting, just for the record, housing privatization overseas is taking place perhaps under a different label. Would you explain that process?

    Dr. ZAKHEIM. Well, what we have are some build-to-lease kinds of arrangements. A host government will provide the land, a private investor will build the facility, the housing, and then we will guarantee essentially to keep it full. We do have leases that are relatively long term to do this.
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    Ray, maybe you want to give some more specifics to that.

    Secretary DUBOIS. The military housing privatization, of course, is restricted to the U.S. and U.S. territories.

    The build-to-lease program is something that is being actively pursued in Europe by the Navy and by the Army. It is privatization by any other name. However, the financial construct is somewhat different, insofar as it is a lease with the institution, i.e., the Department of the Navy, as opposed to military housing privatization in the U.S., which is an integral construct between the developer and the individual family.

    The other piece of this that we need to recognize, as Dr. Zakheim pointed out, is the issue such as we are facing in both U.S. Forces, Korea, and U.S. Forces, Japan, where the host nation is making serious and considerable investments in housing for our accompanied and unaccompanied troops.

    Mr. SAXTON. Let me follow up. I recently spent a day or so at Ramstein, and incidentally, when I went in my room and looked at the guest book, Mr. Taylor had been there one month prior to me. So maybe we both saw the same thing.

    Mr. TAYLOR. Will the record reflect that the towels were still in the room? [Laughter]

    Mr. SAXTON. The towels were still in the room, yes.
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    Mr. REYES. Maybe not the same one.

    Mr. SAXTON. Just to get your off-the-cuff feeling on this subject, there is an extensive on-base military construction housing renovation program going on at Ramstein. Are there opportunities there for privatization on base, leveraging the assets that we have, which are relatively old and need to be remodelled? Is there an opportunity in that kind of a situation where, again, the ground and presumably the housing are owned by the German Government? Is there a way to work that so privatization could be utilized at Ramstein in other situations that are similar?

    Dr. ZAKHEIM. Well, I can't address Ramstein specifically. Maybe my colleague can.

    In general, I think it would be good to create those situations where our allies contribute more to the cost of maintaining our forces in their countries than they do today. I think the Korean model is one that we would like to emulate in many other places.

    The Japanese Government contributes roughly 79 cents on the dollar that goes to supporting our forces in Japan. With the new agreement we have reached, the Korean Government will be providing 50 cents on the dollar.

    That is not the case in Europe. There is not, to my knowledge, any one of our major allies that does anything like that, and so we would certainly welcome the kind of support we receive from the Congress on Korea with respect to Europe as well; and certainly the kind of arrangement you have just discussed would dovetail very neatly with our overall concern.
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    Ray, do you want to add to that?

    Secretary DUBOIS. I will confer with Nelson Gibbs, the Assistant Secretary of the Air Force, who will appear before you. At Ramstein in particular, as you indicated, this would be a negotiation between the United States—in this case, the Department of the Air Force, and the German Government, to figure out the land ownership, the title, the length of the lease. As I have indicated before, it is certainly something that we want to look at if, in point of fact, we can achieve the appropriate force protection necessary, as well as the appropriate financial model. We are mindful of the precious MILCON dollars that this committee and the appropriators of this committee authorize and the appropriators appropriate for overseas base housing.

    Mr. SAXTON. You know, I don't have to tell you this. You know better than I because this is your job; you do it every day. But from what we saw there, if there was an opportunity to use privatization in these kinds of cases, they could then use those resources to fix other things where privatization can't occur. We also saw some rail heads and some administration facilities where you and I wouldn't like to work, I hate to think about our folks being away from home and working in those facilities. They are decrepit.

    To the extent that we can stretch overseas our continental United States (CONUS) MILCON dollars through privatization—it works here, and if it works there, let's look at that. In fact, we are probably going to have a hearing on that subject to see if there is anything that the Congress needs to do to make that process easier, to expedite it or to authorize it if we have to. But maybe we don't have to. So we will see. But I think it is something that we ought to pursue.
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    Mr. Taylor, would you like to—.

    Mr. TAYLOR. If you don't mind, Mr. Chairman, and Mr. Secretary, I apologize for being late. The Coast Guard was also here at the same time, and a couple of other things going on.

    Getting back to the question of Germany, it is my understanding that we are moving our installation at the request of the German Government. This is the fifth or sixth sizable move since 1990 that is taking place; and as you mentioned, we do have limited dollars, particularly for housing.

    What I find troubling as one who is trying to simultaneously meet the needs of our service people to have a quality house, while being fair to the taxpayer, is that, in many instances, I feel like we are leaving behind some very good housing, then moving to places where there is inadequate housing. We are in effect like the cat who is chasing its tail. We never seem to get there.

    To what extent is the administration and the State Department working for some long-term agreements? I mean, more than 4 or 5 years? I am talking more in the terms of 10-to–20-year agreements, saying that, okay, this time we are going to move, but this is the deal for the next 20 years rather than building some nice housing.

    Or in the case of the hotel that my colleague from New Jersey referenced, I believe it has to be replaced as well. I believe it will be given back to the German Government. To what extent are we looking for long-term agreements in Germany?
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    The second question will be—I recently visited the Incirlik Air installation in Turkey and was shown the tents where the Mississippi Air National Guardsmen were going to live for 6 months. I understand the desire of the host nation to make a statement that this is a temporary thing, but the honest analysis of this is that this temporary thing has been going on since 1990. I have seen within the military something between a tent and permanent barracks, which is the sea-hut that we have gone to in Bosnia and Kosovo. Having seen both and actually stayed in a sea-hut for a while, I wonder to what extent are we trying to negotiate with the host nation of Turkey to have something a little bit better than those tents for those people who are rotating through 6-month deployments?

    I have got to believe they can sell their folks that—look, it is nothing but a plywood box; it is not forever—but I would think it is certainly going to be a heck of a lot warmer in the winter and a heck of a lot cooler in the summer than those tents.

    Dr. ZAKHEIM. Well, on Germany I think, in particular, if you are thinking about the efficient basing east initiative, that is what General Austin sees as a long-term plan in fact, and that does address your concern about constantly jumping around. My understanding is—and I stand corrected by my colleague—that that is a way to have an efficient placement of our forces for a considerable period.

    On Turkey, I will take that for the record. I simply don't know the current status. I am aware of the general problem. I have seen it in other parts of the world, where you have something that is, in theory, temporary, but in fact, is pretty permanent. My understanding is that the Pentagon is still a temporary building. It was built as a temporary headquarters.
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    Mr. TAYLOR. Having seen both the Pentagon and those tents—.

    Dr. ZAKHEIM. I don't think they are the same, sir.

    Mr. TAYLOR [continuing]. The Pentagon is a little bit nicer.

    Dr. ZAKHEIM. No. My point is, you are absolutely right in terms of what is sometimes called ''temporary,'' it seems to take on a life that is a little longer than temporary. So I will look into that for the record and get back to you.

    [The information referred to can be found in the Appendix beginning on page ?.]

    Mr. TAYLOR. The last thing I would like to touch on—and I want to do this in as civil a tone as I can. I continue to be taken aback by the notion that we are going to cut back on MILCON funds this year in anticipation of another round of BRAC, but I have yet to have a single person in this administration or even the previous administration come to me and name one installation by name that they want to close.

    My colleague from Hawaii challenged some witnesses a few weeks ago to name three. I will give you the opportunity right now. You keep hearing that there are installations that need to be closed. I don't want to hear it coming from this side of the table, so I want to give you the opportunity right now. Would you name three installations that need to be closed? Because if y'all can't name them, I am not convinced that there is a need for another round of BRAC.
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    Dr. ZAKHEIM. Well, as you know, this is kind of—let me put it this way, sir. We are not meant to preview or forecast what installations will be closed or would be recommended for closure until such time as the BRAC process kicks in. We can't anticipate what would happen beginning in 2005. That does not, however, in any way minimize the force of the argument that some 20 to 25 percent of our bases should be closed, based on a composite analysis of what our requirements are relative to what we have and what we need. Those analyses have been conducted and validated over and over again by our folks in uniform.

    The specifics, to say this base or that base, would be totally contrary to what has been a long-standing intent of the Congress not to prejudge anything, because that indeed violates the spirit and the letter of the entire base closure process.

    Mr. ABERCROMBIE. Would you yield for a moment?

    Mr. TAYLOR. Well, it is up to the chairman. I have got the red light.

    Mr. SAXTON. Go ahead.

    Mr. ABERCROMBIE. And to think you were anxious for a clean getaway, Mr. Secretary.

    Dr. ZAKHEIM. No. I am happy to stay here, sir.

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    Mr. ABERCROMBIE. Conversely, this is where you run into problems. A lot of people up here are sharp, but they are not real slow when you say you come to the 25 percent, and you are not in the position, in the composite and all that kind of stuff.

    At the same time, while you can't name a single installation that would be eligible in your estimation for closing, you are able to make a presentation about all the places where we should spend money, where we should spend the $9 billion.

    The Army could come forward in the next panel; just looking at training and readiness, page six of the budget, there is going to be $23.8 million to construct training and readiness projects, a modified record fire range in Darmstadt, Germany; a live-fire shooting house at Fort Drum, New York; a urban assault course at Fort Benning, Georgia. So, you are able to determine places that you do think money needs to be spent, because obviously you think those facilities are going to be used.

    Do you see the point where it gets frustrating if we can't at least get a recommendation from the Department as to where they think we might go or where a commission should go, as opposed to starting from a theoretical blank page in which an entire set of criteria presumably has to be developed out of nothing. We all know that that is not the case.

    That is where you get the frustration on this side. You see?

    Dr. ZAKHEIM. I guess I would have to take issue with the very last part of what you just said, ''We all know that that is not the case.'' Up to that point, I would say I certainly understand your frustration.
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    Mr. ABERCROMBIE. I am not frustrated. I am pointing out a contradiction.

    Dr. ZAKHEIM. But you see I am not sure there is a contradiction, sir.

    Mr. ABERCROMBIE. You intend to state a paradox.

    Dr. ZAKHEIM. A paradox is a contradiction by a fancier name. The 20 to 25 percent calculus is essentially a parametric estimate. A parametric estimate, by definition, does not involve specifics in terms of the specific base here or there. That is how we get to our calculation that we need to reduce the infrastructure.

    At the same time, as we know, we cannot and should not prejudge the process by identifying places that we think might not be required because we cannot really think about them in that way. We nevertheless have priorities in terms of what must be done. We cannot simply say, we will do no military construction for the next three years under any circumstances—by no service, by no part of the Department, and, therefore, the services then allocate their priority dollars to priority—.

    Mr. ABERCROMBIE. But the reason for that, Mr. Secretary, is that there are installations you can see obviously need—and I am using the word ''obviously'' with deliberation—obviously need expenditures, construction of one kind or another, infrastructure, because you intend to use those bases for those purposes.
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    Dr. ZAKHEIM. Well—.

    Mr. ABERCROMBIE. Now, you might want to modify that base. You might want to say, but we can shrink the size of that base, or we are going to—like on the very next point in the testimony, transformation, obviously those bases are going to change in a way. So—.

    Dr. ZAKHEIM. Let me give you a concrete example, if I may, sir.

    Suppose you put money in a base two years ago. You are not going to put new money this year for military construction necessarily. You might feel that you had done what needed to be done two years ago, or last year and so on. You are obviously not going to modify and build everything at every base every year; that is, recapitalization is anywhere that you do it over a period of time. Unfortunately, we are taking longer to do it with the resources available and we are going to try to do something about that. There are reasons that you don't address every single base at every single year.

    Then the question is, what do you address and why? And I would refer you to the services. They account for what has already been done in the previous years. They account for their most pressing needs, and quite frankly, even if there were no BRAC brought about, created, conceived and so on, they would do it the exact same way, I suspect.
    Mr. ABERCROMBIE. Okay. Thank you for yielding, and thank you for giving me the time. In the end, you have got a terrible political problem,
because nobody believes you.
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    Dr. ZAKHEIM. What can I tell you—.

    Mr. ABERCROMBIE. What you can tell me, for example, is one installation. What I am trying to say to you here is—I am trying to be civil about it, too—is that you have got a political problem. We have to come to conclusions here, and nobody—the public, the taxpayer will not believe you when you do what you just did.

    Let me tell you a fundamental rule of politics, which is not a fancy name for contradiction or for paradox. When you are explaining, you are losing; if you cannot tell somebody exactly what it is that you are doing, you begin to lose right away. When you say places have to be closed and you lose something like a composite index of 25 percent, everybody wants to know, does that mean my job, and they ask us. That is the problem here. It is a practical political problem from my side.

    It is not a contest with you, I assure you. No one here wants to get into a jousting match with you or any member of the administration, regardless of the administration. These same questions were asked—I went through the same routine with the previous administration, Democratic administration.

    There is a practical political problem here that has to be solved in the context of national security, national defense, and we have to answer it. We have to answer up at home to those who may be adversely affected by this. We have to answer up to the taxpayers as a whole. Our problem is, we are being asked to answer, but we can't answer our basic questions so we can't even get started to answer.
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    If the Secretary can come up with a list of recommendations or criteria—how about three criteria for closing bases—then we could get under way and come up with a more satisfactory resolution. Otherwise, I fear we may approach 2005 and 2007 with nothing resolved and an even more contentious situation evolving, which I think would be very unfortunate.

    Dr. ZAKHEIM. Well, first of all, I want to say for the record, Mr. Abercrombie, I know that these are major, major concerns for those of you on that side of the room, and I appreciate the civility. I really do.

    Mr. ABERCROMBIE. Thank you.

    Thank you, Mr. Chairman, for your indulgence.

    Mr. SAXTON. Thank you.

    Listen, we have kind of reached the end, and I know you will miss us, probably about like missing a toothache or something like that.

    Dr. ZAKHEIM. Oh, come on.

    Mr. SAXTON. We thank you for being here today. We know, as I said before, that you have a difficult job to do, and we want to work with you. As it becomes clear on what our course of action will be relative to these issues that we have been discussing, we want to continue to communicate with you so that whatever we do, we do right.
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    As I said earlier, you folks do this every day, and we do the best job we know how, but we want to work with you and in no way work against the best interest of the men and women who we are fortunate to have serving us in the military.

    Thank you for being here today. We appreciate it. We look forward to seeing you again real soon.

    Dr. ZAKHEIM. Thank you very much, Mr. Chairman.

    Mr. SAXTON. Our second panel this afternoon will provide a brief to the subcommittee on the budget request of the Department of the Army. Our principal witness will be Dr. Mario Fiori, Assistant Secretary of the Army for Installations and Environment. Secretary Fiori is accompanied by Major General Robert Van Antwerp, Jr., Assistant Chief of Staff for Installation Management; Major General James Helmly, Commander of the 78th Division of the Army Reserve; and Brigadier General Michael Squier, Deputy Director of the Army National Guard.


    MR. SAXTON: Before you begin, Mr. Secretary, I would like to note that this is your first appearance before the subcommittee. We welcome you. We look forward to building a fruitful relationship with you. As you heard from the previous round of questions, we have some concerns, and we look forward to hearing your views relative to your perspective on these issues.
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    Thank you. And, sir, if you are prepared, you may begin at your will.

    Secretary FIORI. Thank you, Mr. Chairman. I am delighted to be here. I am delighted that my predecessor gave me an opportunity to answer so many questions.

    Mr. Chairman and members of the subcommittee, I am pleased to be here before you with Major General Van Antwerp from the active Army; Major General James Helmly from the Army Reserve; and Brigadier General Mike Squier from the Army National Guard. We are here to discuss the Army's fiscal year 2003 military construction budget. We have provided a detailed written statement for the record, but I want to comment briefly on the highlights of our program.

    The Army has many challenges in front of it. Our goal is to ensure that all our garrisons throughout the world have an equal and outstanding level of service for our soldiers and their families. As I have visited selected Army installations, I observe the progress that has already been made, and I attribute much of the success directly to the long-standing support of this committee and the other committees in Congress and their staffs.

    The Army's overall budget request for fiscal year 2003 supports the Army vision—people, readiness and transformation—and the strategic guidance to transform to a full spectrum force, while ensuring warfighting readiness.

    It reflects a balanced base program that will allow the Army to remain trained and ready throughout fiscal year 2003, while ensuring we fulfill our critical role in the global war on terrorism. Our military construction budget request is $3.2 billion, and we will fund our highest priority facilities and family housing requirements.
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    In fiscal 2002, we presented a budget that was a down payment on our goal to better support our infrastructure. When we developed this year's budget, in light of the events that took place last year, we had some very difficult decisions to make. The need to fund our military pay raises, army transformation, tempo of operations (OPTEMPO), the war on terrorism, increases in health care and other key programs were all included in the decision leading to our request. Thus, the Army budget provides the best balance between all of our programs, including military construction.

    A few critical areas in our military construction request include Army transformation at Fort Lewis, Fort Wainwright and Fort Polk. We have eight projects for $195 million included in the program to ensure transformation continues to progress as envisioned by our leadership.

    Army family housing is a success this year. We are now on target to eliminate inadequate family housing through construction or privatization by 2007. Our budget includes $180 million for the residential communities initiative (RCI), to continue acquisition and transition of 11 installations currently on the way and seven new installations for a total of 50,000 housing units.

    RCI is a great success story. I visited Fort Carson on February 25th, and am delighted to report the RCI program is three months ahead of schedule. There are 338 new units there that are occupied and 500 units renovated. We are renovating them at 40 a month and 20 new ones a month, and for Fort Carson, it will be complete by 2004. The combination of privatization and construction will meet our goal of fixing family housing three years earlier than was reported last year.
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    A portion of our military construction, Army, and our family housing construction program this year is dedicated to overseas construction. Seventy-five percent of the overseas military construction requests will be used to provide better barracks for almost 3,000 soldiers, mainly in Europe and Korea. We are also constructing new facilities to support the efficient basing initiative in Germany, which will consolidate 13 small installations into a single installation at Grafenwoehr.

    Two projects in our request will finalize the Army's construction requirements for our efficient basing south initiative in Italy, which will station a second airborne infantry battalion in Vicenza. Each project is vital to maintain a suitable working and living environment for our soldiers and families overseas.

    At the end of fiscal 2003, we will have 106,000 of our permanent party single soldiers, 77 percent of our goal for barracks modernization, will be funded. Our strategic mobility program will be 100 percent funded. We will have completed all base closures and realignments and will concentrate this year on the final phases of disposal of these properties.

    The Army National Guard anticipates that 30 of 32 weapons of mass destruction civil support team facilities will be initiated.

    Our sustainment, restoration and modernization request is $2.4 billion, which provides 92 percent of our requirements for the Active Army, Army National Guard and the Reserves.

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    In 1998, the Secretary of Defense set a goal to privatize, whenever economical, all utility systems on military installations by September of 2003. We are fully committed to utility privatization, and to date the Army has privatized a total of 25 systems. For fiscal year 2002 we have proposals for 109 systems under procurement and expect at least 35 to be privatized by the end of this fiscal year.

    Our enhanced use leases, real property exchanges and energy-saving performance contracts all contribute to taking care of our installations. This year we initiated a pilot program which Congress approved to contract our first 5 years of maintenance in three of our military construction projects.

    I want to conclude by telling you about the most important initiative in the facilities area, the way in which the Army manages installations. Last year the Secretary of the Army approved a concept of centralized installation management through a regional alignment. We will implement this new management structure, called TIM, or Transformation of Installation Management, on October 1, 2002. A top-down regional alignment creates a corporate structure with the sole focus on efficient, effective management of all our installations. It frees up our mission commanders to concentrate on readiness. They will still have influence on the important installation decisions, but not the day-to-day headaches.

    We believe centralized management will also enhance our ability to integrate Active and Reserve components and to develop multifunctional installations to support the evolving transformation force structure.

    In closing, Mr. Chairman, I look forward to continuing our work in taking care of our soldiers and their families. Thank you, sir.
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    Mr. SAXTON. Thank you very much, Mr. Secretary.

    [The prepared statement of Secretary Fiori can be found in the Appendix on page ?.]
    Mr. SAXTON. Let me go to Mr. Abercrombie at this point.

    Mr. ABERCROMBIE. Thank you very much.

    Mr. Chairman, General Van Antwerp, it is nice to see you again, and I want to convey my gratitude. I think that you were instrumental, if not in overseeing, certainly one of the catalysts involved in the whole barracks renewal at Schofield. I can't recall whether that started taking place around the time you were at Fort Shafter or not. Have you been back there?

    General VAN ANTWERP. I have not, sir. I need to get back.

    Mr. ABERCROMBIE. I think you would be very impressed with the changes that have been made. Mr. Secretary, that may be a good lead-in, because we were talking about transformation and about the management. I think you heard my question or my observation that we have already run into some difficulties with how we deal with construction at the local command level, where the regional fits in.

    I don't expect you to comment on the difficulties the Navy might be having or not having in that regard, but you can see how that could be used as an example.

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    Under this management proposal—how would it deal with a situation where you have—and let's presume for conversation's sake, you have a commander that has taken advantage or not clearly understood what was expected of him or her and has gone off into a situation where, at a minimum, their judgment is called into question, or at worst they have engaged in activities that are clearly dysfunctional and perhaps even illegal.

    Secretary FIORI. Well, obviously that could happen in any sort of management system.

    Mr. ABERCROMBIE. I presume this proposal is such that that kind of thing would be minimized, or you are going to put into effect some kind of procedure that would work against that kind of thing happening.

    Secretary FIORI. Obviously I am not familiar with what the problem with the Navy is, but we do have in the area, if somebody gets out of a box like that, a lot of controls. Every one of the services does. You have your auditors, you have your Inspector General (IG), and you have got to find out what went wrong.

    We are planning a process whereby we are giving our commanders a lot of leeway to operate their facilities, but they have to do it in the bounds of the rules and regulations. They can't violate their environmental rules. They can't violate their budget rules. We have certain amounts of money, absolutely, are focused on certain things. They can't keep swapping. And that is true on either management system.

    Mr. ABERCROMBIE. I would presume that would be the case already. Don't violate the rules and so on. I am trying to get at what changes with this proposal?
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    Secretary FIORI. I can tell you what changes for the advantage of the facilities. We are going to have an organization with seven regions. There will be four in the United States, one in the Pacific, one in Korea, and one in Europe. And we will have a general or an SES or sometimes both as the manager in the chief executive officer/chief operating officer position maybe, and they will be responsible for all of their facilities. They will have a very small staff that will monitor, put the budget together, and submit it, and then submit it up their chain to a management team here in Washington that will prioritize all of their requirements. We will be able to fund a much higher percentage of their budget each year just by the way we are organized.

    Again, if I get somebody who walks out of the box, hopefully there are enough smart people around that will catch a person walking out of the box. No management system prevents that.

    Mr. ABERCROMBIE. That is what I am saying. I am not concerned about that because everybody is supposed to obey the rules. If you get into collusion with somebody to rig a contract, that can happen regardless. What I am concerned about is the centralization, that scares me a little. Maybe I am bringing a parochial view to it, but I am sure, as General Van Antwerp can affirm, when you are dealing with the mainland, and you are trying to deal with Asia and the Pacific out of Hawaii, among other things you have a 3- and 4-hour time delay, they are not working the same shift literally.

    I am going to cite the Army Corps of Engineers as an example. The Army Corps did some regionalization or centralization, but they kept a Pacific Ocean Division, because they discovered that there was a certain amount not only of expertise, but just logistics and time and expertise existing in Asia and the Pacific that simply made it more practical not to refer back to Seattle or to Los Angeles or even further.
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    So where Asia and the Pacific is concerned, what would be the practical act of your centralization? Or will it be centralized in Hawaii for Asia and the Pacific?

    Secretary FIORI. We are going to have a regional director in Korea and a regional director in Hawaii. Hawaii will be Hawaii, Alaska and Japan.

    Mr. ABERCROMBIE. I see. Okay. That makes sense.

    Secretary FIORI. We will have a regional director in the Northeast, Northwest, Southeast, Southwest and one in Germany, and that will be the smallest staff, and they will report to a two-star officer here in Washington who will be under General Van Antwerp.

    Mr. ABERCROMBIE. Did you want to comment on that, General Van Antwerp?

    General VAN ANTWERP. That is exactly right. The only other thing I would say at the installation level, the base operations and the sustainment, restoration, and modernization (SRM) funds, the old real property maintenance (RPM) funds will not be able to be migrated over into mission accounts. So that is definitely a plus for an installation. They will receive more of the money intended for them.

    Mr. ABERCROMBIE. That would tend to also work against difficulties with contracts going around, right, that might not necessarily be the best thing to be done. That is the object in any of that, right?
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    General VAN ANTWERP. That is correct.

    Also underneath what we are doing in centralization, our contracting is going to be centralized as well. So if it is —it will have to have a fairly large threshold, dollar threshold, but a $500 million contract will be done elsewhere and centralized, so there will be limitations on what can be done at the local level.

    Mr. ABERCROMBIE. Okay. Although some of the decisions—and I do think that this is an important element, Mr. Secretary—no matter where you are going to be doing this, I hope that there will be an awareness on your part, and I am certainly going to bring this up with all of the other individuals who may come for the other services, that there has been a bit of a tendency to also centralize contracts or go to giant contractors at the disadvantage of local contractors.

    Now, obviously I feel this particularly in Hawaii, because our contractors can't go across the State line, and by definition we don't have giant contractors that can put $4- and $5 million into a bid process, or $10 million or $12 million, and if they lose it, well, we will make it up on the next one. But I just hope that we can maximize the use of local contractors wherever we are and take into account the expertise and the knowledge and the understanding local contractors have everywhere.

    There has been a tendency to bundle contracts and to go to giant contractors. It is easy for them to come in and say, well, we can just do everything. But that is something I hope you will be sensitive to.
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    Secretary FIORI. Yes, sir. We will be. And one of the things—I will take a plug for my RCI program, of course. We are going to be in Hawaii in August having our RCI meeting as a kick-off to the whole RCI project, and so far, historically, we are looking at least 60 percent of the contract always being local.

    Mr. ABERCROMBIE. Good, because this central thing may help you to do that. If you are in the Northeast, let's have Northeast contractors to the degree we can and so on, because the defense budget is so prominent in so many local economies that it is important, I think, then, for local people, no matter where they are in these various regions, not to feel that they are observers of what is going on rather than participants.

    Just a couple of other things quickly. On the transformations, the MILCON that you are citing me, those areas are ready for actual construction, say, as opposed to doing EISs and that kind of thing. Are you fully satisfied in each of the IBCT areas that funding is there to do what is necessary at whatever stage they are in? Do you understand the question I am driving at?

    General VAN ANTWERP. Yes, sir.

    Mr. ABERCROMBIE. Do you agree, General Van Antwerp, that where IBCT is concerned, there is going to need to be considerable changes in the infrastructure for training?

    General VAN ANTWERP. Yes, sir. It does vary a little bit, depending on what type of units you have there now. If you have a light unit, it will take more, like in Hawaii. We found that at Fort Lewis we did one heavy unit and converted them and one light unit and converted them. So we have a good experience. That is why we did two at Fort Lewis. But all of this is phased, and the construction is phased when we are going to equip that unit and stand up that unit, it is all phased to come on a line at the right time.
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    Mr. ABERCROMBIE. In this budget that is being presented, construction as a generic term, are we doing all of the engineering, the designing, the environmental assessments all of that for all of those IBCTs in this budget? That is what I meant, whatever level is—.

    General VAN ANTWERP. Whatever level is appropriate for this year. We have the programmatic EIS finished. Like in Hawaii we are going to do an actual EIS for this project.

    Mr. ABERCROMBIE. Good move.

    Last thing. Mr. Secretary, you seemed to emphasize with particular verbal vehemence the question you were fully committed to utility privatization. And maybe you hadn't thought about it, but let me tell you. I had a very, very—unfortunately a lot of things that happen get anecdotal—but I had a very, very unfortunate experience with utility privatization because I had Enron come into my office, way before this business with what they were doing now. But it scared me, and it put me off on it, because I could see where they were going. They wanted to cherry-pick the installations like at Schofield, leave the local utility out in the cold.

    I wasn't quite sure how they were going to do this either. That was the other thing that bothered me. I thought, these guys are hustlers, because it is trading going on, and I mean, they are angling to get the contract, but I wasn't quite sure how it was to transpire, but I knew what would happen if they were successful. The local people around them, their rates would have gone way the hell up, because when you are putting the whole thing together, when the local utilities—at least where we are—now, maybe we have to get exemptions for Alaska and Hawaii or noncontiguous areas, Puerto Rico or wherever it happens to be, noncontiguous areas—we had no grid that can be gone to or transfers and all of that. So we would have ended up with the local people in that area paying much higher electricity rates, with the military installations presumably paying less, although it wasn't clear to me how that was exactly going to take place.
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    I had an idea of what they were really going to do is scoop the contract for providing electricity and not end up with the military paying any less at all, but they would simply scoop that profit away.

    So I am very leery of this privatization thing where utilities are concerned, unless you are absolutely certain that you are not disadvantaging the local population or the local area and/or whether you really are going to get savings that don't end up being subject to change orders and God knows what else.

    Secretary FIORI. Yes, sir.

    I have been hustled by various companies, not by Enron, the example—the only example I have of Enron, as a matter of fact, is Fort Hamilton, New York, which is where I am from, and there it was not a matter of electric power at all as much as replacing our sewer systems, replacing our water systems, and replacing our electric distribution systems right on base. That really didn't affect the prices around or outside. We were still buying our utilities.

    Every one of those privatizations, I said we have 109, I think, are active this year, and we are only going to expect to see 35 that will come to make sense, and they will all be evaluated. And, you know, we will be working with the communities.

    Mr. ABERCROMBIE. The main thing with any privatization, I do not want to see the local communities disadvantaged, because, if only for morale purposes, cooperation between local communities and bases is crucial.
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    Secretary FIORI. Yes, sir. In most cases when you are talking about water systems and sewer systems, you need the cooperation of the community.

    Mr. ABERCROMBIE. To be mutually beneficial.

    Secretary FIORI. At the same time we have some real major expenses in these basic infrastructures. This seems to be the only way that we can get it done in a rapid fashion.

    Mr. ABERCROMBIE. Thank you, Mr. Chairman.

    Mr. SAXTON. Mr. Taylor.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    I will open this up to all of you. I remain concerned about the future of U.S. Army South at Fort Buchanan. I think we as a nation find ourself in a bad situation where we know that we need to upgrade quality of life for the people who are stationed there, and yet we do not make the investment because we as a nation haven't decided whether or not we are going to stay. I would certainly love to hear your remarks on that, but more appropriately, I would like to hear that a definitive answer is going to be coming to this Congress in the short term so that we can either make the arrangements to provide adequate housing there or some other place of the Army's choosing. I think for the sake of the people stationed there, we need to come to a speedy conclusion.
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    Secretary FIORI. Yes, sir.

    General VAN ANTWERP. Sir, I agree with you on that. Right now we do have a moratorium on some of the construction there, the family housing and others. We have a $25 million family housing contract that we have had on the books, but on a congressional hold while the Vieques situation and everything was going on. So that has contributed somewhat to the unfortunate conditions for the well-being of the people over there.

    So the Secretary of the Army has asked us to take a look. We are working very hard—this is a command that supports the Commander of Southern Command, of course, and so it is very crucial that we continue as an Army component to support our Commander in Chief down there. We are looking at alternatives, but, at this point, there has been no firm decision to move it out of Puerto Rico. We are in kind of a stalemate that we can't do some construction there that we need to do for the well-being of the soldiers and families.

    Mr. TAYLOR. General, if I may. The old expression killing two birds with one stone. Could I recommend that you give serious consideration to constructing that housing on the end of the island where the bombing range is? And I make a quick case for it. It is 8 miles from the gate to the bombing range. I have done it in a rental car. We set the odometer.

    One of the complaints that we hear from the local residents of Vieques is you wouldn't do this to your own people. Heck, I beat my brains out to have a tank training range put in Camp Shelby, Mississippi. It is one mile from some of my constituents where the impact area is. So certainly we do this to our own people.
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    I think the greatest message as a nation we can send is we think it is so safe, we are putting our own folks within seven miles of it. We already own the land. We have owned the land since the 1940's. I think it sends the message to those folks who think that they can manipulate this government into giving up property that we have paid for so they can develop it and make some money is that we are here to stay.

    Incidentally, I would remind you that the criticism I hear down there is almost always directed at the Navy, not the Army.

    I have been there. I think it would be a phenomenal place for people to live. I understand you have some safety concerns about those folks who go live in the community because of crime. It would be a crime-free place on your own installation.

    And so I understand our jobs. I understand your jobs. But since it is Congress' job to provide the money, and provide for the troops, I would ask you to give very strong consideration to constructing that family housing, if we are going to stay, at Fort Buchanan on Vieques for a heck of a lot of reasons. I think it would be the right thing for our nation to do.

    If we are not going to stay at Fort Buchanan, we have a very large installation at Camp Shelby, Mississippi. We would sure as heck love to have you move in there. If the Puerto Ricans are asking you to leave, I would remind you that just in the past couple of weeks, the Mississippi Legislature has actually put in $5 million of bonding authority to welcome U.S. Army South. We not only say we want you, we are willing to put up some money to get you down there, and I hope you are aware of that.
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    General VAN ANTWERP. Thank you, sir.

    Mr. SAXTON. Thank you very much.

    Let me just back up here a little bit to a subject that we were discussing with the previous panel. Mr. Secretary, what is the Army's share, if you can tell us, of the $400 million in projects deferred in this budget? And why didn't the Army direct more military construction overseas —I have seen firsthand the needs overseas, and if we were going to defer these moneys and not spend them, why didn't we just direct the money to projects scheduled overseas?

    Secretary FIORI. That is a two-part question, sir. First one concerning the $400 million. As Dr. Zakheim stated, that—that that was something that was done. We weighed all of the different programs, and in our case there were some that weren't required, as he said, and others we could defer for some time, and even others we just didn't need to have anymore. So our share, I can tell you, was about $120 million, 118.5 exactly.

    As far as overseas construction, 22 percent of our Military Construction Army (MCA) program, 31 percent of our family housing program this year is overseas. Almost 20 percent of our soldiers are stationed there. So 75 percent of our overseas MCA program, as I mentioned earlier, is for barracks and for 3,000 soldiers there. That plus the efficient basing east, which we are putting $70 million in, and finishing Vicenza, the $35 million is sort of a pretty heavy budget for overseas.

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    Again, we went after our highest-priority things first. And when you talk about the reduction that was included in the DOD $400 million, those are just not on the same priority. I would never want to pick one of those and give one of these up that I have presented in the budget.

    Mr. SAXTON. Let me just say that when we were in Germany for two or three days, and obviously because of my position on the Military Installations an Facilities subcommittee, one of the things that we asked wherever we were is what are your MILCON needs, and how serious do you think they are?

    In one case, we looked at a railhead. You may have heard me mention it earlier today. That was at Baumholder. And the railhead was set up in such a fashion that the armor to be moved out when the troops deployed to some trouble spot are loaded on a train from the back end of the train rather than from the side. Now, I don't know anything about loading tanks on trains, but I saw this process. And the colonel that was explaining this to us looked at us, and I could tell by the look in his eyes how deadly serious he was. He said, you know, when we have to deploy, we have to get out of here, and it takes hours and hours and hours to load those tanks on the train the way we have to load them on. And there has been a proposal on the books for quite some time to give us side-loading capability so we can get the time to a fraction of what it takes us now. And that seems to me to be like a very important issue.

    At the same base we went to the motor pool and saw that soldiers who do the mechanical work on tanks literally have to do it outdoors 365 days a year. That looked like a really important issue because there has been a proposal for an indoor facility where soldiers can work indoors. I would think not only would we worry about their comfort, but their efficiency in doing the mechanical work that they have to do pulling engines out of tanks and all of those things that are very difficult to do in the German countryside.
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    And then we looked at an administration building. You know, if it wasn't so serious it would be funny, the condition of the administration building at Baumholder. And to just focus in on one little tiny issue, we climbed up to the third floor where there were offices, up a wooden set of stairs, in a wooden structure, to find a window that one would have to go through to get to the fire escape. The only route to the fire escape, a window approximately one foot square.

    These are intolerable situations, conditions for those folks to live with. They are away from home, away from their families. They are young soldiers dedicated to—as they put it, we want to go to Afghanistan right now. And they are working under these conditions, difficult operational conditions and safety hazard conditions. We need to fix them.

    And at least, if we are not going to use the money for CONUS projects because BRAC was delayed and that made somebody mad, then we ought to divert the money to these unbelievable kinds of situations that our military personnel have to work in overseas.

    We visited one base. I will just bet that that kind of situation repeats itself over and over again, and it is not fair. It is not fair to our country nor to the people who have to live under these conditions.

    So, I guess my question is, why doesn't DOD and why doesn't the Army, at least if are you going to oppose us using the $1.5 billion that we think we ought to spend, or whatever the number is, if we are going to be denied the administration support on using it for the projects that it was supposed to be used on, why not just divert it to these other necessary expenditures?
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    Secretary FIORI. A couple of things that I would like to address, then I will ask the general to help me on the specific of Germany, because I haven't been in that particular facility. But I have visited other facilities where I fully agree with you. We have working conditions for our people, both office spaces—and, you know, I visited Fort Stewart, as an example, and those are antiquated buildings. They are making do, and they are doing a good job working there. But nonetheless, those aren't the conditions we want people to work in. Our motor pools throughout are not in the best condition, nor are they ready to service the modern Army. We have a long-range program to address that.

    I might say that one of the things you said, something about BRAC—and I joined the Army on August 13th, so I got pretty close to the front end of the entire process of the budget as I was learning it, but I know one thing for sure, that we just didn't talk BRAC at all in the thing. So it wasn't in our thinking process to worry about if there was going to be a BRAC. Should we spend money there? We truly had money to spend, and where was the best place to spend it for the conditions.

    I did mention that at the end of this year, at the end of 2003, sir, that we will have taken care of all of our deployment projects, our mobility projects. And we have funded in Germany, and I would like Van to talk a little bit about the specific question that you brought up in Germany.

    General VAN ANTWERP. The specific railhead that you mentioned, sir, is in the 2007 program right now. It is for $18 million. It will put in those side-loading—adds three new rail spurs. The big problem right now is we are supposed to be able to get a brigade to the port of embarkation in five days. It takes 15 now. So you are absolutely right about the problem there. We do have a program, but, it is—it is in the outyears in 2007.
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    Mr. SAXTON. Thank you.

    Let me direct a question to General Helmly and General Squier. We noted that the Army National Guard and Army Reserve military construction accounts are funded at relatively low levels in this budget request.

    What are the priority needs for each of you that were not funded?

    General SQUIER. General Squier, sir.

    We have a long list of priority requirements for the Army National Guard. We go through a prioritization process with the Army. The program that we have that we are submitting here is consistent with our Army's facility strategy.

    You already heard Dr. Fiori talk about the challenges that we had in trying to put this program together. Last year we had a pretty good program that did not carry through this year. So I can't tell you that I didn't have anything that I took off the plate. I just was not able to accelerate those things that I would need to do to improve our posture.

    Mr. SAXTON. Can you give us any examples of kinds of things that you need that we might be able to help with?

    General SQUIER. Well, the kind of things we are working through, you already mentioned one. That is the IBCTs. One of those IBCTS is going to be the National Guard, Pennsylvania to be exact. It has just now been announced this year.
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    So we are going through the drill. And General Van Antwerp was correct for all of the known requirements that are included in our budget. But we are talking right now about accelerating that particular requirement for that brigade. That decision should be made here very quickly. We will need additional help with planning and design and environmental issues and standing that up.

    And I do have a figure, sir.

    Mr. SAXTON. What is the figure?

    General SQUIER. $6.1 million.

    Mr. SAXTON. General Helmly.

    General HELMLY. Sir, with regard to the Army Reserve, similarly, it is not simply a case of taking off, it is a case of fitting into a top line. We were direct participants in that. In my judgment, last year represented an excellent down payment on attaining long-term requirements. And then as Dr. Fiori and others have mentioned earlier, suddenly our priorities were turned on their head because of nearer-term operational and readiness needs associated with mobilizations and deployments coming from the attacks of 11 September.

    We are satisfied that the current level continues to move in that direction, albeit not as rapidly as any of us would like.

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    With regard to projects that we require, all of those are reflected in the Future Years Defense Plan (FYDP), which, for the Reserve components, that entire list is submitted to Congress. And so the FYDP contains those projects. By description those would resemble the kinds of projects we have in the 2003 budget, organizational maintenance shops, Army Reserve centers, land acquisition for Army Reserve centers, those very same kinds of projects.

    Mr. SAXTON. Let me ask you both, have the needs of the Reserves, the Guard and Reserve, changed any in terms of military infrastructure since 9/11?

    General HELMLY. Sir, with regard to the Army Reserve, certainly force protection has taken on an added emphasis. That is, of course, across the force. Perhaps for the Reserve components our needs are unique in the sense that Reserve centers—and I will let General Squier speak to the National Guard, but National Guard armories and facilities are within the civilian community, and thus in a few cases perhaps are more difficult or challenging to provide the necessary force protection measures. Certainly that is one level.

    Secondarily, I would say that the current face of mobilization in all likelihood, if anything, will continue. That places a preeminence on those facilities and on the installations. Fort Dix is one of those. Fort Dix is the second most used installation in the continental United States for mobilization as we speak. And so ensuring that the kinds of facilities for the training there, for housing for Guard and Reserve soldiers who are mobilizing and demobilizing there, and subsequently for the outloading, both railheads, airfields and the like, are adequately maintained and constructed.

    Mr. SAXTON. General Squier.
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    General SQUIER. For the National Guard, sir, we have a very similar view since 9/11. Obviously force protection, antiterrorism measures are much more important to us. We have done a series review of that and are working those requirements presently with the Army.

    There are some that we could do actually now, but we are going through that process for validation. We will probably be able to work them into our program for next year. Obviously some of the key things of concern are communications capabilities and hardening of facilities, fencing and those kinds of things that we are taking a look at in this process.

    Mr. SAXTON. Are there any MILCON needs attached to the Guard duty deployments, call-ups that have been made? You are standing guard at power plants, airports, U.S. Capitol buildings. Are there any requirements that you have in that regard?

    General SQUIER. All of our requirements are focused in providing a capable, ready force. As General Helmly has mentioned here, there are certain things that would certainly enhance our capabilities to meet those requirements. Those that come to mind in immediate needs, as I kind of mentioned, with the force protection, antiterrorism, communications. We talk about what we call the emergency operations centers, which would facilitate the kind of command and control that we need to bring to bear out there for the emerging new demands on homeland security.

    Facilities for us are a quality of life, attract soldiers, take care of families, and better prepare them to meet the requirements that we expect of the Reserve components. So I have a whole laundry list.
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    General VAN ANTWERP. Sir, if I might add one thing. In 2002, we have $35 million in defending some of these very high-value targets, the weapons of mass destruction, chemical sites. And there is $35 million in MILCON in 2002.

    Mr. SAXTON. Thank you.

    General Helmly, you mentioned Fort Dix. I generally try to not sound parochial at these, but since you mentioned Fort Dix and its status, there is a proposal which General Clue has made me aware of a year or so ago of the construction of some climate control warehouse facilities at Fort Dix in conjunction with a new access ramp to McGuire Air Force Base, which, as you and I know, is next door, and to date, in spite of my urging, I haven't been able to get the Army and the Air Force together in terms of a plan to carry out that joint mission.

    Do you have any new information on that today?

    General HELMLY. Sir, there are actually three projects. One of those is joint with the Air Force. And you are correct, we have not, between the Army and the Air Force, arrived at a meeting of the minds, if you will.

    The first project is a pallet-loading building at Fort Dix. It is on U.S. Forces Command (FORSCOM) strategic mobility listing for fiscal year 2009, so it is farther out. Total cost there is about $4.1 million. Parking ramp on the Fort Dix side, and pertains to a ramp for a large cargo aircraft to load pallets on, cargo pallets. That is about $5 million.

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    Taxiway H is the particular project that a requirement needs to be made with McGuire. I believe that the Fort Dix garrison command is actively pursuing that. McGuire, I am sorry, just changed commanders, I spend a great deal of time there in my capacity as the 78th Division Commander. We do a lot of work there. I will be happy to deal with the installation commander as well as the new McGuire commander and determine where that is, provide the specifics to you, and then tell them of your interest and see if we can't get something moving there.

    Mr. SAXTON. I appreciate that.

    By the way, General Peterson's change of command occurred the other day, and just for my colleagues, we got our first female base commander. We are proud as we can be of her. She is a great lady, and I know that you will enjoy working with her, sir.

    General HELMLY. I enjoyed working with General Peterson and all of the previous Air Force commanders there. We have an excellent relationship. So I feel certain that we can resolve this particular Taxiway H problem.

    [The information referred to can be found in the Appendix beginning on page ?.]

    Mr. SAXTON. Thank you.

    I would like to ask some questions now about, Mr. Secretary, about housing privatization. I have been, as the previous occupant of this chairmanship was, very interested in privatization because we see it as a tool, and a very valuable tool, in the process of increasing the quality-of-life opportunities for people that serve our country. And to the extent that we have been able to study the situation, we think that to date it is working quite well.
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    I have one general concern and then a more specific question which I will get to. My general concern has to do with the question that I asked the previous panel. Essentially the way privatization works is that we try to get a private company, as you know, to make an investment, and then we use BAH as the source of rental payment, if you will. And the advantage to that is that we don't have to make a big up-front investment, and that is very good.

    The concern that I have—particularly with regard to the Army projects, because they are the largest projects, the concern that I have is what that is going to do to our operational budget down the road. And I don't mean this to be negative in any way. I just think that we need to know more about that as we are in the early stages of the privatization process. I would rather know if there is going to be a problem today rather than 10 or 15 years from now.

    Do you see the use of BAH, base housing allowance, as a problem down the road in terms of consuming parts of our operational budget that we are not currently consuming?

    Secretary FIORI. You know, I have been so focused on the advantages of privatization. We wouldn't have a community like Fort Meade with—when we are finished the project, after 50 years you are going to have houses that are going to be on the average of 22 years old. That is fantastic for a 50-year community. It looks like we have made a commitment to not only give good housing today, but continue to give it for a 50-year period of time. It will affect the life cycle course is what you are saying, but it just depends on how well we fund the housing over this 50-year period.

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    So I don't think we have done a very complete—and correct me if I am wrong, anybody in my group that can tell me—that we have a life-cycle course, looking at the increased BAH that you are going to accumulate over the years, because that is, in fact, what is going to happen. And where—at one point we are not going to have to spend that much more money on maintenance of these facilities, and what was that trade-off? That is, I think, the question that you were asking. When do we break—do we ever stop losing money, I guess is the way to answer the question. And that clearly has to address what presumed military construction rate would I have had over this 50-year period of time. And if we haven't done it, I will commit to doing an economic evaluation and report back to you on that.

    [The information referred to can be found in Appendix beginning on page ?.]

    Mr. SAXTON. I would appreciate it. Fort Bragg is a great example, I think, of people at Fort Bragg now apparently for the most part are living in older housing that was built with military construction funds, and therefore we don't have to make those annual expenditures of base housing allowance. So we need to understand quite clearly that 10 years down the road, after all of this is behind us and the construction is finished, that we are going to have those same folks drawing out of another account. And I just am curious to know how that is going to work.

    Secretary FIORI. Well, it is not only construction, sir, it is also the total maintenance of these places. Our SRM funds are going to have to—our SRM funds that we are requiring now will not support those facilities any longer.

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    General VAN ANTWERP. Sir, in recent years we give a garrison commander about 88 percent of his occupancy rate, but it is in Army family housing operation dollars. When we did, Fort Carson, we actually took the money out of the operation account that was running the Fort Carson housing and put that into the military pay account. But what we have elected to do for those next near term, because we are only funding the installations at 88 percent of their occupancy, these are the nonprivatization, what we are doing—I will take Fort Hood, for example. We took those operational dollars and we spread those operational dollars around the rest of the Army so that it would bring everyone else's housing up.

    In the meantime we are paying that account, we are paying that BAH out of the military pay account. So there was an additional bill to the military pay account. When we get the housing operations at 100 percent across the Army for all housing sites, then we will begin to take that operational money and put that into the military pay account again so that it isn't actually a new bill for the rent. A lot of that was already being paid for operation of those. But, of course, under this program, the developer does the operation for 50 years for this, so we are saving all of those operational dollars.

    There is a crossover there after a few years out. But the first thing we are going to do is get the rest of the Army well for even those places where we are not doing privatization.

    Mr. SAXTON. Please don't misunderstand me. I have worked with Mr. Hefley, and after Mr. Hefley moved on to the Military Readiness Subcommittee, I have picked up where he left off, and we have been proceeding with this program.
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    Can I ask a question? Would it be appropriate for me to ask a question, Mr. Secretary, about Fort Bragg and the project there?

    Secretary FIORI. Sure, sir.

    Mr. SAXTON. I understand that the process is moving forward, and I understand that four contractors have survived, I guess is the better way to put it, as finalists in the competition. Is that correct?

    Secretary FIORI. You know, when we bid the request for qualifications (RFQ) for Forts Bragg, Campbell, Stewart and Hunter Army Airfield and Polk—and there were four separate awards that will result from this solicitation. I thought that there were eight offerers that have won. And the way the system is going to work is they will decide—the eight qualified people that we said, you are qualified, they will decide which ones to bid at which places. And we are going to have four proposals that they could bid on, and we don't know yet who is going to bid on which ones.

    General VAN ANTWERP. There were eight offerers that met the minimum standards that could bid on a number of projects that were grouped into this grouping; and the projects, Fort Bragg, Campbell, Stewart, Hunter Army Airfield, and Fort Polk. So you have eight offerers, and now the next step of the process is that they will be evaluated. They will get the choice. If they want to bid Fort Bragg, all eight of those could bid it, or maybe only two or three of those if they want to target one of the other projects.

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    But we now have eight qualified developers to go to the next step in the RFQ process. So when we put Fort Bragg out specifically, several of those will probably bid for Fort Bragg, because it is such a large project.

    Mr. SAXTON. Well, let me tell you what I learned from a fairly reliable source, and you tell me if I am wrong. Maybe I am. My reliable source told me that there were somehow four contractors, bidders remaining, and that three of those four bidders were unable to post the necessary bond. Is that correct? And please explain it to me if it is.

    Secretary FIORI. I will have to get back to you. I have not heard that. I have not heard that we are that close at Fort Bragg to have four contractors evaluating the bids. So I will have to get back to you.

    Mr. SAXTON. The reason I ask you if it was okay to ask you this question is because it may not be fair, because this is kind of the level of detail that you may not be involved in. But the information that I have is that—as I said, that there was just one remaining. And the question I have is, does the ability to be financially responsible—is that capability evaluated someplace along the way before we get to the point where, if the information that I have is correct, we have only one bidder remaining?

    Secretary FIORI. Financial responsibility is a key to the success of this program. That is how they got to these eight. So I am surprised, quite honestly, about the information you just provided me. I will have to get back to you.
    [lThe information referred to can be found in the Appendix beginning on page ?.]
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    Mr. SAXTON. Thank you. Appreciate it.

    Mr Abercrombie, anything further?

    Mr. ABERCROMBIE. Just one thing. I want to make sure, Mr. Secretary, that I understand correctly again the regional management question.

    Did I understand you correctly—or maybe it was General Van Antwerp that indicated this—that there has been difficulty—we have had testimony before, not necessarily in this context, that funds get cannibalized; they have got deployments and operations and maintenance, and those kinds of things are easy funds, quote/unquote, to reach into and grab to fund perfectly legitimate needs, but nonetheless not necessarily that for which MILCON money was intended.

    I want to make sure I understand. Did I understand you correctly that you believe that the regional management system will enable you to retain MILCON funds for MILCON projects and see that those dollars are expended in the way they were originally intended, more easily than they can be now, given the existing management practice?

    General VAN ANTWERP. Well, actually I will separate MILCON dollars from the base operations and SRM. MILCON dollars are targeted for specific projects, and they get used for that purpose.

    Mr. ABERCROMBIE. Period.

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    General VAN ANTWERP. Period. But the base operations dollars and the SRM dollars, the repair and maintenance dollars are in what we call a fungible account, that they can be used—if there is a short-term mission or requirement, then they can use some of those funds with the idea that they are going to pay the garrisons back, if you will.

    So those funds have migrated, and they, frankly, have migrated both ways. Probably the preponderance of those funds have migrated over into mission out of the base operations arena. So what we are doing is we are going to fence those funds. We are going to keep the base operations and SRM funds from migrating. They will be used strictly for base operations and SRM.

    Mr. ABERCROMBIE. So there hasn't been a problem of MILCON dollars perhaps sliding?

    General VAN ANTWERP. Not MILCON, because the MILCON are appropriated and authorized for specific projects.

    Mr. ABERCROMBIE. Well, specifically, but some of the projects could be construed as repair jobs or—.

    General VAN ANTWERP. Once it has that target on it, we track the execution of those projects directly. When you say this is to be used for X project, that is what those dollars are used for. But the base operations and SRM are different because they don't have specific targets per se.

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    Mr. ABERCROMBIE. Just for the record, could I get a summary sheet of what—if you can provide it to the Chairman rather, what current practice is, what the practice will be under regional management, and then what advantage accrues then to regional management. In your estimation is that—.
    General VAN ANTWERP. Sure. We can provide that.

    Mr. ABERCROMBIE. Can you provide that?
    [The information referred to can be found in the Appendix beginning on page ?.]

    Secretary FIORI. We are strong advocates. Obviously we are very strong advocates of this, because we will be able to fence money and more money, and even the money will be earlier so these people can plan their whole year.

    Mr. ABERCROMBIE. When you are talking about the eight developers or something for four or five big projects, it goes back to my point about local contractors. I hope that, again, these eight developers don't say, well, you know, we can bring everybody from Texas, and we don't need to hire anybody from the New York State, or subcontractors or something of that nature.

    Secretary FIORI. No, sir. These developers are—one of the major criteria is that they are financially solvent and can get the money.


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    Secretary FIORI. That pretty well forces them to be large guys.

    Mr. ABERCROMBIE. Some of those projects are just gigantic, and a local firm can't compete. I understand that.

    Secretary FIORI. I can tell you the history and the requirements that we have of those people. As they put our community development plan together, that plan is worked with the community and laying out what we want, and one of the things that they have to provide is what is their small business, disadvantaged business plan. And so far, from the three that we have, I can tell you that about 67 percent is staying very local.

    Mr. ABERCROMBIE. Okay. Don't forget, a lot of the businesses that I am talking about are not disadvantaged businesses. I work on that very hard out in Hawaii. I have seminars. I have conferences. General Van Antwerp has—in fact, I have had conferences out at Fort Shafter, right, where we brought in minority contractors, DOD contracts for women-owned businesses, that kind of thing. But there are a lot of construction jobs out there, a lot of construction companies out there that are local that know the particular circumstances locally and can provide damn good service for master contractors. Just to be sensitive on that issue.

    Secretary FIORI. We are.

    Mr. ABERCROMBIE. Thank you very much, Mr. Chairman.

    Mr. TAYLOR. Gentlemen, we all know people who have been sick as a result of exposure to Agent Orange. I think we all know people who have some form of Gulf War illness. When we move into places like Kosovo and some of the other former Soviet Republics and Warsaw Pact bases where we have in many cases just taken over their installation, given that it is fairly common knowledge that the former Soviet Union did not have the sort of environmental concerns that we have, what kind of tests do we run on those installations to do a baseline study to find out how safe it is to put our people there? In some instances it is just going to be weeks, but as we have seen, for example, at Eagle Base in Bosnia, we have now had folks there for quite some time, and I guess for some time to come. What kind of environmental tests are run up front?
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    I really say this for two reasons: number one, to protect those folks who are stationed there; number two is to come up with a baseline environmental footprint so that we don't, when we leave, find ourselves in the confrontational situations that we now find ourselves with regard to the Panamanians who contend that we have left, you know, some unexploded ordinance and pollution behind.

    So for two good reasons, I want to take care of the folks who are stationed there; number two, from the liability standpoint, looking out for the nation long term when we leave those installations.

    General VAN ANTWERP. Sir, two things. One is every outfit that goes has a surgeon with them, and so they do water testing and all of those quality tests to make sure that our soldiers are not being harmed by what is there. And most of it has to do with the water, the food, and those kinds of things that are consumed.

    As far as the environmental protection, when we go somewhere, we do not live by that country's environmental rules, we live by ours. We have the same standard for people that—if they are operating a vehicle for collecting fluids, for disposing of fluids, we have those same standards, whether we are in Bosnia or we are in Fort Hood, Texas.

    Mr. TAYLOR. General, I am not so worried about what you do. I am worried about what you inherit. I am worried about that baseline place. And again, in some instances when we went into Uzbekistan, we didn't have much time. We had to find a place. It served a need. And I do understand immediacy.
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    But again, in a place like Eagle, or many of the other former Warsaw Pact bases that we have inherited, we have found out that sometimes it is beyond the water. I know in the case of the Navy construction battalion at Gulfport, our nation has spent a fortune burning the soil where Agent Orange was stored for many years. Okay. That is us. And I think we do as a nation have a very high threshold of what we want the environment to be and do tend to look out for our folks. I don't think that those guys did.

    What really brings this to mind is I have got an employee who almost died recently of extremely high levels of mercury in his body. He is a Desert Storm veteran. We are not really sure what caused it, but it is a pretty good bet that something in his service life led to this situation, quite possibly the time he spent over in Saudi Arabia, Kuwait or wherever, and I just don't want to see this happen to anybody else.

    General HELMLY. Congressman, one of the major commands in the U.S. Medical Department is the Center for Health Protection and Preventative Medicine (CHPPM) at Edgewood Arsenal, just outside Aberdeen Proving Ground. While I am certainly not an expert, I have dealt with them. They have world-class experts whose function in life is health protection and preventative medicine as regards air filtration, as regards materials, as regards property, equipment, et cetera.

    I am certain that we can take back to them and ask them to brief you on their capabilities, but, for my part, when I requested their service, they responded rapidly. We got excellent advice from them on the dos and don'ts to protect our soldiers. In this case we are dealing with local, national civilians as well and how to protect them.
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    Mr. TAYLOR. Well, gentlemen, if I may, apparently you are the right guy to ask, so I would like to have that briefing for the reasons I have outlined. What kind of baseline environmental tests are conducted as we take over a base? And to what extent do we forward that information of that baseline study to the host nation so as to minimize conflicts when we leave as to whether or not we are responsible for some environmental problems when we leave, or did we inherit some environmental problems when we got there?

    Secretary FIORI. It is certainly a good question. We will get you a very good answer to it. Or I can tell you, for example, we mentioned CHPPM, the acronym for that organization. I have only recently learned of this CHPPM, and I can't even tell you what it stands for anymore, but they did something very similar to that in the Pentagon when we were all living in that smoke and the environment. They took baselines quite immediately, again a very extremely responsive group.

    Right now I have a spore problem in some of our housing, Fort Lewis, and again, we used those people. What I don't know how to answer is how much of this organization goes overseas to do the exact things that you asked for, and we will have to respond to you on that.

    Mr. TAYLOR. Thank you.
    [The information referred to can be found in the Appendix beginning on page ?.]

    Mr. SAXTON. Thank you. I have just one final question, and it comes because Mr. Abercrombie and I and the good able help of Mr. Hawley and others spent a good deal of last year culminating in the conference dealing with the subject of the expansion of the National Training Center (NTC) at Fort Irwin. Can you tell us the current status and whether progress is being made?
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    Secretary FIORI. Yes, sir. I am fairly well prepared for that, because next week I am going to have to talk about encroachments, so I am learning about the whole subject. But I can give you a quick status of the National Training Center.

    The National Training Center itself has now begun the management of the land that was withdrawn from the Department of Interior's Bureau of Land Management, so we are managing the land. Our NTC is working closely right now with the Bureau of Land Management and the U.S. Fish and Wildlife Service to complete the environmental requirements that are necessary regarding the endangered species and National Environmental Policy Act (NEPA), before we can actually withdraw the land for training, and these two things will be completed by June of 2003.

    We are on schedule right now to complete these two major studies. That is sort of the real-time status. We are funded well. It is on track, on schedule.

    Mr. SAXTON. Thank you.

    And what is the next step? Do you anticipate that we will see this all come to fruition in the foreseeable future?

    Secretary FIORI. I have a schedule for it which I will try to quickly uncover, if some of my associates can help me here, as to when we can we start training.

    General VAN ANTWERP. Once the environmental impact statement is finished, it will give the mitigation requirements. It will also give the obligations for us on the land and what we are entitled to do on the land. So that is a very key thing in June of 2003, that will set the conditions for how the land will be used from that point on.
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    So I think we will be very close at that point, June of 2003.

    Mr. SAXTON. Okay. Thank you.

    Anything further from my colleagues?

    Thank you very much for being here with us. This has been a very productive afternoon. I enjoyed it in the respect that we don't always get to sit for two or three hours without being interrupted by bells and votes and things like that, so it was unusual, and I feel as if we discussed a number of very important issues.

    Thank you for being here to help us out. We appreciate it, and we look forward to seeing you again in the not too distant future.

    Secretary FIORI. Thank you, Mr. Chairman. We had a good time trying to present our program to you.

    Mr. SAXTON. Thank you.

    The hearing is adjourned.

    [Whereupon, at 5:00 p.m., the subcommittee was adjourned.]