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[H.A.S.C. No. 106–37]



FOR FISCAL YEAR 2001—H.R. 4205






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MARCH 22, 2000



One Hundred Sixth Congress

FLOYD D. SPENCE, South Carolina, Chairman

BOB STUMP, Arizona
CURT WELDON, Pennsylvania
JIM SAXTON, New Jersey
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JOHN M. McHUGH, New York
HOWARD ''BUCK'' McKEON, California
J.C. WATTS, Jr., Oklahoma
WALTER B. JONES, Jr., North Carolina
LINDSEY GRAHAM, South Carolina
JIM RYUN, Kansas
BOB RILEY, Alabama
MARY BONO, California
JOSEPH PITTS, Pennsylvania
ROBIN HAYES, North Carolina

JOHN M. SPRATT, Jr., South Carolina
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LANE EVANS, Illinois
GENE TAYLOR, Mississippi
MARTIN T. MEEHAN, Massachusetts
VIC SNYDER, Arkansas
ADAM SMITH, Washington
JAMES H. MALONEY, Connecticut
MIKE McINTYRE, North Carolina
ROBERT BRADY, Pennsylvania
BARON P. HILL, Indiana
JOHN B. LARSON, Connecticut
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Robert S. Rangel, Staff Director
David Trachtenberg, Professional Staff Member
Ashley Godwin, Staff Assistant
Lisa Wetzel, Staff Assistant






    Wednesday, March 22, 2000, Fiscal Year 2001 National Defense Authorization Act—Service Secretaries


    Wednesday, March 22, 2000


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    Skelton, Hon. Ike, a Representative from Missouri, Ranking Member, Committee on Armed Services

    Spence, Hon. Floyd D., a Representative from South Carolina, Chairman, Committee on Armed Services


    Caldera, Hon. Louis, Secretary of the Army

    Danzig, Hon. Richard, Secretary of the Navy

    Peters, Hon. F. Whitten, Secretary of the Air Force

[The Prepared Statements submitted for the Record can be viewed in the hard copy.]

Caldera, Hon. Louis

Danzig, Hon. Richard
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Peters, Hon. F. Whitten

Skelton, Hon. Ike

Spence, Hon. Floyd D.

[The Documents submitted for the Record can be viewed in the hard copy.]
Letter to Mr. Frank Rush, Chairman, Special Panel on Military Operations on Vieques from Secretary Danzig

[The Questions and Answers submitted for the Record can be viewed in the hard copy.]

Mr. Hefley
Mr. Pitts
Mr. Smith, Adam (WA)
Mr. Snyder
Mr. Spence
Mr. Talent


House of Representatives,
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Committee on Armed Services,
Washington, DC, Wednesday, March 22, 2000.

    The committee met, pursuant to notice, at 10:05 a.m., in Room 2118, Rayburn House Office Building, Hon. Floyd D. Spence (chairman of the committee) presiding.


    The CHAIRMAN. The meeting will come to order.

    Today the Committee continues with its oversight of the fiscal year 2001 defense budget request. We have with us this morning three service secretaries: Hon. Louis Caldera, Secretary of the Army; Hon. Richard Danzig, Secretary of the Navy; and the Hon. F. Whitten Peters, Secretary of the Air Force.

    Last month the Committee heard testimony from Secretary of Defense Cohen and Chairman of the Joint Chiefs Gen. Shelton and the four service chiefs on the defense budget request. Since that time, the Committee has been reviewing the request in more detail.

    As I stated then, I am pleased that the Administration has finally submitted a budget that calls for real growth in spending. But one year of real growth, as Secretary of Defense Cohen recently testified, does not a military make.

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    In particular, procurement spending is one area where the disparity between the requirements and available resources continues to be unacceptable, adding to the level of risk our armed forces must face. On March 8, 2000, Deputy Secretary of Defense John Hamre testified that the defense budget request underfunds procurement and stated, and I quote him, ''$60 billion does not provide enough money to recapitalize the force.''

    In a hearing last month before this Committee, former Secretary of Defense William Perry stated that procurement funding ''probably needs to be perhaps $70 billion to $80 billion.'' And I quoted him, too. Moreover, each of our witnesses here today have also expressed concern over some aspect of the budget request.

    For example, the Army has expressed concern over its ability to modernize the force, as less than one-fifth of the procurement budget goes to the Army.

    The Navy expressed concern that its ship building plan still does not reach the level necessary to sustain the current number of ships. In fact, the current rate of ship construction is insufficient to maintain the Quadrennial Defense Review's (QDR) requirement to maintain a fleet of more than 300 ships.

    The Air Force has cited shortfalls in the budget request with respect to real property maintenance and spare parts, and has recently pointed out that essential modernization programs remain underfunded.

    The growing shortfalls were highlighted last month when the services submitted their unfunded requirements list to this Committee. This year's $16 billion list is nearly double last year's submission of only $8.7 billion. This is hardly an encouraging trend.
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    These developments tend to reinforce the belief that we are staring at the front end of a defense train wreck that was predicted in testimony before this committee last month by authors of a recent study conducted by the Center for Strategic and International Studies. Avoiding the train wreck will require a sustained effort over many years.

    The key point is what level of risk we are willing to accept. It is amazing. The Department's last QDR to Congress assesses that the risk for ongoing operations of fighting two major theater wars is moderate to high. The report states that this level of risk increases the potential for higher casualties. I remain concerned that continued underfunding will lead to even a greater risk in the future.

    Our witnesses today deal on a day-to-day basis with the challenges facing all of our armed forces. I look forward to discussing with them how the budget request expresses their concerns, and which shortfalls require the most urgent attention.

    [The prepared statement of Mr. Spence can be found in the Appendix.]

    The CHAIRMAN. But before turning to our witnesses, I would like to first recognize the Committee's Ranking Democrat, Mr. Skelton, for any remarks he would like to make.

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

    The people sitting on the earth face a future with great uncertainty interposed almost equally with great hopes and great fears. At this time of doubt, they look to the United States as never before for goodwill, strength, and wise leadership.

    That was true in 1949 when my father was hearing Harry Truman say that. It wasn't too long ago that America's involvement with other countries consisted of food and education and what these days we call nation-building. We are still doing all those things, of course, but more recently and unfortunately and increasingly we have been called upon to keep the peace or to restore what we have been building.

    But friends and Chairman, Mr. Spence, who is to determine the level of risks? Does anyone hear us—the testimony in this room—talking about the federal budget for defense? Does anyone hear what we say? We have gone all the way from a maximum of $100 billion short to $16 billion short underfunding for requirements of these services to $10 billion to $20 billion short, according to former Secretary of Defense William Perry. Can anybody hear us? I am very, very concerned.

    The duties fall upon the men and women of the American services and the three of you gentlemen—Secretary Caldera, Secretary Danzig, and Secretary Peters—represent the work that this nation is very proud of. But their work is also at a great cost—families separated, budgets redirected, priorities shuffled. So I thank each of you for coming today. Hopefully, you can tell us how, while shuffling those priorities, we can keep the soldiers, sailors, and the Marines whole. I know you can't always do very much without cooperation, but it is within your power to keep the families healthy and offer many educational programs. But more than anything else, gentlemen, tell us again so we can hear one more time the budgetary needs for the defense of the United States. Please. And I thank you.
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    The CHAIRMAN. Thank you, Mr. Skelton.

    [The prepared statement of Mr. Skelton can be found in the Appendix.]

    Without objection, prepared statements of all of our witnesses will be submitted for the record and you can proceed as you would like, Secretary Caldera.


    Secretary CALDERA. Thank you very much, Mr. Chairman. I want to start first of all by saying thank you to you and to your Committee, as always, for your continued support of our service members and in particular of our soldiers. The support you provided last year in terms of addressing our readiness needs, as well as the pay raise and pay and retirement reforms, are having a very significant impact on our force.

    Last year the Army had record reenlistments. We were able to meet our in-state requirements because of that record reenlistment, which occurred in no small part because of our soldiers. Our soldiers felt that the Congress and the American people had recognized their service and their sacrifice by giving them that pay raise. And we thank you for doing that.

    There are two things that I wanted to emphasize this morning. The first is the importance of the timely supplemental for the Kosovo operation. One-and-a-half billion dollars of the Kosovo supplemental is for costs that the Army is incurring today. We need your help in speedily passing this measure.
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    As you know, April 1st will soon be upon us. It is the mid-point of the fiscal year, and we need to know soon whether we are going to be reimbursed for the operating maintenance funds that we are exhausting today because of the Kosovo mission.

    It is not just a question of full reimbursement, it is also a question of timing. If we don't get timely reimbursement, we are going to have to find a way to find the money to keep the operation going. If we don't get full reimbursement, then we need to begin taking the steps now to avoid an anti-deficiency situation. And those steps become only more draconian the later you implement them.

    So it would be only prudent for us to start taking the steps soon to start saving the money to pay for this operation, and those steps would begin to impact readiness.

    The second thing that I wanted to talk to you about this morning concerns transformation of the Army. Since the end of the Cold War, it has been very clear that our military forces needed to change, both because of the reduced threats that came with the demise of the Soviet Union and also because of the new threats that we saw and are seeing emerge.

    The Army, as much as any force, was optimized for the Cold War, prepared for a heavy tank battle on the plains of Europe. Many of the most thoughtful watchers of our military had challenged us to think about how we will change our post-Cold War forces to give the nation increased capabilities across the full spectrum of operations that we will perform in the future.

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    They have challenged us, frankly, not to continue to invest in refining the doctrine, weapons, and capabilities that were appropriate and needed in the Cold War and at the end of the 20th century when we had the historic opportunity to leverage technology and to transform our forces so that they will be more relevant and responsive to the needs of the Nation in the 21st century. And that includes our ability to get to the hot spots faster with the right force to get the job done.

    That was Secretary Cohen's charge to me and to Gen. Shinseki as he came aboard as our thirty-fourth chief of staff. And as a result, Gen. Shinseki and I created a vision for the Army. The Army vision: Soldiers on point for the Nation, persuasive in peace, invincible in war. The vision stresses investment in the training and development of our people, improvements in our readiness, and transformation of the Army.

    As we looked at the Army, we saw that as good as our forces are today and with all that we are doing for our nation, boots on the ground and maintaining war fighting readiness, deterring aggression and executing our Nation's most important continuous submissions, that there were shortcomings, as illustrated by the deployment to Kosovo.

    We saw that our heavy forces were too heavy, that they take too long to deploy and are difficult to maneuver and maintain in parts of the world where we may need to operate. And we saw that our light forces were too light and lacked strength, power, and lethality if deployed into an area where they faced an armored threat. We also discerned that future opponents would not give us the long lead times to deploy and will try to deny us the airstrips and ports that we traditionally use to flow our forces.

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    So we came up with this vision that stresses transforming the Army into a more responsive, more deployable, more agile, more survivable, more sustainable force than we have today, that is capable of being dominant at every point on the spectrum of operations that we may be called to perform.

    We have shared this vision with the other services and within the Department of Defense. Secretary Cohen has been very supportive of where the Chief and I want to take the Army. To jumpstart transformation, we have begun in this fiscal year with your help to stand up the first two of the initial brigades in Fort Lewis, Washington. They are very different from any other brigades that we have ever had before.

    We are in the process of selecting the off-the-shelf weapon platforms that these brigades and others will use as interim brigades to develop the doctrine and requirement capabilities and requirements for this force. We are planning to fund six brigades through 2006, one a year, from within our own budget to jumpstart this transformation process and deliver, as soon as possible, the enhanced capabilities that this force represents.

    And we have begun the investment in science and technology that will lead to the tailored, designed future combat system, the weapon system that our Objective Force will use. The Objective Force is the force that will be the end result of Army transformation.

    We do not have all the answers yet about what this force will look like. But standing up the interim brigades, demonstrating their capabilities, developing the doctrine and the returns on our science and technology investments will help answer these questions. We do not have all the answers, but we are committed to transformation.
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    In the 2001 budget submission, we have reprioritized $1 billion towards this effort. We did this largely within the Army budget by making some very tough decisions. We made some very difficult program kills and program restructuring decisions in order to generate the internal savings that we could devote to transformation.

    Transformation is funded as best we could in the 2001 budget. It is not fully funded for 2002 and beyond at the pace that we would like to see the Army transformed. We need your help to fund that transformation. As we have shown, we are willing to make the tough decisions from within the very small procurement budget that the Army gets.

    Mr. Chairman, you said we get one-fifth of the procurement dollars. We get less than $10 billion of DOD's $60 billion procurement. Less than one-sixth of the procurement dollars.

    We cannot devote all of our resources to transformation because we still have a very grave and very important responsibility to recapitalize and modernize our equipment, to continue our digitization efforts, and to replace and upgrade our aging tanks, fighting vehicles, our helicopters, our artillery and chemical and engineering combat platforms that our war fighting states are counting on today.

    Weapon systems that would, even with transformation, will be part of our force for the next quarter century. Two systems of immediate concern, Grizzly and Wolverine, are not funded in our budget because of our having to budget—juggle the budget priorities to accommodate transformation. But they remain Army requirements.
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    We would welcome any assistance the Congress may have in restoring these programs consistent with keeping the Army's budget submission, which carefully balances readiness, transformation, modernization, and other priorities fundamentally intact.

    Mr. Chairman, we are excited about transformation, committed to working closely with members of this committee to deliver the benefits of transformation to the Nation. I state again that we will need your help this year and the years to come. We simply could not do it all within the Army's existing procurement budget. And we should not have to do it at the expense of reducing the Army's end strength, which will only further aggravate our deployment turbulence, our retention challenges, and threaten our war fighting capabilities and our readiness.

    Thank you for the opportunity to make this opening statement. I look forward to your questions.

    [The prepared statement of Secretary Caldera can be found in the Appendix.]

    The CHAIRMAN. Thank you.

    The Secretary of the Navy.


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    Secretary DANZIG. Thank you, Mr. Chairman. Mr. Chairman, if I might, since you have my prepared statement, I would just like to use this time to briefly provide a complement to the opening comments that you and Mr. Skelton made in your opening statement.

    I very much applaud the perspective that you have in talking about the risk and threat. And it seems to me to be very right and has led to substantial contributions from the two of you individually and this Committee as a whole with respect to strengthening America's military. And I share your desire that we go further to strengthen it further.

    There is another way of looking at this that I think provides another support for the annual approach that you are encouraging. And that is to look not so much at the risk as at the opportunity, at the terrific things that we can do for sailors and Marines and for the Nation's security if we marshal the resources with respect to that and get organized in the right kinds of ways.

    A lot of my efforts have been in that direction. And I would just like to touch on three areas that are suggestive of that. One, what we are doing with respect to people, second with respect to technologies, and third to operations.

    We have the potential to build, in my view, not only a Navy-Marine Corps that does what it does today, which is to always be there for America and to perform splendidly, but to build a really better and a stronger one if we grasp the opportunities that are here now. And your support for that, your funding support for it, your support in terms of your understanding, is vital in that regard.

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    People, in the near term, what we have accomplished already over the last couple of years together is, I think, very, very important. The Navy and Marine Corps met their recruiting calls this last year. We came in over our end-strength goals. We have taken a number of gapped billets at sea, which was 18,000 and reduced it to 9,000. And the pay and other initiatives that you have given us have increased our retention and fundamentally helped our well-being.

    In the longer term, we can do things, though, that make the experience of the U.S. Navy and Marines a much better one, a much stronger one and more professionally successful one. We have, for example, launched the Navy college program. What we are doing is giving people credits for Navy training, college credits.

    We have worked with the American Council of Education. Every person now at boot camp receives a transcript showing how many college credits he will get for his Navy training. The typical sailor will receive 30 credits for his training course in his first term. You need 60 credits for an A.A. degree.

    When we linked this with distance learning and tuition support kinds of opportunities that you have so much helped us with, the kinds of professional and educational opportunities that you, Mr. Skelton, have given so much emphasis to, we have the opportunity for bringing our sailors to A.A. degrees during their first or second terms in the Navy. We will give out to this year's boot camp entrants 50,000 of them—some 1.5 million college credits over the course of their first term in the Navy.

    At the same time you, Mr. Skelton, mentioned in your opening statement how hard people are working. Sailors and Marines are working too hard. The basic truth is one that you have seen and that I see. One of the ways of dealing with that is for us to use civilians more and to introduce better equipment, better support, and better supplies.
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    We are automating our Navy ships so as to relieve the burdens on sailors without cutting expense. We are designing our ships differently. We are providing tools for sailors through smart work plans and programs in ways that I think make the sailors and the marines experience a more professional one and a better one. Your support for those programs is vital over the longer term as we coordinate more and more. As we do more what we call ''smart work'' and ''smart ship programs'', we will achieve a different kind of a Navy.

    In the technology area, the improvements go hand in hand for this. We have designed a DD–21 in a different way from any previous ship. We are looking towards reducing the manning requirements of that ship from over 300 for the destroyers that we have now to under 100.

    In doing that, we changed the living circumstance of our sailors. We can give sailors staterooms on a ship like that. That goes with a college education to again create a different kind of experience for sailors.

    Then in addition, we are reducing the risk associated for sailors. If we can reduce the number of sailors on a destroyer by two-thirds or, as we plan to do, the number of sailors required to man a carrier by one-half, then we wind up dramatically reducing the total ownership cost of those ships and we can buy more ships, a major concern you mentioned in your opening statement, Mr. Chairman.

    DD–21, for example, is a class of 32 ships. We can save 70 percent of our total operating costs of those ships and save $30 billion, is what we're looking at now, and use that $30 billion to buy some 30 additional ships.
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    Down this route lies, it seems to me, enormous reward. The support of this Committee is essential in that regard because we are now for the first time in recent years investing dramatic amounts of money into research and development. We have $3.9 billion associated with research and development for the DD–21. That research and development investment compares with our historic investment in service Research and Development (R&D), R&D for certain ships, of about $5 million a year in the 1970's and 1980's. From $5 million a year to $3.9 billion in the program. That is how we buy a future Navy.

    Similarly, we have invested, with this Committee's support, $1.5 billion in carrier R&D over these program years. That is a big change from the way we have historically done business. And those are pots of money that sometimes get challenged. People say, ''Why are you spending that money on the future?'' I think this Committee understands its support is crucial in this regard.

    I mention also in the technology arena finally a Navy-Marine Corps Intranet. What we are doing in this context is transforming the way in which the Navy functions in the information age. We are taking 143 or so separate networks that now operate and realizing dramatic economies by consolidating and integrating them into one single network. That also gives us great gains not only in economy, but also in terms of security. We can manage a central network and monitor it against intrusions, introduce firewalls and other safeguards much more effectively.

    But most of all, it lays the base for us to do what IBM and General Electric and General Motors have done, which is to create one central corporation in an information age that has the ability to talk amongst its members, sharing databases, and very dramatically increasing the access an individual operator has to being able to order, for example, the spare parts that he needs or call up the personnel system, et cetera, without going through intervening layers of managers of data like we've been talking about.
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    Finally, I would underscore that operationally, we are also changing the ways that this Committee's encouragement, I think, are very, very healthy. If you look at what the Navy did off of Kosovo with Tomahawk missiles, it was very different from what we did with the Tomahawks as recently as the last couple of years in the Persian Gulf. We have increased our time and speed with which we can plan and program those members so that they are now, for the first time, usable against movable targets.

    We have increased the efficacy with which we target in ways that make, I think, the Tomahawk the weapon of choice for the 21st century. We are emphasizing the ability, through the Marine Corps, to undertake what we call ''ship to the action ability''—to actually move people from ships directly to the battlefield without intervening places on the beachhead.

    The B–22, now coming into production, gives us a lot of progress on that front. With our information age advantages, including IT–21 and the Skippernet, we are able to see the battlefield in ways that previously didn't ever occur.

    So I would only emphasize, in conclusion, Mr. Chairman, that in addition to rightly worrying about risks and threats, as you have underscored in your opening statement, I also see a world of opportunities here. A world of reward for the Nation in terms of how advance is made in this Marine Corps. And we are together working towards that.

    Your financial support is fundamental to it. And above all, your understanding of it and your caring about it in the way that you do and your reaching out to grasp the future is for us an immensely positive thing. And I thank you for it.
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    [The prepared statement of Secretary Danzig can be found in the Appendix.]

    The CHAIRMAN. Thank you, Mr. Secretary.

    Secretary Peters.


    Secretary PETERS. Thank you, Mr. Chairman, Mr. Skelton, and distinguished members of the Committee.

    Let me begin by adding my thanks to this Committee for its strong support for the pay raise and retirement reform last year and also for the many adds there and readiness over the last several years. These have really helped the Air Force tremendously, and I think you saw the result of this in Kosovo.

    I am pleased to appear before you today to talk about the Air Force's fiscal year 2001 budget. Our goal in developing this budget was to provide a balanced and integrated plan that supports our evolution into an expeditionary aerospace force and which also implements lessons learned from Kosovo.

    Over the last 18 months, the Air Force has shown that its investments in stealth, precision munitions, unmanned vehicles, and improved Intelligence, Surveillance, and Reconnaissance (ISR) systems have matured into unparalleled combat power. For the first time in history, we employed a significant number of Global Positioning System (GPS) guided munitions in combat and demonstrated an all weather day/night precision strike capability far more lethal and accurate than ever before possible. Used in combat for the first time, the B–1 demonstrated that its new radars and defensive systems allowed accurate bombing using dumb or gravity bombs.
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    The B–2 also performed magnificently. It demonstrated the power of the Joint Direct Attack Munition and our ability to fly from bases inside the United States to strike at the very heart of heavily defended areas thousands of miles away. We have made extensive use of Unmanned Aerial Vehicles (UAV's) in combat. And for the first time we have used UAV intelligence data in real time with data from overhead censors, both aircraft and space systems, to find a fixed target and engage enemy forces.

    But equally important, we increasingly brought raw intelligence data from our ISR platforms directly back to the United States for processing and returned it to deployed units as finished products in minutes to hours. We believe that this ability to reach back to the United States for support is absolutely critical to the 21st century, since it both reduces the airlift requirements, which are a major limiting factor, and limits the number of airmen we must put forward in harm's way in the threat of terrorism, nuclear, chemical and biological weapons.

    We stood up and deployed our new aerospace expeditionary forces. We are now fielding forces five and six. One, two, three and four have already been fielded. And each of these is made up of a combined active duty, Reserve and Guard units.

    And last, but certainly not least, with your help, we began to address serious pay, personnel, modernization, and readiness challenges. Today as a result, we have an increasing inventory of spare parts with back orders down by over 50 percent and mission capable rates stabilizing.

    Our pilot shortage, predicted to be 2,000 pilots short as I speak, will bottom out this year at about 1,200 and should be about half that number by the end of 2001. Our enlisted retention rates for the last few months have been better than the same months last year. Indeed, in February, we retained almost 60 percent of our first term airmen against a goal of 55 percent, and we retained almost three-quarters of our second term airmen against a goal of 75 percent.
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    On the other hand, Air Force recruiting remains a very difficult problem, one that we are addressing by more than double the number of recruiters in the field and by developing creative new ways to market an Air Force career.

    Air Force budget for fiscal year 2001 builds on these successes, and, we hope, continues them. First and foremost, it takes care of our great Air Force people, who are really the true enablers of what we do. It provides improvements in pay, benefits, healthcare, housing, and other vital quality of life concerns. It completes the first stage of important improvements in our recruiting programs and continues to employ and expand our system of bonuses and other incentives to address our recruiting and retention challenges.

    Our modernization and readiness programs continue our commitment to ensuring that when our airmen are called on to go into harm's way, their success will never be in doubt. And we owe them nothing less than that.

    This budget also provides a balanced and integrated plan that supports our evolution into an Expeditionary Aerospace Force or EAF. The EAF represents a fundamental restructuring of the way the Air Force does its business. By presenting Air Force structure as ten rotational forces, we ensure that the majority of our forces are trained and meet our obligation to be ready on very short notice to fight and win two nearly simultaneous major theater wars.

    At the same time, we have two very highly capable forces deployed or trained and ready to deploy for contingency operations to support the increasing need for persistent deployed forward presence in the aftermath of regional contingency operations.
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    The EAF structure improves the quality of life for our men and women and their families by giving them a stable and predictable schedule and ultimately, by reducing the number of days deployed. It also enhances our ability to use traditional Guard and Reserve forces by scheduling their deployments a year or more in advance. As a result of the EAF schedule, over ten percent of deployed manpower requirements will be met by Guard and Reserve forces.

    Finally, through our efforts to reengineer the way we do business, we continue to move active duty manpower for supporting units into deploying units, bringing about 6,000 positions into that change this year in an effort to cut the workload on our people.

    This budget is guided by our recent combat experience. That experience has underscored the fact that the Air Force must remain ready to respond to a full range of missions from humanitarian and peacekeeping to cyber terrorism, weapons of mass destruction, and major theater wars. To do this, we have put renewed emphasis on upgrading ISR and space assets, and we continue to fund significant improvements in our communications, network defense, and command and control infrastructure.

    Working together with this Committee, we are taking the best, most potent aerospace force in the world and making it lighter, neater, and more flexible to meet the national security challenges in the new century.

    Thank you, Mr. Chairman. We look forward to answering your questions.

    [The prepared statement of Secretary Peters can be found in the Appendix.]
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    The CHAIRMAN. Thank you, Mr. Secretary.

    Before we begin questions, I would like to remind the members of the Committee that the time allotted to each member is about five minutes. My observation has been in the past some members have exceeded that by asking questions of all of our witnesses. And sometimes they ask them five questions. And by the time the witness has answered all of it, he has taken about 20 minutes.

    And by doing this, of course I don't need to point out that some of our junior members never get around to asking questions because we take up too much time. I would like to reemphasize that this morning and with that, I would like to yield my time right now to Mr. Skelton.

    Mr. SKELTON. Mr. Chairman, I am going to be brief.

    Secretary Danzig, I wrote you and Stuart Hall this letter last week enclosing the data showing the decline in the number of young people in the Navy going to the intermediate sea war colleges. I will not ask you to go into that today except would you do me a favor and look at it and give me your best thought, as quite honestly, you don't get to be an 0–5 and an 0–6 in the other services unless you go to these war colleges. And I would hope that the Navy would take a good hard look at that.

    I spoke to a Capstone group the other day, and I asked them what intermediate sea war colleges they went to. And they all answered and said the Navy. And I think it is hard to do so. The United States Navy War College, both intermediate and senior, in Newport is just excellent. We have a golden school. And I hope that you would take a hard look at making sure that more folks go to either one or both.
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    On February the 10th, the military service chiefs testified that the combined unfunded requirements for the fiscal year 2001 totaled $15.5 billion. According to the service chiefs, the Army faces a shortfall of $5.5 billion. Navy and Marine Corps shortfalls totals over six-and-a-half billion dollars. And the Air Force unfunded requirements exceed $3.5 billion.

    I noticed at the Secretary of Defense level, Secretary Caldera, the Wolverine and Grizzly, which will help the engineers fight two-theater wars and other engineers who have not had such a smooth running operation as they did in Desert Storm, that was canceled.

    And people are saying, Secretary Danzig, we're going to have a 200-ship Navy, and someday when that happens, if that happens, a potential adversary is going to say, ''America, go home,'' and we will go home. And that is literally becoming a reality.

    And Secretary Peters, the MV–22, joint strike fighter is no longer needed because of lack of fundiing. My only question to you is this. Do any of you disagree? Do any of you disagree with the figures given by your service chiefs, an Army shortfall of $5.5 billion; Navy-Marine Corps shortfall of $7.5 billion; Air Force underfund requirement $3.5 billion. Do any of you disagree? If so, say so.

    Secretary CALDERA. No, Congressman Skelton. And indeed, I would just point out that that shortfall is a shortfall of critical readiness requirements. The most important things. Not—that does not represent everything that is a shortfall that can be executed in 2001. That is, there are other shortfalls that are not executed in 2001. And so it really goes beyond that.
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    Mr. SKELTON. Thank you Secretary Caldera. So in essence, you would agree.

    Secretary CALDERA. Absolutely.

    Mr. SKELTON. Secretary Danzig, do you agree or disagree?

    Secretary DANZIG. Mr. Skelton, I will just note that I think the list is a very valid list of very desirable procurements and other investments. I would note that they are drawn from an overwhelming measure of our program as planned over these next years.

    For me, the proposed investments on that list fall both in the category of things that are desirable and then also on some of the things that have fairly high urgency; for example, investments in ship maintenance this year or investment in real property maintenance, which would otherwise grow worse.

    So I see the list as really having components that are desirable. And the sooner we get to them, the better. And at the same time, then, a smaller number of components that have a lot of urgency. And I particularly call the Committee's attention to the ones that have special urgency.

    Mr. SKELTON. So in essence, you agree.

    Secretary DANZIG. Yes.
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    Mr. SKELTON. Secretary Peters.

    Secretary PETERS. I agree with it. In fact, the Air Force—this is a joint product of Gen. Ryan and myself. Let me add one thing that Secretary Caldera did. We did not put into the list things that couldn't be executed in 2001. And the Air Force, like the other services, is very short on money to recapitalize its force. In particular, we are looking at some year in the future 550 KC–135 tankers aging out. And there is—we have no money at this point anywhere in sight to fix that problem.

    Mr. SKELTON. Do you agree?

    Secretary PETERS. I agree.

    Mr. SKELTON. Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you.

    Mr. Hunter.

    Mr. HUNTER. Thank you, Mr. Chairman.

    Gentlemen, I was—I looked over some of the testimony before the Armed Services Committee that took place shortly before June 1950, when North Korea moved into South. And to me, there were a lot of similarities.
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    But in particular, Secretary Danzig, you have given us a very optimistic thought. And that was the theme that I gleaned from this testimony in 1950. Only Omar Bradley kind of told it like it was and said, ''We can't win a major war at this time.''

    You have massive shortages right now. And your commanders of the Third and Fifth Fleet just sat there and gave us some testimony that they had big shortages. They mentioned the lack of precision munitions to train. A falling mission capability rate for their aircraft. Cruise missile Tomahawk, cruise missile shortages and the effort to exchange them between ships as they go out. The massive personnel shortages, especially in skilled personnel, that they talked about.

    Beyond that, they said that you couldn't get there from here. These are your operating commanders. You can't carry out the missions of the U.S. Navy with a 300-ship Navy. They said that. And that was across the board. They said you needed at least 350 ships. That requires a build rate of between 12 and 14 ships a year.

    You are doing much less than that and you don't have any plans to ramp that up. So my question is, I guess first, do you think—do you agree or disagree with their assessment that you need to have a 350-ship Navy or do you think we can get the job done with a 300-ship Navy?

    And second, why aren't you banging the table with the Administration and letting them know about these shortages? I mean, you know, the Chairman mentioned that we had Jim Schlesinger, a former Secretary of Defense (SECDEF), highly respected, who came in with one of the defense think tanks and said you don't have to be a rocket scientist to look at this, this big inventory of platforms that we have got across the services, Army, Navy, and Marine Corps and of course Air Force. And you look at the life expectancy of the platforms and you look at the rate that we are replacing them with. And he says, ''You come up with a massive cost of replacement that even as you move into new systems, in fact, the new systems are invariably going to be much more expensive than the old systems.'' And the number that this group came up with was close to a $100 billion extra a year defense shortfall.
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    Even Congressional Budget Office (CBO) said that we need to be spending $90 billion—they put the same pencil to this thing. They said you have got to spend $90 billion minimum per year just to maintain the platforms that we have now in your services at a moderately old age. In other words, maintain these old taxi cabs to the point where you can operate them halfway safely. They came up with a $90 billion procurement bill. And even Bill Perry, Secretary—Clinton's Secretary of Defense—then came on and said, ''I disagree. You actually need to be spending maybe close to $80 billion a year in procurement, but not $90 billion.'' Now my question is, do you agree with those numbers, that we are spending much less than we need to be to modernize the force?

    And you know, you look at this unfunded requirements list, it is mostly short-term stuff. It is, let's keep the wheels turning for right now and keep treading water. It is not replacement of our platforms.

    So do you agree that we need, number one, a 350-ship Navy, Secretary Danzig? And second, do you agree that we need to be spending a lot more if we are going to maintain a halfway moderate Navy with respect to the surface and the submarine platforms?

    Secretary DANZIG. Well, you have raised, Mr. Hunter, very important questions. And I admire both the passion with which you are raising them and also the annual approach that you taking, which is an annual approach that I share with you.

    First, with respect to the question about pounding on the table. I have very much pressed within the Administration and publicly for increases in the Navy budget and in the size of the Navy. I think we have actually made some important steps in this regard. And I thank this committee as a whole and you individually for your contribution to that.
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    I came into all this some 16 months ago. We had some intense discussions within DOD involving a lot of people more essential to them than me, but I was definitely a participant in them. And the Administration then came back with a substantial raise in the amounts of money we were spending on the military over the years.

    And we have had some discussions on this Committee about whether that amounted to $112 billion or some other number and how to properly account for it. But I think there is no doubt that the Navy and Marine Corps, and I dare say the other services as well, were dramatically stronger because we had put money in.

    I would add that we had an intense discussion internally in the administration this year about the submarine force. The program was to increase the size of the submarine force from 50 to 55. And we funded that. And I know that you have been very supportive of that move. I think the record will show that I also have been very supportive of it. And you see me pressing for other kinds of opportunities in that regard. For example, the conversion of Trident submarines into conventional missile shooters, rather than simply retiring them, et cetera.

    I would add that we have, during the time I have been secretary, substantially raised the build rate of our ships. And I am quite proud of the fact that I have given you a program, which two years ago, I think, was not anything—nothing as good as this was expected. A program that builds eight ships a year.

    And you make the perfectly correct point that that is not enough over the longer term. And I share that point of view. You are absolutely right. My own calculations about build rate, I think, more precisely lead to a steady state force build rate, if you need 300 ships, of 8.6 ships a year. But we could argue about the numbers. We are not there, we would agree. And we also have some deficit we need to build in. So just building 8.6 doesn't quite get you there.
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    I would note, though, that our ships are now younger than they have historically virtually ever been. We benefitted from the build-up in the early Reagan years in the early 1980s. Our ships came online in very large numbers in the later 1980s. Those ships typically have 30-year ship lives. So at the moment, I am dealing with ships that are 15 or so years old.

    The time for me to build and replace those ships is not right now, it is more—further out. And what I would love to be doing at the moment is taking advantage, in my view, of the youth of the Navy to invest heavily in the research and development I have emphasized and which you have stressed on so many occasions, so that I can build better ships more cheaply in the time ahead.

    I am trying to put us in a position where we are building now at a healthy rate a sustained, continuous rate of eight ships a year and where in the time ahead we are making investments on the time ahead that we can build ships more cheaply and above all operate them more cheaply so we can buy more when the ships get old and we need them.

    Finally, on the question of a 350-ship Navy, I am sure I, like any other Secretary of the Navy and any operating commander in the Navy, would like to see a bigger Navy. I wouldn't, though, say that there is some dramatic breakpoint, some magic number that when we get there, we have arrived at nirvana and short of that, we are in some kind of purgatory.

    You instanced the Korean war in the 1950s circumstance. You are absolutely right. The nation was woefully underprepared. The Navy is not now woefully underprepared, whether it is for a Korean contingency or anything else. And I think we are ready to handle the contingencies today.
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    So in sum, you were raising, I think, very right issues. You and I are probably much closer together than most people in the political arena in discussing these things. But I would put it in the perspective that I just offered. Thank you.

    The CHAIRMAN. Mr. Sisisky.

    Mr. SISISKY. Gentlemen, I really didn't want to get into this argument, but I will.

    Mr. HUNTER. I had a feeling.

    Mr. SISISKY. You know, I don't understand what you just said.


    Mr. SISISKY. You think we need to take care of anything, but we really couldn't. For instance, in the last three years, the Western Pacific is without a carrier battle group. Am I right or wrong?

    Secretary DANZIG. Yes.

    Mr. SISISKY. For a certain amount of months.

    Secretary DANZIG. Correct.
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    Mr. SISISKY. The most dangerous spot in the world, or one of the most dangerous spots. So that is, you know, to me, against the argument that we don't need more ships. You have to be able to station them really to make a difference. But I won't get into that.

    But let me tell you what this all about, all three of you. As I see it, and I am almost like a broken record, the QDR is taking place next year. And I think we have to build, we have to build something for the QDR to see that this is—it's you, gentlemen, that are more meaningful to the QDR than us. We just keep pointing that out to the chiefs to try to point it out because for the first time, hopefully, by law the QDR will be threat-driven rather than budget-driven.

    So it is imperative that you make the case now for next year. We are woefully—I could go into the things in intelligence that it is just hard to believe that a commander of the J–2 in the most troublesome spot in the world would say where our intelligence is because of a lack of assets that we have in the air, under the sea, and other things.

    But I won't get into that. I will ask the question of all three of you. And I might add the Army, too. You know, your plan in the Army is just great, but you are going to try to do it with the same amount of money. And I would like to see how you put an Abrams tank in a C–130. But that is besides the point.

    Earlier this year, the service chiefs testified that the junior Reserve Officer Training Corps (ROTC) program was a great program. And approximately 30 to 40 percent pursued some type of service, either enlisted, Reserve, National Guard, or ROTC. I had my office do a study since that time. The figure is 35 percent.
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    But the great thing about this is that the average per recruit of all services is $10,472. Do you know what the cost is in the junior ROTC per recruit? Do you know? $450. That is a great disparity. And I don't think we can use that entirely, but we called the Pentagon to find out. And 600 and—I will find it in a minute—over 600 schools that can get it, it has been budgeted for, and they said they can't do it until 2004 and 2006. And they can't expedite because they have to train. Give me a break.

    I mean, if you can retire in the military, it is a great thing for somebody to do. And I intend to get a study with the chairman of the Personnel Subcommittee, Mr. Buyer, because it just seems to me this is an opportune time that we could jump on something that would help our recruitment. And I would just like to have you—hear any comments that you may have concerning junior ROTC.

    Secretary CALDERA. Congressman, we think it is a great program. We are investing in increasing junior ROTC. We are adding 50 schools a year over 5 years. There is a DOD cap on the number of schools that you can have. So it is—we will hit that cap once we have those 250 schools. We cannot have more schools unless we lift up that cap.

    Mr. SISISKY. Excuse me. Whose cap is that? That is Department of Defense? Or is that our cap, because we can change anything.


    Secretary CALDERA. And we are putting almost a $100 million against the junior ROTC. So I would—and I have got some core spots I would like to send you on that because we are big believers. We would do more. We have got—almost half the programs in the country are Army programs. And we would add more schools if we could.
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    Secretary DANZIG. I agree with you. It is a very attractive program. Our estimate for the Marine Corps experiences is of the people who participate in junior ROTC, over a third wind up becoming Marines. And as you say, it is very nominate calculation when you look at the cost of recruiting, et cetera. We also are moving to the maximum number of 700, as I recollect, over the course of these program years. And I would be delighted to look with you in the possibilities of accelerating that.

    Mr. SISISKY. You were right on the number. There is 700.

    Secretary DANZIG. We understand each other.

    Mr. SISISKY. The Army is 1,645.

    Secretary DANZIG. Right. Thank you.

    Secretary PETERS. We also are expanding that program up to its maximum. The other thing the Air Force is doing is working in civil air patrol to increase the civil air patrol cadet program, which is equally attractive to many people, which has, I believe, equally good results in terms of getting people into the military.

    Secretary DANZIG. Mr. Chairman, if I could take a point of brevity. Could I just come back for less than a minute to Mr. Sisisky's point about the size of the Navy? Thank you.

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    I just want to clarify. I agree with you that a 350-ship Navy does a better job of extending our presence everywhere in the world. And we are not able to meet all the requests from Commanders in Chief (CINCs) and so forth now with respect to presence. And I think that is a quite important point.

    I merely was responding to the question of a Korean contingency and/or a contingency like that; are we prepared for it? In my judgment, the answer to that is yes.

    Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you. We need to break for a vote, and we will be right back.


    The CHAIRMAN. The meeting will please be in order.

    Before we proceed, I would like to ask unanimous consent to—since Mr. Bateman, who can't be here any longer today, be allowed to ask questions on the record of Secretary Danzig.

    The CHAIRMAN. Mr. Hansen.

    Mr. HANSEN. Thank you, Mr. Chairman. Mr. Chairman, I had a question for Secretary Peters about the civil air patrol and I think he answered it with Mr. Sisisky, which I appreciate very much. Therefore, I would like to ask a question to Secretary Danzig about Vieques, if I could.
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    Mr. Chairman, I would like to have unanimous consent that I could pass out to members of the Committee a letter that was written by the Secretary to Mr. Frank Rush on 15 July 1999. A very eloquent letter and very well done. It was written by the Secretary. And if I could have unanimous consent to pass this letter out.

    [The information referred to can be found in the Appendix.]

    The CHAIRMAN. Without objection.

    Mr. HANSEN. Thank you.

    Mr. Secretary, if I may, I would like you to refer to the letter that you wrote that I was just referring to with the Chairman. And in that, it was a very well written letter. And let me just go through a few highlights if I may.

    The question asked in the letter, ''Why is Vieques important as a training ground for the United States Navy and Marine Corps?'' Answer, ''The training wins wars. Many Americans in uniforms owe their lives to this crucial training. Many would perish without it.''

    The letter describes the critical importance of combining combat training under lifeguard conditions to state flatly that quote, ''This is our most effective training for combat.'' It describes the $3 billion investment made to support the operations of the Puerto Rico operating area. It describes the 57 other locations, 57 other locations in the United States where live fire training is conducted. And it calls any claim that the same site poses a unique burden for Puerto Rico ''plainly wrong.'' Perhaps most importantly, the letter states, ''There is no justification for applying different standards to Puerto Rico than for the mainland of the United States.''
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    My question goes this way, Mr. Secretary. I assume when you wrote that letter last July, which was very clear and you made a very astute point, I assume you stand by it. If this training is directly related to the lives of our front-line servicemen, why would you support the vote on the matter, and isn't that applying a different standard in Puerto Rico.

    Would you support a vote for the hundreds of thousands of Americans who live closer to the line in England or any other areas? Because in my investigation, we found that there are 48 other states that have live fire under almost the same conditions even closer than you have in Vieques.

    If this training is the most effective training for combat, why would you allow your carrier battle groups and amphibious groups to deploy without it? Mr. Secretary, have you or Adm. Johnson or Gen. Shelton or any other official in the Pentagon met with Attorney General Reno of the Justice Department to request her assistance in evicting or arresting the trespassers on the range? If not, why not?

    And is it true that the trespassers now control the front gate of Camp Garcia and now block all access to the property except by boat or air? And may I ask the question, what would you do if the settlement trespassing was going on in Quantico or Utah Test and Training? Is there anyplace else? It worries a lot of us who have gone and fallen on our sword for this military on the intensive training ranges— and believe me, I have—that now we just kind of look the other way.

    Mr. Secretary, I would appreciate a response.
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    Secretary DANZIG. Well, thank you for raising these questions. They are questions that I, as you know, have spent a lot of time with myself over the course of the last year. First of all, I do stand by the statements in that letter. And I appreciate your praising it.

    Vieques is a unique training ground. It is uniquely valuable. It is very important to us if at all possible to retain it. It offers a kind of training that I don't think we are going to be able to replace anywhere else in the world.

    The operational question for us is how do we best proceed, given the intensity of the opposition to the use of the range in Puerto Rico.

    You asked whether this is different or in what ways it is different from other places in the United States. I think your point is entirely correct. It is not different in the sense that there are a lot of other areas where there are a lot of places close to the live fire, and Vieques is not unique in that regard.

    Vieques is in a special circumstance in two respects. One is, unlike most other places in the United States, while we operate the military there and do burden citizens through our activities, there are actually no benefits to the people of Vieques from that presence. In other jurisdictions I find military bases are warmly supported. You know this quite well.

    And I ask myself why that that occurs there and not in Vieques. And one answer is because we have a military presence in other places. Our military personnel go—send their children to the schools in that area, they participate in the economy, they attend the churches, they are part of the community.
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    Vieques is an island. We use it as a target. And since the Marines left Camp Garcia in 1979, we do not have a military presence that is a positive force at all on that island. So one thing, from our standpoint, that it is very valuable to move towards correcting that by engaging us in the economy of the island and doing things like supporting the $40 million of the President's program, as you recall, just by way of investment and having the Navy do things like contribute land, provide—participate in training programs, provide emergency services, and the like.

    The second special thing about Vieques is that the whole issue, as you are well aware, inevitably I think became intertwined with the issues about Puerto Rico's status. Some people in Puerto Rico see this as an argument for independence, others as an argument for statehood, others as an argument for the status quo. Underlying it is a sense for the people in Vieques that they don't have a vote in Congress and they do not have a voice in the outcome.

    That is different from other American constituencies. The President's conclusion and my conclusion was that on balance in order to sustain our operation there, we needed to give them a sense that they have that possibility of participation.

    Realistically, the Vieques training range is some 50 square miles—35 miles of water, 15 miles of land. We need the cooperation of the local citizenry in order to be able to test on those ranges; anybody coming on that range prevents or delays training the way we need to.

    We need some degree of goodwill and support from that community to make it work. And giving people there some sense of voice and participation is, from my standpoint, an important thing. I recognize that it puts us in jeopardy. But the question is, how do we best increase the probability that we can move forward. And I genuinely believe this is the way.
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    Finally, you raised the question have I talked with Attorney General Reno. What do we do about the protestors. And the answer is yes, I have talked with her. We are working with the Justice Department. And from my standpoint, it is important that the rule of law be reasserted in this context and that we resume training on that range, for all the reasons you refer to.

    I pressed hard for that. I think we made progress. I would like to add that from my standpoint, it is desirable that any denominate support to Puerto Rico in kind that is involved in that $40 million package be premised on a certain occasion from me or from the Secretary of Defense that we can in fact use the range and that money should be made contingent on clearance of the range. I am hopeful we will reach that point in time soon.

    Mr. HANSEN. Thank you, Mr. Chairman.

    I really feel, however, that the Attorney General has let us down a little bit.

    The CHAIRMAN. Thank you.

    Mr. Ortiz.

    Mr. ORTIZ. Thank you, Mr. Chairman. I do have a question for Secretary Caldera.

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    But first of all, Mr. Secretary, I want to compliment you and your staff. As most of us know that the Apache were grounded. Couldn't fly because a lot of problems with it. And they went to the outside industry to see how soon they could get repair it. And it was going to take 16 months. But they took it to one of the best Army men, which just happened to be in my district, and they were able to do it before an outside industry could get started.

    I just wanted to compliment how you, your staff, and civilian workers were able to save a lot of money for the taxpayers and were also able to be on the case as needed. Corpus Christi Army—I wanted to be sure that—

    Secretary CALDERA. Congressman, and we thank you for your assistance. But the people there worked around the clock and put in a lot of overtime, were working weekends and everything. It was critical to me and the Army in this and all the other forces that use the Apaches to get those back up and ready. And so we appreciate all that the workers did.

    Mr. ORTIZ. Thank you, Mr. Secretary. It has been brought to my attention that the Army is planning, in Fiscal Year 2002, to initiate a recapitalization program for CH–47 Chinook and UH–60 Blackhawk helicopters. The recapitalization work is planned to modernize both the air, terrain, and components to greatly expand the service life, reduce operation and support costs, improve reliability, maintain safety and efficiency and enhance capability.

    Considering that the Army plans to produce—procure—only a small number of helicopters in fiscal year 2001, it appears most prudent we proceed as soon as possible with a life expansion of this essential asset to the recapitalization program. If the funding resources were available in fiscal year 2001, would the Army accelerate this part of this program?
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    Secretary CALDERA. Absolutely, Congressman. The Chinook has just been a workhorse that has proven its value over and over again all over the world in being able to move men and material and equipment, supply refugee assistance, humanitarian assistance. And so it is a great helicopter.

    They are getting pretty old, but we expect to have them around for a couple of decades more. And the way we are going to have them around is by doing these service flight expansion programs and try to take them back basically to reset the clock on their life to zero. And so that is a program that could be accelerated and could be executed if the funding were there for it. And we would do that.

    Mr. ORTIZ. Thanks again. Thanks for a great job.

    And I don't have any other questions, Mr. Chairman.

    The CHAIRMAN. Thank you, Mr. Ortiz.

    Mr. Hefley.

    Mr. HEFLEY. Thank you, Mr. Chairman.

    Thank you, Gentlemen. I think the Pentagon, as well as the Congress, has finally recognized that we do owe the debt to those in the service in the past and that we promised them that we would take care of their health care. And we haven't lived up to that like many of us would like for us to do.
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    We made a step in that direction when we passed, several years ago, this pilot project for subvention. It seems to be going pretty well. I have one of the largest populations of retirees in the country in Colorado Springs. And now they seem to be pretty happy with it. And we are at the point where we need to expand it nation-wide. I think the Joint Chiefs recommended we go from 10 pilot project sites to 15. I would like to know how you gentlemen feel about expanding it nation-wide.

    And then I understand that there is a problem that Health Care Financing Administration (HCFA) is not paid, that that was a part of the unknown formula and that you are not getting paid for it. If that is the case, what would you like us to do to see that they hold up their end of the bargain? It took the Committee months of negotiation to get that deal. We got the deal, and it sounds to me like one side of the deal is not living up to it. So if you would comment on those two things, I would appreciate it.

    Secretary CALDERA. Congressman, we agree—I certainly agree with you that we need to keep our commitment to our veterans. And it impacts retention and recruitment because they are talking to young people about their experiences in the military and about our Country's owning up to its commitments.

    As we have downsized and we have reduced our presence in installations, in many communities, we no longer have the kind of health care presence that we used to have in the past. So funding things like the Medicare subvention mentioned is important. There is an evaluation of this program that is going on now. One of the challenges is that it was supposed to be cost-neutral. And that there, in fact, is a significant cost of about $40 million that we are putting into it to make this work.
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    And so that really is a—what is of concern to us, because we need to keep those commitments to our veterans. But we also have to be mindful that if we don't control the health care costs, you will start the—the costs will grow in a way that will start making it hard for us to meet our other requirements for readiness and modernization, quality of life, for our current soldiers.

    Mr. HEFLEY. You are putting it into that. That money should be reimbursed by HCFA?

    Secretary CALDERA. That is correct.

    Secretary PETERS. Congressman Hefley, I believe you are correct that we have not been reimbursed by HCFA. We also are not being reimbursed, even if we were given the money, at the rates that we need to be—at which we need to be reimbursed. We are reimbursed at a lower rate than other equivalent providers.

    In the Air Force, we have retailored the Air Force medical service so that it is now a—or soon will be a primary care service for medical treatment facilities. We also, of course, have some specialty folks, not only at Wilford Hall and Air Force hospitals, but also working at community hospitals.

    Our surgeon general feels that we need to have more complex programs to provide for the record. Just a couple of key points. Number one, we do need to be funded at the same level as other providers. Now we don't attempt to charge for military manpower, but we need to be reimbursed for the other forces.
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    Second, we think that the program really doesn't get extended in time as well because it is running out of time as a private program. Our experience is it works well. However, it does not recognize the reality that the military service—medical services are also provided in the civilian community hospitals near the base. In fact, we often don't have critical care capabilities in the medical treatment facility. We handle that either by contract or civilian providers or alternatively by having military doctors at the local hospital. And that piece of it needs some work just conceptually.

    Those are the major issues we see. We also—you know, also, unfortunately, the medical treatment facility with military doctors is never going to be large enough to deal with the complete retirement population. It just—it isn't scaled for that.

    And if we were going to scale it for that, we would have to really do a lot more work than what the requirement is and probably limit space available for care and basically look at retirees and people that have to sign up for the program. And trying to leave space available is very difficult on a widespread basis with lots of retirees because you don't know what your demand is.

    So we need work done on these issues. If I may, I will provide a paper that our surgeon general has done for the record, which recounts our experience and talks about the program.

    [The information referred to can be found in the Appendix.]

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    Mr. HEFLEY. Secretary Caldera, I forgot to ask you about the spare parts fund. We put a lot more money into spare parts and all, and I think we have gained on that problem. But it doesn't seem to be filtering down to the Guard. For instance, in Colorado, we had 38 Army Guard UH–1's. Of those 38, 4 can fly. And then they have got a situation where I think one can fly.

    I understand the necessity to keep the active duty going, but if we are talking about a total force, then you can't have most of your equipment with the Guard and the Reserve down, they are not ready to do anything then when the time comes. Would you like to comment on that?

    Secretary CALDERA. The UH–1's we are trying to get out of the service, out of the fleet eventually and replace them. There is some going on to try to—we will certainly give you the air modernization report that is due on April 1st for the helicopter, for Army helicopter programs.

    There—and that plan does provide for being able to have the Reserve components maintain their flying skills by having enough helicopters through some distribution. It doesn't mean repairing every single one of the UH–1's. Some of them will be repaired, some of them by cannibalizing, frankly, from others in order to be able for them to keep their skills up to the best to maintain the amount of UH–1's we can, but to try to deliver the newer models with greater capability as we go through implementing the air modernization.

    Mr. HEFLEY. Thank you.

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    The CHAIRMAN. Mr. Pickett.

    Mr. PICKETT. Thank you, Mr. Chairman.

    Secretary Danzig, we have talked several times with Navy representatives about the commercial repair yards in the military in Virginia and how they are often confronted by the Navy with a spiking up and down of the work that is available for them.

    This is a very fundamental and very important industrial base issue. As you know, if the Navy follows through in its plan to put more of the nuclear controlling work in the Navy yard, there is going to be a demand for more commercial capability to do the surface ship, to help the surface ships of the Navy. And at the rate the Navy is going now, you are going to put a lot of these folks out of business before we ever get to that point.

    So number one, I would hope that you would try very hard to do something to smooth out this line that has been spiking up in a way that is totally unanticipated by the small business concerns.

    Now this leads me into the question that I want all three of you Secretaries to answer. And that is that I know the supplemental has money in it for all three services. And one of the items that the Navy is requesting in the supplemental is additional ship repair funds.

    But the supplemental has been kicked around, and it is thought now that perhaps it is not going to get at it at all and that you won't have the supplemental this year. Already we are six months into the year 2000 fiscal year.
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    I know every single one of your services has spent money in contingency operations that you didn't intend to spend. You have taken that money out of the operations and infrastructure needs and other things where you are not going to be able to use it. And if this supplemental is not passed, you are just going to be put in a much worse position.

    I would like to know, in addition to your responding to the ship repair issue, Mr. Secretary, how a multitude of these elements and services are going to be impacted if this supplemental is not paid.

    Secretary DANZIG. Well, perhaps I should go first, Mr. Pickett. Your point is well taken. And the connection to the supplemental is quite appropriate. We estimate in round numbers that the Navy maintenance budgets on the East Coast are about $400 million and on the West Coast about $400 million. And then unexpected contingencies are really more towards the $500 million level on each coast. We're opening up ships and finding repair requirements that were greater than we anticipated. We are finding that there was a grounding, an injury to a ship, that gives us unexpected costs.

    To the degree that this supplemental can correct that, we are going to realize efficiencies and increase the readiness in the Navy. To the degree it doesn't, we are going to wind up having to impose costs not only in future years, but also generate delays and a lot of difficulties in the administration to the sailors.

    And in addition to the point you made about the uneven workload, it is the practical reality, as you say, that we look first to supply work to public yards whose operations we guarantee in terms of the work and the like and that that causes fluctuation in the private firms. So a supplemental is very helpful.
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    I would point out as well that there is some $6 billion in there for DOD for rising fuel costs. If those fuel costs, which are factoring a lot of changes, are not dealt with in that context, we are going to wind up having to raise our overhead budgets even further and that will create more destruction. So I would very much like to see the supplemental get through as fast as possible.

    Secretary CALDERA. Congressman, for the Army, $1.5 million of the supplemental is to pay for the Kosovo mission. And it is critical that we get full reimbursement as early as possible. We are expending our Operation and Maintenance (O&M) funds today to support that mission. We will run out of those funds by July. Without the supplemental in Europe, they will run out of those funds by June.

    So, of course, in order to avoid being in a position where we cannot support the Kosovo mission or being in a deficiency situation at the end of the year, we would have to start cutting back on training, cutting back on training rotations at the National Training Center, furloughing the civilian employees. We would have to do those things to get our budget back in line with the money that was appropriated for us to operate with.

    So that it is both a question of full reimbursement and timely reimbursement because those decisions will have to be made. If we don't see that reimbursement, we will have to take—start taking those actions. If we don't take actions early, you are left with only much more draconian measures later as you have fewer options about how to accumulate the savings you need to live within your budget.

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    Secretary PETERS. Congressman Pickett, we have, I think, around a $100 million of operational funds, which we would obviously like to have. We second what Secretary Danzig said. The fuel cost adjustments is in the supplemental. And also there is a medical cost piece in the supplemental that is really critical overall.

    The medical costs. There are large claims against TRICARE. What those will settle out for is unclear. And it is good to have some value. And there are funds in the supplemental now to try to pay for those medical costs, which are obviously essential for us.

    We need to fund medical care. That is now, for the Air Force, probably the number one area which our young men and women cite as a reason they may want to leave the Air Force. As a matter of fact, they feel good about the pay and retirement and they are beginning to feel better about Operating Tempo (OPTEMPO), but medical care is still a major problem.

    And obviously if fuel costs continue to go up, that will ultimately constrain our ability to do the blocking and tackling work we have got to do in the training. And we need to get those in there as well.

    Mr. PICKETT. Thank you very much.

    Thank you, Mr. Chairman.

    The CHAIRMAN. Thank you.

    Mr. Buyer.
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    Mr. BUYER. Thank you Mr. Chairman.

    I just have—I have got two housekeeping issues. One in regard to Mr. Sisisky's question earlier about the junior ROTC. The 250 limit is not DOD. It is statutory. It was done by us. And my present sense is, I have a letter by you, Mr. Sisisky, and also one by Mr. Kuykendall. And I am familiar with the concerns of the United States Marine Corps.

    What I would submit, gentlemen, is that if—rather than for me to raise the cap, I would suggest that I draft language that directs the Secretary of Defense to review and redistribute the current service to ROTC allocations between fiscal years 2001 to 2006.

    I would view it if, one, you, Secretary Danzig, the Marine Corps—presently they are at 170 and capacity is 210. And they want to move everyone off the waiting list, which means they have to bust the cap. And they are willing to fund that, then the DOD ought to give you permission to do that rather than me do something over here.

    So I am going to work on language to direct the DOD to rethink redistribution among these allocations based on what each of you want to do with your particular service. I think that would be the best way, Mr. Sisisky, to handle that. There will be funds willing to do it. And we will make that directive to DOD. Would that satisfy the gentlemen?

    And each of the Secretaries. Is that all right with each of you?

    Secretary DANZIG. Thank you. It is a good idea.
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    Secretary PETERS. Thank you.

    Secretary CALDERA. Congressman, the only thing I would note is that we are trapped, and we have committed the funding to hit our cap. And I believe that is what I heard the other services say. So at this time, I don't believe there is any to redistribute because we are all intending to fully fund our—all the programs that we can, but—

    Mr. BUYER. We will not go beyond our cap. If the Secretary of the Navy wants to do that, then DOD ought to set him up.

    The other issue Mr. Hefley brought up about Medicare subvention, I would say, gentlemen, you are absolutely correct. It is costing you about $2,000 per beneficiary. And it is a good thing we did this as a title program. Dr. Bailey testified here last week that she is in negotiations with HCFA on a new number. But to say that you immediately then move to a nation-wide expansion of Medicare subvention is not the favorite wins at this point.

    I would ask Secretary Caldera this question because I am—I want you to convince me that I am wrong. That is my challenge to you. Okay. My present sense is that the Army, the active Army is not taking care of the Army Reserve when it comes to recruiting. So the Army Reserve missed its recruiting objective of 52,084 by 10,302, which is 19.8 percent for fiscal year 1999. And they are projecting to be about 5,000 short for 2000.

    And my sense is whether I should remove the recruiting of the Army Reserve away from the active Army and create the Army Reserve with its own recruiting function. So I am interested in your opinion on that and can you convince me that that is not necessarily a good idea?
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    And last, Secretary Danzig, let me join in a chorus of those of whom have great concern with regard to Vieques. I also compliment your letter. But I also would like for you to define for the Committee—when they talk about resume training, what does that mean? Inert or do you mean live fire? Because those whom I speak to it is like—it is all about live fire. The coordination of everything on a particular target at a moment in time when it is live, not inert. And so I am curious about—for you to define for us.

    I am also deeply concerned about the precedent that would be set for other reasons where troops train with live fire and do other operations that may not always be popular with a given community around our Country and our territories.

    I am also, in particular, extremely concerned about our operations in Okinawa as an example. I think the idea of giving people the right to a binding referendum on these kinds of questions as a result of civil disobedience is completely the wrong way to go.

    I will use the Air Force as an example. We have a very good relationship with the Tehono O'odham Indian tribe in Arizona. Let's just use this as an example. The Barry M. Goldwater Range sits in the middle of the Indian reservation. They said that they wanted to take their sacred lands back and exercise civil disobedience to do so.

    Now you are in negotiations with a sovereign nation. And they can lay down the same claim. You are bombing our sacred ground, yet we are not deriving any special benefit from it. And when you lay out 40 million to people and what—what, they will gain monies? And you could do it one after another after another after another. So the precedent are very—is very disconcerting to us. So when you say no benefits, freedom and liberty is very real.
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    Thank you.

    Secretary CALDERA. Congressman Buyer, the Reserve components are very important to the total Army. Fifty-four percent of our force structure is in Reserves. We are utilizing that in Bosnia and Kosovo throughout the world. We couldn't have accomplished our mission without them. So Reserve recruiting is very critical to the total Army.

    The kinds of challenges that we had in recruiting last year are being met this year. That is, we are in much better shape when it comes to meeting our section goals for this year even though they are higher. And we have taken some of the steps that I think will yield them the right results for us for the future when adopting best business practices in how we do research in young people's needs and attitudes, how we can work that into the right message to express to them the kinds of opportunities there are for service and education and training and the wonderful experience of serving in the Army.

    And I believe that is going to pay great dividends. And within that whole concept of adopting best business practices, there is a specific focus and accountability for the Reserve component of that recruitment. We are also encouraging the Reserves to do more of the—within the unit effort to reach out and recruit locally because that is where they have to get their members from the local areas.

    And a certain number of our recruiting stations have goals that are specifically focused more on Reserve recruiting than they are on active recruiting, in areas where we have a number of Reservists—for example, in Sacramento. So I think we are doing the kinds of things that will help us meet the recruiting challenges not just for the active component, but for the Reserve components as well.
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    I think that we are starting to prove those out today. We have made all our goals for recruiting for every month that we have results in for so for this year. We are guardedly optimistic about what the final numbers for the year will be. And I think this will inure to the benefit of the active and Reserve components equally.

    Secretary DANZIG. As to Vieques, Mr. Buyer, you have asked two questions. One is what do we mean by training in terms of the certification. You are quite correct in pointing to the difference between inert and live fire. We greatly value live fire, and we value the inert less so. Substantially less so.

    Still, the understanding is that the certification that would be required would be simply for inert fire. And the live fire would not be expected to be reinstituted prior to our referendum on that point. The reason that we value that is two-fold, the inert in the interim. One is the actually utility of the inert.

    The second is simply the resumption of the use of the range and establishing the rhythms of cooperation in a relationship there that enhances the probability of getting a referendum, which could occur as soon as nearly immediately under any conditions. Within 9 months or May 1 of next year, we should be able to arrive at some greater probability that we can get back to live fire, which is what we really would value especially.

    The second part of your question is, are we really conceding to civil disobedience here and what kind of precedent does that set. I don't feel that in any respect our actions here are being driven by the acts of civil disobedience in the presence of protestors on the land. It is a complicated factor, but we have never negotiated for those people or accommodated our actions on some theory about what would be persuasive to them.
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    In the end, as earlier discussion or dialogue here as Mr. Hansen suggests, it is likely that that is a law enforcement action, not an action relating to these main understandings. The understandings that we have developed are not with protestors, they are with the government of Puerto Rico. And it is the participation and support of the lawful authorities there in this process that I think is so important.

    If incidents like this occurred elsewhere, I think residents of the kind you point to would express themselves through your offices or through others and there would be a vital kind of role here for you. We need to achieve that with the government of Puerto Rico. I think through the understandings we have described we have achieved that. And I don't feel in this matter that the protestors really are the central issue by any means.

    The CHAIRMAN. We will break with the next vote and we will be right back.


    Mr. STUMP [presiding]. The meeting will please be in order.

    Mr. Taylor.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    I want to thank you particular gentlemen for being with us today.
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    Secretary Danzig, I will start with you. It is my understanding that the plan on DDG–21 is slipping a little bit. I note on a publication that your office has sent me just this week that the Nation saved a good deal of money by not having the DDGs. I was wondering and hoping that you would take a look at putting together a multi-year—no, that multi-year procurement is in this year's budget cycle.

    I was hoping that you would take a look at one more point on here, keeping in mind that we are not going to get into the DDG–21s as soon we would hope and hopefully once again that would ensure that we have a hot negotiating line all the way through the end of the DDGs to the DDG–21 and hopefully we can save some money and put some good assistance to you at the same time.

    Secretary Caldera, this is going to be totally out of character for me. I'm normally going to bat for the little guys. But it has come to my attention, through several publications that I read, that the little guys are upset that Maj. Gen. Grange is going to be reduced one star in rank at his retirement. And I would certainly hope that you would take a look at the way that this is. It certainly seems to me from what I have read, I don't recall any of the details, but he certainly seems to have deserved to retire at the end of June.

    All three of you I am going to ask a question. Going back to 1956, the Congress enacted the Department of Defense Health Care Act, which provided health care benefits to military retirees and their dependents contingent upon the availability of space at military facilities. In 1966 they passed what became Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), where members could use, until age 65, at which time they were required to enroll in Medicare.
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    There is a program out there that would allow Medicare-eligible retirees to use the base hospitals, which in my opinion is what enlistees were promised 20, 30, 40 years ago. It was lifetime health care for themselves and their dependents at any military care facility. I know that is what it was in 1971 when I enlisted. So I have got to believe that the retirees you are dealing now weren't told anything different.

    As you know, there has been some debate as to whether or not we should be able to compensate. So I would like for you to provide to me the language that it would take—just for HCFA to compensate them properly. And I would also like you to take a look at a bill that has been drafted by Congressman Neil Abercrombie and myself, H.R. 3655, which would fulfill that promise of lifetime health care at any base hospital. If you have Medicare, it would pay the base hospital who provided the health care.

    I think the important thing is it keeps the promise that was made. It also does not come at the expense of the DOD budget. It comes from the Medicare budget. And therefore, that would probably provide an additional 2,000 to 3,000 of health care for everyone in uniform without sacrificing the procurement or readiness of any other programs, all of which are unfunded.

    It is my hope that that, or something like it, is included in the Chairman's mark. But I can say with absolute certainty that if that is not included in the Chairman's mark, it will be offered as an amendment before the full Committee. I would certainly like to add that you gentlemen endorse that move.

    I know the budget deal was signed and the parties who signed that are supposed to live by it. Occasionally my Republican colleagues add a tax break du jour to take care of some fat cat du jour. And as we speak, Congressmen on the Ways and Means Committee will find the last fat cats in America with another tax break. And quite frankly, I would rather take care of our Nation's defense.
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    So if they can break the budget to take care of the fat cats, I think we ought to be able to break the budget deal to take care of a lifetime health care commitment that was made to military retirees, regardless of cost. And I would like to have you gentlemen help me to that end. So I will ask for your thoughts on this.

    Secretary Danzig, I would also like to get with you on this because I understand everything that you said, but I think this especially, I don't think the Navy ought to give up its land. We do have to be a much better neighbor, and I know you are capable of doing that. And I hope that you take the time to; let's have some thoughts on how to do it.

    Secretary DANZIG. Well, perhaps I can start by first of all on Vieques. I would be delighted to talk with you. I am aware of your own business with Vieques and your deep involvement in this issue. And I thank you for it. And I would be delighted to talk more about that and take advantage of your insights with regard to it.

    On the question of the DDGs and multi-year procurement that you raised, we are requesting a revision to the multi-year unilaterals that would enable us to do a multi-year procurement for DDG–51s in the program years beyond this budget year. And from my standpoint, that is a potentially very attractive route to go in terms of both providing the assurance to the industrial base that I know you value and also achieving economies that we normally obtain from multi-year procurements, which I know you also value and obviously said a lot. So I think that is a very attractive route.

    It's very important to us to transition to the DD–21. It is a program that I'm inordinately supportive of. And I view it as a program that gives us rewards that nicely compliment the DDG–51 program. But to transition us to the DD–21, we need to do exactly what you said. We should buy DDG–51s, and multi-year procurement will help us do that.
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    Secretary CALDERA. Congressman, first of all, just on Gen. Grange, I would like to kind of talk to you about the thinking behind that decision. When Gen. Grange retired before completing three years time and grade, after his division command, he knew that by retiring before reaching three years time and grade that he would not be eligible to retire as a two-star without the waiver.

    And he turned down a very prestigious job on Chairman Shelton's staff to be a member of the Joint staff, which really allowed him to meet his time in grade requirement. So I want to be able to talk to you about that situation.

    With respect—I appreciate your concern that our Country ought to hold onto its promises to our veterans, and I share that belief. Our concern with the Medicare subvention program has been related to the cost because the pharmacy benefit is included as a normal part of how we operate our installation hospitals and our no co-pays, et cetera. That is part of what has led to the cost differential and the cost that we are absorbing in a pilot project of about $40 million a year.

    And so that is what is making it difficult for us to voice and expand this program because of the cost implications to a number of veterans who are out there. But I think we do need to look at how we can meet that need that we met—that our Country made.

    Secretary PETERS. Congressman, we in the Air Force are also very supportive of the idea of the expanding Medicare subvention. I would like to send you a paper from our Surgeon General (SG) that explains not only some of the cost issues, but some of the structural issues which need to be resolved to make that an effective program. And I will send that out to you.
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    [The information referred to can be found in the Appendix.]

    Mr. TAYLOR. Mr. Chairman, I know my time is up.

    I would like to give you thoughts on possibly, with such a heavy fuel problem, for the services to tap into some future petroleum reserves just to take care of the military while the prices are very high. Thank you.

    Mr. STUMP. The gentleman from Missouri, Mr. Talent.

    Mr. TALENT. Thank you, Mr. Chairman.

    Thank you, gentlemen, for being here today. I don't know a single member of the House Armed Services Committee that isn't interested in keeping the promise that we made as far as health care concerns to our veterans.

    It is unfortunate to our military active and retirees. It is unfortunate—it shouldn't be that hard of an issue. And it is unfortunate from time to time there are those who will grandstand under the pretense of helping our military retirees and active duty veterans. And yet they are quick on the agenda.

    In particular, this occurred when this Administration consistently underfunded the Department of Defense. I believe this Congress since 2094 has ended about $48 billion back above Administration requests.
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    Having said that, let me get to some issues that I have. Secretary Caldera, two weeks ago Lt. Gen. Kern testified before the joint subcommittees here on Army transformation and modernization plans. And I live five miles from the gate at Fort Rucker. Obviously, I am interested in the addition, I was pleased to hear yesterday that aviation is still the centerpiece of the Army's combined armed forces. Mr. Secretary, is that your position as well, and is the Comanche helicopter still your number one acquisition priority?

    Secretary CALDERA. The helicopters are a very important part of our capabilities. And the Comanche is going to be the quarterback for the digital battlefield. So he provides us an attack reconnaissance capability that we have not had. That is, our number one, that we, in terms of the modernization, we are going to provide that to you, to the Congress, our Army-Air modernization plan that—by April 1 lays out what it is that we are trying to do, both in terms of production of the Comanche as well as taking the Hueys—the Vietnam air helicopters out of the force, replacing them with the Apaches and upgrading those, eventually taking the Kiowas out of the force as well.

    Those are important capabilities for the Army—the combined Army as a team that supports the newer elements. So they are already a critical part of how the Army fights.

    Mr. TALENT. Mr. Secretary, I think my point was is the Comanche still your number one acquisition priority?

    Secretary CALDERA. It is our number one acquisition priority. We do have in the budget this year, as you know, money dedicated for a transformation that is critical for giving the Nation greater capabilities of a lighter, more deployable, more lethal force.
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    And so the money that we have committed to transformation is a critical part of how we will change the Army for the future to meet the threats our Nation will face in coming decades. And that, of course, is also critical for us to keep the transformation and the funding online.

    We did that largely by reprioritizing $1 billion worth of the Army's budget. And we made some tough program decisions. We did not touch the Comanche program in terms of looking at it as a way of keeping transformation on track.

    Mr. TALENT. Let me—with regard to something that was mentioned by both the Chairman and later by you, the Army really will get about $9.4 billion of the $60 billion that is for modernization. And that is a decrease of about 40 percent in the last 10 years. Even if you adjust, as you point out in your testimony, for a smaller Army, we are still spending $5,000 less per soldier than we did in the previous decade.

    Let me ask you to look first of all that it's always a redeposit on all of us. But let's clear it up, first of all, a little bit. Let's assume that neither the Congress nor the Administration breaks the cycle of low funding for the Army and that that continues over the next ten years. Tell me what—in that ten years, tell me what kind of Army we would be looking at as far as modernity is concerned.

    Secretary CALDERA. Well, I will be very candid with you. The Army cannot replace its equipment today on the procurement budget that we have. It is less than $10 billion of the $60 billion that the DOD will commit to modernization this year. We don't have a measurement like the Navy does, 300 ships, a build rate, et cetera. And frankly, we need to find measurements like that because the—when you get to the fight, taking and holding terrain is about being on the ground. Defending terrain is about being on the ground.
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    And the soldiers who ultimately suffer the highest casualties who are the ones who have to face the enemy eyeball to eyeball. And they need to have their equipment modernized just as much as the pilots do and the sailors do. And we are not doing it. And we don't have an easy measure that tells you that you are adequately replacing your tanks, your fighting vehicles, your helicopters. And we can't do it within the budget that we have today.

    We get the smallest share of DOD's money as a service. And because we are a people-intensive service, we have the highest personnel cost operating and maintenance cost percentage of our budget. And that is why we have such little left over to try to recapitalize the force.

    All of—it is something that I am trying to get my hands around because I think it goes farther than just this Administration. I think it is a historical anomaly in a way that we have allocated our defense dollars. Today's soldiers are the ones who are doing the engagement mission, their boots on the ground all over the world. They are a tremendously important conventional force for our Nation. It is not less expensive to replace their equipment.

    We are trying to leverage technology just as much as the other services. We have as much technology in an M1A1 Abrams tank as you do in an F–16. And so if you are going to leverage technology for the benefit of the soldier to give the one who has to sit down there and hunt the enemy down and kill them, if you are going to give him the protection and the tools that he deserves to have to fight our Nation's wars, then you have got to replace and modernize his equipment. And we are simply not doing that today.

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    Mr. TALENT. With that, let me just say I was pleased to hear all your comments on the junior ROTC. And I think Montgomery is in my district. And I hope you will keep me informed on the current status of the reorganization of the Army and the Air Force. Please submit that for the record. We have got a vote coming on. Thank you very much.

    [The information referred to can be found in the Appendix.]

    Mr. STUMP. The gentleman from Pennsylvania, Mr. Pitts, is next. Joe, do you want to try to squeeze a question in or do you want to come back? We may be—

    Mr. PITTS. I will squeeze it in.

    Of all the aircraft that we are involved in Operation Allied Force, the EA–6B was most heavily tasked and perhaps one of the most important to ensure the success of U.S. and NATO strike aircraft.

    Secretary Danzig, the budget request funding is to add an additional squadron. That is good news. But I have a couple of concerns. One concern is about munition capability of our current inventory. Today, according to reports, approximately 42 problems out of an inventory of about 124, I believe, are out of service. And the plan is to have an operational inventory, I believe, of 104.

    What specific efforts are being made and will be made to get our operational inventory up to 104? And another hard aspect of this, press reports indicate the rate of aircraft cannibalization in the Navy has doubled since 1995. For the EA–6B, the cannibalization rate has jumped from 11 per 100 flight hours in 1995 to 24.4 in 1999. And how accurate are those reports, and how does our 2001 budget address these negative trends?
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    Mr. STUMP. Mr. Secretary, before you answer, we have got about six minutes. We are trying to squeeze two people in if you could abbreviate. Thank you.

    Secretary DANZIG. I will. Or if you prefer, sir, you can have the other questions asked and I can come back to this after they are all submitted.

    Mr. STUMP. Well, Mr. Pitts certainly is not going to give up his time. We have one more gentleman that wants to speak. Answer the question.

    Secretary DANZIG. Okay.

    Well, let me state very briefly, Mr. Pitts, I appreciate your concern here. We will get you 104 aircraft in terms of actual operations. The maintenance of our EA–6B's is something that we are very focused on. Particularly important is the agreement on a follow-on aircraft so we can replace it.

    One of the reasons the cannibalizations occur increasingly is because we are dealing with old aircraft that is no longer in production. And we need realistically to move to the new aircraft to deal with that. I can speak for the record with respect to the precise cannibalization numbers that you have. And I would be happy to correspond with you on that. I think we are getting, though, an inordinately stronger EA–6B force as we add this squadron back into a core operating aircraft.

    Mr. PITTS. Mr. Chairman, I had another question, I think, he can respond in writing.
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    Secretary Peters, generally, where does electronic warfare fit into the Air Force transition to the aerospace Air Force and how does the budget reflect that?

    Secretary PETERS. I would be happy to do that for the record.

    [The information referred to can be found in the Appendix.]

    Mr. STUMP. Thank you.

    The gentleman from Arkansas, Dr. Snyder.

    Mr. SNYDER. Thank you, Mr. Chairman.

    Secretary Peters, I wanted to ask you a question if I could. I thought at first it was just a local question, but I am now starting to get some hints from some others that it may be a more regional or national problem with regard to TRICARE. And I have been hearing from some providers who have gone through a lot of problems in the last several years with TRICARE, anyway, and now are having some problems in negotiating with Foundation Health, which is a TRICARE provider in region six.

    And there is two issues. Issue number one is in their dealings, TRICARE is trying to claim that—or Foundation Health claims the doctors versus the hospital. Specifically, the hospital contract runs out in June of this year. And Foundation Health is telling them the hospitals in the town of Jacksonville, they will not renew their contract unless the doctors, whose contract isn't up for renegotiation until October of 2001, unless they agree to have their contract opened up for renegotiation now.
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    Point two is in the course of that, the reason they are doing that is they want to only reimburse the doctors 80 or 85 percent of what Medicare pays. You know, TRICARE is a big pain for providers, anyway. And we try to keep as many options as we can for our personnel and retirees when we are dealing with TRICARE in terms of choice of providers.

    But we have just gone through about a three-year ordeal with Congress about how our Medicare reimbursement is too low and now it appears that our contract for providing delivery health care is trying to get providers to pay four-fifths of what a lot of people make. That has been too low even for Medicare. Is this just a local problem or is this more of a national problem, and what are you going to do about it?

    Secretary PETERS. I don't know about the negotiating issue, but the general problem of low pay for certain services under TRICARE is, in fact, a very significant problem, particularly in the Air Force in the OB/GYN area. We have a number of OB/GYN providers who have abandoned the program because of low payment rates. Of course, that is probably the most important medical service that many of our young men and women need.

    So it is a problem and is one that is in the focus of the Defense Medical Oversight Committee, which is the service undersecretaries and vice chiefs. And we have been working with The Office of the Secretary of Defense (OSD), health affairs, and TRICARE Management Agency to try to get those adjusted to what they need to be to provide the care. I will get back to you on the hospital issue. I don't know the answer on that one.

    [The information referred to can be found in the Appendix.]
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    Mr. SNYDER. Is the provider—is this a regional problem or is it a national problem?

    Secretary PETERS. This is very much a national problem.

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

    Mr. STUMP. Thank you.

    Any conclusions? We have four minutes to make the vote. If not, thank you.

    The meeting is adjourned.

    [Whereupon, at 12:45 p.m., the committee was adjourned.]


March 22, 2000
[This information is pending.]